United
      States Securities and Exchange Commission


Washington,
      D.C. 20549





FORM
      10-QSB





(Mark
      One)





x  QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT
      OF
      1934




For
      the
      quarterly period ended June 30, 2006




o   TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE EXCHANGE ACT





Commission
      File Number 0-31927





LASERLOCK
                TECHNOLOGIES, INC.(Exact
                name of registrant as specified in its
                charter)




NEVADA
            23-3023677(State
                or other jurisdiction of Incorporation
            (IRS
                Employeror
                Organization)
            Identification
                No.)




837
                Lindy Lane, Bala Cynwyd, PA
            19004(Address
                of Principal Executive offices)
            (Zip
                Code)





610-668-1952


(Issuer’s
      Telephone Number, Including Area Code)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding twelve months (or for such shorter period that the registrant was
      required to file such reports), and (2) has been subject to such filing
      requirements for the past 90 days.  Yes  x  No
o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act.  No
x





As
      of
      June 30, 2006, there were 71,240,506 shares of common stock, par value $0.001
      per share, outstanding.





Transitional
      Small Business Issuer Format  Yes
o  No x










Item
      1 – Financial Statements





LaserLock
          Technologies, Inc. and Subsidiaries
 (A
          Development Stage Company)
 
 Consolidated
          Financial Statements
 
 June
          30,
          2006 and 2005
 
 
  LaserLock
          Technologies, Inc. and
          Subsidiaries
 (A
          Development Stage Company)
  CONTENTS
 
 PAGECONSOLIDATED
                    BALANCE SHEETS
                
                
                1CONSOLIDATED
                    STATEMENTS OF OPERATIONS
                
                
                2CONSOLIDATED
                    STATEMENTS OF STOCKHOLDERS' DEFICIT
                
                
                3-5CONSOLIDATED
                    STATEMENTS OF CASH FLOWS
                
                
                6-7NOTES
                    TO CONSOLIDATED FINANCIAL STATEMENTS
                
                
                8-12
  
  LaserLock
          Technologies, Inc. and Subsidiaries
 (A
          Development Stage Company)
 Consolidated
          Balance Sheets
 June
          30,
          2006 and December
          31, 2005
 June
                  30,
              
              December
                  31,2006
              
              2005(Unaudited)
              
              (Audited)ASSETSCURRENT
                  ASSETSCash
                  and cash equivalents
              
              $
              114,943
              
              $
              6,705Receivables
              
              
              18,292
              
              
              21,778Prepaid
                  expenses
              
              
              4,800
              
              
              -Inventory
              
              
              45,527
              
              
              58,820Deferred
                  finance charges
              
              
              191,940
              
              
              -TOTAL
                  CURRENT ASSETS
              
              
              375,502
              
              
              87,303PROPERTY
                  AND EQUIPMENT, NetCapital
                  equipment
              
              
              32,604
              
              
              32,604Less
                  accumulated depreciation
              
              
              15,896
              
              
              13,20316,708
              
              
              19,401Patent
                  costs, net of accumulated amoritization of$20,696
                  and $16,234 as of June 30, 2006and
                  December 31, 2005
              
              
              131,639
              
              
              132,189TOTAL
                  ASSETS
              
              $
              523,849
              
              $
              238,893LIABILITIES
                  AND STOCKHOLDERS' DEFICITCURRENT
                  LIABILITIESAccounts
                  payable and accrued expenses
              
              
              331,903
              
              
              333,287Convertible
                  notes payable
              
              
              580,000
              
              
              -TOTAL
                  CURRENT LIABILITIES
              
              
              911,903
              
              
              333,287TOTAL
                  LIABILITIES
              
              
              911,903
              
              
              333,287STOCKHOLDERS'
                  DEFICITPreferred
                  Stock, $ .001 par value; 75,000,000 shares authorized;no
                  shares issued and outstanding
              
              
              -
              
              
              -Common
                  stock, $ .001 par value; 250,000,000 shares authorized;71,240,506
                  shares issued and oustanding at June 30, 2006and
                  63,590,506 issued and outstanding at December 31, 2005
              
              
              71,240
              
              
              63,590Additional
                  paid in capital
              
              
              6,797,603
              
              
              6,292,447Deficit
                  accumulated during the development stage
              
              
              (7,256,897
              )
              
              (6,450,431
              )STOCKHOLDERS'
                  DEFICIT
              
              
              (388,054
              )
              
              (94,394
              )TOTAL
                  LIABILITIES AND STOCKHOLDERS' DEFICIT
              
              $
              523,849
              
              $
              238,893
  The
        accompanying notes are an integral part of these consolidated financial
        statements.
  -1-
  LaserLock
          Technologies, Inc. and Subsidiaries
 (A
          Development Stage Company)
 Consolidated
          Statements of Operations
 For
          the
          Three Months and Six Months Ended June
          30,
          2006 and 2005
 And
          for
          the Period November 10, 1999 (Date of Inception) to June
          30,
          2006
 (UNAUDITED)
  Three
                    Months
                
                Three
                    Months
                
                Six
                    Months
                
                Six
                    MonthsCumulative
                
                Ended
                
                Ended
                
                Ended
                
                EndedSince
                
                June
                    30,
                
                June
                    30,
                
                June
                    30,
                
                June
                    30,Inception
                
                2006
                
                2005
                
                2006
                
                2005REVENUESSales
                
                $
                186,342
                
                $
                1,355
                
                $
                13,823
                
                $
                5,049
                
                $
                36,518Royalties
                
                
                378,115
                
                
                17,900
                
                
                43,041
                
                
                41,840
                
                
                84,055TOTAL
                    REVENUE
                
                
                564,457
                
                
                19,255
                
                
                56,864
                
                
                46,889
                
                
                120,573COSTS
                    AND EXPENSESResearch
                    and development
                
                
                966,613
                
                
                19,425
                
                
                14,077
                
                
                37,591
                
                
                75,473Patent
                    costs
                
                
                56,975
                
                
                65
                
                
                0
                
                
                611
                
                
                -Legal
                    and Accounting
                
                
                822,225
                
                
                96,564
                
                
                40,142
                
                
                124,042
                
                
                59,924Sales
                    and Marketing
                
                
                3,820,256
                
                
                227,475
                
                
                221,167
                
                
                458,878
                
                
                398,503General
                    and administrative
                
                
                2,287,131
                
                
                93,953
                
                
                166,938
                
                
                164,674
                
                
                248,386Total
                    costs and expense
                
                
                7,953,200
                
                
                437,482
                
                
                442,324
                
                
                785,796
                
                
                782,286LOSS
                    BEFORE OTHER INCOME
                
                
                (7,388,743
                )
                
                (418,227
                )
                
                (385,460
                )
                
                (738,907
                )
                
                (661,713
                )OTHER
                    INCOME (EXPENSE)Interest
                    income
                
                
                61,106
                
                
                984
                
                
                1,789
                
                
                2,153
                
                
                4,217Interest
                    expense
                
                
                (98,982
                )
                
                (43,200
                )
                
                -
                
                
                (69,712
                )
                
                -Gain
                    on disposition of assets
                
                
                4,722
                
                
                -
                
                
                -
                
                
                -
                
                
                -(33,154
                )
                
                (42,216
                )
                
                1,789
                
                
                (67,559
                )
                
                4,217LOSS
                    BEFORE INCOME TAX BENEFIT
                
                
                (7,421,897
                )
                
                (460,443
                )
                
                (383,671
                )
                
                (806,466
                )
                
                (657,496
                )INCOME
                    TAX BENEFIT
                
                
                (165,000
                )
                
                -
                
                
                -
                
                
                -
                
                
                -NET
                    LOSS
                
                $
                (7,256,897
                )
                $
                (460,443
                )
                $
                (383,671
                )
                $
                (806,466
                )
                $
                (657,496
                )BASIC
                    AND DILUTED NET LOSS PERCOMMON
                    SHARE
                
                
                
                
                $
                (0.01
                )
                $
                (0.01
                )
                $
                (0.01
                )
                $
                (0.01
                )BASIC
                    AND DILUTED WEIGHTED AVERAGECOMMON
                    SHARES OUTSTANDING
                
