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 September 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 November 7, 2006 the registrant had outstanding 21,658,020 shares of
Common Stock, $0.0001 par value per share. This includes approximately 182,010
shares that were subscribed for by investors but not paid for yet, which such
stock certificates we retain.

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


<PAGE>
<TABLE>
<CAPTION>
                                     PART I
                              FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS.


                            PROTON LABORATORIES, INC.
                                TABLE OF CONTENTS

<S>                                                                   <C>
                                                                      PAGE

Condensed Consolidated Balance Sheets - September 30, 2006 and
  December 31, 2005 (Unaudited)                                       F-1

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

Condensed Consolidated Statements of Cash Flows for the nine months
  ended September 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)

                                                                      SEPTEMBER 30,     DECEMBER 31,
                                                                              2006              2005
----------------------------------------------------------------------------------------------------
<S>                                                                  <C>              <C>
ASSETS
CURRENT ASSETS
Cash                                                                 $       48,891   $       1,384
Accounts receivable, less allowance for doubtful accounts of
  16,522 and $16,522, respectively                                          14,756          21,927
Stock subscription receivable                                                16,533               -
Prepaid expenses                                                            389,693               -
Inventory                                                                   240,935          32,861
Product development                                                         136,335               -
----------------------------------------------------------------------------------------------------
  TOTAL CURRENT ASSETS                                                      847,143          56,172
----------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Furniture and fixtures                                                       20,461          19,709
Equipment and machinery                                                     161,833         161,833
Leasehold improvements                                                       11,323          11,323
  Accumulated depreciation                                                  (69,175)        (45,820)
----------------------------------------------------------------------------------------------------
  NET PROPERTY AND EQUIPMENT                                                124,442         147,045
----------------------------------------------------------------------------------------------------
DEPOSITS                                                                      6,131           6,131
----------------------------------------------------------------------------------------------------
TOTAL ASSETS                                                         $      977,716   $     209,348
----------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable                                                     $       73,425   $     168,378
Accrued expenses                                                            306,106         252,769
Deferred revenue                                                             52,506          52,506
Preferred dividends payable                                                  14,400           9,600
Stockholder loans, current portion                                          290,642         444,642
----------------------------------------------------------------------------------------------------
  TOTAL CURRENT LIABILITIES                                                 737,079         927,895
----------------------------------------------------------------------------------------------------
STOCKHOLDER LOANS, NET OF CURRENT PORTION                                         -          40,000
----------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY 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 and $0, respectively                     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; 21,308,020 and 14,270,100 shares issued and
  outstanding, respectively                                                   2,133           1,429
Additional paid in capital                                                3,887,906       1,856,601
Stock subscription receivable                                               (20,000)              -
Accumulated deficit                                                      (3,709,402)     (2,696,577)
----------------------------------------------------------------------------------------------------
  TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                                      240,637        (758,547)
----------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                 $      977,716   $     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               FOR THE NINE
                                                   MONTHS ENDED               MONTHS ENDED
                                                   SEPTEMBER30,               SEPTEMBER 30,
                                           --------------------------  --------------------------
                                               2006          2005          2006          2005
---------------------------------------------------------------------  --------------------------
<S>                                        <C>           <C>           <C>           <C>
SALES                                      $    10,433   $   116,791   $    94,994   $   274,501

COST OF GOODS SOLD                              10,900       113,787        81,379       214,649
-------------------------------------------------------------------------------------------------

GROSS PROFIT (LOSS)                               (467)        3,004        13,615        59,852
-------------------------------------------------------------------------------------------------

SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES (including equity-based
  expenses of $674,238, $0, $633,712 and
  $459,040, respectively)                      724,615       114,219       976,656       793,599
-------------------------------------------------------------------------------------------------

LOSS FROM OPERATIONS                          (725,082)     (111,215)     (963,041)     (733,747)
-------------------------------------------------------------------------------------------------

OTHER INCOME AND (EXPENSE)
Interest income                                    963            61         1,163           161
Interest expense                               (13,366)      (17,826)      (46,147)      (90,645)
-------------------------------------------------------------------------------------------------
    NET OTHER EXPENSE                          (12,403)      (17,765)      (44,984)      (90,484)
-------------------------------------------------------------------------------------------------

      NET LOSS                                (737,485)     (128,980)   (1,008,025)     (824,231)

PREFERRED STOCK DIVIDEND                         1,600         1,600         4,800         4,800
-------------------------------------------------------------------------------------------------

LOSS APPLICABLE TO COMMON
  SHAREHOLDERS                             $  (739,085)  $  (130,580)  $(1,012,825)  $  (829,031)
-------------------------------------------------------------------------------------------------

BASIC AND DILUTED LOSS PER
  COMMON SHARE                             $     (0.04)  $     (0.01)  $     (0.06)  $     (0.06)
-------------------------------------------------------------------------------------------------

