United States Securities and Exchange Commission
                             Washington, D.C. 20549
                                   Form 10-QSB

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

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006

                                       OR

             |_| TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
                              EXCHANGE ACT OF 1934
                        For the transition period from to

                        Commission file number 000-31779

                    SECURITY INTELLIGENCE TECHNOLOGIES, INC.
        (Exact name of small business issuer as specified in its charter)

           Florida                                               65-0928369
-------------------------------                              -------------------
(State or other jurisdiction of                                (IRS Employer
 incorporation or organization)                              Identification No.)

                145 Huguenot Street, New Rochelle, New York 10801
                    (Address of principal executive offices)

                                 (914) 654-8700
                           (Issuer's telephone number)

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 |_|

The number of shares of common stock $.0001 par value, of the Registrant issued
and outstanding as of November 7, 2006 was 93,584,668.

<PAGE>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                   FORM 10-QSB

                         PERIOD ENDED SEPTEMBER 30, 2006

                                TABLE OF CONTENTS

PART I -  FINANCIAL INFORMATION

ITEM 1.   Consolidated Financial Statements:

          Consolidated Balance Sheets as of September 30, 2006
             (unaudited) and June 30, 2006                                     3

          Consolidated Statements of Operations (unaudited) for the three
             months ended September 30, 2006 and September 30, 2005            4

          Consolidated Statements of Cash Flow (unaudited) for the three
             months ended September 30, 2006 and September 30, 2005            5

          Notes to Consolidated Financial Statements                           6

Item 2.   Management's Discussion and Analysis of Financial Condition
             and Results of Operations                                        16
PART II - OTHER INFORMATION

Item 2.   Unregistered Sale of Equity Securities and Use of Proceeds          20

Item 3.   Controls and Procedures                                             21

Item 6.   Exhibits and Reports on Form 8-K                                    21


                                       2
<PAGE>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                   September 30,
                                                                                        2006         June 30,
                                                                                   (Unaudited)         2006
                                                                                   -------------   ------------
<S>                                                                                <C>             <C>
ASSETS
Current Assets:
      Cash                                                                         $     31,306    $     27,126
     Inventory                                                                          593,148         662,424
     Other current assets                                                               167,737         186,946
                                                                                   ------------    ------------
        Total current assets                                                            792,191         876,496
Property and Equipment, at cost less accumulated depreciation and amortization
   of $14,000 and $12,000 at September 30, 2006 and June 30, 2006 respectively           11,000          13,000
Receivable from CCS International, Ltd. less allowance for uncollectible amounts
   of $2,936,511 at September 30, 2006 and June 30, 2006                                     --              --
Other assets                                                                             18,199          18,199
                                                                                   ------------    ------------

 Total assets                                                                      $    821,390    $    907,695
                                                                                   ============    ============

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
     Accounts payable and accrued expenses                                         $  2,671,218    $  2,468,121
     Note payable - CEO/stockholder                                                   1,935,125       1,981,744
     Notes payable affiliate - revolving credit agreement                               614,298         614,298
     Notes payable - other                                                              456,500         271,500
     Customer deposits                                                                1,511,125       1,510,452
     Deferred revenue                                                                   389,863         425,173
                                                                                   ------------    ------------
         Total current liabilities                                                    7,578,129       7,271,288
Long term debt - convertible notes payable                                              494,000         494,000
                                                                                   ------------    ------------
Total liabilities                                                                     8,072,129       7,765,288
                                                                                   ------------    ------------
Commitments and contingencies - See Notes
Stockholders' deficit:
     Preferred stock, $.0001 par value, 10,000,000 shares authorized: Series A
         Convertible-$1.00 per share liquidation preference,
            3,500,000 shares authorized, issued and outstanding                             350             350
         Series B Convertible-$1.00 per share liquidation preference,
            1,500,000 shares authorized, issued and outstanding                             150             150
         Series C Convertible-$.01 per share liquidation preference,
            5,000,000 shares authorized, issued and outstanding                              --              --
     Common stock, $.0001 par value, 300,000,000 shares authorized,
         93,584,668 and 92,635,295 issued and outstanding at September 30,
            2006 and June 30, 2006 respectively (Note 8)                                  9,358           9,264
     Additional paid in capital                                                       8,801,176       8,770,073
     Accumulated deficit                                                            (16,071,429)    (15,642,884)
     Accumulated other comprehensive loss                                                 9,656           5,454
                                                                                   ------------    ------------
       Total stockholders' deficit                                                   (7,250,739)     (6,857,593)
                                                                                   ------------    ------------

Total liabilities and stockholders' deficit                                        $    821,390    $    907,695
                                                                                   ============    ============
</TABLE>

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


                                       3
<PAGE>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                            STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                             Three Months Ended
                                                     --------------------------------
                                                               September 30,
                                                     --------------------------------
                                                         2006                2005
                                                     ------------        ------------
<S>                                                  <C>                 <C>
Revenues                                             $    759,784        $    777,541
                                                     ------------        ------------

Costs and expenses:
    Cost of sales                                         232,201             216,512
    Compensation and benefits                             506,745             523,582
    Professional fees                                      43,425              57,672
    Stock based compensation                               20,899                  --
    Selling, general and administrative expenses          327,761             363,908
    Depreciation and amortization                           2,000               2,000
                                                     ------------        ------------
                                                        1,133,031           1,163,674
                                                     ------------        ------------

Operating loss                                           (373,247)           (386,133)
                                                     ------------        ------------

    Interest expense                                       55,298              92,557
                                                     ------------        ------------

Net loss                                             $   (428,545)       $   (478,690)
                                                     ============        ============


Loss per share, basic and diluted:                   $      (0.00)       $      (0.01)
                                                     ============        ============

Weighted average number of shares (Note 8)             92,948,338          76,883,700
                                                     ============        ============
</TABLE>

