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 DECEMBER 31, 2007





OR


o
      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
                Employerincorporation
                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 o




The
      number of shares of common stock $.0001 par value, of the Registrant issued
      and
      outstanding as of February 8, 2008 was
      96,811,726.








SECURITY
      INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES


FORM
      10-QSB





PERIOD
      ENDED DECEMBER 31, 2007




TABLE
      OF
      CONTENTS


PART
                  I -
              FINANCIAL
                  INFORMATIONITEM
                  1.
              Consolidated
                  Financial Statements:Consolidated
                  Balance Sheets as of December 31, 2007 (unaudited) and June 30,
                  2007
              
              3Consolidated
                  Statements of Operations (unaudited) for the three and six months
                  ended
                  December 31, 2007 and December 31, 2006
              
              4Consolidated
                  Statements of Cash Flow (unaudited) for the three and six months
                  ended
                  December 31, 2007 and December 31, 2006
              
              5Notes
                  to Consolidated Financial Statements
              
              6Item
                  2.
              Management's
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              
              15PART
                  II -
              OTHER
                  INFORMATIONItem
                  2.
              Unregistered
                  Sale of Equity Securities and Use of Proceeds
              
              20Item
                  3.
              Controls
                  and Procedures
              
              20Item
                  6.
              Exhibits
                  and Reports on Form
              
              20




2




SECURITY
                  INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED
                  BALANCE SHEETS
  December
                    31,
                
                June
                    30,2007
                
                2007(Unaudited)ASSETSCurrent
                    Assets:Cash
                
                $
                44,137
                
                $
                6,823Inventory
                
                
                667,441
                
                
                557,133Other
                    current assets
                
                
                7,119
                
                
                111,784Total
                    current assets
                
                
                718,697
                
                
                675,740Property
                    and Equipment, at cost less accumulated depreciation and amortizationof
                    $24,000 and $20,000 at December 31, 2007 and June 30, 2007 respectively
                
                
                1,000
                
                
                5,000Receivable
                    from CCS International, Ltd. less allowance for uncollectible
                    amountsof
                    $2,936,511 at December 31, 2007 and June 30, 2007
                
                
                -
                
                
                -Other
                    assets
                
                
                16,261
                
                
                18,199Total
                    assets
                
                $
                735,958
                
                $
                698,939LIABILITIES
                    AND STOCKHOLDERS' DEFICITCurrent
                    liabilities:Accounts
                    payable and accrued expenses
                
                $
                3,460,308
                
                $
                3,373,233Note
                    payable - CEO/stockholder
                
                
                1,651,890
                
                
                2,086,784Notes
                    payable affiliate - revolving credit agreement
                
                
                657,793
                
                
                680,000Notes
                    payable - other
                
                
                384,750
                
                
                389,750Customer
                    deposits
                
                
                3,038,597
                
                
                2,167,489Deferred
                    revenue
                
                
                556,783
                
                
                556,783Total
                    current liabilities
                
                
                9,750,121
                
                
                9,254,039Long
                    term debt - convertible notes payable
                
                
                494,000
                
                
                494,000Total
                    liabilities
                
                
                10,244,121
                
                
                9,748,039Commitments
                    and contingencies - See NotesStockholders'
                    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
                
                
                350Series
                    B Convertible-$1.00 per share liquidation preference,1,500,000
                    shares authorized, issued and outstanding
                
                
                150
                
                
                150Series
                    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,96,811,726
                    and 93,584,668 issued and outstanding at December 31,2007
                    and June 30, 2007 respectively
                
                
                9,681
                
                
                9,358Additional
                    paid in capital
                
                
                9,128,618
                
                
                8,828,941Accumulated
                    deficit
                
                
                (18,683,309
                )
                
                (17,929,828
                )Accumulated
                    other comprehensive income
                
                
                36,347
                
                
                41,929Total
                    stockholders' deficit
                
                
                (9,508,163
                )
                
                (9,049,100
                )Total
                    liabilities and stockholders' deficit
                
                $
                735,958
                
                $
                698,939
  The
        accompanying notes are an integral part of these financial
        statements.




