| 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                                                                                                                                                                                | F-1    |
|                                   | Condensed consolidated balance sheets as of September 30, 2011 (unaudited) and June 30, 2011                                                                                                   | F-1    |
|                                   | Condensed consolidated statements of operations for the three months ended September 30, 2011 and 2010 and for the period from December 18, 2002 (inception) through September 30, 2011 (unaudited) | F-2    |
|                                   | Condensed consolidated statements of changes in stockholders’ equity (deficit) for the period December 18, 2002 (inception) through September 30, 2011 (unaudited)                            | F-3    |
|                                   | Condensed consolidated statements of cash flows for the three months ended September 30, 2011 and 2010 and for the period from December 18, 2002 (inception) through September 30, 2011 (unaudited) | F-4    |
|                                   | Notes to condensed consolidated financial statements                                                                                                                                                | F-5    |
| Item 2.                           | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                                                                         | 3      |
| Item 3.                                | Quantitative and Qualitative Disclosures about Market Risk                                                                                                                                          |   |
| Item 4.                      | Controls and Procedures                                                                                                                                                                             | 6      |
|                                   |                                                                                                                                                                                                |   |
| PART II.      | OTHER INFORMATION                                                                                                                                                                                   | 6      |
| Item 1.                                | Legal Proceedings                                                                                                                                                                                   |   |
| Item 1A.                               | Risk Factors                                                                                                                                                                                        |   |
| 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      |

----

|                                                                       |   | September 30, |       |   | June 30, |   |
|----------------------------------------------------------------------------|--------|---------------|------------|--------|----------|--------|
|                                                                       |   | 2011          |       |   | 2011     |   |
| Assets                                                                     |   | (unaudited)   |       |   |     |   |
| Current assets:                                                            |   |          |       |   |     |   |
|   Cash                                                           |   | $             | 506,350    |   |     | $      | 272,599 |   |
|   Prepaid expenses and other current assets                      |   |          | 555,121    |   |     |   | 948,750 |   |
|                                                                       |   |          |       |   |     |   |   |   |
|     Total current assets                               |   |          | 1,061,471  |   |     |   | 1,221,349 |   |
|                                                                       |   |          |       |   |     |   |   |   |
| Patent costs, less accumulated amortization                                |   |          |       |   |     |   |   |   |
|    of $10,500 and $10,125, respectively                     |   |          | 4,500      |   |     |   | 4,875 |   |
|                                                                       |   |          |       |   |     |   |   |   |
|                                                                       |   |          |       |   |     |   |   |   |
| Total assets                                                               |   | $             | 1,065,971  |   |     | $      | 1,226,224 |   |
|                                                                       |   |          |       |   |     |   |   |   |
| Liabilities and Stockholders' (Deficit)                                    |   |          |       |   |     |   |   |   |
| Current liabilities:                                                       |   |          |       |   |     |   |   |   |
|   Accounts payable and accrued expenses                          |   | $             | 150,057    |   |     | $      | 80,882 |   |
|   Liability for stock to be issued                               |   |          | 961,651    |   |     |   | 1,162,663 |   |
|   Deferred officer's salary                                      |   |          | 65,294     |   |     |   | 65,294 |   |
|   Shareholder loan                                               |   |          | 4,422      |   |     |   | 12,422 |   |
|   Payroll taxes, withholdings and accrued                        |   |          |       |   |     |   |   |   |
|     interest and penalties                             |   |          | 173,580    |   |     |   | 179,964 |   |
|                                                                       |   |          |       |   |     |   |   |   |
|     Total current liabilities                          |   |          | 1,355,004  |   |     |   | 1,501,225 |   |
|                                                                       |   |          |       |   |     |   |   |   |
| Commitments and contingencies                                              |   |          |       |   |     |   |   |   |
|                                                                       |   |          |       |   |     |   |   |   |
| Stockholders' deficit                                                      |   |          |       |   |     |   |   |   |
|   Preferred stock, $.001 par value; 5,000,000 shares             |   |          | 200        |   |     |   | 200 |   |
|     authorized; 200,000 shares issued and outstanding  |   |          |       |   |     |   |   |   |
|   Common stock, $.001 par value; 200,000,000 shares              |   |          |       |   |     |   |   |   |
|     authorized; issued and outstanding 104,214,835 and |   |          |       |   |     |   |   |   |
|     101,702,335 shares, respectively                   |   |          | 104,215    |   |     |   | 101,702 |   |
|   Additional paid-in capital                                     |   |          | 9,056,173  |   |     |   | 8,189,561 |   |
|   Deficit accumulated during the development stage               |   |          | (9,449,621 | )      |     |   | (8,566,464 | ) |
|                                                                       |   |          |       |   |     |   |   |   |
|     Total stockholders' deficit                        |   |          | (289,033   | )      |     |   | (275,001 | ) |
|                                                                       |   |          |       |   |     |   |   |   |
| Total liabilities and stockholders' deficit                                |   | $             | 1,065,971  |   |     | $      | 1,226,224 |   |