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


                                       4
<PAGE>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                    Three Months Ended
                                                                                  ----------------------
                                                                                      September 30,
                                                                                  ----------------------
                                                                                    2006         2005
                                                                                  ---------    ---------
<S>                                                                               <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                                      $(428,545)   $(478,690)
    Adjustments to reconcile net loss to net cash used in operating activities:
      Depreciation and amortization                                                   2,000        2,000
      Amortization of deferred compensation                                          20,899           --
      Stock issued to consultant and employee for services                            9,000      238,930
      Stock issued to 401 K plan                                                      1,298       12,444
      Decrease (increase) decrease in other comphrensive loss                         4,202         (953)
      Noncash compensation - CEO/stockholder                                         56,147        7,762
      Noncash interest expense - CEO/stockholder                                     16,796       16,111
      CHANGES IN OPERATING ASSETS AND LIABILITIES:
        Decrease (increase) decrease in inventory                                    69,276      (21,242)
        Decrease in other current assets                                             19,209        2,745
        Increase in accounts payable and accrued expenses                           203,097       47,987
        Increase (decrease) increase in customer deposits                               673      (50,301)
        (Decrease) in deferred revenue                                              (35,310)    (261,189)
                                                                                  ---------    ---------
Net cash used in operating activities                                               (61,258)    (484,396)
                                                                                  ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Borrowings under notes payable - other                                          200,000           --
    (Repayments) of notes payable - other                                           (15,000)     (59,325)
    (Repayments) under note payable - CEO/stockholder                              (119,562)     (42,403)
    Borrowings under revolving credit agreement - affiliate                              --      457,639
    Proceeds from issuance of common stock                                               --      200,000
                                                                                  ---------    ---------
Net cash provided by financing activities                                            65,438      555,911
                                                                                  ---------    ---------

Net increase in cash                                                                  4,180       71,515

Cash, beginning of period                                                            27,126        1,243
                                                                                  ---------    ---------
Cash, end of period                                                               $  31,306    $  72,758
                                                                                  =========    =========
</TABLE>

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


                                       5
<PAGE>

            Security Intelligence Technologies, Inc. and Subsidiaries
                   Notes To Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

1 - Interim Financial Statements

      The accompanying unaudited consolidated financial statements of Security
Intelligence Technologies, Inc. and subsidiaries (the "Company") have been
prepared pursuant to generally accepted accounting principles for interim
financial statements and the rules and regulations of the Securities and
Exchange Commission. Accordingly, certain information and note disclosures
normally included in annual financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to those rules and regulations. These financial statements should be read in
conjunction with the financial statements and the notes thereto included in the
Company's latest audited financial statements for the year ended June 30, 2006
filed on Form 10-KSB. On November 17, 2005, the board of directors approved a
three-for-one stock distribution pursuant to which the Company issued two shares
for each share of common stock outstanding on the record date, November 28,
2005. All share and per share information in this Form 10-QSB retroactively
reflects the stock distribution. See Note 8.

      In the opinion of management, all adjustments (consisting of normal
recurring adjustments) necessary for a fair presentation of the Company's
financial condition, results of operations and cash flows for the periods
presented have been included. The Company's quarterly results presented herein
are not necessarily indicative of results for a full year.

Organization and Nature of Business

      The Company is engaged in the design, assembly and sale of security and
surveillance products and systems. The Company purchases finished items for
resale from independent manufacturers, and also assembles off-the-shelf
electronic devices and other components into proprietary products and systems at
its own facilities. The Company generally sells to businesses, distributors,
government agencies and consumers through its sales office in Miami, Florida,
its executive offices located in New Rochelle, New York and through its retail
store/service center in London, England.

Principles of Consolidation

      The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries, Homeland Security Strategies, Inc., a New
York corporation, that commenced operations on August 20, 2003; Homeland
Security Strategies of California, Inc., a California corporation, that operated
a sales office that commenced operations on December 26, 2003 and closed in
September 2004; Homeland Security Strategies Inc. of Florida, Inc., a Florida
corporation, that operates a sales office that commenced operations on January
30, 2004 and Homeland Security Strategies (UK), Ltd. (formerly Counter Spy Shop
of Mayfair Limited), a United Kingdom corporation that operates a retail
store/service center. All significant intercompany balances and transactions
have been eliminated in consolidation.

Going Concern and Liquidity

The financial statements of the Company have been prepared assuming the Company
will continue as a going concern, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. The
Company incurred net losses of $428,545 and $3,051,943 for the three months
ended September 30, 2006 and the fiscal year ended June 30, 2006, respectively.
In addition, at September 30, 2006, the Company had a working capital deficit of
$6,785,938, long term debt of $494,000, and a deficiency in stockholders' equity
of $7,250,739. The Company's bank facility terminated in 2002, and the only
source of funds other than operations has been loans from the Company's chief
executive officer and GCOM Consultants, Inc. a company owned by the wife of the
chief executive officer, deposits from customers and distributors, proceeds from
notes and the sale of common stock. (See Notes 3, 4, 5, and 6). These factors
raise substantial doubt about the Company's ability to continue as a going
concern. To address the Company's immediate cash requirements which are
necessary for the Company to continue in business, management


                                       6
<PAGE>

            Security Intelligence Technologies, Inc. and Subsidiaries
                   Notes To Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

1. Nature of Business and Summary of Significant Accounting Policies -
continued:

Going Concern and Liquidity - continued:

discontinued substantially all of its retail operations during the fiscal year
ended June 30, 2004 and re-focused its marketing efforts to focus on its
sophisticated bomb jamming and cellular monitoring systems to the United States
and friendly international governments and contractors of the United States
Government. Sales to these groups of these systems were approximately $161,000
during the three months ended September 30, 2006 and approximately $640,000
during the fiscal year ended June 30, 2006. At September 30, 2006, the Company
had outstanding purchase orders for an additional $1,212,000 of these systems,
however, the Company has encountered difficulties in delivering two of the open
purchase orders that total $1,000,000 and the customers have instituted
litigation against the Company demanding a refunded of their deposit and
additional damages. As part of this effort, the Company has re-focused its
staff, and is actively pursuing additional equity and debt financing to
supplement cash flow from operations. However, the Company's low stock price and
its continuing losses make it difficult to obtain equity and debt funding, and,
there can be no assurances that additional financing will be available to the
Company on acceptable terms, or at all, or that the Company will generate the
necessary cash flow from operations. The Company and its management believe that
its bomb jamming and cellular monitoring systems and the United States and
friendly international governments marketplace are viable products and markets
in which to compete, and ultimately achieve profitability. The Company's ability
to continue its operations is dependent upon its ability to generate sufficient
cash flow either from operations or from financing, to meet its obligations on a
timely basis and to further develop and market its products. However, the
Company's financial condition and continuing losses may inhibit potential
customers from purchasing the Company's products. The accompanying financial
statements do not include any adjustments that might result from the outcome of
these uncertainties.

Revenue recognition

      The Company recognizes revenue from sales upon the delivery of merchandise
to a customer. The Company recognizes revenue from its sophisticated monitoring
systems and bomb jamming systems after installation, testing and customer
acceptance. Non-refundable advance payments received under marketing and
distribution arrangements are deferred and either applied as payments towards
customer purchases made pursuant to the terms of the respective agreements, or
recognized as income at the termination of the agreement if specified purchase
quotas have not been met by the customer. Customer deposits are initially
recorded as liabilities and recognized as revenue when the related goods are
shipped.

