# UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
                                                        Washington, D.C. 20549

# FORM 10-Q

(Mark One)

(X)      QUARTERLY
REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly
period ended March 31, 2008

OR

(_)     TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE ACT OF 1934

For the transition
period from _____________ to ________________.

Commission file number:
001-32566

|SECURITY WITH ADVANCED TECHNOLOGY, INC.               
|------------------------------------------------------
|(Exact name of registrant as specified in its charter)

|Colorado                                                        | 20-1978398                          
|--------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of
 incorporation or organization) | (I.R.S. Employer Identification No.)

|1722 Boxelder Street, Suite 101, Louisville, Colorado 80027
|-----------------------------------------------------------
|(Address of principal executive offices) (Zip Code)        

|(303) 439-0372                                      
|----------------------------------------------------
|(Registrant's telephone number, including area code)

Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 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 [_]  
No [X]

Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or
a smaller reporting company.  See definitions of large accelerated
filer, accelerated filer and smaller reporting company in
Rule 126-2 of the Exchange Act.  (Check one)

Large accelerated filer
|_|   Accelerated filer |_|   Non-accelerated filer |_|   Smaller
Reporting Company |X|

Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [_]
  No [X]

The number of shares of the Registrant's no par value
common stock outstanding as of May 19, 2008, was 7,213,403.

---



# SECURITY WITH ADVANCED
TECHNOLOGY, INC.

|                                                                                                | Page
|----------------------------------------------------------------------------------------------- | ----
|PART 1 Financial Information                                                                   |     
|                                                                                                |     
|Item 1.   Condensed  Consolidated Financial Statements                                          |     
|                                                                                                |     
|Consolidated Balance Sheet as of March 31, 2008 (unaudited) and December 31, 2007               |     
|                                                                                                |     
|Consolidated Statements of Operations For the Three                                             |     
|Months Periods Ended March 31, 2008 and 2007 (unaudited)                                        |     
|                                                                                                |     
|Consolidated Statements of Cash Flows For the Three                                             |     
|Months Ended March 31, 2008 and 2007 (unaudited)                                                |     
|                                                                                                |     
|Notes to  Condensed Consolidated Unaudited  Financial Statements (unaudited)                    |     
|                                                                                                |     
|Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations |     
|                                                                                                |     
|Item 3.    Quantitative and Qualitative Disclosures About Market Risk                           |     
|                                                                                                |     
|Item 4.    Controls and Procedures                                                              |     
|                                                                                                |     
|PART II - Other Information                                                                     |     
|                                                                                                |     
|Item 1.    Legal Proceedings                                                                    |     
|                                                                                                |     
|Item 1A.    Risk Factors                                                                        |     
|                                                                                                |     
|Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds                          |     
|                                                                                                |     
|Item 3.    Defaults Upon Senior Securities                                                      |     
|                                                                                                |     
|Item 4T.    Submission of Matter to a Vote of Security Holders                                  |     
|                                                                                                |     
|Item 5.    Other Information                                                                    |     
|                                                                                                |     
|Item 6.    Exhibits                                                                             |     
|                                                                                                |     
|Signatures                                                                                      |     

2

---



PART I  FINANCIAL
INFORMATION

# Security With Advanced
Technology, Inc.                                                       Consolidated
Balance Sheets

|                                                                  | March 31, 2008
(Unaudited) |  | December 31, 2007 |            
|----------------------------------------------------------------- | -------------------------- |  | ----------------- | -----------
|ASSETS                                                            |                            |  |                   |            
|Current assets:                                                   |                            | 
|Cash                                                              |                            |  | $                 | 3,099,669  
|Trade accounts receivable, net of allowance for doubtful accounts |                            | 
|($44,838 in 2008 and $72,000 in 2007) (Note 6)                    |                            |  |                   | 294,581    
|Inventories (Note 2)                                              |                            |  |                   | 823,147    
|Prepaid inventory deposits                                        |                            |  |                   | 700,304    
|Prepaid expenses and other current assets                         |                            |  |                   | 158,733    
|                                                                  |                            |  |                   |            
|Total current assets                                              |                            |  |                   | 5,076,434  
|                                                                  |                            | 
|Property and equipment, net (Note 3)                              |                            |  |                   | 391,928    
|                                                                  |                            | 
|Intangible and other assets, net (Note 4)                         |                            |  |                   | 3,506,207  
|                                                                  |                            |  |                   |            
|Total assets                                                      |                            |  | $                 | 8,974,569  
|                                                                  |                            |  |                   |            
|LIABILITIES AND STOCKHOLDERS' EQUITY                              |                            | 
|                                                                  |                            | 
|Current liabilities:                                              |                            | 
|Accounts payable                                                  |                            |  | $                 | 343,303    
|Accrued expenses                                                  |                            |  |                   | 375,599    
|Deferred revenues                                                 |                            |  |                   | 248,326    
|Current portion of capital lease obligation                       |                            |  |                   | 4,800      
|Current portion of minimum royalty obligation                     |                            |  |                   | 144,000    
|                                                                  |                            |  |                   |            
|Total current liabilities                                         |                            |  |                   | 1,116,028  
|                                                                  |                            | 
|Long-term capital lease obligation, net of current portion        |                            |  |                   | 5,293      
|Minimum royalty obligation, net of current portion                |                            |  |                   | 623,707    
|                                                                  |                            |  |                   |            
|Total liabilities                                                 |                            |  |                   | 1,745,028  
|                                                                  |                            |  |                   |            
|Commitments and contingencies (Note 7)                            |                            | 
|                                                                  |                            | 
|Stockholders' equity (Note 5):                                    |                            | 
|Preferred stock, no par value, 5,000,000 shares authorized:       |                            | 
|Series A, 2,528,266 (2008) and 2,629,654 (2007)                   |                            | 
|shares issued and outstanding                                     |                            |  |                   | 7,567,602  
|Series B, 747,813 and 612,788 shares issued and outstanding       |                            |  |                   | 3,614,499  
|Common stock, no par value, 30,000,000 shares authorized;         |                            | 
|7,213,403 (2008) and 7,112,015 (2007) shares                      |                            | 
|issued and outstanding                                            |                            |  |                   | 36,867,160 
|Accumulated deficit                                               |                            |  |                   | (40,819,720
|                                                                  |                            |  |                   |            
|Total stockholders' equity                                        |                            |  |                   | 7,229,541  
|                                                                  |                            |  |                   |            
|Total liabilities and stockholders' equity                        |                            |  | $                 | 8,974,569  
|                                                                  |                            |  |                   |            

See Accompanying Notes
to Unaudited Condensed Consolidated Financial Statements.

