United States
                       Securities and Exchange Commission
                             Washington, D. C. 20549

                                   FORM 10-QSB

(Mark One)

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934
     For the quarterly period ended March 31, 2006


[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
     For the transition period from _________________ to __________________



                          Commission File No. 000-50506

                            ASSURETEC Holdings, Inc.
                            ------------------------
              (Exact name of small business issuer in its charter)

           Delaware                                      20-0007441
           --------                                      ----------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

                    200 Perimeter Road, Manchester, NH 03103
                    ----------------------------------------
                    (Address of principal executive offices)

                    Issuer's Telephone Number: (603) 641-8443

                                 Not Applicable
                                 --------------
              (Former name, former address and former fiscal year,
                          if changed since last Report)


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.
                                 Yes [ ] No [X]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
                                 Yes [ ] No [X]


State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. As of June 23, 2006, there were
1,008,568 shares of common stock of the Issuer outstanding.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

<PAGE>

                                TABLE OF CONTENTS


PART I FINANCIAL INFORMATION...................................................3

   ITEM 1    Unaudited Condensed Consolidated Financial Statements.............3
     CONDENSED CONSOLIDATED BALANCE SHEET......................................4
     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS...........................5
     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS...........................6
     NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS......................8

   ITEM 2    Management's Discussion and Analysis of Financial Condition
             and Results of Operations........................................20

   ITEM 3    Controls and Procedures..........................................29




PART II OTHER INFORMATION.....................................................30

   ITEM 1    Legal Proceedings................................................30

   ITEM 2    Unregistered Sales of Equity Securities and Use of Proceeds......30

   ITEM 5    Other Information................................................31

   ITEM 6    Exhibits.........................................................31

   SIGNATURES.................................................................33





                                        2
<PAGE>

                          PART I FINANCIAL INFORMATION

ITEM 1   Condensed Consolidated Financial Statements

The condensed consolidated financial statements included herein have been
prepared by the registrant without audit pursuant to the rules and regulations
of the Securities and Exchange Commission. Although the registrant believes that
the disclosures are adequate to make the information presented not misleading,
certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to such
rules and regulations. It is suggested that these financial statements be read
in conjunction with the audited financial statements and the notes thereto
included in the registrant's Report on Form 10-KSB for the year ended June 30,
2005, as filed with the Securities and Exchange Commission.






                                        3
<PAGE>
<TABLE>
<CAPTION>

                         ASSURETEC HOLDINGS INC. AND SUBSIDIARY

                          CONDENSED CONSOLIDATED BALANCE SHEET

                                     March 31, 2006
                                       (Unaudited)

                                         ASSETS

Current Assets:
<S>                                                                          <C>
   Cash                                                                      $    135,459
   Accounts receivable, net of an allowance for doubtful
   accounts of $41,489                                                             77,737
   Inventory                                                                       26,112
   Prepaid software licensing fees                                                 48,000
                                                                             ------------

          Total current assets                                                    287,308

Property and equipment - net                                                       41,278
Patents - net                                                                      93,182
Deferred financing costs - net                                                     58,733
Prepaid software licensing fees - long term                                       372,864
Other assets                                                                       73,544
                                                                             ------------

          Total Assets                                                       $    926,909
                                                                             ============
                        LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
   Accounts payable and accrued liabilities                                     1,191,250
   Accrued compensation and related payroll taxes                               2,014,898
   Debentures, net of debt discount of $176,490                                   898,510
   Due to related parties                                                         906,470
                                                                             ------------

          Total current liabilities                                          $  5,011,128
                                                                             ------------

Commitments and Contingencies

Stockholders' Deficiency:
  Convertible Preferred stock - $0.001 par value; authorized 5,000,000
     shares; issued and outstanding 4,186 shares, (liquidation                       --
      preference $4,186,000)
   Common stock-$0.001par value; authorized,100,000,000 shares;
      issued and outstanding 1,008,568 shares                                       1,009
   Additional paid-in capital                                                  13,284,288
   Accumulated deficit                                                        (17,369,516)
                                                                             ------------

          Total Stockholders' Deficiency                                       (4,084,219)
                                                                             ------------
          Total Liabilities and Stockholders' Deficiency                     $    926,909
                                                                             ============

The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.

                                            4
<PAGE>

                               ASSURETEC HOLDINGS INC. AND SUBSIDIARY

                           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS




                                                                    (Unaudited)
                                               For the Three Months Ended    For the Nine Months Ended
                                                        March 31,                     March 31,
                                               --------------------------    --------------------------
                                                   2006           2005           2006           2005
                                               -----------    -----------    -----------    -----------

Net revenues                                   $   112,208    $   419,323    $   526,223    $   662,252
Cost of revenues                                    49,852        238,646        233,613        361,150
                                               -----------    -----------    -----------    -----------

          Gross profit                              62,356        180,677        292,610        301,102
                                               -----------    -----------    -----------    -----------

Costs and expenses:
   Selling, general and administrative (1)         448,334        420,767      2,296,103      1,712,022
   Engineering, research and development (1)       463,152        326,541      2,011,822      1,438,889
                                               -----------    -----------    -----------    -----------

Total costs and expenses                           911,486        747,308      4,307,925      3,150,911
                                               -----------    -----------    -----------    -----------

          Loss from operations                    (849,130)      (566,631)    (4,015,315)    (2,849,809)
                                               -----------    -----------    -----------    -----------

Other income (expense):
   Interest expense - related party(1)              (8,894)        (7,716)      (206,384)       (29,738)
   Interest expense                               (127,906)       (18,819)      (429,370)       (73,129)
   Other income                                        223            914          2,174          1,152
                                               -----------    -----------    -----------    -----------

          Net loss                             $  (985,707)   $  (592,252)   $(4,648,895)   $(2,951,524)
                                               ===========    ===========    ===========    ===========

Preferred stock dividends                          (52,118)          --         (154,623)          --
                                               -----------    -----------    -----------    -----------

Net loss attributable to common stockholders   $(1,037,825)   $  (592,252)   $(4,803,518)   $(2,951,524)
                                               ===========    ===========    ===========    ===========

Basic and diluted loss per common share        $     (1.08)   $     (0.93)   $     (5.85)   $     (4.51)
                                               ===========    ===========    ===========    ===========
Weighted average shares outstanding - basic
   and diluted                                     960,696        637,719        821,563        653,764
                                               ===========    ===========    ===========    ===========


(1) Includes stock based compensation:
Selling, general and administrative            $      --      $      --      $   782,217    $   371,131
Engineering, research and development                 --             --          787,089        150,552
Interest expense                                      --             --          180,530           --
                                               -----------    -----------    -----------    -----------


                                               $      --      $      --      $ 1,749,836    $   521,683
                                               ===========    ===========    ===========    ===========

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

                                                  5
<PAGE>

                         ASSURETEC HOLDINGS INC. AND SUBSIDIARY

                     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                     (Unaudited)

                                                              For the Nine Months Ended
                                                                      March 31,
                                                              --------------------------
                                                                 2006           2005
                                                              -----------    -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                   $(4,648,895)   $(2,951,524)
      Adjustments to reconcile net loss to net cash used in
      operating activities:
      Depreciation and amortization                                16,379         14,113
      Compensatory element of stock issuances                   1,749,836        521,682
      Accretion of debt discount                                  261,641           --
      Amortization of deferred financing costs                    117,267           --
      Changes in operating assets and liabilities:
         Accounts receivable                                      (22,204)      (297,899)
         Inventory                                                 (3,936)        (9,976)
         Prepaid software licensing fees                           10,720       (169,426)
         Other current assets and other assets                    (70,000)          --
         Accounts payable and accrued liabilities                (434,733)       509,540
         Accrued compensation                                    (490,603)       663,081
         Customer deposits                                        (16,100)          --
         Deferred maintenance revenue                                --           20,093
                                                              -----------    -----------


             Net cash used in operating activities             (3,530,628)    (1,700,316)
                                                              -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of property and equipment                             (14,361)       (17,563)
   Acquisition of patents                                         (49,806)          --
                                                              -----------    -----------

             Net cash used in investing activities                (64,167)       (17,563)
                                                              -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Net proceeds from issuance of common and preferred stock     2,254,050      1,428,875
   Proceeds from issuance of debentures                         2,200,000           --
   Repayment of debentures                                     (1,125,000)          --
   Fees paid from issuance of debentures                         (105,200)          --
   Proceeds from notes payable - related party                       --              100
   Repurchase of shares of preferred stock                        (25,000)          --
   Repayment of notes payable - related party                     (22,810)       (27,100)
   Advances from affiliates                                       349,096        428,724
                                                              -----------    -----------

             Net cash provided by financing activities          3,525,136      1,830,599
                                                              -----------    -----------

NET (DECREASE) INCREASE IN CASH                                   (69,659)       112,720

CASH, BEGINNING OF PERIOD                                         205,118          1,614
                                                              -----------    -----------

CASH, END OF PERIOD                                           $   135,459    $   114,334
                                                              ===========    ===========

The accompanying notes are an integral part of these unaudited condensed consolidated
financial statements.

