| SMARTMETRIC, INC.                                                                |
|----------------------------------------------------------------------------------|
| (Exact name of small business issuer as specified in its charter)                |
|                                                                             |   |
| Nevada                                                                           | 05-0543557 |
| (State or other jurisdiction of incorporation or organization)    | (IRS Employer Identification No.) |
|                                                                             |   |
| 1150 Kane Concourse, Suite 400, Bay Harbor Islands, FL 33154                     |
| (Address of principal executive offices)                                         |
|                                                                             |   |
| (305) 495-7190                                                                   |
| (Issuer’s telephone number)                                                |

| Large accelerated filer | [ ] | Accelerated filer         | [ ]       |
|-------------------------|-----|---------------------------|-----------|
| Non-accelerated filer   | [ ] | Smaller reporting company | [√] |

----

|                                   |                                                                                                                                                                | Page   |
|----------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                   |                                                                                                                                                                |   |
| PART I.                      | FINANCIAL INFORMATION                                                                                                                                               |   |
| Item 1.                 | Financial Statements                                                                                                                                                |   |
|                                   | Condensed consolidated Balance Sheets as of December 31, 2010 (unaudited) and June 30, 2010                                                                    | F-1    |
|                                   | Condensed consolidated Statements of Operations for the six and three months ended December 31, 2010 and 2009 (unaudited)                                           | F-2    |
|                                   | Condensed consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the period December 18, 2002 (inception) to December 31, 2010 (unaudited). | F-3    |
|                                   | Condensed consolidated Statements of Cash Flows for the six and three months ended December 31, 2010 and 2009 (unaudited)                                           | F-4    |
|                                   | Notes to condensed consolidated Financial Statements (unaudited)                                                                                               | F-5    |
| Item 2.                      | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                                         | 3      |
| Item 3A(T).             | Controls and Procedures                                                                                                                                             | 6      |
|                                   |                                                                                                                                                                |   |
| PART II.                | OTHER INFORMATION                                                                                                                                                   | 8      |
| Item 1.                      | Legal Proceedings                                                                                                                                                   | 8      |
| Item 1A.      | Risk Factors                                                                                                                                                        | 8      |
| Item 2.                 | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                         | 8      |
| Item 3.                      | Defaults Upon Senior Securities                                                                                                                                     | 8      |
| Item 4.                      | (Removed and Reserved)                                                                                                                                              | 8      |
| Item 5.                 | Other Information                                                                                                                                                   | 8      |
| Item 6.       | Exhibits                                                                                                                                                            | 8      |
| Signatures                             |                                                                                                                                                                | 9      |

