UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-QSB

[X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act  of  1934

          For the quarterly period ended June 30, 2006

[ ]  Transition  Report Under Section 13 or 15(d) of the Securities Exchange Act
     of 1934 for the transition period from --- to ---

          Commission file number: 000-31883

                            PROTON LABORATORIES, INC.
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)


              Washington                                   91-2022700
    (State or other jurisdiction of                     (I.R.S. Employer
     incorporation or organization)                    Identification No.)

                        1135 Atlantic Avenue, Suite 101
                                Alameda, CA 94501
                    (Address of principal executive offices)

                                 (510) 865-6412
                            Issuer's telephone number

     Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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

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

     On August 18, 2006 the registrant had outstanding 18,759,261 shares of
Common Stock, $0.0001 par value per share. Some of these shares have not been
certificated yet.

     Transitional Small Business Disclosure Format:   Yes [ ]   No [X]


<PAGE>
                                     PART I

                              FINANCIAL INFORMATION


ITEM 1.     FINANCIAL STATEMENTS.

                            PROTON LABORATORIES, INC.
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                         PAGE
<S>                                                                      <C>
Condensed Consolidated Balance Sheets - June 30, 2006 and
  December 31, 2005 (Unaudited)                                          F-1

Condensed Consolidated Statements of Operations for the three
  and six months ended June 30, 2006 and 2005 (Unaudited)                F-2

Condensed Consolidated Statements of Cash Flows for the six months
  ended June 30, 2006 and 2005 (Unaudited)                               F-3

Notes to Condensed Consolidated Financial Statements (Unaudited)         F-4
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                                      PROTON LABORATORIES, INC
                         CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

                                                                           JUNE 30,    DECEMBER 31,
                                                                               2006            2005
---------------------------------------------------------------------------------------------------
<S>                                                                    <C>           <C>
ASSETS
CURRENT ASSETS
Cash                                                                   $    29,270   $       1,384
Accounts receivable, less allowance for doubtful accounts of $16,522        15,021          21,927
Inventory                                                                   36,549          32,861
---------------------------------------------------------------------------------------------------
  TOTAL CURRENT ASSETS                                                      80,840          56,172
---------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Furniture and fixtures                                                      19,709          19,709
Equipment and machinery                                                    161,833         161,833
Leasehold improvements                                                      11,323          11,323
Less:  accumulated depreciation                                            (61,423)        (45,820)
---------------------------------------------------------------------------------------------------
  NET PROPERTY AND EQUIPMENT                                               131,442         147,045
---------------------------------------------------------------------------------------------------
DEPOSITS                                                                     6,131           6,131
---------------------------------------------------------------------------------------------------
TOTAL ASSETS                                                           $   218,413   $     209,348
---------------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
Accounts payable                                                       $    94,701   $     168,378
Accrued expenses                                                           317,040         252,769
Deferred revenue                                                            52,506          52,506
Preferred dividends payable                                                 12,800           9,600
Stockholder loans, current portion                                         282,000         444,642
---------------------------------------------------------------------------------------------------
  TOTAL CURRENT LIABILITIES                                                759,047         927,895
---------------------------------------------------------------------------------------------------
STOCKHOLDER LOANS, NET OF CURRENT PORTION                                    8,642          40,000
---------------------------------------------------------------------------------------------------
STOCKHOLDERS' DEFICIT
Series A convertible preferred stock, 400,000 shares authorized
  with a par value of $0.0001; 8,000 shares issued and outstanding;
  liquidation preference of $80,000                                         80,000          80,000
Undesignated preferred stock, 19,600,000 shares authorized with a
  par value of $0.0001; no shares issued or outstanding                          -               -
Common stock, 100,000,000 common shares authorized with a par
  value of $0.0001; 16,632,550 and 14,270,100 shares issued and
  outstanding, respectively                                                  1,665           1,429
Additional paid in capital                                               2,339,376       1,856,601
Accumulated deficit                                                     (2,970,317)     (2,696,577)
---------------------------------------------------------------------------------------------------
  TOTAL STOCKHOLDERS' DEFICIT                                             (549,276)       (758,547)
---------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                            $   218,413   $     209,348
---------------------------------------------------------------------------------------------------
</TABLE>