                                            6
<PAGE>

                               ASSURETEC HOLDINGS INC. AND SUBSIDIARY

                           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                             (Continued)


                                                                                    (Unaudited)

                                                                             For the Nine Months Ended
                                                                                     March 31,
                                                                             ------------------------
                                                                                2006          2005
                                                                             ----------   -----------

SUPPLEMENTAL CASH FLOW INFORMATION:
   Interest paid                                                             $   13,637   $      --
                                                                             ==========   ===========
   Income taxes paid                                                         $     --     $      --
                                                                             ==========   ===========

   Non-Cash Investing and Financing Activities:
      Conversion of notes payable into accrued compensation                  $     --     $   (83,205)
                                                                             ==========   ===========
      Granting of warrants in connection with the issuance of debentures     $  438,131   $      --
                                                                             ==========   ===========
      Issuance of preferred stock for settlement of related party advances   $     --     $   300,000
                                                                             ==========   ===========
      Granting of options for settlement of payables due vendors             $   42,572   $   252,219
                                                                             ==========   ===========
      Granting of options for the settlement of accrued compensation         $   50,000   $ 1,925,796
                                                                             ==========   ===========
      Amortization of the deferred compensation for the settlement
       of accrued compensation                                               $   86,003   $    57,334
                                                                             ==========   ===========





The accompanying notes are an integral part of these unaudited condensed consolidated financial
statements.

                                                  7
</TABLE>
<PAGE>

                     ASSURETEC HOLDINGS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                                   (UNAUDITED)


NOTE 1. Nature of Business and Operations

The Company

     AssureTec Holdings, Inc., through its wholly owned subsidiary, AssureTec
Systems, Inc., (collectively the "Company") develops integrated identity
document management applications for use in government and commercial security
applications. The Company's proprietary document management platform
automatically reads, records and authenticates identification documents, such as
passports, visas or driver's licenses, through its proprietary database
software, thereby reducing the risk of human error in detecting falsified or
tampered forms of identification.

     Effective July 1, 2005, the Company is no longer a development stage
company as defined in Financial Accounting Standards Board ("FASB") Statement
No. 7, "Accounting and Reporting For Development Stage Companies."

Going Concern Uncertainty

     The accompanying condensed consolidated financial statements have been
prepared on a going concern basis. The Company has incurred losses of
approximately $17 million since inception. As of March 31, 2006, the Company has
a working capital deficit of approximately $4.7 million. The Company's continued
existence is dependent upon its ability to obtain needed working capital through
additional equity and/or debt financing, and the acceptability of its integrated
identity document management applications for use in government and commercial
security applications to create sales that will help the Company achieve a
profitable level of operations.

     These matters raise substantial doubt about the Company's ability to
continue as a going concern. However, the accompanying consolidated financial
statements have been prepared on a going concern basis, which contemplates the
realization of assets and the satisfaction of the liabilities in the normal
course of business. The condensed consolidated financial statements do not
include any adjustments relating to the recoverability and classification of
asset amounts or the classifications of liabilities that might be necessary
should the Company be unable to continue as a going concern.

     Management is actively pursuing additional equity and/or debt financing. In
February 2006, the Company amended the terms of its September 2005 Debenture
offering (see Note 3 below) to increase the maximum amount of financing to be
raised from $1.65 million to $2.0 million ($2.2 million in the case of over
subscription). In December 2005, the Company extended the terms of the exercise
periods on warrants offered under both the Debenture offering and the September
2005 Private Placement offering (see Notes 3 and 5 below). The Company believes
the extended terms of the warrants better reflect current market expectations by
potential investors, and may improve the ability of the Company to complete
these offerings. Management believes that it will be successful in obtaining
additional financing, from which the proceeds will be primarily used to execute
its operating plan. The Company plans to use its available cash to continue the
development of its technologies and expand the marketing efforts to build demand
for our products. However, no assurances can be provided that the Company will
obtain additional financing or achieve a profitable level of operations.

                                        8
<PAGE>

                     ASSURETEC HOLDINGS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                             (UNAUDITED) (Continued)


NOTE 1. Nature of Business and Operations (continued)

     Sales and marketing activities are gaining market penetration for our
products and services and, based on current forecasts from our sales channels,
we expect our revenues to increase significantly over the next six to twelve
months, although there can be no assurance this will happen. We have reduced
operating expenses while attempting to maintain our technology development and
sales development activities. With our gross margins averaging in the range of
45% to 50% of revenues, any increase from recent levels in revenue generation
will move us toward profitable operations, however, there can be no assurance
that we can maintain gross margins within this range.

NOTE 2. Summary of Significant Accounting Policies

     Basis of Presentation -The condensed consolidated financial statements have
been prepared using the accounting records of AssureTec Holdings, Inc. ("ATH")
and its wholly owned subsidiary, AssureTec Systems, Inc. ("ATS") (collectively,
the "Company"). The accompanying financial data as of March 31, 2006 and for the
three and nine month periods ending March 31, 2006 and 2005, have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to such
rules and regulations. These financial statements should be read in conjunction
with the financial statements and the notes thereto included in our Annual
Report on Form 10-KSB for the year ended June 30, 2005 as filed with the
Securities and Exchange Commission.

     In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations, and cash flows as of March 31, 2006 and for the three and
nine month periods ending March 31, 2006 and 2005, respectively, have been made.
The results of operation for the period ended March 31, 2006 are not necessarily
indicative of the operating results for the full year.

     Principles of Consolidation - As described in Note 1, the condensed
consolidated financial statements include the accounts of ATH and ATS. All
material intercompany balances and transactions have been eliminated.

     Use of Estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during each of the reporting periods. Actual results could
differ from those estimates.

     Prepaid Software Licensing Fees - The Company has a licensing agreement
with an OCR software firm that gives us the rights to resell as a bundled part
of our products up to approximately 2,500 copies of their software for which we
are required to pay a royalty. The Company has estimated the approximate number
of licenses required over the next twelve months, the royalty requirements for
which are included in Current Assets.

                                        9
<PAGE>

                     ASSURETEC HOLDINGS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                             (UNAUDITED) (Continued)


NOTE 2. Summary of Significant Accounting Policies (continued)

     Accrued Compensation - Certain employees and management of the Company have
been deferring their earned compensation since the Company's inception due to
the Company's insufficient working capital levels. The Company properly expensed
these obligations and the corresponding employment taxes associated with these
deferred wages and salaries as incurred. The Company has accrued interest costs
at a rate of 3% per annum on the unpaid balances.

     Revenue Recognition - The Company recognizes revenue in accordance with
guidance contained in SEC Staff Accounting Bulletin No. 104, "Revenue
Recognition in Financial Statements".

     Product Revenues
     Generally, revenue is recognized upon shipment to the customer (which
constitutes delivery), provided that persuasive evidence of an arrangement
exists, the fee is fixed or determinable, and collection is reasonably assured.
To the extent that one or more of these conditions are not met, which has
occurred in the past, revenue is deferred until such time as all four criteria
are met.

     In general, the Company requires an upfront deposit for significant
customer purchases. If the Company receives a payment from a customer prior to
meeting all of the revenue recognition criteria, the payment is recorded as
deferred revenue. The Company's current arrangements with its third party
integrators, value-added resellers and distributors do not provide for any
rights of return, price-protection or other contingencies. The Company's general
credit terms requires a 50% deposit on order and complete payment within 30 days
of shipment.

     The Company records a provision for estimated sales returns and allowances
on product sales in the same period as the related revenue is recorded. These
estimates are based on known and estimated factors. Sales returns and allowances
during each of the reporting periods have been deemed immaterial.

     License and Maintenance Fees
     Fees from the sale of license and maintenance contracts are recognized
ratably over the term of the contract, usually one year.

     The Company has not had any sales with undeliverable elements for the nine
months ended March 31, 2006.