----

| SMARTMETRIC, INC. AND SUBSIDIARY                                          |   |
|---------------------------------------------------------------------------|--------|
| (A Development Stage Company)                                             |   |
| Condensed Consolidated Balance Sheets                                     |   |
| December 31, 2010 (Unaudited) and June 30, 2010                           |   |
|                                                                      |   |   |   |   |   |   |
|                                                                      |   | (unaudited) |   |   |   |   |
|                                                                      |   | DECEMBER |   |   |   |   |
|                                                                      |   |   | 31, |   |   | June 30, |   |
|                                                                      |   |   | 2010 |   |   |   | 2010 |   |
| Assets                                                                    |   |   |   |   |   |   |   |   |
| Current assets:                                                           |   |   |   |   |   |   |   |   |
|   Cash                                                          |   | $ | 765,727 |   |   | $ | - |   |
|   Prepaid expenses and other current assets                     |   |   | 49,069 |   |   |   | 4,069 |   |
|                                                                      |   |   |   |   |   |   |   |   |
|     Total current assets                              |   |   | 814,796 |   |   |   | 4,069 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Equipment, less accumulated depreciation of                               |   |   |   |   |   |   |   |   |
|   $15,984                                                       |   |   | - |   |   |   | - |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Other assets:                                                             |   |   |   |   |   |   |   |   |
|   Patent costs, less accumulated amortization                   |   |   |   |   |   |   |   |   |
|     of $9,375and $8,625 respectively                  |   |   | 5,625 |   |   |   | 6,375 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Total assets                                                              |   | $ | 820,421 |   |   | $ | 10,444 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Liabilities and Stockholders' Equity (Deficiency)                         |   |   |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Current liabilities:                                                      |   |   |   |   |   |   |   |   |
|   Accounts payable and accrued expenses                         |   | $ | 108,681 |   |   | $ | 160,614 |   |
|   Liability for stock to be issued                              |   |   | 1,369,294 |   |   |   | 154,004 |   |
|   Cash overdraft                                                |   |   | - |   |   |   | 15,141 |   |
|   Deferred Officer salary                                       |   |   | 101,891 |   |   |   | 82,424 |   |
|   Shareholder loan                                              |   |   | 12,422 |   |   |   | 19,916 |   |
|   Payroll taxes, withholdings and accrued                       |   |   |   |   |   |   |   |   |
|     interest and penalties                            |   |   | 407,378 |   |   |   | 436,271 |   |
|                                                                      |   |   |   |   |   |   |   |   |
|     Total current and total liabilities               |   |   | 1,999,666 |   |   |   | 868,370 |   |
|                                                                      |   |   |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Commitments and Contingencies                                             |   |   |   |   |   |   |   |   |
| Stockholders' equity:                                                     |   |   |   |   |   |   |   |   |
|   Preferred stock, $.001 par value; 5,000,000 shares            |   |   |   |   |   |   |   |   |
|     authorized, 200,000 shares issued and outstanding |   |   | 200 |   |   |   | 200 |   |
|   Common stock, $.001 par value; 200,000,000 shares             |   |   |   |   |   |   |   |   |
|     authorized, issued and outstanding 93,712,305 and |   |   |   |   |   |   |   |   |
|     89,212,555 shares, respectively                   |   |   | 93,712 |   |   |   | 89,212 |   |
|   Additional paid-in capital                                    |   |   | 6,086,335 |   |   |   | 5,734,086 |   |
| Deficit accumulated during the development stage                          |   |   | (7,359,492 | ) |   |   | (6,681,424 | ) |
|                                                                      |   |   |   |   |   |   |   |   |
|     Total Stockholders' equity (deficiency)           |   |   | (1,179,245 | ) |   |   | (857,926 | ) |
|                                                                      |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders' equity (deficiency)                   |   | $ | 820,421 |   |   | $ | 10,444 |   |

----

| SMARTMETRIC, INC. AND SUBSIDIARY                              |   |
|---------------------------------------------------------------|--------|
| (A development Stage Company)                                 |   |
| Condensed Consolidated Statements of Operations               |   |
| For The Six and Three Months Ended December 31, 2010 and 2009 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   | Cumulative |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   | Totals |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   | Since |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   | Inception |   |
|                                                          |   | Six Months Ended |   | Three Months Ended |   |   | December |   |
|                                                          |   | December 31, |   |   | December 31, |   |   |   | 18, |   |
|                                                          |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |   |   | 2002 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                                                      |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Expenses:                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Officer's salary                                  |   |   | 85,000 |   |   |   | 92,500 |   |   |   | 42,500 |   |   |   | 42,500 |   |   |   | 1,020,000 |   |
|   Other general and administrative                  |   |   | 574,269 |   |   |   | 903,030 |   |   |   | 554,160 |   |   |   | 726,971 |   |   |   | 5,363,765 |   |
|   Research and development                          |   |   | 11,702 |   |   |   | 40,731 |   |   |   | 8,214 |   |   |   | 13,355 |   |   |   | 912,649 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total expenses                        |   |   | 670,971 |   |   |   | 1,036,261 |   |   |   | 604,874 |   |   |   | 782,826 |   |   |   | 7,296,414 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations                                          |   |   | (670,971 | ) |   |   | (1,036,261 | ) |   |   | (604,874 | ) |   |   | (782,826 | ) |   |   | (7,296,414 | ) |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                               |   |   |   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 657 |   |
| Interest expense                                              |   |   | (7,097 | ) |   |   | (9,798 | ) |   |   | (4,608 | ) |   |   | (3,230 | ) |   |   | (63,735 | ) |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                      |   |   | (678,068 | ) |   |   | (1,046,059 | ) |   | $ | (609,482 | ) |   | $ | (786,056 | ) |   | $ | (7,359,492 | ) |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss per share, basic and diluted                         |   | $ | (0.01 | ) |   | $ | (0.01 | ) |   | $ | (0.01 | ) |   | $ | (0.01 | ) |   |   |   |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average common                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   shares outstanding, basic and diluted             |   |   | 92,684,461 |   |   |   | 76,456,548 |   |   |   | 90,160,369 |   |   |   | 77,366,874 |   |   |   |   |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See notes to condensedconsolidated financial statements.      |

