SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For The Quarterly Period Ended March 31, 2006
                           Commission File No. 0-29804

                          SecureCARE Technologies, Inc.
               (Exact name of registrant as specified in charter)

                                     Nevada
            (State or jurisdiction of incorporation or organization)

                                   82-0255758
                      (I.R.S. Employer Identification No.)

          3755 Capital of Texas Highway, Suite 160E Austin, Texas 78704
                    (Address of principal executive offices)

                                 (512) 228-3932
                (Issuer's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:

As of April 30, 2006, there were 20,304,000 shares of Common Stock, $.001 par
value of the registrant issued and outstanding.

Transitional Small Business Disclosure Format (check one) YES [ ] NO [X]

<PAGE>

                          SECURECARE TECHNOLOGIES, INC.
                                   FORM 10-QSB
                                    CONTENTS

<TABLE>
<CAPTION>
                                                                                           Page No.
                                                                                           --------
<S>             <C>                                                                              <C>
PART I          FINANCIAL INFORMATION

      Item 1.   Financial Statements

                Balance Sheets at March 31, 2006(unaudited) and
                December 31, 2005                                                                2

                Statements of Operations (unaudited) for the three months
                ended March 31, 2006 and 2005                                                    3

                Statements of Cash Flows (unaudited) for the three months
                ended March 31, 2006 and 2005                                                    4

                Notes to Interim Financial Statements (unaudited)                                5

      Item 2.   Management's Discussion and Analysis of Financial Condition and Results
                of Operations                                                                   11

      Item 3.   Controls and Procedures                                                         15


PART II         OTHER INFORMATION

      Item 1.   Legal Proceedings                                                               15

      Item 2.   Changes in Securities and Use of Proceeds                                       15

      Item 3.   Defaults Upon Senior Securities                                                 15

      Item 4.   Submission of Matters to a Vote of Security Holders                             15

      Item 5.   Other Information                                                               15

      Item 6.   Exhibits and Reports on Form 8-K                                                15


SIGNATURES                                                                                      16

CERTIFICATIONS                                                                                  17
</TABLE>

                                        1
<PAGE>

                          SECURECARE TECHNOLOGIES, INC.
                                 BALANCE SHEETS
                March 31, 2006 (Unaudited) and December 31, 2005


                                     ASSETS
                                     ------
<TABLE>
<CAPTION>
                                                                                  2006
                                                                              (Unaudited)         2005
                                                                              ------------    ------------
<S>                                                                           <C>             <C>
Current assets
    Cash and cash equivalents                                                 $      6,478    $      3,400
    Accounts receivable - trade, net of allowance for doubtful
       accounts of $10,000 and $5,000, respectively                                 31,758          42,936
    Prepaid expenses                                                                    --          14,905
                                                                              ------------    ------------
         Total current assets                                                       38,236          61,241

Property and equipment, net of accumulated depreciation of
    $382,864 and $361,490, respectively                                             72,448          93,822
Deferred financing fees, net of accumulated amortization of $84,546 and
    $79,032, respectively                                                               --           5,514
Deposits                                                                             5,851          97,830
                                                                              ------------    ------------

         Total assets                                                         $    116,535    $    258,407
                                                                              ============    ============

                      LIABILITIES AND SHAREHOLDERS' DEFICIT
                      -------------------------------------

Current Liabilities
    Current portion of notes payable, including $163,347 and $136,123
       to a related party, respectively, net of debt discount of $8,973
       and $14,164, respectively                                              $  1,437,874    $  1,355,459
    Accounts payable - trade                                                       262,830         222,888
    Accrued payroll                                                                265,236         222,436
    Accrued payroll tax liabilities                                                173,240         170,918
    Deferred revenue                                                                 9,207          16,183
    Accrued interest, including $44,296 to related parties                         213,672         161,337
    Other accrued liabilities                                                      213,145         111,629
                                                                              ------------    ------------
         Total current liabilities                                               2,575,204       2,260,850

Related party notes payable, less current portion                                  381,143         408,367

Other non-current liabilities                                                       53,552              --

Commitments and contingencies

Shareholders' deficit
    Preferred stock - $0.001 par value; 15,000,000 shares authorized:
    Series A preferred stock - 1,955,000 shares issued and outstanding
       (liquidation preference of $1.00 per share)                                   1,955           1,955
    Series B preferred stock - 1,427,273 shares issued and outstanding
       (liquidation preference of $1.10 per share)                                   1,427           1,427
    Common stock - $0.001 par value;  50,000,000 shares authorized,
      20,304,000 and 20,004,000 shares issued and outstanding, respectively         20,304          20,004
    Additional paid-in capital                                                  12,724,223      12,630,770
    Receivable for the purchase of equity                                           (2,000)         (2,000)
    Accumulated deficit                                                        (15,639,273)    (15,062,966)
                                                                              ------------    ------------
         Total shareholders' deficit                                            (2,893,364)     (2,410,810)
                                                                              ------------    ------------

         Total liabilities and shareholders' deficit                          $    116,535    $    258,407
                                                                              ============    ============
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                        2
<PAGE>

                          SECURECARE TECHNOLOGIES, INC.
                      STATEMENTS OF OPERATIONS (UNAUDITED)
               For the Three Months Ended March 31, 2006 and 2005


<TABLE>
<CAPTION>
                                                                      2006            2005
                                                                  ------------    ------------
<S>                                                               <C>             <C>
Revenues                                                          $     90,968    $     67,768

Operating expenses
   Cost of revenues                                                     78,306         190,448
   Selling, general and administrative                                 370,479         511,978
   Loss on lease settlement                                            152,141              --
                                                                  ------------    ------------

   Operating loss                                                     (509,958)       (634,658)

Other expense
   Interest expense (including $6,644 and $6,644 to a
      related party, respectively)                                     (66,349)        (40,511)
                                                                  ------------    ------------

   Net loss                                                           (576,307)       (675,169)
   Deemed dividend upon issuance of convertible preferred stock             --        (198,401)
                                                                  ------------    ------------

Net loss available to common shareholders                         $   (576,307)   $   (873,570)
                                                                  ============    ============

Net loss per common share - basic and diluted                     $      (0.03)   $      (0.04)
                                                                  ============    ============

Weighted average number of common shares outstanding - basic
  and diluted                                                       20,224,000      20,004,000
                                                                  ============    ============
</TABLE>

The accompanying notes are in integral part of these financial statements.