                                       10
<PAGE>

                     ASSURETEC HOLDINGS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                             (UNAUDITED) (Continued)


NOTE 2. Summary of Significant Accounting Policies (continued)

Revenues for the nine months ended March 31, 2006 and 2005:

                                                       March 31,
                                                   2006       2005
                                                 --------   --------
            Product revenues                     $431,048   $592,160
            Cost of product revenues              233,613    361,150
                                                 --------   --------
            Gross profit from product revenues    197,435    231,010
            License and maintenance fees           95,175     70,092
                                                 --------   --------
            Gross profit                         $292,610   $301,102
                                                 ========   ========


     Product Warranties - The Company sells its products with a product warranty
that provides repairs to the hardware and software components outside of normal
wear and tear at no cost. The length of coverage is from ninety days up to one
year. The Company accrues its estimated exposure to warranty claims based upon
historical warranty claim costs as a percentage of sales. Management reviews
these estimates on a regular basis and adjusts the warranty provisions as actual
experience differs from historical estimates. For the nine months ended March
31, 2006 warranty claims were deemed immaterial.

     Stock-Based Compensation - The Company accounts for stock-based employee
compensation arrangements using the intrinsic value method in accordance with
Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued
to Employees" and complies with the disclosure provisions of Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation" as amended by SFAS No. 148 "Accounting for stock-based
compensation - Transition and Disclosure, an amendment of FASB 123", issued in
December 2002.

     Equity instruments issued to non-employee vendors are accounted for in
accordance with the provisions of SFAS No. 123, and Emerging Issues Task Force
("EITF") Issue No. 96-18, "Accounting for Equity Instruments That Are Issued To
Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services." All transactions in which goods or services are the consideration
received for the issuance of equity instruments are accounted for based on the
fair value of the equity instrument issued, whichever is more reliably
measurable. The measurement date of the fair value of the equity instrument
issued is the date on which the counter party's performance is complete.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation- Transition and Disclosure - an Amendment of FASB Statement No.
123." This statement amends SFAS No. 123 to provide alternative methods of
transition for a voluntary change to the fair-value based method of accounting
for stock-based employee compensation, In addition, SFAS No. 148 amends the
disclosure requirements of SFAS No. 123 to require prominent disclosures in both
annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. SFAS No. 148 also requires that those effects be disclosed more
prominently by specifying the form, content and location of those disclosures.
The Company adopted the increased disclosure requirements of SFAS No. 148 during
the year ended June 30, 2003.

     The Company does not maintain a formal incentive compensation plan covering
its employees, directors and independent contractors. Options to purchase the
Company's Common Stock vest at varying intervals, but in general, typically vest
over two to four year periods. An option's maximum term is ten years.

                                       11
<PAGE>

                     ASSURETEC HOLDINGS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                             (UNAUDITED) (Continued)


NOTE 2. Summary of Significant Accounting Policies (continued)

     The following table provides an expanded reconciliation for all periods
presented that adds back to reported net loss the recorded expense under APB No.
25, deducts the total fair value expense under SFAS No. 123, and shows the
reported and pro forma earnings per share amounts:
<TABLE>
<CAPTION>

                                                          Three Months Ended March 31,   Nine months Ended March 31,
                                                               2006           2005           2006           2005
                                                           -----------    -----------    -----------    -----------
<S>                                                        <C>            <C>            <C>            <C>
Net loss attributable to common stockholders,
  as reported                                              $(1,037,825)   $  (592,252)   $(4,803,518)   $(2,951,524)
Add:  stock-based employee compensation costs
  included in net loss, as reported                               --          348,311         56,779        348,311
Less:  stock-based employee compensation as
  determined under fair value based method
  for all awards                                               (11,464)       (30,919)      (116,999)      (464,827)
Fair value adjustment for variable accounting of
employee stock options included in net loss, as reported          --             --        1,336,558           --
                                                           -----------    -----------    -----------    -----------

Pro forma net loss attributable to common
  stockholders                                             $(1,049,289)   $  (274,860)   $(3,527,180)   $(3,068,040)
                                                           ===========    ===========    ===========    ===========

Weighted average shares outstanding, basic
  and diluted                                                  960,696        637,719        821,563        653,764
                                                           ===========    ===========    ===========    ===========

Net loss per share, basic and diluted, as reported         $     (1.08)   $     (0.93)   $     (5.85)   $     (4.51)
                                                           ===========    ===========    ===========    ===========

Net loss per share, basic and diluted, pro forma           $     (1.09)   $     (0.43)   $     (4.29)   $     (4.69)
                                                           ===========    ===========    ===========    ===========
</TABLE>

     The fair value of each employee option grant is estimated on the date of
the grant using the Black-Scholes option-pricing model. Key weighted-average
assumptions used to apply this pricing model are as follows:

                                                         2006           2005
                                                     ------------   ------------
          Risk-free interest rate                        4.0%           3.30%
          Expected life of option grants             5 to 7 years      4 years
          Expected volatility of underlying stock         20%            20%


                                       12
<PAGE>

                     ASSURETEC HOLDINGS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                             (UNAUDITED) (Continued)


NOTE 2. Summary of Significant Accounting Policies (continued)

     New Accounting Pronouncements

     In February 2006, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 155, which is an amendment of SFAS No. 133 and 140. This Statement; a)
permits fair value re-measurement for any hybrid financial instrument that
contains an embedded derivative that otherwise would require bifurcation, b)
clarifies which interest-only strip and principal-only strip are not subject to
the requirements of SFAS 133, c) establishes a requirement to evaluate interests
in securitized financial assets to identify interests that are freestanding
derivatives or that are hybrid financial instruments that contain an embedded
derivative requiring bifurcation, d) clarifies that concentrations of credit
risk in the form of subordination are not embedded derivatives, e) amends SFAS
140 to eliminate the prohibition on a qualifying special-purpose entity from
holding a derivative financial instrument that pertains to a beneficial interest
other than another derivative financial instrument. This Statement is effective
for financial statements for fiscal years beginning after September 15, 2006.
Earlier adoption of this Statement is permitted as of the beginning of an
entity's fiscal year, provided the entity has not yet issued any financial
statements for that fiscal year. Management believes that the adoption of this
Statement will not have a significant impact on its financial statements.

     In March 2006, the FASB issued SFAS No. 156, which amends FASB Statement
No. 140. This Statement establishes, among other things, the accounting for all
separately recognized servicing assets and servicing liabilities. This Statement
amends SFAS No. 140 to require that all separately recognized servicing assets
and servicing liabilities be initially measured at fair value, if practicable.
This Statement permits, but does not require, the subsequent measurement of
separately recognized servicing assets and servicing liabilities at fair value.
An entity that uses derivative instruments to mitigate the risks inherent in
servicing assets and servicing liabilities is required to account for those
derivative instruments at fair value. Under this Statement, an entity can elect
subsequent fair value measurement to account for its separately recognized
servicing assets and servicing liabilities. By electing that option, an entity
may simplify its accounting because this Statement permits income statement
recognition of the potential offsetting changes in fair value of those servicing
assets and servicing liabilities and derivative instruments in the same
accounting period. This Statement is effective for financial statements for
fiscal years beginning after September 15, 2006. Earlier adoption of this
Statement is permitted as of the beginning of an entity's fiscal year, provided
the entity has not yet issued any financial statements for that fiscal year.
Management believes that the adoption of this Statement will not have a
significant impact on its financial statements.



                                       13
<PAGE>

                     ASSURETEC HOLDINGS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                             (UNAUDITED) (Continued)


NOTE 2. Summary of Significant Accounting Policies (continued)

     Net Loss Per Share - Net loss per share is computed in accordance with
Statement of Financial Standards No. 128, "Earnings Per Share"("SFAS No. 128").
SFAS No. 128 requires the presentation for both basic and diluted earnings per
share.

     Basic net loss per common share is computed by dividing net loss
attributable to common stockholders by the weighted average number of common
shares outstanding during the year. Diluted net loss per common share reflects,
in addition to the weighted average number of common shares, the potential
dilution if common stock options and warrants were exercised into common stock,
unless the effects of such exercise would be antidilutive.

     Basic and diluted loss per common share are the same for 2006 and 2005 as
potentially dilutive stock options, preferred stock, and warrants totaling
4,684,954 at March 31, 2006 and 2,354,776 at March 31, 2005 have not been
included in calculations of diluted net loss per share, as their inclusion would
be antidilutive.

