**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-KSB**


x
              ANNUAL
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                  OF 1934For
                  the fiscal year ended:**December
                  31, 2006**ORo
              TRANSITION
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                  OF 1934For
                  the transition period from: ___ to ____


Commission
      File Number 0-14266





**UNIVERSAL
      DETECTION TECHNOLOGY**


(Name
      of
      Small Business Issuer in Its Charter)





**California**
              (State
                or other jurisdiction of incorporation or organization)
            **95-2746949**
              (I.R.S.
                Employer Identification No.)**9595
                Wilshire Blvd., Suite 700**
              **Beverly
                Hills, California**
              (Address
                of principal executive offices)
            **90212**
              (Zip
                Code)





Issuer's
      telephone number: (310) 248-3655




Securities
      registered under Section 12(b) of the Exchange Act: None.


Securities
      registered under Section 12(g) of the Exchange Act: Common Stock, no par
      value.





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. o





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes x No o





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




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




State
      issuer’s revenues for its most recent fiscal year: $111,515





The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates computed by reference to the price at which the common equity
      was
      sold, or the average bid and asked price of such common equity, as of a
      specified date within the past 60 days: $1,899,625 as of April 5,
      2007.





The
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date: 333,267,715 common shares, no par value,
      outstanding as of April 5, 2007.




Documents
      Incorporated By Reference: None.





Transitional
      Small Business Disclosure Format (check one): Yes o No x












**PART
      1**




**FORWARD-LOOKING
      STATEMENTS**




This
      annual report on Form 10-KSB includes forward-looking statements within the
      meaning of Section 27A of the Securities Act of 1933, as amended, which we
      refer
      to in this annual report as the Securities Act, and Section 21E of the
      Securities Exchange Act of 1934, as amended, which we refer to in this annual
      report as the Exchange Act. Forward-looking statements are not statements of
      historical fact but rather reflect our current expectations, estimates and
      predictions about future results and events. These statements may use words
      such
      as "anticipate," "believe," "estimate," "expect," "intend," "predict," "project"
      and similar expressions as they relate to us or our management. When we make
      forward-looking statements, we are basing them on our management's beliefs
      and
      assumptions, using information currently available to us. These forward-looking
      statements are subject to risks, uncertainties and assumptions, including but
      not limited to, risks, uncertainties and assumptions discussed in this annual
      report. Factors that can cause or contribute to these differences include those
      described under the headings "Risk Factors" and "Management Discussion and
      Analysis and Plan of Operation."




If
      one or
      more of these or other risks or uncertainties materialize, or if our underlying
      assumptions prove to be incorrect, actual results may vary materially from
      what
      we projected. Any forward-looking statement you read in this annual report
      reflects our current views with respect to future events and is subject to
      these
      and other risks, uncertainties and assumptions relating to our operations,
      results of operations, growth strategy and liquidity. All subsequent written
      and
      oral forward-looking statements attributable to us or individuals acting on
      our
      behalf are expressly qualified in their entirety by this paragraph. You should
      specifically consider the factors identified in this annual report which would
      cause actual results to differ before making an investment decision. We are
      under no duty to update any of the forward-looking statements after the date
      of
      this annual report or to conform these statements to actual
      results.




**ITEM
      1. DESCRIPTION OF BUSINESS**




**CORPORATE
      HISTORY**




Universal
      Detection Technology (the "Company" or "We") is engaged in the research and
      development of bioterrorism detection devices. We were incorporated on December
      24, 1971, under the laws of California. Our core business for over twenty years
      was the design, manufacture, marketing and sale of automated continuous air
      monitoring instruments used to detect and measure various types of air
      pollution, such as acid rain, ozone depletion and smog episodes. We also
      supplied computer-controlled calibration systems that verified the accuracy
      of
      our instruments, data loggers to collect and manage pollutant information,
      and
      our reporting software for remote centralized applications. In September 2001,
      we retained a new management team. At that same time, the members of the Board
      of Directors resigned and new members were appointed. In the first quarter
      of
      2002, management recommended to the Board, and the Board approved, a change
      to
      our strategic direction. In March 2002, we sold our sole operating subsidiary
      and reconfigured one of our existing air monitoring instruments in order to
      develop the Anthrax Smoke Detector, later renamed BSM-2000. In 2006 we expanded
      our business activities and included new products and services that would
      compliment our core counter bioterrorism expertise. These products and services
      include anthrax detection kits, first responder training courses and reference
      videos, and research & development.




**OVERVIEW**




We
      are
      engaged in the research and development of bioterrorism detection devices.
      Our
      strategy is to identify qualified strategic partners with whom to collaborate
      in
      order to develop commercially viable bioterrorism detection devices. Consistent
      with this strategy, in August 2002, we entered into a Technology Affiliates
      Agreement with NASA’s Jet Propulsion Laboratory, commonly referred to as JPL, to
      develop technology for our bioterrorism detection equipment. Under the
      Technology Affiliates Agreement, JPL developed its proprietary bacterial spore
      detection technology and integrated it into our existing aerosol monitoring
      system, resulting in a product named BSM-2000. BSM-2000 is designed to provide
      continuous unattended monitoring of airborne bacterial spores in large public
      places, with real-time automated alert functionality. The device is designed
      to
      detect an increase in the concentration of bacterial spores, which is indicative
      of a potential presence of Anthrax.




Our
      management continues to gain expertise in anti-terrorism techniques and
      solutions. Through our partnership with Security Solutions International, we
      have begun providing training seminars on terrorism detection and response
      methods. The seminars are designed for security officials, building safety
      managers, and law enforcement personnel. Our first such seminar was held on
      April 6 and 7 of 2006 at the Institute for Criminal Studies at the Broward
      Sheriff's Office in Fort Lauderdale, Florida.




In
      2006
      we have realized revenues of $111,515 from sales of BSM-2000. We have incurred
      losses for the fiscal years ended December 31, 2006 and 2005 in the approximate
      amounts of 2.7 million and $3.5million, respectively, and have an accumulated
      deficit of $32.7 million as of December 31, 2006. At December 31, 2006, we
      were
      in default on certain debt obligations totaling approximately $331,000, in
      addition to accumulated interest of approximately $403,000. We require
      approximately $1.4 million in the next 12 months to repay debt obligations.
      We
      do not anticipate that our cash on hand is adequate to meet our operating
      expenses over the next 12 months. In addition, we do not have adequate capital
      to repay all of our debt currently due and becoming due in the next 12 months.
      We principally expect to raise funds through the sale of equity or debt
      securities. However, during the past 12 months, management spent the substantial
      majority of its time on sales and marketing of Company’s products and services
      in target markets. These activities diverted management from the time it
      otherwise would spend negotiating sales of securities to raise capital. In
      addition, the recent price and volume volatility in the common stock has made
      it
      more difficult for management to negotiate sales of its securities at a fair
      price. We actively continue to pursue additional equity or debt financing,
      but
      cannot provide any assurances that it will be successful. If we are unable
      to
      pay our debts as they becomes due and are unable to obtain financing on terms
      acceptable to us, or at all, we will not be able to accomplish any or all of
      our
      initiatives and will be forced to consider other alternatives.





2





In
      May
      2004, we unveiled the first functional prototype of BSM-2000. The prototype
      operated on external software. In July 2004, we commenced simulated tests with
      benign bacterial spores having anthrax-like properties in order to fine tune
      our
      product. The use of benign spores is as effective as testing with anthrax spores
      because our device is designed to detect an increase in bacterial spore
      concentration levels. Based on results we obtained, we were able to enhance
      the
      sensitivity of BSM-2000 by improving the sample collection efficiency of the
      device, and made certain other modifications to improve efficiency. Our device
      is a functional viable product, available for sale.





In
      2006,
      we have followed a diversification strategy pursuant to which we have added
      various other services to our BSM-2000, biological detection system. By
      combining our in-house experience and knowledge and outside expertise offered
      by
      various consultants and third parties, we have added threat evaluation and
      consulting services, training courses, and event security to our services.
      Such
      services are intended to diversify and expand our customer base. To date, we
      have provided event security for a fashion debut event. Our consulting services
      and training courses have not been sold to date and there is no guarantee that
      any of them will be demanded and sold in the market in the future. Also in
      2006,
      through a partnership with Emergency Film Group, we have featured several
      training references and DVDs available for sale on our website. These DVDs
      are
      used by first responders and security personnel for training purposes. To date
      we have not sold any of these DVDs and there is no guarantee that we will sell
      any in the future.





We
      plan
      to seek and find third parties interested in collaborating on further research
      and development on BSM-2000. Such research shall be aimed at making BSM-2000
      more user-friendly, developing a less complicated interface and software,
      designing a lighter casing, and some cosmetics. The ideal third party
      collaborator would also assist us in marketing BSM-2000 more aggressively.
      There
      is no guarantee that any such collaborators will be found and, if found, that
      this strategy will be successful. The current version of BSM-2000 is fully
      functional and available for sale. To date, we have sold two units to the
      Government of the United Kingdom and we intend to develop a more wide-spread
      use
      for BSM-2000 through our planned collaborative research, development, sales,
      and
      marketing efforts.





We
      were
      engaged in discussions with Rutgers University to perform field-testing. Some
      time has passed and CAIT has not given us any guidance on if or when such
      testing will take place and the Company is pursuing alternatives for
      testing.





In
      the
      second quarter of 2006, we updated our price list for BSM-2000. In evaluating
      the market demand for BSM-2000. Our new list price for BSM-2000 is $109,000.
      We
      also constructed two separate customer accounts called National and Key
      accounts. A Key account represents small to medium customers and resellers
      of
      BSM-2000 who purchase or intend to purchase a minimum of 3 to 5 units of
      BSM-2000 annually. This category of customers receives a 10% discount from
      list
      prices. A National account represents medium to large customers and resellers
      of
      BSM-2000 who purchase or intend to purchase more than 5 units of BSM-2000
      annually. This category of customers receives a 20% discount from list prices.
      As such Key account and National account customers can purchase BSM-2000 for
      $98,000 and $87,000 per unit respectively.





The
      manufacturing on BSM-2000 is outsourced to Original Equipment Manufacturers
      (OEM). We do not have any in-house manufacturing capabilities and do not intend
      to develop any until we reach high volumes of sales of BSM-2000 that would
      justify such facilities. To date we have used services of 2 OEMs for
      manufacturing of our units. We may decide to use services of other manufacturers
      in the future.





In
      February 2006, we entered into a marketing and sales agreement with Security
      Solutions International (SSI), pursuant to which SSI will market BSM-2000 in
      the
      United States. SSI provides training for law enforcement and anti terrorism
      forces and has agreed to feature BSM-2000 in their seminars and conferences.
      We
      had previously entered into an agreement with SSI for marketing of the BSM-2000
      in Central and South America. In February 2006, we co-hosted a training session
      with SSI regarding the protection of government and privately owned buildings;
      the event was attended by law-enforcement and building security personnel.
      To
      date, we have not realized any leads or sales of BSM-2000 as a result of SSI's
      efforts and cannot guarantee that we will realize any sales through SSI soon,
      or
      at all.





In
      April
      2006, in conjunction with SSI, we conducted a training session on "Intelligence
      Gathering and Terrorist Activities" at the Institute for Criminal Studies at
      the
      Broward Sheriff's office in Fort Lauderdale, Florida. Our speakers provided
      an
      overview on terrorism with weapons of mass destruction, their consequences
      and
      steps on how communities can be more alert and vigilant about possible
      biological, chemical, and nuclear attacks. While chemical and nuclear warfare
      are not our core competencies, the protocols used for pre and post event
      planning are very similar to those used in the event of a biological attack
      or
      any event that can cause mass casualties. We maintain close relationships with
      SSI and hope to collaborate on more training or marketing projects with them
      in
      the future. We cannot guarantee that our efforts and collaborations with SSI
      will lead to any sales of our products, our partners’ products, our consulting
      services, or any other one of our services. To date we have not recognized
      any
      revenues as a result of our partnerships with SSI.





In
      April
      2007, we entered an agreement with SSI to sponsor a two-day seminar about
      protecting buildings against terror held in Washington, DC. As part of the
      agreement we will present Universal Detection and its services to the audience
      and exhibit our material throughout the conference.





3





In
      January and February of 2007 we received two purchase orders from SSI for one
      and five units of our anthrax test kits respectively.





In
      March
      2006, we entered into an agreement with Michael Stapleton Associates (MSA).
      MSA
      is based in New York and provides technologies and solutions for explosive
      detection and real time monitoring of various facilities. Pursuant to the
      agreement, we were planning to conduct feasibility studies regarding the
      potential integration of BSM-2000 into MSA's monitoring and screening solutions
      and technologies. To date, we have not conducted any studies under this
      agreement and any collaboration with MSA in the future will be contingent upon
      us being able to raise the necessary funds and successfully design and implement
      the software and hardware needed for integration of BSM-2000 in MSA's solutions.
      Thus far, no feasibility studies have taken place and MSA has not given any
      assurances as to if or when such studies would take place.





In
      March
      2006, we received a firm order from the government of the United Kingdom for
      two
      units of UDTT's BSM-2000 Anthrax Detection Systems. We have shipped both units
      and payment for both has been received. Due to confidentiality of the purchase
      order, we are unable to release the specific use and the name of the branch
      of
      government that has made the purchase.





In
      April
      2006, we engaged Joseph Breen and Associates to prepare and submit an
      application for a contract under the US General Services Administration (GSA)
      schedule. The contract is aimed to enable US government agencies to purchase
      Universal Detection Technology's technology and services. The U.S. GSA is a
      federal management and procurement agency that provides products and services
      to
      the U.S. government. In the third quarter of 2006 GSA informed us that our
      application had some deficiencies that needed to be fixed. As a result, our
      offer was rejected. Joseph Breen & Associates has since prepared another
      application and submitted it to the GSA for review. To date we have not heard
      anything back regarding the status of our application and there is presently
      no
      guarantee that the Company will be awarded a contract under the GSA schedule.
      We
      have made several attempts to contact Joseph Breen and Associates and to obtain
      an update on the status of our application and have been unsuccessful. As such,
      we have decided to terminate our contract with Joseph Breen and Associates
      and
      retain the service of other consultants to obtain a GSA contract.





In
      May
      2006, Joseph Breen & Associates informed the Company that it has started
      talks with the Pentagon regarding BSM-2000 and its potential for the US
      government. The Company has not presented its products and services to any
      representatives from the Pentagon and there is presently no guarantee that
      the
      Company will present or sell its solutions to Pentagon at any time in the
      future. To date, Joseph Breen & Associates has not informed the Company of
      any outcomes regarding the talks it has been held with the Pentagon.
      Furthermore, Joseph Breen & Associates has been unresponsive to Company’s
      calls and messages in the recent months.





We
      initially planned to secure and lease a testing facility close to the JPL
      laboratories where we would be able to implement a quality assurance program
      and
      test our products against the required specifications before shipping them
      to
      customers. We believe that the proximity to JPL and in particular to Caltech
      will help us by utilizing the knowledge of graduate and PhD students familiar
      with the project in a consultant or employment capacity. While we are still
      considering the implementation of this plan, we also are considering sponsoring
      researchers at JPL to work with the inventor of our bacterial spore detection
      technology to perform the tasks of quality assurance and research and
      development. Implementation of either of these plans is dependent on our ability
      to secure adequate funds, and we cannot assure you we will be able to do so
      soon, or at all.





In
      June
      2006 the Company hired a part time mechanical engineer, with expertise in the
      field of instrument design, with the goal of gaining more control over the
      design and manufacturing of BSM-2000 as well as offering in-house advice on
      implementation of the Company’s technology and services. During his time with
      Universal Detection, the engineer traveled to Met One Instrument’s facilities
      and helped expedite the manufacturing of the second unit that was shipped to
      Europe pursuant to our purchase order. He also converted all the mechanical
      drawings into Solidworks and created solutions for reducing the moving parts
      of
      the device.





In
      May
      2006 the Company posted a letter to shareholders from its Chief Executive
      Officer, Mr. Jacques Tizabi, outlining its business and marketing plans. Among
      other topics, the letter covered marketing of BSM-2000, threat of terrorism,
      international distribution, expansion into counterterrorism training, and
      expansion into non-terror related services in the future. The materials included
      in this shareholder letter were mostly forward-looking and were for
      informational purposes only. The Company makes no guarantees that any or all
      parts of such plans may materialize in the future.




In
      the
      second quarter of 2006 the Company initiated a plan to expand its services
      to
      include security related consulting, event security, and counterterrorism
      training. In order to provide these services, the Company has employed a
      collaborative strategy where capable partners in various fields have been chosen
      to complement services and technologies offered by Universal Detection’s staff.
      The success of the Company’s new services and its new strategy depends, among
      other factors, on productive and close relationships between the Company and
      its
      partners, the reputation of its partners, the availability of its partners,
      and
      the viability of technologies offered by its partners. We are not certain that
      all these conditions will be met in the future and hence, we cannot make any
      guarantees about the success of our business strategy.





In
      April
      2006 the Company employed services of the US Department of Commerce’s Commercial
      Service with the goal of promoting its products and services overseas. Pursuant
      to the agreement BSM-2000 was featured on the website of local Commercial
      Service websites in Australia, Singapore, Hong Kong, Indonesia, Belgium, Sweden,
      United Kingdom, South Africa, Qatar, Israel, Saudi Arabia, and Canada.





4





In
      June
      2006, after the launch of a new service, called Event Security aimed at
      providing counterterrorism security solutions for special events, the Company
      announced the first sale of Event Security solutions to a debut reception of
      a
      Los Angeles based fashion brand.





On
      July
      31, 2006 we announced a strategic agreement with UTEK Corporation, a specialty
      finance company focused on technology transfer. Following a 30-day advance
      written termination notice given to Universal Detection Technology by UTEK
      our
      alliance was terminated on September 19, 2006. We have no plans to renew our
      relationship with UTEK Corporation in the future.





In
      February 2006, the Company expanded its relationship with Caltech by licensing
      additional technologies in the field of microbial monitoring and sterility
      verification. While the Company plans to commercialize the microbial monitoring
      technology for use in hospitals, it has not yet started any such activities
      and
      there is no guarantee that it will in the near future. The Company also
      commenced work on developing smart ticket assay for detection of anthrax spores.
      Smart ticket assays are rapid field tests that are similar to common home
      pregnancy tests. Further research and development is needed to fully
      commercialize these smart ticket assays and presently there is no guarantee
      that
      the Company will have necessary funding and resources to conduct such research
      and development.





In
      September 2006, the Company conducted research on the status of readiness
      of buildings in the US to deal with a potential bio-terrorist attack. The
      findings of this research were published in a copyrighted paper that later
      became available for customers on the Company’s website and was also listed for
      sale on the internet store of Amazon.com. We have not sold any copies of this
      research report to date and we may never be able to sell any.





In
      October 2006, the Company entered into an agreement with Emergency Film Group
      to
      provide DVDs and Videos for training of emergency staff and law enforcement
      personnel. Pursuant to the agreement the Company shall utilize and distribute
      DVDs produced by Emergency Film Group to its customers and clients. The Company
      has been adding these DVDs, ranging from training videos on decontamination
      to
      incident command in the field and other emergency topics, to its services.
      The
      DVDs are available fore sale on the Company’s recently developed e-commerce
      store. While the Company shall try its best to market these DVDs alongside
      its
      other products and services there are no guarantees that it will be successful
      in selling any DVDs.





In
      December 2006, the Company entered a new agreement with the Department of
      Commerce’s Commercial Service to promote its newly developed e-commerce store
      internationally. Pursuant to this agreement Universal Detection Technology’s
      e-commerce store was featured on Commercial Service’s website in Australia,
      Malaysia, Singapore, Hong Kong, Indonesia, Philippines, Belgium, Denmark,
      Netherlands, Sweden, Ireland, United Kingdom, Jordan, South Africa, India,
      Qatar, Israel, Saudi Arabia, and Canada.





In
      December 2006, we received a purchase order for anthrax detection test kits
      from
      an Australian homeland security firm. The kits have been shipped and payment
      has
      been received. In late January 2007 we received a purchase order for 50 kits
      from the United States Army at the Dugway Proving Ground in Utah. Payment for
      these kits has been received and the kits have been shipped to the
      Army.





In
      January 2007 the Company entered into an agreement to sell sixty (60) million
      common shares at $0.03 per share to Innovative Marketing, Inc. (IMI) for a
      total
      of $1.8 million in cash equivalent credits. The cash equivalent credits may
      be
      used in combination with cash, to obtain, if and when available, on a best
      efforts basis, certain goods and services used in the daily ongoing business
      of
      the Company as well as providing the potential to satisfy certain other
      obligations of the Company from time and time. There is no guarantee that we
      will be able to utilize any of the credits.





**INDUSTRY
      BACKGROUND**




The
      attacks of September 11, 2001, and the subsequent spread of and potential future
      threat of anthrax spores have created a new sense of urgency in the public
      health systems across the world, and especially in the United States. During
      the
      2001 anthrax attacks in the United States, emergency response personnel,
      clinicians, laboratories, and public health officials were overwhelmed by
      requests for evaluation of suspicious powders and by calls from patients
      concerned about exposures to bioterrorism agents. Systems designed to detect
      bioterrorism agents in clinical and environmental samples have become essential
      components of responses to both hoaxes and actual bioterrorism events. First
      responders and public health officials require sensitive and specific detection
      systems that can identify bioterrorism agents early enough to take actions
      that
      limit their spread.




The
      United States government has responded to this urgent need for preparedness
      against terrorism by establishing the Department of Homeland Security ("DHS").
      The Department of Homeland Security is intended to consolidate the federal
      government's efforts to secure the homeland, with the primary goal being an
      America that is stronger, safer, and more secure.




The
      private sector also has responded to the need for preparedness against
      bioterrorism. A number of companies have developed or are in the process of
      developing various methods to detect harmful pathogens in the air through
      genetic analysis, including DNA or RNA analysis. In recent years, significant
      advances in molecular biology have led to the development of increasingly
      efficient and sensitive techniques for detecting and measuring the presence
      of a
      particular genetic sequence in a biological sample. Genetic testing involves
      highly technical procedures, including:





5




o
      Sample
      preparation - procedures that must be performed to isolate the target cells
      and
      to separate and purify their nucleic acids;