                                        3

<PAGE>

                          SECURECARE TECHNOLOGIES, INC.
                      STATEMENTS OF CASH FLOWS (UNAUDITED)
               For the Three Months Ended March 31, 2006 and 2005


<TABLE>
<CAPTION>
                                                                  2006            2005
                                                              ------------    ------------
<S>                                                           <C>             <C>
Cash flows from operating activities
    Net loss                                                  $   (576,307)   $   (675,169)
    Adjustments to reconcile net loss to net cash used
      in operating activities:
       Depreciation and amortization                                21,374          14,291
       Bad debt expense                                              5,000              --
       Common stock issued for services                             75,000              --
       Stock compensation expense                                   65,625              --
       Loss on lease settlement                                    152,141              --
       Amortization of deferred financing fees                       5,514          11,092
       Amortization of debt discount                                 8,319          10,250
       Increases and decreases in working capital accounts:
       Accounts receivable - trade                                   6,178          (7,153)
       Prepaid Expenses                                             14,905          11,363
       Deposits                                                     32,740              --
       Deferred revenue                                             (6,976)             --
       Accounts payable - trade                                     39,942         (30,664)
       Accrued liabilities                                         159,623          13,008
                                                              ------------    ------------
            Cash flows provided by operating activities              3,078        (652,982)


Cash flows from financing activities
    Payments on notes payable                                           --         (12,500)
    Proceeds from issuance of preferred stock                           --         846,944
                                                              ------------    ------------
       Cash flows provided by financing activities                      --         834,444

Net increase in cash and cash equivalents                            3,078         181,462

Cash and cash equivalents, beginning of period                       3,400          50,847
                                                              ------------    ------------

Cash and cash equivalents, end of period                      $      6,478    $    232,309
                                                              ============    ============
</TABLE>

The accompanying notes are in integral part of these financial statements.

                                        4

<PAGE>

                          SECURECARE TECHNOLOGIES, INC.
                NOTES TO INTERIM FINANCIAL STATEMENTS (Unaudited)

NOTE 1.  NATURE OF OPERATIONS

SecureCARE Technologies, Inc. (the Company or SCTI), formerly eClickMD, Inc.,
was originally incorporated in Idaho in 1961. During 1998, the Company changed
its domicile to the State of Nevada and is now a Nevada Corporation.

The Company provides Internet-based document exchange and e-signature solutions
for the healthcare industry. The Company's customers include physicians, clinics
and home healthcare, hospice and durable medical equipment providers.
SecureCARE's technology eliminates paper, while enhancing the physicians ability
to capture fees for otherwise unbilled time and services, uniquely and directly
impacting the physicians revenue. SecureCARE.net is a secure, HIPAA-ready
(Health Insurance and Portability Act) tracking and reporting tool that
streamlines operations while providing physicians with additional revenue
opportunities. The Company markets its services to customers throughout the
United States, currently operating from its Austin, Texas-based corporate
headquarters.

BASIS OF PRESENTATION

The unaudited financial statements have been prepared in accordance with
accounting principles generally accepted in the United States for interim
financial information and in accordance with the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of the
financial information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation have been included. Results of operations for the
three-month period ended March 31, 2006, are not necessarily indicative of the
results that may be expected for the year ending December 31, 2006.

These financial statements should be read in conjunction with the financial
statements and notes thereto contained in the Company's Annual Report on Form
10-KSB for the year ended December 31, 2005.

GOING CONCERN

The financial statements for the three months ended March 31, 2006 were prepared
on the assumption that the Company will continue as a going concern. The Company
sustained a net loss of $576,307 for the three months ended March 31, 2006. The
Company has accumulated losses through March 31, 2006 of $15,639,273. Net cash
flows from operating activities for the three-month period ended March 31, 2006
totaled $3,078. Total liabilities at March 31, 2006 of $3,009,899 exceed total
assets of $116,535. As of the date of this report, the Company is unable to meet
all of its short-term obligations because of shortages of cash. The Company's
continued existence depends upon the success of management's efforts to raise
additional capital necessary to meet the Company's obligations as they come due,
and to obtain sufficient capital to execute its business plan. The Company
intends to obtain capital primarily through issuances of debt or equity. There
can be no degree of assurance that the Company will be successful in completing
additional financing transactions. Failure to generate additional revenues,
raise additional capital or manage discretionary spending could have a material
adverse effect on the Company's ability to continue as a going concern and to
achieve its intended business objectives. The accompanying unaudited financial
statements do not include any adjustments to reflect the possible effects on the
recoverability and classification of assets or classification of liabilities
which may result from the inability of the Company to continue as a going
concern.

NOTE 2.  SUMMARY OF SIGNFICANT ACCOUNTING PRINCIPLES

REVENUE RECOGNITION

The Company derives its revenues from the following home healthcare provider
sources - recurring monthly service fees, one-time training and set-up fees and
integration and customization services as contracted. The Company recognizes
revenue in accordance with SEC Staff Accounting Bulletin No. 104, Revenue
Recognition (SAB 104). SAB 104 generally requires that four basic criteria must
be met before revenue can be recognized: (1) persuasive evidence of an
arrangement exists; (2) delivery has occurred or services have been rendered;
(3) the fee is fixed and determinable; and (4) collectibility is reasonably
assured. Determination of criteria (3) and (4) are based on management's
judgments regarding the fixed nature of the fee charged for services rendered
and the collectibility of those fees. Should changes in conditions cause
management to determine these criteria are not met for certain sales, revenue
recognized for any reporting period could be adversely affected. In instances
when any one of the four criteria is not met, the Company will either defer
recognition of the monthly service fees until the criteria are met or will
recognize the recurring monthly service fees on a ratable basis. Recognition of
revenue resulting from one-time training and set-up fees, which is billed
upfront, is deferred and amortized over the life of the corresponding
arrangements and is included in deferred revenue in the accompanying financial
statements.

                                       5
<PAGE>

SOFTWARE AND SOFTWARE DEVELOPMENT COSTS

The Company capitalizes costs related to computer software developed or obtained
for internal use in accordance with the American Institute of Certified Public
Accountants Statement of Position (SOP) 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use" and depreciates these
costs using the straight-line method over the estimated useful life of the
software, generally two to three years. SOP 98-1 provides guidance on
determining whether computer software is internal-use software and guidance on
accounting for proceeds of computer software originally developed or obtained
for internal use and then subsequently sold to the public. It also provides
guidance on capitalization of the costs incurred for computer software developed
or obtained for internal use.

LONG-LIVED ASSETS

Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to the undiscounted future net
cash flows expected to be generated by the asset. If such assets are considered
to be impaired, the impairment to be recognized is measured by the amount by
which the carrying amount of the net asset exceeds the fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying amount or
fair value less costs to sell.

STOCK-BASED COMPENSATION

On January 1, 2006, the Company adopted the modified prospective method of SFAS
No. 123 (revised 2004), "Share-Based Payment" ("SFAS No. 123R"), which is a
revision of SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS No.
123"). SFAS No. 123R supersedes APB Opinion No. 25, and amends SFAS No. 95,
"Statement of Cash Flows". SFAS No. 123R requires that all share-based payments
to employees, including the grant of employee stock options, be recognized in
the income statement based on their fair values. Under the modified prospective
application, SFAS No. 123R is applied to new awards and awards modified,
repurchased or cancelled after the effective date. Compensation cost for the
portion of awards for which requisite service has not been rendered that are
outstanding as of the effective date is recognized as the requisite service is
rendered on or after the effective date. The compensation cost for the portion
of awards is based on the grant date fair value of those awards as calculated
for pro-forma disclosure under SFAS No. 123. The Company's financial statements
for the first quarter of 2006 reflect the impact of adopting SFAS No. 123R. In
accordance with the modified prospective method, the Company's financial
statements for the prior periods have not been restated to reflect, and do not
include, the impact of SFAS No. 123R.