                
                
                
                
                66,757,173
                
                
                60,590,506
                
                
                65,398,839
                
                
                60,590,506
 
 The
        accompanying notes are an integral part of these consolidated financial
        statements.
  -2-
 LaserLock
          Technologies, Inc. and Subsidiaries
 (A
          Development Stage Company)
 Consolidated
          Statements of Changes in Stockholders’ Equity (Deficit)
 For
          the
          Period November 10, 1999 (Date of Inception) to June
          30,
          2006
 DeficitAccumulatedCommon
                      Stock
                
                
                
                Additional
                
                During
                    theNumber
                    of
                
                
                
                Consulting
                
                Paid-In
                
                DevelopmentShares
                
                Amount
                
                Fees
                
                Capital
                
                Stage
                
                TotalIssuance
                    of initial 4,278,000 shares on November 10, 1999
                
                
                4,278,000
                
                $
                4,278
                
                $
                -
                
                $
                16,595
                
                $
                -
                
                $
                20,873Issuance
                    of shares of common stock in exchange for services
                
                
                1,232,000
                
                
                1,232
                
                
                -
                
                
                35,728
                
                
                -
                
                
                36,960Issuance
                    of shares of common stock
                
                
                2,090,000
                
                
                2,090
                
                
                -
                
                
                60,610
                
                
                -
                
                
                62,700Stock
                    issuance costs
                
                
                -
                
                
                -
                
                
                -
                
                
                (13,690
                )
                
                -
                
                
                (13,690
                )Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (54,113
                )
                
                (54,113
                )Balance,
                    December 31, 1999
                
                
                7,600,000
                
                
                7,600
                
                
                -
                
                
                99,243
                
                
                (54,113
                )
                
                52,730Issuance
                    of shares of common stock
                
                
                5,449,999
                
                
                5,450
                
                
                -
                
                
                921,050
                
                
                -
                
                
                926,500Issuance
                    of shares of common stock in exchange for services
                
                
                240,000
                
                
                240
                
                
                (40,800
                )
                
                40,560
                
                
                -
                
                
                -Stock
                    issuance costs
                
                
                -
                
                
                -
                
                
                -
                
                
                (16,335
                )
                
                -
                
                
                (16,335
                )Fair
                    value of non-employee stock options grants
                
                
                -
                
                
                -
                
                
                -
                
                
                50,350
                
                
                -
                
                
                50,350Amortization
                    of deferred consulting fees
                
                
                -
                
                
                -
                
                
                20,117
                
                
                -
                
                
                -
                
                
                20,117Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (367,829
                )
                
                (367,829
                )Balance,
                    December 31, 2000
                
                
                13,289,999
                
                
                13,290
                
                
                (20,683
                )
                
                1,094,868
                
                
                (421,942
                )
                
                665,533Issuance
                    of shares of common stock
                
                
                217,500
                
                
                218
                
                
                -
                
                
                77,723
                
                
                -
                
                
                77,941Issuance
                      of shares of common stock and stock options foracquisition
                      of subsidiary
                
                
                2,000,000
                
                
                2,000
                
                
                -
                
                
                736,000
                
                
                -
                
                
                738,000Issuance
                    of stock options
                
                
                -
                
                
                -
                
                
                -
                
                
                15,000
                
                
                -
                
                
                15,000Exercise
                    of options
                
                
                1,450,368
                
                
                1,450
                
                
                -
                
                
                230,609
                
                
                .
                
                
                232,059Fair
                    value of non-employee stock options
                
                
                -
                
                
                -
                
                
                -
                
                
                323,250
                
                
                -
                
                
                323,250Amortization
                    of deferred consulting fees
                
                
                -
                
                
                -
                
                
                20,683
                
                
                -
                
                
                -
                
                
                20,683Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (1,052,299
                )
                
                (1,052,299
                )Balance,
                    December 31, 2001
                
                
                16,957,867
                
                
                16,958
                
                
                -
                
                
                2,477,450
                
                
                (1,474,241
                )
                
                1,020,167
  The
            accompanying notes are an integral part of these consolidated financial
            statements.
 -3-
 LaserLock
            Technologies, Inc. and Subsidiaries
 (A
            Development Stage Company)
 Consolidated
            Statements of Changes in Stockholders’ Equity (Deficit)
 For
            the
            Period November 10, 1999 (Date of Inception) to June
            30,
            2006
 DeficitAccumulatedCommon
                          Stock
                    
                    
                    
                    Additional
                    
                    During
                        theNumber
                        of
                    
                    
                    
                    Consulting
                    
                    Paid-In
                    
                    DevelopmentShares
                    
                    Amount
                    
                    Fees
                    
                    Capital
                    
                    Stage
                    
                    Total
 Issuance
                    of shares of common stock
                
                
                3,376,875
                
                
                3,377
                
                
                -
                
                
                687,223
                
                
                -
                
                
                690,600Fair
                    value of non-employee stock options
                
                
                -
                
                
                -
                
                
                -
                
                
                94,000
                
                
                -
                
                
                94,000Salary
                    due to shareholder contributed capital
                
                
                -
                
                
                -
                
                
                -
                
                
                15,000
                
                
                -
                
                
                15,000Return
                      of shares of common stock related to purchase price
                      adjustment
                
                
                (1,000,000
                )
                
                (1,000
                )
                
                -
                
                
                (353,000
                )
                
                -
                
                
                (354,000
                )Net
                    loss
                
                
                -
                
                
                -
                
                
                
                
                
                -
                
                
                (1,195,753
                )
                
                (1,195,753
                )Balance,
                    December 31, 2002
                
                
                19,334,742
                
                
                19,335
                
                
                -
                
                
                2,920,673
                
                
                (2,669,994
                )
                
                270,014Issuance
                    of shares of common stock
                
                
                22,512,764
                
                
                22,512
                
                
                -
                
                
                1,387,109
                
                
                -
                
                
                1,409,621Fair
                    value of non-employee stock options
                
                
                -
                
                
                -
                
                
                -
                
                
                213,300
                
                
                
                
                
                213,300Issuance
                    of shares of common stock in exchange for services
                
                
                143,000
                
                
                143
                
                
                -
                
                
                23,857
                
                
                
                
                
                24,000Stock
                    issuance costs
                
                
                -
                
                
                -
                
                
                -
                
                
                (49,735
                )
                
                
                
                
                (49,735
                )Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (1,107,120
                )
                
                (1,107,120
                )Balance,
                    December 31, 2003
                
                
                41,990,506
                
                
                41,990
                
                
                -
                
                
                4,495,204
                
                
                (3,777,114
                )
                
                760,080Stock
                    issuance costs
                
                
                -
                
                
                -
                
                
                -
                
                
                (25,000
                )
                
                -
                
                
                (25,000
                )Fair
                          value of non-employee stock options
                
                
                -
                
                
                -
                
                
                -
                
                
                493,600
                
                
                -
                
                
                493,600Issuance
                    of shares of common stock
                
                
                18,600,000
                
                
                18,600
                
                
                -
                
                
                939,881
                
                
                -
                
                
                958,481Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (1,406,506
                )
                
                (1,406,506
                )Balance,
                    December 31, 2004
                
                
                60,590,506
                
                
                60,590
                
                
                -
                
                
                5,903,685
                
                
                (5,183,620
                )
                
                780,655
 The
              accompanying notes are an integral part of these consolidated financial
              statements.
 -4-
  LaserLock
            Technologies, Inc. and Subsidiaries
 (A
            Development Stage Company)
 Consolidated
            Statements of Changes in Stockholders’ Equity (Deficit)
 For
            the
            Period November 10, 1999 (Date of Inception) to June
            30,
            2006
 DeficitAccumulatedCommon
                          Stock
                    
                    
                    
                    Additional
                    
                    During
                        theNumber
                        of
                    
                    
                    
                    Consulting
                    
                    Paid-In
                    
                    DevelopmentShares
                    
                    Amount
                    
                    Fees
                    
                    Capital
                    
                    Stage
                    
                    Total
 Fair
                    value of non-employee stock options
                
                
                -
                
                
                -
                
                
                -
                
                
                286,762
                
                
                -
                
                
                286,762Issuance
                    of shares of common stock
                
                
                3,000,000
                
                
                3,000
                
                
                