3




SECURITY
                  INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED
                  STATEMENTS OF OPERATIONS(Unaudited)
  Three
                  Months Ended
              
              Six
                  Months EndedDecember
                  31,
              
              December
                  31,2007
              
              2006
              
              2007
              
              2006Revenues
              
              $
              185,343
              
              $
              548,835
              
              $
              1,665,329
              
              $
              1,308,619Costs
                  and expenses:Cost
                  of sales
              
              
              105,784
              
              
              200,534
              
              
              902,257
              
              
              432,735Compensation
                  and benefits
              
              
              257,702
              
              
              400,422
              
              
              568,850
              
              
              907,167Professional
                  fees
              
              
              85,685
              
              
              47,032
              
              
              118,008
              
              
              90,457Stock
                  based compensation
              
              
              -
              
              
              20,895
              
              
              -
              
              
              41,794Selling,
                  general and administrative expenses
              
              
              294,346
              
              
              317,278
              
              
              662,165
              
              
              645,039Depreciation
                  and amortization
              
              
              2,000
              
              
              2,000
              
              
              4,000
              
              
              4,000745,517
              
              
              988,161
              
              
              2,255,280
              
              
              2,121,192Operating
                  loss
              
              
              (560,174
              )
              
              (439,326
              )
              
              (589,951
              )
              
              (812,573
              )Interest
                  expense
              
              
              74,711
              
              
              68,363
              
              
              163,530
              
              
              123,661Net
                  loss
              
              $
              (634,885
              )
              $
              (507,689
              )
              $
              (753,481
              )
              $
              (936,234
              )Loss
                  per share, basic and diluted
              
              $
              (0.01
              )
              $
              (0.01
              )
              $
              (0.01
              )
              $
              (0.01
              )Weighted
                  average number of shares
              
              
              96,811,726
              
              
              93,584,668
              
              
              96,320,652
              
              
              93,266,503




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




4


SECURITY
                  INTELLIGENCE TECHNOLOGIES, INC.CONSOLIDATED
                  STATEMENTS OF CASH FLOWS(Unaudited)
  Six
                  Months EndedDecember
                  31,2007
              
              2006CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  loss
              
              $
              (753,481
              )
              $
              (936,234
              )Adjustments
                  to reconcile net loss to net cash provided by (used in)operating
                  activities:Depreciation
                  and amortization
              
              
              4,000
              
              
              4,000Amortization
                  of deferred compensation
              
              
              -
              
              
              41,794Stock
                  issued to consultants and employees for services
              
              
              -
              
              
              9,000Stock
                  issued to 401 K plan
              
              
              -
              
              
              1,298Increase
                  in other comphrensive income
              
              
              (5,582
              )
              
              24,434Noncash
                  compensation - CEO/stockholder
              
              
              125,000
              
              
              125,000Noncash
                  interest expense - CEO/stockholder
              
              
              36,878
              
              
              32,512CHANGES
                  IN OPERATING ASSETS AND LIABILITIES:(Increase)
                  in inventory
              
              
              (110,308
              )
              
              (2,966
              )Decrease
                  in other current assets
              
              
              104,665
              
              
              130,936Decrease
                  in other assets
              
              
              1,938
              
              
              -Increase
                  in accounts payable and accrued expenses
              
              
              87,075
              
              
              482,347Increase
                  in customer deposits
              
              
              871,108
              
              
              37,387Increase
                  in deferred revenue
              
              
              -
              
              
              41,535Net
                  cash provided by (used in) operating activities
              
              
              361,293
              
              
              (8,957
              )CASH
                  FLOWS FROM FINANCING ACTIVITIES:Borrowings
                  under notes payable - other
              
              
              -
              
              
              200,000(Repayments)
                  of notes payable - other
              
              
              (5,000
              )
              
              (35,250
              )(Repayments)
                  under note payable - CEO/stockholder
              
              
              (596,772
              )
              
              (151,162
              )(Repayments)
                  under revolving credit agreement - affiliate
              
              
              (22,207
              )
              
              -Proceeds
                  from issuance of common stock
              
              
              300,000
              
              
              -Net
                  cash provided by (used in) financing activities
              
              
              (323,979
              )
              
              13,588Net
                  increase in cash
              
              
              37,314
              
              
              4,631Cash,
                  beginning of period
              
              
              6,823
              
              
              27,126Cash,
                  end of period
              
              $
              44,137
              
              $
              31,757




The
        accompanying notes are an integral part of these financial
        statements.
 5
 Security
          Intelligence Technologies, Inc. and Subsidiaries
 Notes
          To
          Consolidated Financial Statements
 December
          31, 2007 and 2006
 (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, 2007
      filed on Form 10-KSB.





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, and its
      executive offices located in New Rochelle, New York.





