UNITED
      STATES


SECURITIES
      AND
      EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549





FORM
      10-QSB


Amendment
      Number 1





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





For
      the quarterly period ended June 30,
      2007





o
            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
                incorporation or organization)
            (I.R.S.
                Employer Identification
                No.)








980
        Atlantic Avenue, Suite 110
 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. YesxNo
o





Indicate
      by check whether the registrant is a shell company (as defined
      in Rule
      12b-2 of the Exchange
      Act).   YesoNo
x





On
      August
      17, 2007, the registrant had outstanding 29,070,523 Common
      Stock, $0.0001
      par value per
      share.





Transitional
      Small Business Disclosure Format:   YesoNox












Introduction:This
        amendment
        number 1 provides new Part 1-Item 3—Controls and Procedures, new certifications
        for exhibits 31.1 and 31.2, and the current company address on the cover
        page.









CONTENTS








PAGE
                NO.PART
                I.
            FINANCIAL
                INFORMATIONITEM
                1.
            FINANCIAL
                STATEMENTSCondensed
                Consolidated Balance Sheet (unaudited)Condensed  Consolidated
                Statements of Operations
                (unaudited)Condensed
                Consolidated Statement
                of Stockholders' Deficit (unaudited)Condensed
                Consolidated Statements of Cash Flows
                (unaudited)Notes
                to  Condensed Consolidated Financial Statements
                (unaudited)ITEM
                2.
            Management's
                Discussion and Analysis of Financial Condition and Results of
                OperationsITEM
                3.
            Controls
                and
                ProceduresPART
                II.
            OTHER
                INFORMATIONITEM
                1.
            Legal
                ProceedingsITEM
                2.
            Changes
                in
                SecuritiesITEM
                3.
            Defaults
                Upon
                Senior SecuritiesITEM  4.
            Submission
                of
                Matters to a Vote of Security HoldersITEM
                5.
            Other
                informationITEM
                6.
            Exhibits
                and
                Reports on Form 8-KSignaturesCertifications




Contents





PART  I.     FINANCIAL  INFORMATION





ITEM  1.     FINANCIAL  STATEMENTS





PROTON
      LABORATORIES,
      INC.


TABLE
      OF CONTENTS








PAGECondensed
                  Consolidated Balance
                  Sheets - June 30, 2007 and December 31, 2006
                  (Unaudited)
              F-1Condensed
                  Consolidated Statements
                  of Operations for the three and six months ended June 30, 2007
                  and 2006
                  (Unaudited)
              F-2Condensed
                  Consolidated Statements
                  of Cash Flows for the six months ended June 30, 2007 and 2006
                  (Unaudited)
              F-3Notes
                  to Condensed Consolidated
                  Financial Statements (Unaudited)
              F-4


Contents





LABORATORIES,
      INC.


CONDENSED
      CONSOLIDATED BALANCE SHEETS
      (UNAUDITED)








JUNE
                30,
              2007
            
            
            DECEMBER
                31,
              2006ASSETSCURRENT
                ASSETSCash
            
            $
            1,710
            
            
            $
            9,768Accounts
                receivable, less
                allowance for doubtful accounts of $24,586 and $30,419,
                respectively
            
            
            360
            
            
            
            794Inventory
            
            
            100,764
            
            
            
            143,865TOTAL
                CURRENT
                ASSETS
            
            
            102,834
            
            
            
            154,427PROPERTY
                AND
                EQUIPMENTFurniture
                and
                fixtures
            
            
            23,316
            
            
            
            23,316Equipment
                and
                machinery
            
            
            242,330
            
            
            
            238,776Leasehold
                improvements
            
            
            11,323
            
            
            
            11,323Accumulated
                depreciation
            
            
            (90,566
            )
            
            
            (69,550
            )NET
                PROPERTY AND
                EQUIPMENT
            
            
            186,403
            
            
            
            203,865DEPOSITS
            
            
            6,131
            
            
            
            6,131TOTAL
                ASSETS
            
            $
            295,368
            
            
            $
            364,423LIABILITIES
                AND STOCKHOLDERS'
                DEFICITCURRENT
                LIABILITIESAccounts
                payable
            
            $
            154,892
            
            
            $
            71,314Accrued
                expenses
            
            
            307,554
            
            
            
