United
        States Securities and Exchange Commission
 Washington,
        D.C. 20549
 
 FORM
        10-QSB
 
 
 
 (Mark
        One)
 
 X   QUARTERLY
        REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT
        OF
        1934
  For
        the
        quarterly period ended March 31, 2006
 
 ___  TRANSITION
        REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE EXCHANGE ACT
 
 Commission
        File Number 0-31927
 
 LASERLOCK
                  TECHNOLOGIES, INC.(Exact
                  name of registrant as specified in its charter)NEVADA
              
              23-3023677(State
                  or other jurisdiction of Incorporation
              
              (IRS
                  Employeror
                  Organization)
              
              Identification
                  No.)837
                  Lindy Lane, Bala Cynwyd, PA 19004(Address
                  of Principal Executive offices) (Zip
                  Code)
  _____________________________ 610-668-1952 _________________________
 (Issuer’s
        Telephone Number, Including Area Code)
 
 Indicate
        by check mark whether the registrant (1) has filed all reports required to
        be
        filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
        the
        preceding twelve months (or for such shorter period that the registrant was
        required to file such reports), and (2) has been subject to such filing
        requirements for the past 90 days.  Yes  X  No
 
 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
        March 31, 2006, there were 64,940,506 shares of common stock, par value $0.001
        per share, outstanding.
 
 Transitional
        Small Business Issuer Format  Yes   No
         X
  
 
 Item
        1 -
        Financial Statements
 
 
 LaserLock
        Technologies, Inc. and
        Subsidiaries
 (A
        Development Stage Company)
 
 Consolidated
        Financial Statements
 
 March
        31,
        2006 and
        2005
  
  
 LaserLock
        Technologies, Inc. and
        Subsidiaries
 (A
        Development Stage Company)
 
 CONTENTS
 
 PAGECONSOLIDATED
                  BALANCE SHEETS
              
              
              1CONSOLIDATED
                  STATEMENTS OF OPERATIONS
              
              2CONSOLIDATED
                  STATEMENTS OF STOCKHOLDERS' DEFICIT
              3-5CONSOLIDATED
                  STATEMENTS OF CASH FLOWS
              
              6-7NOTES
                  TO CONSOLIDATED FINANCIAL STATEMENTS
              8-11
  
  LaserLock
        Technologies, Inc. and
        Subsidiaries
 (A
        Development Stage Company)
 Consolidated
        Balance Sheets
 March
        31,
        2006 and December
        31, 2005
 March
                    31,
                
                December
                    31,2006
                
                2005(Unaudited)
                
                (Audited)**Assets**CURRENT
                    ASSETSCash
                    and cash equivalents
                
                $
                224,983
                
                $
                6,705Receivables
                
                
                7,749
                
                
                21,778Inventory
                
                
                54,127
                
                
                58,820Deferred
                    finance charges
                
                
                143,140
                
                
                -TOTAL
                    CURRENT ASSETS
                
                
                429,999
                
                
                87,303PROPERTY
                    AND EQUIPMENT, NetCapital
                    equipment
                
                
                32,604
                
                
                32,604Less
                    accumulated depreciation
                
                
                14,528
                
                
                13,20318,076
                
                
                19,401Patent
                      costs, net of accumulated amoritization of$18,437 and $16,234 as
                      of March 31, 2006 and December 31, 2005
                
                
                131,386
                
                
                132,189TOTAL
                    ASSETS
                
                $
                579,461
                
                $
                238,893LIABILITIES
                    AND STOCKHOLDERS' DEFICITCURRENT
                    LIABILITIESAccounts
                    payable and accrued expenses
                
                
                242,990
                
                
                333,287Convertible
                    notes payable
                
                
                480,000
                
                
                -TOTAL
                    CURRENT LIABILITIES
                
                
                722,990
                
                
                333,287TOTAL
                    LIABILITIES
                
                
                722,990
                
                
                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;64,940,506
                        shares oustanding at March 31, 2006 and 63,590,506 at December
                        31,
                        2005
                
                
                64,940
                
                
                63,590Additional
                    paid
                    in capital
                
                
                6,587,985
                
                
                6,292,447Deficit
                    accumulated during the development stage
                
                
                (6,796,454
                )
                
                (6,450,431
                )STOCKHOLDERS'
                    DEFICIT
                
                
                (143,529
                )
                
                (94,394
                )TOTAL
                    LIABILITIES AND STOCKHOLDERS' DEFICIT
                
                $
                579,461
                
                $
                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 Ended March
        31,
        2006 and
        2005
 And
        for
        the Period November 10, 1999 (Date of Inception) to March
        31,
        2006
 (UNAUDITED)
 Three
                    Months
                
