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 EXCHANGEACT
                OF 1934




For
      the
      quarterly period ended September 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
                or
                  Organization)
            
            (IRS
                Employer
                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
      October 31, 2006, there were 72,440,506 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)




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


September
      30, 2006 and December 31, 2005




September
                  30,
              
              December
                  31,2006
              
              2005(Unaudited)
              
              (Audited)ASSETSCURRENT
                  ASSETSCash
                  and cash equivalents
              
              $
              102,731
              
              $
              6,705Accounts
                  receivable, net of allowance for doubtful accounts of$15,000
                  and $0
              
              
              17,298
              
              
              21,778Inventory
              
              
              43,675
              
              
              58,820Deferred
                  finance charges
              
              
              238,501
              
              
              -TOTAL
                  CURRENT ASSETS
              
              
              402,205
              
              
              87,303PROPERTY
                  AND EQUIPMENT, NetCapital
                  equipment
              
              
              32,604
              
              
              32,604Less
                  accumulated depreciation
              
              
              17,242
              
              
              13,20315,362
              
              
              19,401Patent
                  costs, net of accumulated amoritization of$23,134
                  and $16,234 as of September 30, 2006and
                  December 31, 2005
              
              
              134,039
              
              
              132,189TOTAL
                  ASSETS
              
              $
              551,606
              
              $
              238,893LIABILITIES
                  AND STOCKHOLDERS' DEFICITCURRENT
                  LIABILITIESAccounts
                  payable and accrued expenses
              
              
              306,165
              
              
              333,287Convertible
                  notes payable
              
              
              800,000
              
              
              -TOTAL
                  CURRENT LIABILITIES
              
              
              1,106,165
              
              
              333,287TOTAL
                  LIABILITIES
              
              
              1,106,165
              
              
              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 September 30, 2006and
                  63,590,506 issued and outstanding at December 31, 2005
              
              
              71,240
              
              
              63,590Additional
                  paid in capital
              
              
              7,015,013
              
              
              6,292,447Deficit
                  accumulated during the development stage
              
              
              (7,640,812
              )
              
              (6,450,431
              )STOCKHOLDERS'
                  DEFICIT
              
              
              (554,559
              )
              
              (94,394
              )TOTAL
                  LIABILITIES AND STOCKHOLDERS' DEFICIT
              
              $
              551,606
              
              $
              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 Nine Months Ended September 30, 2006 and 2005


And
      for
      the Period November 10, 1999 (Date of Inception) to September 30,
      2006


(UNAUDITED)




Three
                  Months
              
              Three
                  Months
              
              Nine
                  Months
              
              Nine
                  MonthsCumulative
              
              Ended
              
              Ended
              
              Ended
              
              EndedSince
              
              September
                  30,
              
              September
                  30,
              
              September
                  30,
              
              September
                  30,Inception
              
              2006
              
              2005
              
              2006
              
              2005REVENUESSales
              
              $
              198,259
              
              $
              11,917
              
              $
              6,327
              
              $
              16,966
              
              $
              42,845Royalties
              
              
              414,767
              
              
              36,652
              
              
              40,770
              
              
              78,492
              
              
              124,825TOTAL
                  REVENUE
              
              
              613,026
              
              
              48,569
              
              
              47,097
              
              
              95,458
              
              
              167,670COSTS
                  AND EXPENSESResearch
                  and development
              
              
              981,760
              
              
              15,147
              
              
              28,533
              
              
              52,738
              
              
              104,006Patent
                  costs
              
              
              56,975
              
              
              0
              
              
              -
              
              
              611
              
              
              -Legal
                  and Accounting
              
              
              855,834
              
              
              33,609
              
              
              42,222
              
              
              157,651
              
              
              102,146Sales
                  and Marketing
              
              
              3,991,222
              
              
              170,967
              
              
              241,085
              
              
              629,844
              
              
              639,588General
                  and administrative
              
              
              2,380,800
              
              
              93,668
              
              
              18,661
              
              
              258,343
              
              
              267,047Total
                  costs and expenses
              
              
              8,266,591
              
              
              313,391
              
              
              330,501
              
              
              1,099,187
              
              
              1,112,787LOSS
                  BEFORE OTHER INCOME
              
              
              (7,653,565
              )
              