            266,079Deferred
                revenue
            
            
            52,506
            
            
            
            52,506Preferred
                dividends
                payable
            
            
            19,200
            
            
            
            16,000TOTAL
                CURRENT
                LIABILITIES
            
            
            534,152
            
            
            
            405,899STOCKHOLDER
                LOANS, NET OF CURRENT
                PORTION
            
            
            307,642
            
            
            
            270,642TOTAL
                LIABILITIES
            
            $
            841,794
            
            
            $
            676,541STOCKHOLDERS'
                DEFICITSeries
                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
            
            
            
            80,000Undesignated
                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; 26,470,523 and 21,658,223
                shares issued and outstanding, respectively
            
            
            2,649
            
            
            
            2,168Additional
                paid in
                capital
            
            
            5,515,442
            
            
            
            4,045,371Stock
                subscription
                receivable
            
            
            (20,000
            )
            
            
            (20,000
            )Accumulated
                deficit
            
            
            (6,124,517
            )
            
            
            (4,419,657
            )TOTAL
                STOCKHOLDERS'
                DEFICIT
            
            
            (546,426
            )
            
            
            (312,118
            )TOTAL
                LIABILITIES AND
                STOCKHOLDERS' DEFICIT
            
            $
            295,368
            
            
            $
            364,423




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





F-1
 Contents





PROTON
      LABORATORIES,
      INC.


CONDENSED
      CONSOLIDATED STATEMENTS OF
      OPERATIONS (UNAUDITED)








FOR
                THE THREE MONTHS
                ENDED
            
            
            FOR
                THE SIX MONTHS
                ENDEDJUNE
                30,
            
            
            JUNE
                30,2007
            
            
            2006
            
            
            2007
            
            
            2006SALES
            
            $
            27,298
            
            
            $
            33,639
            
            
            $
            79,039
            
            
            $
            84,561COST
                OF GOODS
                SOLD
            
            
            18,455
            
            
            
            26,187
            
            
            
            48,255
            
            
            
            70,479GROSS
                PROFIT
            
            
            8,843
            
            
            
            7,452
            
            
            
            30,784
            
            
            
            14,082OPERATING
                EXPENSESSelling,
                general and
                administrative expenses (including equity-based expenses of $0, $0,
                $0 and
                $40,526, respectively)
            
            
            163,701
            
            
            
            124,011
            
            
            
            251,239
            
            
            
            252,041Product
                development costs
                (including equity-based expenses of $0, $0, $1,470,551 and $0,
                respectively)
            
            
            -
            
            
            
            -
            
            
            
            1,470,551
            
            
            
            -LOSS
                FROM
                OPERATIONS
            
            
            (154,858
            )
            
            
            (116,559
            )
            
            
            (1,691,006
            )
            
            
            (237,959
            )OTHER
                INCOME AND
                (EXPENSE)Interest
                income
            
            
            59
            
            
            
            175
            
            
            
            112
            
            
            
            200Interest
                expense
            
            
            (5,382
            )
            
            
            (15,044
            )
            
            
            (10,766
            )
            
            
            (32,781
            )NET
                OTHER
                EXPENSE
            
            
            (5,323
            )
            
            
            (14,869
            )
            
            
            (10,654
            )
            
            
            (32,581
            )NET
                LOSS
            
            
            (160,181
            )
            
            
            (131,428
            )
            
            
            (1,701,660
            )
            
            
            (270,540
            )PREFERRED
                STOCK
                DIVIDEND
            
            
            (1,600
            )
            
            
            (1,600
            )
            
            
            (3,200
            )
            
            
            (3,200
            )LOSS
                APPLICABLE TO COMMON
                SHAREHOLDERS
            
            $
            (161,781
            )
            
            $
            (136,228
            )
            
            $
            (1,704,860
            )
            
            $
            (273,740
            )BASIC
                AND DILUTED LOSS PER COMMON
                SHARE
            
            $
            (0.01
            )
            
            $
            (0.01
            )
            
            $
            (0.07
            )
            
            $
            (0.02
            )BASIC
                AND DILUTED WEIGHTED AVERAGE
                SHARES OUTSTANDING
            
            
            26,470,523
            
            
            
            15,483,316
            
            
            
            24,616,797
            
            
            
            14,914,666




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





F-2
 Contents





PROTON
      LABORATORIES,
      INC.


