U.S.
      SECURITIES AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





FORM
      10-QSB





(X)
      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
      ACT OF 1934.





For
      the 3
      month period ended December 31, 2005.





(
      )
      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE


SECURITIES
      EXCHANGE ACT OF 1934.





For
      the
      transition period from to





Commission
      File No. 333-118801





SMARTMETRIC,
      INC.


(Name
      of
      Small Business Issuer in its Charter)





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





9553
      Harding Avenue, Suite 303


Surfside,
      Florida 33154


(Address
      of Principal Executive Offices)





Registrant's
      telephone number, including area code (786) 623-5690





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15 (d) of the Exchange Act during the past 12 months (or for such shorter period
      that the Registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days.





(1)
      Yes X   No    (2)
      Yes X   No





State
      the
      number of shares outstanding of each of the Registrant's classes of common
      equity, as of the latest applicable date:





Common
                Stock
            9,134,280
            December
                31, 2005Class
                A Common Stock
            50,000,000
            December
                31, 2005













SMARTMETRIC,
      INC.


FORM
      10-QSB


December
      31, 2005






INDEX








PART
      I.
      FINANCIAL INFORMATION




PART
                I - FINANCIAL INFORMATION
            PAGEItem
                1 - FINANCIAL STATEMENTS (UNAUDITED)Consolidated
                Balance Sheets -
            F-1December
                31, 2005 and June 30, 2005Consolidated
                Statements of Operations -
            F-2Three
                and Six Months Ended December 31, 2005 and 2004Consolidated
                Statements of Cash Flows -
            F-3Six
                Months Ended December 31, 2005 and 2004Notes
                to Financial Statements -
            F-4Three
                and Six Months Ended December 31, 2005 and 2004Item
                2 - PLAN OF OPERATION
            3Item
                3 -CONTROLS
                AND PROCEDURES
            5PART
                II- OTHER INFORMATION
            5Item
                1 - LEGAL PROCEEDINGS
            5Item
                2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
            5Item
                3 - DEFAULTS UPON SENIOR SECURITIES
            6Item
                4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
            6Item
                5 - OTHER INFORMATION
            6Item
                6 - EXHIBITS
            6


2


PART
      I.
      FINANCIAL INFORMATION






Item
      1. FINANCIAL
      STATEMENTS (UNAUDITED)




Financial
      Statements are attached hereto as F-1 to F-7





Item
      2. PLAN
      OF OPERATION





OVERVIEW





Incorporated
      in 2002, SmartMetric and its founder and CEO, Colin Hendrick, have been engaged
      in research and development of a biometric security solution which would
      authenticate the identity of a person in a self-contained credit card-sized
      device. SmartMetric’s biometric card has been designed to use an on-board finger
      print sensor which is imbedded in the card along with an integrated circuit
      chip
      which will provide one gigabyte of memory capacity. SmartMetric has recently
      completed a prototype of its SmartCard but has not yet begun to manufacture
      SmartCards utilizing its licensed technology. To date, SmartMetric has had
      no
      sales revenues.





In
      December 2001 SmartMetric’s CEO, Colin Hendrick, applied for a patent for this
      biometric card technology connecting SmartCards to networks, and providing
      secure access for such connections. In June 2004, Mr. Hendrick transferred
      this
      technology to Applied Cryptology, Inc., a Nevada corporation, he owns and
      controls, and which owns 49,500,000 shares of SmartMetric common stock. On
      August 1, 2004, Applied Cryptology entered into a license agreement with
      SmartMetric pursuant to which Applied Cryptology agreed to license this
      technology to SmartMetric in perpetuity in exchange for a royalty payment.
      This
      patent was granted on September 14, 2004.





We
      expect
      to outsource manufacturing of our SmartCards once we have sales orders. We
      do
      not intend to purchase any plants or significant equipment.





We
      currently have three full time employees, including Colin Hendrick, our
      President and Chief Executive Officer. Once we have begun to generate sales,
      we
      intend to hire additional employees.





COMPLETION
      OF PROTOTYPE





A
      prototype of our SmartCard was completed in February 2005. The finished product
      is the prototype or model for our SmartCards, which will be manufactured upon
      receipt of customer orders. We intend to revise some of the engineering of
      the
      prototype so as to decrease the size of the circuitry contained in the
      SmartCard. We expect that the revised prototype will be completed by April
      2006.





