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

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| 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 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) |

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|                   | SMARTMETRIC,      INC. |                         |
|------------------------|------------------------|------------------------------|
|                   |                   |                         |   |
| February      20, 2008 | By:                    | /s/ Colin      Hendrick |   |
|                   |                   | Colin      Hendrick          |   |
|                   |                   | President                    |   |

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

----

|                                                                                        |   | December      31, |       |   | June      30, |   |
|---------------------------------------------------------------------------------------------|--------|-------------------|------------|--------|---------------|--------|
|                                                                                        |   | 2007              |       |   | 2007          |   |
|                                                                                        |   | (Unaudited)       |       |   |          |   |
| Assets                                                                                      |   |              |       |   |          |   |
| Current      assets:                                                                        |   |              |       |   |          |   |
|    Cash                                                                      |   | $                 | 5,119      |   |          | $      | 5,534 |   |
|    Prepaid      expenses                                                     |   |              | 2,604      |   |          |   | 58,952 |   |
|                                                                                        |   |              |       |   |          |   |   |   |
|       Total      current assets                               |   |              | 7,723      |   |          |   | 64,486 |   |
|                                                                                        |   |              |       |   |          |   |   |   |
| Equipment,      less accumulated depreciation of                                            |   |              |       |   |          |   |   |   |
|    $7,173      and $5,031, respectively                                      |   |              | 8,811      |   |          |   | 10,953 |   |
|                                                                                        |   |              |       |   |          |   |   |   |
| Other      assets:                                                                          |   |              |       |   |          |   |   |   |
|    Patent      costs, less accumulated amortization                          |   |              |       |   |          |   |   |   |
|       of      $4,875 and $4,125, respectively                 |   |              | 10,125     |   |          |   | 10,875 |   |
|    Organization      costs - net                                             |   |              | -          |   |          |   | 60 |   |
|                                                                                        |   |              |       |   |          |   |   |   |
| Total      assets                                                                           |   | $                 | 26,659     |   |          | $      | 86,374 |   |
|                                                                                        |   |              |       |   |          |   |   |   |
| Liabilities and Stockholders'      Equity                                                   |   |              |       |   |          |   |   |   |
|                                                                                        |   |              |       |   |          |   |   |   |
| Current      liabilities:                                                                   |   |              |       |   |          |   |   |   |
|    Accounts      payable                                                     |   | $                 | 175,542    |   |          | $      | 141,905 |   |
|    Payroll      taxes, withholdings, and accrued                             |   |              |       |   |          |   |   |   |
|       interest      and penalties                             |   |              | 149,681    |   |          |   | 192,069 |   |
|                                                                                        |   |              |       |   |          |   |   |   |
|       Total      current liabilities                          |   |              | 325,223    |   |          |   | 333,974 |   |
|                                                                                        |   |              |       |   |          |   |   |   |
| Other      liabilities                                                                      |   |              | -          |   |          |   | - |   |
|                                                                                        |   |              |       |   |          |   |   |   |
|    Total      liabilities                                                    |   |              | 325,223    |   |          |   | 333,974 |   |
|                                                                                        |   |              |       |   |          |   |   |   |
| Common      stock subject to possible rescission (160,837 shares)                           |   |              | 241,256    |   |          |   | 241,256 |   |
|                                                                                        |   |              |       |   |          |   |   |   |
| Stockholders'      equity :                                                                 |   |              |       |   |          |   |   |   |
|    Preferred      stock, $.01 par value; 5,000,000 shares                    |   |              |       |   |          |   |   |   |
|       authorized,      0 shares issued and outstanding        |   |              | -          |   |          |   | - |   |
|    Class      A common stock, $.001 par value; 50,000,000                    |   |              |       |   |          |   |   |   |
|       shares      authorized, 0 shares issued and outstanding |   |              | -          |   |          |   | - |   |
|    Common      stock, $.001 par value; 100,000,000 shares                    |   |              |       |   |          |   |   |   |
|       authorized,      issued and outstanding 62,273,074 and  |   |              |       |   |          |   |   |   |
|       60,956,761      shares, respectively                    |   |              | 62,273     |   |          |   | 60,957 |   |
|    Additional      paid-in capital                                           |   |              | 2,404,415  |   |          |   | 2,019,814 |   |
|    Deficit      accumulated during the development stage                     |   |              | (3,006,508 | )      |          |   | (2,569,627 | ) |
|                                                                                        |   |              |       |   |          |   |   |   |
|       Total      stockholders' equity (deficiency)            |   |              | (539,820   | )      |          |   | (488,856 | ) |
|                                                                                        |   |              |       |   |          |   |   |   |
| Total      liabilities and stockholders' equity                                             |   | $                 | 26,659     |   |          | $      | 86,374 |   |