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


                                       F-1
<PAGE>
<TABLE>
<CAPTION>
                                           PROTON LABORATORIES, INC
                          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

                                                  FOR THE THREE MONTHS ENDED       FOR THE SIX  MONTHS ENDED
                                                            JUNE 30,                       JUNE 30,
                                                -------------------------------  -----------------------------
                                                     2006             2005           2006            2005
-------------------------------------------------------------------------------  -----------------------------
<S>                                             <C>              <C>             <C>            <C>
SALES                                           $       33,639   $      63,521   $     84,561   $     157,710

COST OF GOODS SOLD                                      26,187          33,499         70,479         100,862
--------------------------------------------------------------------------------------------------------------

GROSS PROFIT                                             7,452          30,022         14,082          56,848
--------------------------------------------------------------------------------------------------------------

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
(INCLUDING EQUITY-BASED EXPENSE OF $0,
459,040, $40,526 AND $459,040)                         124,011         563,886        252,041         679,380
--------------------------------------------------------------------------------------------------------------

LOSS FROM OPERATIONS                                  (116,559)       (533,864)      (237,959)       (622,532)
--------------------------------------------------------------------------------------------------------------

OTHER INCOME AND (EXPENSE)
Interest income                                            175              41            200             100
Interest expense                                       (15,044)        (49,235)       (32,781)        (72,819)
--------------------------------------------------------------------------------------------------------------
  NET OTHER EXPENSE                                    (14,869)        (49,194)       (32,581)        (72,719)
--------------------------------------------------------------------------------------------------------------

    NET LOSS                                          (131,428)       (583,058)      (270,540)       (695,251)

PREFERRED STOCK DIVIDEND                                 1,600           1,600          3,200           3,200
--------------------------------------------------------------------------------------------------------------

LOSS APPLICABLE TO COMMON SHAREHOLDERS          $     (133,028)  $    (584,658)  $   (273,740)  $    (698,451)
--------------------------------------------------------------------------------------------------------------

BASIC AND DILUTED LOSS PER
  COMMON SHARE                                  $        (0.01)  $       (0.04)  $      (0.02)  $       (0.05)
--------------------------------------------------------------------------------------------------------------

BASIC AND DILUTED WEIGHTED AVERAGE
  SHARES OUTSTANDING                                15,486,316      13,362,997     14,914,666      13,176,132
--------------------------------------------------------------------------------------------------------------
</TABLE>

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


                                       F-2
<PAGE>
<TABLE>
<CAPTION>
                            PROTON LABORATORIES, INC
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE SIX MONTHS ENDED                                   2006        2005
---------------------------------------------------------------------------
<S>                                                  <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                             $(270,540)  $(695,251)
Shares issued for services                              40,526     459,040
Adjustments to reconcile net loss to cash used
  in operating activities:
  Depreciation                                          15,603      10,814
  Amortization of loan costs                                 -      27,075
  Changes in operating assets and liabilities
    Accounts receivable                                  6,906      (1,232)
    Inventory                                           (3,688)    (66,681)
    Deposits                                                 -       5,000
    Deferred revenue                                         -      52,506
    Accounts payable                                   (33,151)    (24,187)
    Accrued expenses                                    64,271      75,413
---------------------------------------------------------------------------

  NET CASH FROM OPERATING ACTIVITIES                  (180,073)   (157,503)
---------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment                          -        (146)
---------------------------------------------------------------------------

  NET CASH FROM INVESTING ACTIVITIES                         -        (146)
---------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock                 401,959           -
Payments on notes payable                             (267,852)          -
Proceeds from stockholder loans                         73,852     204,000
---------------------------------------------------------------------------

  NET CASH FROM FINANCING ACTIVITIES                   207,959     204,000
---------------------------------------------------------------------------

NET INCREASE IN CASH                                    27,886      46,351

CASH AT BEGINNING OF PERIOD                              1,384      14,412
---------------------------------------------------------------------------

CASH AT END OF PERIOD                                $  29,270   $  60,763
---------------------------------------------------------------------------

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of common stock for accrued legal services  $  40,526   $       -
Issuance of common stock for loan costs              $       -   $  27,075
Accrual of preferred stock dividends                 $   3,200   $   3,200
</TABLE>

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


                                       F-3
<PAGE>
                            PROTON LABORATORIES, INC
1.1.1     NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE  1  -  BASIS  OF  PRESENTATION  AND  NATURE  OF  OPERATIONS

BASIS  OF PRESENTATION - The condensed consolidated financial statements include
the  accounts  of  Proton  Laboratories,  Inc.,  and its wholly owned subsidiary
("Proton"  or  the  "Company").  All  significant  intercompany transactions and
balances  have  been  eliminated  in  consolidation.