PRODUCTION
      OF SMARTCARDS





Upon
      completion of our revised SmartCard prototype, we will seek to obtain orders
      for
      it. Because SmartMetric does not own or rent a manufacturing facility, we will
      enter into a contract with a manufacturing facility to produce our SmartCards.
      Although we have begun negotiations with two potential manufacturers, no
      contract has been signed.





3


SmartMetric
      does not believe its business is seasonal in any way.





AGREEMENTS





On
      October 30, 2003, we entered into an agreement with Information Spectrum, Inc.
      Pursuant to this agreement, ISI will seek to market our SmartCards. This
      agreement expired on


October
      30, 2005 and has not yet been renewed. We intend to enter into an agreement
      with
      a third party to manufacture our SmartCards, but have not yet done
      so.





THREE
      MONTHS ENDED DECEMBER 31, 2005 COMPARED TO THREE MONTHS ENDED DECEMBER 31,
      2004





We
      had $0
      sales revenues for the year ended June 30, 2005, with a net loss of $258,355.
      For the three months ending December 31, 2005, there were $0 sales revenues
      and
      a net loss of $347,857. For the three months ending December 31, 2004, there
      were $0 sales revenues and a net loss of $44,945. This increased loss of
      $302,912 is a result of an increase in research and development, professional
      fees related to the initial public offering, and accrued officers’ salary. We
      spent $101,579 and $32,690 on research and development for the three months
      ended December 31, 2005 and December 31, 2004 respectively.





SIX
      MONTHS ENDED DECEMBER 31, 2005 COMPARED TO SIX MONTHS ENDED DECEMBER 31,
      2004.





For
      the
      six months ended December 31, 2005, we had $0 sales revenues and a net loss
      of
      $529,413, as compared to $0 sales revenues and a net loss of $61,675 for the
      six
      months ended December 31, 2004. This increase net loss of $467,738 is due to
      an
      increased spending for research and development, professional fees related
      to
      the initial public offering, and accrued officers’ salary. We spent $119,708 on
      research and development during the six months ended December 31, 2005, and
      $40,410 for the same period in 2004. This increase of 196% is related to
      development of the SmartCard prototype and its components. To date, Mr. Hendrick
      has neither been paid, nor reimbursed, for any of these research and development
      costs.





INITIAL
      PUBLIC OFFERING





In
      August
      2005, we commenced our initial public offering, pursuant to which we intend
      to
      raise a minimum of $500,000 and a maximum of $9,999,999. On September 14, 2005,
      we closed on the minimum offering. As of December 31, 2005 we sold 574,023
      shares and raised $861,035 in offering proceeds. We
      estimate that the proceeds from our public offering will allow us to outsource
      production of 1,000 SmartCards, begin marketing them and provide us with enough
      working capital to last 12 months. We expect that orders larger than that will
      require additional financing. Such financing may be in the form of debt or
      equity. Currently, SmartMetric has no material commitments for capital
      expenditures.





4


We
      are in
      the process of applying for our common stock to be listed on the
      Over-The-Counter Bulletin Board.





OFF-BALANCE
      SHEET ARRANGEMENTS





SmartMetric
      is not a party to any off-balance sheet arrangements.





Item
      3. CONTROLS
      AND PROCEDURES





As
      of
      December 31, 2005, an evaluation has been carried out under the supervision
      and
      with the participation of our management, including our Chief Executive Officer
      and Chief Financial Officer, of the effectiveness of the design and the
      operation of our "disclosure controls and procedures" (as such term is defined
      in Rules 13a-15(e) under the Securities Exchange Act of 1934). Based on such
      evaluation, our Chief Executive Officer and Chief Financial Officer have
      concluded that the disclosure controls and procedures are reasonably designed
      and effective to ensure that (i) information required to be disclosed by us
      in
      the reports we file or submit under the Securities Exchange Act of 1934 is
      recorded, processed, summarized and reported within the time periods specified
      in the SEC's rules and forms, and (ii) such information is accumulated and
      communicated to our management, including our Chief Executive Officer and Chief
      Financial Officer, as appropriate to allow timely decisions regarding required
      disclosure. There are no changes in our internal controls over financial
      reporting identified in connection with the evaluation of our disclosure
      controls and procedures.