----

|                                                    |   |                    |       |   |                  |   |       |                    |   |   |       |   |   | Cumulative           |       |
|---------------------------------------------------------|--------|-------------------------|------------|--------|-----------------------|--------|------------|-------------------------|--------|--------|------------|--------|--------|----------------------|------------|
|                                                    |   |                    |       |   |                  |   |       |                    |   |   |       |   |   | During      the      |       |
|                                                    |   |                    |       |   |                  |   |       |                    |   |   |       |   |   | Development          |       |
|                                                    |   |                    |       |   |                  |   |       |                    |   |   |       |   |   | Stage                |       |
|                                                    |   | Three      Months Ended |       |   | Six      Months Ended |   |       | (December      18, 2002 |   |
|                                                    |   | December      31,       |       |   |                  |   |       | December      31,       |   |   |       |   |   | to      December 31, |       |
|                                                    |   | 2007                    |       |   | 2006                  |   |       | 2007                    |   |   | 2006       |   |   |                 | 2007       | ) |
|                                                    |   |                    |       |   |                  |   |       |                    |   |   |       |   |   |                 |       |   |
| Revenues                                                |   | $                       | -          |   |                  | $      | -          |                    |   | $      | -          |   |   | $                    | -          |   |   | $ | - |   |
|                                                    |   |                    |       |   |                  |   |       |                    |   |   |       |   |   |                 |       |   |   |   |   |   |
| Operating      expenses:                                |   |                    |       |   |                  |   |       |                    |   |   |       |   |   |                 |       |   |   |   |   |   |
|    Officer's      salary                 |   |                    | 42,500     |   |                  |   | 42,500     |                    |   |   | 85,000     |   |   |                 | 85,000     |   |   |   | 510,000 |   |
|    Other      general and                |   |                    |       |   |                  |   |       |                    |   |   |       |   |   |                 |       |   |   |   |   |   |
|       administrative      |   |                    | 107,441    |   |                  |   | 149,438    |                    |   |   | 313,147    |   |   |                 | 305,257    |   |   |   | 1,965,297 |   |
|    Research      and                     |   |                    |       |   |                  |   |       |                    |   |   |       |   |   |                 |       |   |   |   |   |   |
|       development         |   |                    | 15,115     |   |                  |   | 28,778     |                    |   |   | 31,763     |   |   |                 | 44,404     |   |   |   | 509,759 |   |
|                                                    |   |                    |       |   |                  |   |       |                    |   |   |       |   |   |                 |       |   |   |   |   |   |
|       Total      expenses |   |                    | 165,056    |   |                  |   | 220,716    |                    |   |   | 429,910    |   |   |                 | 434,661    |   |   |   | 2,985,056 |   |
|                                                    |   |                    |       |   |                  |   |       |                    |   |   |       |   |   |                 |       |   |   |   |   |   |
| Loss      from operations                               |   |                    | (165,056   | )      |                  |   | (220,716   | )                       |   |   | (429,910   | )      |   |                 | (434,661   | ) |   |   | (2,985,056 | ) |
|                                                    |   |                    |       |   |                  |   |       |                    |   |   |       |   |   |                 |       |   |   |   |   |   |
| Interest      income                                    |   |                    | -          |   |                  |   | 46         |                    |   |   | -          |   |   |                 | 130        |   |   |   | 657 |   |
| Interest      expense                                   |   |                    | (5,069     | )      |                  |   | -          |                    |   |   | (6,971     | )      |   |                 | -          |   |   |   | (22,109 | ) |
|                                                    |   |                    |       |   |                  |   |       |                    |   |   |       |   |   |                 |       |   |   |   |   |   |
| Net      loss                                           |   | $                       | (170,125   | )      |                  | $      | (220,670   | )                       |   | $      | (436,881   | )      |   | $                    | (434,531   | ) |   | $ | (3,006,508 | ) |
|                                                    |   |                    |       |   |                  |   |       |                    |   |   |       |   |   |                 |       |   |   |   |   |   |
| Net      loss per share,                                |   |                    |       |   |                  |   |       |                    |   |   |       |   |   |                 |       |   |   |   |   |   |
|    basic      and diluted                |   | $                       | (0.00      | )      |                  | $      | (0.00      | )                       |   | $      | (0.01      | )      |   | $                    | (0.01      | ) |   |   |   |   |
|                                                    |   |                    |       |   |                  |   |       |                    |   |   |       |   |   |                 |       |   |   |   |   |   |
| Weighted      average                                   |   |                    |       |   |                  |   |       |                    |   |   |       |   |   |                 |       |   |   |   |   |   |
|    number      of common                 |   |                    |       |   |                  |   |       |                    |   |   |       |   |   |                 |       |   |   |   |   |   |
|    shares      outstanding,              |   |                    |       |   |                  |   |       |                    |   |   |       |   |   |                 |       |   |   |   |   |   |
|    basic      and diluted                |   |                    | 62,106,824 |   |                  |   | 59,913,326 |                    |   |   | 61,777,746 |   |   |                 | 59,781,073 |   |   |   |   |   |

