**U.S.      Securities and Exchange Commission**
** **

**FORM      10-QSB**

**For      the Transition Period From ____________________ to      _________________**
** **

*Commission      File number 0-024828*
* *

**SENSOR      SYSTEM SOLUTIONS, INC.**
** **

| NEVADA                                                                                 | 98-0204898                                       |
|---------------------------------------------------------------------------------------------|--------------------------------------------------|
| (State                or other jurisdiction ofincorporation                or organization) | (IRS                Employer Identification No.) |

**Transitional      Small Business Disclosure Format**
** **

----

**INDEX**
** **

| PART                  I. FINANCIAL INFORMATION                                                          |   |   |   |   |
|---------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
|                                                                                                    |   |   |   |   |
| Item                  1. Condensed Consolidated Financial Statements:                  (unaudited)      |   |   |   |   |
|                                                                                                    |   |   |   |   |
| Condensed                  Consolidated Balance Sheets as of June 30, 2006                  (unaudited) |   |   |   |   |
| and                  December 31, 2005.                                                                 |   |   | 1      |   |
|                                                                                                    |   |   |   |   |
| Condensed                  Consolidated Statements of Operations for the three and six             |   |   |   |   |
| months                  ended June 30, 2006 and 2005 (unaudited)                                        |   |   | 2      |   |
|                                                                                                    |   |   |   |   |
| Condensed                  Consolidated Statement of Changes in Stockholders'                           |   |   |   |   |
| Deficiency                  for the six months ended March 31, 2006 (unaudited)                         |   |   | 3      |   |
|                                                                                                    |   |   |   |   |
| Condensed                  Consolidated Statements of Cash Flows for the six months                     |   |   |   |   |
| ended                  June 30, 2006 and 2005 (unaudited)                                               |   |   | 4      |   |
|                                                                                                    |   |   |   |   |
| Notes                  to Condensed Consolidated Financial Statements (unaudited)                       |   |   | 5-11   |   |
|                                                                                                    |   |   |   |   |
| Item                  2. Management's Discussion and Analysis or Plan of                  Operations    |   |   | 12-18  |   |
|                                                                                                    |   |   |   |   |
| Item                  3. Controls and Procedures                                                        |   |   | 18     |   |
|                                                                                                    |   |   |   |   |
| PART                  II. OTHER INFORMATION                                                             |   |   |   |   |
|                                                                                                    |   |   |   |   |
| Item                  1. Legal Proceedings                                                              |   |   | 19     |   |
|                                                                                                    |   |   |   |   |
| Item                  2. Changes in Securities and Small Business Issuer Purchases                  of  |   |   |   |   |
| Equity                  Securities                                                                      |   |   | 19     |   |
|                                                                                                    |   |   |   |   |
| Item                  3. Defaults Upon Senior Securities                                                |   |   | 19     |   |
|                                                                                                    |   |   |   |   |
| Item                  4. Submission of Matters to a Vote of Security Holders                            |   |   | 19     |   |
|                                                                                                    |   |   |   |   |
| Item                  5. Other Information                                                              |   |   | 19     |   |
|                                                                                                    |   |   |   |   |
| Item                  6. Exhibits                                                                       |   |   | 19     |   |
|                                                                                                    |   |   |   |   |
| SIGNATURES                                                                                              |   |   | 20     |   |