                
                
                102,000
                
                
                
                
                
                105,000Net
                    loss for the year ended December 31, 2005
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (1,266,811
                )
                
                (1,266,811
                )Balance
                    at December 31, 2005 (Audited)
                
                
                63,590,506
                
                
                63,590
                
                
                -
                
                
                6,292,447
                
                
                (6,450,431
                )
                
                (94,394
                )Fair
                    value of non-employee stock options
                
                
                -
                
                
                -
                
                
                -
                
                
                121,336
                
                
                -
                
                
                121,336Fair
                    value of employee stock options
                
                
                
                
                
                
                
                
                
                
                
                104,000
                
                
                
                
                
                104,000Fair
                    value of warrants issued for deferred finance charges
                
                
                
                
                
                
                
                
                
                
                
                243,640
                
                
                
                
                
                243,640Exercise
                    of warrants
                
                
                4,350,000
                
                
                4,350
                
                
                -
                
                
                39,150
                
                
                -
                
                
                43,500Exercise
                    of options
                
                
                3,300,000
                
                
                3,300
                
                
                
                
                
                (2,970
                )
                
                
                
                
                330Net
                    loss for the three months ended June 30, 2006
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (806,466
                )
                
                (806,466
                )Balance
                    at June 30, 2006 (Unaudited)
                
                
                71,240,506
                
                $
                71,240
                
                $
                -
                
                $
                6,797,603
                
                $
                (7,256,897
                )
                $
                (388,054
                )
  The
          accompanying notes are an integral part of these consolidated financial
          statements.
  -5-
  LaserLock
        Technologies, Inc. and Subsidiaries
 (A
        Development Stage Company)
 Consolidated
        Statements of Cash Flows
 For
        the
        Six Months Ended June
        30,
        2006 and 2005
 And
        for
        the Period November 10, 1999 (Date of Inception) to June
        30,
        2006
 (UNAUDITED)
 Six
                    Months
                
                Six
                    MonthsCumulative
                
                Ended
                
                EndedSince
                
                June
                    30,
                
                June
                    30,Inception
                
                2006
                
                2005CASH
                    FLOWS FROM OPERATING ACTIVITIESNet
                    loss
                
                $
                (7,256,897
                )
                $
                (806,466
                )
                $
                (657,496
                )Adjustments
                    to reconcile net loss to net cashused
                    in operating activitiesFair
                    value of options issued in exchange for services
                
                
                1,686,597
                
                
                225,336
                
                
                221,680Amortization
                    of deferred finance charges
                
                
                51,700
                
                
                51,700Salary
                    due to stockholder contributed to capital
                
                
                15,000
                
                
                -
                
                
                -Amortization
                    and depreciation
                
                
                441,722
                
                
                7,155
                
                
                6,027Gain
                    on disposition of assets
                
                
                (4,722
                )
                
                -
                
                
                -Stock
                    issued in exchange for services
                
                
                165,960
                
                
                -
                
                
                -Financing
                    expenses paid directly from stock proceeds
                
                
                5,270
                
                
                -
                
                
                -Amortization
                    of deferred consulting fees
                
                
                40,800
                
                
                -
                
                
                -(Increase)
                    decrease in assetsReceivables
                
                
                (18,292
                )
                
                3,486
                
                
                (3,852
                )Inventory
                
                
                (45,527
                )
                
                13,293
                
                
                (31,642
                )Prepaid
                    expenses
                
                
                (4,800
                )
                
                (4,800
                )
                
                3,046Increase
                    (decrease) in liabilitiesAccounts
                    payable and accrued expenses
                
                
                331,903
                
                
                (1,384
                )
                
                38,373Deferred
                    revenue
                
                
                -
                
                
                -
                
                
                (7,500
                )Net
                    cash used in operating activities
                
                
                (4,591,286
                )
                
                (511,680
                )
                
                (431,364
                )CASH
                    FLOWS FROM INVESTING ACTIVITIESPurchase
                    of property and equipment
                
                
                (35,749
                )
                
                -
                
                
                (3,223
                )Purchase
                    of intangibles
                
                
                (20,000
                )
                
                -
                
                
                -Purchase
                    of patent costs
                
                
                (152,336
                )
                
                (3,912
                )
                
                (27,174
                )Proceeds
                    from sale of assets
                
                
                6,738
                
                
                -
                
                
                -Net
                    cash used in investing activities
                
                
                (201,347
                )
                
                (3,912
                )
                
                (30,397
                )CASH
                    FLOWS FROM FINANCING ACTIVITIESProceeds
                    from issuance of common stock
                
                
                4,091,447
                
                
                -
                
                
                -Proceeds
                    from exercise of stock options
                
                
                232,389
                
                
                330
                
                
                -Proceeds
                    from issuance of stock options
                
                
                15,000
                
                
                -
                
                
                -Proceeds
                    from exercise of warrants
                
                
                43,500
                
                
                43,500
                
                
                -Proceeds
                    from short-term borrowings
                
                
                630,000
                
                
                580,000
                
                
                -Stock
                    issuance costs
                
                
                (104,760
                )
                
                -
                
                
                -Net
                    cash provided by financing activities
                
                
                4,907,576
                
                
                623,830
                
                
                -NET
                      DECREASE IN CASH ANDCASH
                      EQUIVALENTS
                
                
                114,943
                
                
                108,238
                
                
                (461,761
                )CASH
                    AND CASH EQUIVALENTS - BEGINNING OF PERIOD
                
                
                -
                
                
                6,705
                
                
                676,593CASH
                    AND CASH EQUIVALENTS - END OF PERIOD
                
                $
                114,943
                
                $
                114,943
                
                $
                214,832
 The
            accompanying notes are an integral part of these consolidated financial
            statements.
  -6-
  LaserLock
            Technologies, Inc. and Subsidiaries
 (A
            Development Stage Company)
 Consolidated
            Statements of Cash Flows
 For
            the
            Six Months Ended June
            30,
            2006 and 2005
 And
            for
            the Period November 10, 1999 (Date of Inception) to June
            30,
            2006
 (UNAUDITED)
 Six
                        Months
                    
                    Six
                        MonthsCumulative
                    
                    Ended
                    
                    EndedSince
                    
                    June
                        30,
                    
                    June
                        30,Inception
                    
                    2006
                    
                    2005
 SUPPLEMENTAL
                      DISCLOSURE OF NON-CASHINVESTING
                      AND FINANCING ACTIVITIES:Cash
                    paid during the year for:Interest
                
                $
                29,270
                
                $
                -
                
                $
                -Income
                    taxes
                
                $
                -
                
                $
                -
                
                $
                -Return
                      of shares of common stock related topurchase
                      price adjustmentCommon
                    stock
                
                
                (1,000
                )
                
                -
                
                
                -Additional
                    paid-in capital
                
                
                (353,000
                )
                
                -
                
                
                -Intangible
                    assets
                
                $
                (354,000
                )
                $
                -
                
                $
                -Issuance
                      of common stock and stock options for acquisition of
                      subsidiary
                
                $
                738,000
                
                $
                -
                
                $
                -Common
                      stock sales proceeds appliedto
                      debt and financing expenses repayment
                
                $
                55,270
                
                $
                -
                
                $
                -Fair
                    value of warrants issued for deferred finance charges
                
                $
                243,640
                
                $
                243,640
                
                $
                -
 The
          accompanying notes are an integral part of these consolidated financial
          statements.
  -7-
  LaserLock
          Technologies, Inc. and Subsidiaries
 (A
          Development Stage Company)
 Notes
          to
          Consolidated Financial Statements
 (Unaudited)
  **NOTE
          1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
  ***Basis
          of Presentations***
 
 The
          accompanying unaudited financial statements have been prepared in accordance
          with U.S. generally accepted accounting principles for interim financial
          information and with the instructions for Form 10-QSB and item 310(b) of
          Regulation S-B. Accordingly, they do not include all of the information
          and
          footnotes required by generally accepted accounting principles for complete
          financial statements. In the opinion of management, all adjustments (consisting
          of normal recurring accruals) considered necessary for a fair presentation
          have
          been included. Operating results for the three and six months ended June
          30,
          2006 are not necessarily indicative of the results that may be expected
          for the
          year ended December 31, 2006. The unaudited finanicial statements should
          be read
          in conjunction with the financial statements and footnotes thereto included
          in
          the Company’s annual report on Form 10-KSB for the year ended December 31, 2005.
 