PART
      II.
      OTHER INFORMATION





Item
      1. LEGAL
      PROCEEDINGS





None





Item
      2. UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS





In
      October 2003, SmartMetric issued 50,000,000 shares of Class A common stock
      to
      the President of SmartMetric, Colin Hendrick, at $.001 per share for a total
      of
      $50,000. From November 2003, to June 30, 2004 SmartMetric sold an additional
      8,560,257 shares to Mr. Hendrick at $.01 per share for a total of $85,602.57.
      Mr. Hendrick completed payment for these shares in October 2004. These sales
      were made pursuant to Section 4(2) of the Securities Act of 1933. There was
      no
      general solicitation or advertising, and Mr. Hendrick did not purchase the
      shares with the intent to resell them. In August 2004, Mr. Hendrick assigned
      8,560,257 shares to approximately 600 people for no consideration.





In
      September 2004 through October 2004, SmartMetric sold 68,207 shares of common
      stock to 9 people at $1.50 per share: Leslie Price; Peter Gummer and Kim Murray;
      Robert and Narelle Renfrew; Cheryl McLean; David Frank Walker; Jim Truant;
      Mark
      Edwards and Jenny Lee Stone Superannuation Fund, Jonathan Murphy; and Ronald
      D.
      and Susanne J. Leonard. These shares were sold by Peter Sleep, a director of
      SmartMetric. Of the nine, six persons were already shareholders of SmartMetric
      and all nine were friends and/or acquaintances of Mr. Sleep's. All were familiar
      with SmartMetric and Mr. Sleep prior to September 2004. These nine people were
      presented with the financial statements of SmartMetric, as well as a
      subscription agreement. They did not rely on the registration statement filed
      with the SEC when making the decision to invest in SmartMetric. SmartMetric
      relied upon Section 4(2) of the Securities Act when offering these securities
      to
      a limited number of persons without general solicitation or
      advertising.





5


In
      December 2004 through January 2005, SmartMetric sold 92,630 shares of common
      stock to 11 people at $1.50 per share for a total of $138,945. These 11 people
      were: Veronica Heather Hehir; Robert Michael Hehir; Jacqueline Stone; Wayne
      George Shirley; Colleen R. King Pty Ltd.; David Walker; Leslie Vago; Paul
      Southern; Julie Martin; Josef Wehr; and Robert Towers & Associates Pty Ltd.
      Of these 11 people, 8 were existing shareholders of SmartMetric. The shares
      were
      sold by Peter Sleep, a director of the company. These 11 people were presented
      with the financial statements of SmartMetric, as well as a subscription
      agreement. They did not rely on the registration statement filed with the SEC
      when making the decision to invest in SmartMetric. SmartMetric relied upon
      Section 4(2) of the Securities Act when offering these securities to a limited
      number of persons without general solicitation or advertising.





Item
      3. DEFAULTS
      UPON SENIOR SECURITIES





None





Item
      4. SUBMISSIONS
      OF MATTERS TO A VOTE OF SECURITY HOLDERS





None





Item
      5. OTHER
      INFORMATION





None





Item
      6. EXHIBITS





The
      following exhibits are attached to this Form 10-QSB and made a part
      hereof.





Exhibit
                No.
            Description3(i)
            Articles
                of Incorporation(1)3(ii)
            Bylaws(1)10
            Contract
                with Information Spectrum, Inc.(1)31.1
            Certification
                of HOMI’s Chief Exective Officer and Chief Financial Officer pursuant to
                Rule13a- 14(a) of the Securities Exchange Act of 193432.1
            Certification
                of HOMI’s Chief Exective Officer and Chief Financial Officer required by
                Rule 13a-14(b) under the Securities Exchange Act of 1934 and Section
                1350
                of Chapter 63 of Title 18 the United States Code (18 U.S.C.
                1350)




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





6


SIGNATURE





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly authorized.