----

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

----

|                                                              |   |                      |   |   |              |   |   |    |   |   |        |   |   |       |   |   | Deficit         |   |      |          |   |
|-------------------------------------------------------------------|--------|---------------------------|--------|--------|-------------------|--------|--------|---------|--------|--------|-------------|--------|--------|------------|--------|--------|-----------------|--------|-----------|---------------|--------|
|                                                              |   |                      |   |   |              |   |   |    |   |   |        |   |   |       |   |   | Accumulated     |   |      | Total         |   |
|                                                              |   |                      |   |   |              |   |   |    |   |   |        |   |   | Additional |   |   | During      the |   |      | Stockholders' |   |
|                                                              |   | Class      A Common Stock |   |   | Common      Stock |   |   | Paid-In |   |   | Development |   |   | Equity     |   |
|                                                              |   | Shares                    |   |   | Amount            |   |   | Shares  |   |   | Amount      |   |   | Capital    |   |   | Stage           |   |      | (Deficiency)  |   |
| Conversion      of $60,000 loans payable and                      |   |                      |   |   |              |   |   |    |   |   |        |   |   |       |   |   |            |   |      |
|    accrued      interest to common stock in        |   |                      |   |   |              |   |   |    |   |   |        |   |   |       |   |   |            |   |      |          |   |
|    March      2006                                 |   |                      | -      |   |              | $      | -      |    |   |   | 40,000      |   |   | $          | 40     |   |            | $      | 62,360    |          |   | $ | - |   |   | $ | 62,400 |   |
|                                                              |   |                      |   |   |              |   |   |    |   |   |        |   |   |       |   |   |            |   |      |          |   |   |   |   |   |   |   |   |
| Shares      issued for services                                   |   |                      | -      |   |              |   | -      |    |   |   | 20,000      |   |   |       | 20     |   |            |   | 19,980    |          |   |   | - |   |   |   | 20,000 |   |
|                                                              |   |                      |   |   |              |   |   |    |   |   |        |   |   |       |   |   |            |   |      |          |   |   |   |   |   |   |   |   |
| Sale      of Units from May 2006 to June 2006                     |   |                      |   |   |              |   |   |    |   |   |        |   |   |       |   |   |            |   |      |          |   |   |   |   |   |   |   |   |
|    in      private offering at $1.15 per Unit less |   |                      |   |   |              |   |   |    |   |   |        |   |   |       |   |   |            |   |      |          |   |   |   |   |   |   |   |   |
|    offering      costs of $38                      |   |                      | -      |   |              |   | -      |    |   |   | 192,464     |   |   |       | 192    |   |            |   | 221,104   |          |   |   | - |   |   |   | 221,296 |   |
|                                                              |   |                      |   |   |              |   |   |    |   |   |        |   |   |       |   |   |            |   |      |          |   |   |   |   |   |   |   |   |
| Net      loss for year ended June 30, 2006                        |   |                      |   |   |              |   |   |    |   |   |        |   |   |       |   |   |            |   |      |          |   |   | (1,225,045 | ) |   |   | (1,225,045 | ) |
|                                                              |   |                      |   |   |              |   |   |    |   |   |        |   |   |       |   |   |            |   |      |          |   |   |   |   |   |   |   |   |
| Balances,      June 30, 2006                                      |   |                      | -      |   |              |   | -      |    |   |   | 59,556,369  |   |   |       | 59,556 |   |            |   | 1,260,866 |          |   |   | (1,519,438 | ) |   |   | (199,016 | ) |