----

**PART      I**

**FINANCIAL      INFORMATION **

**Item      1. Financial Statements.**** **

**SENSOR      SYSTEM SOLUTIONS, INC. AND SUBSIDIARY**** **

**CONDENSED      CONSOLIDATED BALANCE SHEETS **

|                                                                                                               |   |   | June                  30, 2006 |   |   | December                  31, |   |
|--------------------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------|--------|--------|-------------------------------|--------|
|                                                                                                               |   |   | (Unaudited)                    |   |   | 2005                          |   |
|                                                                                                               |   |   |                           |   |   |                          |   |
| ASSETS                                                                                                             |   |   |                           |   |   |                          |   |
| CURRENT                  ASSETS                                                                                    |   |   |                           |   |   |                          |   |
| Cash                                                                                                               |   | $      | 11,534                         |   | $      | 172,732                       |   |
| Accounts                  receivable                                                                               |   |   | 137,824                        |   |   | 228,750                       |   |
| Accounts                  receivable, related party                                                                |   |   | 51,565                         |   |   | 1,690                         |   |
| Inventory                                                                                                          |   |   | 304,956                        |   |   | 302,171                       |   |
| Prepaids                  and other current assets                                                                 |   |   | 5,197                          |   |   | 46,634                        |   |
|                                                                                                               |   |   |                           |   |   |                          |   |
| Total                  current assets                                                                              |   |   | 511,076                        |   |   | 751,977                       |   |
| Property                  and equipment, net                                                                       |   |   | 134,768                        |   |   | 233,862                       |   |
| Other                  assets                                                                                      |   |   | 104,112                        |   |   | 104,112                       |   |
|                                                                                                               |   |   |                           |   |   |                          |   |
| Total                  assets                                                                                      |   | $      | 749,956                        |   | $      | 1,089,951                     |   |
|                                                                                                               |   |   |                           |   |   |                          |   |
| LIABILITIES                  AND STOCKHOLDERS' DEFICIENCY                                                          |   |   |                           |   |   |                          |   |
| CURRENT                  LIABILITIES                                                                               |   |   |                           |   |   |                          |   |
| Accounts                  payable and accrued expenses                                                             |   | $      | 1,366,756                      |   | $      | 1,283,825                     |   |
| Accounts                  payable, related party                                                                   |   |   | 157,565                        |   |   | 29,309                        |   |
| Notes                  payable                                                                                     |   |   | 1,362,224                      |   |   | 1,060,171                     |   |
| Notes                  payable, related parties                                                                    |   |   | 322,265                        |   |   | 368,565                       |   |
| Current                  portion of capital lease obligations                                                      |   |   | 9,458                          |   |   | 8,877                         |   |
| Current                  portion of deferred rent concession                                                       |   |   | 6,000                          |   |   | 6,000                         |   |
|                                                                                                               |   |   |                           |   |   |                          |   |
| Total                  current liabilities                                                                         |   |   | 3,224,268                      |   |   | 2,756,747                     |   |
|                                                                                                               |   |   |                           |   |   |                          |   |
|                                                                                                               |   |   |                           |   |   |                          |   |
| LONG-TERM                  LIABILITIES                                                                             |   |   |                           |   |   |                          |   |
| Non-current                  portion of notes payable                                                              |   |   | 23,320                         |   |   | --                            |   |
| Capital                  lease obligations, net of current portion                                                 |   |   | 20,443                         |   |   | 25,322                        |   |
| Deferred                  rent concession, net of current portion                                                  |   |   | 772                            |   |   | 3,772                         |   |
|                                                                                                               |   |   |                           |   |   |                          |   |
|                                                                                                               |   |   | 44,535                         |   |   | 29,094                        |   |
|                                                                                                               |   |   |                           |   |   |                          |   |
| Commitments                  and contingencies                                                                |   |   |                           |   |   |                          |   |
|                                                                                                               |   |   |                           |   |   |                          |   |
| STOCKHOLDERS'                  DEFICIENCY                                                                          |   |   |                           |   |   |                          |   |
| Preferred                  stock, $.001 par value, 20,000,000 shares authorized, none                  outstanding |   |   | --                             |   |   | --                            |   |
| Common                  stock, $.001 par value, 180,000,000 shares authorized,                                     |   |   |                           |   |   |                          |   |
| 76,737,737                  and 61,705,019 shares issued and outstanding                                           |   |   | 76,738                         |   |   | 61,705                        |   |
| Common                  stock to be issued (none and 14,479,093 shares)                                            |   |   | --                             |   |   | 550,000                       |   |
| Additional                  paid-in capital                                                                        |   |   | 16,265,876                     |   |   | 15,456,834                    |   |
| Deferred                  compensation                                                                             |   |   | --                             |   |   | (26,598                       | )      |
| Accumulated                  deficit                                                                               |   |   | (18,861,461                    | )      |   | (17,737,831                   | )      |
|                                                                                                               |   |   |                           |   |   |                          |   |
| Total                  stockholders' deficiency                                                                    |   |   | (2,518,847                     | )      |   | (1,695,890                    | )      |
|                                                                                                               |   |   |                           |   |   |                          |   |
| Total                  liabilities and stockholders' deficiency                                                    |   | $      | 749,956                        |   | $      | 1,089,951                     |   |

