| 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 March 31, 2011 (unaudited) and June 30, 2010                                                                                            | F-1    |
|                                   | Condensed consolidated Statements of Operations for the three and nine months ended March 31, 2011 and 2010 and for the period from December 18, 2002 (inception) through March 31, 2011 | F-2    |
|                                   | Condensed consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the period December 18, 2002 (inception) to March 31, 2011                                      | F-3    |
|                                   | Condensed consolidated Statements of Cash Flows for the nine months ended March 31, 2011 and 2010 and for the period from December 18, 2002 (inception) through March 31, 2011           | F-4    |
|                                   | Notes to Unaudited  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      |

----

|                                                                      |   |      |       |   |     |   |
|---------------------------------------------------------------------------|--------|-----------|------------|--------|----------|--------|
|                                                                      |   |      |       |   |     |   |
|                                                                      |   | March 31, |       |   | June 30, |   |
|                                                                      |   | 2011      |       |   | 2010     |   |
| Assets                                                                    |   |      |       |   |     |   |
| Current assets:                                                           |   |      |       |   |     |   |
|   Cash                                                          |   |      | 573,577    |   |     |   | - |   |
|   Prepaid expenses and other current assets                     |   |      | 9,069      |   |     |   | 4,069 |   |
|                                                                      |   |      |       |   |     |   |   |   |
|     Total current assets                              |   |      | 582,646    |   |     |   | 4,069 |   |
|                                                                      |   |      |       |   |     |   |   |   |
| Equipment, less accumulated depreciation of                               |   |      |       |   |     |   |   |   |
|   $15,984 and $15,984, respectively                             |   |      | -          |   |     |   | - |   |
|                                                                      |   |      |       |   |     |   |   |   |
| Other assets:                                                             |   |      |       |   |     |   |   |   |
|   Patent costs, less accumulated amortization                   |   |      |       |   |     |   |   |   |
|     of $9,750 and $8,625 respectively                 |   |      | 5,250      |   |     |   | 6,375 |   |
|                                                                      |   |      |       |   |     |   |   |   |
| Total assets                                                              |   | $         | 587,896    |   |     | $      | 10,444 |   |
|                                                                      |   |      |       |   |     |   |   |   |
| Liabilities and Stockholders' Equity (Deficit)                            |   |      |       |   |     |   |   |   |
|                                                                      |   |      |       |   |     |   |   |   |
| Current liabilities:                                                      |   |      |       |   |     |   |   |   |
|   Accounts payable and accrued expenses                         |   |      | 109,058    |   |     |   | 160,614 |   |
|   Liability for stock to be issued                              |   |      | 1,590,760  |   |     |   | 154,004 |   |
|   Cash overdraft                                                |   |      | -          |   |     |   | 15,141 |   |
|   Deferred officer's salary                                     |   |      | 90,376     |   |     |   | 82,424 |   |
|   Stockholder loan                                              |   |      | 12,422     |   |     |   | 19,916 |   |
|   Payroll taxes, withholdings and accrued                       |   |      |       |   |     |   |   |   |
|     interest and penalties                            |   |      | 384,753    |   |     |   | 436,271 |   |
|                                                                      |   |      |       |   |     |   |   |   |
|     Total current liabilities                         |   |      | 2,187,369  |   |     |   | 868,370 |   |
|                                                                      |   |      |       |   |     |   |   |   |
| Stockholders' equity (deficit):                                           |   |      |       |   |     |   |   |   |
|   Preferred stock, $.001 par value; 5,000,000 shares            |   |      |       |   |     |   |   |   |
|     authorized, 200,000 shares issued and outstanding |   |      | 200        |   |     |   | 200 |   |
|   Common stock, $.001 par value; 200,000,000 shares             |   |      |       |   |     |   |   |   |
|     authorized, issued and outstanding 96,089,928 and |   |      |       |   |     |   |   |   |
|     89,212,555 shares, respectively                   |   |      | 96,090     |   |     |   | 89,212 |   |
|   Additional paid-in capital                                    |   |      | 6,249,213  |   |     |   | 5,734,086 |   |
|   Deficit accumulated during the development stage              |   |      | (7,944,976 | )      |     |   | (6,681,424 | ) |
|                                                                      |   |      |       |   |     |   |   |   |
|     Total stockholders' (deficit)                     |   |      | (1,599,473 | )      |     |   | (857,926 | ) |
|                                                                      |   |      |       |   |     |   |   |   |
| Total liabilities and stockholders (deficit)                              |   | $         | 587,896    |   |     | $      | 10,444 |   |
|                                                                      |   |      |       |   |     |   |   |   |

|   See notes to condensed consolidated financial statements. |
|-----------------------------------------------------------------------|