In April 2004, the Company changed its name from BentleyCapitalCorp.com, Inc. to
Proton  Laboratories,  Inc.  The Company's subsidiary also changed its name from
Proton  Laboratories,  Inc.  to  Water  Science,  Inc.

CONDENSED  FINANCIAL  STATEMENTS  -  The  accompanying  unaudited  condensed
consolidated  financial  statements are condensed and, therefore, do not include
all disclosures normally required by accounting principles generally accepted in
the  United  States  of America.  These statements should be read in conjunction
with  the  Company's  annual  financial  statements  included  in  the Company's
December  31,  2005  Annual Report on Form 10-KSB.  In particular, the Company's
significant  accounting  principles were presented as Note 1 to the consolidated
financial  statements  in  that  report.  In  the  opinion  of  management,  all
adjustments  necessary  for  a  fair  presentation  have  been  included  in the
accompanying  condensed  consolidated  financial  statements and consist of only
normal  recurring  adjustments.  The  results  of  operations  presented  in the
accompanying  condensed  consolidated  financial  statements  for the six months
ended  June  30,  2006 are not necessarily indicative of the results that may be
expected  for  the  full  year  ending  December  31,  2006.

NATURE  OF  OPERATIONS  -  The  Company's  operations  are  located  in Alameda,
California.  The  core  business  of  the  Company  consists  of  the  sales and
marketing  of  the  Company's  industrial, environmental and residential systems
throughout  the  United States of America which alter the properties of water to
produce  functional  water. The Company acts as an exclusive importer and master
distributor  of  these  products to various companies. Additionally, the Company
formulates intellectual properties under licensing agreements, supplies consumer
products,  consults  on projects utilizing functional water, facilitates between
manufacturer  and  industry  and acts as educators on the benefits of functional
water.

USE  OF  ESTIMATES  - The preparation of financial statements in conformity with
accounting  principles  generally  accepted  in  the  United  States  of America
requires  management  to make estimates and assumptions that affect the reported
amounts  of  assets  and  liabilities,  disclosure  of  contingent  assets  and
liabilities  and  the  reported  amounts  of  revenues  and  expenses during the
reporting  period.  Actual  results  could  differ  from  those  estimates.

INVENTORY  - Inventory consists of purchased finished goods and is stated at the
lower  of  cost  (using  the  first-in,  first-out  method)  or  market  value.

BASIC  AND  DILUTED  LOSS  PER  COMMON  SHARE  -  Basic loss per common share is
calculated  by dividing net loss by the weighted-average number of common shares
outstanding.  Diluted  loss  per common share is calculated by dividing net loss
by  the  weighted-average  number  of  Series A convertible preferred shares and
common  shares  outstanding to give effect to potentially issuable common shares
except  during  loss  periods  when  those  potentially  issuable  shares  are
anti-dilutive.  Potential  common  shares  from convertible preferred stock have
not  been  included  as  they  are  anti-dilutive.


                                      F-4
<PAGE>
NOTE  2  -  BUSINESS  CONDITION

The  accompanying  consolidated  financial  statements  have  been  prepared  in
conformity with accounting principles generally accepted in the United States of
America,  which  contemplate continuation of the Company as a going concern. The
company  has  incurred  losses applicable to common shareholders of $273,740 for
the six months ended June 30, 2006. The Company had a working capital deficit of
$678,207,  and  $871,723  at  June 30, 2006 and December 31, 2005, respectively.
Loans  and  equity  funding  were  required  to  fund  operations.

The  Company  is  working  towards raising additional public funds to expand its
marketing  and revenues.  The Company has spent considerable time in contracting
with  several  major  overseas  corporations  for the co-development of enhanced
antioxidant  beverages for distribution into the overseas markets.  In addition,
the  Company  is  working  with  its  Canadian  business  associates to identify
institutional  businesses to market various disinfection applications based upon
functional  water,  pending  government  approval.