BASIC AND DILUTED WEIGHTED AVERAGE
  SHARES OUTSTANDING                        19,983,251    14,234,230    16,631,410    13,543,217
-------------------------------------------------------------------------------------------------
</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 NINE MONTHS ENDED SEPTEMBER 30,              2006         2005
-------------------------------------------------------------------------
<S>                                              <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                         $(1,008,025)  $(824,231)
Adjustments to reconcile net loss to cash used
  in operating activities:
  Depreciation                                        23,355      16,370
  Loss on disposal of property and equipment               -           -
  Common stock issued for services                   674,238     459,040
  Amortization of loan costs                               -      27,075
  Changes in operating assets and liabilities
    Accounts receivable                                7,171      (7,153)
    Inventory and product development               (344,409)    (29,701)
    Deposits                                               -      (1,131)
    Deferred revenue                                       -      52,506
    Accounts payable                                 (54,427)    (32,579)
    Accrued expenses                                  53,337     108,708
-------------------------------------------------------------------------
  NET CASH FROM OPERATING ACTIVITIES                (648,760)   (231,096)
-------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment                     (752)     (3,562)
-------------------------------------------------------------------------

  NET CASH FROM INVESTING ACTIVITIES                    (752)     (3,562)
-------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock, net          891,019      20,000
Proceeds from stockholder loans                       73,852      48,642
Proceeds form notes payable                                -     164,000
Payment on note payable                             (267,852)          -
-------------------------------------------------------------------------

  NET CASH FROM FINANCING ACTIVITIES                 697,019     232,642
-------------------------------------------------------------------------

NET INCREASE IN CASH                                  47,507      (2,016)
CASH AT BEGINNING OF PERIOD                            1,384      14,412
-------------------------------------------------------------------------

CASH AT END OF PERIOD                            $    48,891   $  12,396
-------------------------------------------------------------------------

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Stock issued for accrued legal services          $    40,526   $       -
Stock issued for future services                 $   389,693   $       -
Stock issued under subscription agreement        $    36,533   $       -
Accrual of preferred stock dividends             $     4,800   $   4,800
Transfer of inventory to equipment               $         -   $  64,500
Issuance of common stock for loan costs          $         -   $  27,075
</TABLE>

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


                                       F-3
<PAGE>
                            PROTON LABORATORIES, INC
        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 nine months
ended  September 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 $1,012,825 for
the  nine  months  ended  September 30, 2006. The Company had working capital of
$110,064  at  September  30,  2006, and a working capital deficit of $871,723 at
December  31,  2005.  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.


                                      F-5
<PAGE>
NOTE 3 - RELATED PARTY TRANSACTIONS

<TABLE>
<CAPTION>
Stockholder loans as of September 30, 2006 and December 31, 2005 consist of
the following:                                                                       2006      2005
-----------------------------------------------------------------------------------------------------
<S>                                                                                <C>       <C>
Note payable to President; principal and interest settled at September 30, 2006    $      -  $168,500

Note payable to President; principal and interest due June 2008;
  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

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 settled at September 30, 2006         -    40,000
-----------------------------------------------------------------------------------------------------
    TOTAL STOCKHOLDER LOANS                                                         290,642   484,642
    Less: Current Portion                                                           290,642   444,642
-----------------------------------------------------------------------------------------------------

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

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

At  September 30, 2006, the Company had accrued interest relating to shareholder
loans  of  $98,018.

During  the nine months ended September 30, 2006, the Company accrued $45,000 as
salaries payable to the company's CEO, resulting in $202,827 of salaries payable
at  September  30,  2006.


                                      F-6
<PAGE>
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.

In  July and August 2006 the Company issued 1,410,000 shares of common stock for
marketing  and  sales expense through December 2006. The value of the shares was
$1,023,405  based  on  market prices ranging from $0.62 to $0.74 per share which
was  the  market  price  of  the Company's common stock on the date of issuance.
Through  September  30, 2006, $633,712 of expense related to the shares had been
recognized  with  the  remaining  $389,693 to be recognized through December 31,
2006.

During May through September the Company issued 5,275,520 shares of common stock
for  cash  proceeds  of  $891,019  and a stock subscription of $36,533 at prices
ranging  from $0.11 to $0.34 per share. The proceeds received are net $41,025 of
offering  costs  paid  and  include 666,250 shares issued to finders as offering
costs. Subsequent to September 30, 2006, $16,533 of subscription receivables had
been  collected  and  is  classified  as  a  current  asset  in the accompanying
financial  statements.

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 September 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.

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  September 30, 2006, the Company had not drawn
funds  under  the  equity  line.

