| Delaware                                | 05-0543557                                 |
|-----------------------------------------|--------------------------------------------|
| (State                of Incorporation) | (IRS                Identification Number) |

| Common                Stock | 62,101,411 | September                30, 2007 |
|-----------------------------|------------|-----------------------------------|
|                        |       |                              |

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|                                                                                                          | PAGE   |
|---------------------------------------------------------------------------------------------------------------|--------|
| PART                I - FINANCIAL INFORMATION                                                                 | 3      |
|                                                                                                          |   |
| Item                1 - FINANCIAL STATEMENTS (UNAUDITED)                                                      | 3      |
|                                                                                                          |   |   |
| Item                2 - PLAN OF OPERATION                                                                     | 3      |
|                                                                                                          |   |
| Item                3 - CONTROLS AND PROCEDURES                                                               | 5      |
|                                                                                                          |   |
| PART                II- OTHER INFORMATION                                                                     | 5      |
|                                                                                                          |   |
| Item                1 – LEGAL PROCEEDINGS                                                               | 5      |
|                                                                                                          |   |
| Item                2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE                OF PROCEEDS | 5      |
|                                                                                                          |   |
| Item                3 – DEFAULTS UPON SENIOR SECURITIES                                                 | 6      |
|                                                                                                          |   |
| Item                4 – SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                             | 6      |
|                                                                                                          |   |
| Item                5 – OTHER INFORMATION                                                               | 6      |
|                                                                                                          |   |
| Item                6 – EXHIBITS                                                                        | 7      |

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| Exhibit                No. | Description                                                                                                                                                                                                                                                                                                                                |
|----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                       |                                                                                                                                                                                                                                                                                                                                       |
| 3(i)                       | Articles                of Incorporation(1)                                                                                                                                                                                                                                                                                                |
|                       |                                                                                                                                                                                                                                                                                                                                       |
| 3(i)(a)                    | Amended                Articles of Incorporation                                                                                                                                                                                                                                                                                           |
|                       |                                                                                                                                                                                                                                                                                                                                       |
| 3(ii)                      | Bylaws(1)                                                                                                                                                                                                                                                                                                                                  |
|                       |                                                                                                                                                                                                                                                                                                                                       |
| 10                         | Contract                with Information Spectrum, Inc.(1)                                                                                                                                                                                                                                                                                 |
|                       |                                                                                                                                                                                                                                                                                                                                       |
| 31.1                       | Certification                of SmartMetric’s Chief Executive Officer pursuant to Rule13a- 14(a) of the                Securities Exchange Act of 1934                                                                                                                                                                               |
|                       |                                                                                                                                                                                                                                                                                                                                       |
| 31.2                       | Certificate                of SmartMetric’s Chief Financial Officer pursuant to Rule13a- 14(a) of the                Securities Exchange Act of 1934                                                                                                                                                                                 |
|                       |                                                                                                                                                                                                                                                                                                                                       |
| 32.1                       | Certification                of SmartMetric’s Chief Executive Officer and Chief Financial Officer                required by Rule 13a-14(b) under the Securities Exchange Act of 1934                and                Section 1350 of Chapter 63 of Title 18 the United States Code (18                U.S.C.                1350) |

| (1) | Incorporated                by reference from SmartMetric’s Registration Statement filed on Form SB-2                filed with the Securities and Exchange Commission on September 3,                2004. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                |            | SMARTMETRIC,              INC.                 |
|-----------------------------------------------------|-----------------|------------------------------------------------|
|                                                |            |                                           |
|   Dated:                November 16, 2007 |   By: | /s/  Colin                Hendrick   |   |
|                                                |            |  Colin                Hendrick, President |
|                                                |            |                                           |
|                                                |            |                                           |