3

---



# Security With Advanced
Technology, Inc.                                                        Statements of
Operations                                                   Three month periods ended
March 31,                                                               (Unaudited)

|                                                                       | 2008 |  | 2007 |           
|---------------------------------------------------------------------- | ---- |  | ---- | ----------
|Net sales (Note 6)                                                     |      |  | $    | 226,076   
|Cost of sales                                                          |      |  |      | 191,050   
|                                                                       |      |  |      |           
|Gross profit (loss)                                                    |      |  |      | 35,026    
|                                                                       |      |  |      |           
|Operating expenses:                                                    |      | 
|Selling, general and administrative (includes $294,270 in 2008         |      | 
|and $1,103,815 in 2007 of non-cash stock-based compensation)           |      |  |      | 1,359,814 
|Research and development                                               |      |  |      | 75,939    
|                                                                       |      |  |      |           
|Total operating expenses                                               |      |  |      | 1,435,753 
|                                                                       |      |  |      |           
|Operating loss                                                         |      |  |      | (1,400,727
|                                                                       |      |  |      |           
|Other income (expense):                                                |      | 
|Interest expense                                                       |      |  |      | (24,773   
|Interest expense, non-cash (includes $138,295 in contingent            |      | 
|beneficial conversion feature in 2007)                                 |      |  |      |          
|Interest income                                                        |      |  |      | 36,588    
|Other                                                                  |      |  |      | 9,140     
|                                                                       |      |  |      |           
|Total other income (expense)                                           |      |  |      | 20,955    
|                                                                       |      |  |      |           
|Net loss                                                               |      |  | $    | (1,379,772
|                                                                       |      |  |      |           
|Basic and diluted net loss per share                                   |      |  | $    | (0.19     
|                                                                       |      |  |      |           
|Basic and diluted weighted average number of common shares outstanding |      |  |      | 7,140,983 
|                                                                       |      |  |      |           

See Accompanying Notes
to Unaudited Condensed Consolidated Financial Statements.

4

---



# Security With Advanced
Technology, Inc.                                                 Consolidated Statements
of Cash Flows                                             Three Month Periods Ended March
31, (Unaudited)

|                                                                 | 2008 |  | 2007 |           
|---------------------------------------------------------------- | ---- |  | ---- | ----------
|Cash flows from operating activities:                            |      |  |      |           
|Net loss                                                         |      |  | $    | (1,379,772
|Adjustments to reconcile net loss to                             |      | 
|net cash used by operating activities:                           |      | 
|Non-cash stock-based compensation                                |      |  |      | 294,270   
|Depreciation and amortization                                    |      |  |      | 201,593   
|Gain on equipment disposals                                      |      |  |      | 6,296     
|Amortization / accretion of interest on debt                     |      |  |      | 23,776    
|(Increase) decrease in:                                          |      | 
|Accounts receivable                                              |      |  |      | 38,031    
|Inventories                                                      |      |  |      | (141,054  
|Prepaid expenses and other assets                                |      |  |      | (272,971  
|Increase (decrease) in:                                          |      | 
|Accounts payable                                                 |      |  |      | (241,825  
|Accrued liabilities and deferred revenue                         |      |  |      | (95,241   
|                                                                 |      |  |      |           
|Net cash used by operating activities                            |      |  |      | (1,566,897
|                                                                 |      |  |      |           
|Cash flows from investing activities:                            |      | 
|Sale of short term investments                                   |      |  |      |          
|Purchases of property and equipment                              |      |  |      | (3,000    
|Purchase of intangibles and other assets                         |      |  |      | (3,978    
|                                                                 |      |  |      |           
|Net cash provided (used) by investing activities                 |      |  |      | (6,978    
|                                                                 |      |  |      |           
|Cash flows from financing activities:                            |      | 
|Proceeds from issuance of convertible notes payable and warrants |      |  |      |          
|Payment of deferred financing costs                              |      |  |      |          
|Repayment of installment obligations                             |      |  |      | (298      
|Proceeds from issuance of preferred and common stock             |      |  |      | 675,125   
|                                                                 |      |  |      |           
|Net cash provided by financing activities                        |      |  |      | 674,827   
|                                                                 |      |  |      |           
|Net increase (decrease) in cash and cash equivalents             |      |  |      | (899,048  
|                                                                 |      | 
|Cash and cash equivalents at beginning of period                 |      |  |      | 3,998,717 
|                                                                 |      |  |      |           
|Cash and cash equivalents at end of period                       |      |  | $    | 3,099,669 
|                                                                 |      |  |      |           
|Supplemental disclosure of cash flow information                 |      | 
|Cash paid during the period for interest                         |      |  | $    | 24,800    
|                                                                 |      |  |      |           
|Schedule of non-cash investing and financing transactions        |      | 
|Conversion of preferred stock into common stock                  |      |  | $    | 304,164   
|                                                                 |      |  |      |           

See Accompanying Notes
to Unaudited Condensed Financial Statements.

5

---



# Security With Advanced
Technology, Inc.                                          Notes to Condensed Consolidated
Financial Statements
                                                              (Unaudited)

| | INTERIM
FINANCIAL STATEMENTS
| | ----------------------------

The accompanying financial statements
of Security With Advanced Technology, Inc. (the Company, SWAT,
we or us) have been prepared in accordance with the instructions
to quarterly reports on Form 10-Q. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the financial
position, results of operations and changes in financial position at March 31, 2008, and
for all periods presented have been made. Certain information and footnote data necessary
for a fair presentation of financial position and results of operations in conformity with
accounting principles generally accepted in the United States of America have been
condensed or omitted. It is therefore suggested that these financial statements be read in
conjunction with the summary of significant accounting policies and notes to financial
statements included in the Companys Form 10-KSB filed with the SEC for the year
ended December 31, 2007, as amended. The results of operations for the period ended March
31, 2008 are not necessarily an indication of operating results for the full year. Certain
amounts in the 2007 interim financial statements have been reclassified to conform to the
2008 presentation.