 **NOTE
          2 - GOING CONCERN**
 
 The
          accompanying consolidated financial statements have been prepared assuming
          that
          the Company will continue as a going concern. The Company has incurred
          significant losses and experienced negative cash flow during the development
          stage. These conditions raise substantial doubt about the Company’s ability to
          continue as a going concern. The consolidated financial statements do not
          include any adjustments that might result from the outcome of this
          uncertainty.
 
 The
          Company is in the development stage at June
          30,
          2006 .
          Successful completion of the Company’s development program and, ultimately the
          attainment of profitable operations is dependant upon future events, including
          obtaining adequate financing to fulfill its development activities and
          achieving
          a level of sales adequate to support the Company’s cost structure. However,
          there can be no assurances that the Company will be able to secure additional
          equity investment or achieve an adequate sales level.
 
 **NOTE
          3 - PATENTS**
 
 The
          Company continues to apply for patents. Accordingly, costs associated with
          the
          registration of these patents have been capitalized and are amortized on
          a
          straight-line basis over the estimated lives of the patent (17 years).
          During
          the six months ended June
          30,
          2006 ,
          additional capitalized patent costs incurred amounted to $3,912. Amortization
          expense for patents was $2,259 and $4,462 for the three and six months
          ended June
          30,
          2006 and
          $2,039 and $3,407 for the three and six months ended June 30,
          2005.
 
 **NOTE
          4 - INCOME TAXES**
 
 There
          is
          no income tax benefit for the losses for the three and six months ended June
          30,
          2006 and 2005 ,
          since
          management has determined that the realization of the net deferred tax
          asset is
          not assured and has created a valuation allowance for the entire amount
          of such
          benefits.
 
 -8-
  LaserLock
          Technologies, Inc. and
          Subsidiaries
 (A
          Development Stage Company)
 Notes
          to
          Consolidated Financial Statements
 (Unaudited)
 
 **NOTE
          5 - STOCK OPTIONS**
 
 In
          March
          2006, in conjunction with a consulting contract, the Company granted options
          to
          purchase 1,200,000 shares of common stock at an exercise price of $0.0001
          per
          share, expiring two days after they become vested. The options vest 200,000
          at
          April 30, 2006 and 100,000 each month thereafter from May 31, 2006 through
          February 2007. In accordance with the fair value method as described in
          accounting requirements of SFAS No. 123(R), the Company recognized consulting
          expenses of $27,000 and $36,000 for the three and six months ended June
          30,
          2006 and no
          consulting expenses for the three and six months ended June 30, 2005. The
          1,200,000 options were fully exercised in April 2006, with 400,000 shares
          issued
          and with the remaining 800,000 shares held in escrow until the vesting
          requirements are met.
 
 In
          May
          2006, in conjunction with a consulting contract, the Company granted options
          to
          purchase 600,000 shares of common stock at an exercise price of $0.0001
          per
          share. The options are exercisable immediately. In accordance with the
          fair
          value method as described in accounting requirements of SFAS No. 123(R),
          the
          Company recognized consulting expenses of $6,000 for the three and six
          months
          ended June
          30,
          2006 and no
          consulting expenses for the three and six months ended June 30, 2005. The
          600,000 options were fully exercised in May 2006, with 100,000 shares issued
          and
          with the remaining 500,000 shares to be issued 100,000 at July 31, 2006
          and
          100,000 each month thereafter from August 31, 2006 through November 30,
          2006.
          The shares are being held in escrow until the vesting requirements are
          met.
 
 In
          May
          2006, in conjunction with a consulting contract, the Company granted options
          to
          purchase 1,500,000 shares of common stock at an exercise price of $0.0001
          per
          share. The options are exercisable immediately. In accordance with the
          fair
          value method as described in accounting requirements of SFAS No. 123(R),
          the
          Company recognized consulting expenses of $7,500 for the three and six
          months
          ended June
          30,
          2006 and no
          consulting expenses for the three and six months ended June 30, 2005. The
          1,500,000 options were fully exercised in June 2006, with 583,333 shares
          issued
          and with the remaining 916,667 shares to be issued 83,333 at July 31, 2006
          and
          83,333 each month thereafter from August 31, 2006 through May 31, 2007.
          The
          shares are currently being held in escrow until the vesting requirements
          are
          met.
 
 **NOTE
          6 - STOCK BASED COMPENSATION**
 
 In
          December 2004, the Financial Accounting Standards Board (“FASB”) issued
          Statement of Financial Accounting Standard SFAS 123 (revised 2004), *Share-Based
          Payment* (“SFAS
          123R”). SFAS 123(R) supersedes APB Opinion No. 25, *Accounting
          for Stock Issued to Employees* ,
          and
          amends SFAS No. 95, *Statement
          of Cash Flows* .
          Generally, the approach in SFAS 123(R) is similar to the approach described
          in
          SFAS 123. However, SFAS 123(R) requires share-based payments to employees,
          including grants of employee stock options, to be recognized in the income
          statement based on their fair values at the date of grant. Pro forma disclosure
          is no longer an alternative.
 
 On
          January 1, 2006, the Company adopted SFAS 123(R) using the modified prospective
          method as permitted under SFAS 123(R). Under this transition method,
          compensation cost recognized in the first quarter of 2006 includes compensation
          cost for all share-based payments granted prior to but not yet vested as
          of
          December 31, 2005, based on the grant-date fair value estimated in accordance
          with the provisions of SFAS 123. In accordance with the modified prospective
          method of adoption, the Company’s results of operations and financial position
          for prior periods have not been restated.
 
 The
          Company uses the Black-Scholes option pricing model to calculate the grant-date
          fair value of an award, with the following assumptions: no dividend yield,
          expected volatility of 60%, risk-free interest rate between 3.6% and 4.5%
          and
          expected option life of five to ten years.
 
 -9-
 
 LaserLock
          Technologies, Inc. and
          Subsidiaries
 (A
          Development Stage Company)
 Notes
          to
          Consolidated Financial Statements
 
 **NOTE
          6 - STOCK BASED COMPENSATION (Continued)**
 
 During
          the three and six months quarter ended June
          30,
          2006 ,
          the
          Company’s net income was approximately $52,000 and $104,000 lower as a result of
          stock-based compensation expense resulting from the adoption of SFAS 123(R).
          As
          of June
          30,
          2006 ,
          there
          was approximately $99,000 of unrecognized compensation expense related
          to
          non-vested market-based share awards that is expected to be recognized
          through
          November 2007.
 
 Prior
          to
          December 31, 2005, the Company followed the provisions of SFAS No. 123,
          “ *Accounting
          for Stock-Based Compensation* ”.
          The
          provisions of SFAS No. 123 allowed companies to either expense the estimated
          fair value of stock options or to continue to follow the intrinsic value
          method
          set forth in Accounting Principles Board Opinion No. 25, “ *Accounting
          for Stock Issued to Employees* ”
(“APB
          25”), but disclose the pro forma effects on net income had the fair value
          of the
          options been expensed. The Company elected to apply APB 25 in accounting
          for its
          stock option incentive plans.
 
 In
          accordance with APB 25 and related interpretations, compensation expense
          for
          stock options was recognized in income based on the excess, if any, of
          the
          quoted market price of the stock at the grant date of the award or other
          measurement date over the amount an employee must pay to acquire the stock.
          Generally, the exercise price for stock options granted to employees was
          equal
          to the fair market value of the Company’s common stock at the date of grant,
          thereby resulting in no recognition of compensation expense by the Company
          prior
          to December 31, 2005.
 
