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

| Common                Stock | 60,378,401 | March                31, 2007 |
|-----------------------------|------------|-------------------------------|
|                        |       |                          |

----

|                                                                                               | 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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| 1.   | Colin                Hendrick |
|----------------|-------------------------------|

| 2.   | Joseph                Katzman |
|----------------|-------------------------------|

| 3.   | Elizabeth                Ryba |
|----------------|-------------------------------|

| 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 and Chief Financial 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                         | 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) |

----

|                                |   | SMARTMETRIC,                INC.         |
|-------------------------------------|--------|------------------------------------------|
|                                |   |                                     |
| Dated:                June 13, 2007 | By:    | /s/                Colin Hendrick        |
|                                |   | Colin                Hendrick, President |
|                                |   |                                     |

----

**SMARTMETRIC,        INC. AND SUBSIDIARY**

**(A        Development Stage Company)**

**Index        to Financial Statements**

|   | Page                                                                                |
|--------|-------------------------------------------------------------------------------------|
|   |                                                                                |   |
|   | Consolidated                    Balance Sheets as of March 31, 2007                 | F-2 |
|   |                                                                                | (Unaudited)                    and June 30, 2006   |   |
|   |                                                                                |   |
|   | Consolidated                    Statements of Operations for the three and nine     | F-3 |
|   |                                                                                | months                    ended March 31, 2007 and 2006 and for the period |   |
|   |                                                                                | December                    18, 2002 (inception) to March 31, 2007 |   |
|   |                                                                                | (Unaudited) |   |
|   |                                                                                |   |
|   | Consolidated                    Statements of Changes in Stockholders’ Equity | F-4 |
|   |                                                                                | for                    the period December 18, 2002 (inception) |   |
|   |                                                                                | to                    March 31, 2007 |   |
|   |                                                                                |   |
|   | Consolidated                    Statements of Cash Flows for the three and nine     | F-6 |
|   |                                                                                | months                    ended March 31, 2007 and 2006 and for the period |   |
|   |                                                                                | December                    18, 2002 (inception) to March 31, 2007 |   |
|   |                                                                                | (Unaudited) |   |
|   |                                                                                |   |
|   | Notes                    to Consolidated Financial Statements                       | F-7 |
|   |                                                                                |   |

----

| **SMARTMETRIC,                  INC. AND SUBSIDIARY**                            |
|----------------------------------------------------------------------------------|
| **(A                  Development Stage Company)**                               |
| **Consolidated                  Balance Sheets**                                 |
|                                                                             |   |   |   |   |   |
|                                                                             |   | **March                  31,** |   |   | **June                  30,** |
|                                                                             |   | **2007** |   |   | **2006** |
|                                                                             |   | **(Unaudited)** |   |   |   |
| **Assets**                                                                       |   |   |   |   |   |
| Current                  assets:                                                 |   |   |   |   |   |
| Cash                                                                             | $ | 2,739 |   | $ | 63,243 |
| Prepaid                  expenses                                                |   | 39,270 |   |   | 32,449 |
|                                                                             |   |   |   |   |   |
| Total                  current assets                                            |   | 42,009 |   |   | 95,692 |
|                                                                             |   |   |   |   |   |
| Equipment,                  less accumulated depreciation of                     |   |   |   |   |   |
| $3,969                  and $629, respectively                                   |   | 12,015 |   |   | 5,102 |
|                                                                             |   |   |   |   |   |
| Other                  assets:                                                   |   |   |   |   |   |
| Patent                  costs, less accumulated amortization                     |   |   |   |   |   |
| of                  $3,750 and $2,625, respectively                              |   | 11,250 |   |   | 12,375 |
| Organization                  costs - net                                        |   | 90 |   |   | 180 |
|                                                                             |   |   |   |   |   |
| Total                  assets                                                    | $ | 65,364 |   | $ | 113,349 |
|                                                                             |   |   |   |   |   |
| **Liabilities                  and Stockholders' Equity**                        |   |   |   |   |   |
|                                                                             |   |   |   |   |   |
| Current                  liabilities:                                            |   |   |   |   |   |
| Accounts                  payable                                                | $ | 121,721 |   | $ | 40,482 |
| Payroll                  taxes, withholdings, and accrued interest and penalties |   | 146,634 |   |   | 30,627 |
|                                                                             |   |   |   |   |   |
| Total                  current liabilities                                       |   | 268,355 |   |   | 71,109 |
|                                                                             |   |   |   |   |   |
| Other                  liabilities                                               |   | - |   |   | - |
|                                                                             |   |   |   |   |   |
| Total                  liabilities                                               |   | 268,355 |   |   | 71,109 |
|                                                                             |   |   |   |   |   |
| 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 60,378,401 and               |   |   |   |   |   |
| 59,556,369                  shares, respectively                                 |   | 60,378 |   |   | 59,556 |
| Additional                  paid-in capital                                      |   | 1,834,527 |   |   | 1,260,866 |
| Deficit                  accumulated during the development stage                |   | (2,339,152) |   |   | (1,519,438) |
|                                                                             |   |   |   |   |   |
| Total                  stockholders' equity (deficiency)                         |   | (444,247) |   |   | (199,016) |
|                                                                             |   |   |   |   |   |
| Total                  liabilities and stockholders' equity                      | $ | 65,364 |   | $ | 113,349 |
|                                                                             |   |   |   |   |   |
| 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** |   |   | **Nine                  Months Ended** |   |   | **(December                  18, 2002** |
|                                                             |   | **March                  31,** |   |   | **March                  31,** |   |   | **to                  March 31,** |
|                                                             |   | **2007** |   |   | **2006** |   |   | **2007** |   |   | **2006** |   |   | **2007)** |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                                                         | $ | - |   | $ | - |   | $ | - |   | $ | - |   | $ | - |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Expenses:                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Officer's                  salary                                |   | 42,500 |   |   | 42,500 |   |   | 127,500 |   |   | 127,500 |   |   | 382,500 |
| Other                  general and                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| administrative                                                   |   | 238,141 |   |   | 221,030 |   |   | 543,398 |   |   | 544,235 |   |   | 1,470,532 |
| Research                  and                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| development                                                      |   | 91,805 |   |   | 39,586 |   |   | 136,209 |   |   | 159,294 |   |   | 471,639 |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  expenses                                  |   | 372,446 |   |   | 303,116 |   |   | 807,107 |   |   | 831,029 |   |   | 2,324,671 |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss                  from operations                            |   | (372,446) |   |   | (303,116) |   |   | (807,107) |   |   | (831,029) |   |   | (2,324,671) |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  income                                 |   | 1 |   |   | - |   |   | 131 |   |   | - |   |   | 657 |
| Interest                  expense                                |   | (12,738) |   |   | (900) |   |   | (12,738) |   |   | (2,400) |   |   | (15,138) |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss                                        | $ | (385,183) |   | $ | (304,016) |   | $ | (819,714) |   | $ | (833,429) |   | $ | (2,339,152) |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss per share,                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| basic                  and diluted                               | $ | (0.01) |   | $ | (0.01) |   | $ | (0.01) |   | $ | (0.01) |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                  average                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| number                  of common                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| shares                  outstanding,                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| basic                  and diluted                               |   | 60,231,892 |   |   | 59,239,093 |   |   | 59,931,346 |   |   | 59,016,858 |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See                  notes to consolidated financial statements. |   |   |   |   |   |   |   |   |   |   |   |