----

|                                              |   |               |       |   |              |   |       |   |   |   |       |   |   |                    |       |
|---------------------------------------------------|--------|--------------------|------------|--------|-------------------|--------|------------|--------|--------|--------|------------|--------|--------|-------------------------|------------|
|                                              |   |               |       |   |              |   |       |   |   |   |       |   |   |                    |       |
|                                              |   |               |       |   |              |   |       |   |   |   |       |   |   |                    |       |
|                                              |   |               |       |   |              |   |       |   |   |   |       |   |   | Period from             |       |
|                                              |   |               |       |   |              |   |       |   |   |   |       |   |   |  December 18, 2002 |       |
|                                              |   |               |       |   |              |   |       |   |   |   |       |   |   | (Inception) through     |       |
|                                              |   | Three Months Ended |       |   | Nine Months Ended |   |       | March  |   |
|                                              |   | March 31,          |       |   | March 31,         |   |       |   | 31,    |   |
|                                              |   | 2011               |       |   | 2010              |   |       | 2011   |   |   | 2010       |   |   |                    | 2011       |   |
|                                              |   |               |       |   |              |   |       |   |   |   |       |   |   |                    |       |   |
| Revenues                                          |   | $                  | -          |   |              | $      | -          |   |   | $      | -          |   |   | $                       | -          |   |   | $ | - |   |
|                                              |   |               |       |   |              |   |       |   |   |   |       |   |   |                    |       |   |   |   |   |   |
| Expenses:                                         |   |               |       |   |              |   |       |   |   |   |       |   |   |                    |       |   |   |   |   |   |
|   Officer's salary                      |   |               | 42,500     |   |              |   | 17,000     |   |   |   | 127,500    |   |   |                    | 109,500    |   |   |   | 1,062,500 |   |
|   General and administrative            |   |               | 288,305    |   |              |   | 120,854    |   |   |   | 862,574    |   |   |                    | 1,023,884  |   |   |   | 5,652,070 |   |
|   Research and development              |   |               | 251,365    |   |              |   | 17,388     |   |   |   | 263,067    |   |   |                    | 58,119     |   |   |   | 1,164,014 |   |
|                                              |   |               |       |   |              |   |       |   |   |   |       |   |   |                    |       |   |   |   |   |   |
|     Total expenses            |   |               | 582,170    |   |              |   | 155,242    |   |   |   | 1,253,141  |   |   |                    | 1,191,503  |   |   |   | 7,878,584 |   |
|                                              |   |               |       |   |              |   |       |   |   |   |       |   |   |                    |       |   |   |   |   |   |
| Loss from operations                              |   |               | (582,170   | )      |              |   | (155,242   | )      |   |   | (1,253,141 | )      |   |                    | (1,191,503 | ) |   |   | (7,878,584 | ) |
|                                              |   |               |       |   |              |   |       |   |   |   |       |   |   |                    |       |   |   |   |   |   |
| Interest income                                   |   |               |       |   |              |   | -          |   |   |   | -          |   |   |                    | -          |   |   |   | 657 |   |
| Interest expense                                  |   |               | (3,314     | )      |              |   | (3,577     | )      |   |   | (10,411    | )      |   |                    | (13,375    | ) |   |   | (67,049 | ) |
|                                              |   |               |       |   |              |   |       |   |   |   |       |   |   |                    |       |   |   |   |   |   |
| Loss before income taxes                          |   |               | (585,484   | )      |              |   | (158,819   | )      |   |   | (1,263,552 | )      |   |                    | (1,204,878 | ) |   |   | (7,944,976 | ) |
| Income taxes                                      |   |               | -          |   |              |   | -          |   |   |   | -          |   |   |                    | -          |   |   |   | - |   |
|                                              |   |               |       |   |              |   |       |   |   |   |       |   |   |                    |       |   |   |   |   |   |
| Net loss                                          |   |               | (585,484   | )      |              |   | (158,819   | )      |   |   | (1,263,552 | )      |   |                    | (1,204,878 | ) |   |   | (7,944,976 | ) |
|                                              |   |               |       |   |              |   |       |   |   |   |       |   |   |                    |       |   |   |   |   |   |
| Net loss per share, basic and diluted             |   | $                  | (0.01      | )      |              | $      | (0.00      | )      |   | $      | (0.01      | )      |   | $                       | (0.02      | ) |   |   |   |   |
|                                              |   |               |       |   |              |   |       |   |   |   |       |   |   |                    |       |   |   |   |   |   |
| Weighted average common                           |   |               |       |   |              |   |       |   |   |   |       |   |   |                    |       |   |   |   |   |   |
|   shares outstanding, basic and diluted |   |               | 90,937,957 |   |              |   | 80,251,666 |   |   |   | 94,286,702 |   |   |                    | 78,786,744 |   |   |   |   |   |
|                                              |   |               |       |   |              |   |       |   |   |   |       |   |   |                    |       |   |   |   |   |   |
|                                              |   |               |       |   |              |   |       |   |   |   |       |   |   |                    |       |   |   |   |   |   |