A summary of these potentially dilutive securities are as follows:

                                                     March 31,
                                                 2006        2005
                                               ---------   ---------
     Options                                   2,091,659   1,444,778
     Warrants                                  1,242,975        --
     Convertible Preferred Stock -See Note 5
         Series A-1                            1,350,320     909,998
                                               ---------   ---------
                                               4,684,954   2,354,776
                                               =========   =========


NOTE 3. Debentures

     In September 2005 the Company issued $1,125,000 of debentures. These
debentures have a six month term and bear interest at 12% annually. For each
$3.00 of debentures purchased, the Company granted one warrant to purchase one
share of Common Stock at $6.00 per share for a period of one year from the date
of investment or upon an initial public offering, whichever occurs earlier. The
Company granted warrants to acquire 375,667 shares of Common Stock. The fair
value of the warrants was calculated using the Black-Scholes Option Valuation
Model. The Company recorded a debt discount of $180,315 which will accrete to
interest expense over the life of the debt.

     The Company incurred fees of approximately $90,000 for the acquisition of
the debentures. These costs have been capitalized and will be amortized to
interest expense over the life of the debt.

     The Company repaid $125,000 of the debentures during the three months ended
September 30, 2005, The remaining balance of $1,000,000 was repaid with proceeds
received from the September 15, 2005 Private Placement during the three months
ended December 31, 2005, as discussed in Note 5.


                                       14
<PAGE>

                     ASSURETEC HOLDINGS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                             (UNAUDITED) (Continued)


NOTE 3. Debentures (continued)

     In December 2005, the Company amended the September 1, 2005 Debenture
offering to increase the offering amount from $1.125 million to $1.650 million
and extended the exercise period of the warrants from a period of one year from
date of investment or upon an initial public offering by the Company, whichever
occurs earlier, to a period of two years from date of investment or within one
year from any initial public offering by the Company, whichever occurs earlier.

     In December 2005, the Debenture offering raised an additional gross
proceeds amount of $90,000, and the Company granted warrants to acquire 30,000
shares of Common Stock. The fair value of the warrants was calculated using the
Black-Scholes Option Valuation Model. The Company recorded a debt discount of
$20,816 which will accrete to interest expense over the life of the debt. The
Company incurred fees of approximately $7,200 for the acquisition of the
debentures. These costs have been capitalized and will be amortized to interest
expense over the life of the debt.

     In February 2006, the Company amended the September 1, 2005 Debenture
offering to increase the offering amount from $1.650 million to $2.0 million
($2.2 million in the case of over subscription). During the three months ended
March 31, 2006, the Debenture offering raised an additional gross proceeds
amount of $985,000, and the Company granted warrants to acquire 328,334 shares
of Common Stock. The fair value of the warrants was calculated using the
Black-Scholes Option Valuation Model. The Company recorded a debt discount of
$237,000 which will accrete to interest expense over the life of the debt. The
Company incurred fees of approximately $78,800 for the acquisition of the
debentures. These costs have been capitalized and will be amortized to interest
expense over the life of the debt.

     There was a total of $261,641 debt discount accreted to interest expense,
and $117,267 of deferred financing fees amortized to interest expense during the
nine month period ended March 31, 2006.


NOTE 4. Accounts Payable and Accrued Liabilities

     Accounts Payable and Accrued Liabilities at March 31, 2006 consisted of the
following:

                                                  March 31, 2006
                                                  --------------
                  Trade Payables                    $  154,254
                  Software Licensing Fees Payable      420,864
                  Professional Fees                    268,848
                  Accrued Interest                     184,254
                  Accrued Dividends Payable            118,695
                  Due to Customer                       44,335
                                                    ----------
                                                    $1,191,250
                                                    ==========


                                       15
<PAGE>

                     ASSURETEC HOLDINGS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                             (UNAUDITED) (Continued)


NOTE 5. Stockholders' Deficiency

     Common Stock

     The Company has 100,000,000 authorized shares of common stock, $0.001 par
value. At March 31, 2006, there were 1,008,568 shares of common stock issued and
outstanding.

     On September 15, 2005, the Company commenced a private offering to
accredited investors only of up to 1,250,000 shares of Common Stock. Pursuant to
this private offering, the Company is offering units for gross proceeds of
$12.00 per unit. Each unit is comprised of two shares of Common Stock at $6.00
per share with one warrant to acquire one share of Common Stock at $6.00 per
share, for each two shares of Common Stock purchased. The warrants issued in
this offering were initially exercisable for a period of one year from the date
of investment or upon an initial public offering by the Company, whichever
occurred earlier. In December 2005, the Company extended the terms of the
exercise periods on warrants offered under both the Debenture offering and the
September 2005 Private Placement offering to a period of two years from date of
investment or within one year from any initial public offering by the Company,
whichever occurs earlier.

     During the three months ended March 31, 2006, the Company sold 37,499
shares of Common Stock, and granted 18,751 warrants, pursuant to the September
15, 2005 private offering raising gross proceeds of $225,000, and net proceeds
of $172,500.

     As of March 31, 2006, a total of 370,849 shares have been sold, and 185,426
warrants have been granted, pursuant to the September 15, 2005 private offering
raising gross proceeds of $2.23 million, of which $1.125 million has been
applied to repay a portion of the September 1, 2005 Debentures.

Convertible Preferred Stock

     The Company has 5,000,000 shares of Convertible Preferred Stock, $0.001 par
value, authorized, issuable in series with rights, preferences, privileges and
restrictions as determined by the Board of Directors.

     Series A-1
     On August 13, 2004, ATH authorized 1,000,000 shares of its Series A-1
Convertible Preferred Stock. Each share of ATH's Series A-1 Convertible
Preferred Stock is convertible into 322.58 shares of Common Stock. The holders
of Series A-1 Convertible Preferred Stock vote with the shares of Common Stock
being entitled to such number of votes as is equal to the whole number of shares
of Common Stock into which such holder's aggregate number of shares of Series
A-1 Convertible Preferred are convertible. Holders of Series A-1 Convertible
Preferred have no redemption rights. Holders of Series A-1 Convertible Preferred
are entitled to receive dividends cumulative out of funds legally available,
therefor, at the rate of 5% of the applicable "Series A-1 Price", adjusted to
reflect any stock-split, stock dividend, combination, recapitalization or
reorganization occurring after the original issue date.

                                       16
<PAGE>

                     ASSURETEC HOLDINGS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                             (UNAUDITED) (Continued)


NOTE 5. Stockholders' Deficiency (continued)

Convertible Preferred Stock (continued)

     In the event of liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, before any payment or distribution shall be
made to the holders of Common Stock, the holders of Series A Convertible
Preferred Stock are entitled to receive out of the assets of the Company an
amount equal to the greater of (i) applicable "Series A-1 Price" per share then
outstanding, plus a sum equal to all declared but unpaid dividends thereon to
the date of final payment or distribution, or (ii) the pro rata amount per share
of the entire assets of the Company available for distribution to the holders of
all Convertible Preferred Stock and Common Stock based upon the total number of
share of Common Stock then outstanding (assuming conversion into Common Stock of
all series and shares of Convertible Preferred Stock); provided, however, that
if the remaining assets of the Company are insufficient to make payment in full
to all holders of Series A Convertible Preferred Stock of the foregoing
liquidation preference, then such assets shall be distributed among the holders
of Series A Convertible Preferred Stock at the time outstanding, ratably in
proportion to the full amounts to which they would otherwise be respectively
entitled. Any transaction or series of transactions which results in a change of
control is deemed to be a liquidation, dissolution or winding up, unless the
holders of at least 75% of the outstanding shares of ATH's Series A-1
Convertible Preferred Stock approve the transaction.

     Series A-2

     In April 2004, ATH authorized 500 shares of Series A-2 Convertible
Preferred Stock, $0.001 par value. The price per share was $10,000. Each share
is convertible into 2,000 shares of Common Stock. The holders of Series A-2
Convertible Preferred Stock vote with the shares of Common Stock being entitled
to such number of votes as is equal to the whole number of shares of Common
Stock into which such holder's aggregate number of shares of Series A-2
Convertible Preferred Stock are convertible. Holders of Series A-2 Convertible
Preferred Stock have no redemption rights. Holders of Series A-2 Convertible
Preferred Stock are entitled to receive dividends in the form of shares of
Common Stock. Dividends accrue at an annual rate of 200 shares of Common Stock
per share of Series A-2 Convertible Preferred Stock on a pro-rata basis based
upon the Original Issue Date. In August 2004, holders of Series A-2 Convertible
Preferred Stock were given rescission rights and/or rights to exchange their
shares for Series A-1 Convertible Preferred Stock.