                Three
                    MonthsCumulative
                
                Ended
                
                EndedSince
                
                March
                    31,
                
                March
                    31,Inception
                
                2006
                
                2005REVENUESSales
                
                $
                184,987
                
                $
                3,694
                
                $
                22,695Royalties
                
                
                360,215
                
                
                23,940
                
                
                41,014TOTAL
                    REVENUE
                
                
                545,202
                
                
                27,634
                
                
                63,709COSTS
                    AND EXPENSESResearch
                    and
                    development
                
                
                947,188
                
                
                18,166
                
                
                61,396Patent
                    costs
                
                
                56,910
                
                
                546
                
                
                -Legal
                    and Accounting
                
                
                725,661
                
                
                27,478
                
                
                19,782Sales
                    and Marketing
                
                
                3,592,781
                
                
                231,403
                
                
                177,336General
                    and administrative
                
                
                2,193,178
                
                
                70,721
                
                
                81,448Total
                    costs and expense
                
                
                7,515,718
                
                
                348,314
                
                
                339,962LOSS
                    BEFORE OTHER INCOME
                
                
                (6,970,516
                )
                
                (320,680
                )
                
                (276,253
                )OTHER
                    INCOME (EXPENSE)Interest
                    income
                
                
                60,122
                
                
                1,169
                
                
                2,428Interest
                    expense
                
                
                (55,782
                )
                
                (26,512
                )
                
                -Gain
                    on
                    disposition of assets
                
                
                4,722
                
                
                -
                
                
                -9,062
                
                
                (25,343
                )
                
                2,428LOSS
                    BEFORE INCOME TAX BENEFIT
                
                
                (6,961,454
                )
                
                (346,023
                )
                
                (273,825
                )INCOME
                    TAX BENEFIT
                
                
                (165,000
                )
                
                -
                
                
                -NET
                    LOSS
                
                $
                (6,796,454
                )
                $
                (346,023
                )
                $
                (273,825
                )BASIC
                      AND DILUTED NET LOSS PERCOMMON
                      SHARE
                
                
                
                
                $
                (0.01
                )
                $
                (0.00
                )BASIC
                      AND DILUTED WEIGHTED AVERAGECOMMON
                      SHARES OUTSTANDING
                
                
                
                
                
                64,040,506
                
                
                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
        Three Months Ended March
        31,
        2006 and
        2005
 And
        for
        the Period November 10, 1999 (Date of Inception) to March
        31,
        2006
 
 
 DeficitCommon
              
              
              
              
              
              
              
              AccumulatedStock
              
              
              
              
              
              Additional
              
              During
                  theNumber
                  of
              
              
              
              Consulting
              
              Paid-In
              
              DevelopmentShares
              
              Amount
              
              Fees
              
              Capital
              
              Stage
              
              TotalIssuance
                  of initial 4,278,000 shares on November 10, 1999
              
              
              4,278,000
              
              $
              4,278
              
              $
              -
              
              $
              16,595
              
              $
              -
              
              $
              20,873Issuance
                  of shares of common stock in exchange for services
              
              
              1,232,000
              
              
              1,232
              
              
              -
              
              
              35,728
              
              
              -
              
              
              36,960Issuance
                  of shares of common stock
              
              
              2,090,000
              
              
              2,090
              
              
              -
              
              
              60,610
              
              
              -
              
              
              62,700Stock
                  issuance costs
              
              
              -
              
              
              -
              
              
              -
              
              
              (13,690
              )
              
              -
              
              
              (13,690
              )Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (54,113
              )
              
              (54,113
              )Balance,
                  December 31, 1999
              
              
              7,600,000
              
              
              7,600
              
              
              -
              
              
              99,243
              
              
              (54,113
              )
              
              52,730Issuance
                  of shares of common stock
              
              
              5,449,999
              
              
              5,450
              
              
              -
              
              
              921,050
              
              
              -
              
              
              926,500Issuance
                  of shares of common stock in exchange for services
              
              
              240,000
              
              
              240
              
              
              (40,800
              )
              
              40,560
              
              
              -
              
              
              -Stock
                  issuance costs
              
              
              -
              
              
              -
              
              
              -
              
              
              (16,335
              )
              
              -
              
              
              (16,335
              )Fair
                  value of non-employee stock options grants
              
              
              -
              
              
              -
              
              
              -
              
              
              50,350
              
              
              -
              
              
              50,350Amortization
                  of deferred consulting fees
              
              
              -
              
              
              -
              
              
              20,117
              
              
              -
              
              
              -
              
              
              20,117Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (367,829
              )
              
              (367,829
              )Balance,
                  December 31, 2000
              
              
              13,289,999
              
              
              13,290
              
              
              (20,683
              )
              
              1,094,868
              
              
              (421,942
              )
              
              665,533Issuance
                  of shares of common stock
              
              
              217,500
              
              
              218
              
              
              -
              
              
              77,723
              
              
              -
              
              
              77,941Issuance
                  of shares of common stock and stock options foracquisition of subsidiary
              
              
              2,000,000
              
              
              2,000
              
              
              -
              
              
              736,000
              
              
              -
              
              
              738,000Issuance
                  of stock options
              
              
              -
              
              
              -
              
              
              -
              
              
              15,000
              
              
              -
              
              
              15,000Exercise
                  of options
              
              
              1,450,368
              
              
              1,450
              
              
              -
              
              
              230,609
              
              
              .
              