o
        Amplification - a chemical process to make large quantities of DNA from the
        nucleic acids isolated from the sample; and
 o
        Detection - the method of determining the presence or absence of the target
        DNA
        or RNA, typically through the use of fluorescent dyes.
  Existing
        technologies for determining the genetic composition of a cell or organism
        generally face the following limitations:
  o
        Require
        skilled technicians and special laboratories. Currently available methods
        and
        systems for genetic analysis require skilled technicians in a controlled
        laboratory setting, including, in many cases, separate rooms to prevent
        contamination of one sample by another. Some progress has been made to automate
        this process.
 o
        Large
        and inflexible equipment. Most currently available genetic analysis equipment
        is
        large and inflexible and requires a technically complex operating environment.
        New designs are attempting to address miniaturization of equipment.
 o
        Timeliness of result. Current sample preparation, amplification and detection
        technologies rely on processes that often require hours to complete, rendering
        results that may not be timely enough to be medically useful. Some new
        instruments are attempting to reduce analysis times.
 o
        Sensitivity constraints. Some existing technologies accept and process only
        very
        small sample volumes, forcing laboratory technicians to spend significant
        effort
        in concentrating larger samples in order to obtain the required level of
        sensitivity for detecting and measuring the presence of a genetic
        sequence.
 o
        Lack of
        integration. We believe that current amplification and detection systems
        do not
        fully automate and integrate sample preparation into their processes in a
        manner
        that can be useful in a non-laboratory setting in a cost effective
        fashion.
 o
        Operational Cost. The operating costs for existing technologies can be extremely
        high, making the implementation of the device cost-prohibitive.
 o
        False
        Positives. Most existing technologies are susceptible to false positive results,
        which can have significant social and economic consequences.
  Currently,
        the two most commonly used methods for genetic testing are microbial culture
        and
        Polymerase Chain Reaction, commonly referred to as PCR. With microbial culture,
        a sample from the environment is placed into a small laboratory dish containing
        a nutrient rich media. The microbial culture is allowed to grow for a specified
        period of time, usually between 24-48 hours. The sample is then examined
        and a
        determination is made as to whether an organism is present in the sample.
        Although highly accurate, the disadvantages of microbial cultures are the
        time
        required to determine the presence of an organism and the need for a laboratory
        and an expertise in culture preparation and analysis.
  PCR
        has
        been one of the most promising methods for an automated anthrax detection
        system. PCR amplifies DNA targets of choice, such as gene sequences encoded for
        the anthrax toxins to detectable levels. PCR is very sensitive and is able
        to
        detect very small amounts of DNA. But, the PCR process typically requires
        about
        three to eight hours to complete, plus an additional three hours for sample
        preparation time, which must usually be performed by a trained technician.
        Some
        developments have been made to automate the PCR process and reduce the analysis
        time. Nonetheless, the process is very expensive. We believe that the principal
        desired characteristics of an anthrax detection system are sustained, online
        operation with minimal maintenance, minimal susceptibility to false alarms,
        and
        low operating costs. These attributes require that we address the limitations
        inherent in most current technologies with a product that can operate as
        a stand
        alone detection device.
  **OUR
        SOLUTION**
  Universal
        Detection Technology's BSM-2000 combines a bio-aerosol capture device with
        a
        chemical test for bacterial spores that is designed to accurately detect
        a
        potential anthrax attack in a timely fashion. Our system is designed to function
        as a first line of defense to detect a potential anthrax attack, on a fully
        automated basis and at a low cost compared to existing technologies. Only
        upon
        actual detection of a possible attack would first responders implement the
        more
        expensive tests such as immunoassay or DNA testing techniques to verify the
        identity of the detected spores. The BSM-2000 device, coupled with a testing
        device to be used only in the event of actual detection, is designed to be
        significantly less expensive than the existing competing technologies that
        are
        used to detect and test for a possible anthrax attack. This is true in large
        part because our device does not require the constant presence of experts
        or any
        continuous testing mechanism for anthrax, both of which substantially increase
        costs.
  Universal
        Detection Technology has also situated itself to provide various
        counter-terrorism products services that can be complimentary to BSM-2000.
        These
        products and services include rapid anthrax detection test kits, training
        courses for first responders, event security, threat evaluation &
consulting, and DVDs aimed at providing information and training regarding
        combating terrorism and managing emergency situations. The Company’s anthrax
        detection kits can be used by emergency personnel to determine whether a
        white
        powder is actually anthrax or not. So far the company has sold these kits
        to
        both the US Army and private customers.
  **COMPANY
        PRODUCTS**
  The
        Company has situated itself to serve as a provider of counter terrorism
        products, consulting, and solutions with a focus on bioterrorism detection.
        The
        Company’s flagship product is an automated real-time bacterial spore detector,
        called BSM-2000, used for detection of abnormal levels of airborne endospores
        such as anthrax. In 2006, we expanded our product base to include small anthrax
        detection test kits, training material and references, training DVDs and
        videos,
        event security, research, and consulting.
  6
   Our
        BSM-2000, consists of the following four components:
  o
        an air
        sampler for aerosol capture, which collects aerosolized particles on a fiber
        tape;
 o
        thermal
        lysis for releasing the dipicolinic acid from the spores;
 o
        reagent
        delivery via syringe pump; and
 o
        a
        lifetime gated luminescence detection of the terbium-dipicolinate
        complex.
  The
        BSM-2000 is designed to continuously monitor the air and measure the
        concentration of airborne bacterial spores. The testing intervals are adjustable
        to respond to varying client needs and can be as short as 15 minutes. Bacterial
        spores are captured on the glass fiber tape. Next, thermal lysis "pops" the
        endospores, releasing a chemical from inside the endospore called dipicolinic
        acid, which is unique to bacterial spores. Then, a syringe pump adds a drop
        of
        terbium containing solution to the tape on the location where the endospores
        were lysed. Finally, a lifetime gated photometer measures the resultant terbium
        dipicolinate luminescence intensity, which is proportional to the bacterial
        spore concentration on the tape. A large change in endospore concentration
        is a
        strong indication of an anthrax attack, because endospores are the means
        by
        which anthrax travels.
  Pursuant
        to our development plan, if an increase in spore concentration is detected,
        an
        alarm will sound notifying both a building's internal security as well as
        local
        emergency services through the device's landline or wireless networking
        capability. The system can be adjusted to ensure that the maximum time it
        takes
        to detect, and generate an alarm in response to a release of bacterial spores
        is
        approximately 15 minutes, which is designed to be adequate to substantially
        reduce the likelihood of widespread contamination. This response time also
        provides adequate time to begin antibiotic treatment prior to the onset of
        symptoms which can arise within two to three days if left untreated. The
        system
        is designed for constant and unattended monitoring of spaces such as public
        facilities and commercial buildings.
  JPL's
        detection technology is designed to sound an alarm only when it detects a
        significant increase in spore count. Natural background fluctuation of airborne
        endospores are very low, approximately 0.1 to 1 spore per liter of air, compared
        to an anthrax attack which would result in a concentration swing many orders
        of
        magnitude greater than background levels. Also, our device does not detect
        spores from other microorganisms, such as fungi and molds, and discriminates
        against detecting aerosol components such as dust. In addition, upon
        installation of the device, we expect to operate it for seven to ten days
        to
        measure the natural concentrations of bacterial spores in the area in which
        the
        device operates, so that the triggering threshold of that device will be
        set at
        an appropriate level for that environment.
  It
        is
        only upon detection of a significant increase in spore count, that our device
        is
        triggered and the sample collected is tested. In contrast, existing competing
        technologies require testing of ambient air samples continuously, which is
        very
        expensive, either because of the expert personnel required or the costs of
        the
        continuous immunoassay or DNA testing. In addition, these competing technologies
        may be more likely to result in false positives due to the volume of tests
        performed. In contrast, BSM-2000 is designed so that testing occurs only
        following an actual detection of substantially increased spore count, which
        significantly reduces the number of overall tests performed. Also, generally
        an
        increase in spore count, whether anthrax or benign, is unusual, and arises
        as a
        result of intentional conduct, which may be important to investigate even
        if the
        spores released ultimately were not harmful.
  False
        positive results are problematic not only for the obvious reason relating
        to
        their level of accuracy, but also because of the cost and consequences of
        a
        false alarm. On one occasion, a false anthrax alarm shut down 11 postal
        facilities in the Washington D.C. area. BSM-2000 is designed to function
        as a
        stand-alone product to detect a likely Anthrax threat, but does not provide
        a
        testing mechanism for samples collected that trigger the device. The BSM-2000
        device is designed to function as a complement to an existing bioterrorism
        detection device in places such as public buildings and stadiums. For example,
        BSM-2000 is designed to serve as a front-end monitor to a PCR-based device.
        In
        the case that our device detects a substantial increase in spore count, the
        PCR-based device would be employed to test the sample collected.
  **MARKETING
        AND SALES**
  Our
        sales
        and marketing plan includes strategic partnership agreements and retention
        of
        our in-house staff and outside consultants. The Company has retained the
        services of consultants to market BSM-2000 in the United States and
        internationally. In 2006 we continued to work closely with our international
        distributors to market our automatic detection systems to government and
        private
        entities outside of the U.S. We assigned a representative in Australia and
        sold
        our anthrax detection kits to an Australian homeland security firm. Through
        the
        efforts of our UK representative, we sold two units of BSM-2000 to the
        government of the UK. We have not sold any units in Singapore or in Italy
        but we
        plan to continue seeking sale leads and communicating with our representative
        in
        those regions to find new opportunities.
  In
        the
        United States, we plan to continue presenting our technology at industry
        events
        and trade shows. We also retain domestic distributors and consultants to
        arrange
        meetings with and presentations to building owners and operators, government
        officials in charge of decisions for safety and security of government and
        private venues and buildings, homeland security officials, and security
        companies. The United States Army has purchased 50 of our anthrax detection
        test
        kits and we plan to try and sell more in 2007.
  In
        2006
        we aggressively used the internet as a means for spreading the word about
        Universal Detection Technology and its products and services to the public.
        This
        strategy includes creation of an interactive and informational presence through
        our website and use of various third parties to bring traffic to our website.
        Although experimental, we have been successful in generating interest and
        traffic in Universal Detection and its services. We intend to do more internet
        marketing and search engine optimization activities in 2007.
  7
  We
        also
        plan to develop brand recognition for our company and for our product through
        attendance at national and international defense related exhibitions, use
        of
        print and video promotional materials, and by granting interviews to national
        and international news media.
  **MANUFACTURING**
  Currently,
        we do not have any manufacturing or distribution capabilities. We have been
        in
        discussions with two third-party contractors, Met One Instruments and Horiba
        Jobin Yvon, regarding the manufacturing of our BSM-2000. Met One and Horiba
        Jobin Yvon have each manufactured three units for us to date. We have no
        agreements and are not obligated to continue to work with any of our Original
        Equipment Manufacturers (OEM). As such, we may choose to work with other
        OEMs in
        the future.
  **RESEARCH
        AND DEVELOPMENT**
  Under
        the
        Technology Affiliates Agreement, JPL developed its proprietary bacterial
        spore
        detection technology and integrated it into our existing aerosol monitoring
        system, resulting in a product which initially we referred to as the Anthrax
        Smoke Detector, and which we renamed BSM-2000 on April 21, 2005. BSM-2000
        is
        designed to provide continuous unattended monitoring of airborne bacterial
        spores in large public places, with real-time automated alert functionality.
        The
        device operates to detect an increase in the concentration of bacterial spores,
        which is indicative of a potential presence of Anthrax. Under our agreement
        with
        JPL, we paid it approximately $250,000 for its services and we received an
        option to license all technology developed under the Technology Affiliates
        Agreement from Caltech. On September 30, 2003, we exercised our option and
        Caltech granted to us a worldwide exclusive license to the patent rights
        referenced in the Technology Affiliates Agreement and a worldwide nonexclusive
        license to rights in related proprietary technology. To maintain our license
        with Caltech, a minimum annual royalty of $10,000 was due to Caltech on August
        1, 2006, and is due on each anniversary thereof, regardless of any product
        sales. Any royalties paid from product sales for the 12-month period preceding
        the date of payment of the minimum annual royalty will be credited against
        the
        annual minimum. Pursuant to the terms of the license, we must pay four percent
        royalties on product sales in countries where a patent is issued and two
        percent
        royalties on product sales in countries where a patent is not issued, as
        well as
        35 percent of net revenues received from sub-licensees. As of the date of
        this
        report we have not paid the minimum royalty of $10,000 due to Caltech on
        August
        1, 2006. According to our license agreement with Caltech, Caltech shall have
        the
        right to terminate our license agreement and the rights and licenses granted
        to
        us if we fail to make any payment due including patent expense or minimum
        annual
        royalties for a period of fifteen days after receiving a second written notice
        from Caltech specifying our failure. To date we have not received any notices
        from Caltech with regards to our August 1, 2006 minimum annual royalty due
        of
        $10,000. Furthermore, we have reached an agreement with Caltech with regards
        to
        the payment of patent fees. This agreement is signed in the form of a second
        amendment to our license agreement with Caltech. Accordingly, we have agreed
        that we owe the amount of $86,318.48 for patent costs incurred by Caltech
        prior
        to December 1, 2006 and that this amount shall be paid to Caltech in ten
        monthly
        installments of $8,631.85. To date, we are up to date with the monthly
        installments called for in the second amendment to our license agreement
        with
        Caltech.
  We
        spent
        $31,000, $12,125, $20,000, and $199,000 on research and development for the
        years ended December 31, 2006, 2005, 2004 and 2003, respectively. We paid
        the
        substantial majority of these amounts ($169,000 in fiscal 2003) to JPL under
        the
        Technology Affiliates Agreement. The $20,000 and additional $30,000 of research
        and development expenses incurred in 2004 and 2003 respectively, related
        to
        equipment allocated out of finished goods inventory for testing at
        JPL.
  **TESTING**
  In
        May
        2004, we unveiled the first functional prototype of BSM-2000. The prototype
        operated on external software. In July 2004, we commenced simulated tests
        with
        benign bacterial spores having anthrax-like properties in order to fine tune
        our
        product. The use of benign spores is as effective as testing with anthrax
        spores
        because our device is designed to detect an increase in bacterial spore
        concentration levels. Based on results we obtained, we were able to enhance
        the
        sensitivity of BSM-2000 by improving the sample collection efficiency of
        the
        device, and made certain other modifications to improve efficiency. Our device
        is a functional viable product, available for sale.
  In
        2005
        we were engaged in discussions with Rutgers University to perform field testing
        for BSM-2000. Some time has passed and CAIT has not given us any guidance
        on if
        or when such testing will take place and the Company is pursuing alternatives
        for testing .
  **GOVERNMENTAL
        APPROVAL**
  We
        are
        not presently aware of any governmental agency approval required for BSM-2000
        before we can sell it in the United States. We cannot assure you that BSM-2000
        is not subject to or will not become subject to governmental approval. To
        the
        extent that any governmental approval is required in the future, we intend
        to
        obtain all required approvals consistent with applicable law. We cannot assure
        you that future governmental regulation will not adversely affect our ability
        to
        successfully commercialize a viable product.
  **EMPLOYEES**
  As
        of
        December 31, 2006, we had a total of five employees. We also employ outside
        consultants from time to time to provide various services. None of our employees
        are represented by a labor union. We consider our employee relations to be
        good.
  8
  **SCIENTIFIC
        ADVISORY BOARD**
  We
        are
        building a Scientific Advisory Board and to date have assembled two scientific
        advisors with demonstrated expertise in fields related to molecular, chemical
        and medical pharmacology and hepatic science. These advisors are not members
        of
        our Board of Directors. The role of our Scientific Advisory Board principally
        is
        to meet periodically with our Chief Executive Officer and certain of our
        consultants and members of JPL to discuss our present and long-term research
        and
        development activities, provide input and evaluation of our overall product
        line, assist and consult on our strategic direction, and introduce us to
        business relationships, industry contacts, and other strategic relationships
        that may be of value to us. Scientific Advisory Board members include: Leonard
        Makowka, M.D., Ph.D., a distinguished clinical surgeon, transplantation
        specialist and medical researcher, recognized as one of the world's leading
        authorities in hepatic science (study relating to the liver), and Louis Ignarro,
        Ph.D., Distinguished Professor of Pharmacology, University of California
        at Los
        Angeles School of Medicine. As medical doctors, both of these individuals
        are
        knowledgeable on the properties of bacterial spores, including Anthrax, how
        these spores operate in our environment, and their effect on the human body,
        which has been valuable in the overall development of BSM-2000. In August
        2003,
        we began paying Dr. Makowka a monthly consulting fee of $5,000. We also issued
        475,000 shares of our common stock to Dr. Makowka as compensation for his
        services. These shares were valued at $85,000, the market value of our common
        stock on the date issued. We stopped paying Dr. Makowka as of June 2005.
        However, we maintain close relationships with Dr. Makowka and he is available
        for help and consultation upon request and he maintains his seat on the
        scientific advisory board. To date Dr. Ignarro has received warrants to purchase
        200,000 shares of our common stock immediately exercisable at $0.25 per share,
        valued at $31,438, as compensation for his services.
  **COMPETITION**
  We
        face
        intense competition from a number of companies that offer products in our
        targeted application areas. Our competitors may offer or be developing products
        superior to ours. From time to time, we have been required to reduce our
        research efforts while we seek to raise additional funds. Our competitors
        may be
        significantly better financed than us. There are various technological
        approaches available to our competitors and us that may be applicable to
        the
        detection of pathogens in the air, and the feasibility and effectiveness
        of
        these techniques has yet to be fully evaluated or demonstrated. Several
        companies provide or are in the process of developing instruments for detection
        of bioterrorism agents.
  Similarly,
        Cepheid, a publicly traded company, focuses on the detection and analysis
        of DNA
        in samples such as blood, urine, cell cultures, food and industrial air and
        water. According to public disclosures of Cepheid, Northrop Grumnan is
        developing a Biohazard Detection System that consists of a detection system
        (GeneXpert(R)) manufactured by Cepheid. This detection system offers rapid
        (about one hour) and sensitive detection of specific gene sequences present
        in
        Bacillus anthracis, the causative agent for anthrax. According to news releases
        of Cepheid, the Biohazard Detection System has been installed at over 35
        U.S.
        Postal Service mail sorting facilities throughout the United
        States.
  Cellomics,
        Inc. has developed a system that utilizes living cells for the detection,
        classification, and identification of chemical and biological warfare threat
        agents such as anthrax and botulinum neurotoxin. Smiths Detection, a privately
        held U.K. company, has developed an automated biological agent detector that
        simultaneously detects up to eight different agents using Immuno-ligand Assay
        chemistries. This device is an on-demand, portable system that identifies
        specific biological agents and their concentration levels. The primary
        competition for BSM-2000 is PCR-based methods. However, the complexity of
        PCR
        makes automated implementation extremely expensive. We believe that BSM-2000
        operating costs will be substantially less than PCR-based methods. Thus,
        we
        expect to be competitive with companies offering these PCR methods. Moreover,
        the two technologies are synergistic and may be employed in concert. In order
        to
        compete against vendors of PCR-based methods, we will need to demonstrate
        the
        advantages of our products over alternative existing technologies and products
        and the potential cost advantages of our products relative to these conventional
        technologies and products.
  We
        also
        expect to encounter intense competition from a number of established and
        development-stage companies that continually enter the bioterrorism detection
        device market. Our competitors may succeed in developing or marketing
        technologies and products that are more effective or commercially attractive
        than our potential products or that render our technologies and potential
        products obsolete. As these companies develop their technologies, they may
        develop proprietary positions that prevent us from successfully commercializing
        our products.
  **INTELLECTUAL
        PROPERTY**
  On
        September 30, 2003, we entered into a license agreement with Caltech whereby
        we
        received licenses to produce, provide and sell proprietary products, processes
        and services for use in the detection of pathogens, spores, and biological
        warfare agents. These licenses include a worldwide exclusive license to the
        patent rights referenced in the Technology Affiliates Agreement with JPL
        and a
        worldwide nonexclusive license to rights in related proprietary technology.
        We
        also have a right under the agreement to grant sublicenses without rights
        to
        sublicense further. Caltech reserves the right to produce, provide and sell
        the
        licensed products, processes and services solely for noncommercial educational
        and research purposes. The United States government also has a worldwide,
        non-exclusive, non-transferable license to use or have used, for the performance
        of work for it or on its behalf, any inventions covered by the patent rights
        or
        the rights in the proprietary technology. The terms of the license further
        require that our licensed products are manufactured substantially in the
        United
        States, unless we can show that domestic manufacturing is not commercially
        feasible.
  As
        part
        of the sale of our wholly-owned subsidiary, Dasibi Environmental Corp. to
        a
        third party in March 2002, we obtained a perpetual nonexclusive license to
        exploit all of Dasibi's intellectual property rights outside of mainland
        China.
        Dasibi's core business had been the design, manufacture and marketing of
        automated continuous monitoring instruments used to detect and measure various
        types of air pollution, such as "acid rain," "ozone depletion" and "smog
        episodes." Dasibi also supplied computer-controlled calibration systems that
        verify the accuracy of our instruments, data loggers to collect and manage
        pollutant information, and final reporting software for remote centralized
        applications.
  9
  **RISK
        FACTORS**
  YOU
        SHOULD READ THE FOLLOWING DISCUSSION AND ANALYSIS TOGETHER WITH OUR CONSOLIDATED
        FINANCIAL STATEMENTS AND RELATED NOTES INCLUDED ELSEWHERE IN THIS ANNUAL
        REPORT.
        SOME OF THE INFORMATION CONTAINED IN THIS DISCUSSION AND ANALYSIS OR SET
        FORTH
        ELSEWHERE IN THIS ANNUAL REPORT, INCLUDING INFORMATION WITH RESPECT TO OUR
        PLANS
        AND STRATEGIES FOR OUR BUSINESS, INCLUDES FORWARD-LOOKING STATEMENTS THAT
        INVOLVE RISKS AND UNCERTAINTIES. YOU SHOULD REVIEW THE "RISK FACTORS" SECTION
        OF
        THIS REPORT FOR A DISCUSSION OF IMPORTANT FACTORS THAT COULD CAUSE ACTUAL
        RESULTS TO DIFFER MATERIALLY FROM THE RESULTS DESCRIBED IN OR IMPLIED BY
        THE
        FORWARD-LOOKING STATEMENTS CONTAINED IN THIS REPORT. IF ANY OF THE FOLLOWING
        RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF
        OPERATIONS COULD SUFFER.
  **OUR
        INDEPENDENT AUDITORS' REPORT EXPRESSES DOUBT ABOUT OUR ABILITY TO CONTINUE
        AS A
        GOING CONCERN.**
 