CONSOLIDATED
      STATEMENTS OF CASH FLOWS
      (UNAUDITED)








FOR
                THE SIX MONTHS ENDED JUNE
                30,
            
            2007
            
            
            2006CASH
                FLOWS FROM OPERATING
                ACTIVITIESNet
                loss
            
            $
            (1,701,660
            )
            
            $
            (270,540
            )Adjustments
                to reconcile net loss
                to cash used in operating activities:Depreciation
            
            
            21,016
            
            
            
            15,603Common
                stock issued for
                services
            
            
            1,470,551
            
            
            
            40,526Changes
                in operating assets and
                liabilitiesAccounts
                receivable
            
            
            434
            
            
            
            6,906Inventory
            
            
            43,102
            
            
            
            (3,688
            )Accounts
                payable
            
            
            83,578
            
            
            
            (33,151
            )Accrued
                expenses
            
            
            41,475
            
            
            
            64,271NET
                CASH FROM OPERATING
                ACTIVITIES
            
            
            (41,504
            )
            
            
            (180,073
            )CASH
                FLOWS FROM INVESTING
                ACTIVITIESPurchases
                of property and
                equipment
            
            
            (3,554
            )
            
            
            -NET
                CASH FROM INVESTING
                ACTIVITIES
            
            
            (3,554
            )
            
            
            -CASH
                FLOWS FROM FINANCING
                ACTIVITIESProceeds
                from issuance of common
                stock, net
            
            
            -
            
            
            
            401,959Proceeds
                from stockholder
                loans
            
            
            37,000
            
            
            
            73,852Payment
                on note
                payable
            
            
            -
            
            
            
            (267,852
            )NET
                CASH FROM FINANCING
                ACTIVITIES
            
            
            37,000
            
            
            
            207,959NET
                INCREASE (DECREASE) IN
                CASH
            
            
            (8,058
            )
            
            
            27,886CASH
                AT BEGINNING OF
                PERIOD
            
            
            9,768
            
            
            
            1,384CASH
                AT END OF
                PERIOD
            
            $
            1,710
            
            
            $
            29,270NON-CASH
                INVESTING AND FINANCING
                ACTIVITIES:Stock
                issued for accrued legal
                services
            
            $
            -
            
            
            $
            40,526Accrual
                of preferred stock
                dividends
            
            $
            3,200
            
            
            $
            3,200




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





F-3
 Contents





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.





CONDENSEDFINANCIALSTATEMENTS-Theaccompanyingunauditedcondensed
        consolidatedfinancialstatements
        are condensed and, therefore,
        do not include all disclosures normally required by accounting principles
        generally accepted in theUnitedStatesof
        America.These
        statements should be read in
        conjunction withtheCompany'sannualfinancialstatementsincludedinthe
        Company's December31,2006Annual
        Report on Form
        10-KSB.In
        particular, the Company's
        significantaccountingprinciples
        were presented as Note 1 to
        the consolidated financialstatementsinthatreport.Intheopinionofmanagement,all
        adjustmentsnecessaryforafairpresentationhavebeenincludedin
        the accompanyingcondensedconsolidatedfinancialstatements
        and consist of only
        normalrecurringadjustments.Theresultsofoperationspresentedin
        the accompanyingcondensedconsolidatedfinancialstatementsfor
        the six months endedJune30,2007
        are not necessarily indicative of
        the results that may be expectedforthefullyearendingDecember31,2007.


NATUREOFOPERATIONS-TheCompany'soperationsarelocatedin
        Alameda, California.ThecorebusinessoftheCompanyconsistsofthesales
        and marketingoftheCompany'sindustrial,
        environmental and
        residential systems throughouttheUnited
        States of America which alter the
        properties of water to producefunctionalwater.
        The Company acts as an exclusive
        importer and master distributoroftheseproducts
        to various companies.
        Additionally, the Company formulates intellectual properties under licensing
        agreements, supplies consumer products,consultson
        projects utilizing functional water,
        facilitates between manufacturerandindustryand
        acts as educators on the benefits of
        functional water.