----

|                                              |   |          |        |
|---------------------------------------------------|--------|---------------|-------------|
|                                              |   |          |        |   |   |   |   |   |   |
|                                              |   |          |        |   |   |   |   |   |   |
|                                              |   |          |        |   |   |   |   | During the |   |
|                                              |   |          |        |   |   |   |   | Development |   |
|                                              |   |          |        |   |   |   |   | Stage |   |
|                                              |   | Three Months  |        |   | Three Months |   |   | (December |   |
|                                              |   | Ended         |        |   | Ended |   |   | 18, 2002 |   |
|                                              |   | September 30, |        |   | September 30, |   |   | to September 30, |   |
|                                              |   | 2011          |        |   | 2010 |   |   | 2011) |   |
|                                              |   |          |        |   |   |   |   |   |   |   |
| Revenues                                          |   | $             | -           |   |   | $ | - |   |   | $ | - |   |
|                                              |   |          |        |   |   |   |   |   |   |   |   |   |
| Operating expenses                                |   |          |        |   |   |   |   |   |   |   |   |   |
|   Officer's salary                      |   |          | 42,500      |   |   |   | 42,500 |   |   |   | 1,147,500 |   |
|   Other general and administrative      |   |          | 743,693     |   |   |   | 19,734 |   |   |   | 6,924,724 |   |
|   Research and development              |   |          | 96,964      |   |   |   | 3,488 |   |   |   | 1,315,571 |   |
|                                              |   |          |        |   |   |   |   |   |   |   |   |   |
|     Total operating expenses  |   |          | 883,157     |   |   |   | 65,722 |   |   |   | 9,387,795 |   |
|                                              |   |          |        |   |   |   |   |   |   |   |   |   |
| Loss from operations                              |   |          | (883,157    | ) |   |   | (65,722 | ) |   |   | (9,387,795 | ) |
|                                              |   |          |        |   |   |   |   |   |   |   |   |   |
| Interest income                                   |   |          | -           |   |   |   | - |   |   |   | 657 |   |
| Interest (expense)                                |   |          | -           |   |   |   | (2,489 | ) |   |   | (62,483 | ) |
|                                              |   |          |        |   |   |   |   |   |   |   |   |   |
| Loss before income taxes                          |   |          | (883,157    | ) |   |   | (68,211 | ) |   |   | (9,449,621 | ) |
| Income taxes                                      |   |          | -           |   |   |   | - |   |   |   | - |   |
|                                              |   |          |        |   |   |   |   |   |   |   |   |   |
| Net loss                                          |   | $             | (883,157    | ) |   | $ | (68,211 | ) |   | $ | (9,449,621 | ) |
|                                              |   |          |        |   |   |   |   |   |   |   |   |   |
| Net loss per share, basic and diluted             |   | $             | (0.01       | ) |   | $ | (0.00 | ) |   |   |   |   |
|                                              |   |          |        |   |   |   |   |   |   |   |   |   |
| Weighted average number of common                 |   |          |        |   |   |   |   |   |   |   |   |   |
|   shares outstanding, basic and diluted |   |          | 105,754,598 |   |   |   | 90,544,444 |   |   |   |   |   |