----

**SENSOR      SYSTEM SOLUTIONS, INC. AND SUBSIDIARY**

**CONDENSED      CONSOLIDATED STATEMENTS OF OPERATIONS **

|                                                        |   |   | For                  the three months ended June                  30, |   |   | For                  the six months ended June                  30, |   |
|-------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------|--------|
|                                                        |   |   | 2006                                                                  |   |   | 2005                                                                |   |   | 2006 |   |   | 2005 |   |
|                                                        |   |   |                                                                  |   |   |                                                                |   |   |   |   |   |   |   |
| Sales,                  net                                 |   | $      | 287,162                                                               |   | $      | 303,256                                                             |   | $ | 817,260 |   | $ | 508,271 |   |
|                                                        |   |   |                                                                  |   |   |                                                                |   |   |   |   |   |   |   |
| Cost                  of goods sold                         |   |   | 154,380                                                               |   |   | 226,570                                                             |   |   | 487,373 |   |   | 373,844 |   |
|                                                        |   |   |                                                                  |   |   |                                                                |   |   |   |   |   |   |   |
| Gross                  profit                               |   |   | 132,782                                                               |   |   | 76,686                                                              |   |   | 329,887 |   |   | 134,427 |   |
|                                                        |   |   |                                                                  |   |   |                                                                |   |   |   |   |   |   |   |
| Operating                  expenses                         |   |   | 542,169                                                               |   |   | 433,693                                                             |   |   | 1,086,986 |   |   | 764,249 |   |
|                                                        |   |   |                                                                  |   |   |                                                                |   |   |   |   |   |   |   |
| Amortization                  of discount on notes payable  |   |   | 135,638                                                               |   |   | 36,339                                                              |   |   | 268,086 |   |   | 191,460 |   |
|                                                        |   |   |                                                                  |   |   |                                                                |   |   |   |   |   |   |   |
| Stock-based                  compensation costs             |   |   | 55,321                                                                |   |   | --                                                                  |   |   | 115,350 |   |   | -- |   |
|                                                        |   |   |                                                                  |   |   |                                                                |   |   |   |   |   |   |   |
| Total                  expenses                             |   |   | 733,128                                                               |   |   | 470,032                                                             |   |   | 1,470,422 |   |   | 955,460 |   |
|                                                        |   |   |                                                                  |   |   |                                                                |   |   |   |   |   |   |   |
| Gain                  on sale of equipment to related party |   |   | --                                                                    |   |   | --                                                                  |   |   | 16,905 |   |   | -- |   |
|                                                        |   |   |                                                                  |   |   |                                                                |   |   |   |   |   |   |   |
| Net                  loss                                   |   | $      | (600,346                                                              | )      | $      | (393,346                                                            | )      | $ | (1,123,630 | ) | $ | (821,282 | ) |
|                                                        |   |   |                                                                  |   |   |                                                                |   |   |   |   |   |   |   |
| Loss                  per common share, basic and diluted   |   | $      | (.01                                                                  | )      | $      | (.01                                                                | )      | $ | (.02 | ) | $ | (.01 | ) |
|                                                        |   |   |                                                                  |   |   |                                                                |   |   |   |   |   |   |   |
| Weighted                  average shares outstanding,       |   |   |                                                                  |   |   |                                                                |   |   |   |   |   |   |   |
| basic                  and diluted                          |   |   | 76,478,851                                                            |   |   | 59,279,241                                                          |   |   | 71,353,572 |   |   | 59,279,241 |   |

----

**SENSOR        SYSTEM SOLUTIONS, INC. AND SUBSIDIARY**

**CONDENSED        CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY**

|                                                                                                       |   |   | Common                  Stock |   |   |   | Common                  Stock to be issued |   |   |   |        |   |   |   |     |   |   |   |                                          |   |   |   |                                           |   |
|------------------------------------------------------------------------------------------------------------|--------|--------|-------------------------------|--------|--------|--------|--------------------------------------------|--------|--------|--------|-------------|--------|--------|--------|----------|--------|--------|--------|-----------------------------------------------|--------|--------|--------|------------------------------------------------|--------|
|                                                                                                       |   |   | Shares                        |   |   |   | Amount                                     |   |   |   | Shares      |   |   |   | Amount   |   |   |   | Additional                    paid-in capital |   |   |   | Deferred                    compensation  |   |   |   | Accumulated                    deficit |   |   |   | Total |   |
|                                                                                                       |   |   |                          |   |   |   |                                       |   |   |   |        |   |   |   |     |   |   |   |                                          |   |   |   |                                           |   |   |   |   |   |   |   |   |   |
| Balance                  January 1, 2006                                                                   |   |   | 61,705,019                    |   |   | $      | 61,705                                     |   |   |   | 14,479,093  |   |   | $      | 550,000  |   |   | $      | 15,456,834                                    |   |   | $      | (26,598                                        | )      |   | $ | (17,737,831 | ) |   | $ | (1,695,890 | ) |
|                                                                                                       |   |   |                          |   |   |   |                                       |   |   |   |        |   |   |   |     |   |   |   |                                          |   |   |   |                                           |   |   |   |   |   |   |   |   |   |
| Cancellation                    of stock                  options                                     |   |   | --                            |   |   |   | --                                         |   |   |   | --          |   |   |   | --       |   |   |   | (26,598                                       | )      |   |   | 26,598                                         |   |   |   | -- |   |   |   | -- |   |
|                                                                                                       |   |   |                          |   |   |   |                                       |   |   |   |        |   |   |   |     |   |   |   |                                          |   |   |   |                                           |   |   |   |   |   |   |   |   |   |
| Stock                  option expense                                                                      |   |   | --                            |   |   |   | --                                         |   |   |   | --          |   |   |   | --       |   |   |   | 70,442                                        |   |   |   | --                                             |   |   |   | -- |   |   |   | 70,442 |   |
|                                                                                                       |   |   |                          |   |   |   |                                       |   |   |   |        |   |   |   |     |   |   |   |                                          |   |   |   |                                           |   |   |   |   |   |   |   |   |   |
| Compensatory                    stock issued                                                               |   |   | 211,625                       |   |   |   | 212                                        |   |   |   | --          |   |   |   | --       |   |   |   | 44,696                                        |   |   |   | --                                             |   |   |   | -- |   |   |   | 44,908 |   |
|                                                                                                       |   |   |                          |   |   |   |                                       |   |   |   |        |   |   |   |     |   |   |   |                                          |   |   |   |                                           |   |   |   |   |   |   |   |   |   |
| Warrants                    issued with notes payable                                                      |   |   | --                            |   |   |   | --                                         |   |   |   | --          |   |   |   | --       |   |   |   | 130,603                                       |   |   |   | --                                             |   |   |   | -- |   |   |   | 130,603 |   |
|                                                                                                       |   |   |                          |   |   |   |                                       |   |   |   |        |   |   |   |     |   |   |   |                                          |   |   |   |                                           |   |   |   |   |   |   |   |   |   |
| Stock                    issued for                    warrants exercised                    in prior year |   |   | 14,479,093                    |   |   |   | 14,479                                     |   |   |   | (14,479,093 | )      |   |   | (550,000 | )      |   |   | 535,521                                       |   |   |   | --                                             |   |   |   | -- |   |   |   | -- |   |
|                                                                                                       |   |   |                          |   |   |   |                                       |   |   |   |        |   |   |   |     |   |   |   |                                          |   |   |   |                                           |   |   |   |   |   |   |   |   |   |
| Stock                    issued for settlement of                    notes payable                         |   |   | 342,000                       |   |   |   | 342                                        |   |   |   | --          |   |   |   | --       |   |   |   | 54,378                                        |   |   |   | --                                             |   |   |   | -- |   |   |   | 54,720 |   |
|                                                                                                       |   |   |                          |   |   |   |                                       |   |   |   |        |   |   |   |     |   |   |   |                                          |   |   |   |                                           |   |   |   |   |   |   |   |   |   |
| Net                  loss                                                                   |   |   | --                            |   |   |   | --                                         |   |   |   | --          |   |   |   | --       |   |   |   | --                                            |   |   |   | --                                             |   |   |   | (1,123,630 | ) |   |   | (1,123,630 | ) |
|                                                                                                       |   |   |                          |   |   |   |                                       |   |   |   |        |   |   |   |     |   |   |   |                                          |   |   |   |                                           |   |   |   |   |   |   |   |   |   |
| Balance                  June 30, 2006                                                                     |   |   | 76,737,737                    |   |   | $      | 76,738                                     |   |   |   | --          |   |   | $      | --       |   |   | $      | 16,265,876                                    |   |   | $      | --                                             |   |   | $ | (18,861,461 | ) |   | $ | (2,518,847 | ) |