----

| SMARTMETRIC, INC. AND SUBSIDIARY                                              |
|-------------------------------------------------------------------------------|
| (A DEVELOPMENT STAGE COMPANY)                                                 |
| CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) |
|  FOR THE PERIOD DECEMBER 18, 2002 (INCEPTION) THROUGH JUNE 30, 2010      |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Deficits |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   |   | Class A |   |   | Common |   |   |   |   |   | Additional |   |   | During |   |   |   |   |
|                                                                          |   |   | Preferred Stock |   |   | Common Stock |   |   | Stock |   |   |   |   |   | Paid-in |   |   | Developmental |   |   |   |   |
|                                                                          |   |   | Shares |   |   | Amount |   |   | Shares |   |   | Amount |   |   | Shares |   |   | Amount |   |   | Capital |   |   | Stage |   |   | Total |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 18,                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2002                                                                          |   |   |   | - |   |   | $ | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss for the                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| period December                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 18, 2002                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (inception)                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| through June                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 30, 2003                                                                      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (60 | ) |   |   | (60 | ) |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| June 30, 2003                                                                 |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (60 | ) |   |   | (60 | ) |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued of                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Class A Common                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stock                                                                         |   |   |   | - |   |   |   | - |   |   |   | 50,000,000 |   |   |   | 50,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 50,000 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued of                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| common stock                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for cash                                                                      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 8,560,257 |   |   |   | 8,560 |   |   |   | 77,042 |   |   |   | - |   |   |   | 85,602 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss for the                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| year                                                                          |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (35,978 | ) |   |   | (35,978 | ) |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, 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 the                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| year                                                                          |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (258,355 | ) |   |   | (258,355 | ) |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance June 30,                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2005                                                                          |   |   |   | - |   |   |   | - |   |   |   | 50,000,000 |   |   |   | 50,000 |   |   |   | 8,560,257 |   |   |   | 8,560 |   |   |   | (18,835 | ) |   |   | (294,393 | ) |   |   | (254,668 | ) |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued of                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| common stock                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for cash, net of                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| offering                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| costs of $138,509                                                             |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 936,112 |   |   |   | 936 |   |   |   | 1,197,361 |   |   |   | - |   |   |   | 1,198,297 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued of                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| common stock                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for services                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| rendered                                                                      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 20,000 |   |   |   | 20 |   |   |   | 19,980 |   |   |   | - |   |   |   | 20,000 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion of                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| loan payable                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and accrued                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| interest to                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| common shares                                                                 |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 40,000 |   |   |   | 40 |   |   |   | 62,360 |   |   |   | - |   |   |   | 62,400 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion of                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Class A common                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| shares to                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| common shares                                                                 |   |   | - |   |   |   | - |   |   |   | (50,000,000 | ) |   |   | (50,000 | ) |   |   | 50,000,000 |   |   |   | 50,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss for the                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| year                                                                          |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,225,045 | ) |   |   | (1,225,045 | ) |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance June 30,                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2006                                                                          |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 59,556,369 |   |   |   | 59,556 |   |   |   | 1,260,866 |   |   |   | (1,519,438 | ) |   |   | (199,016 | ) |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued of                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| common stock                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for cash                                                                      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,208,887 |   |   |   | 1,209 |   |   |   | 759,140 |   |   |   | - |   |   |   | 760,349 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued of                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| common stock                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for services                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| rendered                                                                      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 191,505 |   |   |   | 192 |   |   |   | (192 | ) |   |   | - |   |   |   | - |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss for the                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| year                                                                          |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,050,189 | ) |   |   | (1,050,189 | ) |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance June 30,                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2007                                                                          |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 60,956,761 |   |   |   | 60,957 |   |   |   | 2,019,814 |   |   |   | (2,569,627 | ) |   |   | (488,856 | ) |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued of                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| common stock                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for cash                                                                      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 6,629,634 |   |   |   | 6,629 |   |   |   | 1,293,595 |   |   |   | - |   |   |   | 1,300,224 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued of                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| common stock                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for services                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| rendered                                                                      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,327,000 |   |   |   | 2,327 |   |   |   | 471,073 |   |   |   | - |   |   |   | 473,400 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss for the                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| year                                                                          |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,397,056 | ) |   |   | (1,397,056 | ) |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance June 30,                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008                                                                          |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 69,913,395 |   |   |   | 69,913 |   |   |   | 3,784,482 |   |   |   | (3,966,683 | ) |   |   | (112,288 | ) |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Transfer of                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| shares from                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| temporary equity                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| to common stock                                                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 160,837 |   |   |   | 161 |   |   |   | 241,095 |   |   |   | - |   |   |   | 241,256 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued of                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| common stock                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for cash                                                                      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,412,596 |   |   |   | 4,413 |   |   |   | 438,931 |   |   |   | - |   |   |   | 443,344 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued of                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| common stock                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for services                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| rendered                                                                      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,059,394 |   |   |   | 1,059 |   |   |   | 104,880 |   |   |   | - |   |   |   | 105,939 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss for the                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| year                                                                          |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,103,089 | ) |   |   | (1,103,089 | ) |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance June 30,                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2009                                                                          |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 75,546,222 |   |   |   | 75,546 |   |   |   | 4,569,388 |   |   |   | (5,069,772 | ) |   |   | (424,838 | ) |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for patent                                                                    |   |   |   | 200,000 |   |   |   | 200 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (200 | ) |   |   | - |   |   |   | - |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued of                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| common stock                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for cash                                                                      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 8,808,000 |   |   |   | 8,808 |   |   |   | 431,592 |   |   |   |   |   |   |   | 440,400 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued of                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| common stock                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for services                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| rendered                                                                      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,858,333 |   |   |   | 4,858 |   |   |   | 395,556 |   |   |   | - |   |   |   | 400,414 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Warrants issued                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for services                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 337,750 |   |   |   |   |   |   |   | 337,750 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss for the                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| year                                                                          |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,611,652 | ) |   |   | (1,611,652 | ) |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance June 30,                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2010                                                                          |   |   |   | 200,000 |   |   | $ | 200 |   |   |   | - |   |   | $ | - |   |   |   | 89,212,555 |   |   | $ | 89,212 |   |   | $ | 5,734,086 |   |   | $ | (6,681,424 | ) |   | $ | (857,926 | ) |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued of                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| common stock and                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| warrants for cash                                                             |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,274,000 |   |   |   | 3,274 |   |   |   | 176,176 |   |   |   | - |   |   |   | 179,450 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued of                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| common stock                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for services                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| rendered                                                                      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,225,750 |   |   |   | 1,226 |   |   |   | 176,073 |   |   |   | - |   |   |   | 177,299 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss for the                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| period                                                                        |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (678,068 | ) |   |   | (678,068 | ) |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance December                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 31, 2010                                                                      |   |   |   | 200,000 |   |   | $ | 200 |   |   |   | - |   |   | $ | - |   |   |   | 93,712,305 |   |   | $ | 93,712 |   |   | $ | 6,086,335 |   |   | $ | (7,359,492 | ) |   | $ | (1,179,245 | ) |