Stock-based compensation expense recognized during the period is based on the
value of the portion of the stock-based payment awards that is ultimately
expected to vest. As stock-based compensation expense recognized in the
statement of operations for the first quarter of 2006 is based on awards
ultimately expected to vest, it has been reduced for estimated forfeitures. SFAS
No. 123R requires forfeitures to be estimated at the time of grant and revised,
if necessary, in subsequent periods if actual forfeitures differ from those
estimates.

The adoption of SFAS No. 123R will require the Company to record material
non-cash stock compensation expenses. While the adoption of SFAS No. 123R is not
expected to have a substantial effect on the Company's financial condition or
cash flows, it is expected to have a significant effect on the Company's result
of operations. The future impact of the adoption of SFAS No. 123R cannot be
currently predicted as it will depend on the Company's future decisions to issue
share-based payments.

Prior to January 1, 2006, the Company accounted for stock-based employee
compensation arrangements in accordance with provisions of Accounting Principles
Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees", and
complied with the disclosure provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation" as amended by SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure -- an Amendment of FASB
Statement No. 123". Under APB Opinion No. 25, compensation expense for employees
is based on the excess, if any, on the date of grant, of the fair value of the
Company's stock over the exercise price and is recognized on a straight-line
basis over the vesting term of the option.

The Company accounts for equity instruments issued to non-employees based upon
the fair value of the awards. All transactions in which goods or services are
the consideration received for the issuance of equity instruments are accounted
for based on the fair value of the consideration received or the fair value of
the equity instrument issued, whichever is more reliably measurable. The
measurement date of the fair value of the equity instrument issued is the
earlier of the date on which the counterparty's performance is complete or the
date on which it is probable that performance will occur.

The Board of Directors of the Company approved the SecureCARE Technologies, Inc.
2004 Stock Option Plan on December 3, 2004. The Company has reserved 2,000,000
shares of common stock for issuance under this Plan. The exercise price of each
option granted may not be less than the fair market value of common stock at the
date of grant, without prior approval of the Board of Directors. Options are
exercisable according to the terms set out in the option agreement, not to
exceed ten years. As March 31, 2006 the Company had 892,248 options outstanding,
of which 604,340 were exercisable. All options granted by the Company are
restricted stock awards under rules promulgated by the Securities and Exchange
Commission

The Company adopted SFAS No. 123R using the modified prospective transition
method beginning January 1, 2006. Accordingly, during the three month period
ended March 31, 2006, the Company recorded stock-based compensation expense for
options granted prior to, but not yet vested, as of January 1, 2006, as if the
fair value method required for pro forma disclosure under SFAS No. 123 were in
effect for expense recognition purposes, adjusted for estimated forfeitures.
There were no new options issued during the three months ended March 31, 2006.
As SFAS No. 123R requires that stock-based compensation expense be based on
awards that are ultimately expected to vest, stock based compensation for the
three months ended March 31, 2006 has been reduced for estimated forfeitures.
The impact on the Company's results of operations of recording stock-based
compensation for the three month period ended March 31, 2006 was as follows:

                                       6
<PAGE>

<TABLE>
<CAPTION>
                                                                                   ----------------
                                                                                  Three Months Ended
                                                                                    March 31, 2006
                                                                                   ----------------
<S>                                                                                <C>
         Selling, general and administrative                                       $         65,625
                                                                                   ----------------

         Impact on net loss to common shareholders                                 $         65,625
                                                                                   ================

         Impact on net loss per share to common shareholders (basic and diluted)   $         (0.003)
                                                                                   ================
</TABLE>

The Company calculated the fair value of each option award on the date of grant
using the Black-Scholes option pricing model. The following assumptions were
used for each respective period:

                                                    Three Months Ended March 31,
                                                       2006            2005
                                                   ------------    ------------
                Risk-free interest rates                 5%               5%
                Expected lives                         4 years          4 years
                Dividend                                 0%               0%
                Expected volatility                     100%             100%
                Weighted average volatility             100%             100%

The following table summarizes the activity under the Plan for the three months
ended March 31, 2006:

<TABLE>
<CAPTION>
                                                                                     2004 Stock Incentive Plan
                                                            ------------------------------------------------------------------------

                                                                                                        Weighted
                                                                                     Weighted            Average        Aggregate
                                                                                      Average           Remaining       Intrinsic
                                                                      Shares       Exercise Price   Contractual Term      Value
                                                            ------------------------------------------------------------------------
<S>                                                                    <C>          <C>                <C>               <C>
Outstanding at January 1, 2006                                       1,349,608      $      1.01        0.81 years
Granted                                                                     --
Exercised                                                                   --
Cancelled                                                             (457,359)     $      1.01
                                                            -------------------
Outstanding at March 31, 2006                                          892,249      $      1.01        0.71 years        $      --
                                                            ===================
Vested and expected to vest at March 31, 2006                          750,000      $      1.00        0.75 years        $      --
Options exercisable at March 31, 2006                                  604,340      $      1.02        0.64 years        $      --
</TABLE>

The aggregate intrinsic value is calculated as the difference between the
exercise price of the underlying awards and the quoted price of the Company's
common stock, $0.25, at March 31, 2006. No options were "in-the-money" at March
31, 2006. No options were exercised during the three months ended March 31,
2006.

As of March 31, 2006 there was approximately $175,000 of total unrecognized
compensation cost related to unvested options. The cost is expected to be
recognized over a weighted-average period of 0.75 years.

Prior to the adoption of SFAS No. 123R, the Company provided the disclosures
required under SFAS No. 123, as amended by SFAS No.148. Employee stock-based
compensation expense recognized under SFAS No. 123R was not reflected in the
Company's result of operations for the three months ended March 31, 2005 for
employee stock option awards as all options were granted with an exercise price
equal to the market value of the underlying common stock on the date of grant.
Previously reported amounts have not been restated.

If the Company had recognized compensation expense on a straight-line basis over
the vesting term of the options based upon the fair value at the grant date for
options granted to employees, officers and directors during the three months
ended March 31, 2005 the pro forma effect on net loss attributable to common
shareholders and net loss per share attributable to common shareholders would
have been as follows:

                                       7
<PAGE>

<TABLE>
<CAPTION>
                                                                        --------------
                                                                      Three Months Ended
                                                                        March 31, 2005
                                                                        --------------
<S>                                                                     <C>
         Net loss to common shareholders as reported                    $     (873,570)
         Deduct: Stock-based employee compensation expense determined
            under fair value based method                                     (128,074)
                                                                        --------------

         Pro forma net loss                                             $   (1,001,644)
                                                                        ==============

         Net loss per share to common shareholders:
           As reported - basic and diluted                              $        (0.04)
                                                                        ==============

           Pro forma - basic and diluted                                $        (0.05)
                                                                        ==============
</TABLE>