Contingent Liabilities of CCS

      On March 22, 2005, the Company sold all of the stock of its wholly owned
subsidiary CCS International Ltd. ("CCS"). The Company's balance sheet at
September 30, 2006 does not reflect any liabilities of CCS, since the Company
was not an obligor or guarantor with respect to any of the liabilities except as
set forth in Note 3. Prior to the sale of CCS the Company issued shares of
common stock to settle debt obligations of CCS or its subsidiaries. These
agreements contain a price guarantee that requires CCS to settle in cash any
difference between the original face amounts of the debt and proceeds from the
creditor's subsequent sale of the shares. Since the obligation to make the
payment is an obligation of CCS, and not the Company, the amount by which the
target prices exceeded the value of the stock on September 30, 2006, which was
approximately $738,000, is not reflected as a liability of the Company at
September 30, 2006. In addition at September 30, 2006, CCS's creditors had
initiated lawsuits against CCS for nonpayment of accrued liabilities and its
distributors has initiated litigation for breeches of their agreements in the
total amount of approximately $995,000. Judgments of approximately $ $770,000
have been entered against CCS in these matters. Although the Company has no
contractual obligation with respect to any of the obligations of CCS, and the
Company believes that it has a valid


                                       7
<PAGE>

            Security Intelligence Technologies, Inc. and Subsidiaries
                   Notes To Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

1. Nature of Business and Summary of Significant Accounting Policies -
continued:

Contingent Liabilities of CCS - continued:

defense to any claim that it has any liability with respect to any liabilities
or obligations of CCS, it is possible that creditors of CCS or its subsidiaries
may make a claim against the Company and that they may prevail. One CCS creditor
has obtained a default judgment against the Company based upon the claim that
the Company was responsible for CCS's obligations and another CCS creditor has
initiated an action against the Company claiming that the Company is responsible
for CCS's obligations. (See Note 11).

Financial Guarantees

      The Company has issued shares of common stock to settle its debt
obligations pursuant to an agreement that requires the Company to settle in cash
any difference between the original face amounts of the debt and proceeds from
the creditor's subsequent sale of the shares. The Company accounts for these
transactions by recording the debt at fair value with periodic mark-to-market
adjustments until the guarantee is settled. Unrealized gains or losses resulting
from changes in fair value are included in earnings and accrued expenses.

Stock-based Compensation

      The Company periodically grants stock options to employees in accordance
with the provisions of its stock option plans, with the exercise price of the
stock options being set at the closing market price of the common stock on the
date of grant. The Company also granted shares of preferred stock and stock
options to its senior executive officers pursuant to their employment
agreements. The Company accounts for stock-based compensation plans under
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees", and accordingly accounts for employee stock-based compensation
utilizing the intrinsic value method. FAS No. 123, "Accounting for Stock-Based
Compensation", establishes a fair value based method of accounting for
stock-based compensation plans. The Company has adopted the disclosure only
alternative under FAS No. 123, which requires disclosure of the pro forma
effects on earnings and earnings per share as if FAS No. 123 had been adopted as
well as certain other information.

      In December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment."
This statement replaces SFAS No. 123, "Accounting for Stock-Based Compensation"
and supersedes APB No. 25, "Accounting for Stock Issued to Employees." SFAS
123(R) requires all stock-based compensation to be recognized as an expense in
the financial statements and that such cost be measured according to the fair
value of stock options. In April 2005 the SEC announced that the effective date
of SFAS no. 123R for small business issuers will be suspended until the first
interim or annual reporting period of the company's first fiscal year beginning
on or after December 15, 2005, which, for the Company, is the first quarter of
the fiscal year ended June 30, 2007. Prior to this, the Company provided the pro
forma disclosures required by SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure," on a quarterly basis.

Stock options granted to non-employees are recorded at their fair value, as
determined in accordance with SFAS No. 123 and Emerging Issues Task Force
Consensus No. 96-18, and recognized over the related service period. Deferred
charges for options granted to non-employees are periodically re-measured until
the options vest.

FASB Statement 123, "Accounting for Stock-Based Compensation," required the
Company to provide pro forma information regarding net income (loss) and income
(loss) per share as if compensation cost for the Company's stock


                                       8
<PAGE>

            Security Intelligence Technologies, Inc. and Subsidiaries
                   Notes To Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

1. Nature of Business and Summary of Significant Accounting Policies -
continued:

Stock-based Compensation-continued:

option issuances had been determined in accordance with the fair value based
method prescribed in FASB Statement 123. The Company estimates the fair value of
each stock option at the grant date by using the Black-Scholes option-pricing
model with the following weighted-average assumptions used for grants in fiscal
2005, 2004, 2003 and 2002: dividend yield of 0%, risk-free interest rates
ranging from 3.38% to 4.32%, expected lives of eight years, and expected
volatility ranging from 120% to 178%. Under the accounting provisions of SFAS
Statement 123, the Company's net loss and loss per share for the three months
ended September 30, 2005 would have been the pro forma amounts indicated below:

                                                              Three Months Ended
                                                               September 30,2005
                                                              ------------------

Net loss:
    As reported                                                    $  (478,690)
    Add: Stock based employee compensation expense
       included in reported net loss                                        --
    Deduct: Total stock based employee compensation
       expense determined under the fair value based
         method for all awards                                        (295,394)
                                                                   -----------
                                                                   $  (774,084)
                                                                   ===========

Loss per share, basic and diluted:
    As reported                                                    $     (0.01)
    Proforma                                                       $     (0.01)

Foreign Currency Translation

      The functional currency of the Company's United Kingdom subsidiary is
pound sterling. Accordingly, the Company translates all assets and liabilities
into U.S. dollars at current rates. Revenues, costs, and expenses are translated
at average rates during each reporting period. Gains and losses resulting from
the translation of the consolidated financial statements are excluded from
results of operations and are reflected as a translation adjustment and a
separate component of stockholders' deficit. Gains and losses resulting from
foreign currency transactions are recognized in the consolidated statement of
operations in the period they occur.

Warranties

      The Company warrants the products and systems it sells to be free from
defects in materials and workmanship under normal use. Parts and labor costs to
repair defective products or systems are covered during the first ninety days
after delivery of the product or system. Thereafter the cost is billed to the
customer. A tabular reconciliation of the Company's aggregate product warranty
liability for the three months ended September 30, 2006 and 2005 is as follows:


                                       9
<PAGE>

            Security Intelligence Technologies, Inc. and Subsidiaries
                   Notes To Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

1. Nature of Business and Summary of Significant Accounting Policies -
continued:

Warranties-continued:

                                                              Three Months Ended
                                                              ------------------
                                                                   September 30,
                                                               -----------------
                                                                2006      2005
                                                               -------   -------
Balance July 1,                                                $35,000   $35,000

Charges for warranty work                                           --        --

Accrual for product warranties issued
   during the period                                                --        --
                                                               -------   -------
Balance at September 30                                        $35,000   $35,000
                                                               =======   =======

Use of estimates

      The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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 combined financial statements, and the reported amounts of revenue and
expenses during the reporting periods. Actual results could differ from those
estimates.