The  Company's  ability  to  continue  as  a going concern is dependent upon its
ability  to  generate  sufficient cash flows to meet its obligations on a timely
basis,  to  obtain  additional  financing  as may be required, and ultimately to
attain  profitable  operations.  However,  there is no assurance that profitable
operations  or  sufficient  cash  flows  will  occur  in  the  future.

NOTE  3  -  RELATED  PARTY  TRANSACTIONS

Stockholder  loans  as  of  June  30,  2006 and December 31, 2005 consist of the
following:

<TABLE>
<CAPTION>
                                                                         2006      2005
-----------------------------------------------------------------------------------------
<S>                                                                    <C>       <C>
Note payable to President; principal and interest due May 2006;
  interest is accrued at 30% per annum; secured by inventory           $      -  $168,500

Note payable to President; principal and interest due June 2006;
  interest is accrued at 7% per annum; unsecured                         20,000         -

Note payable to CEO and majority shareholder; principal and
  interest currently due; interest is accrued at 7% per annum;
  unsecured.                                                             84,000    84,000

Note payable to CEO and majority shareholder; principal and
  interest currently due; interest is accrued at 7% per annum;
  unsecured.                                                            125,000   125,000

Note payable to CEO and majority shareholder; principal and
  interest currently due; interest is accrued at 7% per annum;
  unsecured.                                                             40,000    40,000

Note payable to CEO and majority shareholder; principal and
  interest due September 2006; interest is accrued at 7% per annum;
  unsecured.                                                             13,000    13,000


                                      F-5
<PAGE>
Note payable to CEO and majority shareholder; principal and
  interest due September 2007; interest is accrued at 7% per annum;
  unsecured.                                                              8,642    14,142

Note payable to shareholder; principal and interest due January 2007;
  interest is accrued at 7% per annum; unsecured.                             -    40,000

Notes payable to President and CEO; principal and interest due
  March 2008; interest is accrued at 7% per annum; unsecured.                 -         -
-----------------------------------------------------------------------------------------

    TOTAL STOCKHOLDER LOANS                                             290,642   484,642

    Less: Current Portion                                               282,000   444,642
-----------------------------------------------------------------------------------------

    TOTAL STOCKHOLDER LOANS - LONG TERM                                $  8,642  $ 40,000
-----------------------------------------------------------------------------------------
</TABLE>

During the six months ended June 30, 2006, two shareholders advanced the Company
$73,852. The Company made payments on these shareholder notes totaling $267,852
during the six months ended June 30, 2006.

At June 30, 2006, the Company had accrued interest relating to shareholder
loans of $129,913.

During the six months ended June 30, 2006, the Company accrued $30,000 as
salaries payable to the company's CEO, resulting in $185,987 of salaries payable
at June 30, 2006.

NOTE  4  -  COMMON  STOCK

In  March  2006 the Company issued 352,400 shares of common stock for payment of
legal fees.  The value of the shares issued was $81,052, based on a market price
on  date  of  issuance  of $0.23.  $40,526 of this amount is related to services
rendered  during  the  year  ended  December  31,  2005.

During May and June the Company issued 2,010,050 shares of common stock for cash
proceeds  of  $401,959  or  $0.20  per  share.

NOTE  5  -  COMMITMENTS

PRODUCTION  AGREEMENT - In June 2005, the Company entered into an agreement with
Mitachi, a Japanese electronics component manufacturer, to aid in the production
of  enhanced  drinking  water  generators.  Pursuant  to this agreement, Mitachi
agreed  to  pay  the  Company  25,000,000  Yen  for engineering design, molding,
tooling and preparation costs, and the exclusive product distribution rights for
China,  Taiwan, and Japan.  As of June 30, 2006, Mitachi had paid 6,000,000 Yen,
or  $52,506,  for the above mentioned distribution rights.  Since the project is
not  yet  completed  and  no  units have been sold, this amount is classified as
deferred  revenue.