----

**SENSOR      SYSTEM SOLUTIONS, INC. AND SUBSIDIARY**

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS **

|                                                                                                          |   |   | 2006       |   |   |   | 2005      |   |
|---------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|-----------|--------|
|                                                                                                          |   |   |       |   |   |   |      |   |
| Cash                  flows from operating activities:                                                        |   |   |       |   |   |   |      |   |
| Net                  loss                                                                                     |   | $      | (1,123,630 | )      |   | $      | (821,282  | )      |
| Adjustments                  to reconcile net loss to net cash used in operating                  activities: |   |   |       |   |   |   |      |   |
| Stock-based                  compensation costs                                                               |   |   | 115,350    |   |   |   | --        |   |
| Depreciation                  and amortization                                                                |   |   | 36,799     |   |   |   | 51,832    |   |
| Amortization                  of discount on notes payable                                                    |   |   | 268,086    |   |   |   | 191,460   |   |
| Amortization                  of deferred compensation                                                        |   |   | --         |   |   |   | 23,884    |   |
| Gain                  on sale of property and equipment                                                       |   |   | (16,905    | )      |   |   | --        |   |
| Changes                  in operating assets and liabilities:                                                 |   |   |       |   |   |   |      |   |
| Accounts                  receivable                                                                          |   |   | 41,051     |   |   |   | (15,796   | )      |
| Inventory                                                                                                     |   |   | (2,785     | )      |   |   | (34,249   | )      |
| Prepaids                  and other current assets                                                            |   |   | 41,437     |   |   |   | 24,552    |   |
| Deferred                  rent                                                                                |   |   | (3,000     | )      |   |   | (3,000    | )      |
| Accounts                  payable and accrued expenses                                                        |   |   | 215,907    |   |   |   | 324,387   |   |
|                                                                                                          |   |   |       |   |   |   |      |   |
| Net                  Cash Used In Operating Activities                                                        |   |   | (427,690   | )      |   |   | (258,212  | )      |
|                                                                                                          |   |   |       |   |   |   |      |   |
| Cash                  flows from investing activities:                                                        |   |   |       |   |   |   |      |   |
| Proceeds                  from sale of property and equipment                                                 |   |   | 79,200     |   |   |   | --        |   |
|                                                                                                          |   |   |       |   |   |   |      |   |
| Cash                  flows from financing activities:                                                        |   |   |       |   |   |   |      |   |
| Proceeds                  from notes payable                                                                  |   |   | 200,000    |   |   |   | 250,000   |   |
| Principal                  payments on notes payable                                                          |   |   | (8,410     | )      |   |   | --        |   |
| Principal                  payments on capital leases                                                         |   |   | (4,298     | )      |   |   | (3,785    | )      |
|                                                                                                          |   |   |       |   |   |   |      |   |
| Net                  Cash Provided By Financing Activities                                                    |   |   | 187,292    |   |   |   | 246,215   |   |
|                                                                                                          |   |   |       |   |   |   |      |   |
| Net                  decrease in cash and cash equivalents                                                    |   |   | (161,198   | )      |   |   | (11,997   | )      |
|                                                                                                          |   |   |       |   |   |   |      |   |
| Cash                  and cash equivalents, beginning of period                                               |   |   | 172,732    |   |   |   | 17,115    |   |
|                                                                                                          |   |   |       |   |   |   |      |   |
| Cash                  and cash equivalents, end of period                                                     |   | $      | 11,534     |   |   | $      | 5,118     |   |
|                                                                                                          |   |   |       |   |   |   |      |   |
| Supplemental                  disclosure of cash flow information                                             |   |   |       |   |   |   |      |   |
| Cash                  paid for:                                                                               |   |   |       |   |   |   |      |   |
| Interest                                                                                                      |   | $      | 12,790     |   |   | $      | 9,914     |   |
|                                                                                                          |   |   |       |   |   |   |      |   |
| Taxes                                                                                                         |   | $      | --         |   |   | $      | 800       |   |
|                                                                                                          |   |   |       |   |   |   |      |   |
| Non-cash                  investing and financing activities:                                                 |   |   |       |   |   |   |      |   |
| Cancellations                  and forfeitures of stock options                                               |   | $      | 6,598      |   |   | $      | 99,000    |   |
| Compensatory                  stock issued                                                                    |   |   | --         |   |   |   | 1,800,000 |   |
| Warrants                  exercised by shareholders from merger                                               |   |   | --         |   |   |   | 47,802    |   |
| Accrued                  interest added to notes payable principal                                            |   |   | 4,720      |   |   |   | 51,012    |   |
| Discount                  related to warrants and convertible notes                                           |   |   | 130,603    |   |   |   | 160,714   |   |
| Conversion                  of notes payable                                                                  |   |   | 54,720     |   |   |   | 578,512   |   |