1.    
          Going concern, managements plans, accounting policy and recent
          accounting pronouncements:

In the Companys Annual Report
on Form 10-KSB for the fiscal year ended December 31, 2007, as amended, the Report of the Independent
Registered Public Accounting Firm includes an explanatory paragraph that describes
substantial doubt about the Companys ability to continue as a going concern. The
Companys interim consolidated financial statements for the three months ended March
31, 2008 have been prepared on a going concern basis, which contemplates the realization
of assets and the settlement of liabilities and commitments in the normal course of
business. The Company incurred a net loss and utilized net cash in operating activities
of $1,380,000 and $1,567,000, respectively, for the three months ended March 31, 2008.

These conditions raise substantial
doubt about the Companys ability to continue as a going concern.
Managements plans with regard to these matters are discussed below in Item
2  Managements Discussion and Analysis of Financial Condition and Results of
Operations. The accompanying consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty. We
expect to continue to incur losses from operations in 2008. While we expect the
recent Veritas segments product introductions to help increase revenues, such increases for the
near term may only provide limited additional cash flow from such sales. The
Companys ability to continue as a going concern depends on the success of
managements plans to bridge such cash shortfalls in 2008 including the
following:

| | 1. | Aggressively
pursuing additional fund raising activities in 2008;
| | -- | -----------------------------------------------------------------

| | 2. | Continuing
to advance development of the Company's products, particularly the Veritas non-lethal
launchers, to begin selling               such products in 2008, thereby generating cash
flow from such sales;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Attempting
to sub-lease portions of the Company's facilities that are currently not fully utilized
to reduce operating               expenses;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | Contingent
upon the Company's ability to locate perspective buyers or partners, attempt to explore
alternative revenue               sources from licensing or partnering opportunities for
the ShiftWatch TVS and IM-5 products; and
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | Continuing
to monitor and implement cost control initiatives to conserve cash.
| | -- | ------------------------------------------------------------------------------

Recently issued accounting
pronouncements:

In February 2007, the FASB issued
SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS
159). SFAS 159 allows entities to voluntarily choose to measure certain financial
assets and liabilities at fair value (fair value option). The fair value
option may be elected on an instrument-by-instrument basis and is irrevocable, unless a
new election date occurs. If the fair value option is elected for an instrument, SFAS 159
specifies that unrealized gains and losses for that instrument be reported in earnings at
each subsequent reporting date. SFAS 159 was effective for us on January 1, 2008. We
did not apply the fair value option to any of our outstanding instruments and, therefore,
SFAS 159 did not have an impact on our consolidated financial statements.

6

---



In September 2006, the FASB issued
SFAS No. 157, Fair Value Measurements(SFAS 157), which defines
fair value, establishes a framework for measuring fair value in accordance with generally
accepted accounting principles, and expands disclosures about fair value measurements.
SFAS 157 was effective for us on January 1, 2008 for all financial assets and
liabilities. For all nonfinancial assets and liabilities, SFAS 157 is effective for us on
January 1, 2009. As it relates to our financial assets and liabilities, the adoption
of SFAS 157 did not have a material impact on our consolidated financial statements. We
are still in the process of evaluating the impact that SFAS 157 will have on our
nonfinancial assets and liabilities.

Loss per
share

SFAS No.
128, Earnings Per Share, requires dual presentation of basic and diluted earnings
per share (EPS) with a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS computation. Basic EPS
excludes dilution. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted into
common stock or resulted in the issuance of common stock that then shared in the earnings
of the entity.

Loss per share of common stock is
computed based on the weighted average number of common shares outstanding during the
period. Convertible notes, preferred shares, stock options and warrants are not
considered in the calculation, as the impact of the potential common shares (totaling
approximately 14,086,000 shares at March 31, 2008 and approximately 15,211,000 shares at
March 31, 2007) would be to decrease loss per share. Therefore, diluted loss per share is
equivalent to basic loss per share.

2.    Inventories:

Inventories consisted of the
following:

|                             | March 31, 2008 |  | December 31, 2007 |        
|---------------------------- | -------------- |  | ----------------- | -------
|Finished products for resale |                |  | $                 | 462,595
|Work in process              |                |  |                   | 271,082
|Raw materials and components |                |  |                   | 89,470 
|                             |                |  |                   |        
|                             |                |  | $                 | 823,147
|                             |                |  |                   |        

3.     Property
and Equipment:

Property and equipment consisted of
the following:

|                                   | March 31, 2008 |  | December 31, 2007 |         
|---------------------------------- | -------------- |  | ----------------- | --------
|Computer equipment and software    |                |  | $                 | 249,920 
|Production and warehouse equipment |                |  |                   | 233,985 
|Office equipment and improvements  |                |  |                   | 146,068 
|Vehicles                           |                |  |                   | 24,275  
|                                   |                |  |                   |         
|                                   |                |  |                   | 654,248 
|Less accumulated depreciation      |                |  |                   | (262,320
|                                   |                |  |                   |         
|                                   |                |  | $                 | 391,928 
|                                   |                |  |                   |         

7

---



4.    
          Intangible and other assets:

Intangible and other assets
consisted of the following:

|                                    | March 31, 2008 |  | December 31, 2007 |          
|----------------------------------- | -------------- |  | ----------------- | ---------
|Vizer e-Link technology             |                |  | $                 | 1,167,372
|Product rights / reseller agreement |                |  |                   | 2,423,282
|Patents and trademarks              |                |  |                   | 210,696  
|Non-compete (PCP)                   |                |  |                   | 50,000   
|Deposits and other                  |                |  |                   | 12,547   
|Goodwill                            |                |  |                   | 280,000  
|                                    |                |  |                   |          
|                                    |                |  |                   | 4,143,897
|Less accumulated amortization       |                |  |                   | (637,690 
|                                    |                |  |                   |          
|                                    |                |  | $                 | 3,506,207
|                                    |                |  |                   |          

5.     Stockholders equity:

Preferred stock:

In December 2007, holders of a total
of 7,478,133 warrants agreed to exercise their warrants for an aggregate of approximately
747,813 shares of the Companys Series B preferred stock (equivalent to 7,478,133
common share rights) at $5.00 per share each ($0.50 per equivalent common share), with the
Series B preferred stock convertible into ten shares each of common stock. The transaction
generated gross proceeds to the Company of approximately $3,739,066, of which $3,063,942,
representing 612,788 shares of Series B preferred stock had been received by the Company
in December 2007. The remaining funds totaling $675,125 were received in January 2008. The
Series B preferred stock is non-voting, pays no dividends, contains no liquidation
preference and each share of Series B preferred stock is convertible for no additional
consideration into ten shares of common stock.