COMMITMENTS AND CONTINGENCIES

On April 7, 2005 a lawsuit was filed by Norman K. Best, a former officer of the
Company, against SecureCARE Technologies, Inc. The lawsuit is identified as
cause number GN501073 and was filed in the 353rd Judicial District Court of
Travis County, Texas as "Norman K. Best versus SecureCARE Technologies, Inc."
The lawsuit alleges that the Company breached the terms of its agreements with
Mr. Best by failing to tender 50,000 shares of common stock of SecureCARE
Technologies, Inc. which were granted to him. The Company responded to this
lawsuit on May 13, 2005, by filing a general denial, denying all the allegations
raised by the Plaintiff. On July 8, 2005, the Company filed a series of
responses to the plaintiff's request for admission. The Company was required to
produce all documents related to the plaintiff's request for production by May
2, 2006. As of the date of this filing, the Company has asked the plaintiff for
a further extension of this request for production. Although no loss can be
estimated in regard to this lawsuit we do not believe that the outcome of this
matter will have a material effect on our financial position, operating results
or cash flows. However, there can be no assurance that this legal proceeding
will not have a material impact.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the Financial Statements and the reported amount of
revenues and expenses during the reporting period. The Company's most
significant estimates relate to software services revenue recognition,
capitalization of software development costs and depreciation of fixed assets.
Actual results could differ from these estimates.

                                       8
<PAGE>

NOTE 3. NOTES PAYABLE

Notes payable at March 31, 2006 and December 31, 2005 consist of the following:

<TABLE>
<CAPTION>
                                                                            2006                         2005
                                                                 --------------------------   --------------------------
                                                                  Short Term     Long Term     Short Term      Long Term
<S>                                                              <C>            <C>           <C>            <C>
  Note payable to related party bearing interest at 5%,
      principal and interest due September 30, 2010, secured
      by a security interest in the assets and intellectual
      property of the Company; interest payments in default
      as of September 2, 2004; principal payments in default
      as of October 1, 2005                                      $   163,347    $   381,143   $   136,123    $   408,367

  Note payable to investors bearing flat interest at 60%
      Note originally due September 27, 2005; extended through
      April 27, 2006, unsecured                                       50,000             --        50,000             --

  Note payable to investors bearing interest at 18%
      Note is in default as of October 28, 2005, unsecured            75,000             --        75,000             --

  Note payable to investors bearing interest at 18%
      Note is in default  as of October 29, 2005, unsecured          150,000             --       150,000             --

  Note payable to investors bearing interest at 18%
      Note is in default as of December 2,  2005, unsecured          125,000             --       125,000             --

  Note payable to investors bearing interest at 18%
      Note is in default  as of December 4,  2005, unsecured          50,000             --        50,000             --

  Note payable to investors bearing interest at 18%
      Note is in default  as of December 15,  2005, unsecured         50,000             --        50,000             --

  Note payable to investors bearing interest at 7.5%
      Note is in default  as of February 13, 2006, unsecured         220,000             --       220,000             --

  Note payable to investors bearing interest at 7.5%
      Note is in default  as of March 2, 2006, unsecured             150,000             --       150,000             --

  Note payable to investors bearing interest at 7.5%
      Note is in default  as of March 9, 2006, unsecured             150,000             --       150,000             --

  Note payable to Phoebe Holdings, Inc. at 7.5%,
      Note is in default  as of May 1, 2005, unsecured                63,500             --        63,500             --

Convertible bridge note payable bearing interest at 12%
      Principal and interest due October 31, 2006, unsecured          50,000             --        50,000             --

Convertible bridge note payable bearing interest at 12%
      Principal and interest due November 6, 2006, unsecured          25,000             --        25,000             --

Convertible bridge note payable bearing interest at 12%
      Principal and interest due November 7, 2006, unsecured          25,000             --        25,000             --

Convertible bridge note payable bearing interest at 12%
      Principal and interest due November 21, 2006, unsecured         50,000             --            --             --

Convertible bridge note payable bearing interest at 12%
      Principal and interest due November 24, 2006, unsecured         40,000             --        40,000             --

Convertible bridge note payable bearing interest at 12%
      Principal and interest due November 28, 2006, unsecured         10,000             --        10,000             --
                                                                 -----------    -----------   -----------    -----------

                                                                   1,446,847        381,143     1,369,623        408,367

      Less: unamortized debt discount                                 (8,973)            --       (14,164)            --

                                                                 -----------    -----------   -----------    -----------
      Total notes payable                                        $ 1,437,874    $   381,143   $ 1,355,459    $   408,367
                                                                 ===========    ===========   ===========    ===========
</TABLE>

                                       9
<PAGE>

As of March 2, 2006, the Company is in default on the principle amount of
$520,000 in a series of 7.5% Senior Subordinated Notes Payable, issued to a
group of seven investors in February and March of 2004. In addition, accrued
interest on these notes as of March 2, 2006 was approximately $80,000. The notes
may be extended at the option of the Company for an additional six months. If
the notes are extended, the Company must issue one share of Common Stock for
each $4.00 principal and accrued interest on the Notes that are extended, or a
total of approximately 150,000 shares of Common Stock. As of the date of this
filing, the Company has not elected the option of extending the notes for an
additional six months

In October 2005, in conjunction with $150,000 in 12% convertible bridge notes
payable issued pursuant to agreement with Argilus Capital Partners, the Company
issued 30,000 warrants to purchase one share of common stock at a price equal to
the lesser of 75% of the per share purchase price on the closing date or $0.75
per share. These warrants were valued at a range of $0.313 to $0.424 per warrant
resulting in a total fair value of $10,323. This amount was recorded as a debt
discount and is being amortized as a component of interest expense over the life
of the notes (thirteen months).

In September 2005, in conjunction with $50,000 in 12% convertible bridge notes
payable issued pursuant to agreement with Argilus Capital Partners, the Company
issued 10,000 warrants to purchase one share of common stock at a price equal to
the lesser of 75% of the per share purchase price on the closing date or $0.75
per share. These warrants were valued at $0.487 per warrant resulting in a total
fair value of $4,866. This amount was recorded as a debt discount and is being
amortized as a component of interest expense over the life of the notes
(thirteen months).

In November 2004, in conjunction with the 7.5% senior subordinated note payable
to Phoebe Holdings, Inc., the Company issued 50,000 shares of common stock.
These shares were valued at $0.15 per share resulting in a total fair value of
$7,500. This amount was recorded as debt discount and is being amortized as a
component of interest expense over the life of the note (six months).

During February and March 2004, in conjunction with the 7.5% senior subordinated
notes payable to investors, the Company issued 520,000 shares of common stock.
These shares were valued at $0.10 per share resulting in a total fair value of
$52,000. This amount was recorded as debt discount and is being amortized as a
component of interest expense over the life of the notes (two-years).