----

|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |
|-------------------|--------|--------|-----------------|---------|--------|--------------|--------|--------|---------|--------|--------|-------------|--------|--------|---------|---------|--------|-------------|--------|------------|------------|--------|--------|-------------|--------|--------|--------|-----------|
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   | Deficit     |   |   |   |      |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   | Accumulated |   |   |   |      |
|              |   |   |            |    |   |         |   |   | Class A |   |   | Common      |   |   |    |    |   | Additional  |   |       | During the |   |   |        |   |
|              |   |   | Preferred Stock |    |   | Common Stock |   |   | Stock   |   |   |        |   |   | Paid-in |    |   | Development |   |       |       |   |
|              |   |   | Shares          |    |   | Amount       |   |   | Shares  |   |   | Amount      |   |   | Shares  |    |   | Amount      |   |       | Capital    |   |   | Stage       |   |   | Total  |      |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |
| Balance,          |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |
| December 18,      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |
| 2002              |   |   |            | -       |   |         | $      | -      |    |   |   | -           |   |   |    | -       |   |        |   | -          |       |   | $      | -           |   |   | $      | -         |   |   | $ | - |   |   | $ | - |   |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| Net loss for the  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| period December   |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
|  18, 2002    |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| (inception)       |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| through June      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
|  30, 2003    |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | -          |       |   |   | -           |   |   |   | -         |   |   |   | (60 | ) |   |   | (60 | ) |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Balance           |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| June 30, 2003     |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | -          |       |   |   | -           |   |   |   | -         |   |   |   | (60 | ) |   |   | (60 | ) |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Shares issued of  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| Class A Common    |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| stock             |   |   |            | -       |   |         |   | -      |    |   |   | 50,000,000  |   |   |    | 50,000  |   |        |   | -          |       |   |   | -           |   |   |   | -         |   |   |   | - |   |   |   | 50,000 |   |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Shares issued of  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| common stock      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| for cash          |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | 8,560,257  |       |   |   | 8,560       |   |   |   | 77,042    |   |   |   | - |   |   |   | 85,602 |   |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Net loss for the  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| year              |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | -          |       |   |   | -           |   |   |   | -         |   |   |   | (35,978 | ) |   |   | (35,978 | ) |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Balance, June 30, |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
|  2004        |   |   |            | -       |   |         |   | -      |    |   |   | 50,000,000  |   |   |    | 50,000  |   |        |   | 8,560,257  |       |   |   | 8,560       |   |   |   | 77,042    |   |   |   | (36,038 | ) |   |   | 99,564 |   |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Costs associated  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| with sale of      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| common stock      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| subject to        |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| possible          |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| rescission        |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | -          |       |   |   | -           |   |   |   | (95,877   | ) |   |   | - |   |   |   | (95,877 | ) |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Net loss for the  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| year              |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | -          |       |   |   | -           |   |   |   | -         |   |   |   | (258,355 | ) |   |   | (258,355 | ) |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Balance June 30,  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
|  2005        |   |   |            | -       |   |         |   | -      |    |   |   | 50,000,000  |   |   |    | 50,000  |   |        |   | 8,560,257  |       |   |   | 8,560       |   |   |   | (18,835   | ) |   |   | (294,393 | ) |   |   | (254,668 | ) |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Shares issued of  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| common stock      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| for cash, net of  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| offering          |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| costs of $138,509 |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | 936,112    |       |   |   | 936         |   |   |   | 1,197,361 |   |   |   | - |   |   |   | 1,198,297 |   |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Shares issued of  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| common stock      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| for services      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| rendered          |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | 20,000     |       |   |   | 20          |   |   |   | 19,980    |   |   |   | - |   |   |   | 20,000 |   |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Conversion of     |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| loan payable      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| and accrued       |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| interest to       |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| common shares     |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | 40,000     |       |   |   | 40          |   |   |   | 62,360    |   |   |   | - |   |   |   | 62,400 |   |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Conversion of     |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| Class A common    |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| shares to         |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| common shares     |   |   |            | -       |   |         |   | -      |    |   |   | (50,000,000 | )      |   |    | (50,000 | )      |        |   | 50,000,000 |       |   |   | 50,000      |   |   |   | -         |   |   |   | - |   |   |   | - |   |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Net loss for the  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| year              |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | -          |       |   |   | -           |   |   |   | -         |   |   |   | (1,225,045 | ) |   |   | (1,225,045 | ) |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Balance June 30,  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