Inventories

Inventories are valued at the lower of cost (first-in, first-out) or market.

Property and equipment

      Assets are stated at cost. Depreciation is computed over the estimated
useful life of the assets generally using the straight-line method over periods
ranging from five to seven years. Additions and major renewals and betterments
are capitalized and depreciated over their estimated useful lives. Repairs and
maintenance are charged to operating expenses as incurred.

Income taxes

      The Company uses the liability method to determine its income tax expense.
Under this method, deferred tax assets and liabilities are computed based on
differences between financial reporting and tax basis of assets and liabilities
and are measured using the enacted rates and laws that will be in effect when
the differences are expected to reverse. Deferred tax assets are reduced by a
valuation allowance if, based on the weight of the available evidence, it is
more likely than not that all or some portion of the deferred tax assets will
not be realized. The ultimate realization of the deferred tax asset depends on
the Company's ability to generate sufficient taxable income in the future.


                                       10
<PAGE>

            Security Intelligence Technologies, Inc. and Subsidiaries
                   Notes To Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

1. Nature of Business and Summary of Significant Accounting Policies -
continued:

Loss Per Share

The Company calculates earnings per share in accordance with SFAS No. 128,
Earnings Per Share, and SEC Staff Accounting Bulletin No. 98. Accordingly, basic
and diluted loss per share is computed using the weighted average number of
shares of common stock outstanding and excludes all common stock equivalents
outstanding during the period. Common stock equivalents consist of shares
issuable upon the exercise of stock options and warrants using the treasury
stock method. Stock options and preferred stock that are convertible into common
stock based on the Company's attainment of performance goals are not includible
in the calculation of earnings per share until the specified targets are met.
The following securities have been excluded from the diluted computation for the
three months ended September 30, 2006 and 2005 because they are contingently
issuable and/or antidilutive:

                                                           Three Months Ended
                                                         -----------------------
                                                               September 30,
                                                         -----------------------
                                                            2006         2005
                                                         ----------   ----------

Series A convertible preferred stock                     10,500,000   10,500,000
Series B convertible preferred stock                      4,500,000    4,500,000
Series C convertible preferred stock                     15,000,000   15,000,000
Stock options                                            43,828,500   43,828,500
Warrants                                                  1,500,000    1,500,000

Reclassifications

Certain reclassifications have been made to the prior year financial statements
in order to conform to the current year presentation.

New Authoritative Accounting Prouncements

The Company does not anticipate the adoption of recently issued accounting
pronouncements to have a significant impact on the Company's results of
operations, financial position or cash flows.

2. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses at September 30, 2006 consisted of the
following:

Accounts payable - trade                                              $  556,925
Professional fees                                                        471,671
Payroll liabilities (includes delinquent payroll taxes and
   associated interest and penalties of $1,094,258)                    1,463,685
Accrued Interest                                                          84,740
Deferred rent payable                                                     49,197
Other                                                                     45,000
                                                                      ----------
                                                                      $2,671,218
                                                                      ==========


                                       11
<PAGE>

            Security Intelligence Technologies, Inc. and Subsidiaries
                   Notes To Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

3. Note Payable - CEO/stockholder

This amount represents a note payable to the Company's chief executive officer
and includes deferred salary of $466,051 and accrued interest of $164,728 based
on an interest rate of 5% per annum. The Note is due on demand and is secured by
substantially all of the assets of the Company and is subordinated to
outstanding borrowings under the Notes Payable Affiliate - revolving credit
agreement (See Note 4). Prior to the sale of CCS (See Note 7), the Company's
chief executive officer had advanced to CCS the sum of $750,741. Pursuant to his
employment agreement with the Company, the Company guaranteed CCS' obligations
to him to the maximum amount of $738,000. The Company's obligations under this
guaranty are payable only from cash flow from operations not required for the
Company's business. Because of CCS' financial condition, the guaranteed
obligations have been reflected as a liability on the Company's balance sheet.

4. Notes Payable Affiliate - Revolving Credit Agreement

In August 2005, the Company entered into a revolving credit agreement with GCOM
Consultants, Inc., which is owned by the wife of the Company's chief executive
officer, under which the Company may borrow up to $680,000. The Agreement
terminates on September 1, 2015 and requires monthly payments of $4,410 during
the term. Borrowings under the agreement bear interest at the annual rate of
7.025%, are due on demand, and are secured by a security interest in
substantially all of the Company's assets. In connection with this agreement,
the Company's chief executive officer has subordinated his security interest in
the Company's assets to any borrowings under this agreement (See Note 3). As of
September 30, 2006, the Company had borrowed approximately $615,000 under this
agreement.

5. Notes Payable - Others

This amount represents notes payable to three individuals, including Menahem
Cohen, which the Company issued in January 2005 May 2005 and July 2006, and a
note payable issued to a customer of the Company in January 2006. The notes to
the three individuals are payable on demand, bears interest at the rate of 5% ,
11% and 12% per annum, and are unsecured. The note to the Company's customer was
due in February 2006, is currently in default, bears interest at the rate of 12%
per annum and is secured by 1,500,000 shares of the Company's common stock.

6. Long Term Debt - Notes Payable - Convertible Credit Facility; Debt Issuance
Expense

On June 10, 2004 the Company entered into a convertible credit agreement with
private investors pursuant to which the Company borrowed $494,000. The notes
bear interest at the rate of 10% per annum, are convertible into the Company's
common stock at $.0333 per share and matured on June 30, 2005, except that in
the event of default the conversion rate is reduced to $.01667 per share. On
June 30, 2005 the Company and the lenders entered into an agreement amending the
terms of the notes which included an extension of the maturity date until June
30, 2010, a lowering of the conversion price to $.01667 per share and the
lowering of the interest rate to 0% or the minimum allowed by law, subsequent to
July 31, 2005. The conversion feature was valued at $3,847,832 using the
Black-Scholes option-pricing model. The Company expensed $2,304,455 of this
amount in the six months ended December 31, 2004 and $1,543,377 during the
remainder of the year ended June 30, 2005 as debt issuance expense. There were
no similar expenses during the three months ended September 30, 2006 and
September 30, 2005.