 Had
          compensation cost for the Company’s stock option plans been determined based on
          the fair value method set forth in SFAS No. 123 during the prior year,
          the
          Company’s net income (loss) and basic and diluted net income (loss) per common
          share would have been changed to the pro forma amounts indicated
          below:
 Three
                      Months Ended
                  
                  Six
                      Months EndedJune
                      30, 2005
                  
                  June
                      30, 2005Net
                      loss:As
                      reported
                  
                  $
                  383,671
                  
                  $
                  657,496Less:
                      Total stock-based employee compensation expensedetermined
                      under fair value based method for all awards
                  
                  
                  50,500
                  
                  
                  88,700Pro
                      forma net loss
                  
                  $
                  434,171
                  
                  
                  746,196Net
                      loss per common share basic and diluted:As
                      reported
                  
                  $
                  0.01
                  
                  $
                  0.01Pro
                      forma
                  
                  $
                  0.01
                  
                  $
                  0.01
  -10-
 LaserLock
          Technologies, Inc. and
          Subsidiaries
 (A
          Development Stage Company)
 Notes
          to
          Consolidated Financial Statements
  The
          following tables summarize all stock option activity of the Company since
          December 31, 2005:
  Incentive
                    Stock Options OutstandingWeighted
                    AverageNumber
                
                Exercise
                
                Exerciseof
                    Shares
                
                Price
                
                PriceOutstanding,
                    December 31, 2005
                
                
                6,570,000
                
                $
                .03
                    to $.28
                
                $
                0.11Granted
                
                
                -
                
                
                -
                
                
                -Exercised
                
                
                -
                
                
                -
                
                
                -Canceled
                
                
                -
                
                
                -
                
                
                -Outstanding,
                    June 30, 2006
                
                
                6,570,000
                
                $
                .03
                    to $.28
                
                $
                0.11Exercisable,
                    June 30, 2006
                
                
                5,021,387
                
                $
                .03
                    to $.28
                
                $
                0.11
  Non-Employee
                    Stock Options OutstandingWeighted
                    AverageNumber
                
                Exercise
                
                Exerciseof
                    Shares
                
                Price
                
                PriceOutstanding,
                    December 31, 2005
                
                
                11,251,294
                
                $
                .03
                    to $.40
                
                $
                0.12Granted
                
                
                3,300,000
                
                $
                0.0001
                
                
                -Exercised
                
                
                (3,300,000
                )
                $
                0.0001
                
                
                -Canceled
                
                
                (449,632
                )
                $
                .16
                    to $.35
                
                
                -Outstanding,
                    June 30, 2006
                
                
                10,801,662
                
                $
                .03
                    to $.40
                
                $
                0.08Exercisable,
                    June 30, 2006
                
                
                9,968,329
                
                $
                .03
                    to $.40
                
                $
                0.11
  **NOTE
        7 - RELATED PARTY TRANSACTIONS**
 
 The
        Company’s office is owned by its President and Chief Executive Officer. No
        formal lease agreement exists and no direct rent expense has been incurred.
        However, related occupancy costs of $2,092 and $3,652 were incurred during
        the
        three and six months ended June
        30,
        2006 and
        $2,515 and $5,357 during the three and six months ended June 30,
        2005.
  -11-
 LaserLock
          Technologies, Inc. and Subsidiaries
 (A
          Development Stage Company)
 Notes
          to
          Consolidated Financial Statements
 
 **NOTE
          8 - CONVERTIBLE NOTES PAYABLE**
 
 The
          Company commenced a private placement of up to $800,000 principal amount
          of 10%
          senior secured convertible promissory notes due twelve months from the
          date of
          issue to certain of our shareholders and other accredited investors. Purchasers
          of the notes will be issued 10-year warrants exercisable into the Company’s
          shares at an exercise price of $0.01 per share. In addition, if an equity
          financing with total proceeds of more than $5,000,000 occurs while any
          notes are
          outstanding, holders of notes will have the right, at their option, to
          convert
          the outstanding principal and interest of the notes into shares at a discount
          of
          30% of the price per share in the qualified financing. The notes are secured
          by
          a first priority lien on all of the tangible and intangible personal property
          of
          the Company. The beneficial conversion feature was accounted for in accordance
          with Emerging Issue Task Force No. 98-5.
 
 The
          Company has sold $580,000 principal amount of the notes and issued 5,800,000
          warrants as of June 30, 2006. In accordance with FAS 123(R), the Company
          recorded deferred finance charges in the amount of $243,640. The Company
          uses
          the Black-Scholes option pricing model to calculate the grant-date fair
          value of
          an award, with the following assumptions: no dividend yield, expected volatility
          of 60%, risk-free interest rate between 3.6% and 4.5% and expected option
          life
          of five to ten years. The deferred finance charges are being amortized
          over one
          year, which is the term of the convertible notes. As of June 30, 2006 the
          Company received $43,500 for the exercise of 4,350,000 of the
          warrants.
 
 **NOTE
          9 - SUBSEQUENT EVENTS**
 
 After
          June 30, 2006 the Company sold the final $220,000 principal amount of 10%
          senior
          secured convertible promissory notes due twelve months from date of issue
          and
          issued 2,200,000 10-year warrants exercisable into the Company’s shares at an
          exercise price of $0.01 per share. This completed the $800,000 private
          placement
          of 10% senior secured convertible promissory notes.
 
 Of
          the
          warrants issued subsequent to June 30, 2006, 1,200,000 have been
          exercised.


-12-




Item
      2
–
      Management’s Discussion and Analysis of Financial Condition and Results of
      Operations





**Forward-Looking
      Information**





The
      following Management’s Discussion and Analysis should be read in conjunction
      with our unaudited financial statements and notes thereto for the six month
      period ended June 30, 2006 included herein and our audited financial statements
      and notes thereto for the year ended December 31, 2005 included in our Annual
      Report on Form 10-KSB filed with the Securities and Exchange
      Commission.





This
      discussion, analysis and other sections of this report contain, in addition
      to
      historical information, forward-looking statements within the meaning of the
      Private Securities Litigation Reform Act of 1995. Forward-looking statements
      involve known and unknown risks, uncertainties and other factors, which may
      cause our actual results, performance or achievements expressed or implied
      by
      these forward-looking statements to differ materially from such forward-looking
      statements. The forward-looking statements included in this report may prove
      to
      be inaccurate. These statements are based on a number of assumptions concerning
      future events, and are subject to a number of uncertainties and other factors,
      many of which are outside our control. Actual results may differ materially
      from
      such statements for a number of reasons, including the effects of regulation
      and
      changes in capital requirements and funding. In light of the significant
      uncertainties inherent in these forward-looking statements, you should not
      consider this information to be a guarantee by us or any other person that
      our
      objectives and plans will be achieved. We do not undertake to publicly update
      or
      revise its forward-looking statements even if experience or future changes
      make
      it clear that any projected results (expressed or implied) will not be
      realized.





**Overview**





We
      are a
      technology licensing company which licenses our technology to third parties
      who
      incorporate it into their products for resale to their customers and end users
      who incorporate the technology into their products at their manufacturing
      facilities. We receive royalties on volume usage of our technology from third
      parties who sell products incorporating such technologies. We intend to require,
      whenever possible, minimum annual royalties to enter into these licensing
      agreements.





Initially,
      we planned to market anti-counterfeiting solutions to the gaming industry.
      In
      2003, we began to restructure our management team and refocus our short and
      long-term goals.





Our
      new
      focus involves offering security solutions to the gaming industry through third
      parties that supply various products and services to the gaming industry. We
      license our technology to these third-party product and service suppliers who,
      in turn, incorporate our technology into the products they sell. We receive
      a
      royalty on each license. As part of these security solutions, we sell inks
      and
      pigments used to detect counterfeit products and documents to these same
      third-party product and service suppliers. By the end of fiscal year 2003,
      we
      had signed agreements to provide technology for the protection of playing cards,
      dice, and casino chips from fraud with Gaming Partners International (formerly
      known as Bud Jones, Bourgogne et Grasset, and Paul Son) and CoPAG U.S.A. Inc.
      The agreement with Gaming Partners International is still in effect. The
      agreement with CoPAG expired in September 2005 and was not renewed.