USEOFESTIMATES -
        The preparation of financial
        statements in conformity with accountingprinciplesgenerallyacceptedintheUnitedStatesof
        America requiresmanagementto
        make estimates and assumptions that
        affect the reported amountsofassetsandliabilities,disclosureofcontingentassetsand
        liabilitiesandthereportedamountsofrevenuesandexpenses
        during the
        reportingperiod.Actualresultscoulddifferfromthoseestimates.




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
 Contents





PROTON
      LABORATORIES,
      INC.


NOTES
      TO CONDENSED CONSOLIDATED
      FINANCIAL STATEMENTS (UNAUDITED)








NOTE  2  -  BUSINESS  CONDITION





Theaccompanyingconsolidatedfinancialstatementshavebeenpreparedin
        conformity with accounting principles
        generally accepted in the United States of America,whichcontemplate
        continuation of the Company
        as a going concern. The companyhas
        incurred losses applicable to common
        shareholders of $1,704,860 for thesix
        months ended June 30, 2007. For June
        30, 2007 and December 31, 2006 the Companyhadworkingcapitaldeficits
        of $431,318 and $251,472,
        respectively. Loansandequityfundingwererequiredtofundoperations.
 
 TheCompanyisworkingtowards
        raising additional public funds
        to expand its marketingand
        revenues.The
        Company has spent considerable time
        in contracting withseveralmajoroverseascorporationsfor
        the co-development of enhanced
        antioxidantbeverages
        for distribution into the
        overseas markets.In
        addition, theCompanyisworkingwithitsCanadianbusinessassociates
        to identify
        institutionalbusinesses
        to market various
        disinfection applications based upon functionalwater,pendinggovernmentapproval.
 
 OnFebruary20,
        2007, the Board of Directors of
        Proton Laboratories, Inc. (the "Company")ratifiedanexclusiveMarketing,
        Distribution and Sales
        Agreement ("MarketingAgreement")andaManufacturingandPackagingAgreement
        ("ManufacturingAgreement"),eachmadewithAquaThirst,Inc.
        Through the enactmentoftheseagreements,theCompany
        has been able to acquire what is
        viewsaskeycomponentsnecessarytostrengthen
        its infrastructure for the
        manufacturing,marketingandsalesofitsproductsandapplications.
 
 TheCompany'sabilitytocontinueasa
        going concern is dependent upon its
        abilitytogeneratesufficient
        cash flows to meet its
        obligations on a timely basis,toobtainadditionalfinancingas
        may be required, and ultimately to
        attainprofitableoperations.However,there
        is no assurance that profitable
        operationsorsufficientcashflowswilloccurinthefuture.


NOTE  3  -  RELATED  PARTY  TRANSACTIONS





Stockholder  loans  as  of  June  30,  2007
      and December 31, 2006 consist of the following:





2007
            
            
            2006Note
                payable to CEO and majority
                shareholder; principal and interest due December 2009; interest is
                accrued
                at 7% per annum; unsecured.
            
            $
            287,642
            
            
            $
            270,642Note
                payable to shareholder;
                principal and interest due December 2009; interest is accrued at
                7% per
                annum; unsecured.
            
            
            20,000
            
            
            
            -TOTAL
                STOCKHOLDER
                LOAN
            
            
            307,642
            
            
            
            270,642Less:
                Current
                Portion
            
            
            -
            
            
            
            -TOTAL
                STOCKHOLDER LOAN - LONG
                TERM
            
            $
            307,642
            
            
            $
            270,642





During
      the six months ended June 30,
      2007, two shareholders advanced the Company
      $37,000.  The  Company  did not make any payments
      on notes during the six months
      ended  June  30,  2007.





At
      June 30, 2007, the Company had
      accrued interest relating to shareholder loans of $62,321.





Contents





PROTON
      LABORATORIES,
      INC.


NOTES
      TO CONDENSED CONSOLIDATED
      FINANCIAL STATEMENTS (UNAUDITED)





During  the  six  months  ended  June  30,  2007,
      the Company accrued $30,000 as salaries payable to the company's CEO, resulting
      in $225,091 of salaries payable
      at  June  30,  2007.





NOTE  4  -  COMMON  STOCK





During  January  through  June  30,  2007
      the Company issued 4,812,300 shares of
      common  stock  for  various services and
      agreements. The value of the shares was
      $1,470,551  based  on  market prices ranging from
      $0.30 to $0.37 per share which
      was  the  market  price of the Company's common
      stock on the dates of issuances.