----

**SMARTMETRIC,      INC. AND SUBSIDIARY**

**(A      Development Stage Company)**

**Index      to Financial Statements**

----

| **SMARTMETRIC,                  INC. AND SUBSIDIARY**                          |
|---------------------------------------------------------------------------------------------------------|
| **(A                  Development Stage Company)**                             |
| **Consolidated                  Balance Sheets**                               |
|                                                                                                    |   |   |   |   |   |
|                                                                                                    |   | **September                  30,** |   | **June                  30,** |
|                                                                                                    |   | **2007** |   |   | **2007** |
|                                                                                                    |   | **(Unaudited)** |   |   |   |
| **Assets**                                                                                              |   |   |   |   |   |
| Current                  assets:                                                                        |   |   |   |   |   |
|    Cash                                                                                  | $ |           1,350 |   | $ |           5,534 |
|    Prepaid                  expenses                                                     |   |           2,604 |   |   |         58,952 |
|                                                                                                    |   |   |   |   |   |
|       Total                  current assets                               |   |           3,954 |   |   |         64,486 |
|                                                                                                    |   |   |   |   |   |
| Equipment,                  less accumulated depreciation of                                            |   |   |   |   |   |
|    $6,102                  and $5,031, respectively                                      |   |           9,882 |   |   |         10,953 |
|                                                                                                    |   |   |   |   |   |
| Other                  assets:                                                                          |   |   |   |   |   |
|    Patent                  costs, less accumulated amortization                          |   |   |   |   |   |
|       of                  $4,500 and $4,125, respectively                 |   |         10,500 |   |   |         10,875 |
|    Organization                  costs - net                                             |   |                30 |   |   |                60 |
|                                                                                                    |   |   |   |   |   |
| Total                  assets                                                                           | $ |         24,366 |   | $ |         86,374 |
|                                                                                                    |   |   |   |   |   |
| **Liabilities                  and Stockholders' Equity**                                               |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |
| Current                  liabilities:                                                                   |   |   |   |   |   |
|    Accounts                  payable and accrued expenses                                | $ |         96,894 |   | $ |       141,905 |
|    Payroll                  taxes, withholdings, and accrued                             |   |   |   |   |   |
|       interest                  and penalties                             |   |       120,195 |   |   |       192,069 |
|                                                                                                    |   |   |   |   |   |
|       Total                  current liabilities                          |   |       217,089 |   |   |       333,974 |
|                                                                                                    |   |   |   |   |   |
| Other                  liabilities                                                                      |   |                  - |   |   |                  - |
|                                                                                                    |   |   |   |   |   |
|    Total                  liabilities                                                    |   |       217,089 |   |   |       333,974 |
|                                                                                                    |   |   |   |   |   |
| Common                  stock subject to possible rescission (160,837 shares)                           |   |       241,256 |   |   |       241,256 |
|                                                                                                    |   |   |   |   |   |
| Stockholders'                  equity :                                                                 |   |   |   |   |   |
|    Preferred                  stock, $.01 par value; 5,000,000 shares                    |   |   |   |   |   |
|       authorized,                  0 shares issued and outstanding        |   |                  - |   |   |                  - |
|    Class                  A common stock, $.001 par value; 50,000,000                    |   |   |   |   |   |
|       shares                  authorized, 0 shares issued and outstanding |   |                  - |   |   |                  - |
|    Common                  stock, $.001 par value; 100,000,000 shares                    |   |   |   |   |   |
|       authorized,                  issued and outstanding 61,940,574 and  |   |   |   |   |   |
|       60,956,761                  shares, respectively                    |   |         61,941 |   |   |         60,957 |
|    Additional                  paid-in capital                                           |   |    2,340,463 |   |   |    2,019,814 |
|    Deficit                  accumulated during the development stage                     |   |  (2,836,383) |   |   |  (2,569,627) |
|                                                                                                    |   |   |   |   |   |
|       Total                  stockholders' equity (deficiency)            |   |     (433,979) |   |   |     (488,856) |
|                                                                                                    |   |   |   |   |   |
| Total                  liabilities and stockholders' equity                                             | $ |         24,366 |   | $ |         86,374 |
|                                                                                                    |   |   |   |   |   |
| See                  notes to consolidated financial statements.                                        |   |   |   |   |   |