----

**SENSOR      SYSTEMS SOLUTIONS, INC. **

**CONDENSED      NOTES TO FINANCIAL STATEMENTS**

**FOR      THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED)**

----

**SENSOR      SYSTEMS SOLUTIONS, INC. **

**CONDENSED      NOTES TO FINANCIAL STATEMENTS **

**FOR      THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED)**

|                                              |   |   | Three                  months  |   |   | Six                  months    |   |
|---------------------------------------------------|--------|--------|--------------------------------|--------|--------|--------------------------------|--------|
|                                              |   |   | ended                          |   |   | ended                          |   |
|                                              |   |   | June                  30, 2006 |   |   | June                  30, 2006 |   |
|                                              |   |   |                           |   |   |                           |   |
| Dividend                  yield                   |   |   | 0                              | %      |   | 0                              | %      |
| Risk-free                  interest rate          |   |   | 4.9                            | %      |   | 4.9                            | %      |
| Expected                  volatility              |   |   | 230                            | %      |   | 212                            | %      |
| Expected                  life of options (years) |   |   | 6.0                            |   |   | 5.7                            |   |

|                                                           |   |   | Three                  months  |   |   | Six                  months    |   |
|----------------------------------------------------------------|--------|--------|--------------------------------|--------|--------|--------------------------------|--------|
|                                                           |   |   | ended                          |   |   | ended                          |   |
|                                                           |   |   | June                  30, 2005 |   |   | June                  30, 2005 |   |
|                                                           |   |   |                           |   |   |                           |   |
| Net                  loss                                      |   | $      | (393,346                       | )      | $      | (821,282                       | )      |
| Add:                  Stock-based expense included in net loss |   |   | 11,942                         |   |   | 23,884                         |   |
| Deduct:                  Fair value based stock-based expense  |   |   | (11,240                        | )      |   | (25,960                        | )      |
|                                                           |   |   |                           |   |   |                           |   |
| Pro                  forma net loss                            |   | $      | (392,644                       | )      | $      | (823,358                       | )      |
|                                                           |   |   |                           |   |   |                           |   |
| Basic                  and diluted earnings per share:         |   |   |                           |   |   |                           |   |
| As                  reported                                   |   | $      | (.01                           | )      | $      | (.01                           | )      |
|                                                           |   |   |                           |   |   |                           |   |
| Pro                  forma under SFAS No. 123                  |   | $      | (.01                           | )      | $      | (.01                           | )      |

----

**SENSOR      SYSTEMS SOLUTIONS, INC. **

**CONDENSED      NOTES TO FINANCIAL STATEMENTS **

**FOR      THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED)**

|                            |   |   | June                  30, 2006 |   |   | December                  31, |   |
|---------------------------------|--------|--------|--------------------------------|--------|--------|-------------------------------|--------|
|                            |   |   | (Unaudited)                    |   |   | 2005                          |   |
|                            |   |   |                           |   |   |                          |   |
| Raw                  materials  |   | $      | 148,403                        |   | $      | 204,748                       |   |
| Finished                  goods |   |   | 156,553                        |   |   | 97,423                        |   |
|                            |   | $      | 304,956                        |   | $      | 302,171                       |   |