              (264,822
              )
              
              (283,404
              )
              
              (1,003,729
              )
              
              (945,117
              )OTHER
                  INCOME (EXPENSE)Interest
                  income
              
              
              62,365
              
              
              1,259
              
              
              1,026
              
              
              3,412
              
              
              5,243Interest
                  expense
              
              
              (219,334
              )
              
              (120,352
              )
              
              -
              
              
              (190,064
              )
              
              -Gain
                  on disposition of assets
              
              
              4,722
              
              
              -
              
              
              -
              
              
              -
              
              
              -(152,247
              )
              
              (119,093
              )
              
              1,026
              
              
              (186,652
              )
              
              5,243LOSS
                  BEFORE INCOME TAX BENEFIT
              
              
              (7,805,812
              )
              
              (383,915
              )
              
              (282,378
              )
              
              (1,190,381
              )
              
              (939,874
              )INCOME
                  TAX BENEFIT
              
              
              (165,000
              )
              
              -
              
              
              -
              
              
              -
              
              
              -NET
                  LOSS
              
              $
              (7,640,812
              )
              $
              (383,915
              )
              $
              (282,378
              )
              $
              (1,190,381
              )
              $
              (939,874
              )BASIC
                  AND DILUTED NET LOSS PERCOMMON
                  SHARE
              
              
              
              
              $
              (0.01
              )
              $
              (0.00
              )
              $
              (0.02
              )
              $
              (0.02
              )BASIC
                  AND DILUTED WEIGHTED AVERAGECOMMON
                  SHARES OUTSTANDING
              
              
              
              
              
              71,040,506
              
              
              60,590,506
              
              
              67,279,395
              
              
              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 September 30, 2006





DeficitCommon
              
              
              
              
              
              AccumulatedStock
              
              
              
              Additional
              
              During
                  theNumber
                  of
              
              
              
              Consulting
              
              Paid-In
              
              DevelopmentShares
              
              Amount
              
              Fees
              
              Capital
              
              Stage
              
              Total
  Issuance
                  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 for acquisition 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) (Continued)


For
      the
      Period November 10, 1999 (Date of Inception) to September 30, 2006




DeficitCommon
              
              
              
              
              
              AccumulatedStock
              
              
              
              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) (Continued)


For
      the
      Period November 10, 1999 (Date of Inception) to September 30, 2006




DeficitCommon
              
              
              
              
              
              AccumulatedStock
              
              
              
              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
              
              
              -
              
              
              -
              
              
              -
              
              
              160,414
              
              
              -
              
              
              160,414Fair
                  value of employee stock options
              
              
              -
              
              
              -
              
              
              -
              
              
              121,715
              
              
              -
              
              
              121,715Fair
                  value of warrants issued for deferred finance charges
              
              
              -
              
              
              -
              
              
              -
              
              
              392,377
              
              
              -
              
              
              392,377Exercise
                  of warrants
              
              
              5,550,000
              
              
              5,550
              
              
              -
              
              
              49,950
              
              
              -
              
              
              55,500Exercise
                  of options
              
              
              3,300,000
              
              
              3,300
              
              
              -
              
              
              (2,970
              )
              
              -
              
              
              330Shares
                  retired upon cancellation of consulting agreements
              
              
              (1,200,000
              )
              
              (1,200
              )
              
              -
              
              
              1,080
              
              
              -
              
              
              (120
              )Net
                  loss for the nine months ended September 30, 2006
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,190,381
              )
              
              (1,190,381
              )Balance
                  at September 30, 2006 (Unaudited)
              
              
              71,240,506
              
              $
              71,240
              
              $
              -
              
              $
              7,015,013
              
              $
              (7,640,812
              )
              $
              (554,559
              )


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
      Nine Months Ended September 30, 2006 and 2005


And
      for
      the Period November 10, 1999 (Date of Inception) to September 30,
      2006