----

| **SMARTMETRIC,                  INC. AND SUBSIDIARY**                          |
|------------------------------------------------------------------------------------------------------------------------|
| **(A                  Development Stage Company)**                   |
| **Consolidated                  Statements of Operations**           |
| **(Unaudited)**                                                      |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                   |   |   |   |   |   |   |   |   | **Cumulative** |   |
|                                                                                                                   |   |   |   |   |   |   |   |   | ** During                  the** |   |
|                                                                                                                   |   |   |   |   |   |   |   |   | **Development** |
|                                                                                                                   |   |   |   |   |   |   |   |   | ** Stage** |   |
|                                                                                                                   |   | **Three                  Months Ended** |   |   |   | **(December                  18, 2002** |
|                                                                                                                   |   | **September                  30,**   |   |   |   | **to                  September 30,** |
|                                                                                                                   |   | **2007** |   |   | **2006** |   |   |   | **2007)** |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Revenues                                                                                                               | $ |                   - |   | $ |                   - |   |   | $ |                   - |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Operating                  expenses:                                                                                   |   |   |   |   |   |   |   |   |   |   |
|    Officer's                  salary                                                                    |   |          42,500 |   |   |          42,500 |   |   |   |        467,500 |   |
|    Other                  general and administrative                                                    |   |        205,706 |   |   |        155,735 |   |   |   |     1,857,856 |   |
|    Research                  and development                                                            |   |          16,648 |   |   |          15,626 |   |   |   |        494,644 |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
|       Total                  operating expenses                                          |   |        264,854 |   |   |        213,861 |   |   |   |     2,820,000 |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Loss                  from operations                                                                                  |   |      (264,854) |   |   |      (213,861) |   |   |   |   (2,820,000) |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Interest                  income                                                                                       |   |                   - |   |   |                   - |   |   |   |               657 |   |
| Interest                  expense                                                                                      |   |          (1,902) |   |   |                   - |   |   |   |        (17,040) |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss                                                                                              | $ |      (266,756) |   | $ |      (213,861) |   |   | $ |   (2,836,383) |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss per share, basic and diluted                                                                 | $ | (0.00) |   | $ | (0.00) |   |   |   |   |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Weighted                  average number of common                                                                     |   |   |   |   |   |   |   |   |   |   |
|    shares                  outstanding, basic and diluted                                               |   |   61,448,668 |   |   |   59,648,819 |   |   |   |   |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| See                  notes to consolidated financial statements.                                                       |   |   |   |   |   |   |   |   |