NOTE  6  -  SUBSEQUENT  EVENT

Subsequent  to  September  30,  2006 the Company issued 350,000 shares of common
stock  for  cash  proceeds  of  $157,500, or $0.45 per share from one investor.


                                      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  September  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 have incurred losses
applicable  to  common  shareholders  of  $1,012,825  for  the nine months ended
September  30,  2006.  We had working capital of $110,064 at September 30, 2006,
and a working capital deficit of $871,723 at December 31, 2005. Loans and equity
funding  were  required  to  fund  operations.

     We  had  a  stockholder  equity  of  $240,637  at September 30, 2006, and a
stockholders  deficit  of  $758,547at  September  30,  2005.


<PAGE>
Stockholder  loans as of September 30, 2006 and December 31, 2005 consist of the
following:

<TABLE>
<CAPTION>
                                                                                     2006      2005
-----------------------------------------------------------------------------------------------------
<S>                                                                                <C>       <C>
Note payable to President; principal and interest settled at September 30, 2006    $      -  $168,500

Note payable to President; principal and interest due June 2008;
  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

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 settled at September 30, 2006         -    40,000
-----------------------------------------------------------------------------------------------------

  TOTAL STOCKHOLDER LOANS                                                           290,642   484,642

  Less: Current Portion                                                             290,642   444,642
-----------------------------------------------------------------------------------------------------

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


<PAGE>
     During the nine months ended September 30, 2006, two shareholders advanced
us $73,852.  We made payments on all shareholder notes totaling $267,852 during
the nine months ended September 30, 2006.

     At  September  30,  2006,  we  had accrued interest relating to shareholder
loans  of  $98,018.

     During  the  nine  months  ended  September 30, 2006, we accrued $45,000 as
salaries  payable  to  our  CEO,  resulting  in  $202,827 of salaries payable at
September  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  we  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  sales  and  marketing  of  the  industrial, environmental and
residential systems throughout the U.S.A. which alter the properties of water to
produce functional 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.


<PAGE>
     We  recognize  revenue  when  all  four  of the following criteria are met:
(i)persuasive  evidence that an arrangement exists; (ii) delivery of the product
sand/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 locate
din 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
afresh  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.

     In  2006,  we  raised  funds  for  the  following  purposes:

A.   Design,  assembly  and  sales  of  a  proprietary  residential  counter-top
     unitwhich produces an enhanced drinking water through electrolysis. We will
     be the exclusive licensee of the patent. This device will have a filtration
     system  coupled to an electrolysis process whicheffectively filters the tap
     water  while  restructuring  the  properties  of water to make it: (i) have
     greater  mineral  effectiveness; (ii) be tastier than tap water; and, (iii)
     be more hydrating than tap water. We anticipate that this product line will
     be  ready  for  marketing  in  2007.

     We  are  preparing to file an application for a U.S.A. patent on the design
of  the  proprietary  residential water-enhancing device. The patent application
has  been  filed  in  Japan.  and  will be filed shortly in the U.S., Canada and
China.  We  are  currently  evaluating  the  market positioning of this uniquely
advanced  product.  We  will  be  the  exclusive  licensee  of  the  patent.

B.   Design,  assembly,  validation  and  sales  of a proprietary anti-microbial
     spray.  We  have  identified  a  form  of electrolyzed water that may be an
     effective  anti-microbial  agent.  One  of  our proprietary aspects of this
     product may be the stabilization of the electrolyzed water thereby allowing
     for  an  extended shelf life compared to other forms of electrolyzed water.
     This  product is being tested by a third party testing lab to establish the
     efficacies  of  its  anti-microbial effect on MRSA, HBV, HIV and Avian Flu.
     The  objective  of  our  anti-microbial  spray is to be able to control and
     eliminate  these  four  microbial strains on a hard surface or on a topical
     surface.  We anticipate introducing this product to ambulance services as a
     non-chemical  based,  user friendly product for which these microbes do not
     have  an  immunity.  We anticipate that this product line will be ready for
     marketing  in  2007.

     Interim  laboratory  testing  results  that  have  been  attained  from  an
accredited,  3rd  party  testing  laboratory, show the efficacy of the company's
antimicrobial  spray  to have rapid germicidal activity for an antibacterial and
antiviral  agent against Staphylococcus aureus (MRSA), ATCC 6538 and Escherichia
coli  (E. coli), ATCC 11229. The test article was tested in duplicate with three
puffs of spray at a distance of 8 inches with exposure periods of 1 minute and 2
minutes.  Results  showed  that  a  99.98%  (3.71 log10) reduction in numbers of
tested


<PAGE>
bacteria was shown after 1 minute exposure to the test article and a > 99.999% (
>  5.06  log10)  reduction  in  numbers  of  the test bacteria was shown after 2
minutes  exposure  to  the  test  article." Currently, we have completed product
design  of  the  spray  and  we await additional testing on the stability of the
product.