We
      also
      supply fraud protection technology for slot tickets, and have made a commitment
      to sell advertising on the back of slot tickets in the cashless ticket-in
      ticket-out slot machines such as those using the EZ Pay system developed by
      IGT.
      We signed an agreement with Ambient Planet, Ltd. (“Ambient”), a media and
      marketing company, in February 2004. The agreement was extended by mutual
      consent in September 2004 through September 2007. The first sale of this
      advertising model was in the fourth quarter of 2005. The results of the test
      program indicated that the business model did not perform as anticipated. As
      a
      result, this agreement has been terminated.





In
      January 2005, we entered into an agreement with Enigma Importacao e Exportacco
      Ltdn. (“Enigma”), in which we granted Enigma four three-month options to develop
      in Brazil uses for our pending patent. Upon exercise of the three-month options,
      Enigma would pay us a fee and purchase product to be used in testing and
      development of the products during the option period. At the end of the option
      period Enigma had the right to enter into a license agreement with us based
      on a
      minimum license fee and purchase price of product that includes a built in
      royalty. Enigma did not exercise the last three-month option. Several tests
      have
      been conducted by Enigma, potential customers and/or their agents that indicate
      use of our technology might be commercially feasible. One potential customer
      advised Enigma that our technology is acceptable for their use. LaserLock and
      Enigma continue to work together in anticipation of developing commercial
      applications in Brazil, however, to date, no contracts have been entered into
      for the commercial use of this technology.




-13-




In
      February 2005 we entered into a six-month agreement with the Nicolette
      Consulting Group Limited (“NCG”) utilizing the services of Thomas A. Nicolette,
      its principal. The agreement anticipated that NCG would mainly provide sales
      and
      marketing services to LaserLock. During the initial term these services were
      expanded to include strategic planning and the longer-term objectives. In July
      2005, February 2006 and
      August 2006  the
      contract was extended for further six month periods with the understanding
      that
      Mr. Nicolette would, in addition to his sales and marketing services, provide
      services similar to those of a senior executive, although he would not be an
      officer of LaserLock.




On
      December 13, 2005 we signed a Letter of Intent (“LOI”) to acquire a minimum of
      95% of the outstanding shares of ExaqtWorld S.A.R.L. (“Exaqt”) based in Paris,
      France for 36.6% of the outstanding shares of LaserLock (assuming 100% of the
      shares of Exaqt are tendered). With the acquisition of Exaqt we will own the
      worldwide rights in the security sector of a fundamental patent to manufacturer
      multi-tech Electronic Article Surveillance (“EAS”) systems, which simultaneously
      detect multiple EAS frequencies (RF, EM, AM and RFID). The multi-tech EAS
      systems allow seamless integration of the source tagging of products at the
      manufacturing level of the supply chain of the retail industry. The LOI is
      subject to the signing of a definitive agreement between Exaqt and us. The
      standstill agreement contained in the LOI expired
      June 13, 2006.  It
      will
      be necessary for us to obtain sufficient funding to successfully operate and
      expand the business of Exaqt. When the acquisition of Exaqt is completed, Thomas
      A. Nicolette, a consultant to us, will receive approximately 38% of the shares
      to be issued in this transaction. Also, Mr. Nicolette will become President
      and
      Chief Executive Officer and a Director of LaserLock upon the completion of
      the
      transaction.





We
      continue to develop new anti-counterfeiting technologies and to apply for patent
      protection for these technologies wherever possible. Our current patent
      portfolio consists of four granted patents (one granted in 2002, two granted
      in
      2004 and one granted in 2005) and one patent pending. Management believes that
      some of the patents that have been granted may have commercial application
      in
      the future but will require additional capital and/or a strategic partner in
      order to reach the potential markets.





We
      are
      currently exploring the uses of our technologies in general industry and
      government. Whenever possible, we will license our technology to strategic
      partners that currently service those industries and charge them royalty fees
      and/or a share of the revenues/profits from their use of our
      technology.





In
      February 2006 we commenced a private placement of up to $800,000 principal
      amount of 10% senior secured convertible promissory notes due twelve months
      from
      the date of issue (“Notes”) to certain of our shareholders and other accredited
      investors. Purchasers of Notes will be issued 10-year warrants exercisable
      into
      LaserLock’s shares at an exercise price of $0.01 per share. In addition, if an
      equity financing with total proceeds of more than $5,000,000 occurs while any
      Notes are outstanding, holders of Notes will have the right, at their option,
      to
      convert the outstanding principal and interest of the notes into shares at
      a
      discount of 30% of the price per share in the qualified financing. The Notes
      are
      secured by a first priority lien on all of the tangible and intangible personal
      property of LaserLock. The private placement relied upon applicable exemptions
      from registration under Section 4(2) of the Securities Exchange Act of 1934,
      as
      amended, and Section 506 of Regulation D promulgated thereunder.





In
      connection with the private placement, on February 13, 2006, we entered into
      a
      Senior Secured Convertible Note and Warrant Purchase Agreement with Nob Hill
      Capital Partners, L.P., under which the we issued and sold to Nob Hill Capital
      Partners, L.P. a note in the principal amount of $100,000 and a warrant
      exercisable into 1,000,000 of LaserLock’s shares and entered into a security
      agreement granting Nob Hill Capital Partners, L.P. a security interest in
      LaserLock’s tangible and intangible personal property as security for
      LaserLock’s obligations under the note. The Note and warrant were issued in
      reliance upon applicable exemptions from registration under Section 4(2) of
      the
      Securities Exchange Act of 1934, as amended, and Section 506 of Regulation
      D
      promulgated thereunder.





Additional
      Notes in the aggregate principal amount of $700,000 and warrants exercisable
      into 7,000,000 shares were issued by LaserLock in the offering after February
      13, 2006. As of August 10, 2006 we received $55,500 for the exercise of
      5,550,000 of the warrants.





-14-




In
      addition to the above Notes, in order to implement our strategy, it will be
      necessary for us to raise additional capital and/or enter into strategic
      alliances or partnerships. There can be no assurances that such capital or
      strategic alliances or partnerships will be available and, if available, that
      we
      will be able to secure such capital or arrangements on acceptable
      terms.





**Results
      of Operations**





**Comparison
      of the Three-Month Periods Ended June 30, 2006 and June 30,
      2005.**





Since
      we
      were and currently still are in our startup stages it is difficult for us to
      forecast our revenue or earnings accurately. We believe that period-to-period
      comparisons of our operating results may not be meaningful. We believe that
      we
      will start generating larger amounts of revenue in the future due to our
      attempts to cultivate business relationships over the past years.





As
      a
      result of our limited operating history, we do not have meaningful historical
      financial data on which to base planned operating expenses. Thus, annual revenue
      and results of operation are difficult to project.





For
      the
      three months ended June 30, 2006, we had sales and royalty revenues of $19,255
      as compared to $56,864 for the three months ending June 30, 2005. The decrease
      results primarily from lower sales and royalty fees from the use of our casino
      chip security systems. Casinos purchase chips from our licensee when they open
      and these chips can be used for several years before they are replaced. Casinos
      also periodically replace or upgrade their chips. During the current period
      there were no new casinos that placed initial orders for chips. During the
      2005
      period we received royalties from Enigma during a development process for
      Brazil. During the current period no royalties for Brazil were
      received.





Our
      research and development costs aggregated approximately $19,425 for the three
      months ended June 30, 2006 as compared to $14,077 for the three months ended
      June 30, 2005, an increase of $5,348—. This
      increase is
      substantially the result the delivery of samples for testing with potential
      customers.





Our
      patent costs were $65 for the three months ended June 30, 2006. There was no
      expense for the same period in 2005. This expense is the cost for maintaining
      the patents that have been issued to the company.





Our
      legal
      and accounting costs aggregated approximately $96,564 for the three months
      ended
      June 30, 2006 as compared to $40,142 for the three months ended June 30, 2005,
      an increase of $56,422. This increase relates primarily to costs associated
      with
      the proposed acquisition of Exaqt of approximately $23,800 and costs incurred
      for outside legal counsel in connection with the filing of a S-8 registration
      statement and related events.