 Our
        independent auditors' report, dated March 9, 2007, includes an explanatory
        paragraph expressing substantial doubt as to our ability to continue as a
        going
        concern, due to our working capital deficit at December 31, 2006. We have
        experienced operating losses since the date of the auditors' report. Our
        auditor's opinion may impede our ability to raise additional capital on terms
        acceptable to us. If we are unable to obtain financing on terms acceptable
        to
        us, or at all, we will not be able to accomplish any or all of our initiatives
        and will be forced to consider steps that would protect our assets against
        our
        creditors. If we are unable to continue as a going concern, your entire
        investment in us could be lost.
  **WE
        ARE IN DEFAULT OF A SUBSTANTIAL PORTION OF OUR DEBT AND DO NOT HAVE ADEQUATE
        CASH TO FUND OUR WORKING CAPITAL NEEDS. OUR FAILURE TIMELY TO PAY OUR
        INDEBTEDNESS MAY REQUIRE US TO CONSIDER STEPS THAT WOULD PROTECT OUR ASSETS
        AGAINST OUR CREDITORS.**
  If
        we
        cannot raise additional capital, we will not be able to repay our debt or
        pursue
        our business strategies as scheduled, or at all, and we may cease operations.
        We
        have been unable to pay all of our creditors and certain other obligations
        in
        accordance with their terms, and as a result, at December 31, 2006 we are
        in
        default on a portion of our debt totaling approximately $331,000, excluding
        accumulated interest of approximately $403,193. In the aggregate, as of December
        31, 2006, we have approximately $1,379,000 in debt obligations, including
        interest, owing within the next 12 months. We cannot assure you that any
        of
        these note-holders will agree to extend payment of these debt obligations
        or
        ultimately agree to revise the terms of this debt to allow us to make scheduled
        payments over an extended period of time.
  We
        have
        nominal cash on hand and short-term investments and we do not expect to generate
        material cash from operations within the next 12 months. We have attempted
        to
        raise additional capital through debt or equity financings and to date have
        had
        limited success. The downtrend in the financial markets has made it extremely
        difficult for us to raise additional capital. In addition, our common stock
        trades on The Over the Counter Bulletin Board which makes it more difficult
        to
        raise capital than if we were trading on The NASDAQ Stock Market. Also, our
        default in repaying our debt restricts our ability to file registration
        statements, including those relating to capital-raising transactions, on
        Form
        S-3, which may make it more difficult for us to raise additional capital.
        In
        July 2004, we completed a private placement resulting in net proceeds to
        us of
        approximately $2.5 million, all of which have been used. As a condition to
        this
        financing however, we agreed that we would not use the net proceeds to repay
        any
        of our debt outstanding as of the closing of the financing. If we are unable
        to
        obtain financing on terms acceptable to us, or at all, we will not be able
        to
        accomplish any or all of our initiatives and will be forced to consider steps
        that would protect our assets against our creditors.
  **WE
        HAVE A HISTORY OF LOSSES AND WE DO NOT ANTICIPATE THAT WE WILL BE PROFITABLE
        IN
        FISCAL 2007.**
  We
        do not
        anticipate generating significant sales of the BSM-2000 until after we complete
        all testing and modifications, which is contingent principally upon receipt
        of
        adequate funding and our ability to continue to form collaborative arrangements
        with qualified third parties to engage in that testing at nominal cost to
        us. We
        have not been profitable in the past years and had an accumulated deficit
        of
        approximately $33 million at December 31, 2006. We have not had revenues
        from
        sales of our products since the beginning of fiscal 2002, the commencement
        of
        development of our BSM-2000. During the fiscal years ended December 31, 2006
        and
        2005, we had losses of $2.7 million and $3.5 million, respectively. Achieving
        profitability depends upon numerous factors, including our ability to develop,
        market and sell commercially accepted products timely and cost-efficiently.
        We
        do not anticipate that we will be profitable in fiscal 2007.
  **IF
        WE OBTAIN FINANCING, EXISTING SHAREHOLDER INTERESTS MAY BE
        DILUTED.**
  If
        we
        raise additional funds by issuing equity or convertible debt securities,
        the
        percentage ownership of our shareholders will be diluted. In addition, any
        convertible securities issued may not contain a minimum conversion price,
        which
        may make it more difficult for us to raise financing and may cause the market
        price of our common stock to decline because of the indeterminable overhang
        that
        is created by the discount to market conversion feature. In addition, any
        new
        securities could have rights, preferences and privileges senior to those
        of our
        common stock. Furthermore, we cannot assure you that additional financing
        will
        be available when and to the extent we require or that, if available, it
        will be
        on acceptable terms.
  10
  **IF
        WE CANNOT PARTNER WITH THIRD PARTIES TO ENGAGE IN RESEARCH AND DEVELOPMENT
        AND
        TESTING OF OUR DEVICE AT MINIMAL COST TO US, OUR PRODUCT DEVELOPMENT WILL
        BE
        DELAYED.**
  We
        contract with third parties at minimal cost to us to conduct research and
        development activities and we expect to continue to do so in the future.
        Under
        our agreement with JPL, it will engage in limited testing of our device.
        We have
        engaged in discussions with Rutgers University to conduct field testing of
        BSM-2000. Because we are unable to pay third parties to test our product
        and
        instead must rely on a qualified third party's willingness to partner with
        us to
        test our product, our research and development activities and the testing
        of our
        product may be delayed. In addition, since we contract with third parties
        for
        these services, we have less direct control over those activities and cannot
        assure you that the research or testing will be done properly or in a timely
        manner.
  **MANAGEMENT
        HAS NO EXPERIENCE IN PRODUCT MANUFACTURING, MARKETING, SALES, OR DISTRIBUTION.
        WE MAY NOT BE ABLE TO MANUFACTURE OUR BACTERIAL SPORE DETECTOR IN SUFFICIENT
        QUANTITIES AT AN ACCEPTABLE COST, OR IN A TIMELY FASHION, AND MAY NOT BE
        ABLE TO
        MARKET AND DISTRIBUTE IT EFFECTIVELY, EACH OF WHICH COULD HARM OUR FUTURE
        PROSPECTS.**
  If
        we are
        unable to establish an efficient manufacturing process for the BSM-2000,
        our
        costs of production will increase, our projected margins may decrease, and
        we
        may not be able to timely deliver our product to customers. When and if we
        complete all design and testing of our product, we will need to establish
        the
        capability to manufacture it. Management has no experience in establishing,
        supervising, or conducting commercial manufacturing. We plan to rely on third
        party contractors to manufacture our product, although to date we have not
        entered into any manufacturing arrangements with any third party. Relying
        on
        third parties may expose us to the risk of not being able to directly oversee
        the manufacturing process, which may adversely affect the production and
        quality
        of our BSM-2000. In addition, these third party contractors may experience
        regulatory compliance difficulty, mechanical shutdowns, employee strikes,
        or
        other unforeseeable acts that may increase the cost of production or delay
        or
        prevent production.
  In
        addition, if we are unable to establish a successful sales, marketing, and
        distribution operation, we will not be able to generate sufficient revenue
        in
        order to maintain operations. We have no experience in marketing or distributing
        new products. We have not yet established marketing, sales, or distribution
        capabilities for our BSM-2000. At this time, we have an oral agreement with
        KAL
        Consultants, Inc. to assist us with our marketing and sales efforts. To date,
        KAL Consultants' principal function has been to arrange meetings with potential
        buyers of our device, including Secure Wrap. We also plan on entering into
        distribution agreements with third parties to sell our BSM-2000. If we are
        unable to enter into relationships with third parties to market, sell, and
        distribute our products, we will need to develop our own capabilities. We
        have
        no experience in developing, training, or managing a sales force. If we choose
        to establish a direct sales force, we will incur substantial additional expense.
        We may not be able to build a sales force on a cost effective basis or at
        all.
        Any direct marketing and sales efforts may prove to be unsuccessful. In
        addition, our marketing and sales efforts may be unable to compete with the
        extensive and well-funded marketing and sales operations of some of our
        competitors. We also may be unable to engage qualified distributors. Even
        if
        engaged, they may fail to satisfy financial or contractual obligations to
        us, or
        adequately market our products..
  **WE
        CANNOT GUARANTEE THAT OUR BIOTERRORISM DETECTION DEVICE WILL WORK OR BE
        COMMERCIALLY VIABLE.**
  Our
        product in development requires testing, third party verification, potentially
        additional modifications and demonstration of commercial scale manufacturing
        before it can be proven to be commercially viable. Potential products that
        appear to be promising at early stages of development may not reach the market
        for a number of reasons. These reasons include the possibilities that the
        product may be ineffective, unsafe, difficult or uneconomical to manufacture
        on
        a large scale, or precluded from commercialization by proprietary rights
        of
        third parties. We cannot predict with any degree of certainty when, or if,
        the
        testing, modification and validation process will be completed. If our product
        development efforts are unsuccessful or if we are unable to develop a
        commercially viable product timely, we would need to consider steps to protect
        our assets against our creditors.
  **OUR
        PRODUCTS MAY NOT BE COMMERCIALLY ACCEPTED WHICH WILL ADVERSELY AFFECT OUR
        REVENUES AND PROFITABILITY.**
  Our
        ability to enter into the bioterrorism detection device market, establish
        brand
        recognition and compete effectively depends upon many factors, including
        broad
        commercial acceptance of our products. If our products are not commercially
        accepted, we will not recognize meaningful revenue and may not continue to
        operate. The success of our products will depend in large part on the breadth
        of
        information these products capture and the timeliness of delivery of that
        information. The commercial success of our products also depends upon the
        quality and acceptance of other competing products, general economic and
        political conditions and other factors, all of which can change and cannot
        be
        predicted with certainty. We cannot assure you that our new products will
        achieve market acceptance or will generate significant revenue.
  11
  **EXISTING
        AND DEVELOPING TECHNOLOGIES MAY ADVERSELY AFFECT THE DEMAND FOR OUR ONLY
        PRODUCT, THE BSM-2000.**
  Our
        industry is subject to rapid and substantial technological change. Developments
        by others may render our technology and planned product noncompetitive or
        obsolete, or we may be unable to keep pace with technological developments
        or
        other market factors. Competition from other biotechnology companies,
        universities, governmental research organizations and others diversifying
        into
        our field is intense and is expected to increase. According to the public
        filings of Cepheid, one of our competitors, it has begun shipping its detection
        technology product, including for use by the U.S. Postal Service. Cepheid's
        entry into the market before us may make it more difficult for us to penetrate
        the market. In addition, our competitors offer technologies different than
        ours
        which potential customers may find more suitable to their needs. For example,
        Cepheid's technology specifically detects for Anthrax whereas our technology
        detects for an increase in the level of bacterial spores. Many of our
        competitors also have significantly greater research and development
        capabilities than we do, as well as substantially greater marketing,
        manufacturing, financial and managerial resources.
  **SHARES
        ISSUED UPON THE EXERCISE OF OUR OUTSTANDING OPTIONS AND WARRANTS MAY DILUTE
        YOUR
        STOCK HOLDINGS AND ADVERSELY AFFECT OUR STOCK PRICE.**
  If
        exercised, our outstanding options and warrants will cause immediate and
        substantial dilution to our stockholders. We have issued options and warrants
        to
        acquire our common stock to our employees, consultants, and investors at
        various
        prices, some of which are or may in the future be below the market price
        of our
        stock. As of December 31, 2006, we had outstanding options and warrants to
        purchase a total of 23,276,568 shares of common stock. Of these options and
        warrants, all have exercise prices at or above the recent market price of
        $0.007
        per share (as of March 27, 2007) and none have exercise prices at or below
        this
        price.
  **WE
        USE A SIGNIFICANT PORTION OF OUR CASH ON HAND AND STOCK TO PAY CONSULTING
        FEES.
        WE MAY NOT RECEIVE THE BENEFIT WE EXPECT FROM THESE
        CONSULTANTS.**
  The
        consultants that we hire may not provide us with the level of services, and
        consequently, the operating results, we anticipate. We spent approximately
        $0.8
        million and $0.5 million in consulting fees during the years ended December
        31,
        2006 and 2005, respectively, and utilized approximately 20 consultants during
        this period. The consultants we engage provide us with a variety of
        services.
  **THE
        LOSS OF OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER WOULD DISRUPT OUR
        BUSINESS.**
  Our
        success depends in substantial part upon the services of Jacques Tizabi,
        our
        President, Chief Executive Officer and Chairman of the Board of Directors.
        The
        loss of or the failure to retain the services of Mr. Tizabi would adversely
        affect the development of our business and our ability to realize profitable
        operations. We do not maintain key-man life insurance on Mr. Tizabi and have
        no
        present plans to obtain this insurance.
  **IF
        A U.S. PATENT FOR THE BACTERIAL SPORE DETECTION TECHNOLOGY IS NOT ISSUED,
        COMPETITORS MAY BE ABLE TO COPY AND SELL PRODUCTS SIMILAR TO OURS WITHOUT
        PAYING
        A ROYALTY, WHICH WOULD HAVE A MATERIAL ADVERSE IMPACT ON OUR ABILITY TO
        COMPETE.**
  If
        BSM-2000 is commercialized, the lack of U.S. or foreign patent protection
        could
        allow competitors to copy and sell products similar to ours without paying
        a
        royalty. Caltech owns the bacterial spore detection technology that is
        integrated into BSM-2000. On January 31, 2003, Caltech filed a U.S. patent
        application covering the technology, which currently is being reviewed by
        the
        U.S. Patent and Trademark Office. Caltech also filed a patent application
        with
        the European Patent Office. We paid and filed on behalf of Caltech a patent
        application in Japan as well. No patents have been issued and we cannot assure
        you that any patents will be issued. If a U.S. patent is not issued, or not
        issued timely, we may face substantially increased competition in our primary
        geographic market.
 The
          Patent application for "Methods and Apparatus for Assays of Bacterial Spores"
          was docketed to a new Examiner in early 2006, and thus prosecution began
          anew.  The inventor, patent attorney and the examiner continue to review
          the different claims.
  **WE
        MAY BE SUED BY THIRD PARTIES WHO CLAIM OUR PRODUCT INFRINGES ON THEIR
        INTELLECTUAL PROPERTY RIGHTS. DEFENDING AN INFRINGEMENT LAWSUIT IS COSTLY
        AND WE
        MAY NOT HAVE ADEQUATE RESOURCES TO DEFEND OURSELVES.**
  We
        may be
        exposed to future litigation by third parties based on claims that our
        technology, product, or activity infringes on the intellectual property rights
        of others or that we have misappropriated the trade secrets of others. This
        risk
        is compounded by the fact that the validity and breadth of claims covered
        in
        technology patents in general and the breadth and scope of trade secret
        protection involves complex legal and factual questions for which important
        legal principles are unresolved. Any litigation or claims against us, whether
        or
        not valid, could result in substantial costs, could place a significant strain
        on our financial and managerial resources, and could harm our reputation.
        Our
        license agreement with Caltech requires that we pay the costs associated
        with
        initiating an infringement claim and defending claims by third parties for
        infringement, subject to certain offsets that may be allowed against amounts
        we
        may owe to Caltech under the licensing agreement. In addition, intellectual
        property litigation or claims could force us to do one or more of the
        following:
  o
        cease
        selling, incorporating, or using any of our technology and/or products that
        incorporate the challenged intellectual property, which could adversely affect
        our potential revenue;
  12
  o
        obtain
        a license from the holder of the infringed intellectual property right, which
        license may be costly or may not be available on reasonable terms, if at
        all;
        or
  o
        redesign our products, which would be costly and time consuming.
  **THE
        U.S. GOVERNMENT HAS RIGHTS TO THE TECHNOLOGY WE LICENSE FROM
        CALTECH.**
  Under
        the
        license rights provided to the U.S. government in our license agreement with
        Caltech, a U.S. government agency or the U.S. armed forces may, either produce
        the proprietary products or use the proprietary processes or contract with
        third
        parties to provide the proprietary products, processes, and services to one
        or
        more Federal agencies or the armed forces of the U.S. government, for use
        in
        activities carried out by the U.S. government, its agencies, and the armed
        forces, including, for instance, the war on terrorism or the national defense.
        Further, the Federal agency that provided funding to Caltech for the research
        that produced the inventions covered by the patent rights referenced in the
        Technology Affiliates Agreement and the related technology may require us
        to
        grant, or if we refuse, itself may grant a nonexclusive, partially exclusive,
        or
        exclusive license to these intellectual property rights to a third party
        if the
        agency determines that action is necessary:
  o
        because
        we have not taken, or are not expected to take within a reasonable time,
        effective steps to achieve practical application of the invention in the
        detection of pathogens, spores, and biological warfare agents;
  o
        to
        alleviate health or safety needs which are not reasonably satisfied by us
        or our
        sublicensees;
  o
        to meet
        requirements for public use specified by Federal regulations and those
        regulations are not reasonably satisfied by us; or
  o
        because
        we have not satisfied, or obtained a waiver of, our obligation to have the
        licensed products manufactured substantially in the United States.
  **THE
        BACTERIAL SPORE DETECTION TECHNOLOGY IS LICENSED TO US BY CALTECH. IF OUR
        LICENSE TERMINATES, OUR FUTURE PROSPECTS WOULD BE HARMED.**
  The
        loss
        of our technology license would require us to cease operations until we
        identify, license and integrate into our product another technology, if
        available. If we fail to fulfill any payment obligation under the terms of
        the
        license agreement or materially breach the agreement, Caltech may terminate
        the
        license. To maintain our license with Caltech, a minimum annual royalty of
        $10,000 was due to Caltech on August 1, 2005, and is due on each anniversary
        thereof, regardless of any product sales. Any royalties paid from product
        sales
        for the 12-month period preceding the date of payment of the minimum annual
        royalty will be credited against the annual minimum. As
        of the
        date of this report we have not paid the minimum royalty of $10,000 due to
        Caltech on August 1, 2006. According to our license agreement with Caltech,
        Caltech shall have the right to terminate our license agreement and the rights
        and licenses granted to us if we fail to make any payment due including patent
        expense or minimum annual royalties for a period of fifteen days after receiving
        a second written notice from Caltech specifying our failure. To date we have
        not
        received any notices from Caltech with regards to our August 1, 2006 minimum
        annual royalty due of $10,000. Furthermore, we have reached an agreement
        with
        Caltech with regards to the payment of patent fees. This agreement is signed
        in
        the form of a second amendment to our license agreement with Caltech.
        Accordingly, we have agreed that we owe the amount of $86,318.48 for patent
        costs incurred by Caltech prior to December 1, 2006 and that this amount
        shall
        be paid to Caltech in ten monthly installments of $8,631.85. To date, we
        are up
        to date with the monthly installments called for in the second amendment
        to our
        license agreement with Caltech.
  **OUR
        STOCK PRICE IS VOLATILE.**
  The
        trading price of our common stock fluctuates widely and in the future may
        be
        subject to similar fluctuations in response to quarter-to-quarter variations
        in
        our operating results, announcements of technological innovations or new
        products by us or our competitors, general conditions in the bioterrorism
        detection device industry in which we compete and other events or factors.
        In
        addition, in recent years, broad stock market indices, in general, and the
        securities of technology companies, in particular, have experienced substantial
        price fluctuations. These broad market fluctuations also may adversely affect
        the future trading price of our common stock.
  **OUR
        STOCK HISTORICALLY HAS BEEN THINLY TRADED. THEREFORE, SHAREHOLDERS MAY NOT
        BE
        ABLE TO SELL THEIR SHARES FREELY.**
  The
        volume of trading in our common stock historically has been low and a limited
        market presently exists for the shares. We have no analyst coverage of our
        securities. The lack of analyst reports about our stock may make it difficult
        for potential investors to make decisions about whether to purchase our stock
        and may make it less likely that investors will purchase our stock. We cannot
        assure you that our trading volume will increase, or that our historically
        light
        trading volume or any trading volume whatsoever will be sustained in the
        future.
        Therefore, we cannot assure you that our shareholders will be able to sell
        their
        shares of our common stock at the time or at the price that they desire,
        or at
        all.
  **POTENTIAL
        ANTI-TAKEOVER TACTICS AND RIGHTS AND PREFERENCES GRANTED THROUGH THE ISSUANCE
        OF
        PREFERRED STOCK RIGHTS MAY BE DETRIMENTAL TO COMMON
        SHAREHOLDERS.**
  We
        are
        authorized to issue up to 20,000,000 shares of preferred stock. The issuance
        of
        preferred stock does not require approval by the shareholders of our common
        stock. Our Board of Directors, in its sole discretion, has the power to issue
        preferred stock in one or more series and establish the dividend rates and
        preferences, liquidation preferences, voting rights, redemption and conversion
        terms and conditions and any other relative rights and preferences with respect
        to any series of preferred stock. Holders of preferred stock may have the
        right
        to receive dividends, certain preferences in liquidation and conversion and
        other rights, any of which rights and preferences may operate to the detriment
        of the shareholders of our common stock. Further, the issuance of any preferred
        stock having rights superior to those of our common stock may result in a
        decrease in the market price of the common stock and, additionally, could
        be
        used by our Board of Directors as an anti-takeover measure or device to prevent
        a change in our control.
  13
  150
        shares of our preferred stock have been designated as Series A-1 Preferred
        Stock
        (the “Series A-1 Shares”) and have been issued to Mr. Jacques Tizabi, our
        President, Chief Executive Officer, Acting Chief Financial Officer, and Chairman
        of the Board of Directors. The Series A-1 Shares entitle Mr. Tizabi to 1,000,000
        votes per share, which shall vote together with the common stock of the Company
        for all purposes, except where a separate vote of the classes of capital
        stock
        is required by California law. The aggregate value of the 150 shares issued
        to
        Mr. Tizabi is $50,000. The shares have a liquidation value, as described
        in the
        Company’s Articles of Incorporation, of $50,000.  Mr. Tizabi is prohibited,
        by agreement with the Company, from transferring or selling such stock, or
        any
        interest in such stock for so long as the shares are outstanding. In the
        manners
        discussed above, the rights and preferences of the Series A-1 Shares may
        operate
        to the detriment of our common shareholders.
  **THE
        LOWER THE STOCK PRICE, THE GREATER THE NUMBER OF SHARES ISSUABLE UNDER THE
        INVESTMENT AGREEMENT WHICH COULD CONTRIBUTE TO THE FUTURE DECLINE OF OUR
        STOCK
        PRICE AND MATERIALLY DILUTE EXISTING STOCKHOLDERS' EQUITY AND VOTING
        RIGHTS.**
 On
          February 13, 2006 we entered into an Investment Agreement with European
          Equity
          Group ("European"), for the future issuance and purchase of shares of our
          common
          stock. This Investment Agreement establishes what is sometimes termed an
          equity
          line of credit or an equity drawdown facility. T he
          number
          of shares that European will receive under its agreement with us is calculated
          based upon the market price of our common stock prevailing at the time
          of each
          "put". The lower the market price, the greater the number of shares issuable
          under the agreement. Upon issuance of the shares, to the extent that European
          will attempt to sell the shares into the market, these sales may further
          reduce
          the market price of our common stock. This in turn will increase the number
          of
          shares issuable under the agreement. This may lead to an escalation of
          lower
          market prices and ever greater numbers of shares to be issued. A larger
          number
          of shares issuable at a discount to a continuously declining stock price
          will
          expose our shareholders to greater dilution and a reduction of the value
          of
          their investment.
  **THE
        SALE OF OUR STOCK UNDER THE EUROPEAN AGREEMENT COULD ENCOURAGE SHORT SALES
        BY
        THIRD PARTIES, WHICH COULD CONTRIBUTE TO THE FUTURE DECLINE OF OUR STOCK
        PRICE
        AND MATERIALLY DILUTE EXISTING STOCKHOLDERS' EQUITY AND VOTING
        RIGHTS.**
  The
        Investment Agreement does not contain restrictions on short selling.
        Accordingly, any significant downward pressure on the price of our common
        stock
        can encourage short sales by them or others, subject to applicable securities
        laws. This is particularly the case if the shares being placed into the market
        exceed the market's ability to absorb the increased number of shares of stock
        or
        if we have not performed in such a manner to show that the equity funds raised
        will be used by us to grow. Such an event could place further downward pressure
        on the price of our common stock. Even if we use the proceeds under the
        agreement to grow our revenues and profits or invest in assets, which are
        materially beneficial to us, the opportunity exists for short sellers and
        others
        to contribute to the future decline of our stock price. If there are significant
        short sales of our stock, the price decline that would result from this activity
        will cause the share price to decline more so, which, in turn, may cause
        long
        holders of the stock to sell their shares thereby contributing to sales of
        stock
        in the market. If there is an imbalance on the sell side of the market for
        the
        stock, our stock price will decline. If this occurs, the number of shares
        of our
        common stock that is issuable pursuant to the Investment Agreement will
        increase, which will materially dilute existing stockholders' equity and
        voting
        rights.
  **ITEM
        2. DESCRIPTION OF PROPERTY**
  We
        currently do not own any property. As of February 2004, we moved our corporate
        headquarters to 9595 Wilshire Blvd., Suite 700, Beverly Hills, California,
        an
        office space then leased by Astor Capital, Inc., a company owned 50% by our
        President and Chief Executive Officer and 50% by our Vice President of Global
        Strategy. In November 2004, we entered into an agreement pursuant to which
        we
        assumed the lease from Astor. This space, which is approximately 3,245 square
        feet, is adequate for our current needs. The lease requires $231,930 in minimum
        payments through October 2008. We plan to lease property for our testing
        facility as our business demands require in the future.
  **ITEM
        3. LEGAL PROCEEDINGS**
  On
          or
          about April 16, 2004, Plaintiffs A. Sean Rose, Claire F. Rose, and Mark
          Rose
          commenced an action in the Los Angeles Superior Court against the Company
          ( *A.
          Sean Rose, Claire F. Rose and Mark Rose v. Universal Detection Technology,
          fka
          Pollution Research and Control Corporation* )
          for
          amounts allegedly due pursuant to four unpaid promissory notes. On August
          2,
          2004, the parties executed a Confidential Settlement Agreement and Mutual
          Releases (the “Agreement"). On December 30, 2005, Plaintiffs commenced an action
          against the Company, alleging the Company breached the Agreement and sought
          approximately $205,000 in damages. A judgment was entered on April 11,
          2006 for
          $209,277.58. The Company has previously accrued for this
          settlement.
 On
        April
        19, 2006, Plaintiffs Steven P Sion and Sion Consulting, Inc., a Nevada
        corporation, instituted an action in the Los Angeles Superior Court
        ( *Sion
        v. Universal Detection Technology Corporation, et. al.* ; Central
        District Case No. BC350942) against Defendants Universal Detection Technology
        Corporation, Albert E. Gosselin, Jr., Roy Peterson, Greg Edwards, Bombay
        Consortium, Inc., Howard Sperling, Assisted Care, Inc.  As to Universal
        Detection, Plaintiffs alleged claims for:  (1) Breach of Contract; (2)
        Fraud, (3) Negligent Misrepresentation; and (4) Conspiracy in relation to
        the
        sale of Dasibi Environmental Corp.  Plaintiffs seek an unspecified amount
        of compensatory, general and punitive damages against all Defendants.  On
        July 17, 2006, Universal Detection timely filed an Answer to the
        Complaint.  Universal Detection strongly disputes and shall vigorously
        defend against the allegations of the Complaint. To date, discovery has
        commenced, but no trial date has been set.
  On
          June
          2, 2006, Plaintiff Trilogy Capital Partners instituted an action in the
          Los
          Angeles Superior Court ( *Trilogy
          Capital Partners v. Universal Detection Technology, et. al.* ,
          Case
          No. SC089929) against the Company. Plaintiff’s Complaint alleged damages against
          UDT for breach of an engagement letter in the amount of $93,448.54.  Also,
          Plaintiff alleged that UDT had failed to issue warrants to it pursuant
          to a
          written agreement. After completing the initial stages of litigation and
          conducting extensive mediation, Plaintiff and UDT reached a settlement
          wherein
          commencing December 15, 2006, UDT would make monthly payments to Plaintiff
          of
          $2,000 until a debt of $90,000 plus accrued interest at six percent per
          annum
          was fully paid.  In exchange, Plaintiff would release all of its claims
          against UDT. UDT has been current on all of its agreed payments to Plaintiff.
 
 On
          November 15, 2006, Plaintiff NBGI, Inc. instituted an action in the Los
          Angeles
          Superior Court (NBGI, Inc.  v. Universal Detection Technology, et. al.,
          Case No. BC361979) against the Company. NBGI, Inc.’s Complaint alleged breach of
          contract, and requested damages in the amount of $111,014.34 plus interest
          at
          the legal rate and for costs of suit.  UDT strongly disputes and shall
          vigorously defend against the allegations of the Complaint. To date, discovery
          has commenced, but no trial date has been set.
  **ITEM
        4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**
  **NONE.**
  14
  **PART
        II**
 
 **ITEM
        5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDERS MATTERS, AND SMALL BUSINESS
        ISSUER PURCHASES OF EQUITY SECURITIES**
 
 Our
        common stock is traded on the OTC Bulletin Board under the symbol “UDTT.” The
        following table sets forth the high and low bid information of our common
        stock
        on the OTC Bulletin Board for each quarter during the last two fiscal years
        and
        the subsequent interim period, as reported by the OTC Bulletin Board. This
        information reflects inter-dealer prices, without retail mark-up, mark-down
        or
        commission and may not represent actual transactions.
  Year
              
              PeriodHigh
                  Bid
              
              Low
                  Bid2005
              
              First
                  Quarter
              
              0.40
              
              0.19Second
                  Quarter
              
              0.28
              
              0.12Third
                  Quarter
              
              0.25
              
              0.13Fourth
                  Quarter
              
              0.24
              
              0.082006
              
              First
                  Quarter
              
              0.14
              
              0.06Second
                  Quarter
              
              0.08
              
              0.02Third
                  Quarter
              
              0.181
              
              0.007Fourth
                  Quarter
              
              0.0175
              
              0.0042007
              
              First
                  Quarter
              
              0.011
              
              0.0042
  As
        of
        April 5, 2007, we had 1,336 shareholders of record of our common stock.
  **DIVIDEND
        POLICY**
  We
        do not
        currently pay any dividends on our common stock, and we currently intend
        to
        retain any future earnings for use in our business. Any future determination
        as
        to the payment of dividends on our common stock will be at the discretion
        of our
        Board of Directors and will depend on our earnings, operating and financial
        condition, capital requirements and other factors deemed relevant by our
        Board
        of Directors including the General Corporation Law of the State of California,
        which provides that dividends are only payable out of retained earnings or
        if
        certain minimum ratios of assets to liabilities are satisfied. The declaration
        of dividends on our common stock also may be restricted by the provisions
        of
        credit agreements that we may enter into from time to time.
  **SALES
        OF UNREGISTERED SECURITIES**
 
 During
        fiscal 2006, we issued the following securities which were not registered
        under
        the Securities Act of 1933, as amended. We did not employ any form of general
        solicitation or advertising in connection with the offer and sale of the
        securities described below. In addition, we believe the purchasers of the
        securities are “ *accredited
        investors"* for the
        purpose of Rule 501 of the Securities Act. For these reasons, among others,
        the
        offer and sale of the following securities were made in reliance on the
        exemption from registration provided by Section 4(2) of the Securities Act
        or
        Regulation D promulgated by the SEC under the Securities Act:
 
 ·
              During
                  2006, we issued 32,442,091 shares of common stock to employees
                  for
                  services valued at approximately
                  $271,000.
 ·
              During
                  2006, we issued 17,528,382 shares of common stock to various consultants
                  that were valued at approximately
                  $552,000.
 ·
              During
                  2006, we issued 6,122,470 shares of common stock for the exercise
                  of
                  warrants. We received $366,500 in proceeds and $552,000 was used
                  to pay
                  off outstanding obligations direct by the warrant
                  holders.
 ·
              During
                  2007, we issued 150 shares of our preferred stock designated as
                  Series A-1
                  Preferred Stock to Mr. Jacques Tizabi. The aggregate value of the
                  shares
                  is $50,000. In addition, we granted Mr. Tizabi an option to purchase
                  100,000,000 shares of our common stock at an exercise price of
                  $0.01 per
                  share, for a term of five years.  The option is fully vested and
                  immediately exercisable. Previously, we had issued to Mr. Tizabi
                  100,000,000 shares of common stock in exchange for the cancellation
                  of
                  indebtedness owed to him. However, we subsequently determined to
                  cancel
                  such issuance, and issue in lieu thereof, the shares of Series
                  A-1
                  Preferred Stock and the option described
                  above.
  15
  **INVESTMENT
        AGREEMENT WITH EUROPEAN EQUITY GROUP**
  On
        February 13, 2006 we entered into an Investment Agreement with European Equity
        Group ("European"), for the future issuance and purchase of shares of our
        common
        stock. This Investment Agreement establishes what is sometimes termed an
        equity
        line of credit or an equity drawdown facility.
  In
        general, the drawdown facility operates as follows: European, has committed
        to
        provide us up to $10,000,000 as we request it over a 36 month period, in
        return
        for common stock we issue to European. We, in our sole discretion, may during
        the Open Period deliver a "put notice" (the "Put Notice") to European which
        states the dollar amount which we intend to sell to European on the Closing
        Date. The Open Period is the period beginning on the trading day after the
        Registration Statement is declared effective (the "Effective Date") and which
        ends on the earlier to occur of 36 months from the Effective Date or termination
        of the Investment Agreement in accordance with its terms. The Closing Date
        shall
        mean no more than 7 trading days following the Put Notice Date. The Put Notice
        Date shall mean the Trading Day immediately following the day on which European
        receives a Put Notice, however a Put Notice shall be deemed delivered on
        (a) the
        Trading Day it is received by facsimile or otherwise by European if such
        notice
        is received prior to 9:00 am EST, or (b) the immediately succeeding Trading
        Day
        if it is received by facsimile or otherwise after 9:00 am EST on a Trading
        Day.
  The
        amount that we shall be entitled to Put to European shall be equal to, at
        our
        election, either: (A) Two Hundred percent (200%) of the average daily volume
        (U.S. market only) of the Common Stock for the three (3) Trading Days prior
        to
        the applicable Put Notice Date, multiplied by the average of the three (3)
        daily
        closing bid prices immediately preceding the Put Date, or (B) One Hundred
        Thousand dollars ($100,000). During the Open Period, we shall not be entitled
        to
        submit a Put Notice until after the previous Closing has been completed.
        The
        Purchase Price for the Common Stock identified in the Put Notice shall be
        equal
        to ninety-three percent (93%) of the lowest closing Best Bid price of the
        Common
        Stock during the Pricing Period. The Pricing Period is the period beginning
        on
        the Put Notice Date and ending on and including the date that is 5 trading
        days
        after such Put Notice Date.
  Upon
        the
        receipt by European of a validly delivered Put Notice, European shall be
        required to purchase from us, during the period beginning on the Put Notice
        Date
        and ending on and including the date that is 5 Trading days after such Put
        Notice, that number of shares having an aggregate purchase price equal to
        the
        lesser of (a) the Put Amount set forth in the Put Notice and (b) 20% of the
        aggregate trading volume of our common stock during the applicable Pricing
        Period times (x) the lowest closing bid price of our common stock during
        the
        specified Pricing period, but only if such said shares bear no restrictive
        legend and are not subject to stop transfer instructions, prior to the
        applicable Closing Date.
  The
        Investment Agreement expires (a) when European has purchased an aggregate
        of
        $10,000,000 of our Common Stock or (b) 36 months after the Effective Date
        of the
        registration statement (May 12, 2006) of, whichever occurs earlier.
  As
        of
        March 31, 2007, 96,280,919 shares have been issued under the agreements for
        an
        aggregate price of $681,491. We received proceeds of $439,000. The remaining
        $242,491 was used to pay off outstanding notes payable and accrued interest
        directly by European.
 
 **Securities
        Authorized For Issuance Under Equity Compensation Plans**
  Set
        forth
        in the table below is information regarding awards made through equity
        compensation plans, through December 31, 2006, for our last fiscal
        year.
  **Plan
                  Category**
              
              **Number
                  of securities to be issued upon exercises of outstanding options,
                  warrants, and rights**
              
              **Weighted-average
                  exercise price of outstanding options, warrants, and
                  rights**
              
              **Number
                  of securities available for future plan
                  issuance****Equity
                  compensation plans approved by security holders**
              
              N/A
              
              N/A
              
              N/A**Equity
                  compensation plans not approved by security
                  holders****2006
                  Stock Compensation Plan**
              
              7,500,000
                  (1)
              
              N/A
              
              0**2006
                  Consultant Stock Plan**
              
              25,000,000
                  (1)
              
              N/A
              
              0**2006-II
                  Consultant Stock Plan**
              
              37,500,000
                  (1)
              
              N/A
              
              342,965
 
 (1)
        Represents total number of shares of common stock originally authorized for
        stock grants. Stock option grants were not authorized.
 