(UNAUDITED)


Nine
                  Months
              
              Nine
                  MonthsCumulative
              
              Ended
              
              EndedSince
              
              September
                  30,
              
              September
                  30,Inception
              
              2006
              
              2005
 CASH
                  FLOWS FROM OPERATING ACTIVITIESNet
                  loss
              
              $
              (7,640,812
              )
              $
              (1,190,381
              )
              $
              (939,874
              )Adjustments
                  to reconcile net loss to net cashused
                  in operating activitiesFair
                  value of options issued in exchange for services
              
              
              1,743,390
              
              
              282,129
              
              
              256,760Allowance
                  for doubtful accounts
              
              
              15,000
              
              
              15,000Amortization
                  of deferred finance charges
              
              
              153,875
              
              
              153,875
              
              
              -Salary
                  due to stockholder contributed to capital
              
              
              15,000
              
              
              -
              
              
              -Amortization
                  and depreciation
              
              
              445,506
              
              
              10,939
              
              
              9,250Gain
                  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
              
              
              (32,298
              )
              
              (10,520
              )
              
              37,833Inventory
              
              
              (43,675
              )
              
              15,145
              
              
              (39,814
              )Prepaid
                  expenses
              
              
              -
              
              
              -
              
              
              9,811Increase
                  (decrease) in liabilitiesAccounts
                  payable and accrued expenses
              
              
              306,166
              
              
              (27,121
              )
              
              108,788Deferred
                  revenue
              
              
              -
              
              
              -
              
              
              1,965Net
                  cash used in operating activities
              
              
              (4,830,540
              )
              
              (750,934
              )
              
              (555,281
              )CASH
                  FLOWS FROM INVESTING ACTIVITIESPurchase
                  of property and equipment
              
              
              (35,749
              )
              
              -
              
              
              (3,320
              )Purchase
                  of intangibles
              
              
              (20,000
              )
              
              -
              
              
              -Purchase
                  of patent costs
              
              
              (157,174
              )
              
              (8,750
              )
              
              (41,130
              )Proceeds
                  from sale of assets
              
              
              6,738
              
              
              -
              
              
              -Net
                  cash used in investing activities
              
              
              (206,185
              )
              
              (8,750
              )
              
              (44,450
              )CASH
                  FLOWS FROM FINANCING ACTIVITIESProceeds
                  from issuance of common stock
              
              
              4,091,447
              
              
              -
              
              
              -Proceeds
                  from exercise of stock options
              
              
              232,269
              
              
              210
              
              
              -Proceeds
                  from issuance of stock options
              
              
              15,000
              
              
              -
              
              
              -Proceeds
                  from exercise of warrants
              
              
              55,500
              
              
              55,500
              
              
              -Proceeds
                  from short-term borrowings
              
              
              850,000
              
              
              800,000
              
              
              -Stock
                  issuance costs
              
              
              (104,760
              )
              
              -
              
              
              -Net
                  cash provided by financing activities
              
              
              5,139,456
              
              
              855,710
              
              
              -NET
                  DECREASE IN CASH ANDCASH
                  EQUIVALENTS
              
              
              102,731
              
              
              96,026
              
              
              (599,731
              )CASH
                  AND CASH EQUIVALENTS - BEGINNING OF PERIOD
              
              
              -
              
              
              6,705
              
              
              676,593CASH
                  AND CASH EQUIVALENTS - END OF PERIOD
              
              $
              102,731
              
              $
              102,731
              
              $
              76,862




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 (Continued)


For
      the
      Nine Months Ended September 30, 2006 and 2006and 2005


And
      for
      the Period November 10, 1999 (Date of Inception) to September 30,
      2006


(UNAUDITED)


Nine
                  Months
              
              Nine
                  MonthsCumulative
              
              Ended
              
              EndedSince
              
              September
                  30,
              
              September
                  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 optionsfor
                  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
              
              $
              392,376
              
              $
              392,376
              
              $
              -


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


**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 nine months ended September
      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 September 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 nine months ended September 30, 2006, additional capitalized patent costs
      incurred amounted to $8,750. Amortization expense for patents was $2,438 and
      $6,900 for the three and nine months ended September 30, 2006 and $1,909 and
      $5,316 for the three and nine months ended September 30, 2005.