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, 2007, 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  June  2007,
      the Company terminated an equity line of credit
      agreement  with  a  private  investment  fund.  No
      funds were drawn down on this
      equity  line,  and  no  shares  of  stock  were  sold  to  the  investment
      fund.





NOTE  6  -  SUBSEQUENT  EVENTS





On
      July 1, 2007, the Company entered
      into a lease agreement to pay monthly lease payments of $3,852 until June 30,
      2008 and $3,966 from July 1, 2009 through June
      30,  2009.





Future  minimum  lease
      payments under operating lease obligations as of June 30,
      2007  were  as  follows:




Year
      Ending December
      31,





2007
            
            $
            23,1092008
            
            
            46,9032009
            
            
            23,794Total
            
            $
            93,806





During  July
      2007, the Company
      entered into an agreement with Legacy Media, LLC in connection with the
      agreement Legacy Media, LLC has been granted 2.6 million shares of the Company's
      restricted common stock to provide investor
      relations  services.  Legacy  Media, LLC has also
      been issued a convertible note  by  the Company in the
      amount of $250,000 repayable at 8% interest by January  2007. If
      payment is not received by the due date Legacy Media, LLC has  the
      option to convert this note into restricted voting common stock of
      the  Company,  at  the  lesser  of  (i)
      50% of the lowest closing bid price during  15 days prior to
      conversion or (ii) 100% of the average of the five
      lowest  closing  bid  prices  for 30
      Trading Days immediately following any reverse  split in the stock
      price. All of Legacy Media, LLC's shares may be
      registered  in  an  SB-2  filing  at  its  request.





Contents





ITEM  2.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATION





FORWARD-LOOKING  STATEMENT





Certainstatementscontainedherein,including,withoutlimitation,
          statements
          containing the words, "believes," "anticipates," "expects," and other
          wordsofsimilarmeaning,constitute
          "forward-looking statements" within the meaningofSection27A
          of the Securities
          Act of 1933, as amended, and Section 21EoftheSecuritiesExchange
          Act of 1934,
          as amended. Such forward-looking statementsinvolveknownandunknownrisks,
          uncertainties
          and other factors whichmaycauseouractualresults,performanceorachievements,tobe
          materiallydifferentfromanyfutureresults,performance,
          or
          achievements expressedorimpliedbysuchforward-lookingstatements.Giventhese
          uncertainties,readersarecautionednottoplaceunduereliance
          on such
          forward-lookingstatements.Inadditiontotheforward-lookingstatements
          containedherein,the
          following
          forward-looking factors could cause our future resultstodiffermateriallyourforward-lookingstatements:competition,
          funding,governmentcomplianceandmarketacceptanceofourproducts.
 INTRODUCTION
 Thefollowing
        discussion and analysis of our
        financial condition and results of operationsshouldbe
        read in conjunction with our audited
        financial statements andtheaccompanyingnotes
        thereto for the year ended
        December 31, 2006 which appearinour
        Form 10-KSB for the year then ended,
        and our unaudited financial statements for the three and six months ended
        June
        30, 2007 and the accompanying notestheretoandthe
        other financial information
        appearing elsewhere herein.
 
 Theaccompanyingconsolidatedfinancialstatementshavebeenpreparedin
        conformitywithaccountingprinciplesgenerallyacceptedin
        the USA, which
        contemplatesourcontinuationasagoingconcern.We
        have incurred losses
        applicabletocommonshareholders
        of $1,704,860 for the six
        months ended June 30, 2007. We had working capital deficit of $431,318 at
        June
        30, 2007. Loans and equityfundingwererequiredtofundoperations.Wehadastockholder
        deficitof$546,426at
        June 30,2007 and a stockholders
        deficit of $312,118 at December31,2006.


Contents





Our  independent  auditors  made  a  going
      concern qualification in their report
      dated  April  13,  2007,  which  raises  substantial  doubt
      about our ability to
      continue  as  a  going  concern.  The  financial  statements  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 have our primary office located in Alameda,
      California. During  2006 we created a presence in Quincy, Washington
      and Portland, Oregon by
      aligning  ourselves  with  office  spaces  that
      were made available to us. These
      offices  are  used  primarily  for  marketing  and  sales  generation.