 On
        February 13, 2006, our Board of Directors adopted the 2006 Stock Compensation
        Plan (the "Plan"). The Plan authorizes common stock grants to our non-executive
        employees, professional advisors and consultants. We reserved 7,500,000 shares
        of our common stock for awards to be made under the Plan. The Plan is to
        be
        administered by our Board of Directors, or by any committee to which such
        duties
        are delegated by the Board.
  16
  On
        June
        29, 2006, our Board of Directors adopted the 2006 Consultant Stock Plan (the
        "2006 Plan"). The 2006 Plan authorizes common stock grants to our employees,
        officers, directors, consultants, independent contractors, advisors, or other
        service providers, provided that such services are not in connection with
        the
        offer and sale of securities in a capital-raising transaction. We reserved
        25,000,000 shares of our common stock for awards to be made under the 2006
        Plan.
        The 2006 Plan is to be administered by a committee of one or more members
        of our
        Board of Directors.
 
 On
        November 22, 2006, our Board of Directors adopted the 2006-II Consultant
        Stock
        Plan (the "2006-II Plan"). The 2006-II Plan authorizes common stock grants
        to
        our employees, officers, directors, consultants, independent contractors,
        advisors, or other service providers, provided that such services are not
        in
        connection with the offer and sale of securities in a capital-raising
        transaction. We reserved 37,500,000 shares of our common stock for awards
        to be
        made under the 2006-II Plan. The 2006-II Plan is to be administered by a
        committee of two or more members of our Board of Directors.
  With
        respect to each of the above Plans, and subject to the provisions of each
        Plan,
        the Board and/or committee shall have authority to (a) grant, in its discretion,
        stock awards; (b) determine in good faith the fair market value of the stock
        covered by any grant; (c) determine which eligible persons shall receive
        grants
        and the number of shares, restrictions, terms and conditions to be included
        in
        such grants; (d) construe and interpret the Plans; (e) promulgate, amend
        and
        rescind rules and regulations relating to its administration, and correct
        defects, omissions and inconsistencies in the Plans or any grants; (f)
        consistent with the Plans and with the consent of the participant, amend
        any
        outstanding grant; and (g) make all other determinations necessary or advisable
        for the Plans’ administration. The interpretation and construction by the Board
        of any provisions of the Plans shall be conclusive and final.
  **ITEM
        6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
        OPERATION**
  The
        following discussion should be read in conjunction with our consolidated
        financial statements provided in this annual report on Form 10-KSB. Certain
        statements contained herein may constitute forward-looking statements within
        the
        meaning of the Private Securities Litigation Reform Act of 1995. These
        statements involve a number of risks, uncertainties and other factors that
        could
        cause actual results to differ materially, as discussed more fully
        herein.
  The
        forward-looking information set forth in this annual report is as of the
        date of
        this filing, and we undertake no duty to update this information. More
        information about potential factors that could affect our business and financial
        results is included in the section entitled "Risk Factors" of this annual
        report.
  **OVERVIEW**
  We
        are
        engaged in the research and development of bioterrorism detection devices.
        Our
        strategy is to identify qualified strategic partners with whom to collaborate
        in
        order to develop commercially viable bioterrorism detection devices. Consistent
        with this strategy, in August 2002, we entered into a Technology Affiliates
        Agreement with NASA’s Jet Propulsion Laboratory, commonly referred to as JPL, to
        develop technology for our bioterrorism detection equipment. Under the
        Technology Affiliates Agreement, JPL developed its proprietary bacterial
        spore
        detection technology and integrated it into our existing aerosol monitoring
        system, resulting in a product named BSM-2000. BSM-2000 is designed to provide
        continuous unattended monitoring of airborne bacterial spores in large public
        places, with real-time automated alert functionality. The device is designed
        to
        detect an increase in the concentration of bacterial spores, which is indicative
        of a potential presence of Anthrax.
  Our
        management continues to gain expertise in anti-terrorism techniques and
        solutions. Through our partnership with Security Solutions International,
        we
        have begun providing training seminars on terrorism detection and response
        methods. The seminars are designed for security officials, building safety
        managers, and law enforcement personnel. Our first such seminar was held
        on
        April 6 and 7 2006 at the Institute for Criminal Studies at the Broward
        Sheriff's Office in Fort Lauderdale, Florida.
  In
        2006
        we have realized revenues of $111,515 from sales of BSM-2000. We have incurred
        losses for the fiscal years ended December 31, 2006 and 2005 in the approximate
        amounts of $2.7 million and $3.5million, respectively, and have an accumulated
        deficit of $32.7 million as of December 31, 2006. At December 31, 2006, we
        were
        in default on certain debt obligations totaling approximately $331,000, in
        addition to accumulated interest of approximately $403,000. We require
        approximately $1.4 million in the next 12 months to repay debt obligations.
        We
        do not anticipate that our cash on hand is adequate to meet our operating
        expenses over the next 12 months. In addition, we do not have adequate capital
        to repay all of our debt currently due and becoming due in the next 12 months.
        We principally expect to raise funds through the sale of equity or debt
        securities. However, during the past 12 months, management spent the substantial
        majority of its time on sales and marketing of Company’s products and services
        in target markets. These activities diverted management from the time it
        otherwise would spend negotiating sales of securities to raise capital. In
        addition, the recent price and volume volatility in the common stock has
        made it
        more difficult for management to negotiate sales of its securities at a fair
        price. We actively continue to pursue additional equity or debt financing,
        but
        cannot provide any assurances that it will be successful. If we are unable
        to
        pay our debts as they becomes due and are unable to obtain financing on terms
        acceptable to us, or at all, we will not be able to accomplish any or all
        of our
        initiatives and will be forced to consider other alternatives.
  In
        May
        2004, we unveiled the first functional prototype of BSM-2000. The prototype
        operated on external software. In July 2004, we commenced simulated tests
        with
        benign bacterial spores having anthrax-like properties in order to fine tune
        our
        product. The use of benign spores is as effective as testing with anthrax
        spores
        because our device is designed to detect an increase in bacterial spore
        concentration levels. Based on results we obtained, we were able to enhance
        the
        sensitivity of BSM-2000 by improving the sample collection efficiency of
        the
        device, and made certain other modifications to improve efficiency. Our device
        is a functional viable product, available for sale.
  17
  In
        2006,
        we have followed a diversification strategy pursuant to which we have added
        various other services to our BSM-2000, biological detection system. By
        combining our in-house experience and knowledge and outside expertise offered
        by
        various consultants and third parties, we have added threat evaluation and
        consulting services, training courses, and event security to our services.
        Such
        services are intended to diversify and expand our customer base. To date,
        we
        have provided event security for a fashion debut event. Our consulting services
        and training courses have not been sold to date and there is no guarantee
        that
        any of them will be demanded and sold in the market in the future. Also in
        2006,
        through a partnership with Emergency Film Group, we have featured several
        training references and DVDs available for sale on our website. These DVDs
        are
        used by first responders and security personnel for training purposes. To
        date
        we have not sold any of these DVDs and there is no guarantee that we will
        sell
        any in the future.
 
 We
        plan
        to seek and find third parties interested in collaborating on further research
        and development on BSM-2000. Such research shall be aimed at making BSM-2000
        more user-friendly, developing a less complicated interface and software,
        designing a lighter casing, and some cosmetics. The ideal third party
        collaborator would also assist us in marketing BSM-2000 more aggressively.
        There
        is no guarantee that any such collaborators will be found and, if found,
        that
        this strategy will be successful. The current version of BSM-2000 is fully
        functional and available for sale. To date, we have sold two units to the
        Government of the United Kingdom and we intend to develop a more wide-spread
        use
        for BSM-2000 through our planned collaborative research, development, sales,
        and
        marketing efforts.
 
 We
        were
        engaged in discussions with Rutgers University to perform field-testing.
        Some
        time has passed and CAIT has not given us any guidance on if or when such
        testing will take place and the Company is pursuing alternatives for
        testing.
 
 In
        the
        second quarter of 2006, we updated our price list for BSM-2000. In evaluating
        the market demand for BSM-2000. Our new list price for BSM-2000 is $109,000.
        We
        also constructed two separate customer accounts called National and Key
        accounts. A Key account represents small to medium customers and resellers
        of
        BSM-2000 who purchase or intend to purchase a minimum of 3 to 5 units of
        BSM-2000 annually. This category of customers receives a 10% discount from
        list
        prices. A National account represents medium to large customers and resellers
        of
        BSM-2000 who purchase or intend to purchase more than 5 units of BSM-2000
        annually. This category of customers receives a 20% discount from list prices.
        As such Key account and National account customers can purchase BSM-2000
        for
        $98,000 and $87,000 per unit respectively.
 
 The
        manufacturing on BSM-2000 is outsourced to Original Equipment Manufacturers
        (OEM). We do not have any in-house manufacturing capabilities and do not
        intend
        to develop any until we reach high volumes of sales of BSM-2000 that would
        justify such facilities. To date we have used services of 2 OEMs for
        manufacturing of our units. We may decide to use services of other manufacturers
        in the future.
 
 In
        February 2006, we entered into a marketing and sales agreement with Security
        Solutions International (SSI), pursuant to which SSI will market BSM-2000
        in the
        United States. SSI provides training for law enforcement and anti terrorism
        forces and has agreed to feature BSM-2000 in their seminars and conferences.
        We
        had previously entered into an agreement with SSI for marketing of the BSM-2000
        in Central and South America. In February 2006, we co-hosted a training session
        with SSI regarding the protection of government and privately owned buildings;
        the event was attended by law-enforcement and building security personnel.
        To
        date, we have not realized any leads or sales of BSM-2000 as a result of
        SSI's
        efforts and cannot guarantee that we will realize any sales through SSI soon,
        or
        at all.
 
 In
        April
        2006, in conjunction with SSI, we conducted a training session on "Intelligence
        Gathering and Terrorist Activities" at the Institute for Criminal Studies
        at the
        Broward Sheriff's office in Fort Lauderdale, Florida. Our speakers provided
        an
        overview on terrorism with weapons of mass destruction, their consequences
        and
        steps on how communities can be more alert and vigilant about possible
        biological, chemical, and nuclear attacks. While chemical and nuclear warfare
        are not our core competencies, the protocols used for pre and post event
        planning are very similar to those used in the event of a biological attack
        or
        any event that can cause mass casualties. We maintain close relationships
        with
        SSI and hope to collaborate on more training or marketing projects with them
        in
        the future. We cannot guarantee that our efforts and collaborations with
        SSI
        will lead to any sales of our products, our partners’ products, our consulting
        services, or any other one of our services. To date we have not recognized
        any
        revenues as a result of our partnerships with SSI.
 
 In
        April
        2007, we entered an agreement with SSI to sponsor a two-day seminar about
        protecting buildings against terror held in Washington, DC. As part of the
        agreement we will present Universal Detection and its services to the audience
        and exhibit our material throughout the conference.
 
 In
        January and February of 2007 we received two purchase orders from SSI for
        one
        and five units of our anthrax test kits respectively.
 
 In
        March
        2006, we entered into an agreement with Michael Stapleton Associates (MSA).
        MSA
        is based in New York and provides technologies and solutions for explosive
        detection and real time monitoring of various facilities. Pursuant to the
        agreement, we were planning to conduct feasibility studies regarding the
        potential integration of BSM-2000 into MSA's monitoring and screening solutions
        and technologies. To date, we have not conducted any studies under this
        agreement and any collaboration with MSA in the future will be contingent
        upon
        us being able to raise the necessary funds and successfully design and implement
        the software and hardware needed for integration of BSM-2000 in MSA's solutions.
        Thus far, no feasibility studies have taken place and MSA has not given any
        assurances as to if or when such studies would take place.
  18
  In
        March
        2006, we received a firm order from the government of the United Kingdom
        for two
        units of UDTT's BSM-2000 Anthrax Detection Systems. We have shipped both
        units
        and payment for both has been received. Due to confidentiality of the purchase
        order, we are unable to release the specific use and the name of the branch
        of
        government that has made the purchase.
 
 In
        April
        2006, we engaged Joseph Breen and Associates to prepare and submit an
        application for a contract under the US General Services Administration (GSA)
        schedule. The contract is aimed to enable US government agencies to purchase
        Universal Detection Technology's technology and services. The U.S. GSA is
        a
        federal management and procurement agency that provides products and services
        to
        the U.S. government. In the third quarter of 2006 GSA informed us that our
        application had some deficiencies that needed to be fixed. As a result, our
        offer was rejected. Joseph Breen & Associates has since prepared another
        application and submitted it to the GSA for review. To date we have not heard
        anything back regarding the status of our application and there is presently
        no
        guarantee that the Company will be awarded a contract under the GSA schedule.
        We
        have made several attempts to contact Joseph Breen and Associates and to
        obtain
        an update on the status of our application and have been unsuccessful. As
        such,
        we have decided to terminate our contract with Joseph Breen and Associates
        and
        retain the service of other consultants to obtain a GSA contract.
 
 In
        May
        2006, Joseph Breen & Associates informed the Company that it has started
        talks with the Pentagon regarding BSM-2000 and its potential for the US
        government. The Company has not presented its products and services to any
        representatives from the Pentagon and there is presently no guarantee that
        the
        Company will present or sell its solutions to Pentagon at any time in the
        future. To date, Joseph Breen & Associates has not informed the Company of
        any outcomes regarding the talks it has been held with the Pentagon.
        Furthermore, Joseph Breen & Associates has been unresponsive to Company’s
        calls and messages in the recent months.
 
 We
        initially planned to secure and lease a testing facility close to the JPL
        laboratories where we would be able to implement a quality assurance program
        and
        test our products against the required specifications before shipping them
        to
        customers. We believe that the proximity to JPL and in particular to Caltech
        will help us by utilizing the knowledge of graduate and PhD students familiar
        with the project in a consultant or employment capacity. While we are still
        considering the implementation of this plan, we also are considering sponsoring
        researchers at JPL to work with the inventor of our bacterial spore detection
        technology to perform the tasks of quality assurance and research and
        development. Implementation of either of these plans is dependent on our
        ability
        to secure adequate funds, and we cannot assure you we will be able to do
        so
        soon, or at all.
 
 In
        June
        2006 the Company hired a part time mechanical engineer, with expertise in
        the
        field of instrument design, with the goal of gaining more control over the
        design and manufacturing of BSM-2000 as well as offering in-house advice
        on
        implementation of the Company’s technology and services. During his time with
        Universal Detection, the engineer traveled to Met One Instrument’s facilities
        and helped expedite the manufacturing of the second unit that was shipped
        to
        Europe pursuant to our purchase order. He also converted all the mechanical
        drawings into Solidworks and created solutions for reducing the moving parts
        of
        the device
 
 In
        May
        2006 the Company posted a letter to shareholders from its Chief Executive
        Officer, Mr. Jacques Tizabi, outlining its business and marketing plans.
        Among
        other topics, the letter covered marketing of BSM-2000, threat of terrorism,
        international distribution, expansion into counterterrorism training, and
        expansion into non-terror related services in the future. The materials included
        in this shareholder letter were mostly forward-looking and were for
        informational purposes only. The Company makes no guarantees that any or
        all
        parts of such plans may materialize in the future.
 
 In
        the
        second quarter of 2006 the Company initiated a plan to expand its services
        to
        include security related consulting, event security, and counterterrorism
        training. In order to provide these services, the Company has employed a
        collaborative strategy where capable partners in various fields have been
        chosen
        to complement services and technologies offered by Universal Detection’s staff.
        The success of the Company’s new services and its new strategy depends, among
        other factors, on productive and close relationships between the Company
        and its
        partners, the reputation of its partners, the availability of its partners,
        and
        the viability of technologies offered by its partners. We are not certain
        that
        all these conditions will be met in the future and hence, we cannot make
        any
        guarantees about the success of our business strategy.
 
 In
        April
        2006 the Company employed services of the US Department of Commerce’s Commercial
        Service with the goal of promoting its products and services overseas. Pursuant
        to the agreement BSM-2000 was featured on the website of local Commercial
        Service websites in Australia, Singapore, Hong Kong, Indonesia, Belgium,
        Sweden,
        United Kingdom, South Africa, Qatar, Israel, Saudi Arabia, and Canada.
 
 In
        June
        2006, after the launch of a new service, called Event Security aimed at
        providing counterterrorism security solutions for special events, the Company
        announced the first sale of Event Security solutions to a debut reception
        of a
        Los Angeles based fashion brand.
 
 On
        July
        31, 2006 we announced a strategic agreement with UTEK Corporation, a specialty
        finance company focused on technology transfer. Following a 30-day advance
        written termination notice given to Universal Detection Technology by UTEK
        our
        alliance was terminated on September 19, 2006. We have no plans to renew
        our
        relationship with UTEK Corporation in the future.
  19
  In
        February 2006, the Company expanded its relationship with Caltech by licensing
        additional technologies in the field of microbial monitoring and sterility
        verification. While the Company plans to commercialize the microbial monitoring
        technology for use in hospitals, it has not yet started any such activities
        and
        there is no guarantee that it will in the near future. The Company also
        commenced work on developing smart ticket assay for detection of anthrax
        spores.
        Smart ticket assays are rapid field tests that are similar to common home
        pregnancy tests. Further research and development is needed to fully
        commercialize these smart ticket assays and presently there is no guarantee
        that
        the Company will have necessary funding and resources to conduct such research
        and development.
 
 In
        September 2006, the Company conducted a research on the status of readiness
        of
        buildings in the US to deal with a potential bio-terrorist attack. The findings
        of this research were published in a copyrighted paper that later became
        available for customers on Company’s website and was also listed for sale on the
        internet store of Amazon.com. We have not sold any copies of this research
        report to date and we may never be able to sell any.
 
 In
        October 2006, the Company entered into an agreement with Emergency Film Group
        to
        provide DVDs and Videos for training of emergency staff and law enforcement
        personnel. Pursuant to the agreement the Company shall utilize and distribute
        DVDs produced by Emergency Film Group to its customers and clients. The Company
        has been adding these DVDs, ranging from training videos on decontamination
        to
        incident command in the field and other emergency topics, to its services.
        The
        DVDs are available fore sale on Company’s recently developed e-commerce store.
        While the Company shall try its best to market these DVDs alongside its other
        products and services there are no guarantees that it will be successful
        in
        selling any DVDs.
 
 In
        December 2006, the Company entered a new agreement with the Department of
        Commerce’s Commercial Service to promote its newly developed e-commerce store
        internationally. Pursuant to this agreement Universal Detection Technology’s
        e-commerce store was featured on Commercial Service’s website in Australia,
        Malaysia, Singapore, Hong Kong, Indonesia, Philippines, Belgium, Denmark,
        Netherlands, Sweden, Ireland, United Kingdom, Jordan, South Africa, India,
        Qatar, Israel, Saudi Arabia, and Canada.
 
 In
        December 2006, we received a purchase order for anthrax detection test kits
        from
        an Australian homeland security firm. The kits have been shipped and payment
        has
        been received. In late January 2007 we received a purchase order for 50 kits
        from the United States Army at the Dugway Proving Ground in Utah. Payment
        for
        these kits has been received and the kits have been shipped to the
        Army.
 
 In
        January 2007 the Company entered into an agreement to sell sixty (60) million
        common shares at $0.03 per share to Innovative Marketing, Inc. (IMI) for
        a total
        of $1.8 million in cash equivalent credits. The cash equivalent credits may
        be
        used in combination with cash, to obtain, if and when available, on a best
        efforts basis, certain goods and services used in the daily ongoing business
        of
        the Company as well as providing the potential to satisfy certain other
        obligations of the Company from time and time. There is no guarantee we will
        be
        able to use any of the credits.
  **PLAN
        OF OPERATION**
 
 In
        the
        second quarter of 2006, we updated our price list for BSM-2000. In evaluating
        the market demand for our product, BSM-2000, we retained the services of
        outside
        consultants, Joseph Breen Associates. Our new set price for BSM-2000 is
        $109,000. We also constructed two separate customer accounts called National
        and
        Key accounts. A Key account represents small to medium customers and resellers
        of BSM-2000 who purchase or intend to purchase a minimum of 3 to 5 units
        of
        BSM-2000 annually. This category of customers receives a 10% discount from
        list
        prices. A National account represents medium to large customers and resellers
        of
        BSM-2000 who purchase or intend to purchase more than 5 units of BSM-2000
        annually. This category of customers receives a 20% discount from list prices.
        As such Key account and National account customers can purchase BSM-2000
        for
        $98,000 and $87,000 per unit respectively.
  We
        have
        diversified our activities and plan to engage more in value added services
        to
        complement our bioterrorism detection technologies. We have received a purchase
        order for two units of BSM-2000 and have manufactured and delivered one of
        the
        machines. We plan to provide installation and training services upon delivery
        of
        the second unit.
  Additionally,
        through our collaboration with third parties we have expanded our services
        to
        include training services for bio-terrorism detection to first responders
        and
        emergency personnel. In 2006, we have created an e-commerce store that features
        DVDs and training references for counter terrorism training, emergency response,
        site management and control, and other emergency related topics. We have
        also
        conducted brief research in the area of counter terrorism with a focus on
        bio-terrorism and have published the report. We plan to engage in more research
        activities with the goal of finding valuable insights about the status of
        Nation’s preparedness for bio-terrorism and we plan to share our findings with
        public. In 2006, we initiated a building security survey with the goal of
        analyzing the status and safety of buildings in the US. To date, we have
        not had
        enough respondents to make the project’s finding statistically viable. We are
        planning to seek more respondents and to complete the research. There is
        no
        guarantee that we will be able to obtain enough survey responses.
  **LIQUIDITY
        AND CAPITAL RESOURCES**
 
 We
        require approximately $3.2 million in the next 12 months to repay debt
        obligations and execute our business plan. We do not anticipate that our
        cash on
        hand is adequate to meet our operating expenses over the next 12 months.
        Also,
        we do not believe we have adequate capital to repay all of our debt currently
        due and becoming due in the next 12 months. We anticipate that our uses of
        capital during the next 12 months principally will be for:
  20
  o
        administrative expenses, including salaries of officers and other employees
        we
        plan to hire;
  o
        repayment of debt;
  o
        sales
        and marketing;
  o
        product
        testing and manufacturing; and
  o
        expenses of professionals, including accountants and attorneys.
 
 To
        maintain our license with Caltech, a minimum annual royalty of $10,000 is
        due to
        Caltech on each year on August 1, regardless of any product sales. Any royalties
        paid from product sales for the 12-month period preceding the date of payment
        of
        the minimum annual royalty will be credited against the annual minimum. Pursuant
        to the terms of the license, we must pay 4% royalties on product sales in
        countries where a patent is issued and 2% royalties on product sales in
        countries where a patent is not issued, as well as 35% of net revenues received
        from sublicensees. As
        of the
        date of this report we have not paid the minimum royalty of $10,000 due to
        Caltech on August 1, 2006. According to our license agreement with Caltech,
        Caltech shall have the right to terminate our license agreement and the rights
        and licenses granted to us if we fail to make any payment due including patent
        expense or minimum annual royalties for a period of fifteen days after receiving
        a second written notice from Caltech specifying our failure. To date we have
        not
        received any notices from Caltech with regards to our August 1, 2006 minimum
        annual royalty due of $10,000. Furthermore, we have reached an agreement
        with
        Caltech with regards to the payment of patent fees. This agreement is signed
        in
        the form of a second amendment to our license agreement with Caltech.
        Accordingly, we have agreed that we owe the amount of $86,318.48 for patent
        costs incurred by Caltech prior to December 1, 2006 and that this amount
        shall
        be paid to Caltech in ten monthly installments of $8,631.85. To date, we
        are up
        to date with the monthly installments called for in the second amendment
        to our
        license agreement with Caltech.
 
 Our
        working capital deficit at December 31, 2006, was $3,345,242. Our independent
        auditors' report includes an explanatory paragraph relating to substantial
        doubt
        as to our ability to continue as a going concern, due to our working capital
        deficit at December 31, 2006. We require approximately $1.4 million to repay
        indebtedness including interest in the next 12 months. As a condition to
        completing our private placement in July 2004, we agreed not to use any of
        the
        proceeds to repay debt outstanding at the time of the closing of the offering,
        or to pay accrued but unpaid salary to our Chief Executive Officer, or our
        monthly consulting fee under our Agreement for Investment Banking and Advisory
        Services with Astor Capital, Inc. We terminated this agreement effective
        September 30, 2004. As of December 31, 2006, we owed our Chief Executive
        Officer
        $830,725 of accrued but unpaid salary under his employment agreement. The
        following provides the principal terms of our outstanding debt as of December
        31, 2006:
 
 o
        One
        loan from three family members, each of whom is an unaffiliated party, evidenced
        by four promissory notes in the aggregate principal amounts of $100,000,
        $50,000, $50,000, and $100,000, each due June 24, 2001 with interest rates
        ranging from 11% to 12%. We entered into a settlement agreement in the third
        quarter of 2004 with each of these parties. Pursuant to this agreement, at
        June
        30, 2005, we were required to pay an additional $80,000 as full payment of
        our
        obligations. We did not make this payment and are in default of these notes.
        As
        of December 31, 2006, we have $353,910 accrued for including interest in
        anticipation of settling these notes.
 
 o
        One
        loan from an unaffiliated party in the aggregate principal amount of $195,000
        with interest at a rate of 9.012% per annum. Pursuant to a letter agreement
        dated as of August 10, 2004, we entered into a settlement with this party
        and
        agreed to pay a total of $261,000 pursuant to a scheduled payment plan through
        July 2005. Additionally, the Company, in September 2004, issued 206,250 shares
        of common stock upon the conversion of unpaid interest in the aggregate amount
        of $33,000. At December 31, 2006, there was $161,000 principal amount (and
        $35,164 in interest) remaining on this note. We did not make our scheduled
        payment under this note in July 2005, and are in default of this note.
 
 o
        One
        loan from an unaffiliated party in the aggregate principal amount of $98,500,
        due July 31, 2005, with interest at the rate of 9% per annum. Pursuant to
        a
        letter agreement dated August 10, 2004, between us and this third party,
        we
        agreed to pay a total of $130,800 pursuant to a scheduled payment plan through
        July 2005. At December 31, 2006, there was $74,500 principal amount (and
        $21,127
        in interest) remaining on this note. We did not make our scheduled payment
        under
        this note in July 2005, and are in default of this note.
 
 o
        One
        from an unaffiliated party evidenced by two promissory notes in the aggregate
        principal amount of $35,000, due September 10, 2002, and verbally extended
        to a
        date to be mutually agreed upon by the parties, with interest at the rate
        of 10%
        per annum. As of December 31, 2006, we owed $15,944 in interest on this note.
 
 o
        One
        loan from an unaffiliated party evidenced by a promissory note in the aggregate
        principal amount of $75,000, due on May 10, 2003, and verbally extended to
        a
        date to be mutually agreed upon by the parties, with interest at the rate
        of 18%
        per annum. As of December 31, 2006 we owed $4,821 in interest on this note.
 
 o
        One
        loan from an unaffiliated party evidenced by a promissory note in the aggregate
        principal amount of $50,000 due on November 10, 2005 with an interest rate
        of
        12% per annum. As of December 31, 2006, there was $20,000 principal amount
        remaining on this note. We did not make our scheduled payment under this
        note in
        November 2005. We have verbally extended the unpaid note and the due date
        and
        other terms are being renegotiated so the note is not considered in default.
 
 o
        One
        loan from an unaffiliated party evidenced by a promissory note in the aggregate
        principal amount of $50,000 due on July 31, 2005 with an interest rate of
        12%
        per annum. As of December 31, 2006, we owed $10,000 in interest on this note.
        We
        did not make our scheduled payment under this note in July 2005. We have
        verbally extended the unpaid note and the due date and other terms are being
        renegotiated so the note is not considered in default.
  21
  o
        One
        loan from an unaffiliated party evidenced by a promissory note in the aggregate
        principal amount of $30,000 due on August 31, 2005 with an interest rate
        of 15%
        per annum. As of December 31, 2006, we owed $6,413 in interest on this note.
        We
        did not make our scheduled payment in August 2005. We have verbally extended
        the
        unpaid note and the due date and other terms are being renegotiated so the
        note
        is not considered in default.
 