During March 2008, the holder of
101,388 shares of Series A preferred stock elected to convert such shares into 101,388
shares of the Companys common stock on a one-for-one basis as provided for under the
terms of the Series A preferred stock. As a result of this conversion, a total of $304,164
was reclassified from preferred stock to common stock in the period.

8

---



Common stock transactions:

On March 26, 2007,
 the holders of warrants to purchase 12,229 shares of the Companys common stock,
elected to exercise the warrants at the exercise price of $1.66 per share. These
warrant exercises generated proceeds to the Company of $20,299.

During the three months ended March
31, 2007, a total of $5,199,900 received in the private placement of unregistered
securities was allocated to the value of the Investor Warrants and the beneficial
conversion feature of the Notes, as part of the March 2007 offering. This amount was recognized as
additional interest expense over the life of the Notes.

Stock-based compensation:

SWAT currently provides stock-based
compensation to employees and directors, under the Companys 2004 Stock Incentive
Plan (Plan) that has been approved by the Companys shareholders. Stock
options granted under the Plan generally vest over three to four years from the date of
grant as specified in the Plan or by the compensation committee of the Companys
board of directors and are exercisable for a period of up to ten years from the date of
grant. During the three months ended March 31, 2008 and 2007, SWAT recorded share-based
compensation expense related to stock options resulting in non-cash expense of $294,270
and $1,103,815, respectively.

The Company estimated the fair value
of each stock option at the grant date by using the Black-Scholes option pricing model
with the following weighted average assumptions used for grants during the three months
ended March 31, 2008 and 2007:

|                        | 2008 |  | 2007         | 
|----------------------- | ---- |  | ------------ | 
|Expected term           |      |  | 10 years     | 
|Volatility              |      |  | 93% to 99%   | 
|Risk-free interest rate |      |  | 3.5% to 3.7% | 
|Dividend yield          |      |  | 0            | 
|Forfeitures             |      |  | 5            | 

The expected term of stock options
represents the period of time that the stock options granted are expected to be
outstanding based on historical exercise trends. The expected volatility is based on the
historical price volatility of SWATs common stock. The risk-free interest rate
represents the U.S. Treasury bill rate for the expected life of the related stock
options. The dividend yield represents SWATs anticipated cash dividend over the
expected life of the stock options. Forfeitures represent the weighted average estimate
of future options to be cancelled primarily due to employee terminations.

A summary of stock option activity
of options to employees and directors for the three months ended March 31, 2008, is
presented below:

|                               | Shares
Under
Option |  | Weighted
Average
Exercise
Price |           | Weighted
Average
Remaining
Contractual
Life (Years) |   | Aggregate
Intrinsic
Value | 
|------------------------------ | ------------------- |  | ------------------------------- | --------- | --------------------------------------------------- | - | ------------------------- | 
|Outstanding at January 1, 2008 |                     |  |                                 | 1,375,172 |                                                     | $ | 4.51                      | 
|Granted                        |                     |  |                                 | 340,000   |                                                     |   | 1.14                      | 
|Exercised                      |                     |  |                                 |          |                                                     |   |                           | 
|Forfeited                      |                     |  |                                 | (220,725  | )                                                   |   | 4.43                      | 
|                               |                     |  |                                 |           |                                                     |   |                           | 
|Outstanding at March 31, 2008  |                     |  |                                 | 1,494,447 |                                                     | $ | 3.75                      | 
|                               |                     |  |                                 |           |                                                     |   |                           | 
|Exercisable at March 31, 2008  |                     |  |                                 | 799,647   |                                                     | $ | 4.56                      | 
|                               |                     |  |                                 |           |                                                     |   |                           | 

9

---



Based upon the Companys experience, approximately 95% of
the total stock options or approximately 1,420,000 options, are expected to vest in the
future, under their terms.

During the three months ended March 31, 2008, options to purchase 340,000 shares of common stock were
granted under the Plan to employees, officers and directors. The options are subject to vesting
provisions, are exercisable at a weighted average of $1.14 per share, and expire in ten years. During
the three months ended March 31, 2008, options to purchase 220,725 shares of common stock were cancelled
due to forfeitures.

The weighted average grant-date fair
value of options granted during the three months ended March 31, 2008 and 2007 was $1.01
and $3.96, respectively. The total fair value of stock options granted to employees that
vested during the three months ended March 31, 2008 and 2007 was $675,000 and $1,131,000,
respectively. During three months ended March 31, 2008 and 2007, no employee stock
options were exercised.

The aggregate intrinsic value in the
table above represents the total intrinsic value (the difference between our closing
stock price on March 31, 2008 and the exercise price, multiplied by the number of
in-the-money options) that would have been received by the option holders, had all option
holders been able to and in fact, had exercised their options on March 31, 2008.

A summary of the status of the
Companys non-vested options to purchase common stock granted to employees, officers
and directors and changes during the period ended March 31, 2008 is presented below.

|Nonvested Shares             |  | Nonvested
Shares
Under
Option |  | Weighted
Average
Exercise
Price |   | Weighted
Average
Grant Date
Fair Value |     
|---------------------------- |  | ----------------------------- |  | ------------------------------- | - | -------------------------------------- | ----
|Nonvested at January 1, 2008 |  |                               |  | 716,395                         |   | $                                      | 4.47
|Granted                      |  |                               |  | 340,000                         |   |                                        | 1.14
|Vested                       |  |                               |  | (187,536                        | ) |                                        | 4.58
|Forfeited                    |  |                               |  | (174,059                        | ) |                                        | 4.43
|                             |  |                               |  |                                 |   |                                       
|Nonvested at March 31, 2008  |  |                               |  | 694,800                         |   | $                                      | 2.80
|                             |  |                               |  |                                 |   |                                       

As of March 31, 2008, the Company
had approximately $1,178,000 of unrecognized compensation cost related to stock options
that will be recorded over a weighted average period of approximately 1.2 years.