SMARTMETRIC,
                INC.Dated:
                February 16, 2006
            
            By:
            /s/
                Colin HendrickColin
                Hendrick, President








7


**SMARTMETRIC,
                INC. AND SUBSIDIARY****(A
                Development Stage Company)****Consolidated
                Balance Sheets****December
                31,**
            
            
            **June
                30,****2005**
            
            
            **2005****Assets**
            
            **(Unaudited)**Current
                assets:Cash
            $
            306,049
            
            $
            928Stock
                subscriptions receivable
            
            -
            
            
            15,000Due
                from president
            
            6,216
            
            
            20,873Prepaid
                expenses
            
            1,400
            
            
            1,400Total
                current assets
            
            313,665
            
            
            38,201Equipment,
                less accumulated depreciationof
                $380 and $0, respectively
            
            1,901
            
            
            -Other
                assets:Patent
                costs, less accumulated amortizationof
                $1,875 and $1,125, respectively
            
            13,125
            
            
            13,875Deferred
                offering costs
            
            -
            
            
            135,000Organization
                costs - net
            
            240
            
            
            300Total
                assets
            $
            328,931
            
            $
            187,376**Liabilities
                and Stockholders' Equity**Current
                liabilities:Notes
                payable
            $
            60,000
            
            $
            -Accounts
                payable and accrued expenses
            
            89,149
            
            
            115,788Accrued
                salary due to president
            
            -
            
            
            85,000Total
                current liabilities
            
            149,149
            
            
            200,788Other
                liabilities
            
            -
            
            
            -Total
                liabilities
            
            149,149
            
            
            200,788Common
                stock subject to possible rescission (160,837 shares)
            
            241,256
            
            
            241,256Stockholders'
                equity :Preferred
                stock, $.01 par value; 5,000,000 sharesauthorized,
                0 shares issued and outstanding
            
            -
            
            
            -Class
                A common stock, $.001 par value;50,000,000
                shares authorized, 50,000,000 sharesissued
                and outstanding
            
            50,000
            
            
            50,000Common
                stock, $.001 par value; 45,000,000 sharesauthorized,
                issued and outstanding 9,134,280 and8,560,257
                shares, respectively
            
            9,134
            
            
            8,560Additional
                paid-in capital
            
            703,198
            
            
            (18,835)Deficit
                accumulated during the development stage
            
            (823,806)
            
            
            (294,393)Total
                stockholders' equity (deficiency)
            
            (61,474)
            
            
            (254,668)Total
                liabilities and stockholders' equity
            $
            328,931
            
            $
            187,376See
                notes to consolidated financial statements.




F-1




**SMARTMETRIC,
                  INC. AND SUBSIDIARY****(A
                  Development Stage Company)****Consolidated
                  Statements of Operations****(Unaudited)****Cumulative****During
                  the****Development****Stage****Three
                  Months**
              
              
              **Six Months**
              
              
              **(December
                  18, 2002****Ended
                  December 31,**
              
              
              **Ended
                  December 31,**
              
              
              **to
                  December 31,****2005**
              
              
              **2004**
              
              
              **2005**
              
              
              **2004**
              
              
              **2005)**Revenues
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -Expenses:Officer's
                  salary
              
              42,500
              
              
              -
              
              
              85,000
              
              
              -
              
              
              170,000Other
                  general andadministrative
              
              202,878
              
              
              12,255
              
              
              323,205
              
              
              21,265
              
              
              395,746Research
                  anddevelopment
              
              101,579
              
              
              32,690
              
              
              119,708
              
              
              40,410
              
              
              256,560Interest
              
              900
              
              
              -
              
              
              1,500
              
              
              -
              
              
              1,500Total
                  expenses
              
              347,857
              
              
              44,945
              
              
              529,413
              
              
              61,675
              
              
              823,806Net
                  loss
              $
              (347,857)
              
              $
              (44,945)
              
              $
              (529,413)
              
              $
              (61,675)
              
              $
              (823,806)Net
                  loss per share,basic
                  and diluted
              $
              (0.01)
              
              $
              (0.00)
              
              $
              (0.01)
              
              $
              (0.00)Weighted
                  averagenumber
                  of commonshares
                  outstanding,basic
                  and diluted
              
              59,049,247
              
              
              58,560,257
              
              
              58,905,741
              
              
              58,560,257See
                  notes to consolidated financial statements.