 o
        One
        loan from an unaffiliated party evidenced by a promissory note in the aggregate
        principal amount of $30,000 due on July 31, 2005 with an interest rate of
        10%
        per annum. As of December 31, 2006, we owed $6,375 in interest on this note.
        We
        did not make our scheduled payment under this note in July 2005. We have
        verbally extended the unpaid note and the due date and other terms are being
        renegotiated so the note is not considered in default.
 
 o
        One
        loan from an unaffiliated party evidenced by a promissory note in the aggregate
        principal amount of $30,000 due on October 30, 2005 with an interest rate
        of 12%
        per annum. We agreed to issue 100,000 shares of common stock to the noteholder
        as additional consideration for extending credit to us. As of December 31,
        2006
        we owed $4,800 in interest on this note. We did not make our scheduled payment
        on October 30, 2005. We have verbally extended the unpaid note and the due
        date
        and other terms are being renegotiated so the note is not considered in
        default.
 
 o
        One
        loan from an unaffiliated party evidenced by a promissory note in the aggregate
        principal amount of $60,000 due on November 15, 2005 with an interest rate
        of
        12% per annum. We agreed to issue 50,000 shares of common stock to the
        noteholder as additional consideration for extending credit to us. As of
        December 31, 2006 we owed $9,900 in interest on this note and the shares
        have
        not yet been issued. We have verbally extended the unpaid note and the due
        date
        and other terms are being renegotiated so the note is not considered in
        default.
 
 o
        One
        loan from an unaffiliated party evidenced by a promissory note in the aggregate
        principal amount of $40,000 due on December 31, 2005 with an interest rate
        of
        12% per annum. We agreed to issue 30,000 shares of common stock to the
        noteholder as additional consideration for extending credit to us which have
        not
        been issued. As of December 31, 2006 there was $2,400 principal amount (and
        $216
        in interest) remaining on this note. We have verbally extended the unpaid
        note
        and the due date and other terms are being renegotiated so the note is not
        considered in default.
 
 o
        One
        loan from an unaffiliated party evidenced by a promissory note in the aggregate
        principal amount of $90,000 due on November 13, 2005 with an interest rate
        of
        12% per annum. We agreed to issue 200,000 shares of common stock to the
        noteholder as additional consideration for extending credit to us. This note
        has
        not been repaid and we are in default. As of December 31, 2006 we owed $12,150
        in interest on this note and the shares have not yet been issued. We have
        verbally extended the unpaid note and the due date and other terms are being
        renegotiated so the note is not considered in default.
 
 o
        One
        loan from an unaffiliated party evidenced by a promissory note in the aggregate
        principal amount of $15,000 due on December 20, 2005 with an interest rate
        of
        12.5% per annum. As of December 31, 2006 we owed $1,950 in interest. We did
        not
        make our scheduled payment on December 20, 2005. We have verbally extended
        the
        unpaid note and the due date and other terms are being renegotiated so the
        note
        is not considered in default.
 
 o
        One
        loan from an unaffiliated party evidenced by a promissory note in the aggregate
        principal amount of $100,000 due on March 31, 2006 with an interest rate
        of 12%
        per annum. As of December 31, 2006 we owed $10,500 in interest. We did not
        make
        our scheduled payment on March 31, 2006. We have verbally extended the unpaid
        note and the due date and other terms are being renegotiated so the note
        is not
        considered in default.
 
 o
        One
        loan from an unaffiliated party evidenced by a promissory note in the aggregate
        principal amount of $20,000 due on May 17, 2006 with an interest rate of
        12.5%
        per annum. As of December 31, 2006 we owed $1,664 in interest. We did not
        make
        our scheduled payment on May 17, 2006. We have verbally extended the unpaid
        note
        and the due date and other terms are being renegotiated so the note is not
        considered in default.
 
 o
        One
        loan from an unaffiliated party evidenced by a promissory note in the aggregate
        principal amount of $30,000 due on May 26, 2006 with an interest rate of
        12.5%
        per annum. As of December 31, 2006 we owed $2,344 in interest. We did not make
        our scheduled payment on May 26, 2006. We have verbally extended the unpaid
        note
        and the due date and other terms are being renegotiated so the note is not
        considered in default.
 
 o
        One
        loan from an unaffiliated party evidenced by a promissory note in the aggregate
        principal amount of $14,975 due on August 31, 2006 with an interest rate
        of
        12.5% per annum. As of December 31, 2006 we owed $624 in interest. We did
        not
        make our scheduled payment on August 31, 2006. We have verbally extended
        the
        unpaid note and the due date and other terms are being renegotiated so the
        note
        is not considered in default.
  22
  o
        One
        loan from an unaffiliated party evidenced by a promissory note in the aggregate
        principal amount of $25,000 due on August 21, 2006 with an interest rate
        of
        12.5% per annum. As of December 31, 2006 we owed $1,042 in interest. We did
        not
        make our scheduled payment on August 21, 2006. We have verbally extended
        the
        unpaid note and the due date and other terms are being renegotiated so the
        note
        is not considered in default.
  o
        One
        loan from an unaffiliated party evidenced by a promissory note in the aggregate
        principal amount of $44,256 due on October 17, 2008 with an interest rate
        of
        16.75% per annum. As of December 31, 2006 we owed $36,153 in principal amount
        on
        this note.
 
 Management
        continues to take steps to address the Company's liquidity needs. Recently
        management concluded discussions with most of our note holders and amended
        the
        terms of these notes to provide for extended scheduled payment arrangements.
        Management continues to seek extensions with respect to debt past due.
        Management also may seek additional extensions with respect to these notes
        and
        the Company's debt as it becomes due. In addition, management may endeavor
        to
        convert some portion of the principal amount and interest on our debt into
        shares of common stock.
 
 Historically,
        we have financed operations through private debt and equity financings. In
        recent years, financial institutions have been unwilling to lend to us and
        the
        cost of obtaining working capital from investors has been expensive. We
        principally expect to raise funds through the sale of equity or debt securities.
        During the years ended December 31, 2006 and 2005, the Company received gross
        proceeds of approximately $0.8 million and $0.9 million, respectively, from
        the
        sale of equity and debt securities. The Company actively continues to pursue
        additional equity or debt financings, but cannot provide any assurance that
        it
        will be successful. If we are unable to pay our debt as it becomes due and
        are
        unable to obtain financing on terms acceptable to us, or at all, we will
        not be
        able to accomplish any or all of our initiatives and will be forced to consider
        steps that would protect our assets against our creditors.
 
 **OFF-BALANCE
        SHEET ARRANGEMENTS**
  We
        have
        not entered into any off-balance sheet arrangements that have or are reasonably
        likely to have a current or future effect on our financial condition, changes
        in
        financial condition, revenues or expenses, results of operations, liquidity,
        capital expenditures, or capital resources, and that would be considered
        material to investors.
  **ITEM
        7. FINANCIAL STATEMENTS**
 
 Our
        audited financial statements for the year ended December 31, 2006, as set
        forth
        below, are included with this Annual Report on Form 10-KSB. Our audited
        financial statements are prepared on the basis of accounting principles
        generally accepted in the United States and are expressed in U.S. dollars.
 
 PageReport
                  of Independent Registered Public Accounting
                  Firm
              F-1Consolidated
                  Balance Sheets, December 31,
                  2006
              F-2Consolidated
                  Statements of Operations for the Years Ended
                  December 31, 2006 and 2005
              F-3Consolidated
                  Statement of Stockholders’ Equity
                  (Deficit) for the Years Ended December 31, 2006 and
                  2005
              F-4Consolidated
                  Statements of Cash Flows for the Years Ended
                  December 31, 2006 and 2005
              F-5Notes
                  to Consolidated Financial
                  Statements
              F-6
                  to F-28
  23
  **AJ.
        ROBBINS, P.C.**
 **216
        SIXTEENTH STREET**
 **SUITE
        600**
 **DENVER,
        COLORADO 80202**
  **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
  Audit
        Committee
 Universal
        Detection Technology
 Beverly
        Hills, California
  We
        have
        audited the accompanying consolidated balance sheet of Universal Detection
        Technology and Subsidiaries as of December 31, 2006, and the related
        consolidated statements of operations, changes in stockholders' equity
        (deficit), and cash flows for each of the years in the two year period then
        ended. These financial statements are the responsibility of the Company's
        management. Our responsibility is to express an opinion on these consolidated
        financial statements based on our audits.
  We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audits to obtain reasonable assurance about whether the
        consolidated financial statements are free of material misstatement. An audit
        includes examining, on a test basis, evidence supporting the amounts and
        disclosures in the consolidated financial statements. An audit also includes
        assessing the accounting principles used and significant estimates made by
        management, as well as evaluating the overall consolidated financial statement
        presentation. We believe that our audits provide a reasonable basis for our
        opinion.
  In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the consolidated financial position of Universal
        Detection Technology and Subsidiaries as of December 31, 2006, and the results
        of its consolidated operations and its cash flows for each of the years in
        the
        two year period then ended in conformity with generally accepted accounting
        principles in the United States of America.
  The
        accompanying consolidated financial statements have been prepared assuming
        that
        the Company will continue as a going concern. As discussed in Note 1 to the
        consolidated financial statements, the Company has suffered recurring losses
        from operations, it has a net working capital deficiency, and has a net capital
        deficiency that raises substantial doubt about the entity's ability to continue
        as a going concern. Management's plans in regard to these matters are also
        described in Note 1. The consolidated financial statements do not include
        any
        adjustments that might result from the outcome of this uncertainty.
  **AJ.
        ROBBINS, PC**
 **CERTIFIED
        PUBLIC ACCOUNTANTS**
  DENVER,
        COLORADO
 March
        9,
        2007, except for Note 12 which is dated March 28, 2007
  F-1
 UNIVERSAL
                    DETECTION TECHNOLOGY AND SUBSIDIARIESCONSOLIDATED
                    BALANCE SHEETSASSETSDecember
                    31,
                  2006CURRENT
                    ASSETS:Cash
                    and cash equivalents
                
                $
                18,113Restricted
                    cash and certificate of deposit
                
                
                62,307Prepaid
                    expenses and other current assets
                
                
                37,971Total
                    current assets
                
                
                118,391Deposits
                
                
                10,226Equipment,
                    net
                
                
                82,400Patent
                    Costs
                
                
                117,341Total
                    assets
                
                $
                328,358LIABILITIES
                    AND STOCKHOLDERS' EQUITY (DEFICIT)CURRENT
                    LIABILITIES:Accounts
                    payable, trade
                
                $
                708,198Accrued
                    liabilities
                
                
                1,374,127Notes
                    payable - related party
                
                
                2,500Notes
                    payable
                
                
                975,615Accrued
                    interest expense
                
                
                403,193Total
                    current liabilities
                
                
                3,463,633Notes
                    payable
                
                
                19,153Total
                    liabilities
                
                
                3,482,786COMMITMENTS
                    AND CONTINGENCIES
                
                
                -STOCKHOLDERS'
                    EQUITY (DEFICIT):Preferred
                    stock, $.01 par value, 20,000,000 shares authorized, -0- issued
                    and
                    outstanding
                
                
                -Common
                    stock, no par value, 480,000,000 shares authorized,177,409,099
                    shares
                    issued and outstanding
                
                
                25,483,357Additional
                    paid-in-capital
                
                
                4,101,605Accumulated
                    (deficit)
                
                
                (32,739,390
                )Total
                    stockholders' equity (deficit)
                
                
                (3,154,428
                )Total
                    liabilities and stockholders' (deficit)
                
                $
                328,358
 
 See
          accompanying notes to consolidated financial statements.
  F-2
  UNIVERSAL
                    DETECTION TECHNOLOGY AND
                    SUBSIDIARIESCONSOLIDATED
                    STATEMENTS OF OPERATIONSFor
                    the Year
                  Ended
                  December
                    31,
                  2006
                
                For
                    the Year
                  Ended
                  December
                    31,
                  2005REVENUE
                
                $
                111,515
                
                $
                -COST
                    OF GOODS SOLD
                
                
                97,190
                
                
                -GROSS
                    PROFIT
                
                
                14,325
                
                
                -OPERATING
                    EXPENSES:Selling,
                    general and administrative
                
                
                2,259,685
                
                
                2,852,161Marketing
                
                
                174,143
                
                
                358,690Research
                    and development
                
                
                31,338
                
                
                12,125Depreciation
                
                
                24,727
                
                
                23,129Total
                    expenses
                
                
                2,489,893
                
                
                3,246,105(LOSS)
                    FROM OPERATIONS
                
                
                (2,475,568
                )
                
                (3,246,105
                )OTHER
                    INCOME (EXPENSE):Interest
                    income
                
                
                973
                
                
                3,621Interest
                    expense
                
                
                (211,269
                )
                
                (200,700
                )Amortization
                    of loan fees
                
                
                (16,926
                )
                
                (91,985
                )Net
                    other income (expense)
                
                
                (227,222
                )
                
                (289,064
                )(LOSS)
                    FROM OPERATIONS BEFORE INCOME TAXES
                
                
                (2,702,790
                )
                
                (3,535,169
                )INCOME
                    TAX EXPENSE
                
                
                -
                
                
                -NET
                    (LOSS)
                
                $
                (2,702,790
                )
                $
                (3,535,169
                )NET
                    INCOME (LOSS) PER SHARE - BASIC AND DILUTED:
                
                $
                (0.03
                )
                $
                (0.07
                )WEIGHTED
                    AVERAGE SHARES - BASIC AND DILUTED
                
                
                86,650,120
                
                
                51,766,178
 
 See
          accompanying notes to consolidated financial statements.
  F-3
  UNIVERSAL
                    DETECTION TECHNOLOGY AND
                    SUBSIDIARIESCONSOLIDATED
                    STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)FOR
                    THE YEARS ENDED DECEMBER 31, 2006 AND 2005Shares
                
                Common
                    Stock
                  Amount
                
                Additional
                  Paid-in-Capital
                
                Accumulated
                  (Deficit)
                
                Total
                  Stockholders'
                  (Deficit)BALANCE,
                    DECEMBER 31, 2004
                
                
                49,867,159
                
                $
                22,462,380
                
                $
                3,730,700
                
                $
                (26,501,431
                )
                $
                (308,351
                )Stock
                    issued in private placements, net of offering costs of
                    $32,942
                
                
                1,373,928
                
                
                158,479
                
                
                -
                
                
                -
                
                
                158,479Exercise
                    of warrants
                
                
                100,000
                
                
                19,000
                
                
                -
                
                
                -
                
                
                19,000Stock
                    issued for services
                
                
                4,372,279
                
                
                547,636
                
                
                -
                
                
                -
                
                
                547,636Stock
                    issued for loan fees
                
                
                100,000
                
                
                15,000
                
                
                -
                
                
                -
                
                
                15,000Warrants
                    issued for services
                
                
                -
                
                
                -
                
                
                358,594
                
                
                -
                
                
                358,594Warrants
                    issued as loan fees
                
                
                -
                
                
                -
                
                
                12,311
                
                
                -
                
                
                12,311Net
                    (loss) for the year
                
                
                -
                
                
                -
                
                
                -
                
                
                (3,535,169
                )
                
                (3,535,169
                )55,813,366
                
                
                23,202,495
                
                
                4,101,605
                
                
                (30,036,600
                )
                
                (2,732,500
                )Stock
                    issued under investment agreement
                
                
                65,452,790
                
                
                534,991
                
                
                -
                
                
                -
                
                
                534,991Exercise
                    of warrants
                
                
                6,122,470
                
                
                918,371
                
                
                -
                
                
                -
                
                
                918,371Stock
                    issued for services
                
                
                49,970,473
                
                
                823,000
                
                
                -
                
                
                -
                
                
                823,000Stock
                    issued in settlement
                
                
                50,000
                
                
                4,500
                
                
                -
                
                
                -
                
                
                4,500Net
                    (loss) for the year
                
                
                -
                
                
                -
                
                
                -
                
                
                (2,702,790
                )
                
                (2,702,790
                )177,409,099
                
                $
                25,483,357
                
                $
                4,101,605
                
                $
                (32,739,390
                )
                $
                (3,154,428
                )
 
 See
          accompanying notes to consolidated financial statements.
  F-4
 UNIVERSAL
                    DETECTION TECHNOLOGY AND
                    SUBSIDIARIESCONSOLIDATED
                    STATEMENTS OF CASH FLOWSFor
                    the Year
                  Ended
                  December
                    31,
                  2006
                
                For
                    the Year
                  Ended
                  December
                    31,
                  2005CASH
                    FLOWS FROM (TO) OPERATING ACTIVITIES:Net
                    (loss)
                
                $
                (2,702,790
                )
                $
                (3,535,169
                )Adjustments
                    to reconcile net (loss) to net cash (used in) operations:Stock
                    issued for settlement
                
                
                4,500Stock
                    issued for services
                
                
                541,550
                
                
                299,592Stock
                    issued for compensation to employees
                
                
                271,450
                
                
                248,044Stock
                    issued as loan fees
                
                
                -
                
                
                15,000Warrants
                    granted for services
                
                
                -
                
                
                358,594Warrants
                    granted for loan fees
                
                
                -
                
                
                12,311Depreciation
                    and amortization
                
                
                24,727
                
                
                23,129Changes
                    in operating assets and liabilities:
                
                
                .
                
                
                .Assets
                    held for sale
                
                
                50,369
                
                
                (3,797
                )Patent
                    Costs
                
                
                (86,319
                )Deferred
                    interest
                
                
                -
                
                
                24,300Prepaid
                    expenses
                
                
                490,002
                
                
                585,343Accounts
                    payable
                
                
                292,730
                
                
                229,004Accrued
                    expenses
                
                
                228,757
                
                
                358,058Accrued
                    interest
                
                
                186,226Net
                    cash (used in) operating activities
                
                
                (698,798
                )
                
                (1,385,591
                )CASH
                    FLOWS (TO) INVESTING ACTIVITIES:Purchase
                    of equipment
                
                
                -
                
                
                (20,778
                )Redemption
                    of certificates of deposit
                
                
                -
                
                
                252,340(Increase)
                    in restricted cash
                
                
                19,056
                
                
                21,479Net
                    cash provided by investing activities
                
                
                19,056
                
                
                253,041CASH
                    FLOWS FROM (TO) FINANCING ACTIVITIES:Bank
                    overdraft
                
                
                (1,113
                )
                
                1,113Proceeds
                    from issuance of common stock
                
                
                764,500
                
                
                210,420Payment
                    of offering costs
                
                
                -
                
                
                (32,942
                )Payments
                    in advance of warrants being granted
                
                
                -
                
                
                20,000Payments
                    of capital lease
                
                
                -
                
                
                (2,317
                )Proceeds
                    from notes payable
                
                
                89,975
                
                
                511,000Proceeds
                    from notes payable - related party
                
                
                13,819
                
                
                173,353Payments
                    on notes payable
                
                
                (45,702
                )
                
                (154,000
                )Payments
                    on notes payable - related party
                
                
                (136,872
                )
                
                (47,800
                )Net
                    cash provided by financing activities
                
                
                684,607
                
                
                678,827NET
                    INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                
                
                4,865
                
                
                (453,723
                )CASH
                    AND CASH EQUIVALENTS, BEGINNING OF YEAR
                
                
                13,248
                
                
                466,971CASH
                    AND CASH EQUIVALENTS, END OF YEAR
                
                $
                18,113
                
                $
                13,248SUPPLEMENTAL
                    DISCLOSURES OF CASH FLOW INFORMATION:Interest
                    Paid
                
                $
                20,648
                
                $
                -
 
 See
          accompanying notes to consolidated financial statements.
 F-5
  UNIVERSAL
          DETECTION TECHNOLOGY AND SUBSIDIARIES
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 FOR
          THE
          YEARS ENDED DECEMBER 31, 2006 AND 2005
 
 **NOTE
          1 - BUSINESS ACTIVITY**
 
 Universal
          Detection Technology, a California corporation, primarily designed, manufactured
          and marketed air pollution monitoring instruments. Beginning in 2002, the
          Company has focused its research and development efforts in developing
          a real
          time biological weapon detection device. To accelerate development of its
          initial biological weapon detection device, the Company has developed and
          is
          implementing a collaborative partnering strategy. Under this strategy,
          the
          Company identifies and partners with researchers and developers. The Company
          has
          entered into a technology affiliates agreement with NASA's Jet Propulsion
          Laboratory ("JPL") to develop technology for its bio-terrorism detection
          equipment. The Company has also entered a license agreement with the California
          Institute of Technology ("CalTech"), which grants the Company licensed
          patent
          rights to technology that was developed under the Technology Affiliates
          Agreement with JPL. **** During
          2006, the Company expanded its services to include security related consulting,
          event security and counterterrorism training. This includes providing DVD”s and
          Videos for training of emergency staff and law enforcement personnel and
          sales
          of anthrax detection test kits.
 
 **GOING
          CONCERN AND MANAGEMENT'S PLANS**
 
 As
          of
          December 31, 2006, the Company had a working capital deficit of $3,345,242
          and a
          capital deficit of $3,154,428. These conditions raise substantial doubt
          about
          its ability to continue as a going concern. Its ability to continue as
          a going
          concern is dependent upon its ability to develop additional sources of
          capital
          and ultimately achieve profitable operations. The financial statements
          do not
          include any adjustments that might result from the outcome of this uncertainty.
          The Company's financial statements have been presented on the basis that
          it is a
          going concern, which contemplates the realization of assets and the satisfaction
          of liabilities in the normal course of business.
 
 The
          Company is currently devoting its efforts to raising capital, and to the
          development, field testing and marketing of its bio-terrorism detection
          device,
          known as BSM-2000. The Company entered into a technology affiliates agreement
          and a license agreement with Caltech, which resulted in the unveiling of
          the
          first functional prototype of its BSM-2000 in May 2004. Although the Company
          continues to engage in testing of BSM-2000 to improve its functionality,
          BSM-2000 is currently available for sale.
  The
          Company has entered into various agreements with distribution partners
          as well
          as commercial real estate consultants to initiate sales and develop
          relationships to raise awareness of the Company’s products in the United States,
          Europe and Asia.
  The
          Company has been considering sponsoring researchers at JPL to work with
          the
          inventor of its bacterial spore detection technology to perform the tasks
          of
          quality assurance and research and development. Implementation of this
          plan is
          dependent on the Company’s ability to secure adequate funding and to date the
          Company has not been able to initiate this program.
  In
          2006,
          the Company has attempted to diversify its products and services by offering
          various other services in addition to its BSM-2000, biological detection
          system.
          By combining in-house experience and knowledge and outside expertise offered
          by
          various consultants and third parties, the Company has added threat evaluation
          and consulting services, training courses, and event security to its services.
          Such services are intended to diversify and expand the customer base. To
          date,
          the Company has provided event security for a fashion debut event, but
          has only
          generated a nominal amount of revenue. Consulting services and training
          courses
          have not been sold to date. Also in 2006, through a partnership with Emergency
          Film Group, the Company has featured several training references and DVDs
          available for sale on its website. These DVDs may be used by first responders
          and security personnel for training purposes. The Company has not sold
          any of
          these products to date.
  F-6
  UNIVERSAL
          DETECTION TECHNOLOGY AND SUBSIDIARIES
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 FOR
          THE
          YEARS ENDED DECEMBER 31, 2006 AND 2005
 
 The
          Company plans to seek third parties interested in collaborating on further
          research and development of the BSM-2000. The research will be to make
          the
          BSM-2000 more user-friendly, developing a less complicated interface and
          software, designing a lighter casing, and some cosmetic changes.
 
 In
          February 2006, the Company entered into a marketing and sales agreement
          with
          Security Solutions International (SSI), pursuant to which SSI will market
          BSM-2000 in the United States. In February 2006, the Company co-hosted
          a
          training session with SSI regarding the protection of government and privately
          owned buildings. In April 2006, in conjunction with SSI, the Company conducted
          a
          training session on "Intelligence Gathering and Terrorist Activities" at
          the
          Institute for Criminal Studies at the Broward Sheriff's office in Fort
          Lauderdale, Florida.
 
 The
          Company maintains close relationships with SSI and hopes to collaborate
          on more
          training or marketing projects with them in the future. In January and
          February
          of 2007 the Company received two purchase orders from SSI for one and five
          units
          of our anthrax test kits respectively.
 
 During
          2006, the Company sold two units the BSM-2000 Anthrax Detection Systems
          to the
          government of the United Kingdom. The Company shipped both units and payment
          for
          both has been received and the Company has no further obligations under
          the
          sales agreement. During the first quarter of 2007, the Company shipped
          anthrax
          detection kits under various purchase agreements for proceeds of
          $550.
 
 In
          an
          effort to raise capital for the execution of its business plan, in January
          2006
          the Company entered into an agreement with 66 on its warrant holders, holding
          a
          total of 6,122,470 Company warrants, to exchange their warrants with new
          ones
          with a new exercise price of $0.15. The exchanged warrants were subsequently
          re-priced and assigned to new investors. The new investors can exercise
          the
          warrants at a newly set price of $0.15. As of December 31, 2006 the company
          had
          received exercise notices for all 6,122,470 outstanding warrants from the
          new
          investors, with proceeds of $918,371. The Company received $346,500 cash
          and the
          remaining $571,871 was paid directly to note holders for repayment of
          outstanding notes payable and accrued interest during 2006.
 
 In
          February 2006, the Company entered into an Investment Agreement with a
          third
          party, for the future issuance and purchase of shares of its common stock.
          This
          Investment Agreement is an arrangement similar to an equity line of credit
          or an
          equity drawdown facility. The Company will be provided up to $10,000,000,
          as
          requested over a 36 month period. The Company may during the Open Period
          (36
          months) deliver a “put notice” to the investor which states the dollar amount
          the Company intends to sell its stock. The amount that the Company is entitled
          to Put is subject to certain limitations and terms of the agreement. As
          of
          December 31, 2006 65,452,790 shares were sold for $534,991. The Company
          received
          $192,629 cash and the remaining $342,362 paid directly to note holders
          for
          repayment of outstanding notes payable and accrued interest during 2006.
  F-7
  UNIVERSAL
          DETECTION TECHNOLOGY AND SUBSIDIARIES
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 FOR
          THE
          YEARS ENDED DECEMBER 31, 2006 AND 2005
 
 In
          January 2007, the Company entered into an agreement to sell 60,000,000
          shares of
          its common to a third party for $1,800,000 cash equivalent credits. The
          cash
          equivalent credits may be used in combination with cash to obtain certain
          goods
          and services. The value of the stock issued in consideration for the credits
          was
          $288,000. While management believes that it will be able to utilize the
          credits
          to purchase goods or services to be used in the operations of the Company,
          it
          must raise additional debt or equity financing in order to combine the
          credits
          with cash consideration. Management continually evaluates its ability to
          utilize
          the cash equivalent credits and has elected to carry the credits at $0
          on its
          future balance sheets.
 
 NOTE
          2 -
          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 CONSOLIDATION
 The
          consolidated financial statements include the accounts of Universal Detection
          Technology and its wholly-owned subsidiaries (the "Company"). All significant
          intercompany balances and transactions have been eliminated in consolidation.
          The Company's wholly owned subsidiary
          Nutek, Inc. ("Nutek") is inactive. The Company's wholly owned subsidiary
          Logan
          Medical Devices, Inc. ("Logan") is currently inactive.
 