Future maturities of notes payable at March 31, 2006 are as follows:

                2006              1,446,847
                2007                108,898
                2008                108,898
                2009                108,898
                2010                 54,449
                                -----------

                Total           $ 1,827,990
                                ===========


NOTE 4. SHAREHOLDERS' DEFICIT

On January 24, 2006 the Company entered into a consulting agreement with an
individual, Howard Alweil, (the "Consultant") for services related to locating
qualified executive personnel and reviewing the implementation strategy of the
Company's public relations and marketing efforts. As compensation for those
services, the Company agreed to issue the consultant 300,000 registered shares
of the Company's common stock, to be registered under a Registration Statement
on Form S-8 or any other available form as soon as was practicable after the
execution and delivery of the consulting agreement. Accordingly, the Company
filed a Form S-8 Registration Statement Under the Securities Act of 1933 on
February 10, 2006. The Company recorded $75,000 in financial consulting expenses
related to the issuance of the 300,000 shares of common stock which were valued
at $0.25 per share on January 24, 2006.

NOTE 5.  LOSS ON LEASE SETTLEMENT EXPENSES

The Company was notified on January 20, 2006, that it was in default under its
master electronic equipment lease primarily due to its failure to pay the base
monthly rental payments after October, 2005. On February 20, 2006, the Company
returned approximately $300,000 of the hardware and software to the lessor,
retaining approximately $14,000 of the original leased property. The notice of
default on the lease did not relieve, suspend or waive the Company's continued
responsibility for the monthly rental payments for the balance of the initial
lease term. As of February 20, 2006, the Company had approximately $59,000 of
its original lease deposit amount of $124,717 in tact. The Company has
restructured the lease for an additional twenty-four months for the balance of
the amount owed on its original lease offset by credit given for the lease
deposit of $59,000. The restructured balance totals $107,102 and the Company
expects to commence payments on the restructured lease in June 2006.
Accordingly, in conjunction with the restructured lease, the Company recorded a
loss on lease settlement in the first quarter of 2006 totaling $166,341 to
reflect the complete consumption of the lease deposit of $59,239 and the
remaining lease liability of $107,102.

The Company was notified on February 21, 2006, that it was in default under the
lease for its principal executive office located in Austin, Texas, due to its
failure to timely pay the base monthly rental. The Company was directed to
vacate the premises no later than February 28, 2006. The Company vacated the
premises on February 28, 2006 and temporarily relocated its principal executive
office to an alternative location in Austin, Texas in approximately 300 square
feet of leased office space. The lessor has agreed to extinguish the lease and
will require the Company to pay its outstanding base monthly rental amounts owed
through February 28, 2006, totaling $47,433, including applicable late fees.
Because the original lease was a three-year, sliding scale square-footage rate
lease, and the square-footage rates increased in years two and three, as of
February 28, 2006 the Company had recorded $14,200 in additional rent expense to
average out the three-year total rent expense. Because the lessor agreed to
extinguish the lease as of February 28, 2006 the Company reversed its additional
rent expense accrual of $14,200, resulting in a reduction in the loss on lease
settlement recognized in the first quarter of 2006.

                                       10
<PAGE>

NOTE 6.  SUBSEQUENT EVENT

On April 4, 2006, the Company entered into a Loan Agreement (the "Loan
Agreement") with Euro Financial Fidelity, Inc. ("EFF") which provides for a loan
to the Company of $7,000,000 by June 15, 2006 (the "Loan"). The Loan will be
represented by a ten year, 6% promissory note (the "Note") providing for
quarterly payments of accrued interest only commencing April 1, 2007 and a
balloon payment of all accrued interest and principal on April 1, 2016. The Loan
Agreement restricts the Company's use of the Loan proceeds to certain items
agreed to by the Company and EFF. Payment of the Note and performance by the
Company under the terms of the Loan Agreement are secured by 1,000 shares of
newly authorized Series C Contingently Convertible Preferred Stock (the "Series
C Stock"). Each share of Series C Stock is convertible into 56,000 shares of the
Company's Common Stock (an aggregate of 56,000,000 shares) upon the Company's
default under the Note and Loan Agreement, but otherwise has no voting rights,
no rights to receive dividends nor any liquidation preference. Since the Company
does not have sufficient shares of its common stock authorized to meet this
contingent obligation, the Company agreed in the Loan Agreement to increase its
authorized shares of common stock at its next shareholders' meeting. The Company
will also take such actions as are required to timely register the shares which
are contingently issuable upon conversion of the Series C Preferred. Upon
repayment of the Loan, the Series C Stock will have no further rights. The
issuance of the Series C Stock was exempt from registration by reason of Section
4(2) of the Securities Act of 1933, as amended, as not involving any public
offering. As of the date of this filing the Loan has not been funded.

ITEM 2. MANGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

                           Forward Looking Statements

This Quarterly Report on Form 10-QSB contains "forward-looking" statements as
such term is defined in the Private Securities Litigation Reform Act of 1995 and
information relating to the Company that are based on the beliefs of the
Company's management as well as assumptions made by and information currently
available to the Company's management. When used in this report, the words
"anticipate," "believe," "estimate," "expect" and "intend" and words or phrases
of similar import, as they relate to the Company or Company management, are
intended to identify forward-looking statements. Such statements reflect the
current risks, uncertainties and assumptions related to certain factors
including, without limitations, competitive factors, general economic
conditions, customer relations, relationships with vendors, the interest rate
environment, governmental regulation and supervision, seasonality, distribution
networks, product introductions and acceptance, technological change, changes in
industry practices, onetime events and other factors described herein and in
other filings made by the company with the Securities and Exchange Commission.
Based upon changing conditions, should any one or more of these risks or
uncertainties materialize, or should any underlying assumptions prove incorrect,
actual results may vary materially from those described herein as anticipated,
believed, estimated, expected or intended. The Company does not intend to update
these forward-looking statements.

OVERVIEW

Management believes that the Company is the leading provider of Internet-based
document exchange and e-signature solutions for the healthcare industry. Built
with state-of-the art development tools from the Microsoft dotNET development
solutions, SecureCARE.net is tailored to the needs of physicians, clinics and
home healthcare, hospice and durable medical equipment providers. These
end-to-end solutions offer a revolutionary approach to accessing information and
managing time-consuming forms and authorizations. SecureCARE's easy to use
technology eliminates paper, while enhancing the physicians ability to capture
fees for otherwise unbilled time and services, uniquely and directly impacting
the physicians revenue. SecureCARE.net is a highly secure, HIPAA-ready tracking
and reporting tool that streamlines operations while providing physicians with
additional revenue opportunities. The Company markets its services to customers
throughout the United States, currently operating from its Austin, Texas-based
corporate headquarters.

The Company intends to utilize the Internet to provide browser initiated
healthcare document exchange and e-signature solutions that facilitate the
confidential, on-line exchange of healthcare information for many participants
in the healthcare industry. Based on the technology and products in place, other
applications can be developed that will enhance the Company's position in both
the physician's office, home health agencies, and other providers such as
nursing homes, pharmacies, durable medical equipment providers, and information
sites. These services using Internet technology in the healthcare industry are
subject to risks, including but not limited to those associated with competition
from existing companies offering similar services, rapid technological change,
development risks, management of growth and a minimal previous record of
operations or earnings.