7. Disposition of Assets - Sale of CCS International, Ltd.

On March 22, 2005, the Company sold all of the stock of CCS for $100 and
contingent consideration consisting of 5% of CCS's and its subsidiaries' net
sales through March 31, 2015. CCS has not generated any sales since that date of
sale. Because of CCS's financial condition the Company has established a full
reserve for uncollectible amounts due from them of $2,936,511. Prior to the sale
of CCS, the Company's president and chief executive office, had advanced to CCS
the sum of $750,741. Pursuant to Mr. Jamil's employment agreement with the
Company, the Company guaranteed CCS


                                       12
<PAGE>

            Security Intelligence Technologies, Inc. and Subsidiaries
                   Notes To Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

7. Disposition of Assets - Sale of CCS International, Ltd. - continued:

obligations to Mr. Jamil to the maximum amount of $738,000 (See Notes 3). The
Company's obligations under this guaranty are payable only from cash flow from
operations not required for the Company's business. Because of CCS' financial
condition, the guaranteed obligations have been reflected as a liability of the
Company's balance sheet under the caption "Notes Payable - CEO/Stockholder".

8. Common Stock

Stock Issuances

During the three months ended September 30, 2006 the Company issued the
following securities:

The Company issued 300,000 shares of common stock in payment of consulting
services valued at $3,600.

The Company issued 600,000 shares of common stock to employees in payment of
$5,400 of accrued wages.

The Company issued 49,373 shares of common stock to its 401 (K) Savings Plan,
valued at $1,298, as its match to employee's contributions (See Note 9).

Stock Distribution

On November 17, 2005 the Company's board of directors authorized a three-for-one
stock distribution pursuant to which the Company issued two shares of common
stock for each share outstanding on the record date, November 28, 2005. The
shares were distributed to stockholders on or about December 5, 2005. All
references to numbers of common shares and per share data in the accompanying
financial statements have been adjusted to reflect the stock distribution on a
retroactive basis. The par value of the additional shares of common stock issued
in connection with the stock distribution was credited to "Common stock" and a
like amount charged to "Additional paid-in-capital" in the three month period
ended December 31, 2005. The terms of the Company's Series A, Series B and
Series C Convertible Preferred stock provide for a change in the conversion rate
to adjust for the stock distribution. Accordingly, each share of the Company's
Series A, Series B and Series C Convertible Preferred stock has become
convertible into three shares of the Company's common stock.

Amendment to Articles of Incorporation

On November 17, 2005 the Company's board of directors authorized an amendment to
the Company's Articles of Incorporation increasing the authorized shares of the
Company's common stock, par value $.0001 per share from one hundred million to
three hundred million, effective on November 28, 2005.

9. 401(K) Savings Plan

The Company maintains a qualified deferred compensation plan under section
401(k) of the Internal Revenue Code. Under the plan, employees may elect to
defer up to 15% of their salary, subject to the Internal Revenue Service limits.
The Company may make a discretionary match as well as a discretionary
contribution. During the three months ended September 30, 2006 the Company
matched employees contributions of $1,298 by issuing 49,373 shares if its common
stock to the plan. During the three months ended September 30, 2005 the Company
matched employees contributions of $12,444 by issuing 206,214 shares if its
common stock to the plan.


                                       13
<PAGE>

            Security Intelligence Technologies, Inc. and Subsidiaries
                   Notes To Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

10. Income taxes

The Company did not incur any income tax liabilities during the three month
periods ended September 30, 2006 and 2005 due to operating losses. As of
September 30, 2006 and September 30, 2005 the Company has increased its tax
valuation allowance to offset the deferred tax benefits of net operating losses
and other temporary differences arising during the three months ended September
30, 2006 and 2005 because management is uncertain as to their ultimate
realization.

11. Legal Matters

On or about February 10, 2005 the Company commenced an action in the Supreme
Court of New York against the landlord of its New York offices; captioned
Security Intelligence Technologies, Inc. v. GHP Huguenot LLC, claiming the
landlord breached the lease between the parties by not providing certain agreed
to services. The case is currently in discovery.

On or about March 11, 2005, an action was commenced against the Company in the
City Court of the City of New Rochelle, New York by the Company's landlord of
its New York offices, captioned GHP Huguenot LLC v. Security Intelligence
Technologies, Inc., claiming the Company was a habitually late in paying its
monthly rent and seeking to evict the Company from the premises. The Company has
denied the material allegations of the claim and has raised affirmative defenses
thereto and believes that it has valid defenses to the claim. The case is
currently in discovery.

In March 2006, the District of Columbia filed a wage and hour claim on the
Company on behalf of a former employee alleging he is owed commissions on the
sales of equipment. The Company has denied the material allegations of the claim
and has raised affirmative defenses thereto and believes that it has valid
defenses to the claim. The case has been scheduled for trial to commence on
February 7, 2007.

On or about May 19, 2006, an action was commenced against the Company in the
Supreme Court of New York, captioned Munir Sukhtian Group Co. v. Security
Intelligence Technologies, Inc. claiming the Company failed to deliver certain
equipment and demanding a refund of the $105,000 deposit it had paid. The
Company has denied the material allegations of the claim and has raised
affirmative defenses thereto and believes that it has valid defenses to the
claim.

On or about March 7, 2005, an action was commenced against the Company in the
Supreme Court of New York, captioned 444 Madison, LLC v. Security Intelligence
Technologies, Inc., claiming the Company is a successor in interest to CCS
International Ltd. ("CCS") and should be held liable for a judgment the
plaintiff had had been awarded against CCS. On December 23, 2005 the plaintiff
was awarded a default judgment in the amount of $229,990 plus interest of
approximately $50,000. In July 2006 the Company retained new outside counsel and
filed an order seeking to vacate the judgment and restoring the case to the
Court's calendar claiming the Company had ineffective counsel. On August 21,
2006, the Court denied the motion and reaffirmed the judgment. The Company
believes it has valid defenses to any claim that they are a successor in
interest to CCS International Ltd. The Company plans to seek to negotiate a
settlement of the judgment and pursue a malpractice action against its prior
outside counsel but can give no assurances that it will be able to negotiate any
reduction in the judgment or that it will recover any amounts from its outside
counsel if it institutes an action against him.

On or about September 21, 2005, an action was commenced against the Company in
the Circuit Court For Miami Dade County captioned Allan Dunteman and Zarco
Einhorn Salkowski & Britto, PA v. Security Intelligence Technologies, Inc.
claiming the Company had failed to perform certain duties it was to perform to
facilitate a settlement the plaintiff had previously reached with CCS
International Ltd. and demanding $15,000 and that the Company is a successor in
interest to CCS and should be liable for the amount of CCS's settlement of
$88,750 plus interest. The Company has denied the material allegations of the
claim and has raised affirmative defenses thereto and believes that it has valid
defenses to the claim.