 REVENUE
          RECOGNITION
 Revenue
          is recognized upon satisfaction of the Company's obligations, generally
          upon
          shipment and acceptance of products and devices have occurred. Title of
          goods is
          generally transferred when the products are shipped from the Company's
          facility.
          Income not earned will be recorded as deferred revenue. Service revenue,
          including event security, is recognized when services are
          performed.
 
 INVENTORIES
 Inventories,
          consisting of finished goods, are stated at the lower of cost (first-in
          first-out) basis or market.
 
 RECLASSIFICATIONS
 Certain
          prior year amounts have been reclassified to conform with the current year’s
          presentation, none of which had an impact on total assets, stockholders’ equity
          (deficit), net loss, or net loss per share.
 
 ADVERTISING
          EXPENSES
 The
          Company expenses advertising costs as incurred. During the years ended
          December
          31, 2006 and 2005, the Company did not have significant advertising
          costs.
  F-8
  UNIVERSAL
          DETECTION TECHNOLOGY AND SUBSIDIARIES
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 FOR
          THE
          YEARS ENDED DECEMBER 31, 2006 AND 2005
 
 PROPERTY
          AND EQUIPMENT AND DEPRECIATION AND AMORTIZATION
 
 Property
          and equipment, consist of office furniture and equipment, leasehold improvements
          and lab testing equipment, is recorded at cost less accumulated depreciation.
          Depreciation and amortization is provided for on the straight-line method
          over
          the estimated useful lives of the assets, generally three to five years
          or over
          the term of the lease.
 Equipment
                  
                  $
                  51,998Furniture
                  
                  
                  64,669Leasehold
                      Improvements
                  
                  
                  25,444142,111Accumulated
                      depreciation
                  ****
                  ****
                  (59,711
                  )Fixed
                      assets, net of depreciation
                  
                  
                  82,400
                  ****
 Total
          depreciation and amortization expense was $24,727 and $23,129 for the years
          ended December 31, 2006 and 2005, respectively. As of December 31, 2006,
          accumulated depreciation was $59,711.
 
 STOCK-BASED
          COMPENSATION
  In
          December 2004 the Financial Accounting Standards Board issued FAS 123-R.
          FAS
          123-R is a revision of FAS No. 123, as amended, Accounting for Stock-Based
          Compensation ("FAS 123") and supersedes Accounting Principles Board Opinion
          ("APB") No. 25, Accounting for Stock Issued to Employees. FAS 123-R eliminates
          the alternative to use the intrinsic value method of accounting that was
          provided in FAS 123, which generally resulted in no compensation expense
          recorded in the financial statements related to the issuance of equity
          awards to
          employees. FAS 123-R requires that the cost resulting from all share-based
          payment transactions be recognized in the financial statements. FAS 123-R
          establishes fair value as the measurement objective in accounting for
          share-based payment arrangements and requires all companies to apply a
          fair-value-based measurement method in accounting for generally all share-based
          payment transactions with employees. The Company has adopted FAS 123-R.
          All
          previously granted stock options were fully vested prior to the adoption
          of FAS
          123-R
  RESTRICTED
          CASH
  Restricted
          cash is the balance required under the Company’s office lease.
  STOCK
          BASED COMPENSATION TO OTHER THAN EMPLOYEES
  The
          Company accounts for equity instruments issued in exchange for the receipt
          of
          goods or services from other than employees in accordance with Statement
          of
          Financial Accounting Standards No. 123, “Accounting *for
          Stock-Based Compensation* ,”
and
          the conclusions reached by the Emerging Issues Task Force in Issue No.
          96- 18,
“Accounting for Equity Instruments That Are Issued to Other Than Employees
          for
          Acquiring or in Conjunction with Selling Goods or Services” (“EITF 96-18”).
          Costs are measured at the estimated fair market value of the consideration
          received or the estimated fair value of the equity instruments issued,
          whichever
          is more reliably determinable. The value of equity instruments issued for
          consideration other than employee services is determined on the earlier
          of a
          performance commitment or completion of performance by the provider of
          goods or
          services as defined by EITF 96-18. In the case of equity instruments issued to
          consultants, the fair value of the equity instrument is recognized over
          the term
          of the consulting agreement.
  F-9
  UNIVERSAL
          DETECTION TECHNOLOGY AND SUBSIDIARIES
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 FOR
          THE
          YEARS ENDED DECEMBER 31, 2006 AND 2005
 
 EARNINGS
          PER COMMON SHARE
  The
          Company computes earnings per common share in accordance with Statement
          of
          Financial Accounting Standards No. 128, "Earnings per Share" (SFAS No.
          128). The
          Statement requires dual presentation of basic and diluted EPS on the face
          of the
          income statement for all entities with complex capital structures and requires
          a
          reconciliation of the numerator and denominator of the basic EPS computation
          to
          the numerator and denominator of the diluted EPS computation. Basic loss
          per
          share is computed by dividing loss available to common shareholders by
          the
          weighted average number of common shares outstanding. The computation of
          diluted
          loss per share is similar to the basic loss per share computation except
          the
          denominator is increased to include the number of additional shares that
          would
          have been outstanding if the dilutive potential common shares had been
          issued.
          In addition, the numerator is adjusted for any changes in income or loss
          that
          would result from the assumed conversions of those potential shares. However,
          such presentation is not required if the effect is antidilutive. Accordingly,
          the diluted per share amounts do not reflect the impact of warrants and
          options
          or convertible debt outstanding for 17,154,098 and 24,034,999 shares
          at December 31, 2006 and 2005, respectively, because the effect of each
          is
          antidilutive.
 
 CASH
          EQUIVALENTS
  For
          purposes of reporting cash flows, the Company considers all short term,
          interest
          bearing deposits with original maturities of three months or less to be
          cash
          equivalents.
 
 PATENTS
          AND IMPAIRMENT OF LONG-LIVED ASSETS
  Patents
          and other intangible assets with finite useful lives are amortized on a
          straight-line basis over their estimated useful lives. In accordance with
          Statement of Financial Accounting Standard (SFAS) No. 142, GOODWILL AND
          OTHER
          INTANGIBLE ASSETS ("SFAS 142"), the Company periodically evaluates its
          long-lived assets by measuring the carrying amounts of assets against the
          estimated undiscounted future cash flows associated with them. At the time
          the
          carrying value of such assets exceeds the fair value of such assets, impairment
          is recognized. To date, no adjustments to the carrying value of the assets
          have
          been made. The Company has not recorded amortization expense related to
          its
          patent acquisition costs because the awarding of the patent is still
          pending.
 
 FAIR
          VALUE OF FINANCIAL INSTRUMENTS
  The
          carrying amounts of cash, accounts receivable, notes receivable, accounts
          payable, accrued expenses and notes payable approximate fair value because
          of
          the short maturity of these items.
 
 RESEARCH
          AND DEVELOPMENT COSTS
  In
          2002,
          the Company entered into a technology affiliates agreement with NASA's
          Jet
          Propulsion Laboratory ("JPL") to develop technology for its bio-terrorism
          detection equipment. Research and development costs are charged to expense
          as
          incurred. Research and development expenses were $31,338 and $12,125 for
          the
          years ended December 31, 2006 and 2005, respectively.
  F-10
  UNIVERSAL
          DETECTION TECHNOLOGY AND SUBSIDIARIES
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 FOR
          THE
          YEARS ENDED DECEMBER 31, 2006 AND 2005
 
 INCOME
          TAXES
  Deferred
          income taxes are recorded to reflect the tax consequences in future years
          of
          temporary differences between the tax basis of the assets and liabilities
          and
          their financial statement amounts at the end of each reporting period.
          Valuation
          allowances are established when necessary to reduce deferred tax assets
          to the
          amount expected to be realized. Income tax expense is the tax payable for
          the
          current period and the change during the period in deferred tax assets
          and
          liabilities. The deferred tax assets and liabilities have been netted to
          reflect
          the tax impact of temporary differences. At December 31, 2006, a full valuation
          allowance has been established for the deferred tax asset as management
          believes
          that it is more likely than not that a tax benefit will not be
          realized.
 
 USE
          OF
          ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
  The
          preparation of financial statements in conformity with generally accepted
          accounting principles requires management to make estimates and assumptions
          that
          affect the reported amounts of assets and liabilities and disclosure of
          contingent assets and liabilities at the date of the financial statements,
          and
          revenues and expenses during the reporting period. Actual results could
          differ
          from those estimates.
 
 CONCENTRATION
          OF CREDIT RISK
  Generally,
          the Company required no collateral when it extends credit to its customers.
          The
          Company's credit losses in the aggregate have not exceeded managements'
          expectations. The Company maintains all cash in bank accounts, which at
          times
          may exceed federally insured limits. The Company has not experienced a
          loss in
          such accounts.
 
 RECENTLY
          ISSUED ACCOUNTING PRONOUNCEMENTS
  The
          Company has adopted all accounting pronouncements effective before
          December 31, 2006, which are applicable to the Company.
 
 In
          June 2006, the Emerging Issues Task Force issued EITF No.06-3, How Taxes
          Collected from Customers and Remitted to Governmental Authorities Should
          Be
          Presented in the Income Statement (That Is, Gross versus Net Presentation)
          (“EITF No.06-3”), which clarifies diversity in practice on the presentation of
          different types of taxes in the financial statements. The Task Force concluded
          that, for taxes within the scope of the issue, a company may adopt a policy
          of
          presenting taxes either gross within revenue or net. That is, it may include
          charges to customers for taxes within revenues and the charge for the taxes
          from
          the taxing authority within cost of sales, or, alternatively, it may net
          the
          charge to the customer and the charge from the taxing authority. If taxes
          subject to this Issue are significant, a company is required to disclose
          its
          accounting policy for presenting taxes and the amounts of such taxes that
          are
          recognized on a gross basis. The guidance in this consensus is effective
          for the
          first interim reporting period beginning after December 15, 2006. The
          Company is currently assessing the impact, if any, that the adoption EITF
          No.06-03 will have on its financial statements.
  In
          July 2006, the FASB issued FASB Interpretation No. 48, Accounting for
          Uncertainty in Income Taxes—An Interpretation of FASB Statement No. 109
          (“FIN No. 48”), which became effective for the Company on January 1,
          2007. This interpretation clarifies the accounting for income tax benefits
          that
          are uncertain in nature. Under FIN No. 48, a company will recognize a tax
          benefit in the financial statements for an uncertain tax position only
          if
          management’s assessment is that its position is “more likely than not” (i.e., a
          greater than 50 percent likelihood) to be upheld on audit based only on the
          technical merits of the tax position. This accounting interpretation also
          provides guidance on measurement methodology, derecognition thresholds,
          financial statement classification and disclosures, interest and penalties
          recognition, and accounting for the cumulative-effect adjustment. The new
          interpretation is intended to provide better financial statement comparability
          among companies.
  F-11
  UNIVERSAL
          DETECTION TECHNOLOGY AND SUBSIDIARIES
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 FOR
          THE
          YEARS ENDED DECEMBER 31, 2006 AND 2005
 
 Required
          annual disclosures include a tabular reconciliation of unrecognized tax
          benefits
          at the beginning and end of the period; the amount of unrecognized tax
          benefits
          that, if recognized, would affect the effective tax rate; the amounts of
          interest and penalties recognized in the financial statements; any expected
          significant impacts from unrecognized tax benefits on the financial statements
          over the subsequent 12-month reporting period; and a description of the
          tax
          years remaining to be examined in major tax jurisdictions. FIN No. 48 is
          effective for fiscal years beginning on or after December 15, 2006. The
          Company is currently assessing the impact, if any, that the adoption of
          FIN
          No. 48 will have on its financial statements.
  In
          September 2006, the Securities and Exchange Commission issued Staff Accounting
          Bulletin ("SAB") No. 108, "Considering the Effects of Prior Year Misstatements
          when Quantifying Misstatements in Current Year Financial Statements". SAB
          No.
          108 was issued in order to eliminate the diversity in practice surrounding
          how
          public companies quantify financial statement misstatements. SAB No. 108
          requires that registrants quantify errors using both a balance sheet (iron
          curtain) approach and an income statement (rollover) approach then evaluate
          whether either approach results in a misstated amount that, when all relevant
          quantitative and qualitative factors are considered, is material. SAB No.
          108 is
          effective for fiscal years ending after November 15, 2006. The Company
          adopted
          the bulletin during 2006. The adoption did not have a material effect on
          its
          consolidated results of its operations, financial position, or cash
          flows.
 
 In
          September 2006, the FASB issued SFAS No. 157, “Fair *Value Measurements* .”
This
          statement clarifies the definition of fair value, establishes a framework
          for
          measuring fair value and expands the disclosures on fair value measurements.
          SFAS No. 157 is effective for fiscal years beginning after
          November 15, 2007. Management has not determined the effect, if any; the
          adoption of this statement will have on the financial statements.
 
 In
          September 2006, the FASB issued SFAS No. 158, “Employers' Accounting for Defined
          Benefit Pension and Other Postretirement Plans−An amendment of FASB Statements
          No. 87, 88, 106, and 132(R)”. One objective of this standard is to make it
          easier for investors, employees, retirees and other parties to understand
          and
          assess an employer's financial position and its ability to fulfill the
          obligations under its benefit plans. SFAS No. 158 requires employers to
          fully
          recognize in their financial statements the obligations associated with
          single−employer defined benefit pension plans, retiree healthcare plans, and
          other postretirement plans. SFAS No. 158 requires an employer to fully
          recognize
          in its statement of financial position the over funded or under funded
          status of
          a defined benefit postretirement plan (other than a multiemployer plan)
          as an
          asset or liability and to recognize changes in that funded status in the
          year in
          which the changes occur through comprehensive income. This Statement also
          requires an employer to measure the funded status of a plan as of the date
          of
          its year-end statement of financial position, with limited exceptions.
          SFAS No.
          158 requires an entity to recognize as a component of other comprehensive
          income, net of tax, the gains or losses and prior service costs or credits
          that
          arise during the period but are not recognized as components of net periodic
          benefit cost pursuant to SFAS No. 87. This Statement requires an entity
          to
          disclose in the notes to financial statements additional information about
          certain effects on net periodic benefit cost for the next fiscal year that
          arise
          from delayed recognition of the gains or losses, prior service costs or
          credits,
          and transition asset or obligation. The Company is required to initially
          recognize the funded status of a defined benefit postretirement plan and
          to
          provide the required disclosures for fiscal years ending after December
          15,
          2006. Management believes that this statement will not have a significant
          impact
          on the financial statements.
  F-12
  UNIVERSAL
          DETECTION TECHNOLOGY AND SUBSIDIARIES
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 FOR
          THE
          YEARS ENDED DECEMBER 31, 2006 AND 2005
 
 In
          December 2006, the FASB issued FSP EITF 00-19-2, “Accounting for
          Registration Payment Arrangements.” This FASB Staff Position (“FSP”) addresses
          an issuer’s accounting for registration payment arrangements. This FSP specifies
          that the contingent obligation to make future payments or otherwise transfer
          consideration under a registration payment arrangement, whether issued
          as a
          separate agreement or included as a provision of a financial instrument
          or other
          agreement, should be separately recognized and measured in accordance with
          FASB
          Statement No. 5, *Accounting
          for Contingencies* .
          The
          guidance in this FSP amends FASB Statements No. 133, *Accounting
          for Derivative Instruments and Hedging Activities* ,
          and No.
          150, *Accounting
          for Certain Financial Instruments with Characteristics of both Liabilities
          and
          Equity* ,
          and
          FASB Interpretation No. 45, *Guarantor’s
          Accounting and Disclosure Requirements for Guarantees, Including Indirect
          Guarantees of Indebtedness of Others* ,
          to
          include scope exceptions for registration payment arrangements. This FSP
          further
          clarifies that a financial instrument subject to a registration payment
          arrangement should be accounted for in accordance with other applicable
          generally accepted accounting principles (“GAAP”) without regard to the
          contingent obligation to transfer consideration pursuant to the registration
          payment arrangement. This FSP is effective immediately for registration
          payment
          arrangements and the financial instruments subject to those arrangements
          that
          are entered into or modified subsequent to the date of issuance of this
          FSP. For
          registration payment arrangements and financial instruments subject to
          those
          arrangements that were entered into prior to the issuance of this FSP,
          this
          guidance shall be effective for financial statements issued for fiscal
          years
          beginning after December 15, 2006, and interim periods within those fiscal
          years. Early adoption of this FSP for interim or annual periods for which
          financial statements or interim reports have not been issued is permitted.
          The
          Company has chosen to adopt this FSP early and its adoption had no effect
          on the
          December 31, 2006 financial statements.
  NOTE
          3 -
          ACCRUED LIABILITIES
  Included
          in accrued liabilities are payments due in connection with certain loan
          fees for
          loans in 2005. A total of 300,000 shares are payable to third parties.
          The total
          value of the stock on the date of the notes were $68,600.
  F-13
  UNIVERSAL
          DETECTION TECHNOLOGY AND SUBSIDIARIES
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 FOR
          THE
          YEARS ENDED DECEMBER 31, 2006 AND 2005
 
 NOTE
          4 -
          NOTES PAYABLE, RELATED PARTY
 
 During
          the year ended December 31, 2005, the Company borrowed
          a total of $41,853 from its president and chief executive officer under
          promissory notes executed by the Company. The notes had interest rates
          ranging
          from 0% to 28.8% per year. The Company repaid notes totaling $34,700 during
          2005
          and $7,153 during 2006. $2,500 remains outstanding at December 31,
          2006 ,
          which
          bears no interest and has no repayment terms.
 
 During
          the year ended December 31, 2005, the Company borrowed a total of $115,900
          from
          its vice-president of Global Strategy under promissory notes executed by
          the
          Company. The notes had interest rates ranging from 10% to 12.5% per year.
          The
          Company repaid all $115,900 in principal and $11,920 in interest during
          2006.
 
 During
          the year ended December 31, 2006, the Company borrowed a total of $13,819
          from
          its president and chief executive officer under promissory notes executed
          by the
          Company. The notes had interest rates of 12.5% per year. The Company repaid
          $13,819 and paid $1,629 in interest for obligations originating in 2005
          and
          2006.
 
 NOTE
          5 -
          NOTES PAYABLE
 
 Notes
          payable consisted of the following at December 31,2006:
 
 Notes
                    payable to individuals, subject to contingent settlement agreement
                    and
                    summary judgment, interest at 11.67% per annum, principal and
                    interest due
                    January 1, 2006, in default, unsecured
                
                $
                95,740Note
                    payable, subject to settlement agreement, interest at 9.012%
                    per annum,
                    principal and interest due July 2005, in default,
                    unsecured
                
                
                161,000Note
                    payable, subject to settlement agreement, interest at 9.17% per
                    annum,
                    principal and interest due July 2005, in default,
                    unsecured
                
                
                74,500Bridge
                    loan payable, interest of 10% per annum, principal and interest
                    due
                    September 2002 and verbally extended, unsecured
                
                
                35,000Note
                    payable, interest at 18% per annum, due May 2003 and verbally
                    extended,
                    unsecured
                
                
                75,000Note
                    payable, interest at 12% per annum, due November 2005 and verbally
                    extended, unsecured
                
                
                20,000
 
 F-14
  UNIVERSAL
          DETECTION TECHNOLOGY AND SUBSIDIARIES
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 FOR
            THE
            YEARS ENDED DECEMBER 31, 2006 AND 2005
 Note
                    payable, interest at 12% per annum, due July 2005 and verbally
                    extended,
                    unsecured
                
                
                50,000Note
                    payable, interest at 15% per annum, due August 2005 and verbally
                    extended,
                    unsecured
                
                
                30,000Note
                    payable, interest at 10% per annum, due July 2005 and verbally
                    extended,
                    unsecured
                
                
                30,000Note
                    payable, interest at 12% per annum, due October 2005 and verbally
                    extended, unsecured
                
                
                30,000Note
                    payable, interest at 12% per annum, due November 2005 and verbally
                    extended, unsecured
                
                
                60,000Note
                    payable, interest at 12% per annum, due December 2005 and verbally
                    extended, unsecured
                
                
                2,400Note
                    payable, interest at 12% per annum, due November 2005 and verbally
                    extended, unsecured
                
                
                90,000Note
                    payable, interest at 12.5% per annum, due December 2005 and verbally
                    extended, unsecured
                
                
                15,000Note
                    payable, interest at 12% per annum, due March 2006 and verbally
                    extended,
                    unsecured
                
                
                100,000Note
                    payable, interest at 12.5% per annum, due May 2006 and verbally
                    extended,
                    unsecured
                
                
                20,000
 F-15
  UNIVERSAL
            DETECTION TECHNOLOGY AND SUBSIDIARIES
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 FOR
            THE
            YEARS ENDED DECEMBER 31, 2006 AND 2005
 Note
                    payable, interest at 12.5% per annum, due May 2006 and verbally
                    extended,
                    unsecured
                
                
                30,000Note
                    payable, interest at 12.5% per annum, due August 2006 and verbally
                    extended, unsecured
                
                
                14,975Note
                    payable, interest at 12.5% per annum, due August 2006 and verbally
                    extended, unsecured
                
                
                25,000Note
                    payable, interest at 16.75% per annum, due October 2008
                
                
                36,153Total
                    notes payable
                
                $
                994,768Less:
                    Long-term portion
                
                
                (19,153
                )Current
                    Notes Payable
                
                $
                975,615
 
 The
          Company entered into a contingent settlement agreement on July 26, 2004
          related
          to $440,765 of notes payable to individuals and related accrued interest.
          In
          July 2004, the Company paid a total of $73,333 towards the debt and agreed
          to
          pay a total of $298,667, including interest through January 2006 in full
          payment. The Settlement Agreement provides for an accelerated payment schedule
          at the Company's option, which would reduce the total payment made by the
          Company by approximately $12,000. The Company defaulted on the two remaining
          payments totaling $80,000 at which time the entire remaining balance became
          due,
          including default interest and legal fees. The Company currently has accrued
          $258,170 for interest and legal fees in addition to the $95,740 principal
          balance.
 
 During
          August 2004, the Company entered into an agreement to settle a note payable
          in
          the amount of $200,000 plus accrued interest. The parties agreed to settle
          the
          debt for $261,000 payable as follows: Twelve consecutive payments of $12,500
          payable monthly commencing August 31, 2004 and ending July 31, 2005; a
          lump-sum
          payment of $95,000 payable on July 31, 2005; and a one-time interest payment
          of
          $16,000 on July 31, 2005. This agreement includes an additional $7,500
          as
          inducement to the note holder to enter into the extended agreement, which
          was
          amortized as a loan fee over the term of the agreement. Scheduled payments
          were
          not made on the note and the company is currently in default. The Company
          currently has accrued $35,164 for interest in addition to the $161,000
          principal
          balance.
  F-16
  UNIVERSAL
          DETECTION TECHNOLOGY AND SUBSIDIARIES
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 FOR
          THE
          YEARS ENDED DECEMBER 31, 2006 AND 2005
 
 During
          August 2004, the Company entered into an agreement to settle a note payable
          in
          the amount of $100,000 plus accrued interest. The parties agreed to settle
          the
          debt for $130,800 payable as follows: Twelve consecutive payments of $6,000
          payable monthly commencing August 31, 2004 and ending July 31, 2005; a
          lump-sum
          payment of $50,500 payable on July 31, 2005; and a one-time interest payment
          of
          $8,300 on July 31, 2005. The Company had previously recognized a $38,610
          gain on
          forgiveness of accrued interest related to this transaction. Scheduled
          payments
          were not made on the note and the company is currently in default. The
          Company
          currently has accrued $21,127 for interest in addition to the $74,500 principal
          balance.
 
 **NOTE
          6 - INCOME TAXES**
 
 The
          income tax provision (benefit) for the years ended December 31, 2006 and
          2005
          differs from the computed expected provision (benefit) at the federal statutory
          rate for the following reasons:
 
 2006
                
                2005Computed
                    expected income tax provision(benefit)
                
                $
                (918,949
                )
                $
                (1,201,957
                )Net
                    operating loss carryforwardincreased
                
                
                773,305
                
                
                1,023,664Accrued
                    liabilities
                
                
                77,173
                
                
                45,866Stock-based
                    expenses
                
                
                62,605
                
                
                126,107Non-deductible
                    meals & entertainment
                
                
                3,303
                
                
                3,932Depreciation
                
                
                2,563
                
                
                2,388Income
                    tax provision (benefit)
                
                $
                -
                
                $
                -
 
 The
                    components of the deferred tax assets and (liabilities)as
                    of December 31, 2006 were as follows:Deferred
                    tax assets:Temporary
                    differences:Depreciation
                
                $
                (15,870
                )Accrued
                    liabilities
                
                
                90,792Net
                    operating loss carryforward
                
                
                9,259,725Valuation
                    allowance
                
                
                (9,334,647
                )Net
                    long-term deferred tax asset
                
                $
                -
  F-17
  UNIVERSAL
          DETECTION TECHNOLOGY AND SUBSIDIARIES
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 FOR
          THE
          YEARS ENDED DECEMBER 31, 2006 AND 2005
 
 The
          components of the deferred tax (expense) benefit were as follows for the
          years
          ended December 31, 2006 and 2005:
 
 2006
                
                2005Deferred
                    tax assets:Accrued
                    expenses
                
                $
                36,832
                
                
                (318,840
                )Depreciation
                
                
                5,849
                
                
                --Increase
                    in net operating loss carryforward
                
                
                1,074,326
                
                
                1,173,888Change
                    in valuation allowance
                
                
                (1,117,007
                )
                
                (855,048
                )$
                -
                
                $
                -
 
 As
          of
          December 31, 2006, the Company has net operating losses carryforwards of
          approximately $2 3,149,000
          expiring in 2012 through 2026.
 
 NOTE
          7-STOCKHOLDERS' EQUITY
 
 PREFERRED
          STOCK
  The
          Company is authorized to issue up to 20,000,000 shares of preferred stock,
          $.01
          par value per share in series to be designated by the Board of Directors.
          No
          preferred shares are issued and outstanding.
 
 COMMON
          STOCK
 PRIVATE
          PLACEMENT
  During
          2004, the Company completed a private placement of common stock and warrants.
          Included in the offering were warrants to purchase common stock at $0.50
          and
          $0.70 per share. In January 2006, the investors returned their Class A
          and B
          warrants in exchange for new warrants exercisable at $.15 per share. The
          Class A
          and B warrants were repriced to be exercisable at $.15 per share and were
          reassigned to new investors. As of December 31, 2006 the company had received
          exercise notices for all 6,122,470 outstanding warrants from the new investors,
          with proceeds of $918,371. The Company received $366,500 cash and the remaining
          $551,871 was paid directly to note holders for repayment of outstanding
          notes
          payable and accrued interest during 2006.
 