     At March 31, 2006, outstanding shares of Convertible Preferred Stock were
as follows:

                               Authorized Shares         Issued Shares
                               -----------------         -------------
           Series A-1              1,000,000                 4,186
           Series A-2                    500                    --

     During the three months ended March 31, 2006, The Company sold 25 shares of
Convertible Preferred Stock for gross proceeds of $25,000 and net cash proceeds
of $22,500.


                                       17
<PAGE>

                     ASSURETEC HOLDINGS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                             (UNAUDITED) (Continued)


NOTE 6. Commitments and Contingencies

     In March 2006, the Company exercised its option to extend the current lease
of approximately 5,600 square feet of office space at our headquarters at 200
Perimeter Road, Manchester, NH through June 30, 2008. In addition, the lease has
been amended to add an additional 1,200 square feet of leased space beginning
June 1, 2006 and running through June 30, 2008. The amended lease requires
minimum annual payments of approximately $54,000 through its expiration.

Litigation

     In the normal course of business, the Company may be involved in legal
proceedings in the ordinary course of business. Such matters are subject to many
uncertainties, and outcomes are not predictable with assurance. The Company
currently is not involved in any legal proceedings which are not in the ordinary
course of business.

     On June 23, 2006, the Company received notification that 3M Innovative
Properties Company, The 3M Company, filed suit against the Company alleging
infringement of US Patent Nos. 6,019,278 and 6,611,612. This action was taken
while the Company was engaged in negotiations with 3M for a licensing agreement.
The issue was settled on July 13, 2006, and as part of the settlement agreement,
the Company entered into a non-exclusive license agreement with 3M.


NOTE 7. Related Party Transactions

     As of March 31, 2006 amounts due to related parties consisted of the
following:

                                               March 31, 2006
                                               --------------
                      Advances                    $598,137
                      Professional Fees            132,500
                      Accrued Interest             139,905
                      Accrued Dividends Payable     35,928
                                                  --------
                                                  $906,470
                                                  ========

     Certain of the Company's obligations have been funded by RT Robertson
Consultants, Inc. and Robertson Financial Advisors, LLC, companies owned and
controlled by the family of the Company's chief executive officer (the "Related
Party"). At March 31, 2006, the Company owes the Related Party $598,137.
Effective July 1, 2002, the Company agreed to accrue interest on these amounts
at 5.0% per annum. The Company recorded approximately $8,894 in the three months
ended March 31, 2006 in interest expense - related party in the Condensed
Consolidated Statements of Operations. As of March 31, 2006, $139,905 of accrued
interest was owed to the related party.

                                       18
<PAGE>

                     ASSURETEC HOLDINGS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                             (UNAUDITED) (Continued)


NOTE 7. Related Party Transactions (continued)

     As of March 31, 2006, the Company owed the Chief Executive Officer and the
then Treasurer in the aggregate $132,500 for certain professional and management
fees incurred during the years ended June 30, 2003 and 2002. The Company has not
incurred these charges during the nine months ended March 31, 2006.

     As of March 31, 2006, the related party is owed $35,928 in accrued
dividends payable for the 958 shares of Convertible Preferred Stock owned by the
related party.


NOTE 8. Subsequent Events

     Debentures

     On April 7, 2006, the Company amended the Debenture offering to increase
the offering amount from $2.0 million to $3.0 million ($3.3 million in the case
of over subscription). In May 2006, the Debenture offering raised an additional
gross proceeds amount of $450,000, and the Company granted warrants to acquire
150,000 shares of Common Stock. The fair value of the warrants was calculated
using the Black-Scholes Option Valuation Model. The Company recorded a debt
discount of $110,000 which will accrete to interest expense over the life of the
debt. The Company incurred fees of approximately $36,000 for the acquisition of
the debentures. These costs have been capitalized and will be amortized to
interest expense over the life of the debt.

     Other

     On June 23, 2006, the Company received notification that 3M Innovative
Properties Company, The 3M Company, filed suit against the Company alleging
infringement of US Patent Nos. 6,019,278 and 6,611,612. This action was taken
while the Company was engaged in negotiations with 3M for a licensing agreement.
The issue was settled on July 13, 2006, and as part of the settlement agreement,
the Company entered into a non-exclusive license agreement with 3M.

     On June 23, 2006, the Company filed a Form 15 with the Securities and
Exchange Commission effectively terminating the Company's requirement to file
reports under the Securities Exchange Act of 1934. At the time of filing the
Form 15, the Company had approximately 52 record holders of the class of
securities covered by the Company's registration statement. The Company's stock
has never been listed on any Exchange nor has it been publicly traded. After
serious consideration, the Company concluded that the advantages to the Company
of being a reporting company under the 1934 Act do not offset the costs, both
direct expenses and indirect costs.



                                       19
<PAGE>

ITEM 2  Management's Discussion and Analysis of Financial Condition and Results
        of Operations

Forward-Looking Statements

     This Quarterly report contains forward-looking statements about our
business, financial condition, and prospects that reflect our assumptions and
beliefs based on information currently available. Forward-looking statements
often include the words "believe," "expect," "anticipate," "intend," "plan,"
"estimate" or similar expressions. In this report, forward-looking statements
also include:

     o    statements about our business plans;

     o    estimates of future financial performance;

     o    statements regarding other factors that could affect our future
          operations or financial position; and

     o    other statements that are not matters of historical fact.

     These statements may be found under "Management's Discussion and Analysis
of Financial Condition and Results of Operations" herein as well as in this
report generally. Our ability to achieve our goals depends on many known and
unknown risks and uncertainties, including changes in general economic and
business conditions. These factors could cause our actual performance and
results to differ materially from those described or implied in forward-looking
statements.

     We believe it is in the best interests of our investors to use
forward-looking statements in discussing future events. However, given these
uncertainties, readers of this Form 10-QSB and investors are cautioned not to
place undue reliance on such forward-looking statements. These forward-looking
statements speak only as of the date of this report. The Company disclaims any
responsibility to revise or update these statements or any factors that may
affect actual results, whether as a result of new information, future events or
otherwise.

     The discussion in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" should be read together with our financial
statements and related notes included elsewhere in this Quarterly Report on Form
10-QSB.

Overview

     We develop integrated identity document management applications for use in
government and commercial security applications. Our proprietary document
management platform automatically reads, records and authenticates
identification documents, such as passports, visas or driver's licenses, through
our proprietary database software thereby reducing the risk of human error in
detecting falsified or tampered forms of identification. We are subject to a
number of risks including dependencies on key individuals, competition from
other substitute products and larger companies, the successful development and
marketing of our products and the need to obtain adequate financing necessary to
fund our future operations.

     Our historical results of operations have been prepared using the
historical accounting records of AssureTec Holdings and our wholly owned
subsidiary AssureTec Systems. The operations of AssureTec Holdings are limited
and consist primarily of certain management costs, such as compensation and
third party management and accounting services. Historical references to our
operations primarily consist of those transactions executed by AssureTec Systems
in the development of our integrated identity document management applications.

                                       20
<PAGE>

     Our historical results of operations and financial condition do not include
any adjustments relating to the recoverability of assets or the classification
of liabilities that might be necessary should we be unable to continue as a
going concern. Our independent public accounting firm's audit report for the
fiscal year ended June 30, 2005 indicates that there is substantial doubt about
our ability to continue as a going concern.

Critical Accounting Policies

     The discussion and analysis of our financial condition and results of
operations is based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of those financial statements requires us to make
estimates and judgments that affect the reported amount of assets and
liabilities at the date of our financial statements. Actual results may differ
from these estimates under different assumptions or conditions.

     Critical accounting policies are those that reflect significant judgments
or uncertainties, and potentially result in materially different results under
different assumptions and conditions. The Company believes that our most
critical accounting policies include those dealing with accounting for stock
options and warrants.

Accounting for Stock-Based Compensation
     We account for options granted to employees in accordance with the
provisions of Accounting Principles Board ("APB") Opinion No. 25, Accounting for
Stock Issued to Employees, and comply with the disclosure provisions of SFAS No.
123, Accounting for Stock-Based Compensation. Under APB No. 25, compensation
expense is recognized based on the difference, if any, on the date of grant
between the estimated market value of the Company's stock and the amount an
employee must pay to acquire the stock. Compensation expense is recognized
immediately for past services and ratably for future services over the
option-vesting period.

     We account for the fair value of options and warrants for non-employees in
accordance with SFAS No. 123, "Accounting for Stock Based Compensation," which
requires that compensation cost be measured after the grant date based on the
value of the award and is recognized over the service period, which is also the
vesting period. The fair value of each option grant is estimated on the date of
grant using the Black-Scholes option-pricing model. We will be required to
account for options and warrants for employees during the annual reporting
period beginning July 1, 2006 as a result of the FASB's issuance of SFAS No.
123R "Accounting For Stock Based Compensation."