              
              232,059Fair
                  value of non-employee stock options
              
              
              -
              
              
              -
              
              
              -
              
              
              323,250
              
              
              -
              
              
              323,250Amortization
                  of deferred consulting fees
              
              
              -
              
              
              -
              
              
              20,683
              
              
              -
              
              
              -
              
              
              20,683Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,052,299
              )
              
              (1,052,299
              )Balance,
                  December 31, 2001
              
              
              16,957,867
              
              
              16,958
              
              
              -
              
              
              2,477,450
              
              
              (1,474,241
              )
              
              1,020,167
  The
        accompanying notes are an integral part of these consolidated financial
        statements.
  3
  
 
 LaserLock
        Technologies, Inc. and
        Subsidiaries
 (A
        Development Stage Company)
 Consolidated
        Statements of Changes in Stockholders’ Equity (Deficit)(Continued)
 For
        the
        Three Months Ended March
        31,
        2006 and
        2005
 For
        the
        Period November 10, 1999 (Date of Inception) to March
        31,
        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 priceadjustment
              
              
              (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
        Three Month Ended March
        31,
        2006 and
        2005
 And
        for
        the Period November 10, 1999 (Date of Inception) to March
        31,
        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
                
                
                -
                
                
                -
                
                
                -
                
                
                67,748
                
                
                -
                
                
                67,748Fair
                    value of employee stock options
                
                
                
                
                
                
                
                
                
                
                
                52,000
                
                
                
                
                
                52,000Fair
                    value of warrants issued for deferred finance charges
                
                
                
                
                
                
                
                163,640
                
                
                
                
                
                163,640Exercise
                    of warrants
                
                
                1,350,000
                
                
                1,350
                
                
                -
                
                
                12,150
                
                
                -
                
                
                13,500Net
                    loss for the three months ended March 31, 2006
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (346,023
                )
                
                (346,023
                )Balance
                    at March 31, 2006 (Unaudited)
                
                
                64,940,506
                
                $
                64,940
                
                $
                -
                
                $
                6,587,985
                
                $
                (6,796,454
                )
                $
                (143,529
                )
 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
        Three Months Ended March
        31,
        2006 and
        2005
 And
        for
        the Period November 10, 1999 (Date of Inception) to March
        31,
        2006
 (UNAUDITED)
 Three
                    Months
                
                Three
                    MonthsCumulative
                
                Ended
                
                EndedSince
                
                March
                    31,
                
                March
                    31,Inception
                
                2006
                
                2005CASH
                    FLOWS FROM OPERATING ACTIVITIESNet
                    loss
                
                $
                (6,796,454
                )
                $
                (346,023
                )
                $
                (273,825
                )Adjustments
                    to
                    reconcile net loss to net cash used in operating
                    activitiesFair
                    value of options issued in exchange for services
                
                
                1,581,009
                
                
                119,748
                
                
                55,000Amortization
                    of deferred finance charges
                
                
                20,500
                
                
                20,500Salary
                    due to stockholder contributed to capital
                
                
                15,000
                
                
                -
                
                
                -Amortization
                    and depreciation
                
                
                438,095
                
                
                3,528
                
                
                2,678Gain
                    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
                
                
                (7,749
                )
                
                14,029
                
                
                (8,352
                )Inventory
                
                
                (54,127
                )
                
                4,693
                
                
                (20,342
                )Increase
                    (decrease) in liabilitiesAccounts
                    payable and accrued expenses
                
                
                242,990
                
                
                (90,297
                )
                
                (8,385
                )Deferred
                    revenue
                
                
                -
                
                
                -
                
                
                (3,750
                )Net
                    cash used in operating activities
                
                
                (4,353,428
                )
                
                (273,822
                )
                
                (256,976
                )CASH
                    FLOWS FROM INVESTING ACTIVITIESPurchase
                    of
                    property and equipment
                
                
                (35,749
                )
                
                -
                
                
                (3,223
                )Purchase
                    of
                    intangibles
                
                
                (20,000
                )
                
                -
                
                
                -Purchase
                    of
                    patent costs
                
                
                (149,824
                )
                
                (1,400
                )
                
                (8,720
                )Proceeds
                    from
                    sale of assets
                