Our
      sales
      and marketing costs aggregated $227,475 for the three months ended June 30,
      2006
      as compared to $ 221,167 for the three months ended June 30, 2005 an increase
      of
      $6,308. This increase results from a settlement of a terminated marketing
      agreement for $28,000, increased costs associated with a consulting agreement
      of
      approximately $10,000 offset by lower costs for marketing-related stock options
      and other marketing expenses.





Our
      general and administrative costs aggregated $93,953 for the three months ended
      June 30, 2006 as compared to $166,938 for the three months ended June 30, 2005,
      a decrease of $72,985. The decrease results from lower costs for consultants,
      insurance and other general and administrative expenses.





Our
      interest expense for the three months ended June 30, 2006 was $43,200. This
      expense includes accrued interest on the 10% Notes in the amount of $12,000
      and
      $31,200 for the amortization of deferred finance charges related to the issuance
      of warrants in connection with the sale of the Notes. There was no interest
      expense for the same period last year.





The
      net
      loss for the three months ended June 30, 2006 was $460,443 or $0.01 per share.
      This compares to a net loss of $383,671 or $0.01 per share for the same period
      in 2005, an increase in the net loss of $76,772. Included in the net loss for
      the 2006 period was $136,788 that represents the expense portion of the fair
      value of stock options and warrants issued compared to $166,680 for the 2005
      period, a decrease of $29,892. In 2005 there was no expense for warrants
      issued.





-15-




**Comparison
      of the Six-Month Periods Ended June 30, 2006 and June 30,
      2005.**





Since
      we
      were and currently still are in our startup stages it is difficult for us to
      forecast our revenue or earnings accurately. We believe that period-to-period
      comparisons of our operating results may not be meaningful. We believe that
      we
      will start generating larger amounts of revenue in the future due to our
      attempts to cultivate business relationships over the past years.





As
      a
      result of our limited operating history, we do not have meaningful historical
      financial data on which to base planned operating expenses. Thus, annual revenue
      and results of operation are difficult to project.





For
      the
      six months ended June 30, 2006, we had sales and royalty revenues of $46,889
      as
      compared to $120,573 for the six months ending June 30, 2005. The decrease
      results primarily from lower sales and royalty fees from the use of our casino
      chip security systems. Casinos purchase chips from our licensee when they open
      and these chips can be used for several years before they are replaced. Casinos
      also periodically replace or upgrade their chips. During the current period
      there were no new casinos that placed initial orders for chips. During the
      2005
      period we received royalties from Enigma during a development process for
      Brazil. During the current period no royalties for Brazil were
      received.





Our
      research and development costs aggregated approximately $37,591 for the six
      months ended June 30, 2006 as compared to $75,473 for the six months ended
      June
      30, 2005, a decrease of $—37,882.
      This
      decrease is substantially the result a lower cost of products sold in 2006
      due
      to lower sales.





Our
      patent costs were $611 for the six months ended June 30, 2006. There was no
      expense for the same period in 2005. This expense is the cost for maintaining
      the patents that have been issued to the company.





Our
      legal
      and accounting costs aggregated approximately $124,042 for the six months ended
      June 30, 2006 as compared to $59,924 for the six months ended June 30, 2005,
      an
      increase of $64,118. This increase relates primarily to costs associated with
      the proposed acquisition of Exaqt and costs incurred for outside legal counsel
      in connection with the filing of a S-8 registration statement and related
      events.





Our
      sales
      and marketing costs aggregated $458,878 for the six months ended June 30, 2006
      as compared to $398,503 for the six months ended June 30, 2005 an increase
      of
      $60,375. This increase results from a settlement of a terminated marketing
      agreement for $28,000, increased costs associated with a consulting agreement
      partially offset by lower costs for marketing-related stock
      options.





Our
      general and administrative costs aggregated $164,674 for the six months ended
      June 30, 2006 as compared to $248,386 for the six months ended June 30, 2005,
      a
      decrease of $83,712. The decrease principally results from lower costs for
      consultants, insurance and other general and administrative
      expenses.





Our
      interest expense for the six months ended June 30, 2006 was $69,712. This
      expense includes accrued interest on the 10% Notes in the amount of $18,000
      and
      $51,700 for the amortization of deferred finance charges related to the issuance
      of warrants in connection with the sale of the Notes. There was no interest
      expense for the same period last year.





The
      net
      loss for the six months ended June 30, 2006 was $806,466 or $0.01 per share.
      This compares to a net loss of $657,496 or $0.01 per share for the same period
      in 2005, an increase in the net loss of $148,970. Included in the net loss
      for
      the 2006 period was $277,036 that represents the expense portion of the fair
      value of stock options and warrants issued compared to $221,680 for the 2005
      period, a decrease of $55,356. In 2005 there was no expense for warrants
      issued. ****





**Liquidity
      and Capital Resources**





Our
      cash
      balance at June 30, 2006 of $114,943 was $108,238 more than the $6,705 as of
      December 31, 2005. This increase is the result of the sale of $580,000 in one
      year notes and the exercise of warrants and stock options for $43,830 reduced
      by
      the cash portion of our net loss for the period.





Working
      capital at June 30, 2006 was a negative $536,401 as compared to a negative
      $245,984 at December 31, 2005, a decrease in working capital of $290,417 from
      December 31, 2005.




-16-




Our
      cash
      flow from operations, since inception, has been and continues to be negative.
      We
      continue to attempt to solicit customers and expect to continue to expend funds
      in excess of our revenues during the balance of the current year.




Future
      capital requirements and the adequacy of available funds will depend on numerous
      factors, including the successful commercialization of our existing products,
      cost of filing, prosecuting, defending and enforcing any current and future
      patent claims and other intellectual property rights, competing technological
      and market developments and the building of strategic alliances for the
      development and marketing of our products. In the event our plans change or
      our
      assumptions change or prove to be inaccurate or the funds available prove to
      be
      insufficient to fund operations at the planned level (due to further
      unanticipated expenses, delays, problems or otherwise), we could be required
      to
      obtain additional funds through equity or debt financing, through strategic
      alliances with corporate partners and others, or through other sources in order
      to bring our products through to commercialization. We do not have any committed
      sources of additional financing, and there can be no assurance that additional
      funding will be available on acceptable terms, if at all. If adequate funds
      are
      not available, we may be required to further delay, scale back, or eliminate
      certain aspect of our operations or attempt to obtain funds through arrangements
      with collaborative partners or others that may require us to surrender rights
      to
      certain of our technologies, product development projects, certain products
      or
      existing markets. Specifically, if we are unable to consummate sales, we may
      have to delay our anticipated marketing and delivery dates, scale back our
      third-party production capabilities or eliminate certain areas of further
      research and development. If adequate funds are not available, our business,
      financial condition, and results of operations will be materially and adversely
      affected.





In
      February 2006 we commenced a private placement of up to $800,000 principal
      amount of 10% senior secured convertible promissory notes due twelve months
      from
      the date of issue to certain of our shareholders and other accredited investors.
      Purchasers of notes will be issued 10-year warrants exercisable into LaserLock’s
      shares at an exercise price of $0.01 per share. In addition, if an equity
      financing with total proceeds of more than $5,000,000 occurs while any notes
      are
      outstanding, holders of notes will have the right, at their option, to convert
      the outstanding principal and interest of the notes into shares at a discount
      of
      30% of the price per share in the qualified financing. The notes are secured
      by
      a first priority lien on all of LaserLock’s tangible and intangible personal
      property. The private placement will rely upon applicable exemptions from
      registration under Section 4(2) of the Securities Exchange Act of 1934, as
      amended, and Section 506 of Regulation D promulgated thereunder. As of August
      10, 2006, the private placement was completed with the sale of $800,000 in
      notes
      and issuance of 8,000,000 warrants. As of August 10, 2006 we received $55,500
      from the exercise of 5,550,000 of the warrants.





In
      addition to the private placement of notes and warrants described above, in
      order to implement our strategy, it will be necessary for us to raise additional
      capital and/or enter into strategic alliances or partnerships. There can be
      no
      assurances that such capital or strategic alliances or partnerships will be
      available and, if available, that we will be able to secure such capital or
      arrangements on acceptable terms.