                                       14
<PAGE>

            Security Intelligence Technologies, Inc. and Subsidiaries
                   Notes To Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

11. Legal Matters - continued:

On or about September 12, 2006, an action was commenced against the Company's
subsidiary Homeland Security Strategies, Inc. in the Superior Court of the State
of Arizona, captioned The Armored Group, LLC . v. Homeland Security Strategies,
Inc. claiming the Company failed to deliver certain equipment and demanding a
refund of the $450,000 deposit it had paid and additional damages of $1,892,000.
The Company plans to deny the material allegations of the claim and raise
affirmative defenses thereto and believes that it has valid defenses to the
claim.

In addition to these matters, CCS and one or more of its subsidiaries are the
defendant in a number of actions, in which the total amount claimed, is
approximately $995,000. Judgments have been rendered against CCS in these
matters in the approximate amount of $770,000. Although the Company is not a
party to any agreement with the plaintiff in any of these actions and has not
taken any action to guarantee these obligations, it is possible that the
plaintiffs may seek to make a claim against it. The Company believes that it has
no liability in any of these actions, and will vigorously defend any action
which seeks to impose liability upon it.

Although the Company has no contractual obligation with respect to any of the
obligations of CCS, and it believes that it has a valid defense to any claim
that it has any liability with respect to any potential liabilities or
obligations of CCS, two of CCS's creditors have made claims against it claiming
that it is a successor in interest to CCS and as noted above, in one of those
cases a default judgment was entered against it. It is possible that additional
creditors of CCS or its subsidiaries may make additional claims against the
Company and that they may prevail. The Company believes that it has meritorious
and valid defenses against all such potential litigation, and will vigorously
defend any actions based on such claims.

12. Supplemental Disclosures of Cash Flow Information

Supplemental disclosures of cash flow information for the three month periods
ended September 30, 2006 and 2005 are as follows:

                                                              Three Months Ended
                                                             -------------------
                                                                September 30,
                                                             -------------------
                                                               2006       2005
                                                             --------   --------

Interest paid                                                $ 19,447   $ 72,234
                                                             ========   ========

Taxes paid                                                   $    835   $    685
                                                             ========   ========

    Accrued interest and deferred salary credited to
    note payable - CEO/stockholder                           $ 72,943   $ 23,873
                                                             ========   ========


                                       15
<PAGE>

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

General Overview

      The following discussion should be read in conjunction with our financial
statements, including the notes thereto. Our financial statements and
information have been prepared to reflect our financial position as of September
30, 2006 and September 30, 2005. Historical results and trends should not be
taken as indicative of future operations.

      We are operating under a heavy financial burden as reflected in our
substantial working capital deficiency and our continuing losses and negative
cash flow from operations. We have sought to address these problems during
fiscal 2004 by closing our retail operations, although we continue to generate
modest retail sales from our headquarters and our London branch, and by entering
into credit agreement with certain stockholders pursuant to which we borrowed
$494,000. These notes were initially due in June 2005, and were extended for
five years.

      In August 2005, we entered into a revolving credit agreement with GCOM
Consultants, Inc., which is owned by the wife of our chief executive officer,
under which we may borrow up to $680,000. The Agreement terminates on September
1, 2015 and requires monthly payments of $4,410 during the term. Borrowings
under the agreement bear interest at the annual rate of 7.025%, are due on
demand, and are secured by a security interest in substantially all of our
assets. In connection with this agreement, our chief executive officer has
subordinated his security interest in our assets to any borrowings under this
agreement. As of September 30, 2006, we had borrowed approximately $615,000
under this agreement.

      Our working capital deficiency has made it difficult for us to attract new
business and maintain relations with our customers and suppliers. Other than our
credit agreement and loans from our chief executive officer, our main source of
funds has been our customer deposits which we use for our operations.

      If we are unable to increase our sales and pay our note holders and other
creditors, it may be necessary for us to cease business and seek protection
under the Bankruptcy Code.

Prior to 2004, a significant portion of our revenue was derived from sales by
our retail stores which were operated by CCS, which was then our wholly-owned
subsidiary. In March 2005, we sold the stock of CCS to Menahem Cohen, who was
then our vice president and a director, for $100 and contingent consideration
consisting of 5% of CCS's and its subsidiaries' net sales through March 31,
2015. CCS has not generated any sales since that date of sale.

During the fiscal year ended June 30, 2004 and continuing thereafter, we changed
the direction of our sales effort. We substantially reduced our retail
operations by closing our retail stores or converting to them to sales offices,
followed in March 2005 with the sale of our retail subsidiaries. We expanded our
marketing efforts directed at commercial and governmental users, particularly
with respect to our sales of our bomb-jamming systems and our communications
monitoring systems. We do not anticipate that retail sales will account for a
significant portion of our sales on an ongoing basis.

Although we have marketed a number of products in the past, we believe that our
ability to generate profits in the future will be dependent upon our ability to
develop market and sell our bomb-jamming equipment and market and sell the
communications monitoring equipment that we distribute pursuant to a
distribution agreement with a foreign supplier. If we are not able to generate
sales from these products or from any new products which we may either develop
or for which we may acquire distribution rights, we may be unable to operate
profitably and it may be necessary for us to discontinue our operations and seek
protection under the Bankruptcy Code.

A significant portion of our revenue for the three months ended September 30,
2006 represents non-refundable deposits from distributors which were forfeited
upon expiration or termination of the distribution agreements as a result of the
failure of the distributors to purchase our products. The deposits were to be
applied to the purchase price of products ordered pursuant to the distribution
agreement. Although we recognize these deposits as revenue upon expiration or
termination of the contracts, the distributors may claim that they are entitled
to a refund of the unused deposits, notwithstanding the characterization of the
deposits as non-refundable. Although we believe that we are complying with the
terms of the contracts, we cannot assure you that the distributors will not be
successful if they bring these claims against us.


                                       16
<PAGE>

Critical accounting policies

      We prepare our financial statements in accordance with accounting
principles generally accepted in the United States of America. Preparing
financial statements in accordance with generally accepted accounting principles
requires us to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities as
of the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. The following paragraphs include a
discussion of some of the significant accounting policies and methods applied to
the preparation of our consolidated financial statements. See Note 1 of Notes to
Consolidated Financial Statements for further discussion of significant
accounting policies.

Use of estimates

      The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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 combined financial statements, and the reported amounts of revenue and
expenses during the reporting periods. Actual results could differ from those
estimates.

Inventories

      Inventories are valued at the lower of cost (first-in, first-out) or
market.