|                                                              |   |                      |   |   |              |   |   |    |   |   |        |   |   |       |   |   |            |   |      |          |   |   |   |   |   |   |   |   |
| Sale      of Units in private placements                          |   |                      | -      |   |              |   | -      |    |   |   | 1,208,887   |   |   |       | 1,209  |   |            |   | 759,140   |          |   |   | - |   |   |   | 760,349 |   |
|                                                              |   |                      |   |   |              |   |   |    |   |   |        |   |   |       |   |   |            |   |      |          |   |   |   |   |   |   |   |   |
| Shares      issued for services and adjustments                   |   |                      | -      |   |              |   | -      |    |   |   | 191,505     |   |   |       | 192    |   |            |   | (192      | )             |   |   | - |   |   |   | - |   |
|                                                              |   |                      |   |   |              |   |   |    |   |   |        |   |   |       |   |   |            |   |      |          |   |   |   |   |   |   |   |   |
| Net      loss for year ended June 30, 2007                        |   |                      | -      |   |              |   | -      |    |   |   | -           |   |   |       | -      |   |            |   | -         |          |   |   | (1,050,189 | ) |   |   | (1,050,189 | ) |
|                                                              |   |                      |   |   |              |   |   |    |   |   |        |   |   |       |   |   |            |   |      |          |   |   |   |   |   |   |   |   |
| Balances,      June 30, 2007                                      |   |                      | -      |   |              |   | -      |    |   |   | 60,956,761  |   |   |       | 60,957 |   |            |   | 2,019,814 |          |   |   | (2,569,627 | ) |   |   | (488,856 | ) |
|                                                              |   |                      |   |   |              |   |   |    |   |   |        |   |   |       |   |   |            |   |      |          |   |   |   |   |   |   |   |   |
| Unaudited:                                                        |   |                      |   |   |              |   |   |    |   |   |        |   |   |       |   |   |            |   |      |          |   |   |   |   |   |   |   |   |
| Sale      of Units in private placements                          |   |                      | -      |   |              |   | -      |    |   |   | 1,236,313   |   |   |       | 1,236  |   |            |   | 360,681   |          |   |   | - |   |   |   | 361,917 |   |
|                                                              |   |                      |   |   |              |   |   |    |   |   |        |   |   |       |   |   |            |   |      |          |   |   |   |   |   |   |   |   |
| Shares      issued for services                                   |   |                      | -      |   |              |   | -      |    |   |   | 80,000      |   |   |       | 80     |   |            |   | 23,920    |          |   |   | - |   |   |   | 24,000 |   |
|                                                              |   |                      |   |   |              |   |   |    |   |   |        |   |   |       |   |   |            |   |      |          |   |   |   |   |   |   |   |   |
| Net      loss for six months ended                                |   |                      |   |   |              |   |   |    |   |   |        |   |   |       |   |   |            |   |      |          |   |   |   |   |   |   |   |   |
|    December      31, 2007                          |   |                      | -      |   |              |   | -      |    |   |   | -           |   |   |       | -      |   |            |   | -         |          |   |   | (436,881 | ) |   |   | (436,881 | ) |
|                                                              |   |                      |   |   |              |   |   |    |   |   |        |   |   |       |   |   |            |   |      |          |   |   |   |   |   |   |   |   |
| Balances,      December 31, 2007                                  |   |                      | -      |   |              | $      | -      |    |   |   | 62,273,074  |   |   | $          | 62,273 |   |            | $      | 2,404,415 |          |   | $ | (3,006,508 | ) |   | $ | (539,820 | ) |