|  2006        |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | 59,556,369 |       |   |   | 59,556      |   |   |   | 1,260,866 |   |   |   | (1,519,438 | ) |   |   | (199,016 | ) |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Shares issued of  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| common stock      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| for cash          |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | 1,208,887  |       |   |   | 1,209       |   |   |   | 759,140   |   |   |   | - |   |   |   | 760,349 |   |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Shares issued of  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| common stock      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| for services      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| rendered          |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | 191,505    |       |   |   | 192         |   |   |   | (192      | ) |   |   | - |   |   |   | - |   |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Net loss for the  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| year              |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | -          |       |   |   | -           |   |   |   | -         |   |   |   | (1,050,189 | ) |   |   | (1,050,189 | ) |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Balance June 30,  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
|  2007        |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | 60,956,761 |       |   |   | 60,957      |   |   |   | 2,019,814 |   |   |   | (2,569,627 | ) |   |   | (488,856 | ) |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Shares issued of  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| common stock      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| for cash          |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | 6,629,634  |       |   |   | 6,629       |   |   |   | 1,293,595 |   |   |   | - |   |   |   | 1,300,224 |   |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Shares issued of  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| common stock      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| for services      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| rendered          |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | 2,327,000  |       |   |   | 2,327       |   |   |   | 471,073   |   |   |   | - |   |   |   | 473,400 |   |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Net loss for the  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| year              |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | -          |       |   |   | -           |   |   |   | -         |   |   |   | (1,397,056 | ) |   |   | (1,397,056 | ) |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Balance June 30,  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
|  2008        |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | 69,913,395 |       |   |   | 69,913      |   |   |   | 3,784,482 |   |   |   | (3,966,683 | ) |   |   | (112,288 | ) |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Transfer of       |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| shares from       |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| temporary equity  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| to common stock   |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | 160,837    |       |   |   | 161         |   |   |   | 241,095   |   |   |   | - |   |   |   | 241,256 |   |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Shares issued of  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| common stock      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| for cash          |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | 4,412,596  |       |   |   | 4,413       |   |   |   | 438,931   |   |   |   | - |   |   |   | 443,344 |   |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Shares issued of  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| common stock      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| for services      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| rendered          |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | 1,059,394  |       |   |   | 1,059       |   |   |   | 104,880   |   |   |   | - |   |   |   | 105,939 |   |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Net loss for the  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| year              |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | -          |       |   |   | -           |   |   |   | -         |   |   |   | (1,103,089 | ) |   |   | (1,103,089 | ) |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Balance June 30,  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
|  2009        |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | 75,546,222 |       |   |   | 75,546      |   |   |   | 4,569,388 |   |   |   | (5,069,772 | ) |   |   | (424,838 | ) |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Shares issued     |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| for patent        |   |   |            | 200,000 |   |         |   | 200    |    |   |   | -           |   |   |    | -       |   |        |   | -          |       |   |   | -           |   |   |   | (200      | ) |   |   | - |   |   |   | - |   |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Shares issued of  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| common stock      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| for cash          |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | 8,808,000  |       |   |   | 8,808       |   |   |   | 431,592   |   |   |   |   |   |   |   | 440,400 |   |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Shares issued of  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| common stock      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| for services      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| rendered          |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | 4,858,333  |       |   |   | 4,858       |   |   |   | 395,556   |   |   |   | - |   |   |   | 400,414 |   |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Warrants issued   |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| for services      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   | 337,750   |   |   |   |   |   |   |   | 337,750 |   |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Net loss for the  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| year              |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | -          |       |   |   | -           |   |   |   | -         |   |   |   | (1,611,652 | ) |   |   | (1,611,652 | ) |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Balance June 30,  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