----

**SENSOR      SYSTEMS SOLUTIONS, INC. **

**CONDENSED      NOTES TO FINANCIAL STATEMENTS **

**FOR      THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED)**

NOTE      3      NOTES PAYABLE 

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | June                    30, 2006(Unaudited) |   | December                  31,2005 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------|--------|-----------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                             |   |                              |
| Two                lines of credit, unsecured, interest payable monthly at 10.75% and                11.5%                per annum, due on demand.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | $91,245                                          |   | $92,983                           |
|  Note                payable, unsecured, converted to three-year note in 2006 with monthly                principal payments of $1,112 plus interest at 1% over prime (currently                a                total of 8.5%).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  33,328                                     |   |  40,000                      |
|  Note                payable, unsecured, interest payable monthly at 10% per annum, payable                as                a percentage of any future private or public stock                offerings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  90,000                                     |   |  90,000                      |
|  Four                notes payable, secured by all assets of the Company, interest at                8% per                annum, payable at various maturities through August 21, 2006. One                note for                $200,000 was due February 21, 2006 and was converted into a note                due                August 21, 2006. The other notes for $64,800, $32,400 and $47,707                were due                on April 18, 2006, April 20, 2006 and May 30, 2006, respectively.                The                Company is currently negotiating an extension of these notes. At                maturity,                the notes are convertible at the holder's option at a conversion                price                equal to 70% of the weighted average price of the common stock for                the 30                trading days immediately preceding the conversion date. In addition,                each                note has warrants attached that, once the note is converted into                stock,                allow the holder to purchase stock at 85% of the weighted average                price of                the common stock for the 30 trading days immediately preceding the                conversion date. The aggregate intrinsic value of the beneficial                conversion feature of these notes and warrants, valued at $329,679,                has                been recorded as loan discount costs and is being amortized over                the life                of the respective note as additional interest cost. |  346,907                                    |   |  346,907                     |
|  Note                payable, secured by all assets of the Company, interest at 10% per                annum,                payable on December 23, 2006. The note is convertible, with some                limitations, at the holder’s option at a conversion price equal to the                lesser of $0.35 or 90% of the lowest volume weighted average price                of the                common stock for the 15 trading days immediately preceding the conversion                date. In addition, the note has detachable warrants that allow the                holder                to buy 600,000 shares of common stock at $0.2878 per share and another                600,000 shares at $0.35 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  800,000                                    |   |  800,000                     |
|  Note                payable, secured by all assets of the Company, interest at 10% per                annum,                payable on February 14, 2007. The note is convertible, with some                limitations, at the holder’s option at a conversion price equal to the                lesser of $0.35 or 90% of the lowest volume weighted average price                of the                common stock for the 15 trading days immediately preceding the conversion                date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  200,000                                    |   |  --                          |
|  Less,                remaining debt discount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  (175,936)                                  |   |  (309,719)                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                             |   |                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 1,385,544                                        |   | 1,060,171                         |
| Less,                non-current portion of notes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | (23,320)                                         |   | --                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | $1,362,224                                       |   | $1,060,171                        |

----

**SENSOR      SYSTEMS SOLUTIONS, INC.**

**CONDENSED      NOTES TO FINANCIAL STATEMENTS **

**FOR      THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED)**

NOTE      4      NOTES PAYABLE, RELATED PARTIES 

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | June                30, 2006(Unaudited) |   | December                31,2005 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------|--------|---------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                         |   |                            |
| Note                payable to the sister of the Company's Chief Executive Officer, secured                by                all assets of the Company, interest at 14.25% per annum, due December                31,                2004. The note payable was originally issued by Advanced Custom Sensors,                Inc. (ACSI), which merged with the company in 2004. In connection                with the                note payable, ACSI issued warrants expiring September 17, 2008, to                purchase 190,665 shares of ACSI's common stock at $.50 per share                (The ACSI                warrant is convertible into 5,372,940 shares of the Company's stock).                The                intrinsic value of the warrant ($190,665) has been recorded as loan                discount costs and is being amortized over the life of the note as                additional interest cost. The Company is currently negotiating an                extension of this note.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | $190,665                                     |   | $190,665                        |
| Note                payable to the sister of the Company's Chief Executive Officer, secured                by                all assets of the Company, interest at 10.0% per annum, due March                15,                2005. The note payable was originally issued by ACSI in 2003, at                which                time ACSI issued a warrant expiring September 17, 2008, to purchase                100,000 shares of stock at $.50 per share (the ACSI warrant is convertible                into 2,817,215 shares of the Company's common stock). The intrinsic                value                of the original warrant ($100,000) was recorded as a loan discount                cost,                and was amortized over the life of the original note as additional                interest cost. The original note was due September 16, 2004. On September                16, 2004, a new note was issued to replace the original note. At                maturity,                the new note is convertible at the holder's option at a conversion                price                equal to 80% of the weighted average price of the common stock for                the 30                trading days immediately preceding the conversion date. In addition,                the                note has warrants attached that, once the note is converted into                stock,                allow the holder to purchase stock at 85% of the weighted average                price of                the common stock for the 30 trading days immediately preceding the                conversion date. The intrinsic value of the beneficial conversion                feature                of the note and warrants, valued at $48,125, has been recorded as                loan                discount costs and is being amortized over the life of the note as                additional interest cost. The Company is currently negotiating an                extension of this note. | 110,000                                      |   | 110,000                         |
| Note                payable to an employee of the Company, secured by all assets of the                Company, interest at 8.0%per annum, due May 30, 2006. At maturity,                the                note is convertible at the holder's option at a conversion price                equal to                70% of the weighted average price of the common stock for the 30                trading                days immediately preceding the conversion date. In addition, the                note has                warrants attached that, once the note is converted into stock, allow                the                holder to purchase stock at 85% of the weighted average price of                the                common stock for the 30 trading days immediately preceding the conversion                date. The intrinsic value of the beneficial conversion feature of                the note                and warrants, valued at $13,886, has been recorded as loan discount                costs                and is being amortized over the life of the note as additional interest                cost. The Company is currently negotiating an extension of this                note.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 21,600                                       |   | 21,600                          |
| Note                payable to shareholder, secured by all assets of the Company, interest                at                8.0% per annum at 8.0% per annum, due April 3, 2006. At maturity                the note                is convertible at the holder's option at a conversion price equal                to 70%                of the weighted average price of the common stock for the 30 trading                days                immediately preceding the conversion date. In addition, the note                has                warrants attached that, once the note is converted into stock, allow                the                holder to purchase stock at 85% of the weighted average price of                the                common stock for the 30 trading days immediately preceding the conversion                date. The intrinsic value of the beneficial conversion feature of                the note                and warrants, valued at $32,143, has been recorded as loan discount                costs                and is being amortized over the life of the note as additional interest                cost. This note and accrued interest of $4,720 was converted into                342,000                shares of common stock at maturity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | --                                           |   | 50,000                          |
|  Less,                remaining debt discount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  --                                |   |  (3,700)                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                         |   |                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $322,265                                     |   | $368,565                        |