----

|                      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |          |    |   |   |   |        |    |   |   | 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 and          |   |   |            |    |   |         |   |   |    |   |   |        |   |   |          |    |   |   |   |        |    |   |   |        |   |   |   |      |   |   |   |   |   |
| warrants 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              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |          |    |   |   |   |        |    |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| rendered                  |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |          | -       |   |   |   | -           |    |   |   | -           |   |   |   | 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         |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |          | -       |   |   |   | 10,264,030  |    |   |   | 10,264      |   |   |   | 1,851,014 |   |   |   | - |   |   |   | 1,861,278 |   |
|                      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |          |    |   |   |   |        |    |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Shares issued of          |   |   |            |    |   |         |   |   |    |   |   |        |   |   |          |    |   |   |   |        |    |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| common stock and warrants |   |   |            |    |   |         |   |   |    |   |   |        |   |   |          |    |   |   |   |        |    |   |   |        |   |   |   |      |   |
| for services              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |          |    |   |   |   |        |    |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| rendered                  |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |          | -       |   |   |   | 2,225,750   |    |   |   | 2,226       |   |   |   | 604,461   |   |   |   | - |   |   |   | 606,687 |   |
|                      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |          |    |   |   |   |        |    |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Net loss for the          |   |   |            |    |   |         |   |   |    |   |   |        |   |   |          |    |   |   |   |        |    |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| period                    |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |          | -       |   |   |   | -           |    |   |   | -           |   |   |   | -         |   |   |   | (1,885,040 | ) |   |   | (1,885,040 | ) |
|                      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |          |    |   |   |   |        |    |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Balance June              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |          |    |   |   |   |        |    |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| 30, 2011                  |   |   |            | 200,000 |   |         |   | 200    |    |   |   | -           |   |   |          | -       |   |   |   | 101,702,335 |    |   |   | 101,702     |   |   |   | 8,189,561 |   |   |   | (8,566,464 | ) |   |   | (275,001 | ) |
|                      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |          |    |   |   |   |        |    |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Shares issued of          |   |   |            |    |   |         |   |   |    |   |   |        |   |   |          |    |   |   |   |        |    |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| common stock and warrants |   |   |            |    |   |         |   |   |    |   |   |        |   |   |          |    |   |   |   |        |    |   |   |        |   |   |   |      |   |
| for services              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |          |    |   |   |   |        |    |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| rendered                  |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |          | -       |   |   |   | 2,512,500   |    |   |   | 2,513       |   |   |   | 866,612   |   |   |   | - |   |   |   | 869,125 |   |
|                      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |          |    |   |   |   |        |    |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Net loss for the          |   |   |            |    |   |         |   |   |    |   |   |        |   |   |          |    |   |   |   |        |    |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| period                    |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |          | -       |   |   |   | -           |    |   |   | -           |   |   |   | -         |   |   |   | (883,157 | ) |   |   | (883,157 | ) |
|                      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |          |    |   |   |   |        |    |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Balance September         |   |   |            |    |   |         |   |   |    |   |   |        |   |   |          |    |   |   |   |        |    |   |   |        |   |   |   |      |   |   |   |   |   |
| 30, 2011                  |   |   |            | 200,000 |   |         | $      | 200    |    |   |   | -           |   |   | $             | -       |   |   |   | 104,214,835 |    |   | $      | 104,215     |   |   | $      | 9,056,173 |   |   | $ | (9,449,621 | ) |   | $ | (289,033 | ) |