                
                6,738
                
                
                -
                
                
                -Net
                    cash used in investing activities
                
                
                (198,835
                )
                
                (1,400
                )
                
                (11,943
                )CASH
                    FLOWS FROM FINANCING ACTIVITIESProceeds
                    from
                    issuance of common stock
                
                
                4,091,447
                
                
                -
                
                
                -Proceeds
                    from
                    exercise of stock options
                
                
                232,059
                
                
                -
                
                
                -Proceeds
                    from
                    issuance of stock options
                
                
                15,000
                
                
                -
                
                
                -Proceeds
                    from
                    exercise of warrants
                
                
                13,500
                
                
                13,500
                
                
                -Proceeds
                    from
                    short-term borrowings
                
                
                530,000
                
                
                480,000
                
                
                -Stock
                    issuance costs
                
                
                (104,760
                )
                
                -
                
                
                -Net
                    cash provided by financing activities
                
                
                4,777,246
                
                
                493,500
                
                
                -NET
                    DECREASE IN CASH ANDCASH
                    EQUIVALENTS
                
                
                224,983
                
                
                218,278
                
                
                (268,919
                )CASH
                    AND CASH EQUIVALENTS - BEGINNING OF PERIOD
                
                
                -
                
                
                6,705
                
                
                676,593CASH
                    AND CASH EQUIVALENTS - END OF PERIOD
                
                $
                224,983
                
                $
                224,983
                
                $
                407,674
 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
        Three Months Ended March
        31,
        2006 and
        2005
 And
        for
        the Period November 10, 1999 (Date of Inception) to March
        31,
        2006
 (UNAUDITED)
 
 
 Three
                  Months
              
              Three
                  MonthsCumulative
              
              Ended
              
              EndedSince
              
              March
                  31,
              
              March
                  31,Inception
              
              2006
              
              2005SUPPLEMENTAL
                  DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:Cash
                  paid during the year for:Interest
              
              $
              29,270
              
              $
              -
              
              $
              -Income
                  taxes
              
              $
              -
              
              $
              -
              
              $
              -Return
                  of shares of common stock related to purchase
                  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
              
              $
              163,640
              
              $
              163,640
              
              $
              -
 
 The
        accompanying notes are an integral part of these consolidated financial
        statements.
  7
  
 LaserLock
        Technologies, Inc. and
        Subsidiaries
 (A
        Development Stage Company)
 Notes
        to
        Consolidated Financial Statements
 (Unaudited)
 
 **NOTE
        1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 ***Basis
        of Presentations***
 
 The
        accompanying unaudited financial statements have been prepared in accordance
        with U.S. generally accepted accounting principles for interim financial
        information and with the instructions for Form 10-QSB and item 310(b) of
        Regulation S-B. Accordingly, they do not include all of the information and
        footnotes required by generally accepted accounting principles for complete
        financial statements. In the opinion of management, all adjustments (consisting
        of normal recurring accruals) considered necessary for a fair presentation
        have
        been included. Operating results for the three months ended March 31, 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 March
        31,
        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 three months ended March 31, 2006, additional capitalized patent costs
        incurred amounted to $1,400. Amortization expense for patents was $2,303
        for the
        three months ended March 31, 2006 and $1,368 for the three months ended March
        31, 2005.
 
 **NOTE
        4 - INCOME TAXES**
 
 There
        is
        no income tax benefit for the losses for the three months ended March 31,
        2006
        and 2005, since management has determined that the realization of the net
        deferred tax asset is not assured and has created a valuation allowance for
        the
        entire amount of such benefits.
  8
  
 LaserLock
        Technologies, Inc. and
        Subsidiaries
 (A
        Development Stage Company)
 Notes
        to
        Consolidated Financial Statements
 (Unaudited)
 
 
 **NOTE
        5 - STOCK OPTIONS**
 
 In
        March
        2006, in conjunction with a consulting contract, the Company granted options
        to
        purchase 1,200,000 shares of common stock at an exercise price of $0.0001
        per
        share, expiring two days after they become vested. The options vest 200,000
        at
        April 30, 2006 and 100,000 each month thereafter from May 31, 2006 through
        February 2007. In accordance with the fair value method as described in
        accounting requirements of SFAS No. 123(R), the Company recognized consulting
        expenses of $9,000 and $0 for the three months ended March 31, 2006 and 2005.
        The 1,200,000 options were fully exercised in April 2006, with 200,000 shares
        issued and with the remaining 1 million shares held in escrow until the vesting
        requirements are met.
 