|  2010        |   |   |            | 200,000 |   |         | $      | 200    |    |   |   | -           |   |   | $       | -       |   |        |   | 89,212,555 |       |   | $      | 89,212      |   |   | $      | 5,734,086 |   |   | $ | (6,681,424 | ) |   | $ | (857,926 | ) |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Shares issued of  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| common stock and  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| warrants for cash |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | 5,651,623  |       |   |   | 5,652       |   |   |   | 339,054   |   |   |   | - |   |   |   | 344,706 |   |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Shares issued of  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| common stock      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| for services      |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| rendered          |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | 1,225,750  |       |   |   | 1,226       |   |   |   | 176,073   |   |   |   | - |   |   |   | 177,299 |   |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Net loss for the  |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
| period            |   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |    | -       |   |        |   | -          |       |   |   | -           |   |   |   | -         |   |   |   | (1,263,552 | ) |   |   | (1,263,552 | ) |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Balance March     |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |
|  31, 2011    |   |   |            | 200,000 |   |         | $      | 200    |    |   |   | -           |   |   | $       | -       |   |        |   | 96,089,928 |       |   | $      | 96,090      |   |   | $      | 6,249,213 |   |   | $ | (7,944,976 | ) |   | $ | (1,599,473 | ) |
|              |   |   |            |    |   |         |   |   |    |   |   |        |   |   |    |    |   |        |   |       |       |   |   |        |   |   |   |      |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                |   |              |       |   |            |   |       |              |   |
|-----------------------------------------------------------------------------------------------------|--------|-------------------|------------|--------|-----------------|--------|------------|-------------------|--------|
|                                                                                                |   |              |       |   |            |   |       | PERIOD FROM       |   |
|                                                                                                |   |              |       |   |            |   |       | DECEMBER 18, 2002 |   |
|                                                                                                |   |              |       |   | (INCEPTION)     |   |
|                                                                                                |   | NINE MONTHS ENDED |       |   | THROUGH         |   |
|                                                                                                |   | MARCH 31,         |       |   |  MARCH 31, |   |
|                                                                                                |   | 2011              |       |   | 2010            |   |       |              | 2011   |   |
|                                                                                                |   |              |       |   |            |   |       |              |   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                                                                |   |              |       |   |            |   |       |              |   |   |
|   Net loss                                                                                |   | $                 | (1,263,552 | )      |            | $      | (1,204,878 | )                 |   | $ | (7,944,976 | ) |
|                                                                                                |   |              |       |   |            |   |       |              |   |   |   |   |
|   Adjustments to reconcile net loss to net cash                                           |   |              |       |   |            |   |       |              |   |   |   |   |
|     used in operating activities:                                               |   |              |       |   |            |   |       |              |   |   |   |   |
|     Depreciation                                                                |   |              | -          |   |            |   | 2,385      |              |   |   | 15,984 |   |
|     Amortization                                                                |   |              | 1,125      |   |            |   | 1,125      |              |   |   | 9,750 |   |
|     Common stock and warrants issued for consulting services                    |   |              | 177,299    |   |            |   | 575,000    |              |   |   | 1,514,802 |   |
|     Interest accrued on convertible notes payable                               |   |              | -          |   |            |   | -          |              |   |   | 2,400 |   |
|                                                                                                |   |              |       |   |            |   |       |              |   |   |   |   |
|   Changes in assets and liabilities                                                       |   |              |       |   |            |   |       |              |   |   |   |   |
|     (Increase) decrease in prepaid expenses                                     |   |              | (5,000     | )      |            |   | 27,804     |              |   |   | (9,069 | ) |
|     Increase (decrease) in accounts payable and accrued expenses                |   |              | (51,556    | )      |            |   | 101,823    |              |   |   | 109,058 |   |