 SALES
          OF
          COMMON STOCK
  During
          the year ended December 31, 2005, the company sold 1,373,928 shares of
          common
          stock for a total of $191,420. The company paid placement fees totaling
          $32,942.
  F-18
  UNIVERSAL
          DETECTION TECHNOLOGY AND SUBSIDIARIES
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 FOR
          THE
          YEARS ENDED DECEMBER 31, 2006 AND 2005
 
 In
          February 2006, the Company entered into an Investment Agreement with a
          third
          party, for the future issuance and purchase of shares of its common stock.
          This
          Investment Agreement is an arrangement similar to an equity line of credit
          or an
          equity drawdown facility. The Company will be provided up to $10,000,000,
          as
          requested over a 36 month period. The Company may during the Open Period
          (36
          months) deliver a “put notice” to the investor which states the dollar amount
          the Company intends to sell its stock. The amount that the Company is entitled
          to Put is subject to certain limitations and terms of the agreement. As
          of
          December 31, 2006 65,452,790 shares were sold for $534,991. The Company
          received
          $398,000 cash and the remaining $136,991 paid directly to note holders
          for
          repayment of outstanding notes payable and accrued interest during 2006.
 
 STOCK
          ISSUED FOR SERVICES
 
 During
          the year ended December 31, 2006, the Company issued an aggregate of 32,442,091
          shares of its common stock to various employees of the Company as compensation.
          The shares were valued at a total of $271,450.
 
 During
          the ended December 31, 2006, the Company entered into various agreements
          for
          strategic business planning, financial advisory, investor relations and
          public
          relations services. As compensation for the services to be rendered, the
          Company
          issued 17,528,382 shares of common stock, valued at $551,550, the fair
          value of
          the stock on the dates of issuance. The Company has recorded $10,000 at
          December
          31, 2006 as a prepaid expense to be amortized during January 2007, the
          remaining
          life of the contract.
 
 During
          the year ended December 31, 2005, the Company issued an aggregate of 1,959,385
          shares of its common stock to various employees of the Company as compensation.
          The shares were valued at a total of $248,044, the fair market value of
          the
          shares on the days issued.
 
 In
          October 2005, the Company issued 100,000 shares as payment of loan fees
          on a
          note to an unrelated party. The shares were valued at $15,000, the fair
          market
          value on the date of the loan and have been fully amortized.
 
 In
          September 2005, the Company issued 1,012,894 shares of its common stock
          as
          partial payment of an advertising campaign. The shares were valued at $172,192,
          the fair market value of the stock on the day issued and have been fully
          amortized.
 
 On
          December 15, 2005, the Company entered into a three month Product Sales
          and
          Marketing Consulting Agreement with an unrelated individual and issued
          1,400,000
          shares of common stock with a fair value of $127,400. The fair value was
          recorded as prepaid expenses to be amortized over the term of the agreement.
          For
          the years ended December 31, 2006 and 2005, the Company recognized $106,667
          and
          $21,333, respectively, as stock based compensation expense related to this
          agreement.
 
 On
          September 8, 2004, the Company entered into a Product Sales and Marketing
          Consulting Agreement with an unrelated individual, commencing September
          8, 2004
          and ending December 31, 2006. As compensation for the services to be rendered,
          the Company issued 410,000 shares of its common stock with a fair value
          of
          $254,200 and has been recorded as prepaid expenses to be amortized over
          the term
          of the agreement. For the years ended December 31, 2006 and December 31,
          2005,
          the Company recognized the remaining $108,943 per year as stock based
          compensation expense related to this agreement.
  F-19
  UNIVERSAL
          DETECTION TECHNOLOGY AND SUBSIDIARIES
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 FOR
          THE
          YEARS ENDED DECEMBER 31, 2006 AND 2005
 
 During
          fourth quarter of 2004, the Company entered into two agreements for strategic
          business planning, financial advisory, investor relations and public relations
          services. As compensation, the Company issued a total of 1,700,000 shares
          of its
          common stock to the consultants, valued at $943,000, the fair market value
          of
          the, which was amortized over the terms of the agreements. The Company
          expensed
          related consulting fees of $0 and $652,500 for the years ended December
          31, 2006
          and December 31, 2005, respectively.
 
 ISSUANCE
          OF OPTIONS AND WARRANTS
 
 On
          March
          2, 2005, the Company entered into a consulting agreement for advisory and
          consulting services in connection with its general business. The agreement
          was
          to expire in March 1, 2007, but was terminated early. As compensation for
          entering into the agreement and providing services thereunder, the consultant
          received an option to purchase 50,000 shares of the Company's common stock,
          exercisable immediately, at the price of $0.24 per share. The option was
          valued
          at $5,551 using the Black Scholes model for American options, with volatility
          of
          90% and a risk free interest rate of 3.5%. The market price of the common
          stock
          on the date of the grant was $0.23. The Company recognized $5,551 in expense
          during 2005.
  On
          August
          3, 2005, the Company entered into a consulting agreement for advisory and
          consulting services in connection with its general business. The agreement
          expired November 3, 2005. As compensation for entering into the agreement
          and
          providing services thereunder, the consultant received 50,000 warrants
          of the
          Company’s stock at a price of $0.40 per share, 50,000 warrants of the Company’s
          stock at a price of $0.80 per share and 50,000 warrants to purchase the
          Company’s stock at a price of $1.20 per share. The warrants were valued at $256
          using the Black Scholes model for warrants, with volatility of 82% and
          a risk
          free interest rate of 3.5%. The market price of the common stock on the
          date of
          the grant was $0.17. The Company recognized $256 in expense in
          2005.
  On
          August
          19, 2005, the Company entered into a consulting agreement for advisory
          and
          consulting services in connection with its general business. The agreement
          expires August 18, 2006. As compensation for entering into the agreement
          and
          providing services thereunder, the consultant received 3,600,000 warrants
          of the
          Company’s stock at a price of $0.17 per share. The warrants were values at
          $293,171 using the Black Scholes model for warrants, with volatility of
          82% and
          a risk free interest rate of 3.5%. The market price of the common stock
          on the
          date of the grant was $0.155. The Company recognized $184,132 and $109,039
          in
          expense in 2006 and 2005, respectively.
   F-20
  UNIVERSAL
          DETECTION TECHNOLOGY AND SUBSIDIARIES
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 FOR
          THE
          YEARS ENDED DECEMBER 31, 2006 AND 2005
 
 In
          September 2005, the Company issued 250,000 warrants of the Company’s stock at a
          price of $0.05 per share as payment of loan fees. The warrants expire in
          one
          year. The warrants were valued at $12,311 using the Black Sholes model
          for
          warrants with a volatility of 82% and a risk free interest rate of 3.5%.
          The
          market price of the common stock on the day of grant was $0.091. The Company
          recognized $12,311 in expense in 2005.
  In
          December 2005, the Company issued 1,000,000 warrants of the Company’s stock at a
          price of $0.10 to an employee of the Company for services rendered, expiring
          in
          five years. The warrants were valued at $59,616 using the Black Sholes
          model for
          warrants with a volatility of 82% and a risk free interest rate of 3.5%.
          The
          market price of the common stock on the day of grant was $0.091. The Company
          recognized $59,616 in expense in 2005.
 
 STOCK
          OPTION PLAN
  During
          2003, the Company adopted the 2003 Stock Incentive Plan ("the Plan"), which
          provides for the granting of stock and options to selected officers, directors,
          employees and consultants of the Company. 4,500,000 shares are reserved
          for
          issuance under the Plan for the granting of options. Unless terminated
          sooner,
          the Plan will terminate on June 22, 2013. The options issued under the
          Plan may
          be exercisable to purchase stock for a period of up to ten years from the
          date
          of grant.
 On
            February 13, 2006, the Board of Directors adopted the 2006 Stock Compensation
            Plan (the "Plan"). The Plan authorizes common stock grants to the Company’s
            non-executive employees, professional advisors and consultants. The Company
            reserved 7,500,000 shares of its common stock for awards to be made under
            the
            Plan.
 On
          June
          29, 2006, the Company’s Board of Directors adopted the 2006 Consultant Stock
          Plan (the "2006 Plan"). The 2006 Plan authorizes common stock grants to
          our
          employees, officers, directors, consultants, independent contractors, advisors,
          or other service providers, provided that such services are not in connection
          with the offer and sale of securities in a capital-raising transaction.
          The
          Company reserved 25,000,000 shares of our common stock for awards to be
          made
          under the 2006 Plan.
 
 On
          November 22, 2006, the Company’s Board of Directors adopted the 2006-II
          Consultant Stock Plan (the "2006-II Plan"). The 2006-II Plan authorizes
          common
          stock grants to our employees, officers, directors, consultants, independent
          contractors, advisors, or other service providers, provided that such services
          are not in connection with the offer and sale of securities in a capital-raising
          transaction. The Company reserved 37,500,000 shares of our common stock
          for
          awards to be made under the 2006-II Plan.
  F-21
  UNIVERSAL
          DETECTION TECHNOLOGY AND SUBSIDIARIES
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 FOR
          THE
          YEARS ENDED DECEMBER 31, 2006 AND 2005
 
 The
          following table summarizes the activity of options and warrants under all
          agreements and plans for the two years ended December 31, 2005 and
          2006:
 
 Number
                    of
                  Options
                
                Warrants
                
                Weighted
                      Average ExercisePrice
                
                AmountOutstanding,
                    December 31, 2004
                
                
                8,970,446
                
                
                11,380,699
                
                
                0.50
                
                
                10,939,329Granted
                
                
                200,000
                
                
                5,000,000
                
                
                0.15
                
                
                757,500Exercised
                
                
                (100,000
                )
                
                -
                
                
                0.19
                
                
                (19,000
                )Expired/cancelled
                
                
                (710,446
                )
                
                (555,700
                )
                
                0.86
                
                
                (1,088,886
                )Outstanding,
                    December 31, 2005
                
                
                8,360,000
                
                
                15,824,999
                
                
                0.44
                
                
                10,588,943Granted
                
                
                -
                
                
                6,122,470
                
                
                0.15
                
                
                918,371Exercised
                
                
                -
                
                
                (6,122,470
                )
                
                0.15
                
                
                (918,371
                )Expired/cancelled
                
                
                (300,000
                )
                
                (608,431
                )
                
                1.28
                
                
                (1,166,002
                )Outstanding,
                    December 31, 2006
                
                
                8,060,000
                
                
                15,216,568
                
                
                0.34
                
                
                9,422,941
 F-22
  UNIVERSAL
          DETECTION TECHNOLOGY AND SUBSIDIARIES
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 FOR
          THE
          YEARS ENDED DECEMBER 31, 2006 AND 2005
 
 The
          following table summarizes information about stock options and warrants
          outstanding at December 31, 2006:
 
 OPTIONS
                    AND WARRANTSOUTSTANDING
                
                EXERCISABLERANGE
                    OF
                  EXERCISE
                  PRICES
                
                NUMBER
                  OUTSTANDING
                
                WEIGHTED
                  AVERAGE
                  REMAINING
                  CONTRACTUAL
                  LIFE-YEARS
                
                WEIGHTED
                  AVERAGE
                  EXERCISE
                  PRICE
                
                NUMBER
                  EXERCISABLE
                
                WEIGHTED
                  AVERAGE
                  EXERCISE
                  PRICE0.05
                
                to
                  $0.33
                
                
                18,722,470
                
                
                4.80
                
                
                0.263
                
                
                18,722,470
                
                
                0.2630.35
                
                to
                  $0.50
                
                
                3,538,715
                
                
                2.45
                
                
                0.50
                
                
                3,538,715
                
                
                0.500.53
                
                to
                  $0.80
                
                
                808,715
                
                
                1.69
                
                
                0.57
                
                
                808,715
                
                
                0.570.875
                
                to
                  $1.75
                
                
                206,668
                
                
                1.23
                
                
                0.98
                
                
                206,668
                
                
                0.9823,276,568
                
                
                4.13
                
                
                0.335
                
                
                23,276,568
                
                
                0.335
 
 The
          weighted average exercise price of options at their grant date during the
          years
          ended December 31, 2006 and 2005 where the exercise price equaled the market
          price at the grant date, was $0.0 and $0.16 respectively. The weighted
          average
          exercise price of options and warrants at their grant date during the years
          ended December 31, 2006 and 2005, where the exercise price exceeded the
          market
          price was $0.0 and $0.15, respectively. The weighted average exercise price
          of
          options and warrants at their date of grant during the years December 31,
          2006
          and 2005, where the exercise price was less than the market price on the
          grant
          date, was $0.0 and $0.05, respectively.
 
 The
          weighted average fair values of warrants at their grant date during the
          years
          ended December 31, 2006 and 2005 where the exercise price equaled the market
          price on the day of grant, were $0.15 and $0.08, respectively. The weighted
          average fair values of warrants at their date of grant during the years
          ended
          December 31, 2006 and 2005, where the exercise price exceeded the market
          price
          on the grant date was $0.0 and $0.08 respectively. The weighted average
          fair
          value of the of warrants during the years December 31, 2006 and 2005, where
          the
          exercise price was less than the market price at the date of grant, was
          $0.00
          and $0.05 respectively. The estimated fair value of each option granted
          is
          calculated using the Black-Sholes model for American options. The weighted
          average assumptions used in the model were as follows:
  F-23
  UNIVERSAL
          DETECTION TECHNOLOGY AND SUBSIDIARIES
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 FOR
          THE
          YEARS ENDED DECEMBER 31, 2006 AND 2005
 
 2006
                2005Risk-free
                    interest rate
                N/A
                3.50%Volatility
                N/A
                82.08%Expected
                    life
                N/A
                3.22
                    yearsDividend
                    yield
                0%
                0%
 
 NOTE
          9 -
          COMMITMENTS AND CONTINGENCIES
 
 In
          April
          2004, certain noteholders commenced an action against the Company for amounts
          allegedly due pursuant to four unpaid promissory notes. In August 2004,
          the
          parties executed a Confidential Settlement Agreement and Mutual Releases.
          In
          December 2005, the noteholders commenced the above-referenced action against
          the
          Company, alleging the Company breached the settlement agreement and are
          seeking
          approximately $250,000 in damages.
 
 LITIGATION
  a)
          A.
          Sean Rose, Claire F. Rose and Mark Rose v. Universal Detection Technology,fka
          Pollution Research and Control Corporation Superior Court of the State
          of
          California for the County of Los Angeles, North Central District, Case
          No.
          EC042040.
  On
          or
          about April 16, 2004, Plaintiffs commenced an action against the Company
          (Case
          No. EC 038824) for amounts allegedly due pursuant to four unpaid promissory
          notes. On August 2, 2004, the parties executed a Confidential Settlement
          Agreement and Mutual Releases (the "Agreement"). On December 30, 2005,
          Plaintiffs commenced the above-referenced action against the Company, alleging
          the Company breached the Agreement and seeking approximately $205,000 in
          damages. A judgment was entered on April 11, 2006. The Company has previously
          accrued for this settlement.
  b)
          Steven
          P. Sion and Sion Consulting, Inc. v. Universal Detection Technology Corporation,
          et. Al. Superior Court of the State of California for the County of Los
          Angeles,
          Case NO. BC350942
  On
          April
          19, 2006, Plaintiffs Steven P Sion and Sion Consulting, Inc., a Nevada
          corporation, instituted an action in the Los Angeles Superior Court (Central
          District Case No. BC350942) against Defendants Universal Detection Technology
          Corporation, Albert E. Gooselin, Jr., Roy Peterson, Greg Edwards, Bombay
          Consortium, Inc., Howard Sperling, Assisted Care, Inc. As to Universal
          Detection, Plaintiffs alleged claims for: (1) Breach of Contract; (2) Fraud,
          (3)
          Negligent Misrepresentation; and (4) Conspiracy in relation to the sale
          of
          Dasibi Environmental Corp. Plaintiffs seeks an unspecified amount of
          compensatory, general and punitive damages against all Defendants. On July
          17,
          2006, Universal Detection timely filed an Answer to the Complaint. Universal
          Detection strongly disputes and shall vigorously defend against the allegations
          of the Complaint. To date, no trial date has been set. While Universal
          Detection
          disputes these allegations, the Company cannot control the outcome of the
          case
          or what damages, if any, will result.
  F-24
  UNIVERSAL
          DETECTION TECHNOLOGY AND SUBSIDIARIES
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 FOR
          THE
          YEARS ENDED DECEMBER 31, 2006 AND 2005
  c)
          During
          2005, the Company entered into two lease agreements to lease testing equipment.
          The Company had violated the terms of the lease as the Company sold the
          equipment in March 2006. In April 2006, the leasing company agreed to remove
          the
          sale of equipment as a default of the lease and treat the two leases as
          one
          single purchase transaction. Under the forebearance agreement entered into
          by
          the two parties, the Company shall pay the outstanding balance plus interest
          at
          a rate of 18% in monthly payments of $1,816 until October 15, 2008. The
          outstanding balance on this note is $36,153 as of December 31,
          2006.
 On
            June
            2, 2006, Plaintiff Trilogy Capital Partners instituted an action in the
            Los
            Angeles Superior Court ( *Trilogy
            Capital Partners v. Universal Detection Technology, et. al.* ,
            Case
            No. SC089929) against Defendant Universal Detection Technology. Plaintiff’s
            Complaint alleged damages against the Company for breach of an engagement
            letter
            in the amount of $93,448.54.  Also, Plaintiff alleged that the plaintiff
            had failed to issue warrants to it pursuant to a written agreement, which
            have
            been recorded and expensed in the December 31, 2006 and 2005 financial
            statements. After completing the initial stages of litigation and conducting
            extensive mediation, Plaintiff and the Company reached a settlement commencing
            December 15, 2006, the Company would make monthly payments to Plaintiff
            of
            $2,000 until a debt of $90,000 plus accrued interest at six percent per
            annum
            was fully paid.  In exchange, Plaintiff would release all of its claims
            against the Company. The amounts due under the agreement have previously
            been
            accrued for in the financial statements.
 
 On
            November 15, 2006, Plaintiff NBGI, Inc. instituted an action in the Los
            Angeles
            Superior Court (NBGI, Inc.  v. Universal Detection Technology, et. al.,
            Case No. BC361979) against Defendant Universal Detection Technology.
            NBGI,
            Inc.’s Complaint alleged breach of contract, and requested damages in the
            amount
            of $111,014.34 plus interest at the legal rate and for costs of suit.  The
            Company strongly disputes and shall vigorously defend against the allegations
            of
            the Complaint. To date, discovery has commenced, but no trial date has
            been set.
            The Company has recorded the amounts due as notes payable in the financial
            statements.
 From
          time
          to time, the Company is a party to a number of lawsuits arising in the
          normal
          course of business. In the opinion of management, the resolution of these
          matters will not have a material adverse effect on the Company's operations,
          cash flows or financial position.
 
 EMPLOYMENT
          AGREEMENTS
 
 In
          September 2001, the Company entered into an employment agreement with its
          President and Chief Executive Officer. Under the agreement, base salary
          is
          $250,000 to be adjusted on an annual basis. The Company granted options
          to
          purchase 1,150,000 shares of its common stock exercisable at $0.30 per
          share.
 
 On
          August
          23, 2004, the Company entered into an amendment of the employment agreement
          with
          its President and Chief Executive Officer. The amendment provides that
          $100,000
          of the Officer's annual salary shall be accrued as payable until such time
          as
          the Company has the financial resources to pay any or all of the accrued
          amount.
          The agreement also provides for salary increases of 5% per year commencing
          January 1, 2006, and an extension of the term of the agreement until December
          31, 2010. In addition, automobile cost is limited to a maximum of $2,500
          per
          month and the Company will reimburse the officer for individual life insurance
          premiums up to $1,000 per month and for health insurance premiums and related
          expenses.
  F-25
  UNIVERSAL
          DETECTION TECHNOLOGY AND SUBSIDIARIES
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 FOR
          THE
          YEARS ENDED DECEMBER 31, 2006 AND 2005
 
 On
          October 1, 2004, the Company entered into an employment agreement with
          its Vice
          President of Global Strategy. For the period from October 1 through December
          31,
          2004, compensation was $35,000 per month. Thereafter, the agreement provides
          for
          salary of $150,000 per year plus health care costs not to exceed $400 per
          month.
          Employment is at will and may be terminated by either party at any
          time.
 
 The
          Company is obligated to make certain minimum salary payments as follows:
 
 YEAR
          ENDING DECEMBER 31,
 
 2007
                
                $
                275,6252008
                
                
                289,4062009
                
                
                303,8762010
                
                
                319,070$
                1,187,977
 
 LICENSE
          AGREEMENT
 
 On
          September 30, 2003, the Company entered into a license agreement with CalTech
          whereby CalTech granted the Company an exclusive, royalty-bearing license
          to
          make, use, and sell all products that incorporate the technology that was
          developed under the Technology Affiliates Agreement with JPL and is covered
          by
          related patents. In addition, the grant includes a nonexclusive, royalty-bearing
          license to make derivative works of the technology. The Company is required
          to
          make quarterly royalty payments to CalTech, ranging from 2% to 4% of net
          revenues for each licensed product made, sold, licensed, distributed, or
          used by
          the Company and 35% of net revenues that the Company receives from sublicensing
          the licensed products. A minimum annual royalty of $10,000 was due and
          paid to
          CalTech on August 1, 2005 and each anniversary thereof. The minimum royalty
          will
          be offsetby the abovementioned royalty payments, if any.
 
 OPERATING
          LEASES
  On
          October 14, 2004, the Company entered into an assignment of a lease agreement
          (sublease) for office space with Astor Capital, a company owned 50% by
          the
          Company’s President and Chief Executive Officer and 50% by the Company’s Vice
          President of Global Strategy effective November 1, 2004. The agreement
          provides
          for the sublease of office common areas to Astor for a monthly fee equal
          to $500
          per month. The sublease assigns to the Company all right, title and interest
          in
          and to any security deposit or other refundable amounts to which Astor
          may be
          entitled. The Company has been assigned the rights to the related security
          deposit of $10,226 and leasehold improvements of $25,445 and has recorded
          such
          amounts, offsetting relating amounts due from Astor.
  F-26
  Future
          minimum operating lease payments at December 31, 2006 consist of the
          following:
 
 2007
                
                $
                119,4402008
                
                
                112,490$
                231,930
 Rent
            expense was $117,109 and $99,236 for 2006 and 2005
            respectively.
 NOTE
          10 -
          SUPPLEMENTAL CASH FLOW INFORMATION
 
 Cash
          paid
          for interest was $20,648 and $0 during the years ended December 31, 2006
          and
          2005 respectively.
 
 NOTE
          11
          SUBSEQUENT EVENTS
 
 During
          the first quarter of 2007, the Company issued and aggregate of 12,187,498
          shares
          of its common stock to employees as payment for current and past services
          valued
          at approximately $52,000.
  During
          the first quarter of 2007, the Company’s president and CEO loaned the Company a
          total of $21,000 with interest rates of 12%-12.5%, all of which were due
          by
          February 20, 2007 and have been repaid.
 
 During
          the first quarter of 2007, an investor purchased 33,338,129 shares of common
          stock as required under an investment agreement for a aggregate amount
          of
          $146,500. The Company received $21,000 in proceeds and the remaining $125,500
          was used to pay off outstanding notes payable and accrued interest directly
          by
          the investor.
 
 During
          the first quarter of 2007, the Company executed promissory notes totaling
          $270,000 payable to an unrelated parties. The promissory notes bear interest
          at
          12.5% per annum and were due between February 14, 2007 and April 5, 2007.
          No
          payments have been made and the notes and they are past due.
 
 During
          the first quarter of 2007, the Company entered into several consulting
          and
          advisory agreements. The Company plans to utilize the consultants to assist
          in
          the marketing and sales of its products, as well as improve its business
          plans
          and operations. The Company issued 48,000,000 shares of its common stock
          as
          partial payment to certain consultants for an aggregate price of
          $299,600.
 
 NOTE
          12
          PREFERRED STOCK ISSUANCE
 
 On
          March
          28, 2007, the Board of Directors approved the creation of the Series A-1
          Preferred Stock of the Company and the issuance of 150 shares of such stock
          to
          Jacques Tizabi for $50,000 in accrued compensation.  The stock entitles the
          holder to 1,000,000 votes per share, which shall vote together with the
          Common
          Stock of the Company for all purposes, except where a separate vote of
          the
          classes of capital stock is required by California law. The aggregate value
          of
          the 150 shares issued to Mr. Tizabi is $50,000. The shares have a liquidation
          value, as described in the Company’s Articles of Incorporation, of
          $50,000.  Mr. Tizabi is prohibited, by agreement with the Company, from
          transferring or selling such stock, or any interest in such stock for so
          long as
          the shares are outstanding. In addition, the Company has granted to Mr.
          Tizabi
          an option to purchase 100,000,000 shares of Common Stock at an exercise
          price of
          $0.01 per share, for a term of five years.  The option is fully vested and
          immediately exercisable.
  F-27
  UNIVERSAL
          DETECTION TECHNOLOGY AND SUBSIDIARIES
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 FOR
          THE
          YEARS ENDED DECEMBER 31, 2006 AND 2005
 
 Previously,
          the Company had issued to Mr. Tizabi, 100,000,000 shares of Common Stock
          in
          exchange for the cancellation of indebtedness owed to him. However, the
          Company
          determined to cancel such issuance, and issue in lieu thereof, the shares
          of
          Series A-1 Preferred Stock and the Option described above. Additionally,
          Mr.
          Tizabi has contributed $550,000 of accrued compensation to the Company
          and will
          be recorded as contributed capital.
  F-28
  **ITEM
          8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
          DISCLOSURE**
  None.
  **ITEM
        8A. CONTROLS AND PROCEDURES**
 
 As
        required by the Securities Exchange Act of 1934 (the “Exchange Act”), we carried
        out an evaluation of the effectiveness of the design and operation of our
        disclosure controls and procedures as of December 31, 2006, being the date
        of
        our most recently completed fiscal year end. This evaluation was carried
        out
        under the supervision and with the participation of our Chief Executive Officer
        and Chief Financial Officer. Based upon that evaluation, our Chief Executive
        Officer and Chief Financial Officer concluded that our disclosure controls
        and
        procedures are effective to ensure that the information required to be disclosed
        by us in the reports that we file or submit under the Exchange Act is recorded,
        processed, summarized and reported within the time periods specified by the
        rules and forms of the Securities and Exchange Commission.
 
 Disclosure
        controls and procedures are controls and other procedures that are designed
        to
        ensure that information required to be disclosed our reports filed or submitted
        under the Exchange Act is recorded, processed, summarized and reported, within
        the time periods specified in the Securities and Exchange Commission's rules
        and
        forms. Disclosure controls and procedures include, without limitation, controls
        and procedures designed to ensure that information required to be disclosed
        in
        our reports filed under the Exchange Act is accumulated and communicated
        to
        management, including our Chief Executive Officer and Chief Financial Officer,
        to allow timely decisions regarding required disclosure.
 
 During
        our most recently completed fiscal year ended December 31, 2006, there were
        no
        changes in our internal control over financial reporting that have materially
        affected, or are reasonably likely to affect, our internal control over
        financial reporting.
  The
        term
“internal control over financial reporting” is defined as a process designed by,
        or under the supervision of, the registrant's principal executive and principal
        financial officers, or persons performing similar functions, and effected
        by the
        registrant's board of directors, management and other personnel, to provide
        reasonable assurance regarding the reliability of financial reporting and
        the
        preparation of financial statements for external purposes in accordance with
        generally accepted accounting principles and includes those policies and
        procedures that:
  (1)
              Pertain
                  to the maintenance of records that in reasonable detail accurately
                  and
                  fairly reflect the transactions and dispositions of the assets
                  of the
                  registrant;
  (2)
              Provide
                  reasonable assurance that transactions are recorded as necessary
                  to permit
                  preparation of financial statements in accordance with generally
                  accepted
                  accounting principles, and that receipts and expenditures of the
                  registrant are being made only in accordance with authorizations
                  of
                  management and directors of the registrant; and
  (3)
              Provide
                  reasonable assurance regarding prevention or timely detection of
                  unauthorized acquisition, use or disposition of the registrant's
                  assets
                  that could have a material effect on the financial statements.
 