On December 9, 2005, the Company implemented a staff reduction of approximately
sixteen employees in what is expected to be a temporary cost reduction in
response to the failure of the Company to obtain necessary financing to fund
operations. The Company intends to secure a banking or investment partner and it
is downsizing its cost structure to preserve its value and operate from its
current sales revenues during this interim period. A cost contained operating
plan, including four full-time employees and additional part-time resources, was
implemented to support the Company's physician and home healthcare provider
customer base and to maintain its technology platform. As additional investment
capital is attracted, the Company will resume its aggressive marketing, sales
and product development initiatives. The Company has implemented a personnel and
cost reduction program that reduced its monthly cash requirements by
approximately $200,000.

On April 4, 2006, the Company entered into a Loan Agreement (the "Loan
Agreement") with Euro Financial Fidelity, Inc. ("EFF") which provides for a loan
to the Company of $7,000,000 by June 15, 2006 (the "Loan"). The Loan will be
represented by a ten year, 6% promissory note (the "Note") providing for
quarterly payments of accrued interest only commencing April 1, 2007 and a
balloon payment of all accrued interest and principal on April 1, 2016. The Loan
Agreement restricts the Company's use of the Loan proceeds to certain items
agreed to by the Company and EFF. Payment of the Note and performance by the
Company under the terms of the Loan Agreement are secured by 1,000 shares of
newly authorized Series C Contingently Convertible Preferred Stock (the "Series
C Preferred Stock"). Each share of Series C Preferred Stock is convertible into
56,000 shares of the Company's Common Stock (an aggregate of 56,000,000 shares)
upon the Company's default under the Note and Loan Agreement, but otherwise has
no voting rights, no rights to receive dividends nor any liquidation preference.
Since the Company does not have sufficient shares of its common stock authorized
to meet this contingent obligation, the Company agreed in the Loan Agreement to
increase its authorized shares of common stock at its next shareholders'
meeting. The Company will also take such actions as are required to timely
register the shares which are contingently issuable upon conversion of the
Series C Preferred Stock. Upon repayment of the Loan, the Series C Preferred
Stock will have no further rights. The issuance of the Series C Preferred Stock
was exempt from registration by reason of Section 4(2) of the Securities Act of
1933, as amended, as not involving any public offering. As of the date of this
filing the Loan has not been funded.

                                       11
<PAGE>

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

The discussion and analysis of our financial condition and results of operations
are based on our unaudited financial statements, which have been prepared
according to U.S. generally accepted accounting principles. In preparing these
financial statements, we are required to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses and
related disclosures of contingent assets and liabilities. We evaluate these
estimates on an on-going basis. We base these estimates on historical experience
and on various other assumptions that we believe are reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities. Actual results may differ from
these estimates under different assumptions or conditions. We consider the
following accounting policies to be the most important to the portrayal of our
financial condition and that require the most subjective judgment.

REVENUE RECOGNITION

The Company derives its revenues from the following home healthcare provider
sources - recurring monthly service fees, one-time training and set-up fees and
integration and customization services as contracted. The Company recognizes
revenue in accordance with SEC Staff Accounting Bulletin No. 104, Revenue
Recognition (SAB 104). SAB 104 generally requires that four basic criteria must
be met before revenue can be recognized: (1) persuasive evidence of an
arrangement exists; (2) delivery has occurred or services have been rendered;
(3) the fee is fixed and determinable; and (4) collectibility is reasonably
assured. Determination of criteria (3) and (4) are based on management's
judgments regarding the fixed nature of the fee charged for services rendered
and the collectibility of those fees. Should changes in conditions cause
management to determine these criteria are not met for certain sales, revenue
recognized for any reporting period could be adversely affected. In instances
when any one of the four criteria is not met, the Company will either defer
recognition of the monthly service fees until the criteria are met or will
recognize the recurring monthly service fees on a ratable basis. Recognition of
revenue resulting from one-time training and set-up fees, which are billed
upfront, is deferred and amortized over the life of the corresponding
arrangements and is included in deferred revenue in the accompanying financial
statements.

SOFTWARE AND SOFTWARE DEVELOPMENT COSTS

The Company capitalizes costs related to computer software developed or obtained
for internal use in accordance with the American Institute of Certified Public
Accountants Statement of Position (SOP) 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use" and depreciates these
costs using the straight-line method over the estimated useful life of the
software, generally two to three years. SOP 98-1 provides guidance on
determining whether computer software is internal-use software and guidance on
accounting for proceeds of computer software originally developed or obtained
for internal use and then subsequently sold to the public. It also provides
guidance on capitalization of the costs incurred for computer software developed
or obtained for internal use.

LONG-LIVED ASSETS

Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to the undiscounted future net
cash flows expected to be generated by the asset. If such assets are considered
to be impaired, the impairment to be recognized is measured by the amount by
which the carrying amount of the net asset exceeds the fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying amount or
fair value less costs to sell.

STOCK-BASED COMPENSATION

On January 1, 2006, the Company adopted the modified prospective method of SFAS
No. 123 (revised 2004), "Share-Based Payment" ("SFAS No. 123R"), which is a
revision of SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS No.
123"). SFAS No. 123R supersedes APB Opinion No. 25, and amends SFAS No. 95,
"Statement of Cash Flows". SFAS No. 123R requires that all share-based payments
to employees, including the grant of employee stock options, be recognized in
the income statement based on their fair values. Under the modified prospective
application, SFAS No. 123R is applied to new awards and awards modified,
repurchased or cancelled after the effective date. Compensation cost for the
portion of awards for which requisite service has not been rendered that are
outstanding as of the effective date is recognized as the requisite service is
rendered on or after the effective date. The compensation cost for the portion
of awards is based on the grant date fair value of those awards as calculated
for pro-forma disclosure under SFAS No. 123. The Company's financial statements
for the first quarter of 2006 reflect the impact of adopting SFAS No. 123R. In
accordance with the modified prospective method, the Company's financial
statements for the prior periods have not been restated to reflect, and do not
include, the impact of SFAS No. 123R.

Stock-based compensation expense recognized during the period is based on the
value of the portion of the stock-based payment awards that is ultimately
expected to vest. As stock-based compensation expense recognized in the
statement of operations for the first quarter of 2006 is based on awards
ultimately expected to vest, it has been reduced for estimated forfeitures. SFAS
No. 123R requires forfeitures to be estimated at the time of grant and revised,
if necessary, in subsequent periods if actual forfeitures differ from those
estimates.

The adoption of SFAS No. 123R will require the Company to record material
non-cash stock compensation expenses. While the adoption of SFAS No. 123R is not
expected to have a substantial effect on the Company's financial condition or
cash flows, it is expected to have a significant effect on the Company's result
of operations. The future impact of the adoption of SFAS No. 123R cannot be
currently predicted as it will depend on the Company's future decisions to issue
share-based payments.

Prior to January 1, 2006, the Company accounted for stock-based employee
compensation arrangements in accordance with provisions of Accounting Principles
Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees", and
complied with the disclosure provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation" as amended by SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure -- an Amendment of FASB
Statement No. 123". Under APB Opinion No. 25, compensation expense for employees
is based on the excess, if any, on the date of grant, of the fair value of the
Company's stock over the exercise price and is recognized on a straight-line
basis over the vesting term of the option.