**NOTE
      4 - INCOME TAXES**




There
      is
      no income tax benefit for the losses for the three and nine months ended
      September 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


**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. The 1,200,000 options were fully exercised in April 2006, with
      400,000 shares issued. In accordance with the fair value method as described
      in
      accounting requirements of SFAS No. 123(R), the Company used 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 334%,
      risk-free interest rate of 4.8% and expected option life of one to twelve
      months. The fair market value of the options was $108,000. The Company had
      appropriately recorded the expense associated with the consulting contract
      monthly. The agreement, however, was cancelled in the third quarter of 2006
      along with 800,000 unvested shares held in escrow. Because the Company had
      previously recognized consulting expenses relative to some of the unvested
      shares, the Company needed to reverse that amount in accordance with FAS No.
      123(R), because the terms of the agreement had changed. Accordingly, the Company
      recognized consulting expenses of ($8,970) and $26,970 for the three and nine
      months ended September 30, 2006.





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. 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. In accordance with the fair
      value method as described in accounting requirements of SFAS No. 123(R), the
      Company used the fair market value to calculate the grant-date fair value of
      an
      award, because these options were exercised immediately. The fair market value
      of the options was $12,000. Accordingly, the Company recognized consulting
      expenses of $6,000 and $12,000 for the three and nine months ended September
      30,
      2006. The agreement was cancelled in the third quarter of 2006 however, 100,000
      additional shares were issued prior to cancellation. The remaining 400,000
      shares held in escrow were also cancelled.





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 used the fair market value to calculate the grant-date fair value of
      an
      award, because these options were exercised immediately. The fair market value
      of the options was $90,000. Accordingly, the Company recognized consulting
      expenses of $22,500 and $30,000 for the three and nine months ended September
      30, 2006. 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. There are 666,668 shares being held in escrow at September 30, 2006 until
      the vesting requirements are met.





In
      August
      2006, in conjunction with a two month consulting contract, the Company granted
      options to purchase 300,000 shares of common stock at an exercise price of
      $0.01
      per share. The options were exercisable 150,000 at the end of each month of
      the
      contract. In accordance with the fair value method as described in accounting
      requirements of SFAS No. 123(R), the Company used 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 172%, risk-free
      interest rate of 5% and expected option life of one to two months. The fair
      market value of the options was $17,000. Accordingly, the Company recognized
      consulting expenses of $17,000 and $17,000 for the three and nine months ended
      September 30, 2006.




9


LaserLock
      Technologies, Inc. and Subsidiaries


(A
      Development Stage Company)


Notes
      to
      Consolidated Financial Statements








**NOTE
      5 - STOCK OPTIONS (Continued)**




The
      following tables summarize all non employee stock option activity of the Company
      since December 31, 2005:




Non-Employee
                  Stock Options and Warrants OutstandingWeighted
                  AverageNumber
              
              Exercise
              
              Exerciseof
                  Shares
              
              Price
              
              PriceOutstanding,
                  December 31, 2005
              
              
              11,251,294
              
              $.03
                  to $.40
              
              $
              0.12Granted
              
              
              11,600,000
              
              $.01
                  to 0.0001
              
              
              -Exercised
              
              
              (7,650,000
              )
              $0.0001
              
              
              -Canceled
              
              
              (1,649,632
              )
              $.0001
                  to $.35
              
              
              -Outstanding,
                  September 30, 2006
              
              
              13,551,662
              
              $.0001
                  to $.40
              
              $
              0.07Exercisable,
                  September 30, 2006
              
              
              12,801,662
              
              $.0001
                  to $.40
              
              $
              0.08





**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 169%, risk-free interest rate between 3.6% and 4.5%
      and
      expected option life of five to ten years.