Principles
      of Consolidation





The
      consolidated financial statements include the accounts of the Company and its
      wholly-owned subsidiaries, Homeland Security Strategies, Inc., a Delaware
      corporation, that commenced operations on July 14, 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 of Florida, Inc., a Florida corporation,
      that
      operates a sales office that commenced operations on January 30, 2004, Homeland
      Security Strategies (UK), Ltd. (formerly Counter Spy Shop of Mayfair Limited),
      a
      United Kingdom corporation that operated a retail store/service center that
      ceased operations on December 31, 2006 and HSS Express Funds, Inc., that
      commenced operations on January 8, 2007 to provide administrative services
      to
      all of the consolidated companies. 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 $753,481 and $2,286,944 for the six months ended
      December 31, 2007 and the fiscal year ended June 30, 2007, respectively. In
      addition, at December 31, 2007, the Company had a working capital deficit of
      $9,031,424, long term debt of $494,000, and a deficiency in stockholders’ equity
      of $9,508,163. 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, 6 and 8). 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 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 $1,053,000 during the six months ended December
      31,
      2007 and approximately $405,000 during the fiscal year ended June 30, 2007.
      At
      December 31, 2007, the Company had outstanding purchase orders for an additional
      amount of approximately $2,382,000 for these systems however; customers
      representing $1,072,000 of these orders have instituted litigation against
      the
      Company for failure to deliver. As part of this marketing 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 either equity
      or debt financing, and, there can be no assurances that additional financing
      which is necessary for the Company to continue in business, 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.




6


Security
        Intelligence Technologies, Inc. and Subsidiaries
 Notes
        To
        Consolidated Financial Statements
 December
        31, 2007 and 2006
 (Unaudited)





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




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 December 31, 2007
      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 December 31, 2007, which was approximately $840,000,
      is
      not reflected as a liability of the Company at December 31, 2007. In addition
      at
      December 31, 2007, 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 $966,000.
      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 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
      obtaineda
      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).




7


Security
        Intelligence Technologies, Inc. and Subsidiaries
 Notes
        To
        Consolidated Financial Statements
 December
        31, 2007 and 2006
 (Unaudited)


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




Stock-based
      Compensation





Effective
      July 1, 2006, The Company adopted Statement of Financial Accounting Standards
      Statement 123(R) “Share Based Payment” (“SFAS123(R)”) utilizing the “modified
      prospective” method as described in SFAS 123(R). In the “modified prospective”
method, compensation cost is recognized for all share-based payments granted
      after the effective date and for all unvested awards granted prior to the
      effective date. In accordance with SFAS 123(R) prior period amounts were not
      restated. SFAS 123(R) also requires the tax benefit associated with these
      share-based payments to be classified as financing activities in the Statement
      of Cash Flows, rather than operating cash flows as required under previous
      regulations.





FASB
      Statement 123, “Accounting for Stock-Based Compensation,” requires 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 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
      of
      3.38% to 4.32%, expected lives of eight years, and expected volatility ranging
      from 120% to 178%.





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 six months ended December 31, 2007 and 2006 is as
      follows:


Six
                    Months EndedDecember
                    31,2007
                
                2006Balance
                    July 1,
                
                $
                35,000
                
                $
                35,000Charges
                    for warranty work
                
                
                -
                
                
                -Accrual
                    for product warranties issuedduring
                    the period
                
                
                -
                
                
                -Balance
                    at December 31
                
                $
                35,000
                
                $
                35,000


8





Security
        Intelligence Technologies, Inc. and Subsidiaries
 Notes
        To
        Consolidated Financial Statements
 December
        31, 2007 and 2006
 (Unaudited)





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




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 consolidated
      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.




9


Security
        Intelligence Technologies, Inc. and Subsidiaries
 Notes
        To
        Consolidated Financial Statements
 December
        31, 2007 and 2006
 (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 and six months ended December 31,
      2007 and 2006 because they are contingently issuable and/or
      antidilutive:




Three
                  & Six Months EndedDecember
                  31,2007
              
              2006Series
                  A convertible preferred stock
              
              
              10,500,000
              
              
              10,500,000Series
                  B convertible preferred stock
              
              
              4,500,000
              
              
              4,500,000Series
                  C convertible preferred stock
              
              
              15,000,000
              
              
              15,000,000Stock
                  options
              
              
              43,828,500
              
              
              43,828,500Warrants
              
              
              -
              
              
              1,500,000




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 December 31, 2007 consisted of the
      following:


Accounts
                  payable - trade
              
              $
              693,357Professional
                  fees
              
              
              698,497Payroll
                  liabilities (includes delinquent payroll taxes andassociated
                  interest and penalties of $1,580,166)
              
              
              1,852,992Accrued
                  Interest
              
              
              117,538Deferred
                  rent payable
              
              
              41,674Other
              
              
              56,250$
              3,460,308




10


Security
        Intelligence Technologies, Inc. and Subsidiaries
 Notes
        To
        Consolidated Financial Statements
 December
        31, 2007 and 2006
 (Unaudited)





3.
      Note
      Payable - CEO/stockholder





This
      amount represents a note payable to the Company's chief executive officer and
      includes deferred salary of $771,976 and accrued interest of $270,193 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
      December 31, 2007 the Company had borrowed approximately $658,000 under this
      agreement.




5.
      Notes
      Payable - Others





This
      amount represents notes payable to two individuals, which the Company issued
      in
      January 2005 and July 2006, and a note payable issued to a customer of the
      Company in January 2006. The notes to the two individuals are payable on demand,
      bears interest at the rate of 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 and was expensed during
      year ended June 30, 2005 as debt issuance expense. There were no similar
      expenses during the six months ended December 31, 2007 and 2006.




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’s 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’s financial condition, the guaranteed obligations have been reflected as
      a liability on the Company’s balance sheet under the caption “Notes Payable -
      CEO/Stockholder”.




11


Security
        Intelligence Technologies, Inc. and Subsidiaries
 Notes
        To
        Consolidated Financial Statements
 December
        31, 2007 and 2006
 (Unaudited)





8.
      Common
      Stock





During
      the six months ended December 31, 2007 the Company sold 3,227,058 shares of
      common stock to an accredited investor for $300,000.





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 six months ended December 31, 2007 there were no employee contributions
      to
      the plan. During the six months ended December 31, 2006 the Company matched
      employee’s contributions of $1,298 by issuing 49,373 shares of its common stock
      to the plan.





10.
      Income taxes





The
      Company did not incur any income tax liabilities during the six months ended
      December 31, 2007 and 2006 due to operating losses. As of December 31, 2007
      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 six months ended December 31, 2007 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, Westchester County, 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. The Company is unable to determine whether it is reasonably possible
      that it will incur a loss in this matter.





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. On March 26, 2007 a judgment was entered against the Company in
      the
      amount of $161,377 and this amount was accrued by a charge to income. The
      Company plans to seek to negotiate a settlement of the judgment but can give
      no
      assurances that it will be successful in negotiating any reduction in the amount
      of the judgment.




12




Security
        Intelligence Technologies, Inc. and Subsidiaries
 Notes
        To
        Consolidated Financial Statements
 December
        31, 2007 and 2006
 (Unaudited)





11.
      Legal
      Matters - continued:





On
      or
      about May 19, 2006, an action was commenced against the Company in the Supreme
      Court of New York, Westchester County, 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. The Company is
      unable to determine whether it is reasonably possible that it will incur a
      loss
      in this matter.





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 and these amounts have been accrued by a charge to income.
      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. The Company is unable to determine whether it is reasonably possible
      that
      it will incur a loss in this matter.





On
      or
      about January 19, 2006, an action was commenced against CCS and the Company
      in
      the Supreme Court of the State of New York, Westchester County, captioned El
      Mundo Co., Ltd. v. CCS International Ltd. and Security Intelligence
      Technologies, Inc. claiming that CCS breached the distribution agreement it
      had
      entered into with CCS in 1997 and demanding the return of $433,284 it had paid
      to CCS and that the Company should be held liable as a successor in interest
      to
      CCS. The case is currently in discovery. 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 that it is a successor in
      interest to CCS International Ltd. The Company is unable to determine
      whether it is reasonably possible that it will incur a loss in this
      matter.





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.
      On or about December 15, 2006 the Company filed a motion to dismiss the action
      for lack of jurisdiction or in the alternative to transfer the venue from
      Arizona to the Southern District of New York. On April 10, 2007 the Arizona
      Court dismissed the action for lack of jurisdiction. On or about October 31,
      2007, the plaintiff brought this action against the Company in the United States
      District Court, Southern District of New York
      captioned The Armored Group, LLC v. Homeland Security Strategies, Inc and
      Security Intelligence Technologies, Inc.
      again claiming the Company failed to deliver certain equipment and demanding
      a
      refund of the $450,000 deposit it had paid and additional damages of not less
      than $1,500.000. The Company plans to deny the material allegations of the
      claim
      and will raise affirmative defenses thereto and believes that it has valid
      defenses to the claim. The Company is unable to determine whether it is
      reasonably possible that it will incur a loss in this
      matter.