Revenue recognition

      We recognize revenue from sales upon the delivery of merchandise to a
customer. We recognize revenue from our sophisticated monitoring systems and
bomb jamming systems after installation, testing and customer acceptance.
Non-refundable advance payments received under marketing and distribution
arrangements are deferred and either applied as payments towards customer
purchases made pursuant to the terms of the respective agreements, or recognized
as income at the termination of the agreement if specified purchase quotas have
not been met by the customer. Customer deposits are initially recorded as
liabilities and recognized as revenue when the related goods are shipped.

Stock-based Compensation

      We periodically grant stock options to employees in accordance with the
provisions of our stock option plans, with the exercise price of the stock
options being set at the closing market price of the common stock on the date of
grant. We also granted shares of preferred stock and stock options to our senior
executive officers pursuant to their employment agreements. We account for
stock-based compensation plans under Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees", and accordingly accounts for
employee stock-based compensation utilizing the intrinsic value method. FAS No.
123, "Accounting for Stock-Based Compensation", establishes a fair value based
method of accounting for stock-based compensation plans. We have adopted the
disclosure only alternative under FAS No. 123, which requires disclosure of the
pro forma effects on earnings and earnings per share as if FAS No. 123 had been
adopted as well as certain other information.

      In December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment."
This statement replaces SFAS No. 123, "Accounting for Stock-Based Compensation"
and supersedes APB No. 25, "Accounting for Stock Issued to Employees." SFAS No.
123(R) requires all stock-based compensation to be recognized as an expense in
the financial statements and that such cost be measured according to the fair
value of stock options. In April 2005 the SEC announced that the effective date
of SFAS No. 123R for small business issuers will be suspended until the first
interim or annual reporting period of the company's first fiscal year beginning
on or after December 15, 2005, which for the Company is the first quarter of the
fiscal year ended June 30, 2007. Prior to this date the Company provided the pro
forma disclosures required by SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure," on a quarterly basis.


                                       17
<PAGE>

      Stock options granted to non-employees are recorded at their fair value,
as determined in accordance with SFAS No. 123 and Emerging Issues Task Force
Consensus No. 96-18, and recognized over the related service period. Deferred
charges for options granted to non-employees are periodically re-measured until
the options vest.

Income taxes

      We use the liability method to determine income tax expense. Under this
method, deferred tax assets and liabilities are computed based on differences
between financial reporting and tax basis of assets and liabilities and are
measured using the enacted rates and laws that will be in effect when the
differences are expected to reverse. Deferred tax assets are reduced by a
valuation allowance if, based on the weight of the available evidence, it is
more likely than not that all or some portion of the deferred tax assets will
not be realized. The ultimate realization of the deferred tax asset depends on
our ability to generate sufficient taxable income in the future. Because of our
losses we did not incur any income tax expense during the three months ended
September 30, 2006 and September 30, 2005. Financial guarantees

      The agreements pursuant to which we issued certain shares to settle debt
obligations contain a price guarantee that requires us to settle in cash any
difference between the original face amounts of the debt and proceeds from the
creditor's subsequent sale of the shares. We account for these transactions by
recording the debt at fair value with periodic mark-to-market adjustments until
the guarantee is settled. Unrealized gains or losses resulting from changes in
fair value are included in earnings and accrued expenses.

Fair Value of Financial Instruments

      The fair values of financial instruments recorded on the balance sheet are
not significantly different from their carrying amounts due to the short-term
nature of those instruments, or because they are accounted for at fair value.

Foreign Currency Translation

      The functional currency of our United Kingdom subsidiary is pound
sterling. Accordingly, we translate all assets and liabilities into United
States dollars at current rates. Revenues, costs, and expenses are translated at
average rates during each reporting period. Gains and losses resulting from the
translation of the consolidated financial statements are excluded from results
of operations and are reflected as a translation adjustment and a separate
component of stockholders' deficit. Translation adjustments were $9,358 as of
September 30, 2006. Gains and losses resulting from foreign currency
transactions are recognized in the consolidated statement of operations in the
period they occur.

Contingent Liabilities of CCS

On March 22, 2005, we sold all of the stock of CCS to Menahem Cohen for $100 and
contingent consideration consisting of 5% of CCS's and its subsidiaries' net
sales through March 31, 2015. CCS has not generated any sales since that date of
sale. Our balance sheet at September 30, 2006 does not reflect any liabilities
of CCS, since we were not an obligor or guarantor with respect to any of the
liabilities except as set forth in Note 3 of Notes to Consolidated Financial
Statements. Prior to the disposition of CCS we issued shares of common stock to
settle debt obligations of CCS or its subsidiaries. These agreements contain a
price guarantee that requires CCS to settle in cash any difference between the
original face amounts of the debt and proceeds from the creditor's subsequent
sale of the shares. Since the obligation to make the payment is an obligation of
CCS, and not us, the amount by which the target prices exceeded the value of the
stock on September 30, 2006, which was approximately $738,000, is not reflected
as our liability at September 30, 2006. Although we have no contractual
obligation with respect to any of the obligations of CCS, and we believe we have
a valid defense to any claim that we have any liability with respect to any
liabilities or obligations of CCS, it is possible that a creditor of CCS or its
subsidiaries may make a claim against us and that they may prevail.


                                       18
<PAGE>

RESULTS OF OPERATIONS - Three Months Ended September 30, 2006 and 2005

Revenues. Revenues for the three months ended September 30, 2006 (the "2006
Period") were $759,784, a decrease of $17,757, or 2.3%, from revenues of
$777,541 for the three months ended September 30, 2005 (the "2005 Period")
primarily as a consequence of a decrease of $78,088, or 32.8% in revenues
recognized from the termination of distribution agreements with non refundable
deposit balances to $160,174 in the 2006 Period from $238,262 in the 2005 Period
which was partially offset by an increase in product sales of $60,331, or
11.19%, to $599,610 in the 2006 Period from $539,279 in the 2005 Period.

Cost of Revenue. Cost of sales increased by $15,689, or 7.3% to $232,201 in the
2006 Period from $216,512 in the 2005 Period as a consequence of increased
product sales. Cost of sales as a percentage of product sales decreased to 38.7%
in the 2006 Period from 40.2% in the 2005 Period primarily as a consequence of
selling higher margin products in the 2006 Period.

Compensation and benefits. Compensation and benefits decreased by $16,837, or
3.2% to $506,745 in the 2006 Period from $523,582 in the 2005 Period primarily
due to outsourcing certain marketing and sales functions to outside consultants.

Professional fees and legal matters. Professional fees and legal matters
decreased by $14,247, or 24.7% to $43,425 in the 2006 Period from $57,672 in the
2005 Period. Based on a review of our outstanding legal matters and CCS's
outstanding legal matters and unpaid settlements, we have established, in
consultation with outside counsel, reserves for litigation costs that we believe
are probable and can be reasonable estimated. We can provide no assurance,
however, that such reserves will be sufficient to absorb actual losses that may
result from unfavorable outcomes. Moreover, it is possible that the resolution
of litigation contingencies will have a material adverse impact on our
consolidated financial condition, results of operations, and cash flows.