----

| SMARTMETRIC, INC. AND SUBSIDIARY                                                             |   |
|----------------------------------------------------------------------------------------------|--------|
| (A DEVELOPMENT STAGE COMPANY)                                                                |   |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                              |   |
| FOR THE SIX MONTHS ENDED DECEMBER 31, 2010 AND 2009                                          |   |
| WITH CUMULATIVE TOTALS SINCE DECEMBER 18, 2002 (INCEPTION) (UNAUDITED)                       |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |
|                                                                                         |   |   |   |   | CUMULATIVE |   |
|                                                                                         |   |   |   |   |   |   |   | TOTALS |   |
|                                                                                         |   |   |   |   | SINCE |   |
|                                                                                         |   | SIX MONTHS ENDED |   |   | DECEMBER |   |
|                                                                                         |   | DECEMBER 31, |   |   |   | 18, |   |
|                                                                                         |   | 2010 |   |   | 2009 |   |   |   | 2002 |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                                                         |   |   |   |   |   |   |   |   |   |   |
|   Net loss                                                                         |   | $ | (678,068 | ) |   | $ | (1,046,059 | ) |   | $ | (7,359,492 | ) |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
|   Adjustments to reconcile net loss to net cash                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|     used in operating activities:                                        |   |   |   |   |   |   |   |   |   |   |   |   |
|     Depreciation                                                         |   |   | - |   |   |   | 2,385 |   |   |   | 15,984 |   |
|     Amortization                                                         |   |   | 750 |   |   |   | 750 |   |   |   | 9,375 |   |
|     Common stock and warrants issued for consulting services             |   |   | 177,299 |   |   |   | 575,000 |   |   |   | 1,514,802 |   |
|     Interest accrued on convertible notes payable                        |   |   | - |   |   |   | - |   |   |   | 2,400 |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
|   Changes in assets and liabilities                                                |   |   |   |   |   |   |   |   |   |   |   |   |
|     (Increase) decrease in prepaid expenses                              |   |   | (45,000 | ) |   |   | 27,803 |   |   |   | (49,069 | ) |
|     Increase (decrease) in accounts payable and accrued expenses         |   |   | (51,933 | ) |   |   | 31,537 |   |   |   | 108,681 |   |
|     Increase in deferred Officer salary                                  |   |   | 19,467 |   |   |   | - |   |   |   | 101,891 |   |
|     Increase (decrease) in cash overdraft                                |   |   | (15,141 | ) |   |   | - |   |   |   | - |   |
|     Increase (decrease) in payroll taxes, accrued interest and penalties |   |   | (28,893 | ) |   |   | 102,778 |   |   |   | 407,378 |   |
|     Total adjustments                                                    |   |   | 56,549 |   |   |   | 740,253 |   |   |   | 2,111,442 |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
|     Net cash used in operating activities                                |   |   | (621,519 | ) |   |   | (305,806 | ) |   |   | (5,248,050 | ) |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
|   Acquisition of equipment                                                         |   |   | - |   |   |   | - |   |   |   | (15,984 | ) |
|   Patent costs                                                                     |   |   | - |   |   |   | - |   |   |   | (15,000 | ) |
|     Net cash used in investing activities                                |   |   | - |   |   |   | - |   |   |   | (30,984 | ) |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
|     Proceeds from notes payable                                          |   |   | - |   |   |   | - |   |   |   | 60,000 |   |
|     Increase in liability for stock to be issued                         |   |   | 1,215,290 |   |   |   | 177,700 |   |   |   | 1,369,294 |   |
|     Increase in due from shareholder                                     |   |   | - |   |   |   | 19,874 |   |   |   | - |   |
|      Increase (decrease) in cash overdraft                          |   |   | - |   |   |   | 65,713 |   |   |   | - |   |
|     Loans from related parties                                           |   |   | (7,494 | ) |   |   | - |   |   |   | 66,849 |   |
|     Repayments of loans from related parties                             |   |   | - |   |   |   | - |   |   |   | (54,427 | ) |
|     Stock subscriptions received from private placements                 |   |   | 179,450 |   |   |   | - |   |   |   | 3,626,044 |   |
|     Sale of common stock in public offering                              |   |   | - |   |   |   | - |   |   |   | 1,115,472 |   |
|     Public offering costs incurred                                       |   |   | - |   |   |   | - |   |   |   | (138,471 | ) |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
|       Net cash provided by financing activities                |   |   | 1,387,246 |   |   |   | 263,287 |   |   |   | 6,044,761 |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCREASE (DECREASE) IN                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|   CASH AND CASH EQUIVALENTS                                                        |   |   | 765,727 |   |   |   | (42,519 | ) |   |   | 765,727 |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS-                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|   BEGINNING OF PERIOD                                                              |   |   | - |   |   |   | 42,519 |   |   |   | - |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS-END OF PERIOD                                                      |   | $ | 765,727 |   |   | $ | - |   |   | $ | 765,727 |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH PAID DURING THE YEAR FOR:                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
|   Income taxes                                                                     |   | $ | - |   |   | $ | - |   |   | $ | - |   |
|   Interest expense                                                                 |   | $ | - |   |   | $ | - |   |   | $ | 28,174 |   |