13
 
  Security
          Intelligence Technologies, Inc. and Subsidiaries
 Notes
          To
          Consolidated Financial Statements
 December
          31, 2007 and 2006
 (Unaudited)





11.
      Legal
      Matters - continued:




On
      or
      about January 2, 2007, an action was commenced against the Company’s subsidiary
      Homeland Security Strategies, Inc. in the Supreme Court of the State of New
      York, Westchester County, captioned Formosa Forensic Analysis Technology, Inc.
      v. Homeland Security Strategies, Inc. claiming the Company failed to deliver
      certain equipment and demanding a refund of the $64,800 deposit it had paid
      and
      additional damages in an amount to be determined by the Court. 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 Company
      is unable to determine whether it is reasonably possible that it will incur
      a
      loss in this matter.





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 $966,000. 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. The Company is unable to determine
      whether it is reasonably possible that it will incur a loss in these
      matters





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,
      three
      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 six month periods ended December
      31, 2007 and 2006 are as follows:


Six
                  Months EndedDecember
                  31,2007
              
              2006Interest
                  paid
              
              $
              62,589
              
              $
              43,919Taxes
                  paid
              
              $
              614
              
              $
              835Accrued
                  interest and deferred salary credited tonote
                  payable - CEO/stockholder
              
              $
              161,878
              
              $
              157,512


14




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 December
      31, 2007 and December 31, 2006. 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 by entering into credit agreements 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 December
      31, 2007, we had borrowed approximately $658,000 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.





Because
      of our working capital problems we are delinquent in payment of payroll taxes.
      At December 31, 2007, our liabilities included delinquent payroll taxes and
      associated interest and penalties of $1,580,166.




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. Although
      we no longer have any interest in CCS, CCS has significant liabilities and
      contractual obligations, and creditors of CCS may claim that we are liable
      for
      CCS’ obligations. One creditor of CCS has obtained a default judgment against
      us, and another has commenced litigation against us for obligations of CCS.
      If
      creditors of CCS obtain and seek to enforce any significant judgment against
      us,
      we may seek protection under the Bankruptcy Code.




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.




15




A
      significant portion of our revenue for the year ended June 30, 2007 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. There was no similar revenue for the six
      months ended December 31, 2007.





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.





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





Prior
      to
      2004, a significant portion of the Company’s revenue was derived from sales by
      retail stores which were operated by the Company’s wholly-owned subsidiary, CCS
      International, Inc. (“CCS”). Commencing in mid 2003 and continuing through March
      2004, the Company closed all of its retail stores, although the Company
      continues to make modest retail sales from its headquarters. On March 22, 2005,
      the Company sold the stock of CCS for $100 and contingent consideration
      consisting of 5% of CCS’s and its subsidiaries’ net sales through March 31,
      2015. Because of CCS’s financial condition the Company has established a full
      reserve for uncollectible amounts due from them of $2,936,511. The Company’s
      balance sheet at December 31, 2007 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 Notes 5 and 9. 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
      creditors 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 December 31, 2007, which was
      approximately $840,000, is not reflected as a liability of the Company at
      December 31, 2007. In addition at December 31, 2007, CCS’s creditors had
      initiated lawsuits against CCS for nonpayment of accrued liabilities and its
      distributors has initiated litigation for breaches of their agreements in the
      total amount of approximately $966,000. 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 defense to any claim that it has any
      liability with respect to any liabilities or obligations of CCS, creditors
      of
      CCS or its subsidiaries have and may continue to make claims against the Company
      and 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 two other CCS creditors have initiated actions against the
      Company claiming that the Company is responsible for CCS’s obligations. (See
      Note 11 of Notes to Financial Statements).





16





Stock-based
      Compensation





Effective
      July 1, 2006, The Company adopted Statement of Financial Accounting Standards
      Statement 123(R) “Share Based Payment” (“SFAS123(R)”) utilizing the “modified
      prospective” method as described in SFAS 123(R). In the “modified prospective”
method, compensation cost is recognized for all share-based payments granted
      after the effective date and for all unvested awards granted prior to the
      effective date. In accordance with SFAS 123(R) prior period amounts were not
      restated. SFAS 123(R) also requires the tax benefit associated with these
      share-based payments to be classified as financing activities in the Statement
      of Cash Flows, rather than operating cash flows as required under previous
      regulations.