Subsequent to March 31, 2008, a
newly hired employee was granted options to purchase  20,000 shares of common stock
exercisable at $0.52 per share vesting over a three year period and expiring in ten
years.

10

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6.     Industry
Segments and Customer Concentration:

Industry Segments

The Company now operates in business
segments that are divided into three distinct business reporting units. The first business
unit, called Veritas, includes the operations of Veritas Tactical,
which distributes and produces non-lethal personal protection devices and compliance
products and creates innovative training systems and tools to increase the quality of
training worldwide for law enforcement, militaries, both private and government, and
civilians. Veritas also includes the results of the Perfect Circle operations, which were
acquired in July 2007 and in 2007 included the IM-5 launcher division, which was
terminated as of December 31, 2007. The second business unit called the Technology
Division includes the operations of Vizer, which specializes in product design,
system design, engineering, installation, and integration of facility security systems
including access control, video surveillance, intrusion detection, and wireless mesh
network systems. The third business unit operates within the Technology
Division and includes the operations of ShiftWatch which is a product line of mobile
digital video surveillance solutions for public transportation. All of the industry
segments are located at the Companys headquarters in Louisville, Colorado. The
Company determines its segment results consistent with its management reporting and
consolidated accounting policies. Selected financial information from the Companys
business segments is as follows:

|Three months ended
March 31, 2008 |  | Veritas |   | Vizer     |   | ShiftWatch |           | Corporate
Overhead /
Eliminations |   | Totals  |  
|--------------------------------- |  | ------- | - | --------- | - | ---------- | --------- | --------------------------------- | - | ------- | -
|Net sales                         |  |         | $ | 131,926   |   | $          | 93,438    |                                   | $ | 662     |  
|Gross profit (loss)               |  |         |   | 89,653    |   |            | 3,952     |                                   |   | (58,579 | )
|Operating loss                    |  |         |   | (264,457  | ) |            | (195,898  | )                                 |   | (91,219 | )
|Interest expense                  |  |         |   | 23,715    |   |            |          |                                   |   |        |  
|Net loss                          |  |         |   | (283,265  | ) |            | (193,460  | )                                 |   | (91,219 | )
|Depreciation and                  |  |        
|amortization                      |  |         |   | 114,182   |   |            | 68,166    |                                   |   | 19,245  |  
|Capital expenditures              |  |         |   |          |   |            | 2,031     |                                   |   | 969     |  
|Identifiable assets               |  |         |   | 3,992,073 |   |            | 1,105,100 |                                   |   | 764,191 |  
|Stock based compensation          |  |         |   |          |   |            |          |                                   |   |        |  

|Three months ended
March 31, 2007 |  | Veritas |   | Vizer    |   | ShiftWatch |          | Corporate
Overhead /
Eliminations |   | Totals   |  
|--------------------------------- |  | ------- | - | -------- | - | ---------- | -------- | --------------------------------- | - | -------- | -
|Net sales                         |  |         | $ | 12,258   |   | $          | 48,004   |                                   | $ | 92,058   |  
|Gross profit (loss)               |  |         |   | 5,329    |   |            | (23,501  | )                                 |   | (91,064  | )
|Operating loss                    |  |         |   | (832,169 | ) |            | (125,097 | )                                 |   | (446,893 | )
|Interest expense                  |  |         |   |         |   |            | 4,670    |                                   |   | 22       |  
|Net loss                          |  |         |   | (832,219 | ) |            | (127,367 | )                                 |   | (442,943 | )
|Depreciation and                  |  |        
|amortization                      |  |         |   |         |   |            | 900      |                                   |   | 9,750    |  
|Capital expenditures              |  |         |   |         |   |            | 50,803   |                                   |   | 10,755   |  
|Stock based compensation          |  |         |   |         |   |            |         |                                   |   |         |  

Certain of our contracts require that the Company provide installation of our products either at the
customers location or in some cases at the OEM bus manufacturer. In these cases, the revenue
recognition process is not completed until the Company has completed the installation and the products
are working and accepted by the customer and overall revenue recognition criteria have been satisfied.
Products and materials issued in connection with such jobs in progress are treated as the Companys
inventory until such revenue is recognized. Any billings issued or cash collected under the terms of the
contracts in advance of the revenue being recognized are recorded in the meantime as deferred revenue.

11

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Customer concentration

As of March 31, 2008, two customers
comprised 41% and 17%, respectively, of the outstanding total accounts receivable
balance. For the three months ended March 31, 2008, one customer accounted for 51% of net
sales. As of December 31, 2007, two customers comprised 51% and 11%, respectively, of the
outstanding total accounts receivable balance. For the three-month period ended March 31,
2007, two customers accounted for 40% and 15% respectively, of net sales.

7.     Contingencies:

On April 13, 2007, a complaint was
filed in United States District Court, Southern District of California, Case No. 07CV
0672 JAH POR, by Pepperball Technologies, Inc. (PTI) against Security With
Advanced Technology, Inc., Vizer Group, Inc. and Avurt International, Inc. PTI alleges in
the civil action that the prospective manufacture and distribution of our non-lethal
projectile launchers infringed certain of their patents and breached a Reseller Agreement
and Non- Disclosure Agreement between Vizer Group, Inc. and PTI.  PTI is seeking (a)
an unspecified amount of monetary
damages for the alleged patent infringement and breach of contract, (b) an injunction to
prohibit further alleged patent infringement and (c) other relief and costs. We
believe that PTIs claims are without merit and we are vigorously defending this
matter, including pursuing counterclaims against PTI.

On January 26, 2008, the Company and
a director, Gregory Pusey, and an officer, Jeffrey G. McGonegal, were served with a
complaint filed in District Court  Larimer County, Fort Collins, Colorado, by Scott
G. and Sandy Sutton concerning amounts that Mr. and Mrs. Sutton allege are due to them in
connection with the termination of Mr. Suttons employment agreement with the
Company and in connection with the merger agreement effective as of December 31, 2006
between the Company and Vizer Group, Inc. (Vizer), the Company we acquired from
the shareholders of Vizer, including Mr. and Mrs. Sutton. Specifically, the complaint
asserts that Mr. Sutton is due severance and other amounts under his employment agreement
and that Mr. and Mrs. Sutton are due earn-out consideration and other amounts under the
merger agreement. The complaint also asserts that the Company and the named individual
defendants knew or should have known that certain information, representations and
warranties associated with the Company as part of the merger agreement were inaccurate
and untrue at the time the merger agreement was executed. We believe that the Suttons claims
are without merit and we are vigorously defending this matter, including pursuing
counterclaims against them.