----

|                                                                              |   |                  |     |   |                    |   |     | Cumulative           |   |
|-----------------------------------------------------------------------------------|--------|-----------------------|----------|--------|-------------------------|--------|----------|----------------------|--------|
|                                                                              |   |                  |     |   |                    |   |     | During      the      |   |
|                                                                              |   |                  |     |   |                    |   |     | Development          |   |
|                                                                              |   |                  |     |   |                    |   |     | Stage                |   |
|                                                                              |   | Six      Months Ended |     |   | (December      18, 2002 |   |
|                                                                              |   | December      31,     |     |   |                    |   |     | to      December 31, |   |
|                                                                              |   | 2007                  |     |   | 2006                    |   |     |                 | 2007   |   |
|                                                                              |   |                  |     |   |                    |   |     |                 |   |   |
| Cash      flows from operating activities:                                        |   |                  |     |   |                    |   |     |                 |   |   |
|    Net      loss                                                   |   | $                     | (436,881 | )      |                    | $      | (434,531 | )                    |   | $ | (3,006,508 | ) |
|    Interest      accrued on convertible notes payable              |   |                  | -        |   |                    |   | -        |                 |   |   | 2,400 |   |
|    Shares      issued for services                                 |   |                  | 24,000   |   |                    |   | -        |                 |   |   | 44,000 |   |
|    Depreciation      of equipment                                  |   |                  | 2,142    |   |                    |   | 2,369    |                 |   |   | 7,173 |   |
|    Amortization      of patent costs                               |   |                  | 750      |   |                    |   | 750      |                 |   |   | 4,875 |   |
|    Changes      in operating assets and liabilities:               |   |                  |     |   |                    |   |     |                 |   |   |   |   |
|       Prepaid      expenses                         |   |                  | 56,348   |   |                    |   | (21,031  | )                    |   |   | (2,604 | ) |
|       Organization      costs                       |   |                  | 60       |   |                    |   | 60       |                 |   |   | - |   |
|       Accounts      payable and accrued expenses    |   |                  | 33,637   |   |                    |   | 30,658   |                 |   |   | 175,542 |   |
|       Payroll      taxes, withholdings, and accrued |   |                  |     |   |                    |   |     |                 |   |   |   |   |
|          interest      and penalties |   |                  | (42,388  | )      |                    |   | 55,485   |                 |   |   | 149,681 |   |
|                                                                              |   |                  |     |   |                    |   |     |                 |   |   |   |   |
|       Net      cash used for operating activities   |   |                  | (362,332 | )      |                    |   | (366,240 | )                    |   |   | (2,625,441 | ) |
|                                                                              |   |                  |     |   |                    |   |     |                 |   |   |   |   |
| Cash      flows from investing activities:                                        |   |                  |     |   |                    |   |     |                 |   |   |   |   |
|    Equipment      purchased                                        |   |                  | -        |   |                    |   | (10,253  | )                    |   |   | (15,984 | ) |
|    Patent      costs incurred                                      |   |                  | -        |   |                    |   | -        |                 |   |   | (15,000 | ) |
|                                                                              |   |                  |     |   |                    |   |     |                 |   |   |   |   |
|   Net      cash used for investing activities                           |   |                  | -        |   |                    |   | (10,253  | )                    |   |   | (30,984 | ) |