The Company accounts for equity instruments issued to non-employees based upon
the fair value of the awards. All transactions in which goods or services are
the consideration received for the issuance of equity instruments are accounted
for based on the fair value of the consideration received or the fair value of
the equity instrument issued, whichever is more reliably measurable. The
measurement date of the fair value of the equity instrument issued is the
earlier of the date on which the counterparty's performance is complete or the
date on which it is probable that performance will occur.

                                       12
<PAGE>

RESULTS OF OPERATIONS

Three months ended March 31, 2006 compared to three months ended March 31, 2005

Revenues for the three months ended March 31, 2006 were $90,968 compared to
$67,768 for the three months ended March 31, 2005. This 35% increase in sales
reflects the strong marketplace momentum that the Company experienced throughout
year 2005. The Company had 97 signed and billable provider locations at March
31, 2005.

The strong marketplace momentum the Company experienced throughout year 2005 was
slowed in the first quarter of 2006 by actions the Company was required to take
on December 9, 2005, when it implemented a staff reduction of approximately
sixteen employees in what is expected to be a temporary cost reduction in
response to the failure of Argilus LLC, an investment banking firm located in
Pittsford, NY, to provide operating and growth capital, as contracted for in
late September of 2005. The Company intends to secure a replacement banking or
investment partner and it downsized its cost structure to preserve its value and
operate from its current sales revenues during this interim period. A cost
contained operating plan, including four full-time employees and additional
part-time resources, was implemented to support the Company's physician and home
healthcare provider customer base and to maintain its technology platform. As
additional investment capital is attracted, the Company will resume its
aggressive marketing, sales and product development initiatives. The Company has
implemented a personnel and cost reduction program that reduced its monthly cash
requirements by approximately $200,000.

Management believes that revenues will grow significantly over the next twelve
to eighteen months if the Company is able to raise the additional capital
required to execute its marketing and sales strategy. To that end, on April 4,
2006, the Company entered into a Loan Agreement (the "Loan Agreement") with Euro
Financial Fidelity, Inc. ("EFF") which provides for a loan to the Registrant of
$7,000,000 by June 15, 2006 (the "Loan"). The Loan will be represented by a ten
year, 6% promissory note (the "Note") providing for quarterly payments of
accrued interest only commencing April 1, 2007 and a balloon payment of all
accrued interest and principal on April 1, 2016. The Loan Agreement restricts
the Company's use of the Loan proceeds to certain items agreed to by the Company
and EFF. Payment of the Note and performance by the Company under the terms of
the Loan Agreement are secured by 1,000 shares of newly authorized Series C
Contingently Convertible Preferred Stock (the "Series C Stock"). Each share of
Series C Stock is convertible into 56,000 shares of the Company's Common Stock
(an aggregate of 56,000,000 shares) upon the Company's default under the Note
and Loan Agreement, but otherwise has no voting rights, no rights to receive
dividends nor any liquidation preference. Since the Company does not have
sufficient shares of its common stock authorized to meet this contingent
obligation, the Company agreed in the Loan Agreement to increase its authorized
shares of common stock at its next shareholders' meeting. The Company will also
take such actions as are required to timely register the shares which are
contingently issuable upon conversion of the Series C Preferred. Upon repayment
of the Loan, the Series C Stock will have no further rights. The issuance of the
Series C Stock was exempt from registration by reason of Section 4(2) of the
Securities Act of 1933, as amended, as not involving any public offering. As of
the date of this filing the Loan has not been funded.

Costs of revenues were $78,306 for the three months ended March 31, 2006
compared to $190,448 for the three months ended March 31, 2005. This 59%
decrease in cost of revenues was primarily attributable to the staff reductions
the Company implemented in December 2005 resulting in lower salaries and
benefits and other employee-related expenses of $106,000 and lower custom form
design expenses of $12,000. Partially offsetting these lower expenses was higher
depreciation expense of $7,000. In February 2005, the Company commenced
depreciating approximately $170,000 in internal use software development costs.

Selling, general and administrative expenses were $370,479 for the three months
ended March 31, 2006 compared to $511,978 for the three months ended March 31,
2005. This 28% decrease in expenses was primarily attributable to the staff
reductions the Company implemented in December 2005 resulting in lower salaries
and benefits and other employee-related expenses of $108,000 and lower travel
and entertainment expenses of $47,000. The Company also recognized approximately
$65,000 in stock compensation expense for stock options vested during the first
quarter of 2006 due to its adoption of SFAS No. 123R using the modified
prospective transition method. Marketing Consulting costs were $30,000 lower in
2006 because in its efforts to cut costs, the Company no longer retained outside
marketing consulting resources. Other marketing costs, including press release
expenses and web-site development expenses were approximately $10,000 lower in
2006. Other corporate general and administrative expenses, including legal
expenses, building rent, insurance, telephone, cellular phone and postage
expenses decreased $48,000 in 2006. Partially offsetting these lower expenses
were higher financial consulting expenses of $42,000. On January 24, 2006 the
Company entered into a consulting agreement with an individual, Howard Alweil,
(the "Consultant") for services related to locating qualified executive
personnel and reviewing the implementation strategy of the Company's public
relations and marketing efforts. As compensation for those services, the Company
agreed to issue to the Consultant 300,000 registered shares of the Company's
common stock, to be registered under a Registration Statement on Form S-8 or any
other available form as soon as was practicable after the execution and delivery
of the consulting agreement. Accordingly, the Company filed a Form S-8
Registration Statement Under the Securities Act of 1933 on February 10, 2006. In
the first quarter of 2006, the Company recorded $75,000 in financial consulting
expenses related to the issuance of the 300,000 shares of common stock which
were valued at $0.25 per share on January 24, 2006.

Management expects that operating expenses will increase over the next twelve to
eighteen months if the Company is able to raise the additional capital required
to make the necessary investments in technology enhancements and in its planned
marketing, sales and support programs.

Loss on lease settlement expenses totaled $152,141 for the three months ended
March 31, 2006.

The Company was notified on January 20, 2006, that it was in default under its
master electronic equipment lease primarily due to its failure to pay the base
monthly rental payments after October, 2005. On February 20, 2006, the Company
returned approximately $300,000 of the hardware and software to the lessor,
retaining approximately $14,000 of the original leased property. The notice of
default on the lease did not relieve, suspend or waive the Company's continued
responsibility for the monthly rental payments for the balance of the initial
lease term. As of February 20, 2006, the Company had approximately $59,000 of
its original lease deposit amount of $124,717 in tact. The Company has
restructured the lease for an additional twenty-four months for the balance of
the amount owed on its original lease offset by credit given for the lease
deposit of $59,000. The restructured balance totals $107,102 and the Company
expects to commence payments on the restructured lease in June 2006.
Accordingly, in conjunction with the restructured lease, the Company recorded a
loss on lease settlement in the first quarter of 2006 totaling $166,341 to
reflect the complete consumption of the lease deposit of $59,239 and the
remaining lease liability of $107,102.