C.   Design  and assembly of 3 proprietary commercial-grade electrolysis systems
     based  on  a  standard  platform.  There are many industrial uses for water
     electrolysis  systems.  Our  3  system designs based on a standard platform
     which  minimizes  the  need  for  different  components  for  different
     applications.  The standard platform will provide ease of assembly, ease of
     use,  durability  and  cost  effectiveness. We anticipate that this product
     line  will  be  ready  for  marketing  in  2007.

D.   Testing of wine enhancement and other alcohol-synergistic products. through
     the  use of our equipment being integrated into an existing wine production
     line  to  achieve:

     1.   A jumpstart to the wine aging process.

     2.   The control of the wine aging process.

     3.   The termination of the wine aging process.

     4.   The  ability  to  circumvent  the  use  of  a  particular wine process
          ingredient.

     5.   The ability  to  bring  a  specific  component  of  wine  to  the
          forefront  of  taste.

     6.   The ability  to  tone  down  a  specific  component  of  wine so as to
          reduce  its  taste.

     7.   The ability  to  control  the  classification  (rating)  of  a  wine
          product  based  on  a  desired  combination of several features of the
          wine.

     Laboratory  testing  results  indicate  that the functional water molecules
attach  to  the  alcohol  resulting  in conditions similar to conventional aging
methods.  During  the  laboratory  testing,  a  minimum  of  a  10-year  aging
characteristic was applied to whiskey enhanced through this process, and similar
enhancements  to  taste,  texture  and  beverage  body  were  observed  on other
alcohol-synergistic  products  such  as sake and tequila. Further lab testing is
being conducted on a 2006 Chardonnay and a 2006 Petite Syrah. One barrel of each
wine will be processed through the enhancement process in the near future. These
products  will be provided as pre-market test products to a focused audience for
feedback  and  recommended  product  refinements prior to readying a product for
market.  The  first  lab  test objective is to determine the ability of the wine
enhancement  process  to  take  a full-bodied Petite Syrah and introduce an aged
mellowness  to  it.  Through this objective, and if success is achieved, we will
able to introduce this technique to wine makers that are interested in expanding
the market presence of an improved Petite Syrah. The second objective is to work
through established distribution channels to introduce the electrolysis-enhanced
Petite  Syrah  to  an  overseas  market.

RESULTS OF OPERATIONS-Nine Months ended September 30, 2006 and 2005.

     We  had  revenue of $94,994 for the for the nine months ended September 30,
2006 compared to revenue of $274,501 for the for the nine months ended September
30,  2005.  This was a revenue decrease attributable to management efforts being
directed  at  fundraising  and  product  development.

     We  incurred  a  net loss of $1,008,025 for the nine months ended September
30,  2006  and  a  net  loss of $824,231 for the nine months ended September 30,
2005.  This  was  an  increase  in  net loss arrtributable to in-kind consultant
compensation  expenses.

     Cash  used by operating activities was $648,760 for the for the nine months
ended  September  30,  2006  compared  to  cash  used by operating activities of
$231,096  for  the  nine  months  ended  September  30,  2005.

     We  had total assets at September 30, 2006 of $847,143, compared to $56,172
for  the  quarter ended September 30, 2005. This increase in assets reflects our
spending  on  inventory,  product  development  and  prepaid  expenses


<PAGE>
using  funds  that we raised in the second and third fiscal quarters of 2006. We
anticipate  entering  the  new product sales mode for these new products in late
2006  and  early  2007.

LIQUIDITY

     At  September  30,  2006,  we  had  cash  on hand of $48,891. 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 funds. 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  September  30,  2006,  we  owed  stockholder  loans  of  $290,642.

     In  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. As of
September 30, 2006, Mitachi had paid 6,000,000 Yen, or $52,506, for distribution
rights. Since the project is not yet completed and no units have been sold, this
amount  is  classified  as  deferred  revenue.

     In  2005,  we entered into an equity line of credit with a private investor
by  which  we have the right to draw an aggregate of up to $10,000,000 from time
to time. As of September 30, 2006, we had not drawn funds under the equity line.

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.


<PAGE>
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  nine  months ended September 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  September  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.

We considered these matters in connection with the quarterly closing process and
the  preparation  of  the  September  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,  we  will  implement  enhancements to our internal
controls,  accounting staff and procedures, which we believe address the matters
raised  by  HB&M.

     (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 September 30, 2006 that has materially affected, or is
reasonably  likely  to  materially  affect,  our internal control over financial
reporting.


<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.

     NONE.

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.


<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.

November 20, 2006
                                          By: /s/ Edward Alexander
                                          Edward Alexander
                                          Director, Chief Executive Officer, and
                                          Chief Financial Officer