                                      F-6
<PAGE>
EQUITY  LINE  -  In  November  2005,  the  Company  entered  into an equity line
agreement  with  a  private  investor  (the  "Equity Line Investor").  Under the
equity line, the Company had the right to draw up to $10,000,000 from the Equity
Line  Investor.  The  Company  was  entitled  to  draw funds and to "put" to the
Equity  Line  Investor  shares  of the Company's Class A common stock in lieu of
repayment  of  the  draw.  As  of June 30, 2006, the Company had not drawn funds
under  the  equity  line.

NOTE  6  -  SUBSEQUENT  EVENT

Subsequent  to  June  30, 2006 the Company issued 524,985 shares of common stock
for  cash  proceeds  of  $104,985,  or  $0.20  from  various  investors.

Previously,  the Company entered into an agreement whereby an investor agreed to
purchase,  up  to  $2,000,000 dollars worth of common shares of the Company at a
per  share  purchase  price equal to 40% of the previous day's last trade price.
Subsequent to June 30, 2006, the Company issued 1,026,711 shares of common stock
under  this  agreement for cash proceeds of $226,599 (net of $30,197 of issuance
costs).

In  July  2006,  the  Company issued 1,851,250 shares of common stock to various
individuals  for  their  services in raising equity funds and marketing upcoming
Company  products.  The  Company  is  currently  evaluating  the  value of these
shares.


                                      F-7
<PAGE>
ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS.

FORWARD-LOOKING STATEMENT

     Certain statements contained herein, including, without limitation,
statements containing the words, "believes," "anticipates," "expects," and other
words of similar meaning, constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause our actual results, performance or achievements, to be
materially different from any future results, performance, or achievements
expressed or implied by such forward-looking statements. Given these
uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements. In addition to the forward-looking statements
contained herein, the following forward-looking factors could cause our future
results to differ materially our forward-looking statements: competition,
funding, government compliance and market acceptance of our products.

INTRODUCTION

     The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with our audited financial
statements and the accompanying notes thereto for the year ended December 31,
2005 which appear in our Form 10-KSB for the year then ended, and our unaudited
financial statements for the quarter ended June 30, 2006 and the accompanying
notes thereto and the other financial information appearing elsewhere herein.
The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the USA, which
contemplate our continuation as a going concern.

     We had a stockholders deficit of $549,276 at June 30, 2006, and a
stockholders deficit of $758,547 at June 30, 2005.

     Loans from our CEO and our president have been necessary to fund our
operations.

     Stockholder  loans as of June 30, 2006 and December 31, 2005 consist of the
following:

<TABLE>
<CAPTION>
                                                                       JUNE 30,   DECEMBER
                                                                         2006     31, 2005
-------------------------------------------------------------------------------------------
<S>                                                                    <C>        <C>
Note payable to President; principal and interest due May 2006;
  interest is accrued at 30% per annum; secured by inventory           $       -  $ 168,500

Note payable to President; principal and interest due June 2006;
  interest is accrued at 7% per annum; unsecured                          20,000          -

Note payable to CEO and majority shareholder; principal and
  interest currently due; interest is accrued at 7% per annum;
  unsecured.                                                              84,000     84,000

Note payable to CEO and majority shareholder; principal and
  interest currently due; interest is accrued at 7% per annum;
  unsecured.                                                             125,000    125,000

Note payable to CEO and majority shareholder; principal and
  interest currently due; interest is accrued at 7% per annum;
  unsecured.                                                              40,000     40,000


                                      F-8
<PAGE>
Note payable to CEO and majority shareholder; principal and
  interest due September 2006; interest is accrued at 7% per annum;
  unsecured.                                                              13,000     13,000

Note payable to CEO and majority shareholder; principal and
  interest due September 2007; interest is accrued at 7% per annum;
  unsecured.                                                               8,642     14,142

Note payable to shareholder; principal and interest due January 2007;
  interest is accrued at 7% per annum; unsecured.                              -     40,000

Notes payable to President and CEO; principal and interest due
  March 2008; interest is accrued at 7% per annum; unsecured.                  -          -
-------------------------------------------------------------------------------------------

    TOTAL STOCKHOLDER LOANS                                              290,642    484,642

    Less: Current Portion                                                282,000    444,642
-------------------------------------------------------------------------------------------

    TOTAL STOCKHOLDER LOANS - LONG TERM                                $   8,642  $  40,000
-------------------------------------------------------------------------------------------
</TABLE>

     During the six months ended June 30, 2006, two shareholders advanced the
Company $73,852. The Company made payments on these shareholder notes totaling
$267,852 during the six months ended June 30, 2006.