F-2




**SMARTMETRIC,
                  INC. AND SUBSIDIARY****(A
                  Development Stage Company)****Consolidated
                  Statements of Cash Flows****(Unaudited)****Cumulative****During
                  the****Development****Stage****Six
                  Months**
              
              
              **(December
                  18, 2002****Ended
                  December 31,**
              
              
              **to
                  December 31,****2005**
              
              
              **2004**
              
              
              **2005)**Cash
                  flows from operating activities:Net
                  loss
              $
              (529,413)
              
              $
              (61,675)
              
              $
              (823,806)Depreciation
                  of equipment
              
              380
              
              
              -
              
              
              380Amortization
                  of patent costs
              
              750
              
              
              375
              
              
              1,875Changes
                  in operating assets and liabilities:Due
                  from president
              
              14,657
              
              
              -
              
              
              (6,216)Prepaid
                  expenses
              
              -
              
              
              (1,400)
              
              
              (1,400)Organization
                  costs
              
              60
              
              
              60
              
              
              (240)Accounts
                  payable and accrued expenses
              
              (26,639)
              
              
              1,750
              
              
              89,149Accrued
                  salary due to president
              
              (85,000)
              
              
              -
              
              
              -Net
                  cash used for operating activities
              
              (625,205)
              
              
              (60,890)
              
              
              (740,258)Cash
                  flows from investing activities:Equipment
                  purchase
              
              (2,281)
              
              
              -
              
              
              (2,281)Patent
                  costs incurred
              
              -
              
              
              (15,000)
              
              
              (15,000)Net
                  cash used for investing activities
              
              (2,281)
              
              
              (15,000)
              
              
              (17,281)Cash
                  flows from financing activities:Proceeds
                  from notes payable
              
              60,000
              
              
              -
              
              
              60,000Loans
                  from president
              
              -
              
              
              2,577
              
              
              54,427Repayment
                  of loans from president
              
              -
              
              
              (25,000)
              
              
              (54,427)Stock
                  subscriptions collected, net
              
              15,000
              
              
              93,861
              
              
              280,981Net
                  proceeds from public offering
              
              857,607
              
              
              (27,500)
              
              
              722,607Net
                  cash provided by financing activities
              
              932,607
              
              
              43,938
              
              
              1,063,588Net
                  increase (decrease) in cash
              
              305,121
              
              
              (31,952)
              
              
              306,049Cash,
                  beginning of period
              
              928
              
              
              64,142
              
              
              -Cash,
                  end of period
              $
              306,049
              
              $
              32,190
              
              $
              306,049Supplemental
                  disclosures of cash flow information:Interest
                  paid
              $
              -
              
              $
              -
              
              $
              -Income
                  taxes paid
              $
              -
              
              $
              -
              
              $
              -See
                  notes to consolidated financial statements.




F-3


**SMARTMETRIC,
        INC. AND SUBSIDIARY**
 **(A
        Development Stage Company)**
 **Notes
        to Consolidated Financial Statements**
 **For
        the Three and Six Months Ended December 31, 2005 and 2004**
 **and
        For the Period December 18, 2002 (Date of Inception)**
 **to
        December 31, 2005**
 **(Unaudited)**
 
 **NOTE
        1 - INTERIM FINANCIAL STATEMENTS**
 
 The
        unaudited financial statements as of December 31, 2005 and for the three
        and six
        months ended December 31, 2005 and 2004 have been prepared in accordance
        with
        accounting principles generally accepted in the United States for interim
        financial information and with instructions to Form 10-QSB. In the opinion
        of
        management, the unaudited financial statements have been prepared on the
        same
        basis as the annual financial statements and reflect all adjustments, which
        include only normal recurring adjustments, necessary to present fairly the
        financial position as of December 31, 2005 and the results of operations
        and
        cash flows for the three and six month periods ended December 31, 2005 and
        2004.
        The financial data and other information disclosed in these notes to the
        interim
        financial statements related to these periods are unaudited. The results
        for the
        three and six month period ended December 31, 2005 is not necessarily indicative
        of the results to be expected for any subsequent quarter of the entire year
        ending June 30, 2006. The balance sheet at June 30, 2005 has been derived
        from
        the audited financial statements at that date.
 
 Certain
        information and footnote disclosures normally included in financial statements
        prepared in accordance with accounting principles generally accepted in the
        United States have been condensed or omitted pursuant to the Securities and
        Exchange Commission’s rules and regulations. These unaudited financial
        statements should be read in conjunction with our audited financial statements
        and notes thereto for the year ended June 30, 2005 as included in our report
        on
        Form 10-KSB.
 