During
      the three and nine months ended September 30, 2006, the Company’s net income was
      approximately $18,000 and $121,000 lower as a result of stock-based compensation
      expense resulting from the adoption of SFAS 123(R). As of September 30, 2006,
      there was approximately $81,000 of unrecognized compensation expense related
      to
      non-vested market-based share awards that is expected to be recognized through
      November 2007.




10





LaserLock
      Technologies, Inc. and Subsidiaries


(A
      Development Stage Company)


Notes
      to
      Consolidated Financial Statements








**NOTE
      6 - STOCK BASED COMPENSATION (Continued)**




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
              
              Nine
                  Months EndedSeptember
                  30, 2005
              
              September
                  30, 2005Net
                  loss:As
                  reported
              
              $
              282,378
              
              $
              939,874Less:
                  Total stock-based employee compensation expensedetermined
                  under fair value based method for all awards
              
              
              32,637
              
              
              100,200Pro
                  forma net loss
              
              $
              315,015
              
              
              1,040,074Net
                  loss per common share basic and diluted:As
                  reported
              
              $
              -
              
              $
              0.02Pro
                  forma
              
              $
              -
              
              $
              0.02




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,
                  September 30, 2006
              
              
              6,570,000
              
              $.03
                  to $.28
              
              $
              0.12Exercisable,
                  September 30, 2006
              
              
              5,661,665
              
              $.03
                  to $.28
              
              $
              0.11




11


LaserLock
      Technologies, Inc. and Subsidiaries


(A
      Development Stage Company)


Notes
      to
      Consolidated Financial Statements








**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 $1,080 and $4,732 were incurred during
      the
      three and nine months ended September 30, 2006 and $4,136 and $9,493 during
      the
      three and nine months ended September 30, 2005.








**NOTE
      8 - CONVERTIBLE NOTES PAYABLE**




In
      February 2006, 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.





As
      of
      September 30, 2006, the Company sold $800,000 principal amount of the notes
      and
      issued 8,000,000 warrants. In accordance with FAS 123(R), the Company recorded
      deferred finance charges in the amount of $392,376. 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
      169%, risk-free interest rate between 3.6% and 4.5% and expected warrant 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 September 30, 2006
      the
      Company received $55,500 for the exercise of 5,550,000 of the
      warrants.






**NOTE
      9 - SUBSEQUENT EVENTS**





On
      October 20, 2006, the Company entered into an agreement with a third party
      to
      identify and commercialize non security related applications for the Company’s
      patented technologies. The fee for this agreement is $55,000 and will be paid
      by
      the issuance of the Company’s restricted stock.




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 nine month
      period ended September 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 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 were 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 September 30, 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 September 30, 2006 and September 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 September 30, 2006, we had sales and royalty revenues of
      $48,569 as compared to $47,097 for the three months ending September 30, 2005.
      During the period, sales of inks increased by $5,590. Offsetting the increased
      sales were lower royalty revenues of $4,118. As a result total revenues were
      $1,472 higher than for the same period last year. During 2005, we received
      royalties from Enigma in connection with the development our technology in
      Brazil. During the current period, we received no royalties from Enigma in
      connection with the development of our technology in Brazil.





Our
      research and development costs aggregated $15,147 for the three months ended
      September 30, 2006 as compared to $28,533 for the three months ended September
      30, 2005, a decrease of $13,386. This decrease is substantially the result
      of
      reduced expenditures for current technologies during the period.





Our
      legal
      and accounting costs aggregated $33,609 for the three months ended September
      30,
      2006 as compared to $42,222 for the three months ended September 30, 2005,
      a
      decrease of $8,613. The decrease results from a reduction of $3,835 in
      accounting fees and $4,778 in legal fees. Both reductions result from better
      management of our outside professional services.





Our
      sales
      and marketing costs aggregated $170,967 for the three months ended September
      30,
      2006 as compared to $241,085 for the three months ended September 30, 2005
      a
      decrease of $70,118. This decrease results from reduced costs associated with
      marketing consultants, related travel and other marketing costs.