     At June 30, 2006, the Company had accrued interest relating to shareholder
loans of $129,913.

     During the six months ended June 30, 2006, the Company accrued $30,000 as
salaries payable to the company's CEO, resulting in $185,987 of salaries payable
at June 30, 2006.

     Our independent auditors made a going concern qualification in their report
dated March 29, 2006, which raises substantial doubt about our ability to
continue as a going concern. The financial statements herein do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or amounts and classification of liabilities that might be necessary
should the Company be unable to continue in existence.

     Our ability to continue as a going concern is dependent upon our ability to
generate sufficient cash flows to meet our obligations on a timely basis, to
obtain additional financing as may be required, and ultimately to attain
profitable operations. However, there is no assurance that profitable operations
or sufficient cash flows will occur in the future.

     We are located in Alameda, California. We are a biotechnology company that
develops new, practical applications for electrolyzed water and the electrolysis
process. Our processes and equipment alters the properties of water through
electrolysis with electrolytic ion separation and through the conversion of
existing properties found in water to achieve functional results. Our business
consists of the salesand marketing of the industrial, environmental and
residential systems throughout the U.S.A. which alter the properties of water to
produce functional


                                      F-9
<PAGE>
water. We act as an exclusive importer and master distributor of these products
to various companies in which uses for the product range from food processing to
retail water sales. We are working towards raising funds to expand our marketing
and revenues. We have spent considerable time negotiating with several overseas
corporations for the co-development of enhanced antioxidant beverages for
distribution into the overseas markets. In addition, we are working with
Canadian businesses to identify markets for various disinfection applications of
functional water, pending government approval. We are working on agricultural
applications of functional water. We are working on packaging for a spray-on
application of function water for pathogen counter-measures.

     We formulate intellectual properties under licensing agreements, supply
consumer products, consult on projects utilizing functional water, facilitate
usage, uses and users of functional water between manufacturer and industry and
act as educators on the benefits of functional water. Our business has been
focused on marketing functional water equipment and systems.
Alkaline-concentrated functional water may have health-beneficial properties and
may be used for drinking and cooking purposes. Acidic-concentrated functional
water may be used as a topical, astringent medium.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Our discussion and analysis of our financial condition and results of
operations is based upon our consolidated financial statements, which have been
prepared in accordance with generally accepted accounting principles. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenue and
expenses, and related disclosure of contingent assets and liabilities. On an
ongoing basis, we evaluate our estimates. We base our estimates on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances. These estimates and assumptions provide a basis for us
to make judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Our actual results may differ from
these estimates under different assumptions or conditions, and these differences
may be material.

     We recognize revenue when all four of the following criteria are met: (i)
persuasive evidence that an arrangement exists; (ii) delivery of the products
and/or services has occurred; (iii) the selling price is both fixed and
determinable and; (iv) collectibility is reasonably probable. Our revenues are
derived from sales of our industrial, environmental and residential systems
which alter the properties of water to produce functional water. We believe that
this critical accounting policy affects our more significant judgments and
estimates used in the preparation of our consolidated financial statements.

     Our fiscal year end is December 31.

     We have a joint research and development program with Weber Farms located
in Washington State. Weber Farms is family-owned with a long history of raising
and marketing quality potatoes, wheat and corn. In 1979, Weber Farms built a
fresh pack potato warehouse to ensure better quality and more oversight of the
marketing of open potatoes both to domestic and foreign markets. In 1997, a
state-of- the-art potato storage facility capable of storing 50,000 tons was
built. End uses of Weber Farm potatoes are generally in the areas of boxed and
bagged potatoes for retail stores, hash browns, French fries and other
retail-type products. We will work together in various areas where Proton's
electrolyzed water, with its unique efficacies, can be integrated into potato
production and post-harvesting processes. Understanding that Proton's water
brings about certain potato maintenance efficacies, environmental and worker
safety, on-site production abilities and cost efficiencies, both parties are
looking forward to a mutually rewarding relationship.