     The Black-Scholes option-pricing model is used to estimate the fair value
of a stock option. The model calculates the theoretical fair value based on a
number of assumptions utilizing, the stock price, strike price, expiration date,
risk-free rate of return, and the standard deviation (volatility) of the stock's
return. Stock based compensation valuations may differ significantly if the
Company used different assumptions or a different option model, based on the
before mentioned assumptions and the alternative model's formula driven
calculations. The Company has not relied on any other option pricing models for
the issuance of its options or warrants as the Black-Scholes option-pricing
model is currently the model most widely used for reporting companies. The
uncertain assumptions estimating the valuation of these equity transactions may
have a material effect on our financial performance during the reported periods.

                                       21
<PAGE>

     For the purposes of estimating the fair value of options and warrants, as
indicated in the Notes to Financial Statements elsewhere in this report, the
Company has assumed a volatility of 20% based upon the fact that our stock is
not traded, nor has it ever traded, publicly nor is it listed on any Exchange
for public trading. If a higher volatility number were used, with all other
assumptions remaining the same, the fair value of options and warrants would be
higher as well. While this would not impact the actual cash flow of the Company,
it would have the effect of increasing reported operating and other expenses as
a result of the higher fair value estimates.


Results of Operations

For The Three Months Ended March 31, 2006 and 2005

     Total revenues for the three months ended March 31, 2006 and 2005 were
$112,208 and $419,323, respectively.

                                                       March 31,
                                                   2006       2005
                                                 --------   --------
            Product revenues                     $ 87,155   $384,277
               Cost of product revenues            49,852    238,646
                                                 --------   --------
            Gross profit from product revenues     37,303    145,631

            License and maintenance fees           25,053     35,046
                                                 --------   --------
            Total Gross profit                   $ 62,356   $180,677
                                                 ========   ========


     Revenues are comprised of product sales and software licensing and
maintenance fees. Revenues related to product sales were $87,155 and $384,277
for the quarters ended March 31, 2006 and 2005 respectively, while revenues
related to software licensing and maintenance fees were $25,053 and $35,046 for
the same periods. Revenues for the quarter ended March 31, 2006 resulted from
the sale and shipment of hardware and software to a total of 9 different systems
integrators and reseller partners. The largest customers accounted for 31%, 19%
and 17% respectively. Revenues for the quarter ended March 31, 2005, were from
the sale and shipment of hardware and software to 7 different systems
integrators and reseller partners, with the largest customers accounting for 55%
and 27% respectively.

     Cost of revenues for the three months ended March 31, 2006 and 2005 was
$49,852 and $238,646, respectively. Cost of revenues represents the cost of the
hardware components, manufacturing and related overhead, labor and other costs
for the products we shipped. The decrease in costs from 2005 to 2006 was due
directly to the decreased volume. There are no costs allocated to the revenues
generated from our software licensing and maintenance fees.

     Selling, general and administrative expenses for the three months ended
March 31, 2006 increased to $448,334 from $420,767 in the comparable period in
2005. This increase for the quarter was due to:

     1) An increase in Selling expenses due to wage and benefit expense
increases beginning January 1, 2006, and relocation/housing expenses related to
movement of a sales executive to Singapore, off-set somewhat by reduced expenses
related to converting two full-time sales positions to part-time, contractor
status.

     2) An increase in G&A expenses due to wage and benefit expense increases
beginning January 1, 2006, and an increase in legal expenses related to our
intellectual property, off-set somewhat by a reduction in professional fees
related to our SEC filings.

                                       22
<PAGE>

     Engineering, research and development expenses for the three month period
ended March 31, 2006 increased to $463,152 from $326,541 in the comparable
period in 2005. The $136,611 increase in engineering, research and development
costs was a result primarily of an increase in wage and benefit expenses and the
addition of two senior software engineers as compared to the year earlier
period. In addition, the Company invested approximately $60,000 during the
quarter with the third-party manufacturer of the Company's ID-100 product line
towards design and feature modifications to meet market requirements. The ID-100
product line is scheduled for initial production shipments before the end of
fiscal 2006.

     Other Expense for the three months ended March 31, 2006 was $136,577,
compared to Other Expense of $25,621 for the three months ended March 31, 2005.
The increase of $110,956 was attributable primarily to the accretion of the debt
discount of approximately $78,000, and approximately $33,000 amortized to
interest expense for deferred financing fees related to the acquisition of the
debentures offered with the September 1, 2005 Debenture offering, reflected in
Interest expense.

     For the three months ended March 31, 2006, net loss was $985,707 compared
to a net loss of $592,252 for the year earlier period. The increase in net loss
was attributable to an increase in loss from operations of $282,499 due to a
decrease in gross profit resulting from reduced shipment volume and increases in
both SG&A and R&D expenses, and an increase of about $110,956 in interest
expense resulting primarily from the accretion of debt discount and amortization
of deferred financing fees for the September 1, 2005 debenture offering.

     For the three months ended March 31, 2006, the Company had accrued
Preferred stock dividends of $52,118 compared to none in the year earlier
period, resulting in a net loss applicable to Common shareholders of $1,037,825,
or $(1.08) per basic and diluted share, for the period ended March 31, 2006,
compared to a net loss applicable to Common shareholders of $592,252, or $(0.93)
per basic and diluted share, for the year earlier period.

For The Nine Months Ended March 31, 2006 and 2005

     Total revenues for the nine months ended March 31, 2006 and 2005 were
$526,223 and $662,252, respectively.

                                                       March 31,
                                                   2006       2005
                                                 --------   --------
            Product revenues                     $431,048   $592,160
            Cost of product revenues              233,613    361,150
                                                 --------   --------
            Gross profit from product revenues    197,435    231,010

            License and maintenance fees           95,175     70,092
                                                 --------   --------
            Gross profit                         $292,610   $301,102
                                                 ========   ========


     Revenues are comprised of product sales and software licensing and
maintenance fees. Revenues related to product sales were $431,048 and $592,160
for the periods ended March 31, 2006 and 2005 respectively, while revenues
related to software licensing and maintenance fees were $95,175 and $70,092 for
the same periods. The increase in software licensing and maintenance fees is due
to the increased installed base of systems from which we derive recurring
revenue. Product revenues for the nine months ended March 31, 2006 were derived
from the sale and shipment of hardware and software to 20 different systems
integrators and reseller partners, with the largest customers accounting for
approximately 33% and 11% of total revenues for the period. No other customer

                                       23
<PAGE>

accounted for more than 10% of the total revenues for the period. Revenues for
the nine months ended March 31, 2005 were derived from the sale and shipments of
hardware and software to 11 different systems integrators and reseller partners,
with the largest customers accounting for approximately 55% and 17% of total
revenues for the period. No other customer accounted for more than 10% of the
total revenues for the period.

     Cost of revenues for the nine months ended March 31, 2006 and 2005 was
$233,613 and $361,150, respectively. Cost of revenues represents the cost of the
hardware components, manufacturing and related overhead, labor and other costs
for the products we shipped. The decrease in costs from 2005 to 2006 was due to
the decreased volume. There are no costs allocated to the revenues generated
from our software licensing and maintenance fees.

     Selling, general and administrative expenses for the nine months ended
March 31, 2006, increased to $2,296,103 from $1,712,022 in the comparable period
in 2005. The increase of $584,081 in selling, general and administrative
expenses was attributable to:

     1)   An increase of $411,086 in stock based compensation expense, related
          to variable accounting treatment for stock options previously issued
          to employees, to $782,217 for the period ended March 31, 2006, from
          $371,131 for the nine months ended March 31, 2005.

     2)   An increase in SG&A expenses resulting primarily from increased
          expenses due to wage and benefit expense increases beginning January
          1, 2006, and increased travel and living expenses, including
          relocation/housing expenses related to movement of a sales executive
          to Singapore, off-set somewhat by reduced wage and benefit expenses
          related to the elimination of one full-time position and converting
          two full-time sales positions to part-time, contractor status.

     Engineering, research and development expenses for the nine month period
ended March 31, 2006 increased to $2,011,822 from $1,438,889 in the comparable
period in 2005. The $572,933 increase in engineering, research and development
costs was a result primarily due to:

     1)   An increase of $636,537 in stock based compensation expense, related
          to variable accounting treatment for stock options previously issued
          to employees, to $787,089 for the period ended March 31, 2006, from
          $150,552 for the nine months ended March 31, 2005.