Our
      general and administrative costs aggregated $93,668 for the three months ended
      September 30, 2006 as compared to $18,661 for the three months ended September
      30, 2005, an increase of $75,007. The increase results from an allowance for
      bad
      debts in the current period of $15,000 and higher costs for consultants and
      other general and administrative expenses. Also, the general and administrative
      costs for the three months ended September 30, 2005 were not indicative of
      the
      ongoing costs for the full year.





Our
      interest expense for the three months ended September 30, 2006 was $ 120,352.
      This expense includes accrued interest on the 10% Notes and other interest
      of
      $18,177 and $102,175 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 September 30, 2006 was $383,915 or $0.01 per
      share. This compares to a net loss of $282,378 or $0.00 per share for the same
      period in 2005, an increase in the net loss of $101,537. Included in the net
      loss for the 2006 period was $ 158,969 that represents the expense portion
      of
      the fair value of stock options ($56,794) and warrants ($102,175) issued
      compared to $35,080 for the fair value of stock options issued in the 2005
      period, an increase of $123,889. In 2005 there was no expense for warrants
      issued.





**Comparison
      of the Nine-Month Periods Ended September 30, 2006 and September 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.





15


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
      nine months ended September 30, 2006, we had sales and royalty revenues of
      $95,458 as compared to $167,670 for the nine months ending September 30, 2005
      a
      decrease of $72,212. 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 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 $52,738 for the nine months ended
      September 30, 2006 as compared to $104,006 for the nine months ended September
      30, 2005, a decrease of $51,268--. 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 nine months ended September 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 $157,651 for the nine months ended September
      30,
      2006 as compared to $102,146 for the nine months ended September 30, 2005,
      an
      increase of $55,505. 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 $629,844 for the nine months ended September
      30,
      2006 as compared to $639,588 for the nine months ended September 30, 2005 a
      decrease of $9,744. This decrease results from lower costs for stock options
      issued under marketing-related and consulting agreements, which costs were
      partially offset by a settlement of a terminated marketing agreement for
      $28,000.





Our
      general and administrative costs aggregated $258,343 for the nine months ended
      September 30, 2006 as compared to $267,047 for the nine months ended September
      30, 2005, a decrease of $8,704. The decrease principally results from lower
      costs for other general and administrative expenses partially offset by an
      allowance for bad debts in the current period of $15,000.





Our
      interest expense for the nine months ended September 30, 2006 was $190,064.
      This
      expense includes accrued interest on the 10% Notes in the amount of $36,167,
      other interest of $22 and $153,875 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 nine months ended September 30, 2006 was $1,190,381 or $0.02 per
      share. This compares to a net loss of $939,874 or $0.02 per share for the same
      period in 2005, an increase in the net loss of $250,507. Included in the net
      loss for the 2006 period was $436,004 that represents the expense portion of
      the
      fair value of stock options ($282,129) and warrants ($153,875) issued compared
      to $256,760 for the 2005 period, an increase of $179,244. In 2005 there was
      no
      expense for warrants issued. ****





**Liquidity
      and Capital Resources**





Our
      cash
      balance at September 30, 2006 of $102,731 was $96,026 more than the $6,705
      as of
      December 31, 2005. This increase is the result of the sale of $800,000 in one
      year notes and the exercise of warrants and stock options for $55,710 reduced
      by
      the cash portion of our net loss for the period.





Working
      capital at September 30, 2006 was a negative $703,960 as compared to a negative
      $245,984 at December 31, 2005, a decrease in working capital of $457,976 from
      December 31, 2005.





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 and during
      the
      near term.





16


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 were 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 September 30, 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.





On
      November 2, 2006, we entered into an agreement with Athanor Capital Partners
      Limited, based in London, United Kingdom (“Athanor”), under which Athanor will
      act as a corporate advisor and broker to us. With Athanor’s guidance, we intend
      to form a new holding company in the United Kingdom (“Newco”) and to attempt to
      raise up to $5,000,000 through the issuance of Newco’s shares on the London
      Stock Exchange’s AIM market (“AIM”). Under the terms of the agreement, Athanor
      will provide corporate finance advice and capital raising assistance to us
      in
      connection with a proposed application for the admission of Newco’s shares to
      trade on the AIM. This initiative contemplates that we will use the proceeds
      of
      the offering to complete the acquisition of the assets of ExaqtWorld S.A.R.L.,
      including ExaqtWorld’s patent portfolio, fund the global sales and marketing
      operations of the combined product lines, and exchange all outstanding shares
      of
      Laserlock for shares in Newco. Following the consummation of that transaction
      and the admission of Newco’s shares on the AIM, the shares of Laserlock will no
      longer trade on the United States over the counter market.