----

| **SMARTMETRIC                  AND SUBSIDIARY**                       |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **(A                  Development Stage Company)**                    |
| **Consolidated                  Statement of Changes in Stockholders' Equity**                 |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | **Deficit** |   |   |   |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | **Accumulated** |   |   | **Total** |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   | **Additional** |   |   | **During                  the** |   |   | **Stockholders'** |
|                                                                                                                                                                 |   | **Class                  A Common Stock** |   | **Common                  Stock** |   |   | **Paid-In** |   |   | **Development** |   | **Equity** |
|                                                                                                                                                                 |   | **Shares** |   |   | **Amount** |   | **Shares** |   |   | **Amount** |   |   | **Capital** |   |   | **Stage** |   |   | **(Deficiency)** |
| Net                  loss for period December 18, 2002                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    (date                  of inception) to June 30, 2003                                                                                              |   |                      - |   | $ |                     - |   |                     - |   | $ |                  - |   | $ |                    - |   | $ |                     (60) |   | $ |                      (60) |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances,                  June 30, 2003                                                                                                                             |   |                      - |   |   |                     - |   |                     - |   |   |                  - |   |   |                    - |   |   |                     (60) |   |   |                      (60) |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sale                  of Class A common stock in October                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    2003                  at a price of $.001 per share                                                                                                |   |     50,000,000 |   |   |           50,000 |   |                     - |   |   |                  - |   |   |                    - |   |   |                          - |   |   |                 50,000 |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sale                  of common stock from October 2003                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    to                  June 2004 at a price of $,01 per share                                                                                         |   |                      - |   |   |                     - |   |      8,560,257 |   |   |          8,560 |   |   |          77,042 |   |   |                          - |   |   |                 85,602 |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss for year ended June 30, 2004                                                                                                               |   |                      - |   |   |                     - |   |                     - |   |   |                  - |   |   |                    - |   |   |              (35,978) |   |   |               (35,978) |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances,                  June 30, 2004                                                                                                                             |   |     50,000,000 |   |   |           50,000 |   |      8,560,257 |   |   |          8,560 |   |   |          77,042 |   |   |              (36,038) |   |   |                 99,564 |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Costs                  associated with sale of common                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    stock                  subject to possible rescission                                                                                              |   |                      - |   |   |                     - |   |                     - |   |   |                  - |   |   |        (95,877) |   |   |                          - |   |   |               (95,877) |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss for year ended June 30, 2005                                                                                                               |   |                      - |   |   |                     - |   |                     - |   |   |                  - |   |   |                    - |   |   |            (258,355) |   |   |             (258,355) |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances,                  June 30, 2005                                                                                                                             |   |     50,000,000 |   |   |           50,000 |   |      8,560,257 |   |   |          8,560 |   |   |        (18,835) |   |   |            (294,393) |   |   |             (254,668) |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sale                  of common stock from August 2005                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    to                  February 2006 in public offering at                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    $1.50                  per share less offering costs of                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    $138,471                                                                                                                                           |   |                      - |   |   |                     - |   |         743,648 |   |   |             744 |   |   |        976,257 |   |   |                          - |   |   |               977,001 |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion                  of Class A common stock to                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    common                  stock by related parties in                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    February                  and May 2006                                                                                                             |   |    (50,000,000) |   |   |          (50,000) |   |    50,000,000 |   |   |        50,000 |   |   |                    - |   |   |                          - |   |   |                           - |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See                  notes to consolidated financial statements.                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| **SMARTMETRIC                  AND SUBSIDIARY**                       |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **(A                  Development Stage Company)**                    |
| **Consolidated                  Statement of Changes in Stockholders' Equity**                 |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | **Deficit** |   |   |   |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | **Accumulated** |   |   | **Total** |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   | **Additional** |   |   | **During                  the** |   |   | **Stockholders'** |
|                                                                                                                                                                 |   | **Class                  A Common Stock** |   | **Common                  Stock** |   |   | **Paid-In** |   |   | **Development** |   | **Equity** |
|                                                                                                                                                                 |   | **Shares** |   |   | **Amount** |   | **Shares** |   |   | **Amount** |   |   | **Capital** |   |   | **Stage** |   |   | **(Deficiency)** |
| Conversion                  of $60,000 loans payable and                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    accrued                  interest to common stock in                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    March                  2006                                                                                                                        |   |                      - |   | $ |                     - |   |           40,000 |   | $ |               40 |   | $ |          62,360 |   | $ |                          - |   | $ |                 62,400 |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                  issued for services                                                                                                                          |   |                      - |   |   |                     - |   |           20,000 |   |   |               20 |   |   |          19,980 |   |   |                          - |   |   |                 20,000 |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sale                  of Units from May 2006 to June 2006                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    in                  private offering at $1.15 per Unit less                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    offering                  costs of $38                                                                                                             |   |                      - |   |   |                     - |   |         192,464 |   |   |             192 |   |   |        221,104 |   |   |                          - |   |   |               221,296 |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss for year ended June 30, 2006                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |         (1,225,045) |   |   |          (1,225,045) |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances,                  June 30, 2006                                                                                                                             |   |                      - |   |   |                     - |   |    59,556,369 |   |   |        59,556 |   |   |     1,260,866 |   |   |         (1,519,438) |   |   |             (199,016) |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sale                  of Units in private placements                                                                                                                 |   |                      - |   |   |                     - |   |      1,208,887 |   |   |          1,209 |   |   |        759,140 |   |   |                          - |   |   |               760,349 |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                  issued for services and adjustments                                                                                                          |   |                      - |   |   |                     - |   |         191,505 |   |   |             192 |   |   |             (192) |   |   |                          - |   |   |                           - |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss for year ended June 30, 2007                                                                                                               |   |                      - |   |   |                     - |   |                     - |   |   |                  - |   |   |                    - |   |   |         (1,050,189) |   |   |          (1,050,189) |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances,                  June 30, 2007                                                                                                                             |   |                      - |   |   |                     - |   |    60,956,761 |   |   |        60,957 |   |   |     2,019,814 |   |   |         (2,569,627) |   |   |             (488,856) |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unaudited:                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sale                  of Units in private placements                                                                                                                 |   |                      - |   |   |                     - |   |         903,813 |   |   |             904 |   |   |        296,729 |   |   |                          - |   |   |               297,633 |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                  issued for services                                                                                                                          |   |                      - |   |   |                     - |   |           80,000 |   |   |               80 |   |   |          23,920 |   |   |                          - |   |   |                 24,000 |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss for three months ended                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    September                  30, 2007                                                                                                                |   |                      - |   |   |                     - |   |                     - |   |   |                  - |   |   |                    - |   |   |            (266,756) |   |   |             (266,756) |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances,                  September 30, 2007                                                                                                                        |   |                      - |   |   |                     - |   |    61,940,574 |   |   |        61,941 |   |   |     2,340,463 |   |   |         (2,836,383) |   |   |             (433,979) |
|                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See                  notes to consolidated financial statements.                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| **SMARTMETRIC,                  INC. AND SUBSIDIARY**                      |
|------------------------------------------------------------------------------------------------------------------------------|
| **(A                  Development Stage Company)**                         |
| ** Consolidated                  Statements of Cash Flows**           |
| **(Unaudited)**                                                            |
|                                                                                                                         |   |   |   |   |   |   |   |   | **Cumulative** |   |
|                                                                                                                         |   |   |   |   |   |   |   |   | ** During                  the** |   |
|                                                                                                                         |   |   |   |   |   |   |   |   | **Development** |
|                                                                                                                         |   |   |   |   |   |   |   |   | ** Stage** |   |
|                                                                                                                         |   | **Three                  Months Ended** |   |   |   | **(December                  18, 2002** |
|                                                                                                                         |   | **September                  30,**   |   |   |   | **to                  September 30,** |
|                                                                                                                         |   | **2007** |   |   | **2006** |   |   |   | **2007)** |   |
|                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| Cash                  flows from operating activities:                                                                       |   |   |   |   |   |   |   |   |   |   |
|    Net                  loss                                                                                  | $ |          (266,756) |   | $ |          (213,861) |   |   | $ |          (2,836,383) |   |
|    Interest                  accrued on convertible notes payable                                             |   |                       - |   |   |                       - |   |   |   |                   2,400 |   |
|    Shares                  issued for services                                                                |   |             24,000 |   |   |                       - |   |   |   |                 44,000 |   |
|    Depreciation                  of equipment                                                                 |   |               1,071 |   |   |               1,884 |   |   |   |                   6,102 |   |
|    Amortization                  of patent costs                                                              |   |                  375 |   |   |                  375 |   |   |   |                   4,500 |   |
|    Changes                  in operating assets and liabilities:                                              |   |   |   |   |   |   |   |   |   |   |
|       Prepaid                  expenses                                                        |   |             56,348 |   |   |                       - |   |   |   |                 (2,604) |   |
|       Organization                  costs                                                      |   |                    30 |   |   |                    30 |   |   |   |                      (30) |   |
|       Accounts                  payable and accrued expenses                                   |   |            (45,011) |   |   |             21,194 |   |   |   |                 96,894 |   |
|       Payroll                  taxes, withholdings, and accrued                                |   |   |   |   |   |   |   |   |   |   |
|          interest                  and penalties                                |   |            (71,874) |   |   |             23,228 |   |   |   |               120,195 |   |
|                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
|       Net                  cash used for operating activities                                  |   |          (301,817) |   |   |          (167,150) |   |   |   |          (2,564,926) |   |
|                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| Cash                  flows from investing activities:                                                                       |   |   |   |   |   |   |   |   |   |   |
|    Equipment                  purchased                                                                       |   |                       - |   |   |              (9,353) |   |   |   |               (15,984) |   |
|    Patent                  costs incurred                                                                     |   |                       - |   |   |                       - |   |   |   |               (15,000) |   |
|                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
|   Net                  cash used for investing activities                                                          |   |                       - |   |   |              (9,353) |   |   |   |               (30,984) |   |
|                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| Cash                  flows from financing activities:                                                                       |   |   |   |   |   |   |   |   |   |   |
|    Proceeds                  from notes payable                                                               |   |                       - |   |   |                       - |   |   |   |                 60,000 |   |
|    Loans                  from related party                                                                  |   |                       - |   |   |                       - |   |   |   |                 54,427 |   |
|    Repayment                  of loans from related party                                                     |   |                       - |   |   |                       - |   |   |   |               (54,427) |   |
|    Stock                  subscriptions collected from private placements, net                                |   |           297,633 |   |   |           148,558 |   |   |   |            1,560,259 |   |
|    Sale                  of common stock in public offering                                                   |   |                       - |   |   |                       - |   |   |   |            1,115,472 |   |
|    Public                  offering costs incurred                                                            |   |                       - |   |   |                       - |   |   |   |             (138,471) |   |
|                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
|    Net                  cash provided by  financing activities                                      |   |           297,633 |   |   |           148,558 |   |   |   |            2,597,260 |   |
|                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| Net                  increase (decrease) in cash                                                                             |   |              (4,184) |   |   |            (27,945) |   |   |   |                   1,350 |   |
|                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| Cash,                  beginning of period                                                                                   |   |               5,534 |   |   |             63,243 |   |   |   |                          - |   |
|                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| Cash,                  end of period                                                                                         | $ |               1,350 |   | $ |             35,298 |   |   | $ |                   1,350 |   |
|                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| Supplemental                  disclosures of cash flow information:                                                          |   |   |   |   |   |   |   |   |   |   |
|    Interest                  paid                                                                             | $ |               2,096 |   | $ |                       - |   |   | $ |                   2,096 |   |
|                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
|    Income                  taxes paid                                                                         | $ |                       - |   | $ |                       - |   |   | $ |                          - |   |
|                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| See                  notes to consolidated financial statements.                                                             |   |   |   |   |   |   |   |   |   |   |