     2)   A net decrease of $63,604 in R&D expenses resulting primarily from an
          increase in expenses related to the continuing development and testing
          of our new ID-100 and ID-400 product lines and increased wage and
          benefit expense increases beginning January 1, 2006, off-set somewhat
          by a reduction in contract labor expenses.

     Other expense for the nine months ended March 31, 2006 was $633,580
compared to $101,715 for the nine months ended March 31, 2005. The increase of
$531,865 in other expenses was attributable primarily to:

     1)   An increase in interest expense related to the accretion of the debt
          discount of $261,641 associated with the September 1, 2005 Debenture
          offering, and

     2)   An increase of $117,267 amortized to interest expense for deferred
          financing fees related to the acquisition of the September 1, 2005
          Debenture offering, and

     3)   An increase of $180,530 in stock based compensation charges to
          interest for the issuance of 200,000 warrants to the related party in
          exchange for a covenant not to request repayment of advances due to
          the Company by a Related Party which were in excess of $600,000.

     4)   A reduction of $27,573 in interest expenses resulting from the
          conversion of approximately $2.2 million of deferred compensation into
          stock options in December 2004 and the resulting decrease in accrued
          interest due.

                                       24
<PAGE>

     For the nine months ended March 31, 2006, net loss was $4,648,895 compared
to a net loss of $2,951,524 for the year earlier period. The increase in net
loss for the period of $1,697,371 was attributable to:

     1)   A decrease of $8,492 in gross profit resulting from reduced shipment
          volume, and

     2)   An increase of $1,157,014 in SG&A and R&D expenses due primarily to a
          $1,047,623 increase in stock based compensation expenses related to
          variable accounting treatment for stock options previously issued to
          employees, and an increase in wage and benefit expense increases
          beginning January 1, 2006, and increased expenses for ongoing
          development of our ID-100 and ID-400 product lines.

     3)   An increase of about $531,865 in Other expenses related primarily to
          interest expense resulting from the accretion of debt discount and
          amortization of deferred financing fees for the September 1, 2005
          Debenture offering, and stock based compensation charges to interest
          for the issuance of 200,000 warrants to the related party in exchange
          for a covenant not to request repayment of advances due to the Company
          by a Related Party which were in excess of $600,000.

     For the nine months ended March 31, 2006, the Company had accrued Preferred
stock dividends of $154,623 compared to none in the year earlier period. This
resulted in a net loss applicable to Common shareholders of $4,803,518, or
$(5.85) per basic and diluted share, for the period ended March 31, 2006,
compared to a net loss applicable to Common shareholders of $2,951,524, or
$(4.51) per basic and diluted share, for the year earlier period.















                                       25
<PAGE>

Financial Condition, Liquidity and Capital Resources

     At March 31, 2006, we had cash of $135,459 and a working capital deficiency
of approximately $4.72 million, compared to cash of $205,118 and a working
capital deficiency of approximately $3.97 million at June 30, 2005, and cash of
$114,334 and a working capital deficiency of approximately $3.93 million at
March 31, 2005. Working capital deficiencies result when the Company's current
liabilities exceed its current assets. These matters raise substantial doubt
about the Company's ability to continue as a going concern, and our continuation
as a going concern will require that we raise additional capital, generate
sufficient cash flow from operations, and meet our obligations on a timely basis
and ultimately attain profitability.

                                                        Nine Months Ended
                                                            March 31,
                                                       2006           2005
                                                   -----------    -----------
  Net Loss                                         $(4,648,895)   $(2,951,524)
       Add back non-cash expenses                    2,145,123        535,795
                                                   -----------    -----------
  Adjusted Net Loss                                $(2,503,772)   $(2,415,729)
                                                   -----------    -----------
       Changes in Operating Assets & Liabilities    (1,026,856)       715,413
                                                   -----------    -----------
  Net Cash Used in Operating Activities            $(3,530,628)   $(1,700,316)
                                                   ===========    ===========
  Net Cash Used in Investing Activities            $   (64,167)   $   (17,563)
                                                   ===========    ===========
  Net Cash Provided by Financing Activities        $ 3,525,136    $ 1,830,599
                                                   ===========    ===========
        Net (Decrease) Increase in Cash            $   (69,659)   $   112,720
                                                   -----------    -----------
        Cash, Beginning of Period                  $   205,118    $     1,614
                                                   -----------    -----------
  Cash, End of Period                              $   135,459    $   114,334
                                                   ===========    ===========


     For the nine months ended March 31, 2006, we incurred net losses of
$4,648,895 on revenues of $526,223 compared to net losses of $2,951,524 on
slightly higher revenues of $662,252 for the nine months ended March 31, 2005.
Adjusting net loss for the two periods to add back non-cash expenses for
depreciation, amortization, stock-based compensation expense, accretion of debt
discount charges taken during the period ended March 31, 2006, yields an
adjusted net loss of $2,503,772 for the nine months ended March 31, 2006
compared to an adjusted net loss, on slightly higher revenues, of $2,415,728 for
the year earlier period. This increase in year-over-year net loss from operating
activities is primarily a result of increased wage and benefit expenses
beginning January 1, 2006. The year-over-year increase of $1,609,328 in non-cash
expenses were attributable to an increase of $1,228,154 in stock-based
compensation expenses, due primarily to the variable accounting adjustments for
previous issued options, an increase of $378,908 for amortization of deferred
financing and accretion of debt discount expenses, and an increase of $2,266 in
depreciation.

     For the nine months ended March 31, 2006, changes in operating assets and
liabilities used $1,026,856 of cash compared to producing $715,413 of cash for
the nine month period ended March 31, 2005. For the current period, increases in
accounts receivables, inventory, and other current assets were off-set by a
slight reduction in prepaid software license fees resulting in the use of
$85,420 cash, compared to the year earlier period use of $477,301 cash. During
the current period, the Company used cash, primarily from financing activities,
to reduce accounts payable, accrued liabilities and accrued compensation a total
of $925,336, while during the year earlier period, our suppliers and employees
were a source of cash as our accounts payable, accrued liabilities and accrued
compensation accounts increased a total of $1,172,621.

     Net cash used in investing activities for the nine months ended March 31,
2006 was $64,167 as compared to $17,563 for the nine month period ended March
31, 2005. Respectively, $14,361 and $17,563 were spent during each period for

                                       26
<PAGE>

purchase of property and equipment, primarily new computer equipment to support
development and administrative activities. The primary reason for the
year-over-year increase in cash used in investing activities was $49,806
invested during the current period for various patent related expenses as the
Company seeks to increase its portfolio of issued patents to protect and
increase the value of its intellectual property.

     Net cash provided by financing activities was $3,525,136 for the nine
months ended March 31, 2006 as compared to $1,830,299 for the year earlier
period. Net proceeds from the issuance of common and preferred stock accounted
for $2,229,050 and $1,428,875, respectively in each period, while net proceeds
from the issuance of debentures, initiated on September 1, 2005, were $969,800
in the current period. Net proceeds from advances from affiliates and Related
Parties amounted to $326,286 for the current period, as compared to $401,624 for
the year earlier period.

     On September 1, 2005, we initiated a private placement to accredited
investors of debentures with warrants to purchase Common Stock. These debentures
have a six month term from the date of investment and bear interest at 12%
annually and are to be repaid from proceeds from any subsequent offering. For
each $3.00 of debentures purchased, the Company issued one warrant to purchase
one share of Holdings Common Stock at $6.00 per share. The warrants issued in
this offering were initially exercisable for a period of one year from the date
of investment or upon an initial public offering by the Company, whichever
occurred earlier. This private Debenture offering initially raised gross
proceeds of $1.125 million and net proceeds of approximately $1.035 million. In
December 2005, the Company amended the Debenture offering to increase the
offering amount from $1.125 million to $1.650 million, in addition to extending
the exercisable period on the warrants from a period of one year from date of
investment or upon an initial public offering by the Company, whichever occurs
earlier, to a period of two years from date of investment or within one year
from any initial public offering by the Company, whichever occurs earlier. In
December 2005, the Debenture offering raised an additional gross proceeds amount
of $90,000, and the Company issued warrants to acquire 30,000 shares of Common
Stock. The fair value of the warrants is $20,816 and is recorded as a debt
discount which will accrete to interest expense over the life of the debt. In
January 2006, the Debenture offering raised an additional gross proceeds amount
of $100,000, and the Company issued warrants to acquire 33,333 shares of Common
Stock. The Company is evaluating the financial and accounting impact of this
transaction. In February 2006, the Company amended the Debenture offering again,
to increase the offering amount from $1.650 million to $2.0 million ($2.2
million in the case of over subscription). During the three months ended March
31, 2006, the Debenture offering raised an additional gross proceeds amount of
$985,000, and the Company granted warrants to acquire 328,334 shares of Common
Stock. The fair value of the warrants was calculated using the Black-Scholes
Option Valuation Model. The Company recorded a debt discount of $237,000 which
will accrete to interest expense over the life of the debt. The Company incurred
fees of approximately $78,800 for the acquisition of the debentures. These costs
have been capitalized and will be amortized to interest expense over the life of
the debt. There was a total of $261,641 debt discount accreted to interest
expense, and $117,267 of fees amortized to interest expense during the nine
month period ended March 31, 2006.