Our
      business consists of the
      development, marketing and sales of the industrial, environmental, and
      residential systems through the United States which alter the
      properties  of  water  to produce functional
      water. During 2006, we continued to import  and  resell
      systems manufactured by various Japanese companies; however,
      during  the  same  time  period  the  company
      started design, engineering, parts
      sourcing  and  assembly  identification  for  developing  its  own
      brand labeled
      products.  In  Management's  view,  the  company  has  successfully  designed,
      engineered  and  developed  five commercial
      systems and one residential unit. We
      need  to  raise  more funds to bring our
      residential counter top unit to market,
      and  there  is  no assurance that such funds can
      be raised. The Company believes the food safety commercial unit will be ready
      for market introduction during the
      third  quarter  of  2007,following  certification
      by an independent underwriters
      laboratory.  We  are  prioritizing  the  marketing  and
      distribution of our food safety  commercial  unit which can
      also have applications in the medical, dental
      and  sports  facility  industries.





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.





In
        February, 2007, the Company entered
        into an exclusive Marketing, Distribution andSalesAgreementandaManufacturingandPackaging
        Agreement with Aqua
        Thirst,Inc.Theseagreementseffectively
        provide that the Company
        will have accesstoAquathirst'sproductdistributionchannelsindomesticand
        internationalmarkets.Thesedistributionchannelswillcover
        residential, cosmetic,medical,agricultural,foodprocessing
        and consumer product
        areas.




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.





Contents





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.





At  June  30,  2007,  we  had  accrued
      interest relating to shareholder loans of
      $62,321  and  outstanding principal due to shareholder loans
      of $307,642. During the six months ended June 30, 2007 we accrued $30,000 as
      salaries payable to our
      CEO,  resulting  in  $225,091  of  salaries  payable  at  June  30,  2007.





RESULTS
      OF OPERATIONS-Six Months ended
      June 30, 2007 and 2006.





We  had  revenue  of  $79,039
      for the six months ended June 30, 2007 compared to
      revenue  of  $84,561  for  the six
      months ended June 30, 2006. During the period
      that  the  company is developing its new line of products,
      the revenue base will
      remain  fairly  consistent.





We  incurred
      a net loss of
      $1,701,660 for the six months ended June 30, 2007 and
      a  net  loss  of  $270,540  for  the
      six months ended June 30, 2006. This was an
      increase  in  net  loss attributable to in-kind
      consultant compensation expenses
      incurred  in  the  sourcing of manufacturing,
      marketing and sales infrastructure
      necessary  for  the  company.





Cash  used
      by operating
      activities was $41,504 for the six months ended June 30,
      2007  compared  to  cash  used  by  operating
      activities of $180,073 for the six
      months  ended  June  30,  2006.





We  had  total  assets  at  June  30,  2007
      of $295,368, compared to $364,423 at December 31, 2006. During the period that
      the company is developing its new line
      of  products,  the  total  asset  base  will  remain  fairly  consistent.





LIQUIDITY  At  June  30,  2007,  we  had  cash  on
      hand of $1,710. 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.





Contents




At  June  30,  2007,  we  owed  stockholder
      loans of $307,642. In March 2007, we
      entered  into  an  equity line of credit with a
      private investor. As of June 30,
      2007  we  terminated  this  equity  line  without  draw  down.





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.





Based
      on
      their evaluation of our disclosure controls and procedures (as defined in
      Rule 13a-15e under the Securities Exchange Act of 1934), our principal
      executive officer and principal financial officer have concluded that
      as of the end of the period covered by this quarterly report on Form
      10-QSB such disclosure controls and procedures were not effective to
      ensure that information required to be disclosed by us in reports that
      we file or submit under the Exchange Act is recorded,
      processed, summarized and reported within the time periods specified
      in Securities and Exchange Commission rules and forms, because of certain
      adjustments required by our auditors in the area of equity.




In
      connection with its review of the Company's consolidated financial
      statements for the quarter ended September 30, 2007, 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, 2007 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.





In
      response to the observations made by HB&M, we are in the process of
      implementing enhancements to our internal controls, accounting staff and
      procedures, which we believe address the matters raised by HB&M, including
      the retaining of additional outside consultants and employees who will have
      the
      skills, training and familiarity with certain complex technical accounting
      pronouncements appropriate to preparing our financial statements and
      disclosures.