 **NOTE
        6 - STOCK BASED COMPENSATION**
 
 In
        December 2004, the Financial Accounting Standards Board (“FASB”) issued
        Statement of Financial Accounting Standard SFAS 123 (revised 2004), *Share-Based
        Payment* (“SFAS
        123R”). SFAS 123(R) supersedes APB Opinion No. 25, *Accounting
        for Stock Issued to Employees* ,
        and
        amends SFAS No. 95, *Statement
        of Cash Flows* .
        Generally, the approach in SFAS 123(R) is similar to the approach described
        in
        SFAS 123. However, SFAS 123(R) requires share-based payments to employees,
        including grants of employee stock options, to be recognized in the income
        statement based on their fair values at the date of grant. Pro forma disclosure
        is no longer an alternative.
 
 On
        January 1, 2006, the Company adopted SFAS 123(R) using the modified prospective
        method as permitted under SFAS 123(R). Under this transition method,
        compensation cost recognized in the first quarter of 2006 includes compensation
        cost for all share-based payments granted prior to but not yet vested as
        of
        December 31, 2005, based on the grant-date fair value estimated in accordance
        with the provisions of SFAS 123. In accordance with the modified prospective
        method of adoption, the Company’s results of operations and financial position
        for prior periods have not been restated.
 
 The
        Company uses the Black-Scholes option pricing model to calculate the grant-date
        fair value of an award, with the following assumptions: no dividend yield,
        expected volatility of 60%, risk-free interest rate between 3.6% and 4.5%
        and
        expected option life of five to ten years.
 
 During
        the quarter ended March 31, 2006, the Company’s net income was approximately
        $52,000 lower as a result of stock-based compensation expense as a result
        of the
        adoption of SFAS 123(R). As of March 31, 2006, there was approximately $150,000
        of unrecognized compensation expense related to non-vested market-based share
        awards that is expected to be recognized through November 2007.
 
 Prior
        to
        December 31, 2005, the Company followed the provisions of SFAS No. 123,
“ *Accounting
        for Stock-Based Compensation* ”.
        The
        provisions of SFAS No. 123 allowed companies to either expense the estimated
        fair value of stock options or to continue to follow the intrinsic value
        method
        set forth in Accounting Principles Board Opinion No. 25, “ *Accounting
        for Stock Issued to Employees* ”
(“APB
        25”), but disclose the pro forma effects on net income had the fair value of
        the
        options been expensed. The Company elected to apply APB 25 in accounting
        for its
        stock option incentive plans.
 
 In
        accordance with APB 25 and related interpretations, compensation expense
        for
        stock options was recognized in income based on the excess, if any, of the
        quoted market price of the stock at the grant date of the award or other
        measurement date over the amount an employee must pay to acquire the stock.
        Generally, the exercise price for stock options granted to employees was
        equal
        to the fair market value of the Company’s common stock at the date of grant,
        thereby resulting in no recognition of compensation expense by the Company
        prior
        to December 31, 2005.
  9
  LaserLock
        Technologies, Inc. and
        Subsidiaries
 (A
        Development Stage Company)
 Notes
        to
        Consolidated Financial Statements
 March
        31,
        2006 and
        2005
 
 
 **NOTE
        6 - STOCK BASED COMPENSATION (Continued)**
 
 
 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 EndedMarch
                  31, 2005Net
                  loss:As
                  reported
              
              $
              273,825Less:
                  Total stock-based employee compensation expensedetermined
                  under fair value based method for all awards
              
              
              38,200Pro
                  forma net loss
              
              
              312,025Net
                  loss per common share basic and diluted:As
                  reported
              
              $
              -Pro
                  forma
              
              $
              0.01
  The
        following tables summarize all stock option activity of the Company since
        December 31, 20005:
  Incentive
                  Stock Options OutstandingWeighted
                  AverageNumber
              
              Exercise
              
              Exerciseof
                  Shares
              
              Price
              
              PriceOutstanding,
                  December 31, 2005
              
              
              6,570,000
              
              $
              .03
                  to $.28
              
              $
              0.11Granted
              
              
              -
              
              
              -
              
              
              -Exercised
              
              
              -
              
              
              -
              
              
              -Canceled
              
              
              -
              
              
              -
              
              
              -Outstanding,
                  March 31, 2006
              
              
              6,570,000
              
              $
              .03
                  to $.28
              
              $
              0.11Exercisable,
                  March 31, 2006
              
              
              4,714,443
              
              $
              .03
                  to $.28
              
              $
              0.11
 
 10
  LaserLock
        Technologies, Inc. and
        Subsidiaries
 (A
        Development Stage Company)
 Notes
        to
        Consolidated Financial Statements
 March
        31,
        2006 and
        2005
 
 
 **NOTE
        6 - STOCK BASED COMPENSATION (Continued)**
  Non-Employee
                  Stock Options OutstandingWeighted
                  AverageNumber
              