----

**SMARTMETRIC,      INC. AND SUBSIDIARY**

**(A        Development Stage Company)**

**Notes        to Consolidated Financial Statements**

**For        the Three Months Ended September 30, 2007 and 2006**

**and        For the Period December 18, 2002 (Date of Inception)**

**to        September 30, 2007**

**(Unaudited)**

**NOTE        1 – INTERIM FINANCIAL STATEMENTS**

**NOTE        2 – ORGANIZATION**

**NOTE        3 – COMMON STOCK SUBJECT TO POSSIBLE RESCISSION**

----

**SMARTMETRIC,        INC. AND SUBSIDIARY**

**(A        Development Stage Company)**

**Notes        to Consolidated Financial Statements**

**For        the Three Months Ended September 30, 2007 and 2006**

**and        For the Period December 18, 2002 (Date of Inception)**

**to        September 30, 2007**

**(Unaudited)**

**NOTE        4 – STOCKHOLDERS’ EQUITY**

|                                              | **Three                Months**       |   |                             |
|---------------------------------------------------|---------------------------------------|--------|----------------------------------|
|                                              | **Ended**                             |   | **Year                Ended**    |
|                                              | **September                30, 2007** |   | **June                30, 2007** |
|                                              |                                  |   |                             |
| Outstanding                at beginning of period | 1,291,780                             |   |    192,464        |
| Issued                                            | 903,813                               |   | 1,291,780                        |
| Exercised                                         | -                                     |   | -                                |
| Expired                                           | (184,899)                             |   | (192,464)                        |
|                                              |                                  |   |                             |
| Outstanding                at end of period       | 2,010,694                             |   | 1,291,780                        |

----

**SMARTMETRIC,        INC. AND SUBSIDIARY**

**(A        Development Stage Company)**

**Notes        to Consolidated Financial Statements**

**For        the Three Months Ended September 30, 2007 and 2006**

**and        For the Period December 18, 2002 (Date of Inception)**

**to        September 30, 2007**

**(Unaudited)**

**NOTE        5 – COMMITMENTS AND CONTINGENCIES**

----