We
      are in
      the process of improving our internal controls in an effort to
      remediate these deficiencies. Our Chief Financial Officer has
      implemented revisions and instituted certain checks and balances to our
      accounting system. Additionally, he has addressed tighter controls over all
      aspects of financial revenue and expense recognition, as well as improving
      supervision and training of our accounting staff. We are continuing
      our efforts to enhance, improve and strengthen our control processes and
      procedures. Our management and directors will continue to work with our
      auditors and other outside advisors to ensure that our controls
      and procedures are adequate and effective.





(b) 
       Changes in internal control over financial reporting.





During
      the quarter under report, our Chief Financial Officer has implemented revisions
      and instituted certain checks and balances to our accounting system.
      Additionally, he continues to address tighter controls over all aspects of
      financial revenue and expense recognition, as well as improving supervision
      and
      training of our accounting staff.





The
      evaluation of our disclosure controls included a review of whether there
      were any significant deficiencies in the design or operation of such
      controls and procedures, material weaknesses in such controls and
      procedures, any corrective actions taken with regard to such deficiencies
      and weaknesses and any fraud involving management or other employees
      with a significant role in such controls and procedures.





Contents





PART  II  -OTHER  INFORMATION





ITEM  1.   LEGAL  PROCEEDINGS





None.





ITEM  2.  CHANGES  IN  SECURITIES.





No
      securities were issued for the
      quarter ended June 30,2007.





Subsequent
      to June 30, 2007,during July
      2007, the Company entered into an agreement with Legacy Media, LLC in connection
      with the agreement Legacy Media, LLC has been granted 2.6 million shares of
      the
      Company's restricted common stock to provide investor relations services. Legacy
      Media, LLC has also been issued a convertible note by the Company in the amount
      of $250,000 repayable at 8% interest by January 2008. If payment is not received
      by the due date Legacy Media, LLC has the option to convert this note into
      restricted voting common stock of the Company, at the lesser of (i) 50% of
      the
      lowest closing bid price during 15 days prior to conversion or (ii) 100% of
      the
      average of the five lowest closing bid prices for 30 Trading Days immediately
      following any reverse split in the common stock. All of Legacy Media, LLC's
      shares may be registered in an SB-2 filing at its request.





These
      securities were issued in private
      transactions, in reliance on the exemption available under Section 4(2) of
      the
      1933 Act.





ITEM
      3. DEFAULTS UPON
      SENIOR SECURITIES





NONE.





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





No
      matters were submitted to a vote of
      security holders during the quarter ended June, 30, 2007.





PursuanttoSectionRCW23B.07.040(b)
          of the Revised Code of Washington, a
          majorityoftheshareholdersofProtonLaboratories,Inc.actingbya
          ShareholderConsentinLieuofAnnual
          Meeting have appointed a new
          Board of Directorsas
          follows: Edward Alexander, Don
          Gallego, Gregory Darragh, Jed A. Astin, Gary Taylor and Steven
          Perry. Mr.Miceal Ledwithhas
          stepped down from the Board
          followinggoodservice.Themajorityshareholdersalsoconsentedtothe
          amendmentofthearticlesofincorporationto
          increase the number of Board
          Memberstonine.Theyhavealso
          consented to the appointment of Dr.
          Kochiki Hanoakatothe
          Board as soon as the amendment has
          been properly filed with the stateofWashington.
 
 The
          effective date of the consent is
          June 6, 2007. Majority shareholder consents were received as of July 27,
          2007.
          The total number of shareholder votes in favor of the consent was 16,279,308.
          Proton's total outstanding number of shares on the effective date of the
          consent
          was 29,185,673. A 14-C Statement will be filed with the Commission
          promptly.


ITEM  5.  OTHER  INFORMATION





N/A





ITEM  6.  EXHIBITS  AND  REPORTS  ON  FORM  8-K





Exhibit
      31.1  Certification





Exhibit
      31.2  Certification





Exhibit
      32.1  Certification





Exhibit
      32.2  Certification





Contents





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.








PROTON
                LABORATORIES,
                INC.Date:  January
                4,
                2008
            By:  /s/
                Edward
                AlexanderEDWARD
                ALEXANDERChief
                Executive Officer,
                President,Principal
                Accounting officer
                andChief
                Financial
                Officer