 **NOTE
        2 - ORGANIZATION**
 
 SmartMetric,
        Inc. (“SmartMetric” or the “Company”) was incorporated in the State of Nevada on
        December 18, 2002. SmartMetric is developing a credit card size plastic card
        embedded with an integrated circuit chip and biometric fingerprint sensor
        which
        provides identification of the user (the “SmartMetric Smart Card”) to market to
        government agencies, corporations, and organizations interested in
        identification cards.
 
 **NOTE
        3 - NOTES PAYABLE**
 
 In
        July
        2005, the Company received a total of $60,000 in loans from two stockholders.
        The notes bear interest at a rate of 6% per annum and are due in full on
        December 31, 2007.
 
 **NOTE
        4 - COMMON STOCK SUBJECT TO POSSIBLE RESCISSION**
 
 On
        November 3, 2004, the Company deposited $102,311 from the sale of a total
        of
        68,207 shares of common stock to 9 investors at a price of $1.50 per share.
        The
        net proceeds to the Company, after deducting $44,052 in costs relating to
        this
        private placement for fees paid to an unrelated third party, was
        $58,259.
 
 On
        January 30, 2005, the Company closed a second private placement which resulted
        in the sale of a total of 92,630 shares of common stock to 11 investors at
        a
        price of $1,50 per share, or $138,945 gross proceeds. The net proceeds to
        the
        Company, after deducting $51,000 in fees paid to an unrelated third party
        and
        $825 in other costs, was $87,120.
 
 Since
        the
        private placements referred to in the two preceding paragraphs occurred after
        the Company’s filing of its Registration Statement on Form SB-2 on September 3,
        2004 (see note 5), the related investors may have rescission rights under
        the
        federal securities laws. Accordingly, the Company has classified the $241,256
        gross proceeds from these private placements as temporary equity separate
        and
        apart from stockholders’ equity and has classified the $95,877 related costs as
        a deduction from stockholders’ equity.
 
 In
        the
        event that a claim for rescission arises and is allowed, the Company will
        deduct
        such amount from “common stock subject to possible rescission”. In the event
        that it is determined an investor no longer has a possible rescission right,
        the
        gross will be recorded as stockholders’ equity.
 
 Management
        is unable to determine at this time whether any claim for rescission will
        be
        filed against the Company; however, there is no assurance that claims will
        not
        be asserted.
 
 **NOTE
        5 - STOCKHOLDERS’ EQUITY**
 
 In
        October 2003, the Company sold 50,000,000 shares of Class A common stock
        to the
        president of the Company at a price of $.001 per share, or $50,000 total.
        From
        October 2003 to June 30, 2004, the Company sold 8,560,257 shares of common
        stock
        (the “Additional Shares”) to the president of the Company at a price of $.01 per
        share, or $85,602 total. These Additional Shares were assigned by the president
        of the Company in varying amounts to approximately 600 shareholders for no
        consideration.
 
 The
        Class
        A common stock and the common stock have identical voting and other
        rights.
 
 **NOTE
        6 - PUBLIC OFFERING**
 
 The
        Company filed a Form SB-2 registration statement with the U.S. Securities
        and
        Exchange Commission in September 2004 (which was declared effective on August
        15, 2005) in connection with a public offering (the “Public Offering”) of up to
        6,666,666 shares of common stock at $1.50 per share or $9,999,999 total.
        The
        Company is offering the shares directly on a “best efforts, all or none basis”
as to the first 333,333 shares and on a best efforts basis as to the remaining
        6,333,333 shares. The shares are being sold by SmartMetric’s officers and
        directors in a self-underwritten offering (although the Company may decide
        to
        engage registered broker-
 dealers
        to assist in the sale) for a period of 90 days (which may be extended for
        an
        additional 90 days at the Company’s option). Also, certain selling shareholders
        are offering 11,721,094 shares
 for
        sale
        in this offering, 3,000,000 of which are shares of Class A Common
        Stock.
 
 From
        August 15, 2005 to December 31, 2005, the Company sold a total of 574,023
        shares
        of common stock in the Public Offering resulting in gross proceeds of $861,035.
        The net proceeds to the Company, after deducting $138,428 in offering costs,
        was
        $722,607.
 