----

|                                                                                                          |   |          |     |   |          |   |    | During the       |   |
|---------------------------------------------------------------------------------------------------------------|--------|---------------|----------|--------|---------------|--------|---------|------------------|--------|
|                                                                                                          |   |          |     |   |          |   |    | Development      |   |
|                                                                                                          |   |          |     |   |          |   |    | Stage            |   |
|                                                                                                          |   | Three Months  |     |   | Three Months  |   |    | (December        |   |
|                                                                                                          |   | Ended         |     |   | Ended         |   |    |  18, 2002   |   |
|                                                                                                          |   | September 30, |     |   | September 30, |   |    | to September 30, |   |
|                                                                                                          |   | 2011          |     |   | 2010          |   |    |  2011)      |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                                                                          |   |          |     |   |          |   |    |             |   |   |
|   Net (loss)                                                                                        |   | $             | (883,157 | )      |          | $      | (68,211 | )                |   | $ | (9,449,621 | ) |
|                                                                                                          |   |          |     |   |          |   |    |             |   |   |   |   |
|   Adjustments to reconcile net loss to net cash                                                     |   |          |     |   |          |   |    |             |   |   |   |   |
|     used in operating activities:                                                         |   |          |     |   |          |   |    |             |   |   |   |   |
|     Depreciation                                                                          |   |          | -        |   |          |   | -       |             |   |   | 15,984 |   |
|     Amortization                                                                          |   |          | 375      |   |          |   | 375     |             |   |   | 10,500 |   |
|     Common stock and warrants issued for services                                         |   |          | -        |   |          |   | -       |             |   |   | 2,145,202 |   |
|     Interest accrued on convertible notes payable                                         |   |          | -        |   |          |   | -       |             |   |   | 2,400 |   |
|                                                                                                          |   |          |     |   |          |   |    |             |   |   |   |   |
|   Changes in assets and liabilities                                                                 |   |          |     |   |          |   |    |             |   |   |   |   |
|      (Increase) decrease in prepaid expenses and other assets                        |   |          | 393,629  |   |          |   | -       |             |   |   | (555,121 | ) |
|     Increase (decrease) in accounts payable and accrued expenses                          |   |          | 69,175   |   |          |   | 9,895   |             |   |   | 150,057 |   |
|     Increase (decrease) in deferred officer's salary                                      |   |          | -        |   |          |   | 19,467  |             |   |   | 65,294 |   |
|     Increase (decrease) in payroll taxes, withholdings and accrued interest and penalties |   |          | (6,384   | )      |          |   | (58,986 | )                |   |   | 173,580 |   |
|                                                                                                          |   |          |     |   |          |   |    |             |   |   |   |   |
|     Net cash (used in) operating activities                                               |   |          | (426,362 | )      |          |   | (97,460 | )                |   |   | (7,441,725 | ) |
|                                                                                                          |   |          |     |   |          |   |    |             |   |   |   |   |
| 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 (decrease) in cash overdraft                                                 |   |          | -        |   |          |   | (15,141 | )                |   |   | - |   |
|     Loans from related parties                                                            |   |          | -        |   |          |   | 483     |             |   |   | 74,343 |   |
|     Repayments of loans from related parties                                              |   |          | (8,000   | )      |          |   | -       |             |   |   | (69,921 | ) |
|     Proceeds from sale of common stock in public offering and private placements          |   |          | 668,113  |   |          |   | 37,000  |             |   |   | 6,952,986 |   |
|     Change in liability for stock to be issued                                            |   |          | -        |   |          |   | 114,731 |             |   |   | 961,651 |   |
|                                                                                                          |   |          |     |   |          |   |    |             |   |   |   |   |
|       Net cash provided by financing activities                                 |   |          | 660,113  |   |          |   | 137,073 |             |   |   | 7,979,059 |   |
|                                                                                                          |   |          |     |   |          |   |    |             |   |   |   |   |
| NET INCREASE IN                                                                                               |   |          |     |   |          |   |    |             |   |   |   |   |
|   CASH                                                                                              |   |          | 233,751  |   |          |   | 39,613  |             |   |   | 506,350 |   |
|                                                                                                          |   |          |     |   |          |   |    |             |   |   |   |   |
| CASH                                                                                                          |   |          |     |   |          |   |    |             |   |   |   |   |
|    Beginning of period                                                                         |   |          | 272,599  |   |          |   | -       |             |   |   | - |   |
|                                                                                                          |   |          |     |   |          |   |    |             |   |   |   |   |
|    End of period                                                                               |   | $             | 506,350  |   |          | $      | 39,613  |             |   | $ | 506,350 |   |
|                                                                                                          |   |          |     |   |          |   |    |             |   |   |   |   |
| CASH PAID DURING THE PERIOD FOR:                                                                              |   |          |     |   |          |   |    |             |   |   |   |   |
|   Income taxes                                                                                      |   | $             | -        |   |          | $      | -       |             |   | $ | - |   |
|   Interest expense                                                                                  |   | $             | -        |   |          | $      | -       |             |   | $ | 28,174 |   |
|                                                                                                          |   |          |     |   |          |   |    |             |   |   |   |   |
| SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES                                           |   |          |     |   |          |   |    |             |   |
|   Issuance of common stock in satisfaction of liability to issue common stock                       |   | $             | -        |   |          | $      | 146,454 |             |   | $ | 300,458 |   |
|   Warrants issued for prepaid consulting services                                                   |   | $             | -        |   |          | $      | -       |             |   | $ | 146,658 |   |
|   Conversion of notes payable and accrued interest to common stock                                  |   | $             | -        |   |          | $      | -       |             |   | $ | 62,400 |   |
|   Issuance of preferred stock and reduction of additional paid in capital for patent                |   | $             | -        |   |          | $      | -       |             |   | $ | 200 |   |
|   Stock issued for prepaid consulting services                                                      |   | $             | 841,358  |   |          | $      | -       |             |   | $ | 1,124,088 |   |