Stock based compensation. Stock based compensation is attributable to the grant
of options and warrants to employees in accordance with FASB 123(R) that became
effective for us on July 1, 2006. There was no comparable expense in the 2005
Period.

Selling, general and administrative expenses. Selling, general and
administrative expenses decreased by $36,147, or 9.9% to $327,761 in the 2006
Period from $363,908 in the 2005 Period. This decrease was primarily due to a
decrease in a number of administrative support services.

Depreciation and amortization. Depreciation and amortization had no change and
was $2,000 in the 2006 Period and $2,000 in the 2005 Period.

Interest expense. Interest expense decreased by $37,259, or 40.3% to $55,298 in
the 2006 Period from $92,557 in the 2005 Period primarily as a result of closing
costs of $37,921 associated with the revolving line of credit we entered into in
August 2005 reflected in the 2005 Period with no similar expense in the 2006
Period.

As a result of the factors described above, our net loss decreased by $50,145,
or 10.5% to $428,545, $.00 per share, in the 2006 Period from $478,690, $.01 per
share, in the 2005 Period.

Liquidity and Capital Resources

At September 30, 2006 we had cash of $31,306, no accounts receivable and a
working capital deficit of $6,785,938 and long term debt of $494,000. During the
2006 Period, we had a negative cash flow from operations of $61,258. Our
accounts payable and accrued expenses at September 30, 2006 were $2,671,218. As
a result of our continuing losses, our working capital deficiency has increased.
We funded our losses through the sale of our common stock, loans from our chief
executive officer and a company owned by his wife and the issuance of notes to
private investors. We also utilized vendor credit and customer deposits.


                                       19
<PAGE>

Our accounts payable and accrued expenses increased from $2,468,121 at June 30,
2006 to $2,671,218 at September 30, 2006 an increase of $203,097 reflecting our
inability to pay creditors currently. We also had customer deposits and deferred
revenue of $1,900,988 which relate to payments on orders which had not been
filled at that date. We have used our advance payments to fund our operations.
If our vendors do not extend us necessary credit we may not be able to fill
current or new orders, which may affect the willingness of our clients to
continue to place orders with us.

During the past three years we have sought, and been unsuccessful, in our
efforts to obtain adequate funding for our business. Because of our losses and
our working capital deficiency, we are not able to increase our borrowing. Our
bank facility terminated on November 1, 2002 and since that date we have not
been able to arrange financing with a replacement bank or institutional lender.
In June 2004, we entered into a convertible credit agreement with certain
stockholders pursuant to which we borrowed $494,000. Our obligations to these
lenders matured on June 30, 2005, and were extended until June 30, 2010. In
August, 2005, we entered into a revolving credit agreement with GCOM
Consultants, Inc., a company owned by the wife of our chief executive officer,
under which we may borrow up to $680,000. We borrowed approximately $615,000
under this agreement. These borrowings are due on demand. If demand is made, we
do not presently have the resources to pay the lender. If the lender seeks to
demand payment or otherwise enforce the notes, it may be necessary for us to
seek protection under the Bankruptcy Code. We continue to require funds for our
operations, and our failure either to obtain financing or generate cash flow
from operations would materially impair our ability to continue in business, and
we cannot assure you that we will be able to obtain the necessary financing. If
we do not obtain necessary funding, either from operations or from investors, we
may be unable to continue our operations and it may be necessary for us to seek
protection under the Bankruptcy Code.

Our main source of funds other than the private investors has been from loans
from our chief executive officer, a company owned by the chief executive
officer's wife, customer deposits and vendor credits. During fiscal 2006 we
received $343,000 from the sale of our common stock. We cannot provide any
assurance that we will be able to raise any more money through the sale of our
equity securities. We may not be able to obtain any additional funding, and, if
we are not able to raise funding, we may be unable to continue in business.
Furthermore, if we are able to raise funding in the equity markets, our
stockholders might suffer significant dilution and the issuance of securities
may result in a change of control. These factors raise substantial doubt about
our ability to continue as a going concern. Our financial statements do not
include any adjustments that might result from the outcome of these
uncertainties.

In March 2005, we sold the stock of CCS. Prior to the sale CCS had incurred
liabilities, which continue as liabilities of CCS. Although we did not guaranty
payment of the obligations of CCS, it is possible that creditors of CCS may seek
payment from us. Although we believe that we have no liability to creditors of
CCS, we cannot assure you that a court would not reach a contrary conclusion.
Regardless of whether we ultimately prevail, we would incur significant legal
and other costs in defending any such action.

                            PART II OTHER INFORMATION

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds.

      During the three months ended September 30, 2006 we issued the following
in transactions which were not registered pursuant to the Securities Act of
1933:

      o     We issued 600,000 shares of common stock to employees in payment of
            $5,400 of accrued wages.

      o     We issued 49,373 shares of common stock to our 401 (K) Savings Plan,
            valued at $1,298, as our match to contributions by employees. (See
            Note 9).

None of these shares were issued in transactions involving a public offering
pursuant to Section 4(2) of the Securities Act of 1933, as amended. No
underwriting or broker was involved in the stock issuances and the Company did
not pay any compensation to any person in connection with the stock issuances.


                                       20
<PAGE>

Item 3. Controls and Procedures

As of the end of the three months ended September 30, 2006, our chief executive
officer and chief financial officer evaluated the effectiveness of our
disclosure controls and procedures. Based on their evaluation, the chief
executive officer and the chief financial officer have concluded that our
disclosure controls and procedures are effective in alerting them to material
information that is required to be included in the reports that we file or
submit under the Securities Exchange Act of 1934 and that the information
required to be disclosed in the reports that we file or submit under the
Securities Exchange Act of 1934 is accumulated and communicated to our
management, including our chief executive officer and chief financial officer,
to allow timely decisions regarding required disclosure.

There has been no change in our internal control over financial reporting that
occurred during our last fiscal quarter that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.

Item 6. EXHIBITS AND REPORTS ON FORM 8K

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

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

32.1     Certificate of Chief Executive Officer and Chief Financial Officer
         pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

                                   SIGNATURES

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

                                    SECURITY INTELLIGENCE TECHNOLOGIES, INC.

                                    By: /s/ Ben Jamil
                                        ----------------------------------------
                                        Ben Jamil, chief executive officer

                                    By: /s/ Chris R. Decker
                                        ----------------------------------------
                                        Chris R. Decker, chief financial officer

Date: November 20, 2006


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