     We have also been experimenting with the uses of electrolysis to complement
or  bypass  the  conventional  wine  aging  process  by  applying the process of
electrolysis  to  young  wine  that  has  been  fermented  but  not  aged.

     We have begun the design and engineering of three market-ready industrial
electrolysis systems based on one standard platform. The strong advantage of
designing these three systems utilizing a standard platform allows for cost
efficiencies in assembly, ease of maintenance and the ability to have systems
that will be able to produce all of


                                      F-10
<PAGE>
the required forms of electrolyzed water to meet most of the industrial
applications for which electrolysis is beneficial. Market-ready units for
industrial applications are scheduled delivery to us in late 2006.

     We are preparing to submit its anti-microbial sprays for testing at an
independent testing laboratory.  The testing will determine the efficacy of our
proprietary anti-microbial water in the elimination of germs.  After testing is
completed, we will plan for commercial production of the sprays.  Upon the
successful completion of the testing, our goal is to have market-ready sprays
for germ elimination scheduled for delivery to us 90 days thereafter.

     We are in the final phase of component sourcing and tool sourcing for our
proprietary residential water-enhancing device. The home system utilizes an
advanced form of electrolysis to enhance the beneficial properties of
electrolytes found in tap water. This unit will allow for an individual to
create an enhanced, drink similar to bottled water through a contemporary
kitchen counter-top appliance which will retail at an attractive and affordable
price.  Upon the completion of component sourcing and tool sourcing, we can
begin manufacturing.  Our goal is to have market-ready residential units
scheduled for delivery to us in early 207.

     We recently hired Hiroshi Tanaka as its VP of Technology. Mr. Tanaka is an
expert in the field of industrial and consumer uses of electrolyzed water.


RESULTS OF OPERATIONS-SIX MONTHS ENDED June 30, 2006 AND 2005.

     We had revenue of $84,561 for the for the six months ended June 30, 2006
compared to revenue of $157,710  for the for the six months ended June 30, 2005.
This was a revenue decrease of $73,149 attributable to management efforts being
directed at fundraising and product development.

     We incurred a net loss of $270,540 for the six months ended June 30,
2006 and a net loss of $695,251 for the six months ended June 30, 2005.

     Cash used by operating activities was $180,073 for the for the six months
ended June 30, 2006 compared to cash used by operating activities of $157,503
for the six months ended June 30, 2005.

LIQUIDITY

     At June 30, 2006, we had cash on hand of $29,270.  Our growth is dependent
on our attaining profit from our operations and our raising of additional
capital either through the sale of stock or borrowing. There is no assurance
that we will be able to raise any equity financing or sell any of our products
to generate a profit.

     At June 30, 2006, we owed stockholder loans of $290,642.

     In June 2005, we entered into an agreement with Mitachi, a Japanese
electronics component manufacturer, to aid in the production of enhanced
drinking water generators. Pursuant to this agreement, Mitachi agreed to pay us
25,000,000 Yen for engineering design, molding, tooling and preparation costs,
and the exclusive product distribution rights for China, Taiwan, and Japan.
Through June 30, 2006, Mitachi had paid to us an aggregate of6,000,000 Yen (US
$52,506in connection with this agreement. Since the project is not yet completed
and no units have been sold, this amount is classified as deferred revenue.

     We sometimes issue stock for in-kind payments of compensation to
consultants. Subsequently, in July 2006, we issued an aggregate of 1,851,250
shares of common stock to five consultants as payment in-kind for services
rendered.


                                      F-11
<PAGE>
FUTURE CAPITAL REQUIREMENTS

     Our growth is dependent on attaining profit from our operations, or our
raising additional capital either through the sale of stock or borrowing. There
is no assurance that we will be able to raise any equity financing or sell any
of our products at a profit.

     Our future capital requirements will depend upon many factors, including:

     -    The cost to acquire equipment that we then would resell.

     -    The cost of sales and marketing.

     -    The rate at which we expand our operations.

     -    The results of our consulting business.

     -    The response of competitors.


ITEM 3.     CONTROLS AND PROCEDURES.