----

----

----

----

|                                                  |   | Estimated Useful Lives( Years) |   |    | September 30,2011 |   |   | June 30,2011 |   |
|-------------------------------------------------------|--------|-------------------------------------|--------|---------|-------------------|--------|--------|--------------|--------|
|                                                  |   |                                |   |    |              |   |   |         |   |
| Legal fees paid in connection with patentApplications |   |                                | 10     |    |              | $      | 15,000 |         |   | $ | 15,000 |   |
|                                                  |   |                                |   |    |              |   |   |         |   |   |   |   |
| Less: accumulated amortization                        |   |                                |   | (10,500 | )                 |   |   | (10,125      | )      |
| Patent costs, net                                     |   |                                | $      | 4,500   |              |   | $      | 4,875        |   |

----

----

----

----

----

----

| Outstanding - June 30, 2011      |   |   | 8,279,028  |   |
|----------------------------------|--------|--------|------------|--------|
| Issued                           |   |   | 3,344,721  |   |
| Exercised                        |   |   | -          |   |
| Expired                          |   |   | (560,850)  |   |
|                             |   |   |       |   |
| Outstanding - September 30, 2011 |   |   | 11,062,899 |   |

| Outstanding - June 30, 2010      |   |   | 7,239,750        |   |
|----------------------------------|--------|--------|------------------|--------|
| Issued                           |   |   | 436,850          |   |
| Exercised                        |   |   | -                |   |
| Expired                          |   |   | (486,000         | )      |
|                             |   |   |             |   |
| Outstanding - September 30, 2010 |   |   |   7,190,600 |   |

----

| 1.   | For an order pursuant to 35 U.S.C. section 271 declaring that both MasterCard and Visa have infringed one or more claims of the ‘464 Patent; |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | A preliminary and permanent injunction against both MasterCard and Visa prohibiting each of them from further infringement of the ‘464 Patent; |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.   | An award of actual damages the Company has suffered by reason of the infringement charged in the complaint in an amount not less than a reasonable royalty on both MasterCard’s and Visa’s infringement of the ‘464 Patent: |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.   | An award to the Company of its costs; and |
|----------------|-------------------------------------------|

| 5.   | Such other relief as the Court may deem just and proper. |
|----------------|----------------------------------------------------------|

----

----

----

----

|  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 limited resources of the Company, we plan to defer the establishment of an effective internal audit function until our product is ready for production and sale. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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 capable individuals, and will ensure all timely filing of our 10-Qs and 10K in the future. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 1.   | For an order pursuant to 35 U.S.C. section 271 declaring that both MasterCard and Visa have infringed one or more claims of the ‘464 Patent; |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | A preliminary and permanent injunction against both MasterCard and Visa prohibiting each of them from further infringement of the ‘464 Patent; |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.   | An award of actual damages the Company has suffered by reason of the infringement charged in the complaint in an amount not less than a reasonable royalty on both MasterCard’s and Visa’s infringement of the ‘464 Patent: |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.   | An award to the Company of its costs; and |
|----------------|-------------------------------------------|

| 5.   | Such other relief as the Court may deem just and proper. |
|----------------|----------------------------------------------------------|

| 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:  November 18, 2011 | By:               | /s/ C. Hendrick                                 |   |
|                                |              | C. Hendrick, President (Principal Executive Officer) |   |
|                                |              |                                                 |   |
|                                |              |                                                 |   |

|                                 |   |                                                                  |   |
|--------------------------------------|--------|-----------------------------------------------------------------------|--------|
| Dated:  November 18 , 2011 | By:    | /s/ Jay Needelman                                                |   |
|                                 |   | Jay Needelman , Chief Financial Officer (Principal Financial Officer) |   |
|                                 |   |                                                                  |   |
|                                 |   |                                                                  |   |