 Our
        management, including our Chief Executive Officer and Chief Financial Officer,
        does not expect that our disclosure controls or our internal controls will
        prevent all error and all fraud. A control system, no matter how well conceived
        and operated, can provide only reasonable, not absolute, assurance that the
        objectives of the control system are met. Further, the design of a control
        system must reflect the fact that there are resource constraints, and the
        benefits of controls must be considered relative to their costs. Because
        of the
        inherent limitations in all control systems, no evaluation of controls can
        provide absolute assurance that all control issues and instances of fraud,
        if
        any, within our company have been detected. These inherent limitations include
        the realities that judgments in decision-making can be faulty and that
        breakdowns can occur because of simple errors or mistakes. Additionally,
        controls can be circumvented by the individual acts of some persons, by
        collusion of two or more people or by management override of the control.
        The
        design of any system of controls also is partially based on certain assumptions
        about the likelihood of future events, and we cannot assure you that any
        design
        will succeed in achieving its stated goals under all potential future
        conditions. Over time, controls may become inadequate because of changes
        in
        conditions, or the degree of compliance with the policies or procedures may
        deteriorate. Because of the inherent limitations in a cost-effective control
        system, misstatements due to error or fraud may occur and not be
        detected.
  **ITEM
        8B. OTHER INFORMATION**
  None.
  24
  **PART
        III**
  **ITEM
        9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH
        SECTION 16 (A) OF THE EXCHANGE ACT**
  Set
        forth
        below are the names, ages, positions and business experience of our directors,
        executive officers, and key employees as of April 5, 2007.
  **Name**
              **Age**
              **Position**Jacques
                  Tizabi
              36
              President,
                  Chief Executive Officer, Acting Chief Financial Officer, and
                  DirectorMatin
                  Emouna (1)
              38
              DirectorMichael
                  Collins (1)
              37
              Secretary
                  and DirectorAli
                  Moussavi
              36
              Vice
                  President of Global Strategy
 
 (1)
        Member of Audit and Compensation Committees.
  All
        directors hold office until the next annual meeting of our shareholders and
        until their successors have been elected and qualified. Officers serve at
        the
        pleasure of the board of directors.
  There
        are
        no family relationships among any of our directors, executive officers, or
        persons nominated or chosen as our directors or executive officers.
  **Business
        Experience**
  JACQUES
        TIZABI has been the Chief Executive Officer, President and Chairman of the
        Board
        of Directors of our Company, and Acting Chief Financial Officer since October
        2001. Mr. Tizabi spends on average 40-50 hours per week providing services
        to
        us, and also is involved with several other companies in industries unrelated
        to
        our business. He is the co-founder and managing partner of Astor Capital,
        Inc.,
        which was founded in 1995 and specializes in investment banking and asset
        management, predominantly in the area of direct private investment in public
        companies. He is also a director of eCast Media, a subsidiary of NT Media
        Corp.
        of California, a publicly traded company, and President, Chief Executive
        Officer, and director of Riddle Records, Inc., a publicly traded company.
        Mr.
        Tizabi has substantial experience in evaluating, structuring and negotiating
        direct investments in public companies and later stage private companies.
        Mr.
        Tizabi holds a B.S. degree in Business from New York University and an M.B.A.
        from Pepperdine University.
  MICHAEL
        COLLINS has been the Secretary and a director of our Company since October
        2001.
        He has been an independent business consultant since December 1998. Between
        1993
        and 1997, Mr. Collins worked for Twentieth Century Fox International, PolyGram
        Filmed Entertainment and Savoy Pictures in the field of media management.
        Mr.
        Collins received a B.A. in Political Science from Columbia University and
        an
        M.B.A. from The Anderson School at UCLA.
  MATIN
        EMOUNA has served as a director of our Company since October 2001. Since
        1997,
        Mr. Emouna has maintained his own law practice in New York, where he represents
        foreign and domestic clients in a broad range of real estate transactions,
        with
        emphasis on new constructions, commercial real estate transactions, shopping
        center development, financing, and commercial leasing. Mr. Emouna also serves
        as
        a general counsel for Omni Abstract Title, Radio Sedayeh Iran and several
        non-profit religious organizations. He holds a B.S. degrees in Business
        Administration and Spanish from New York State University at Albany and a
        J.D.
        from Benjamin N. Cardozo School of Law.
  ALI
        MOUSSAVI has been the Vice President of Global Strategy of our Company since
        October 2004. Mr. Moussavi principally is responsible for identifying and
        structuring international opportunities and partnerships. Mr. Moussavi has
        substantial experience and knowledge in global expansion and for over the
        past
        five years, has acted as corporate advisor to several U.S. companies,
        structuring financial and business reorganization plans and assisting in
        the
        expansion of their consumer and/or investment base to the European and Asian
        continents. Mr. Moussavi is a co-founder of Astor Capital, Inc. He holds
        a B.S.
        degree in Mathematics from New York University.
  **COMMITTEES**
  Our
        Audit
        Committee currently consists of Michael Collins and Matin Emouna. Each Audit
        Committee member is independent within the meaning of the applicable NASDAQ
        listing standards and applicable rules and regulations promulgated by the
        Securities and Exchange Commission. Our Audit Committee currently does not
        have
        a financial expert within the meaning of the applicable SEC rules as management
        does not believe one is necessary in light of the Company's current stage
        of
        product development.
  Our
        Compensation Committee determines matters pertaining to the compensation
        and
        expense reporting of certain of our executive officers, and administers our
        stock option, incentive compensation, and employee stock purchase plans.
        Our
        Compensation Committee currently consists of Michael Collins and Matin
        Emouna.
  25
  **CODE
        OF ETHICS**
  We
        have
        adopted a Code of Business Conduct and Ethics which is designed to set the
        standards of business conduct and ethics and help directors and employees
        resolve ethical issues. The Code applies to all directors and employees,
        including the Chief Executive Officer and Chief Financial Officer and other
        persons performing similar functions. The Code covers topics including, but
        not
        limited to, conflicts of interest, confidentiality of information, fair dealing
        with customers, supplies and competitors, and compliance with applicable
        laws,
        rules and regulations. The purpose of the Code is to ensure to the greatest
        possible extent that our business is conducted in a consistently legal and
        ethical manner. Upon written request to the Company, we will provide a copy
        of
        the Code free of charge.
  **SECTION
        16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE**
 
 Section
        16(a) of the Securities Exchange Act of 1934, as amended, requires our executive
        officers and directors, and persons who own more than ten percent of our
        common
        stock, to file with the Securities and Exchange Commission initial reports
        of
        ownership, and reports of changes in ownership, of our common stock and other
        equity securities of ours. Executive officers, directors and greater than
        ten
        percent shareholders are required by SEC regulations to furnish us with copies
        of all Section 16(a) reports that they file. To our knowledge, based solely
        on a
        review of the copies of the reports furnished to us, and representations
        from
        our executive officers and directors that no other reports were required
        during
        the fiscal year ended December 31, 2006, we believe our executive officers,
        directors and greater than ten percent shareholders of our common stock,
        complied with all Section 16(a) filing requirements applicable to
        them.
  **ITEM
        10. EXECUTIVE COMPENSATION**
  **EXECUTIVE
        COMPENSATION**
 
 The
        following executive compensation disclosure reflects all compensation awarded
        to, earned by, or paid to the executive officers below for the fiscal year
        ended
        December 31, 2006. The following table summarizes all compensation for fiscal
        year 2006 received by our Chief Executive Officer. No other executive officer
        earned in excess of $100,000
        in fiscal year 2006.
 
 **SUMMARY
                  COMPENSATION TABLE**Name
                  and
                principal
                  position
              Year
              Salary
                ($)
              Bonus
                ($)
              Stock
                Awards
                ($)
              Option
                Awards
                ($)
              Non-Equity
                Incentive
                  Plan
                Compensation
                ($)
              
              Nonquali-
                fied
                Deferred
                Compen-
                sation
                Earnings
                ($)
              
              All
                  Other
                Compen-
                sation
                ($)
              Total
                ($)Jacques
                  Tizabi,
                President,
                  CEO, Acting CFO
              2006
              $262,500
              --
              --
              --
              --
              
              --
              
              --
              $0
  **OUTSTANDING
        EQUITY AWARDS AT FISCAL YEAR-END**
  The
        following reflects all outstanding equity awards for the executive officer
        named
        above.
  **OUTSTANDING
                  EQUITY AWARDS AT FISCAL YEAR-END****Option
                  Awards**
              
              **Stock
                  Awards**Name
              
              Number
                  of securities underlying unexercised options (#)
                  Exercisable
              
              Number
                  of securities underlying unexercised options (#)
                  Unexercisable
              
              Equity
                  incentive plan awards: number of securities underlying unexercised
                  earned
                  options (#)
              
              Option
                  exercise price ($)
              
              Option
                  expiration date
              
              Number
                  of shares or units of stock that have not vested (#)
              
              Market
                  value of shares or units of stock that have not vested ($)
              
              Equity
                  incentive plan awards: number of unearned shares, units, or other
                  rights
                  that have not vested (#)
              
              Equity
                  incentive plan awards: market or payout value of unearned shares,
                  units,
                  or other rights that have not vested ($)Jacques
                  Tizabi
              
              
              7,950,000
 
 26
  **DIRECTOR
        COMPENSATION**
  The
        following reflects all compensation awarded to, earned by, or paid to the
        directors below for the fiscal year ended December 31, 2006.
  **DIRECTOR
                  COMPENSATION**Name
              Fees
                  Earned or
                Paid
                  in Cash ($)
              Stock
                Awards
                ($)
              Option
                Awards
                ($)
              Non-Equity
                Incentive
                Plan
                Compen-
                sation
                ($)
              
              Change
                  in
                Pension
                  Value
                and
                Nonqualified
                Deferred
                Compensation
                Earnings
                ($)
              
              All
                Other
                Compen-
                sation
                ($)
              Total
                ($)Jacques
                  Tizabi
              $0
              --
              --
              --
              
              --
              
              --
              $0Matin
                  Emouna
              $0
              --
              --
              --
              
              --
              
              --
              $0Michael
                  Collins
              $0
              --
              --
              --
              
              --
              
              --
              $0
  On
        October 18, 2004, the Board of Directors determined to compensate independent
        directors in the amount of $15,000 each for services rendered through December
        31, 2004. The Board also determined to compensate the independent directors
        $5,000 each for services to be rendered for the period January 1, 2005 through
        December 31, 2005. No compensation was paid to directors for the period January
        1, 2006 through December 31, 2006. When we request our Board members to attend
        meetings in person, it is our policy to reimburse directors for reasonable
        travel and lodging expenses incurred in attending those Board meetings.
  **EMPLOYMENT
        AGREEMENTS**
  We
        have
        an employment agreement with Jacques Tizabi. Mr. Tizabi's employment agreement,
        dated as of September 24, 2001, and amended August 23, 2004, provides for
        Mr.
        Tizabi to serve as our Chairman of the Board, Chief Executive Officer and
        President until December 31, 2010, unless otherwise extended. The employment
        agreement provides for Mr. Tizabi to receive an annual base salary of $250,000,
        subject to salary increases of 5% per year commencing January 1, 2006. Mr.
        Tizabi also is entitled to specified perquisites, including participation
        in any
        group life, medical, disability and other insurance plans provided by us,
        use of
        a luxury automobile approved by the compensation committee (with a maximum
        cost
        of $2,500 per month), monthly dues for club memberships not to exceed $1,500
        per
        month, and reimbursement of entertainment expenses provided to our customers,
        vendors, and strategic partners. To date, Mr. Tizabi has not received any
        of
        these specified perquisites.
  If
        Mr.
        Tizabi's employment is terminated due to his death, the employment agreement
        provides that we will pay Mr. Tizabi's estate his remaining base salary during
        the remaining scheduled term of the employment agreement, accelerate the
        vesting
        of his options and continue to provide family medical benefits. If Mr. Tizabi's
        employment is terminated due to his disability, the employment agreement
        provides that we will pay Mr. Tizabi his remaining base salary during the
        remaining scheduled term of the employment agreement (reduced by any amounts
        paid under long-term disability insurance policy maintained by us for the
        benefit of Mr. Tizabi).
  If
        Mr.
        Tizabi terminates the employment agreement for cause, if we terminate the
        employment agreement without cause or in the event of a change of control,
        in
        which event the employment of Mr. Tizabi terminates automatically, we will
        pay
        Mr. Tizabi his remaining base salary during the remaining scheduled term
        of the
        employment agreement and an amount based on his past bonuses and continue
        to
        provide specified benefits and perquisites.
  If
        Mr.
        Tizabi terminates the employment agreement without cause or we terminate
        the
        employment agreement for cause, Mr. Tizabi is entitled to receive all accrued
        and unpaid salary and other compensation and all accrued and unused vacation
        and
        sick pay.
  If
        any of
        the payments due Mr. Tizabi upon termination qualifies as "excess parachute
        payments" under the Internal Revenue Code, Mr. Tizabi also is entitled to
        an
        additional payment to cover the tax consequences associated with these excess
        parachute payments.
  Mr.
        Tizabi has agreed that he will defer payment of all accrued but unpaid bonus
        or
        salary, or other compensation payable to him in excess of $150,000 per year,
        for
        2005 and 2006 until December 31, 2007.
  We
        also
        have an employment agreement with Ali Moussavi. Mr. Moussavi's employment
        agreement, dated as of October 1, 2004, provides for Mr. Moussavi to serve
        as
        our Vice President of Global Strategy. The employment agreement provides
        for Mr.
        Moussavi to receive an annual base salary of $150,000. Mr. Moussavi has agreed
        that his annual base salary for 2006 may be paid to him in either cash or
        shares
        of our stock.
  27
  **ITEM
                  11.**
              **SECURITIES
                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                  STOCKHOLDER MATTERS**
 
 **BENEFICIAL
        OWNERSHIP**
  The
        following table sets forth information as of April 5, 2007, relating to the
        ownership of our common and preferred stock, by (i) each person known by
        us to
        be the beneficial owner of more than five percent of the outstanding shares
        of
        each class of our capital stock, (ii) each of our directors and nominees,
        (iii)
        each of our named executive officers and (iv) all of our executive officers
        and
        directors as a group. Except as may be indicated in the footnotes to the
        table
        and subject to applicable community property laws, each person has the sole
        voting and investment power with respect to the shares owned. The address
        of
        each person listed is in care of Universal Detection Technology, 9595 Wilshire
        Blvd., Suite 700, Beverly Hills, California 90212.
  Name
                  of Beneficial Owner
              
              Number
                  of Shares of Common Stock Beneficially Owned (1)
              
              Percent
                  of Class (1)
              
              Number
                  of Shares of Preferred Stock Beneficially Owned (1)
              
              Percent
                  of Class (1)Jacques
                  Tizabi,
                President,
                  CEO, Acting CFO, Director
              
              107,979,700
                  (2)
              
              24.4%
              
              150
              
              100%Ali
                  Moussavi,
                Vice
                  President of Global Strategy
              
              0
              
              *
              
              0
              
              *Matin
                  Emouna,
                Director
              
              0
              
              *
              
              0
              
              *Michael
                  Collins,
                Secretary
                  and Director
              
              0
              
              *
              
              0
              
              *Directors
                  and executive officers as a group (4 persons)
              
              107,979,700
                  (2)
              
              24.4%
              
              150
              
              100%*
                  Less than 1%.
  (1)
              Under
                  Rule 13d-3 under the Exchange Act, certain shares may be deemed
                  to be
                  beneficially owned by more than one person (if, for example, persons
                  share
                  the power to vote or the power to dispose of the shares). In addition,
                  shares are deemed to be beneficially owned by a person if the person
                  has
                  the right to acquire the shares (for example, upon exercise of
                  an option)
                  within 60 days of the date as of which the information is provided.
                  In
                  computing the percentage ownership of any person, the amount of
                  shares
                  outstanding is deemed to include the amount of shares beneficially
                  owned
                  by that person (and only that person) by reason of these acquisition
                  rights. As a result, the percentage of outstanding shares of any
                  person as
                  shown in this table does not necessarily reflect the person’s actual
                  ownership with respect to the number of shares of our common stock
                  actually outstanding at April 5, 2007. As of April 5, 2007, we
                  had
                  333,267,715 common shares, no par value, outstanding, and 150 shares
                  of
                  Series A-1 Preferred Stock, no par value,
                  outstanding.
  (2)
              Includes
                  107,950,000 shares that may be acquired upon the exercise of fully
                  vested
                  options.
  **CHANGE
        IN CONTROL**
  We
        are
        not aware of any arrangement that might result in a change in control in
        the
        future.
  **ITEM
        12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**
  There
        were no transactions with related persons, promoters, or control persons
        that
        required disclosure during the period covered by this report.
  **ITEM
        13. EXHIBITS**
  3.1
        Articles of Incorporation of A. E. Gosselin Engineering, Inc. (now the Company)
        (incorporated herein by reference to Exhibit 3(a) to Amendment No. 1 to the
        Registration Statement on Form 10 of Dasibi Environmental
        Corporation).
  3.2
        Certificate of Amendment of Articles of Incorporation of A. E. Gosselin
        Engineering, Inc. (now the Company) (incorporated herein by reference to
        Exhibit
        3(a) to Amendment No. 1 to the Registration Statement on Form 10 of Dasibi
        Environmental Corporation).
  3.3
        Certificate of Amendment of Articles of Incorporation of Dasibi Environmental
        Corp. (now the Company) (incorporated herein by reference to Exhibit 3(a)
        to
        Amendment No. 1 to the Registration Statement on Form 10 of Dasibi Environmental
        Corporation).
  3.4
        Amended and Restated Bylaws of Registrant (incorporated by reference to Exhibit
        3.4 of the Company's Annual Report on Form 10-KSB for the year ended December
        31, 2001, filed on April 15, 2002).
  3.5
        Certificate of Determination of Preferences of
        Preferred Shares.
  28
  4.1
        Amended and Restated 2003 Stock Incentive Plan (incorporated by reference
        to
        Exhibit 4.2 of the Company's Annual Report on Form 10-KSB for the year ended
        December 31, 2004, filed on March 31, 2005).
  4.2
        2006
        Stock Compensation Plan (incorporated by reference to the Company's Form
        S-8
        Registration Statement filed on February 13, 2006).
  4.3
        2006
        Consultant Stock Plan (incorporated by reference to the Company's Form S-8
        Registration Statement filed on June 30, 2006).
  4.4
        2006-II Consultant Stock Plan (incorporated by reference to the Company's
        Form
        S-8 Registration Statement filed on November 22, 2006).
  10.1
        Employment Agreement by and between the Company and Jacques Tizabi dated
        September 25, 2001 (incorporated by reference to the Company's Quarterly
        Report
        on Form 10-QSB for the Quarter Ended March 31, 2002, filed on May 20,
        2002).
  10.2
        Amendment to Employment Agreement of Jacques Tizabi, dated August 23, 2004.
        (incorporated by reference to Exhibit 10.1 to the Company 's Quarterly Report
        on
        Form 10-QSB for the Quarter Ended September 30, 2004, filed on November 22,
        2004).
  10.3
        Technology Affiliates Agreement by and between the Company and California
        Institute of Technology, dated August 6, 2002. (incorporated herein by reference
        to Exhibit 10.3 to the Company 's Annual Report on Form 10-KSB for the fiscal
        year ended December 31, 2002, filed on April 15, 2003).
  10.4
        Licensing Agreement by and between Universal Detection Technology and California
        Institute of Technology, dated September 30, 2003 (incorporated by reference
        to
        Exhibit 10.4 to the Company 's Quarterly Report on Form 10-QSB for the Quarter
        Ended September 30, 2003, filed on November 19, 2003).
  10.5
        Agreement for Investment Banking and Advisory Services, by and between the
        Company and Astor Capital, Inc., dated June 1, 2003 (incorporated by reference
        to Exhibit 10.5 of the Company 's Annual Report on Form 10-KSB for the year
        ended December 31, 2003, filed on March 31, 2004).
  10.6
        Amendment to Agreement for Investment Banking and Advisory Services with
        Astor
        Capital, Inc. dated April 29, 2004 (incorporated by reference to Exhibit
        10.1 to
        the Company 's Quarterly Report on Form 10-QSB for the Quarter Ended June
        30,
        2004, filed on August 23, 2004).
  10.7
        Amendment to Agreement for Investment Banking and Advisory Services with
        Astor
        Capital, Inc. dated September 22, 2004 (incorporated by reference to Exhibit
        10.4 to the Company 's Quarterly Report on Form 10-QSB for the Quarter Ended
        September 30, 2004, filed on November 22, 2004).
  10.8
        Standard Form Office Lease, dated September 2003, between Astor Capital,
        Inc.
        and CSDV, a Limited Partnership. (incorporated by reference to Exhibit 10.2
        to
        the Company 's Quarterly Report on Form 10-QSB for the Quarter Ended September
        30, 2004, filed on November 22, 2004).
  10.9
        Assumption of Lease Agreement, dated October 14, 2004, between Universal
        Detection Technology and Astor Capital, Inc. (incorporated by reference to
        Exhibit 10.2 to the Company 's Quarterly Report on Form 10-QSB for the Quarter
        Ended September 30, 2004, filed on November 22, 2004).
  10.10
        Letter Agreement, dated August 10, 2004, between the Company and IIG Equity
        Opportunities Fund Ltd. (incorporated by reference to the exhibit so described
        in Amendment No. 5 to the Company's Registration Statement on Form SB-2,
        File
        No. 333-117859, filed with the Securities and Exchange Commission on February
        2,
        2005).
  10.11
        Letter Agreement, dated August 10, 2004, between the Company and Target Growth
        Fund Ltd. (incorporated by reference to the exhibit so described in Amendment
        No. 5 to the Company's Registration Statement on Form SB-2, File No. 333-117859,
        filed with the Securities and Exchange Commission on February 2,
        2005).
  10.12
        Letter Agreement, dated September 21, 2004 between the Company and JRT Holdings.
        (incorporated by reference to the exhibit so described in Amendment No. 5
        to the
        Company's Registration Statement on Form SB-2, File No. 333-117859, filed
        with
        the Securities and Exchange Commission on February 2, 2005).
  10.13
        Letter Agreement, dated October 1, 2004, between the Company and Ali Moussavi.
        (incorporated by reference to the exhibit so described in Amendment No. 5
        to the
        Company's Registration Statement on Form SB-2, File No. 333-117859, filed
        with
        the Securities and Exchange Commission on February 2, 2005).
  10.14
        Letter of Engagement dated August 19, 2005, between Trilogy Capital Partners,
        Inc. and Universal Detection Technology (incorporated by reference to the
        Company's Current Report on Form 8-K filed on September 28,
        2005).
  29
  10.15
        Form of Stock Purchase Warrant (incorporated by reference to the Company's
        Registration Statement on Form SB-2 filed on February 14, 2006).
  10.16
        Stock Purchase Warrant issued to Trilogy Capital Partners (incorporated by
        reference to the Company's Registration Statement on Form SB-2 filed on February
        14, 2006).
  10.17
        Investment Agreement by and between Universal Detection Technology, a California
        corporation, and European Equity Group (incorporated by reference to the
        Company's Registration Statement on Form SB-2 filed on February 14,
        2006).
  10.18
        Form of Consulting Agreement (incorporated by reference to the Company's
        Registration Statement on Form SB-2 filed on February 14, 2006).
  21.1
        Subsidiaries of Registrant (incorporated by reference to Exhibit 21.1 of
        the
        Company 's Annual Report on Form 10-KSB for the year ended December 31, 2003,
        filed March 31, 2004).
  31.1
        Certification pursuant to Section 302 of the
        Sarbanes-Oxley Act of 2002.
  32.1
        Certification pursuant to 18 U.S.C. Section 1350, as
        adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  **ITEM
        14. PRINCIPAL ACCOUNTANTS FEES AND SERVICES**
  The
        Audit
        Committee approved the engagement of AJ. Robbins, PC as our independent auditors
        for the year ended December 31, 2006. The Committee also has approved the
        engagement of AJ. Robbins as our independent auditors through the quarter
        ending
        September 30, 2007.
  **AUDIT
        FEES**
  The
        aggregate fees billed by AJ. Robbins, PC for the audit and review of our
        annual
        financial statements and services that are normally provided by an accountant
        in
        connection with statutory and regulatory filings or engagements for the fiscal
        years ended December 31, 2006 and 2005, were approximately $90,867 and $66,691,
        respectively.
  **AUDIT-RELATED
        FEES**
  The
        aggregate fees billed by AJ. Robbins, PC for assurance and related services
        rendered by AJ. Robbins that are reasonably related to the performance of
        the
        audit or review of our financial statements for the fiscal years ended December
        31, 2006 and 2005 were approximately $0 and $0, respectively.
  **TAX
        FEES**
  The
        aggregate fees billed by AJ. Robbins, PC for professional services rendered
        for
        tax compliance, tax advice and tax planning for the fiscal years ended December
        31, 2006 and 2005, were approximately $8,843 and $9,779
        respectively.
  **ALL
        OTHER FEES**
  No
        other
        fees were billed by AJ. Robbins, PC for the fiscal years ended December 31,
        2006
        and 2005.
  **AUDIT
        COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES**
  The
        audit
        committee is required to pre-approve the audit and non-audit services performed
        by the independent auditor in order to assure that the provision of such
        services do not impair the auditor's independence.
  30
  **SIGNATURES**
 
 In
        accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
        the
        registrant caused this report to be signed on its behalf by the undersigned,
        thereunto duly authorized.
  Date:
                  April 15, 2007
              UNIVERSAL
                  DETECTION TECHNOLOGYBy:
              /s/
                Jacques TizabiJacques
                  Tizabi, President, Chief ExecutiveOfficer,
                  Acting Chief Financial Officer, and Chairman of the Board of
                  Directors
 
 POWER
        OF
        ATTORNEY
  KNOW
        ALL
        PERSONS BY THESE PRESENTS, that each person whose signature appears below
        constitutes and appoints Jacques Tizabi, his attorney-in-fact, each with
        the
        power of substitution, for him and in his name, place and stead, in any and
        all
        capacities, to sign any and all amendments to this Annual Report on Form
        10-KSB,
        and to file the same, with all exhibits thereto and all documents in connection
        therewith, with the Securities and Exchange Commission, granting unto said
        attorney-in-fact and agents, full power and authority to do and perform each
        and
        every act and thing requisite and necessary to be done in and about the
        premises, as fully to all intents and purposes as he might or could do in
        person, hereby ratifying and confirming said attorney-in-fact and agents
        or any
        of them, or his or their substitute or substitutes, may lawfully do or cause
        to
        be done by virtue hereof.
  In
        accordance with the Securities Exchange Act of 1934, this report has been
        signed
        below by the following persons on behalf of the registrant and in the capacities
        and on the dates indicated.
   Date:
                  April 15, 2007
              /s/
                Jacques TizabiJacques
                  Tizabi, President, Chief ExecutiveOfficer,
                  Acting Chief Financial Officer, and Chairman of the Board of
                  DirectorsDate:
                  April 15, 2007
              /s/
                Michael CollinsMichael
                  Collins,
                Secretary
                  and DirectorDate:
                  April 15, 2007
              /s/
                Matin EmounaMatin
                  Emouna,
                Director




31