        (a)  Evaluation  of  disclosure  controls  and procedures. Our principal
executive and financial officer evaluated our disclosure controls and procedures
(as  defined  in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
of  1934,  as  amended)  as  of  the end of the period covered by this quarterly
report.  Based on this evaluation, our principal executive officer and principal
financial  officer  concluded  that these disclosure controls and procedures are
effective  and  designed to ensure that the information required to be disclosed
in  our  reports filed or submitted under the Securities Exchange Act of 1934 is
recorded,  processed, summarized and reported within the requisite time periods.

        In  connection  with  its review of the Company's consolidated financial
statements  for  the three and six months ended June 30, 2006, Hansen, Barnett &
Maxwell  ("HB&M"),  the Company's registered public accounting firm, advised the
Audit  Committee  and  management  of  internal  control matters with respect to
certain  financial  reporting  controls  that  they  considered to be a material
weakness, which is described below. A material weakness is a control deficiency,
or  a combination of control deficiencies, that results in there being more than
a  remote  likelihood  that  a  material  misstatement  of the annual or interim
financial  statements  will  not be prevented or detected. The material weakness
identified  at  June  30,  2006  was  as  follows:

          A  material  weakness  existed  in  our  control  environment relating
          to inadequate staffing of our technical accounting function, including
          a  lack  of sufficient personnel with skills, training and familiarity
          with  certain complex technical accounting pronouncements that have or
          may  affect  our  financial  statements  and  disclosures.

The  Company  considered  these matters in connection with the quarterly closing
process  and  the  preparation  of  the  June  30,  2006  consolidated financial
statements  included  in  this  Form  10-QSB and determined that no prior period
financial  statements  were  materially affected by such matters. In response to
the  observations  made by HB&M, the Company will implement certain enhancements
to  its  internal  controls,  accounting staff and procedures, which it believes
address  the  matters  raised  by  Hansen,  Barnett  &  Maxwell.

     (b)  Changes  in  Internal  Control  Over Financial Reporting. There was no
change  in  our  internal  control over financial reporting (as defined in Rules
13a-15(f)  and  15d-15(f) under the Securities Exchange Act of 1934, as amended)
identified  in  connection with the evaluation of our internal control performed
during  the  quarter  ended  June  30,  2006 that has materially affected, or is
reasonably  likely  to  materially  affect,  our internal control over financial
reporting.




                                      F-12
<PAGE>
                                    PART II

                                OTHER INFORMATION


ITEM 1.     LEGAL PROCEEDINGS.

     None.

ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES.

     None.

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES.

     None.

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     NONE.

ITEM 5.     OTHER INFORMATION.

     In July 2006, Mr. Hiroshi Tanaka was appointed our Vice President of
Technology.  Mr. Tanaka resides in and is a citizen of Japan.  From 1992 through
2004,  Mr. Tanaka was the Chief Engineer at ARV.  From 2004 through the present,
Mr. Tanaka has been the president of Solution Technos.  From 2005 through the
present, Mr.


                                      F-13
<PAGE>
Tanaka has been the president of Innovative Design and Technology, the successor
company to Solution Technos.  We granted 100,000 shares of common stock to Mr.
Tanaka as compensation.  Innovative Design and Technology is one of our
manufacturing vendors.

     Payments to Innovative Design and Technology.   In 2006 to date, we have
     --------------------------------------------
paid Innovative Design and Technology the sum of $230,000 for product design and
manufacturing services.

     Proposed payments to Mt. Tanaka.  In connection with wine enhancement
     --------------------------------
technology that is the intellectual property and know-how of Mr., Tanaka, we are
presently negotiating to acquire a USA license from Mr., Tanaka.


ITEM 6.     EXHIBITS.

Exhibit
Number      Name
--------------------------------------------------------------

31.1        Certification pursuant to Section 13a-14 of CEO.

31.2        Certification pursuant to Section 13a-14 of CFO.

32.1        Certification pursuant to Section 1350 of CEO.

32.2        Certification pursuant to Section 1350 of CFO.


                                      F-14
<PAGE>
                                   SIGNATURES

     In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized in Alameda, California.


                                          PROTON LABORATORIES, INC.


August 21, 2006                           (signed)
                                                  -------------------------
                                          By: /s/ Edward Alexander
                                          Edward Alexander
                                          Director, Chief Executive Officer, and
                                          Chief Financial Officer


                                      F-15