Our
      actual research and development and related activities may vary significantly
      from current plans depending on numerous factors, including changes in the
      costs
      of such activities from current estimates, the results of our research and
      development programs, the results of clinical studies, the timing of regulatory
      submissions, technological advances, determinations as to commercial potential,
      the status of competitive products and the availability of sufficient funds
      to
      achieve our goals. We expect to expend between $25,000 and $75,000 in cash
      on
      our research and development program for fiscal 2006. This amount does not
      include any provision for research and development activities as a result of
      the
      acquisition of Exaqt. Our research and development plans over the next year
      include the application of our product to additional materials, as well as
      improving our existing products in conjunction with client feedback and the
      commercialization of new products. The focus and direction of our operations
      also will be dependent upon the establishment of collaborative arrangements
      with
      other companies.





Our
      current policy is to invest our cash reserves in bank deposits, certificates
      of
      deposit, commercial paper, corporate notes, U.S. government instruments or
      other
      investment-grade quality instruments.





There
      can
      be no assurance that we will be able to commercialize our technologies or that
      profitability will ever be achieved. We expect that our operating results will
      fluctuate significantly from year to year in the future and will depend on
      a
      number of factors, most of which are beyond our control.





-17-




**Off-Balance
      Sheet Arrangements**





We
      do not
      have any off-balance sheet arrangements that have or are reasonably likely
      to
      have a current or future effect on our financial condition, changes in financial
      condition, revenues or expenses, results of operations, liquidity, capital
      expenditures or capital resources that would be material to
      investors.





-18-


Item
      3 – Controls and Procedures





(a)  Evaluation
      of Disclosure Controls and Procedures





Our
      Chief
      Executive Officer and principal financial officer evaluated the effectiveness
      of
      our disclosure controls and procedures as of the end of the period covered
      by
      this report. Based on that evaluation, the Chief Executive Officer and principal
      financial officer concluded that our disclosure controls and procedures as
      of
      the end of the period covered by this report are functioning effectively to
      provide reasonable assurance that the information required to be disclosed
      by
      LaserLock in reports filed under the Securities Exchange Act of 1934 is
      recorded, processed, summarized and reported within the time periods specified
      in the Securities and Exchange Commission's rules and forms. A controls system,
      no matter how well designed and operated, cannot provide absolute assurance
      that
      the objectives of the controls system are met, and no evaluation of controls
      can
      provide absolute assurance that all control issues and instances of fraud,
      if
      any, within a company have been detected. We note that the same person serves
      as
      both the Chief Executive Officer and principal financial officer.





(b)  Change
      in
      Internal Control over Financial Reporting





No
      change
      in our internal control over financial reporting occurred during our most recent
      fiscal quarter that has materially affected, or is reasonably likely to
      materially affect, our internal control over financial reporting.





-19-


PART
      II -
      OTHER INFORMATION




Item
      1.
      Legal Proceedings





There
      are
      no pending legal proceedings to which LaserLock or any of its subsidiaries
      is a
      party or to which any of their properties is the subject that are expected
      to
      have a material effect on our financial position, results of operations or
      cash
      flows.





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





In
      February 2006 we commenced a private placement of up to $800,000 principal
      amount of 10% senior secured convertible promissory notes due twelve months
      from
      the date of issue to certain of our shareholders and other accredited investors.
      Purchasers of notes will be issued 10-year warrants exercisable into LaserLock’s
      shares at an exercise price of $0.01 per share. In addition, if an equity
      financing with total proceeds of more than $5,000,000 occurs while any notes
      are
      outstanding, holders of notes will have the right, at their option, to convert
      the outstanding principal and interest of the notes into shares at a discount
      of
      30% of the price per share in the qualified financing. The notes are secured
      by
      a first priority lien on all of the tangible and intangible personal property
      of
      LaserLock. The private placement relied upon applicable exemptions from
      registration under Section 4(2) of the Securities Exchange Act of 1934, as
      amended, and Section 506 of Regulation D promulgated thereunder. On or about
      August 10, 2006, we completed the offering. As of August 10, 2006, warrants
      exercisable into 5,550,000 shares have been exercised for an aggregate price
      of
      $55,500. Proceeds from the sales were used for working capital.





Item
      6.
      Exhibits





3.1  Amended
      and Restated Articles of Incorporation of the Company dated December 17, 2003
      (filed with the Company's Annual Report on Form 10-KSB on March 30, 2004 and
      incorporated herein by reference).





3.2  Amended
      and Restated Bylaws of the Company dated December 17, 2003 (filed with the
      Company's Annual Report on Form 10-KSB on March 30, 2004 and incorporated herein
      by reference).





10.1  Regulation
      S Stock Purchase Agreement, dated March 10, 2004, by and between the Company
      and
      California Securities, S.A. (filed with the Company's Quarterly Report on Form
      10-QSB on May 17, 2004 and incorporated herein by reference).





10.2  Senior
      Secured Convertible Note and Warrant Purchase Agreement, dated February 13,
      2006, among the Company and Nob Hill Capital Partners, L.P. (Filed on the
      Company’s Form 8-K on February 17, 2006 and incorporated herein by
      reference).





10.3  Schedule
      of Purchasers who have entered into the Senior Secured Convertible Note and
      Warrant Purchase Agreement filed on Form 8-K on February 17, 2006 and
      incorporated herein by reference (filed on the Company’s Form 10-KSB on March
      31, 2006 and incorporated herein by reference).





10.4  Senior
      Secured Convertible Promissory Note, dated February 17, 2006, by the Company
      in
      favor of Nob Hill Capital Partners, L.P. in the amount of $100,000 (Filed on
      Form 8-K on February 17, 2006 and incorporated herein by
      reference).





10.5  Schedule
      of Payees who have entered into a senior secured convertible promissory note
      substantially identical to the Senior Secured Convertible Promissory Note filed
      on Form 8-K on February 17, 2006 and incorporated herein by reference (filed
      on
      the Company’s Form 10-KSB on March 31, 2006 and incorporated herein by
      reference).





10.6  Warrant,
      issued by the Company in favor of Nob Hill Capital Partners, L.P., dated
      February 13, 2006 (Filed on Form 8-K on February 17, 2006 and incorporated
      herein by reference).





10.7  Schedule
      of Holders to whom the Company has issued a warrant substantially identical
      to
      the Warrant filed on Form 8-K on February 17, 2006 and incorporated herein
      by
      reference (filed on the Company’s Form 10-KSB on March 31, 2006 and incorporated
      herein by reference).










10.8  Security
      Agreement, dated February 13, 2006, by and between the Company and Nob Hill
      Capital Partners, L.P. (Filed on Form 8-K on February 17, 2006 and incorporated
      herein by reference).





10.9  Schedule
      of Secured Parties who have entered into a security agreement substantially
      identical to the Security Agreement filed on Form 8-K on February 17, 2006
      and
      incorporated herein by reference (filed on the Company’s Form 10-KSB on March
      31, 2006 and incorporated herein by reference).





10.10  Grant
      of
      3,000,000 shares of the Company to Norman A. Gardner on January 3, 2006 in
      consideration for services provided to the Company (Filed on Form 8-K on January
      18, 2006 and incorporated herein by reference).





10.11  Non-binding
      letter of intent, entered into on January 10, 2006, pursuant to which the
      Company will acquire a minimum of 95% of the shares of ExaqtWorld S.A.R.L.
      (Filed on Form 8-K on January 11, 2006 and incorporated herein by
      reference).





31.1  Certification
      of Chief Executive Officer and principal financial officer pursuant to Section
      302 of the Sarbanes-Oxley Act of 2002.*





32.1  Certification
      of Chief Executive Officer and principal financial officer pursuant to Section
      906 of the Sarbanes-Oxley Act of 2002.*





99.1  LaserLock
      Technologies, Inc. 2003 Stock Option Plan adopted on December 19, 2003 (filed
      with the Company's Annual Report on Form 10-KSB on March 30, 2004 and
      incorporated herein by reference).







*  The
      same
      individual serves as the Company's Chief Executive Officer and principal
      financial officer.










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.




LaserLock
              Technologies, Inc.(Registrant)  Date:
              August 14, 2006
            By:
            /s/
              Norman GardnerNorman
              GardnerPresident
              and
              CEO