----

| **SMARTMETRIC,                INC. AND SUBSIDIARY**                           |
|-------------------------------------------------------------------------------|
| **(A                Development Stage Company)**                              |
| **Consolidated                Statements 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 |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See                notes to consolidated financial statements.                |   |   |   |   |   |   |   |   |   |   |   |   |

----

| **SMARTMETRIC,                  INC. AND SUBSIDIARY**                           |
|---------------------------------------------------------------------------------|
| **(A                  Development Stage Company)**                              |
| **Consolidated                  Statements 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 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 |   |   | - |   |   | - |   | - |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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) |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unaudited:                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sale                  of Units in                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| private                  offerings                                              | - |   |   | - |   | 822,032 |   |   | 822 |   |   | 573,661 |   |   | - |   | 574,483 |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss for nine                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| months                  ended                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| March                  31, 2007                                                 | - |   |   | - |   | - |   |   | - |   |   | - |   |   | (819,714) |   | (819,714) |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances,                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| March                  31, 2007                                                 | - |   | $ | - |   | 60,378,401 |   | $ | 60,378 |   | $ | 1,834,527 |   | $ | (2,339,152) | $ | (444,247) |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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** |
|                                                                             |   | **Nine                  Months Ended** |   |   |   | **(December                  18, 2002** |
|                                                                             |   | **March                  31,** |   |   |   | **to                  March 31,** |
|                                                                             |   | **2007** |   |   | **2006** |   |   |   | **2007)** |
| Cash                  flows from operating activities:                           |   |   |   |   |   |   |   |   |   |
| Net                  loss                                                        | $ | (819,714) |   | $ | (833,429) |   |   | $ | (2,339,152) |
| Interest                  accrued on convertible notes payable                   |   | - |   |   | - |   |   |   | 2,400 |
| Shares                  issued for services                                      |   | - |   |   | - |   |   |   | 20,000 |
| Depreciation                  of equipment                                       |   | 3,340 |   |   | 570 |   |   |   | 3,969 |
| Amortization                  of patent costs                                    |   | 1,125 |   |   | 1,125 |   |   |   | 3,750 |
| Changes                  in operating assets and liabilities:                    |   |   |   |   |   |   |   |   |   |
| Prepaid                  expenses                                                |   | (6,821) |   |   | (29,748) |   |   |   | (39,270) |
| Organization                  costs                                              |   | 90 |   |   | 90 |   |   |   | (90) |
| Accounts                  payable                                                |   | 81,239 |   |   | (58,195) |   |   |   | 121,721 |
| Payroll                  taxes, withholdings, and accrued interest and penalties |   | 116,007 |   |   | - |   |   |   | 146,634 |
| Accrued                  salary due to president                                 |   | - |   |   | (85,000) |   |   |   | - |
|                                                                             |   |   |   |   |   |   |   |   |   |
| Net                  cash used for operating activities                          |   | (624,734) |   |   | (1,004,587) |   |   |   | (2,080,038) |
|                                                                             |   |   |   |   |   |   |   |   |   |
| Cash                  flows from investing activities:                           |   |   |   |   |   |   |   |   |   |
| Equipment                  purchased                                             |   | (10,253) |   |   | (2,281) |   |   |   | (15,984) |
| Patent                  costs incurred                                           |   | - |   |   | - |   |   |   | (15,000) |
|                                                                             |   |   |   |   |   |   |   |   |   |
| Net                  cash used for investing activities                          |   | (10,253) |   |   | (2,281) |   |   |   | (30,984) |
|                                                                             |   |   |   |   |   |   |   |   |   |
| Cash                  flows from financing activities:                           |   |   |   |   |   |   |   |   |   |