----

**SENSOR      SYSTEMS SOLUTIONS, INC.**** **

**CONDENSED      NOTES TO FINANCIAL STATEMENTS **

**FOR      THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED)**

|                                        |   | Shares |      | Average                  Exercise Price |   |
|---------------------------------------------|--------|--------|-----------|-----------------------------------------|--------|
| Balance                  at January 1, 2006 |   |   | 76,000    |                                    | $      | .50 |   |
| Cancelled                                   |   |   | (76,000   | )                                       |   | .50 |   |
| Replacement                  options        |   |   | 760,000   |                                    |   | .21 |   |
| Granted                                     |   |   | 850,000   |                                    |   | .19 |   |
| Exercised                                   |   |   | --        |                                    |   |   |   |
|                                        |   |   |      |                                    |   |   |   |
| Balance                  at June 30, 2006   |   |   | 1,610,000 |                                    | $      | .20 |   |

----

**SENSOR      SYSTEMS SOLUTIONS, INC. **

**CONDENSED      NOTES TO FINANCIAL STATEMENTS **

**FOR      THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED)**

| As                of June 30, 2006                     |   |   | Amount |   |
|--------------------------------------------------------|--------|--------|--------|--------|
| 2006                (six months)                       |   | $      | 6,366  |   |
| 2007                                                   |   |   | 12,732 |   |
| 2008                                                   |   |   | 12,732 |   |
| 2009                                                   |   |   | 3,903  |   |
|                                                   |   |   | 35,733 |   |
| Amount                representing interest            |   |   | (5,832 | )      |
|                                                   |   |   |   |   |
| Present                value of minimum lease payments |   |   | 29,901 |   |
| Less:                Current portion                   |   |   | (9,458 | )      |
|                                                   |   | $      | 20,443 |   |

| 2006                  (six months) |   | $      | 128,350 |   |
|------------------------------------|--------|--------|---------|--------|
| 2007                               |   |   | 151,095 |   |
|                               |   | $      | 279,445 |   |

----

**Item      2. Management’s Discussion And Analysis or Plan of      Operation.**
** **

**Cautionary      Statement**
** **

***Statements      in this report on Form 10-QSB that are forward-looking are based on current      expectations. Actual results may differ materially. Forward-looking statements      involve numerous risks and uncertainties including, but not limited to, the      possibility that the demand for our products may decline as a result of possible      changes in general and industry specific economic conditions, the effects of      competitive pricing and such other risks and uncertainties as are described      in      this report on Form 10-QSB and other documents previously filed or hereafter      filed by us from time to time with the Securities and Exchange Commission.      All      forward-looking statements speak only as of the date made, and we undertake      no      obligation to update these forward-looking statements .***

***OVERVIEW***
*** ***

***STRATEGIC      PLAN***
*** ***

| §   | **Increase                the revenue of our existing sensor component business**.                Once finalized, the majority of our sensor component manufacturing                will be                moved to our joint venture in China to help reduce the cost of our                products. We will invest to increase our production capacity and                will                qualify offshore suppliers to meet the increasing demands. Substantial                efforts will be invested in sales and marketing in order to expand                our                customer base and to secure additional OEM                projects. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | **Develop                sensor solution business.**                By                leveraging the advances in technology and the large industry-wide                investments in wireless and telecommunication in the last decade,                we can                now offer total sensor solutions at a very affordable price. These                sensor                solutions are modules containing sensing elements, signal conditioning                circuitry, software for calibration and interface, and capability                of                wireless communication and/or networking. They will provide information                continuously** **to                decision makers in all phases of business                operation. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | **Penetrate                the automotive sensor market in China****and India****.**                By                leveraging the marketing channel of USI, our joint venture                partner,                and X-Lab Global,                a                leading technology advisory and strategic consulting firm, we will                have                access to the automotive market in China and                India immediately.                We plan to use the next twoyears                to build up our production capacity, product offerings and technical                team                there. We expect to import automotive sensors produced by our joint                venture to North America and Europe around 2008. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | **Strategic                acquisition**:                Being a public company gives us a supplemental tool to grow our business                through acquisition in addition to internal growth. We will actively                seek                equity or debt funding to bring in the necessary resources to execute                this                plan. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**RESULTS      OF OPERATIONS**