|     Increase in deferred Officer's salary                                       |   |              | 7,952      |   |            |   | -          |              |   |   | 90,376 |   |
|     Increase (decrease) in payroll taxes, accrued interest and penalties        |   |              | (51,518    | )      |            |   | 137,375    |              |   |   | 384,753 |   |
|                                                                                                |   |              |       |   |            |   |       |              |   |   |   |   |
|     Net cash used in operating activities                                       |   |              | (1,185,250 | )      |            |   | (359,366   | )                 |   |   | (5,826,922 | ) |
|                                                                                                |   |              |       |   |            |   |       |              |   |   |   |   |
|                                                                                                |   |              |       |   |            |   |       |              |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                                                |   |              |       |   |            |   |       |              |   |   |   |   |
|   Acquisition of equipment                                                                |   |              | -          |   |            |   | -          |              |   |   | (15,984 | ) |
|   Patent costs                                                                            |   |              | -          |   |            |   | -          |              |   |   | (15,000 | ) |
|     Net cash used in investing activities                                       |   |              | -          |   |            |   | -          |              |   |   | (30,984 | ) |
|                                                                                                |   |              |       |   |            |   |       |              |   |   |   |   |
|                                                                                                |   |              |       |   |            |   |       |              |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                                |   |              |       |   |            |   |       |              |   |   |   |   |
|     Proceeds from notes payable                                                 |   |              | -          |   |            |   | -          |              |   |   | 60,000 |   |
|     Increase in liability for stock to be issued                                |   |              | 1,436,756  |   |            |   | 177,700    |              |   |   | 1,590,760 |   |
|      Increase (decrease) in cash overdraft                                 |   |              | (15,141    | )      |            |   | -          |              |   |   | - |   |
|     Loans from related parties                                                  |   |              | -          |   |            |   | -          |              |   |   | 74,343 |   |
|     Repayments of loans from related parties                                    |   |              | (7,494     | )      |            |   | -          |              |   |   | (61,921 | ) |
|     Proceeds from issuance of common stock and warrants from private placements |   |              | 344,706    |   |            |   | 146,500    |              |   |   | 3,791,300 |   |
|     Sale of common stock in public offering                                     |   |              | -          |   |            |   | -          |              |   |   | 1,115,472 |   |
|     Public offering costs incurred                                              |   |              | -          |   |            |   | -          |              |   |   | (138,471 | ) |
|                                                                                                |   |              |       |   |            |   |       |              |   |   |   |   |
|       Net cash provided by financing activities                       |   |              | 1,758,827  |   |            |   | 324,200    |              |   |   | 6,431,483 |   |
|                                                                                                |   |              |       |   |            |   |       |              |   |   |   |   |
| NET INCREASE (DECREASE) IN                                                                          |   |              |       |   |            |   |       |              |   |   |   |   |
|   CASH AND CASH EQUIVALENTS                                                               |   |              | 573,577    |   |            |   | (35,166    | )                 |   |   | 573,577 |   |
|                                                                                                |   |              |       |   |            |   |       |              |   |   |   |   |
| CASH AND CASH EQUIVALENTS-                                                                          |   |              |       |   |            |   |       |              |   |   |   |   |
|   BEGINNING OF PERIOD                                                                     |   |              | -          |   |            |   | 42,519     |              |   |   | - |   |
|                                                                                                |   |              |       |   |            |   |       |              |   |   |   |   |
| CASH AND CASH EQUIVALENTS-END OF PERIOD                                                             |   | $                 | 573,577    |   |            | $      | 7,353      |              |   | $ | 573,577 |   |
|                                                                                                |   |              |       |   |            |   |       |              |   |   |   |   |
| CASH PAID DURING THE YEAR FOR:                                                                      |   |              |       |   |            |   |       |              |   |   |   |   |
|   Income taxes                                                                            |   | $                 | -          |   |            | $      | -          |              |   | $ | - |   |
|   Interest expense                                                                        |   | $                 | 10,411     |   |            | $      | 13,375     |              |   | $ | 28,174 |   |
|                                                                                                |   |              |       |   |            |   |       |              |   |   |   |   |
|                                                                                                |   |              |       |   |            |   |       |              |   |   |   |   |