On
      signing the agreement, we paid Athanor a $10,000 non-refundable fee and granted
      them options to purchase 1,000,000 shares of our common stock at $.0001 per
      share. If Newco’s shares are admitted for trading on the AIM, Athanor will be
      paid a success fee of £122,000 (approximately $230,189) and 6% of the gross
      proceeds of the offering. In addition, under the terms of the agreement, we
      granted Athanor warrants, exercisable for three years following issuance, to
      purchase up to 3% of the shares of Newco outstanding upon completion of the
      offering at the subscription price of the shares sold. If we terminate the
      agreement with Athanor without cause at any time prior to the consummation
      of
      the offering, we are obligated to pay Athanor a termination fee of up to £40,000
      (approximately $76,000), based on the amount of work undertaken by Athanor
      through the termination date.





17


There
      can
      be no assurances that Athanor will be successful in securing additional capital
      on acceptable terms or that Laserlock will complete any of the transactions
      described above in connection with the proposed offering of Newco
      shares.





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. 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.





**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 September 30, 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.





On
      November 2, 2006, we entered into an agreement with Athanor Capital Partners
      Limited, based in London, United Kingdom (“Athanor”), under which Athanor will
      act as a corporate advisor and broker to us. With Athanor’s guidance, we intend
      to form a new holding company in the United Kingdom (“Newco”) and to attempt to
      raise up to $5,000,000 through the issuance of Newco’s shares on the London
      Stock Exchange’s AIM market (“AIM”). Under the terms of the agreement, Athanor
      will provide corporate finance advice and capital raising assistance to us
      in
      connection with a proposed application for the admission of Newco’s shares to
      trade on the AIM. This initiative contemplates that we will use the proceeds
      of
      the offering to complete the acquisition of the assets of ExaqtWorld S.A.R.L.,
      including ExaqtWorld’s patent portfolio, fund the global sales and marketing
      operations of the combined product lines, and exchange all outstanding shares
      of
      Laserlock for shares in Newco. Following the consummation of that transaction
      and the admission of Newco’s shares on the AIM, the shares of Laserlock will no
      longer trade on the United States over the counter market.





On
      signing the agreement, we paid Athanor a $10,000 non-refundable fee and granted
      them options to purchase 1,000,000 shares of our common stock at $.0001 per
      share. If Newco’s shares are admitted for trading on the AIM, Athanor will be
      paid a success fee of £122,000 (approximately $230,189) and 6% of the gross
      proceeds of the offering. In addition, under the terms of the agreement, we
      granted Athanor warrants, exercisable for three years following issuance, to
      purchase up to 3% of the shares of Newco outstanding upon completion of the
      offering at the subscription price of the shares sold. If we terminate the
      agreement with Athanor without cause at any time prior to the consummation
      of
      the offering, we are obligated to pay Athanor a termination fee of up to £40,000
      (approximately $76,000), based on the amount of work undertaken by Athanor
      through the termination date.





There
      can
      be no assurances that Athanor will be successful in securing additional capital
      on acceptable terms or that Laserlock will complete any of the transactions
      described above in connection with the proposed offering of Newco
      shares.





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).





20


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).





10.12  Letter
      Agreement re: Proposed Admission through an Introduction of Laserlock
      Technologies, Inc. to trading on the London Stock Exchange plc’s AIM, entered
      into on November 2, 2006 by Laserlock Technologies, Inc. and Athanor Capital
      Partners Limited (Filed on Form 8-K on November 8, 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.




21




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:
              November 10, 2006
            By:
            /s/Norman
              GardnerNorman GardnerPresident and
              CEO




22