              Exercise
              
              Exerciseof
                  Shares
              
              Price
              
              PriceOutstanding,
                  December 31, 2005
              
              
              11,251,294
              
              $
              .03
                  to $.40
              
              $
              0.12Granted
              
              
              -
              
              
              -
              
              
              -Exercised
              
              
              -
              
              
              -
              
              
              -Canceled
              
              
              (299,632
              )
              $
              .16
                  to $.35
              
              
              -Outstanding,
                  March 31, 2006
              
              
              10,951,662
              
              $
              .03
                  to $.40
              
              $
              0.09Exercisable,
                  March 31, 2006
              
              
              10,034,995
              
              $
              .03
                  to $.20
              
              $
              0.11
  **NOTE
        7 - RELATED PARTY TRANSACTIONS**
 
 The
        Company’s office is owned by its President and Chief Executive Officer. No
        formal lease agreement exists and no direct rent expense has been incurred.
        However, related occupancy costs of $3,468 and $2,842 were incurred during
        the
        three months ended March
        31,
        2006 and
        2005 .
 
 **NOTE
        8 - CONVERTIBLE NOTES PAYABLE**
 
 The
        Company commenced a private placement of up to $800,000 principal amount
        of 10%
        senior secured convertible promissory notes due twelve months from the date
        of
        issue to certain of our shareholders and other accredited investors. Purchasers
        of the notes will be issued 10-year warrants exercisable into 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
        Company has sold $480,000 principal amount of the notes and issued 4,800,000
        warrants as of March 31, 2006. In accordance with FAS 123(R), the Company
        recorded deferred finance charges in the amount of $163,640. The deferred
        finance charges are being amortized over one year, which is the term of the
        convertible notes. Previously, the Company reported, in February 2006, that
        $100,000 of additional notes were sold and an additional 1,000,000 warrants
        were
        issued. However, due to certain restrictions associated with the sale the
        Company deferred acceptance. As of March 31, 2006 the Company received $13,500
        for the exercise of 1,350,000 of the warrants.
  11
 
 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 three month
        period ended March 31, 2006 included herein and our audited financial statements
        and notes thereto for the year ended December 31, 2006 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 both third
        parties
        who incorporate it into their products for resale to their customers, and
        also
        directly to 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.
 Beginning
        in early 2003, we began to refocus our goals and alter our business plans.
        Initially, the plan was to primarily market anti-counterfeiting solutions
        to the
        gaming industry. In 2003, we restructured our management team and refocused
        our
        short and long-term goals.
 
 We
        offer
        security solutions to the gaming industry through third parties. These third
        parties sell to the gaming industry various supplies and services. We have
        licensed to these companies our technology receiving royalty payments, and
        selling to the same companies inks and pigments that are used to detect
        counterfeit products and documents. The third parties incorporate our technology
        into the products they sell to the gaming industry. 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. In addition, we supply technology for the protection of slot tickets
        from fraud.
 
 We
        have
        also 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, we do not anticipate pursuing any future sales.
 
 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. During each option period
        Enigma
        will pay us a fee and purchase product to be used in testing and development
        of
        the products. At the end of the option period Enigma has 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.
  12
  
 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 and February 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 currently expires 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. We, whenever possible will use licenses and strategic partners
        that
        currently service those industries who will pay royalties and/or a share
        of the
        revenues/profits from their use of our technology.
 
 We
        recently 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 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.
 
 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 up to $700,000 and warrants
        exercisable into up to 7,000,000 shares may be issued by LaserLock in the
        offering after February 13, 2006. As of May 5, 2006, we sold an aggregate
        of
        $480,000 in notes and issued 4,800,000 in warrants, including Nob Hill Capital
        Partners, L.P. Previously the Company reported the $100,000 of additional
        notes
        were sold and an additional 1,000,000 warrants were issued. However, due
        to
        certain restrictions associated with the sale the Company deferred acceptance.
        As of March 31, 2006 the Company received $13,500 for the exercise of 1,350,000
        of the warrants.
  13
  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.
 
 **Comparison
        of the Three Month Period Ended March 31, 2006 and March 31,
        2005.**
 
 **Results
        of Operations**
 
 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 near future due to
        our
        attempts to cultivate business relationships over the past year.
 
 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 March 31, 2006, we had sales and royalties revenues of
        $27,634 as compared to $63,709 for the three months ending March 31, 2005.
        The
        decrease results primarily from lower sales and royalty fees from the use
        of our
        casino chip security systems. Casinos purchase chips from our licensee when
        they
        open and these chips can be used for several years before they are replaced.
        Casinos also periodically replace or upgrade their chips. During the current
        period there were no new casinos that placed initial orders for chips. During
        the 2005 period we received royalties from Enigma during a development process
        for Brazil. During the current period no royalties for Brazil were
        received.
 