----

----

| NOTE 1 -     | ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED) |
|----------------------------------|----------------------------------------------------|

| NOTE 2 -     | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|----------------------------------|--------------------------------------------|

----

| NOTE 2 -  | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
|----------------|--------------------------------------------------------|

----

| NOTE 2 -    | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
|----------------------------|--------------------------------------------------------|

----

| NOTE 2 -     | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
|----------------------------------|--------------------------------------------------------|

----

| NOTE 3 -  | EQUIPMENT |
|----------------|-----------|

|                           |   |                                |   |    |          |   |   |               |   |
|--------------------------------|--------|-------------------------------------|--------|---------|---------------|--------|--------|--------------------|--------|
|                           |   | Estimated Useful Lives( Years) |   |    | March 31,2011 |   |   | June 30, 2010 |   |
|                           |   |                                |   |    |          |   |   |               |   |
| Computer equipment             |   |                                | 3-5    |    |          | $      | 15,984 |               |   | $ | 15,984 |   |
|                           |   |                                |   |    |          |   |   |               |   |   |   |   |
| Less: accumulated depreciation |   |                                |   | (15,984 | )             |   |   | (15,984            | )      |
| Equipment, net                 |   |                                | $      | 0       |          |   | $      | 0                  |   |

| NOTE 4 -    | PATENT COSTS |
|----------------------------|--------------|

|                                                  |   | Estimated Useful Lives( Years) |   |   | March 31,2011 |   |   | June 30,2010 |   |
|-------------------------------------------------------|--------|-------------------------------------|--------|--------|---------------|--------|--------|--------------|--------|
|                                                  |   |                                |   |   |          |   |   |         |   |
| Legal fees paid in connection with patentApplications |   |                                | 10     |   |          | $      | 15,000 |         |   | $ | 15,000 |   |
|                                                  |   |                                |   |   |          |   |   |         |   |   |   |   |
| Less: accumulated amortization                        |   |                                |   | (9,750 | )             |   |   | (8,625       | )      |
| Patent costs, net                                     |   |                                | $      | 5,250  |          |   | $      | 6,375        |   |

----

| NOTE 5 -   | COMMITMENTS |
|----------------------|-------------|

----

| NOTE 6 -   | STOCKHOLDERS’ EQUITY (DEFICIT) |
|----------------------|--------------------------------------|

----

| NOTE 6 -   | STOCKHOLDERS’ EQUITY (DEFICIT) |
|----------------------|--------------------------------------|

----

| NOTE 6 -    | STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED) |
|----------------------------|--------------------------------------------------|

----

| NOTE 6 -     | STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED) |
|----------------------------------|--------------------------------------------------|

| Outstanding - July 1, 2010   |   |   | 7,239,750                                                                                                                       |   |
|------------------------------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|
| Issued                       |   |   | 1,699,028                                                                                                                       |   |
| Exercised                    |   |   |                      - |   |
| Expired                      |   |   |         (1,621,000                                                                      | )      |
|                         |   |   |                                                                                                                            |   |
| Outstanding - March 31, 2011 |   |   | 7,317,778                                                                                                                       |   |

----

----

----

----

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

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

----

| 1)   | We have committed to the establishment of effective internal audit functions, however, due to the scarcity of qualified candidates with extensive experience in U.S. GAAP reporting and accounting in the region, we were not able to hire sufficient internal audit resources as ofMay 23, 2011.  However, we will increase our search for qualified candidates with assistance from recruiters and through referrals. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

| Exhibit No. |   | Description                                                                                                                                                                                                          |
|-------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |   |                                                                                                                                                                                                                 |
| 31.1        |   | Certification of SmartMetric’s Chief Executive Officer pursuant to Rule13a- 14(a) of the Securities Exchange Act of 1934                                                                                       |
|        |   |                                                                                                                                                                                                                 |
| 31.2        |   | Certificate of SmartMetric’s Chief Financial Officer pursuant to Rule13a- 14(a) of the Securities Exchange Act of 1934                                                                                         |
|        |   |                                                                                                                                                                                                                 |
| 32.1        |   | Certification of SmartMetric’s Chief Executive Officer required by Rule 13a-14(b) under the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 the United States Code (18 U.S.C. 1350) |

| 32.2 | Certification of SmartMetric’s Chief Financial Officer required by Rule 13a-14(b) under the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 the United States Code (18 U.S.C. 1350) |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                          | SMARTMETRIC, INC. |                      |
|-------------------------------|-------------------|---------------------------|
|                          |              |                      |   |
| Dated:  May23, 2011 | By:               | /s/ Colin Hendrick   |   |
|                          |              | Colin Hendrick, President |   |
|                          |              |                      |   |
|                          |              |                      |   |

|                           |   |                                    |   |
|--------------------------------|--------|-----------------------------------------|--------|
| Dated:  May 23, 2011 | By:    | /s/ Jay Needelman                  |   |
|                           |   | Jay Needelman , Chief Financial Officer |   |
|                           |   |                                    |   |
|                           |   |                                    |   |