| Proceeds                  from notes payable                                     |   | - |   |   | 60,000 |   |   |   | 60,000 |
| Loans                  from related party                                        |   | - |   |   | - |   |   |   | 54,427 |
| Repayment                  of loans from related party                           |   | - |   |   | - |   |   |   | (54,427) |
| Stock                  subscriptions collected from private placements, net      |   | 574,483 |   |   | 15,000 |   |   |   | 1,076,760 |
| Sale                  of common stock in public offering                         |   | - |   |   | 1,112,001 |   |   |   | 1,115,472 |
| Public                  offering costs incurred                                  |   | - |   |   | - |   |   |   | (138,471) |
|                                                                             |   |   |   |   |   |   |   |   |   |
| Net                  cash provided by financing activities                       |   | 574,483 |   |   | 1,187,001 |   |   |   | 2,113,761 |
|                                                                             |   |   |   |   |   |   |   |   |   |
| Net                  increase (decrease) in cash                                 |   | (60,504) |   |   | 180,133 |   |   |   | 2,739 |
|                                                                             |   |   |   |   |   |   |   |   |   |
| Cash,                  beginning of period                                       |   | 63,243 |   |   | 928 |   |   |   | - |
|                                                                             |   |   |   |   |   |   |   |   |   |
| Cash,                  end of period                                             | $ | 2,739 |   | $ | 181,061 |   |   | $ | 2,739 |
|                                                                             |   |   |   |   |   |   |   |   |   |
| Supplemental                  disclosures of cash flow information:              |   |   |   |   |   |   |   |   |   |
| Interest                  paid                                                   | $ | 9,665 |   | $ | - |   |   | $ | 9,665 |
|                                                                             |   |   |   |   |   |   |   |   |   |
| 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 and Nine Months Ended March 31, 2007 and 2006 **

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

**to        March 31, 2007 **

**(Unaudited)**

**NOTE        1 - INTERIM FINANCIAL STATEMENTS**

**NOTE        2 - ORGANIZATION**

----

**SMARTMETRIC,        INC. AND SUBSIDIARY**

**(A        Development Stage Company)**

**Notes        to Consolidated Financial Statements**

**For        the Three and Nine Months Ended March 31, 2007 and 2006 **

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

**to        March 31, 2007 **

**(Unaudited)**

**NOTE        3 - PAYROLL TAXES, WITHHOLDINGS, AND ACCRUED **

**INTEREST        AND PENALTIES**

|                                                               |   |   | **March                    31,** |   |   | **June                    30,** |
|--------------------------------------------------------------------|--------|--------|----------------------------------|--------|--------|---------------------------------|
|                                                               |   |   | **2007**                         |   |   | **2006**                        |
|                                                               |   |   | **(Unaudited)**                  |   |   |                            |
|                                                               |   |   |                             |   |   |                            |
| Social                    security and Federal income tax withheld |   | $      | 89,791                           |   | $      | 23,687                          |
| Social                    security taxes                           |   |   | 19,861                           |   |   | 6,940                           |
| Accrued                    interest                                |   |   | 3,073                            |   |   | -                               |
| Accrued                    penalties                               |   |   | 33,909                           |   |   | -                               |
|                                                               |   |   |                             |   |   |                            |
| Total                                                              |   | $      | 146,634                          |   | $      | 30,627                          |
|                                                               |   |   |                             |   |   |                            |

**NOTE        4 - COMMON STOCK SUBJECT TO POSSIBLE RESCISSION **

----

**SMARTMETRIC,        INC. AND SUBSIDIARY**

**(A        Development Stage Company)**

**Notes        to Consolidated Financial Statements**

**For        the Three and Nine Months Ended March 31, 2007 and 2006 **

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

**to        March 31, 2007 **

**(Unaudited)**

**NOTE        5 - STOCKHOLDERS’ EQUITY**

**NOTE        6 - COMMITMENTS AND CONTINGENCIES**

----

**SMARTMETRIC,        INC. AND SUBSIDIARY**

**(A        Development Stage Company)**

**Notes        to Consolidated Financial Statements**

**For        the Three and Nine Months Ended March 31, 2007 and 2006 **

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

**to        March 31, 2007 **

**(Unaudited)**

**NOTE        7 - RELATED PARTY TRANSACTIONS**

----