12

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# ITEM 2.

# MANAGEMENTS
DISCUSSION AND ANALYSIS  OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

# Overview

Security
With Advanced Technology, Inc. (SWAT, the Company, we or
us) is a provider of high-tech security products and services, which include
non-lethal devices, surveillance and intrusion detection systems and mobile digital video
surveillance solutions.  SWATs products and services are designed for
government agencies, the military and law enforcement, in addition to transportation,
commercial facilities and non-lethal protection. The nature of our business includes
sales and marketing, engineering, customer support, manufacturing, administration and
finance. We maintain our primary facilities and personnel in Louisville, Colorado.

Effective
December 31, 2006, we completed the acquisition of Vizer Group, Inc. (Vizer)
and Vizers wholly-owned subsidiary, Avurt International, Inc. (Avurt).
As consideration, we issued Vizers shareholders 754,380 shares of the Companys
newly-issued, restricted common stock and assumed a note payable of approximately
$114,000. Up to an additional 533,333 shares of our restricted common stock are issuable
subject to the terms of an earn-out provision contingent upon the achievement of
specified future revenue and operating thresholds. Due to our abandonment in late 2007 of
the Avurt launcher business that was acquired from Vizer, we do not expect to ever be
able to achieve the milestones required to issue the Vizer earn-out shares (subject to
the outcome of our litigation with our former President and Chief Executive Officer
described in Part II  Item 1  Legal Proceedings).

On
July 10, 2007, the Companys subsidiary, Avurt International, Inc. (Avurt),
acquired certain assets and rights owned by Perfect Circle Projectiles, LLC (PCP)
for approximately $2.8 million. The assets acquired in the acquisition consist of PCPs
spherical projectile business for tactical and related uses including PCPs and one
of its affiliates domestic and international patent portfolio, trade secrets,
machinery, tooling and associated assets and rights.

# Results of Operations

In
the Companys Annual Report on Form 10-KSB for the fiscal year ended December 31,
2007, the Report of the Independent Registered Public Accounting Firm includes an
explanatory paragraph that describes substantial doubt about the Companys ability
to continue as a going concern. The Companys interim consolidated financial
statements for the three months ended March 31, 2008 have been prepared on a going
concern basis, which contemplates the realization of assets and the settlement of
liabilities and commitments in the normal course of business. The Company incurred a net
loss and utilized net cash in operating activities of $1,380,000 and $1,567,000,
respectively, for the three months ended March 31, 2008.

These
conditions raise substantial doubt about the Companys ability to continue as a
going concern. Managements plans with regard to these matters are discussed below.
The accompanying consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty. We expect to continue to incur losses
from operations in 2008. While we expect the recent Veritas segments product introductions to help
increase revenues, such increases for the near term may only provide limited additional
cash flow from such sales. The Companys ability to continue as a going concern
depends on the success of managements plans to bridge such cash shortfalls in 2008
including the following:

| | 1. | Aggressively
pursuing additional fund raising activities in 2008;
| | -- | -----------------------------------------------------------------

| | 2. | Continuing
to advance development of the Company's products, particularly the Veritas non-lethal
launchers, to begin selling               such products in 2008, thereby generating cash
flow from such sales;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Attempting
to sub-lease portions of the Company's facilities that are currently not fully utilized
to reduce operating               expenses;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | Contingent
upon the Company's ability to locate perspective buyers or partners, attempt to explore
alternative revenue               sources from licensing or partnering opportunities for
the ShiftWatch TVS and IM-5 products; and
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | Continuing
to monitor and implement cost control initiatives to conserve cash.
| | -- | ------------------------------------------------------------------------------

# Comparison of the three
months ended March 31, 2008 to 2007

Net
sales for the three months ended March 31, 2008 totaled $226,100, which is a $76,800 or
48% increase from net sales of $152,300 for the three months ended March 31, 2007. The
change in sales between 2008 and 2007 is attributable to an increase in sales in the
Veritas segment of $131,900 net of a decrease in revenues from the ShiftWatch division of
$91,300 and a small decrease in the Vizer division in 2008.

13

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Cost of sales for the three months ended March 31, 2008 totaled $191,100, which is a $70,500 decrease as
compared to the 2007 period. The change in cost of sales primarily resulted from the additional costs
incurred in 2007 associated with the previously disclosed issues related to the ShiftWatch TVS 300 unit
installation, testing and re-work which  resulted in the reported gross loss in 2007.

Selling,
general and administrative expenses in the three months ended March 31, 2008, totaled
$1,359,800, which is a $1,158,400 or 46% decrease as compared to the 2007 period.
Commencing in late 2007 and continuing into early 2008, the Company undertook a
significant expense reduction program, primarily as a result of the delay in achieving
product revenues. The decrease impacted most operational areas and resulted in a net
decrease of $160,600 in payroll related expenses, a $249,300 reduction in advertising
among other reductions. Stock based compensation decreased by $809,500 in 2008 due
primarily to the fact that the options granted in the three months ended March 31, 2007
to the new Vizer and Avurt employees were one-third vested upon grant, combined with a
lower number of options being granted in the 2008 period.

Research
and development expenses in the three months ended March 31, 2008 totaled $75,900, which
is a $415,600 or 85% decrease as compared to the 2007 period. The decrease is primarily
associated with development costs being substantially suspended in late 2007 and
continuing into early 2008. Outside consulting and engineering on the now terminated IM-5
project was reduced by $292,600 and development payroll related expenses was reduced by $160,600
in 2008 period as compared to the 2007 period.

Interest
expense for the three months ended March 31, 2008, totaled $24,800, which is a $122,500
decrease as compared to the 2007 period. The decrease was primarily attributable to the
non-cash amortization of the $138,300 additional interest expense associated with the
amount allocated to the warrants and the beneficial conversion features from the
convertible debt offering completed in March 2007.

No
income tax benefit was recorded on the loss for the three months ended March 31, 2008, as
our management was unable to determine that it was more likely than not that such benefit
would be realized.