 **NOTE
        7 - COMMITMENTS**
 
 Marketing
        agreement - On October 30, 2003, SmartMetric executed an agreement with
        Information Spectrum, Inc. (“ISI”). Pursuant to this agreement, ISI shall seek
        to market SmartMetric’s Smart Card technology by actively seeking customers
        interested in purchasing credential cards which incorporate SmartMetric’s
        patented Smart Card technology. Prior to ISI offering SmartMetric products
        by
        submitting a formal proposal, ISI and SmartMetric shall enter into a “Teaming
        Agreement” which will define each party’s rights and obligations concerning that
        particular sales opportunity. Every proposal will require its own Teaming
        Agreement. Pursuant to this Agreement, ISI is the exclusive reseller of
        SmartMetric products to agencies of the United States government and the
        Government of Canada. In addition, ISI has the right of first refusal for
        other
        marketing, sales or re-sales opportunities for customers other than the United
        States or Canadian governments. The term of this agreement is two years and
        may
        be extended upon mutual agreement of the parties.
 
 Patent
        license agreement - Effective August 1, 2004, SmartMetric executed a license
        agreement with Applied Cryptology, Inc. (“ACI”), a corporation controlled by
        SmartMetric’s president and the owner of certain technology. Pursuant to the
        license agreement, SmartMetric has the right to make use of this technology
        for
        the purpose of developing software and systems to be used by SmartMetric
        to
        provide any or all of the following: 1) secure transactions over the Internet
        from home and office computers; 2) an automatic method for connecting to
        remote
        computers; 3) a method of developing targeted advertising to home and/or
        office
        computers; 4) identity verification and access control as provided for in
        the
        patent. Pursuant to this license agreement, ACI will receive 2% of all revenues
        generated by SmartMetric on products which utilize this patented technology.
        The
        license fee will be paid on a quarterly basis based on revenues received
        during
        the quarter. The license fee shall be due within 45 days of the end of each
        quarter. In the event no revenues are generated through the use of any of
        the
        licensed patents during a given quarter, no money shall be owed ACI for such
        quarter. ACI may rescind the license agreement and reclaim all rights and
        interest in the patents if certain events, such as SmartMetric’s filing for
        bankruptcy protection or reorganization, occur. This license agreement will
        remain in effect for the lives of the patents. SmartMetric may utilize the
        patent-pending technological applications anywhere in the world without
        limitation.
 
 Employment
        agreement - Effective July 1, 2004, SmartMetric executed an employment agreement
        with its president. Pursuant to this employment agreement, the president
        shall
        receive an annual salary of $170,000 commencing January 1, 2005. This salary
        will commence upon the Company achieving gross revenues of $1,000,000. Until
        that time, the salary shall be accrued and SmartMetric may pay the president
        as
        salary up to 25% of any offering proceeds received by the Company, which
        amount
        shall not exceed $170,000 in any given 12 month period. The president is
        also
        eligible for an annual bonus based on certain performance criteria to be
        determined by a Compensation Committee of the board of directors at a later
        date. His employment may be terminated for cause at any time. According to
        the
        employment agreement, any inventions, ideas, disclosures and improvements
        made
        or conceived by him during his employment, including adoptions and improvements
        to existing patents, shall be his property. The term of this agreement is
        one
        year and may be renewed by the mutual written agreement of the president
        and the
        Company for additional consecutive one year terms. In June 2005, the parties
        renewed this employment agreement for one year to June 30, 2006.
 
 Lease
        agreements - In November 2004, SmartMetric executed a lease agreement for
        office
        space in Aventura, Florida. This agreement provides for monthly rentals of
        $800
        and an initial term of six months ending May 31, 2005. Unless the lessor
        is
        notified in writing at least 60 days prior to the Termination Date (which
        notification was not made), this agreement renews for additional one-year
        terms.
        Lessor has the right to terminate the lease agreement at any time upon 45
        days
        advance written notice to SmartMetric. In September 2005, SmartMetric executed
        two lease agreements for additional office space in Surfside, Florida. These
        agreements provide for monthly rentals totaling $1,166 and terms of one year
        ending August 31, 2006.
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