FASB
      Statement 123, “Accounting for Stock-Based Compensation,” requires 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 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
      of
      3.38% to 4.32%, expected lives of eight years, and expected volatility ranging
      from 120% to 178%.





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.





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.




17




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.


Use
      of
      estimates





RESULTS
      OF OPERATIONS - Six Months Ended December 31, 2007 and December 31,
      2006





Revenues.
      Revenues for the six months ended December 31, 2007 (the “2007 Period”) were
      $1,665,329, an increase of $356,710, or 27.3%, from revenues of $1,308,619
      for
      the six months ended December 31, 2006 (the “2006 Period”) primarily
      as a consequence of an increase in product sales of $566,884, or 51.6%, to
      $1,665,329 in the 2007 Period from $1,098,445 in the 2006 Period partially
      offset by a decrease of $210,174 in revenues recognized from the termination
      of
      distribution agreements with non refundable deposit balances from the 2006
      Period to the 2007 Period.





Cost
      of
      Revenue. Cost of sales increased by $469,522, or 108.5% to $902,257 in the
      2007
      Period from $432,735 in the 2006 Period as a consequence of increased product
      sales. Cost of sales as a percentage of product sales was 54.2% in the 2007
      Period and 39.4% the 2006 Period primarily the result of a $880,000 sale of
      cellular monitoring equipment in the 2007 Period that had an associated cost
      of
      sales of 63.6%.




Compensation
      and benefits. Compensation and benefits decreased by $338,317, or 37.3%, to
      $568,850 in the 2007 Period from $907,167 in the 2006 Period primarily due
      to
      (i) outsourcing certain marketing and sales functions to outside consultants,
      and (ii) the result of implementing cost cutting programs.





Professional
      fees and legal matters. Professional fees and legal matters increased by
      $27,551, or 30.5%, to $118,008 in the 2007 Period from $90,457 in the 2006
      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 was $41,794 during the 2006 Period
      and 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 2007 Period as these costs had been fully
      amortized in the fiscal year ended June 30, 2007.





Selling,
      general and administrative expenses. Selling, general and administrative
      expenses increased by $17,126, or 2.7%, to $662,165 in the 2007 Period from
      $645,039 in the 2006 Period. This increase was primarily the result of (i)
      an
      increase in consulting fees of $86,995, or 146.8%, resulting from outsourcing
      certain marketing and sales functions to outside consultants, and (ii) an
      increase in travel and international exhibition expenses of $53,195, or 64.1%,
      partially offset by the implementation of cost cutting programs designed to
      decrease a number of administrative support services.





Depreciation
      and amortization. Depreciation and amortization had no change and was $4,000
      in
      the 2007 Period and $4,000 in the 2006 Period.




Interest
      expense. Interest expense increased by $39,869, or 32.2% to $163,530 in the
      2007
      Period from $123,661 in the 2006 Period primarily as a result of increased
      costs
      resulting from a continued increase in the Company’s interest bearing
      outstanding debt obligations.




18




As
      a
      result of the factors described above, our net loss decreased by $182,753,
      or
      19.5%, to $753,481, $.01 per share, in the 2007 Period from $936,234, $.01
      per
      share, in the 2006 Period.





Liquidity
      and Capital Resources





At
      December 31, 2007 we had cash of $44,137, no accounts receivable and a working
      capital deficit of $9,031,424 and long term debt of $494,000. Our accounts
      payable and accrued expenses at December 31, 2007 were $3,460,308. 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.





Our
      accounts payable and accrued expenses increased from $3,373,233 at June 30,
      2007
      to $3,460,308 at December 31, 2007 an increase of $87,075 reflecting our
      inability to pay creditors currently. We also had customer deposits and deferred
      revenue of $3,595,380 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 $658,000 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 the 2007 Period we received
      $300,000 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.




19




PART
      II
      OTHER INFORMATION





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





During
      the six months ended December 31, 2007 we issued the following in transactions
      which were not registered pursuant to the Securities Act of 1933:





·
            .We
                sold 3,227,058 shares of common stock to an accredited investor for
                $300,000.





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.





Item
      3.
      Controls and Procedures





As
      of the
      end of the six months ended December 31, 2007, 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
              JamilBen
              Jamil, chief executive officer  By:
              /s/
                Chris R. DeckerChris
                  R. Decker, chief financial officer


Date:
      February 15, 2008




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