# Issuances of Stock
Options

Our
board of directors has reserved a total of 2,250,000 shares of our common stock for
issuance pursuant to our 2004 Stock Incentive Plan, as amended (the Plan). Our
board of directors administers the plan. During the three month periods ended March 31,
2008 and 2007, the Company issued options to employees and directors to purchase 340,000
shares of common stock exercisable at an average price of $1.14 and 692,000 shares of
common stock, exercisable at an average price of $4.83, respectively.

# Liquidity and Capital
Resources

We
had a net loss of $1,379,800 including $495,900 in noncash expenses relating to
$294,300 in stock based compensation and $201,600 for depreciation and amortization for
the three months ended March 31, 2008. We expect our expenses into 2008 to remain
generally at the levels incurred for the three months ended March 31, 2008. We are
currently engaged in activities to increase our sales from the less lethal products that
have recently moved into production and growth in the Vizer division.  We anticipate
that spending for research and development for the fiscal year ending December 31, 2008,
will be closely controlled and focused on adding new products that have a high level of
probability of achieving near-term revenues. If significant additional revenues are
achieved in 2008, we may increase certain overhead expenses to support such sales. We
expect that a loss will be incurred for most, if not all, of 2008.

At
March 31, 2008, we had working capital of $3,960,400, of which $3,099,700 million was in
cash.

Capital
expenditures, primarily for tooling, development and testing equipment, office equipment
and facility improvement costs for the fiscal year ending December 31, 2008 are
anticipated to total approximately $50,000 to $100,000.

# Operating Activities

Net
cash consumed by operating activities was $1,566,900 during the three months ended March
31, 2008. Cash was consumed by the loss of $1,379,800, less non-cash expenses of $294,300
in stock based compensation and $201,600 for depreciation and amortization. Increases in
inventories and prepaid expenses and other current assets totaled $414,000 during the
period primarily due to increases associated with payments made to the Mark-IV launcher
manufacturer. Accounts payable, accrued expenses and deferred revenue decreased by
$337,100 during the period consuming cash, generally reflecting the decrease in over-all
overhead and operating expense levels in 2008.

14

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Net
cash consumed by operating activities was $2,273,000 during the three months ended March
31, 2007. Cash was consumed by the loss of $3,227,000, less non-cash expenses of
$1,267,000, relating to $1,104,000 in stock based compensation, $138,000 in interest
accretion on the convertible note offering and $25,000 for depreciation and amortization.
Increases in inventories and prepaid expenses and other current assets totaled $787,000
during the period due to increases primarily associated with the upcoming launch of the
Avurt launcher. Accounts payable, accrued expenses and deferred revenue increased by
$552,000 during the period reflecting the associated inventory build-up as well as the
deferred revenues associated with the delays in the ShiftWatch TVS 300 product
installations, providing cash
 to the Company.

# Investing Activities

Net
cash outflows from investing activities consumed $7,000 during the three months ended
March 31, 2008. The outflow was primarily attributable to purchase of equipment, patents
and trademarks.

Net
cash inflows from investing activities provided $1,662,000 during the three months ended
March 31, 2007. The inflow was primarily attributable to a reduction in the cash invested
in short term investment accounts, net of $86,000 invested in equipment and patents.

# Financing Activities

Net
cash inflows from financing activities generated $674,800 during the three months ended
March 31, 2008, primarily from the final $675,100 in proceeds received in January 2008,
from the December 2007 warrant conversion.

Net
cash inflows from financing activities generated $5,056,000 during the three months ended
March 31, 2007, primarily from the $5,200,000 private placement in 2007, net of $160,000
in financing expenses paid.

# Recently issued
accounting pronouncements:

In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities (SFAS 159). SFAS 159 allows entities to
voluntarily choose to measure certain financial assets and liabilities at fair value (fair
value option). The fair value option may be elected on an instrument-by-instrument
basis and is irrevocable, unless a new election date occurs. If the fair value option is
elected for an instrument, SFAS 159 specifies that unrealized gains and losses for that
instrument be reported in earnings at each subsequent reporting date. SFAS 159 was
effective for us on January 1, 2008. We did not apply the fair value option to any
of our outstanding instruments and, therefore, SFAS 159 did not have an impact on our
consolidated financial statements.

In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements(SFAS
157), which defines fair value, establishes a framework for measuring fair value in
accordance with generally accepted accounting principles, and expands disclosures about
fair value measurements. SFAS 157 was effective for us on January 1, 2008 for all
financial assets and liabilities. For all nonfinancial assets and liabilities, SFAS 157
is effective for us on January 1, 2009. As it relates to our financial assets and
liabilities, the adoption of SFAS 157 did not have a material impact on our consolidated
financial statements. We are still in the process of evaluating the impact that SFAS 157
will have on our nonfinancial assets and liabilities.

# CAUTIONARY STATEMENT
REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

Certain statements in
Managements Discussion and Analysis of Financial Condition and Results of
Operations and other portions of this report are forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject
to the safe harbor created thereby. These statements relate to future events or our future
financial performance and involve known and unknown risks, uncertainties and other factors
that may cause our actual results, levels of activity, performance or achievements or our
industry to be materially different from those expressed or implied by any forward-looking
statements. In some cases, forward-looking statements can be identified by terminology
such as may, will, could, would,
should, expect, plan, anticipate,
intend, believe, estimate, predict,
potential or other comparable terminology. Please see the Cautionary
Note Regarding Forward-Looking Statements in our Form 10-KSB for the year ended
December 31, 2007, as amended, for a discussion of certain important factors that relate
to forward-looking statements contained in this report. Although we believe that the
expectations reflected in these forward-looking statements are reasonable, we can give no
assurance that such expectations will prove to be correct. Unless otherwise required by
applicable securities laws, we disclaim any intention or obligation to update or revise
any forward-looking statements, whether as a result of new information, future events or
otherwise.

15

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# Item 3.   Quantitative and
Qualitative Disclosures About Market Risk.

Not applicable to smaller reporting
companies.

# Item 4T.  
Controls and Procedures

| | (a) | Evaluation
of Disclosure Controls and Procedures.
| | --- | -------------------------------------------------

Our management, including our Chief
Executive Officer / Chief Financial Officer, has conducted an evaluation of the
effectiveness of our disclosure controls and procedures (as defined in the Securities
Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the last day of the period of
the accompanying financial statements (the Evaluation Date). Based on that
review and evaluation, our Chief Executive Officer / Chief Financial Officer concluded
that, as of the Evaluation Date, our disclosure controls and procedures were adequate and
effective to ensure that material information relating us would be made known to them by
others within those entities in a timely manner, particularly during the period in which
this quarterly report on Form 10-Q was being prepared, and that no changes are required at
this time, except as described below.