 Our
        research and development costs aggregated approximately $18,166 for the three
        months ended March 31, 2006 as compared to $61,396 for the three months ended
        March 31, 2005, a decrease of $43,230. This decrease is substantially the
        result
        a lower cost of products sold in 2006 due to lower sales.
 Our
        patent costs were $546 for the three months ended March 31, 2006. There was
        no
        expense for the same period in 2005. This expense is the cost for maintaining
        the patents that have been issued to the company.
 
 Our
        legal
        and accounting costs aggregated approximately $27,478 for the three months
        ended
        March 31, 2006 as compared to $19,782 for the three months ended March 31,
        2005,
        an increase of $7,696. This increase relates primarily to higher costs incurred
        for outside legal counsel in connection with current projects.
 
 Our
        sales
        and marketing costs aggregated $231,403 for the three months ended March
        31,
        2006 as compared to $177,336 for the three months ended March 31, 2005 an
        increase of $54,067. This increase results from increases in the expense
        of
        marketing-related non-employee stock options of $13,967 and $40,000 for employee
        stock options.
 
 Our
        general and administrative costs aggregated $70,721 for the three months
        ended
        March 31, 2006 as compared to $81,448 for the three months ended March 31,
        2005,
        a decrease of $10,727. The decrease results from lower costs for insurance
        and
        other general and administrative expenses.
 
 Our
        interest expense for the three months ended March 31, 2006 was $26,512. This
        expense includes interest on the $480,000 in 10% one year notes sold beginning
        in February 2006 in the amount of $6,000 and $20,500 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 March 31, 2006 was $346,023 or $0.01 per
        share.
        This compares to a net loss of $273,825 or $0.00 for the same period in 2005,
        an
        increase in the net loss of $72,198. Included in the net loss for the 2006
        period was $119,748 that represented the fair value of stock options issued
        compared to $55,000 for the 2005 period, an increase of
        $64,748.
  14
  **Liquidity
        and Capital Resources**
 
 Our
        cash
        balance at March 31, 2006 of $224,983 was $218,278 more than the $6,705 as
        of
        December 31, 2005. This increase is the result of the sale of $480,000 in
        one
        year notes reduced by the cash portion of our net loss for the
        period.
 
 Working
        capital at March 31, 2006 was a negative $292,991 as compared to a negative
        $245,984 at December 31, 2005, a decrease in working capital of $47,007 from
        December 31, 2005. This decrease in working capital relates principally to
        the
        issuance of the convertible notes and payments of accounts payable and accrued
        expenses for the three months ended March 31, 2006.
 
 Our
        cash
        flow from operations, since inception, has been and continues to be negative.
        We
        continue to attempt to solicit customers and expect to continue to expend
        funds
        in excess of our revenues during the balance of the current year.
 
 Future
        capital requirements and the adequacy of available funds will depend on numerous
        factors, including the successful commercialization of our existing products,
        cost of filing, prosecuting, defending and enforcing any current and future
        patent claims and other intellectual property rights, competing technological
        and 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, if necessary,
        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.
 
 We
        recently commenced a private placement of up to $800,000 principal amount
        of 10%
        senior secured convertible promissory notes due twelve months from the date
        of
        issue to certain of our shareholders and other accredited investors. Purchasers
        of notes will be issued 10-year warrants exercisable into LaserLock’s shares at
        an exercise price of $0.01 per share. In addition, if an equity financing
        with
        total proceeds of more than $5,000,000 occurs while any notes are outstanding,
        holders of notes will have the right, at their option, to convert the
        outstanding principal and interest of the notes into shares at a discount
        of 30%
        of the price per share in the qualified financing. The notes are secured
        by a
        first priority lien on all of LaserLock’s tangible and intangible personal
        property. The private placement will rely upon applicable exemptions from
        registration under Section 4(2) of the Securities Exchange Act of 1934, as
        amended, and Section 506 of Regulation D promulgated thereunder. As of May
        5,
        2006, we sold an aggregate of $480,000 in notes and issued 4,800,000 in
        warrants. During the three months ended March 31, 2006 the Company received
        $13,500 from the exercise of 1,350,000 of the warrants.
 
 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.
 
 Our
        actual research and development and related activities may vary significantly
        from current plans depending on numerous factors, including changes in the
        costs
        of such activities from current estimates, the results of our research and
        development programs, the results of clinical studies, the timing of regulatory
        submissions, technological advances, determinations as to commercial potential,
        the status of competitive products and the availability of sufficient funds
        to
        achieve our goals. We expect to expend between $25,000 and $75,000 in cash
        on
        our research and development program for fiscal 2006. This amount does not
        include any provision for research and development activities as a result
        of the
        acquisition of Exaqt. Our research and development plans over the next year
        include the application of our product to additional materials, as well as
        improving our existing products in conjunction with client feedback and the
        commercialization of new products. The focus and direction of our operations
        also will be dependent upon the establishment of collaborative arrangements
        with
        other companies.
  15
  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.
 