----

----

----

----

----

----

|                           |   |   | Estimated  |    |   |    |         |    |   |    |                |   |
|--------------------------------|--------|--------|-----------------|---------|--------|---------|--------------|---------|--------|---------|---------------------|--------|
|                           |   |   | Useful Lives    |    |   |    | December 31, |    |   |    | June  30, |   |
|                           |   |   | ( Years)        |    |   |    | 2010         |    |   |    | 2010                |   |
| Computer equipment             |   |   | 3-5             |    |   | $  | 15,984       |    |   | $  | 15,984              |   |
|                           |   |   |            |    |   |    |         |    |   |    |                |   |
| Less: accumulated depreciation |   |   |            | (15,984 | )      |    |         | (15,984 | )      |
| Equipment, net                 |   |   | $               | 0       |   |    | $            | 0       |   |

|                                                   |   | Estimated Useful Lives( Years) |   |   | December 31,2010 |   |   | June 30,2010 |   |
|--------------------------------------------------------|--------|-------------------------------------|--------|--------|------------------|--------|--------|--------------|--------|
|                                                   |   |                                |   |   |             |   |   |         |   |
| Legal fees paid in connection with patent Applications |   |                                | 10     |   |             | $      | 15,000 |         |   | $ | 15,000 |   |
|                                                   |   |                                |   |   |             |   |   |         |   |   |   |   |
| Less: accumulated amortization                         |   |                                |   | (9,375 | )                |   |   | (8,625       | )      |
| Patent costs, net                                      |   |                                | $      | 5,625  |             |   | $      | 6,375        |   |

----

----

----

----

----

| Outstanding - July 1        |   |   | 7,239,750 |   |
|-----------------------------|--------|--------|-----------|--------|
| Issued                      |   |   | 1,379,622 |   |
| Exercised                   |   |   | -         |   |
| Expired                     |   |   | -         |   |
|                        |   |   |      |   |
| Outstanding - end of period |   |   | 8,619,372 |   |

| Outstanding - July 1        |   |   | 3,750,569                                                                                                                                                                             |   |
|-----------------------------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Issued                      |   |   |                 2,500,000                                                                             |   |
| Exercised                   |   |   |                               - |   |
| Expired                     |   |   | (918,000)                                                                                                                                                                             |   |
|                        |   |   |                                                                                                                                                                                  |   |
| Outstanding - end of period |   |   |   5,332,569                                                                                                                                                                      |   |

----

----

----

----

| Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
|---------|------------------------------------------------------------|

| Item 4. | CONTROLS AND PROCEDURES |
|---------|-------------------------|

----

| 1)   | We have committed to the establishment of effective internal audit functions, however, due to the scarcity of qualified candidates with extensive experience in U.S. GAAP reporting and accounting in the region, we were not able to hire sufficient internal audit resources as of February 22, 2011.  However, we will increase our search for qualified candidates with assistance from recruiters and through referrals. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2)   | Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible.  However, to the extent possible, we will implement procedures to ensure that the initiation of transactions, the custody of assets and the recording of transactions will be performed by separate individuals, and will ensure all timely filings in the future. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Exhibit No. | Description                                                                                                                                                                                                          |
|-------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                 |
| 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 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) |

| 32.2 | Certification of SmartMetric’s 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:  February 22, 2011 | By:               | /s/ Colin Hendrick       |   |
|                                |              | Colin Hendrick, President     |   |
|                                |              | (Principle Executive Officer) |   |
|                                |              |                          |   |

|                                |   |                                              |   |
|-------------------------------------|--------|---------------------------------------------------|--------|
| Dated:  February 22, 2011 | By:    | /s/ Jay Needelman                            |   |
|                                |   | Jay Needelman , Chief Financial Officer           |   |
|                                |   | (Principal Financial and Accounting Officer) |   |
|                                |   |                                              |   |