***Three      months Ended June 30, 2006 and 2005***
*** ***

**Revenues**
** **

**Gross      Profit**
** **

**Total      Expenses**
** **

**Net      Loss**
** **

***Six      months Ended June 30, 2006 and 2005***

**Revenues      **

**Gross      Profit **

----

**Total      Expenses **

**Net      Loss **

***FINANCIAL      CONDITION, LIQUIDITY, CAPITAL RESOURCES***
*** ***

**Going      Concern**
** **

----

**Commitments      and Contingencies**

| As                  of June 30, 2006                     |   |   | Amount |   |
|----------------------------------------------------------|--------|--------|--------|--------|
| 2006                  (six months)                       |   | $      | 6,366  |   |
| 2007                                                     |   |   | 12,732 |   |
| 2008                                                     |   |   | 12,732 |   |
| 2009                                                     |   |   | 3,903  |   |
|                                                     |   |   | 35,733 |   |
| Amount                  representing interest            |   |   | (5,832 | )      |
| Present                  value of minimum lease payments |   |   | 29,901 |   |
| Less:                  Current portion                   |   |   | (9,458 | )      |
|                                                     |   | $      | 20,443 |   |

The      Company leases its office and facility through July 31, 2007 under a long-term      operating lease agreement. Under terms of the lease, the Company pays the cost      of repairs and maintenance.

| 2006                  (six months) |   | $      | 128,350 |   |
|------------------------------------|--------|--------|---------|--------|
| 2007                               |   |   | 151,095 |   |
|                               |   | $      | 279,445 |   |

**Inflation      and Changing Prices**
** **

**CRITICAL      ACCOUNTING POLICIES**
** **

**Revenue      Recognition**
** **

**Stock      - based compensation**
** **

**Inventories**
** **

----

***Recent      Accounting Pronouncements***
*** ***

***RISKS      RELATED TO OUR BUSINESS***
*** ***

***We      have had negative cash flows from operations. Our business operations may fail      if our actual cash requirements exceed our estimates, and we are not able to      obtain further financing.***

***A      decline in the price of our common stock could affect our ability to raise      further working capital and adversely impact our operations.***

----

***If      we issue additional shares in the future this may result in dilution to our      existing stockholders.***
*** ***

***We      have a history of losses and negative cash flows, which is likely to continue      unless our products gain sufficient market acceptance to generate a commercially      viable level of sales.***

***Unless      we can establish significant sales of our current products, our potential      revenues may be significantly reduced.***

***We      could lose our competitive advantages if we are not able to protect any      proprietary technology and intellectual property rights against infringement,      and any related litigation could be time-consuming and costly.***

----

***Our      products may become obsolete and unmarketable if we are unable to respond      adequately to rapidly changing technology and customer demands.***

***If      we fail to effectively manage our growth our future business results could      be      harmed and our managerial and operational resources may be strained***
*.      *

*OFF      BALACE SHEET ARRANGMENTS*
* *

**Item      3. Controls And Procedures**
** **

(a)        *Evaluation      of Disclosure Controls and Procedures.*

*Changes      in Internal Controls. *

----

**PART      II **

**OTHER      INFORMATION **

**Item      1. **
**Legal      Proceedings.**
** **

**Item      2. **
**Changes      In Securities and Small Business Issuer Purchases of Equity      Securities.**
** **

On      February 14, 2006, the Company issued a note payable for $200,000, secured      by      all assets of the Company, interest at 10% per annum, payable on February 14,      2007. The note is convertible, with some limitations, at the holder’s option at      a conversion price equal to the lesser of $0.35 or 90% of the lowest volume      weighted average price of the common stock for the 15 trading days immediately      preceding the conversion date.

**Item      3. **
**Defaults      Upon Senior Securities.**
** **

**Item      4.**       **Submission      of Matters to a Vote of Security Holders.**** **

**Item      5. **
**Other      Information.**
** **

None.

**Item 6.       Exhibits**
** **

----

**SIGNATURES      **

**SENSOR      SYSTEM SOLUTIONS, INC.**
** **

|                                |                                                                                                                          |                                |
|-------------------------------------|-------------------------------------------------------------------------------------------------------------------------------|-------------------------------------|
|                           |                                                                                                                     |                           |
| Dated:              August 14, 2006 |                                                                                                                          | /s/ Michael              Young |
|                                | Name:                Michael YoungTitle:                Chief Executive Officer andPrincipalAccounting                Officer |
|                                |                                                                                                                          |

----