                                       13
<PAGE>

The Company was notified on February 21, 2006, that it was in default under the
lease for its principal executive office located in Austin, Texas, due to its
failure to timely pay the base monthly rental. The Company was directed to
vacate the premises no later than February 28, 2006. The Company vacated the
premises on February 28, 2006 and temporarily relocated its principal executive
office to an alternative location in Austin, Texas in approximately 300 square
feet of leased office space. The lessor has agreed to extinguish the lease and
will require the Company to pay its outstanding base monthly rental amounts owed
through February 28, 2006, totaling $47,433, including applicable late fees.
Because the original lease was a three-year, sliding scale square-footage rate
lease, and the square-footage rates increased in years two and three, as of
February 28, 2006 the Company had recorded $14,200 in additional rent expense to
average out the three-year total rent expense. Because the lessor agreed to
extinguish the lease as of February 28, 2006 the Company reversed its additional
rent expense accrual of $14,200, resulting in a reduction in the loss on lease
settlement recognized in the first quarter of 2006.

Interest expense for the three months ended March 31, 2006 was $66,349 compared
to $40,511 in 2005. Higher interest expense in 2006, was primarily attributable
to a higher debt load, resulting from notes payable the Company issued in the
second, third and fourth quarters of 2005.

LIQUIDITY AND CAPITAL RESOURCES

Net cash flows from operating activities for the three-month period ended March
31, 2006 totaled $3,078. Net cash used by operating activities for the
three-month period ended March 31, 2005 was $652,982. The decrease in net cash
used by operating activities in 2006 primarily resulted from the staff
reductions the Company implemented in December 2005.

Net cash provided by financing activities was $0 for the three months ended
March 31, 2006. Net cash provided by financing activities was $834,444 for three
months ended March 31, 2005 and consisted primarily of proceeds from issuance of
its Series B Convertible Preferred Stock.

The Company has limited cash resources and intends to raise additional capital
through the issuance of debt or equity. The Company believes the additional
capital will allow it to continue its marketing efforts in its core products and
develop and add new functional enhancements to the browser-based versions of its
products. The availability of cash through such resources is not assured and if
the Company is not able to raise enough cash, the Company might be forced to
limit its operations and marketing activities, or ultimately cease operations.

The financial statements for the three months ended March 31, 2006 were prepared
on the assumption that the Company will continue as a going concern. The Company
sustained a net loss of $576,307 for the three months ended March 31, 2006. The
Company has accumulated losses through March 31, 2006 of $15,639,273. Net cash
flows from operating activities for the three-month period ended March 31, 2006
totaled $3,078. Total liabilities at March 31, 2006 of $3,009,899 exceed total
assets of $116,535. As of the date of this report, the Company is unable to meet
all of its short-term obligations because of shortages of cash. The Company's
continued existence depends upon the success of management's efforts to raise
additional capital necessary to meet the Company's obligations as they come due,
and to obtain sufficient capital to execute its business plan. The Company
intends to obtain capital primarily through issuances of debt or equity. There
can be no degree of assurance that the Company will be successful in completing
additional financing transactions. Failure to generate additional revenues,
raise additional capital or manage discretionary spending could have a material
adverse effect on the Company's ability to continue as a going concern and to
achieve its intended business objectives. The accompanying unaudited financial
statements do not include any adjustments to reflect the possible effects on the
recoverability and classification of assets or classification of liabilities
which may result from the inability of the Company to continue as a going
concern.

RELATED PARTY TRANSACTIONS

As of March 31, 2006 and 2005, the Company had principal amounts of $544,490 in
notes payable to a related party, Gryphon Opportunities Fund I, LLC. During the
three-month periods ended March 31, 2006 and 2005, there were no principal
repayments on these notes payable.

At March 31, 2006, the required monthly interest payments on these notes
payable, due to commence on September 1, 2004, were not made by the Company to
Gryphon Opportunities Fund I, LLC. At March 31, 2006, the required monthly
principal payments on these notes payable, due to commence on September 1, 2005,
were not made by the Company to Gryphon Opportunities Fund I, LLC. Gryphon
Opportunities Fund I, LLC waived the Company's non-compliance with the terms of
the note payable agreements as of March 31, 2006 through April 1, 2007.

                                       14
<PAGE>

ITEM 3. CONTROLS AND PRODCECURES

Members of our management, including Neil Burley, our Chief Financial Officer
and Principal Accounting and Financial Officer, have evaluated the effectiveness
of our disclosure controls and procedures, as defined by paragraph (e) of
Exchange Act Rules 13a-15 or 15d-15, as of March 31, 2006, the end of the period
covered by this report. Based upon that evaluation, Mr. Burley concluded that
our disclosure controls and procedures are effective.

INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in our internal control over financial reporting or in
other factors identified in connection with the evaluation required by paragraph
(d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the quarter
ended March 31, 2006 that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.


                                     PART II
                                OTHER INFORMATION

Item 1. Legal Proceedings

On April 7, 2005 a lawsuit was filed by Norman K. Best, a former officer of the
Company, against SecureCARE Technologies, Inc. The lawsuit is identified as
cause number GN501073 and was filed in the 353rd Judicial District Court of
Travis County, Texas as "Norman K. Best versus SecureCARE Technologies, Inc."
The lawsuit alleges that the Company breached the terms of its agreements with
Mr. Best by failing to tender 50,000 shares of common stock of SecureCARE
Technologies, Inc. which were granted to him. The Company responded to this
lawsuit on May 13, 2005, by filing a general denial, denying all the allegations
raised by the Plaintiff. On July 8, 2005, the Company filed a series of
responses to the plaintiff's request for admission. The Company was required to
produce all documents related to the plaintiff's request for production by May
2, 2006. As of the date of this filing, the Company has asked the plaintiff for
a further extension of this request for production. Although no loss can be
estimated in regard to this lawsuit we do not believe that the outcome of this
matter will have a material effect on our financial position, operating results
or cash flows. However, there can be no assurance that this legal proceeding
will not have a material impact.

Item 2. Changes in Securities

None.

Item 3. Defaults Upon Senior Securities

None.

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

None.


Item 5. Other Information

None.



Item 6. Exhibits and Reports on Form 8-K

  a)    EXHIBITS

    31.1   Certification of the Chief Executive Officer pursuant to Section 302
           of the Sarbanes-Oxley Act of 2002

    31.2   Certification of the Chief Financial Officer pursuant to Section 302
           of the Sarbanes-Oxley Act of 2002

    32     Certfications of the Chief Executive Officer and Chief Financial
           Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
           Section 906 of the Sarbanes-Oxley Act of 2002


  b)    REPORTS ON FORM 8-K

    None.

                                       15
<PAGE>

                                   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.

                                         SecureCare Technologies, Inc.
                                         (Registrant)


Date:  June 13, 2006                     By: /s/ ROBERT WOODROW
                                             ----------------------------------
                                             Robert Woodrow
                                             President, Chief Executive Officer
                                             And Director


Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.


NAME                       TITLE

/s/ ROBERT WOODROW         President, Chief Executive        Date: June 13, 2006
------------------------   Officer and Director
Robert Woodrow




/s/ NEIL BURLEY            Chief Financial Officer           Date: June 13, 2006
------------------------   (Principal Financial and
Neil Burley                Accounting Officer)

                                       16