The Company did not maintain an
effective control environment based on criteria established in the COSO framework.
Specifically, the Company did not adequately design in an effective manner the procedures
necessary to support on a timely basis the requirements of the financial reporting and
closing process.

Our evaluation concluded that,
although policies and procedures appropriate for operating control activities were
designed, and in large part instituted, the Company has not been successful in designing
and implementing polices for the control environment. The control environment sets the
tone of an organization, influences the control consciousness of its people, and is the
foundation of all other components of internal control over financial reporting. A
material weakness in the control environment affects all other internal control
components.

We have also identified conditions as
of March 31, 2008 that we believe are significant deficiencies in internal controls that
include: 1) a lack of segregation of duties in accounting and financial reporting
activities; and 2) the lack of a sufficient number of qualified accounting personnel. Our
former Chief Financial Officer became our Chief Executive Officer in October 2007. Our
Company has not hired another individual to act as our Chief Financial Officer. We believe
the absence of a full-time Chief Financial Officer has resulted in a significant
deficiency with respect to the lack of qualified accounting personnel. We have been able
to mitigate this deficiency by engaging outside consultants to assist the Company in its
accounting activities, but believe that the only effective long-term solution to our
accounting needs is to hire a qualified replacement Chief Financial Officer or Chief
Accounting Officer. Due to our budgetary constraints, we are uncertain as to when we will
be able to accomplish this.

We do not believe that these
deficiencies constitute material weaknesses because of the use of temporary controllers,
the review by our Chief Executive Officer of accounting information and reconciliations,
and the use of outside consultants.

We are also in the process of taking
additional corrective measures to further remedy the deficiencies in future periods.

Management believes these
deficiencies in internal control did not result in material inaccuracies or omissions of
material fact and, to the best of its knowledge, believes that the consolidated financial
statements for the three months ended March 31, 2008 fairly present in all material
respects the financial condition and results of operations for the Company in conformity
with GAAP. There is however, a reasonable possibility that a material misstatement of the
annual or interim financial statements would not have been prevented or detected as a
result of the control environment weaknesses.

Changes in Internal
Control Over Financial Reporting

There was no change in internal
controls over financial reporting (as defined in Rule 13a-15(f) promulgated under the
Securities Exchange Act or 1934) identified in connection with the evaluation described in
the preceding paragraph that occurred during the Companys first fiscal quarter that
has materially affected or is reasonably likely to materially affect the Companys
internal control over financial reporting.

# PART II  
OTHER INFORMATION

# Item 1.  
Legal Proceedings

On
April 13, 2007, a complaint was filed in United States District Court, Southern District
of California, Case No. 07CV 0672 JAH POR, by Pepperball Technologies, Inc.
(PTI) against Security With Advanced Technology, Inc., Vizer Group, Inc. and
Avurt International, Inc. PTI alleges in the civil action that the prospective manufacture
and distribution of our non-lethal projectile launchers infringed certain of their patents
and breached a Reseller Agreement and Non- Disclosure Agreement between Vizer Group, Inc.
and PTI.  PTI is seeking (a) an unspecified amount of monetary damages for the alleged patent infringement and breach
of contract, (b) an injunction to prohibit further alleged patent infringement and (c)
other relief and costs. We believe that PTIs claims are without merit and we
are vigorously defending this matter, including pursuing counterclaims against PTI.

16

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On
January 26, 2008, the Company and a director, Gregory Pusey, and an officer, Jeffrey G.
McGonegal, were served with a complaint filed in District Court  Larimer County,
Fort Collins, Colorado, by Scott G. and Sandy Sutton concerning amounts that Mr. and Mrs.
Sutton allege are due to them in connection with the termination of Mr. Suttons
employment agreement with the Company and in connection with the merger agreement
effective as of December 31, 2006 between the Company and Vizer Group, Inc.
(Vizer), the Company we acquired from the shareholders of Vizer, including Mr.
and Mrs. Sutton. Specifically, the complaint asserts that Mr. Sutton is due severance and
other amounts under his employment agreement and that Mr. and Mrs. Sutton are due earn-out
consideration and other amounts under the merger agreement. The complaint also asserts
that the Company and the named individual defendants knew or should have known that
certain information, representations and warranties associated with the Company as part of
the merger agreement were inaccurate and untrue at the time the merger agreement was
executed. We believe that the Suttons claims are without merit and we are vigorously
defending this matter, including pursuing counterclaims against them.

We
are not a party to any other legal proceedings, the adverse outcome of which would, in
managements opinion, have a material adverse effect on our business, financial
condition and results of operations.

# ITEM 1A.   Risk Factors

The
Companys business, financial condition, operating results and cash flows can be
impacted by a number of factors, any one of which could cause the Companys actual
results to vary materially from recent results or from the Companys anticipated
future results. For a discussion identifying risk factors and important factors that could
cause actual results to differ materially from those anticipated, see the Companys
Annual Report on Form 10-KSB for the year ended December 31, 2007, as amended.

# Item 2.  
Unregistered Sales of Equity Securities and Use of Proceeds

None

# Item 3.   Defaults
Upon Senior Securities

None

# Item 4.  
Submission of Matters to a Vote of Security Holders

None

# Item 5.   Other
Information

None

# Item 6.  
Exhibits

|(a) | Exhibits.
|--- | ---------

|EXHIBIT | DESCRIPTION
|------- | -----------

|31.1 | Rule
13a-14(a)/15d-14(a) - Certification of Chief Executive Officer and Chief Financial Officer. Filed herewith.
|---- | ----------------------------------------------------------------------------------------------------------------

|32 | Section
1350 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the SARBANES-OXLEY ACT               of 2002. Filed herewith.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

17

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SIGNATURES

Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

|                    |                                                                                                                                                              
|------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|Dated: May 19, 2008 | Security With Advanced Technology, Inc.
(Registrant)
 
By: /s/ Jeffrey G. McGonegal
Jeffrey G. McGonegal,
Chief Financial Officer and
Chief Financial Officer

18

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