|                                                                              |   |                  |     |   |                    |   |     |                 |   |   |   |   |
| Cash      flows from financing activities:                                        |   |                  |     |   |                    |   |     |                 |   |   |   |   |
|    Proceeds      from notes payable                                |   |                  | -        |   |                    |   | -        |                 |   |   | 60,000 |   |
|    Loans      from related party                                   |   |                  | -        |   |                    |   | -        |                 |   |   | 54,427 |   |
|    Repayment      of loans from related party                      |   |                  | -        |   |                    |   | -        |                 |   |   | (54,427 | ) |
|    Stock      subscriptions collected from private placements, net |   |                  | 361,917  |   |                    |   | 377,842  |                 |   |   | 1,624,543 |   |
|    Sale      of common stock in public offering                    |   |                  | -        |   |                    |   | -        |                 |   |   | 1,115,472 |   |
|    Public      offering costs incurred                             |   |                  | -        |   |                    |   | -        |                 |   |   | (138,471 | ) |
|                                                                              |   |                  |     |   |                    |   |     |                 |   |   |   |   |
|    Net      cash provided by  financing activities       |   |                  | 361,917  |   |                    |   | 377,842  |                 |   |   | 2,661,544 |   |
|                                                                              |   |                  |     |   |                    |   |     |                 |   |   |   |   |
| Net      increase (decrease) in cash                                              |   |                  | (415     | )      |                    |   | 1,349    |                 |   |   | 5,119 |   |
|                                                                              |   |                  |     |   |                    |   |     |                 |   |   |   |   |
| Cash,      beginning of period                                                    |   |                  | 5,534    |   |                    |   | 63,243   |                 |   |   | - |   |
|                                                                              |   |                  |     |   |                    |   |     |                 |   |   |   |   |
| Cash,      end of period                                                          |   | $                     | 5,119    |   |                    | $      | 64,592   |                 |   | $ | 5,119 |   |
|                                                                              |   |                  |     |   |                    |   |     |                 |   |   |   |   |
| Supplemental      disclosures of cash flow information:                           |   |                  |     |   |                    |   |     |                 |   |   |   |   |
|    Interest      paid                                              |   | $                     | 5,833    |   |                    | $      | -        |                 |   | $ | 5,833 |   |
|                                                                              |   |                  |     |   |                    |   |     |                 |   |   |   |   |
|    Income      taxes paid                                          |   | $                     | -        |   |                    | $      | -        |                 |   | $ | - |   |

----

----

|                                          |   | Six Months      Ended  |      |   | Year    Ended      |   |
|-----------------------------------------------|--------|------------------------|-----------|--------|--------------------|--------|
|                                          |   | December 31,      2007 |      |   | June 30,      2007 |   |
|                                          |   |                   |      |   |               |   |
| Outstanding at      beginning of period       |   |                   | 1,291,780 |   |               |   | 192,464 |   |
| Issued                                   |   |                   | 1,236,313 |   |               |   | 1,291,780 |   |
| Exercised                           |   |                   | -         |   |               |   | - |   |
| Expired                                  |   |                   | (529,014  | )      |               |   | (192,464 | ) |
|                                          |   |                   |      |   |               |   |   |   |
| Outstanding at end      of period   |   |                   | 1,999,079 |   |               |   | 1,291,780 |   |

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