  16
  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.
  17
  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
 
 We
        recently 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 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 May
        5,
        2006, we sold an aggregate of $480,000 in notes and issued 4,800,000 in
        warrants. During the three months ended March 31, 2006 the Company received
        $13,500 from the exercise of 1,350,000 of the warrants.
 
 Item
        6.
        Exhibits
 
 3.1  Amended
        and Restated Articles of Incorporation of the Company dated December 17,
        2003
        (filed with the Company's Annual Report on Form 10-KSB on March 30, 2004
        and
        incorporated herein by reference).
 
 3.2  Amended
        and Restated Bylaws of the Company dated December 17, 2003 (filed with the
        Company's Annual Report on Form 10-KSB on March 30, 2004 and incorporated
        herein
        by reference).
 
 10.1  Regulation
        S Stock Purchase Agreement, dated March 10, 2004, by and between the Company
        and
        California Securities, S.A. (filed with the Company's Quarterly Report on
        Form
        10-QSB on May 17, 2004 and incorporated herein by reference).
 
 10.2  Senior
        Secured Convertible Note and Warrant Purchase Agreement, dated February 13,
        2006, among the Company and Nob Hill Capital Partners, L.P. (Filed on the
        Company’s Form 8-K on February 17, 2006 and incorporated herein by
        reference).
 
 10.3  Schedule
        of Purchasers who have entered into the Senior Secured Convertible Note and
        Warrant Purchase Agreement filed on Form 8-K on February 17, 2006 and
        incorporated herein by reference (filed on the Company’s Form 10-KSB on March
        31, 2006 and incorporated herein by reference).
 
 10.4  Senior
        Secured Convertible Promissory Note, dated February 17, 2006, by the Company
        in
        favor of Nob Hill Capital Partners, L.P. in the amount of $100,000 (Filed
        on
        Form 8-K on February 17, 2006 and incorporated herein by
        reference).
 
 10.5  Schedule
        of Payees who have entered into a senior secured convertible promissory note
        substantially identical to the Senior Secured Convertible Promissory Note
        filed
        on Form 8-K on February 17, 2006 and incorporated herein by reference (filed
        on
        the Company’s Form 10-KSB on March 31, 2006 and incorporated herein by
        reference).
 
 10.6  Warrant,
        issued by the Company in favor of Nob Hill Capital Partners, L.P., dated
        February 13, 2006 (Filed on Form 8-K on February 17, 2006 and incorporated
        herein by reference).
 
 10.7  Schedule
        of Holders to whom the Company has issued a warrant substantially identical
        to
        the Warrant filed on Form 8-K on February 17, 2006 and incorporated herein
        by
        reference (filed on the Company’s Form 10-KSB on March 31, 2006 and incorporated
        herein by reference).
  18
  10.8  Security
        Agreement, dated February 13, 2006, by and between the Company and Nob Hill
        Capital Partners, L.P. (Filed on Form 8-K on February 17, 2006 and incorporated
        herein by reference).
 
 10.9  Schedule
        of Secured Parties who have entered into a security agreement substantially
        identical to the Security Agreement filed on Form 8-K on February 17, 2006
        and
        incorporated herein by reference (filed on the Company’s Form 10-KSB on March
        31, 2006 and incorporated herein by reference).
 
 10.10  Grant
        of
        3,000,000 shares of the Company to Norman A. Gardner on January 3, 2006 in
        consideration for services provided to the Company (Filed on Form 8-K on
        January
        18, 2006 and incorporated herein by reference).
 
 10.11  Non-binding
        letter of intent, entered into on January 10, 2006, pursuant to which the
        Company will acquire a minimum of 95% of the shares of ExaqtWorld S.A.R.L.
        (Filed on Form 8-K on January 11, 2006 and incorporated herein by
        reference).
 
 31.1  Certification
        of Chief Executive Officer and principal financial officer pursuant to Section
        302 of the Sarbanes-Oxley Act of 2002.*
 
 32.1  Certification
        of Chief Executive Officer and principal financial officer pursuant to Section
        906 of the Sarbanes-Oxley Act of 2002.*
 
 99.1  LaserLock
        Technologies, Inc. 2003 Stock Option Plan adopted on December 19, 2003 (filed
        with the Company's Annual Report on Form 10-KSB on March 30, 2004 and
        incorporated herein by reference).
 
 ----------------------------------------------
 *  The
        same
        individual serves as the Company's Chief Executive Officer and principal
        financial officer.
  19
  
 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:
        May
        15, 2006  By:  /s/Norman
        Gardner _______________________
 Norman Gardner
 President and CEO
  20