     On September 15, 2005, we commenced a private offering to accredited
investors of up to 1,250,000 shares of Holdings Common Stock. Pursuant to this
private offering, the Company is offering Common Stock at $6.00 per share with
one warrant to acquire one share of Common Stock at $6.00 per share, for each
two shares of Common Stock purchased. The warrants issued in this offering were
initially exercisable for a period of one year from the date of investment or
upon an initial public offering by the Company, whichever occurred earlier. As
of March 31, 2006, a total of 370,849 shares have been sold pursuant to this
offering raising gross proceeds of $2.2 million, of which $1.125 million was
applied to retire the initial amount raised from the September 1, 2005 Debenture

                                       27
<PAGE>

offering. In December 2005, the Company extended the exercise period on the
warrants issued in this offering extending the exercise period from a period of
one year from date of investment or upon an initial public offering by the
Company, whichever occurs earlier, to a period of two years from date of
investment or within one year from any initial public offering by the Company,
whichever occurs earlier. The Company believes the extended terms better reflect
market expectations of investors, and may improve the ability of the Company to
complete these offerings. As a result of this amendment, the Company recognized
a fair-value adjustment of $175,762 related to a total of 542,342 issued
warrants during the quarter ended December 31, 2005.

     We will use the balance of new proceeds from these offerings, if any,
primarily to strengthen our sales and marketing efforts and to better position
us for another private placement or a public offering. Subject to the
availability of adequate continued financing, we plan to continue development
and enhancement of our technology products, including the launching of the
ID-100 and ID-400 product lines, during the next twelve months. We plan to
introduce the two new product lines during the second half of calendar year
2006; the ID-400 with a new high-resolution camera and RFID (radio frequency
identification) capability required in many government programs, as well as a
new low-end model, the ID-100, designed for the high volume market place. If we
are successful in obtaining additional financing, we expect to hire additional
employees, primarily in the areas of marketing, sales, finance, engineering and
quality assurance. This will require us to purchase additional computer
equipment; however, any such purchases are not expected to be significant.

     With the Private Placement offering of shares and warrants begun in
September 2005, we are attempting to raise up to an additional $7.5 million
($6.9 million net of expenses). As of March 31, 2006, we have raised
approximately $3.3 million (net of initial debenture repayment) since September
1, 2005, an average of approximately $471,000 monthly, which represents only
half the current average operating run-rate for the Company. Successfully
completing this subscription by the close of our current fiscal year, June 30,
2006, in addition to the cash currently on hand, would allow us to operate for a
period in excess of one year without a significant increase in revenues. There
is no assurance that we will be successful in raising these additional funds.

     If we are not able to raise the entire amount in this timeframe, or if we
are not able to raise sufficient capital to maintain the current level of
operations, we will need to reduce expenses by restricting development projects
to maintaining the current product lines at or below the current functionality
levels. We do not believe, though there can be no such assurances, that such
restrictions, in and of themselves, would have a major impact on near-term (up
to 18 months) revenues as these forecasted projects are based on the current
product lines and functionality. Insufficient funds to provide adequate support
to our customers, including adequate inventory to provide products for
development, testing and demonstration requirements, could, however, have a
significant impact on revenues. In addition, inadequate funding could impact our
ability to maintain the level of staffing, and professional assistance and
oversight, required to complete our efforts to prepare and file the three
remaining delinquent interim reports from Fiscal 2005, and to timely prepare and
file future reports to the Securities and Exchange Commission.

     In March 2006, the Company exercised its option to extend the current lease
of approximately 5,600 square feet of office space at our headquarters at 200
Perimeter Road, Manchester, NH through June 30, 2008. In addition, the lease has
been amended to add an additional 1,200 square feet of leased space beginning
June 1, 2006 and running through June 30, 2008. The amended lease requires
minimum annual payments of approximately $54,000 through its expiration.

                                       28
<PAGE>

ITEM 3 Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

     We maintain "disclosure controls and procedures" (as defined in the
Securities Exchange Act of 1934 Rules 13a-15(e) and 15(d)-15(e)) designed to
ensure that information required to be disclosed in reports filed under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
and reported within the specified time periods.

     Our chief executive officer, who currently also functions as the Company's
principal financial officer, with the participation of our management, have
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures as of March 31, 2006, the end of the period covered by
this report. Based upon that evaluation, the chief executive officer concluded
that, while our disclosure controls and procedures are effective in timely
alerting them to material information required to be included in our periodic
filings with the Securities and Exchange Commission, there is a lack of
segregation of duties at the Company due to the small number of employees
dealing with general administrative and financial matters. In addition, the
accounting department does not currently have the depth of experience to
critically evaluate and appropriately implement certain new accounting
pronouncements, such as sophisticated stock based transactions involving options
and warrants, requiring our auditors from time to time to propose audit
adjustments. These constitute a significant deficiency in the financial
reporting.

     Management is currently evaluating this situation with the intentions to
attempt to minimize the risks associated with the significant deficiency
identified and discussed in the immediately proceeding section of the Item 3. If
the volume of the business increases and sufficient capital is secured, it is
the Company's intention to increase staffing to mitigate the current lack of
segregation of duties and increase the depth of technical knowledge within the
general administrative and financial functions.

     However, at this time management has decided that, considering the
employees involved and the control procedures in place, the risks associated
with such lack of segregation are currently manageable, and the potential
benefits of adding additional employees to clearly segregate duties and add
depth of experience do not justify the expenses associated with such increases,
particularly in light of our current liquidity situation.

(b) Changes in Internal Controls

     During the period covered by this report, all of the accounting and
bookkeeping duties previously handled by the independent accountant/bookkeeper
with whom the Company has been contracting since inception have been fully
assumed by a full-time manager and two experienced part-time contract employees.
In addition, the Company on December 21, 2006, hired a senior manager with
extensive experience in finance, sales and marketing areas, and who has been
working as a contractor with the Company since July 2005, to manage the finance
and administration functions of the Company. Effective April 1st, 2006, he is
also assuming the secretary/treasurer roles in the Company, replacing the
independent accountant with whom the Company has been contracting since
inception in that function. We believe that these changes have brought, and will
continue to provide, tighter internal reporting controls and more timely and
accurate resolution of material, or potentially material, issues.

     Other than these changes, there have been no further changes in our
internal control over financial reporting that have materially affected or are
reasonably likely to materially affect our internal control over financial
reporting.

                                       29
<PAGE>

                            PART II OTHER INFORMATION

ITEM 1 Legal Proceedings

     In the normal course of business, the Company may be involved in legal
proceedings in the ordinary course of business. Such matters are subject to many
uncertainties, and outcomes are not predictable with assurance. The Company
currently is not involved in any legal proceedings which are not in the ordinary
course of business.

     On June 23, 2006, the Company received notification that 3M Innovative
Properties Company, The 3M Company, filed suit against the Company alleging
infringement of US Patent Nos. 6,019,278 and 6,611,612. This action was taken
while the Company was engaged in negotiations with 3M for a licensing agreement.
The issue was settled on July 13, 2006, and as part of the settlement agreement,
the Company entered into a non-exclusive license agreement with 3M.


ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds

     The Company and subsidiary made the following issuances of unregistered
securities during the past three years, all of which were made pursuant to
Section 4(2) of the Securities Act and pursuant to Regulation D promulgated
thereunder.

     Common Stock

     On September 15, 2005 the Company commenced a private offering to
accredited investors of up to 1,250,000 shares of Common Stock. Pursuant to this
private offering, the Company is offering units for gross proceeds of $12.00 per
unit. Each unit is comprised of two shares of Common Stock at $6.00 per share
with one warrant to acquire one share of Common Stock at $6.00 per share, for
each two shares of Common Stock purchased. The warrants granted in this offering
are exercisable for a period of one year from the date of investment or upon an
initial public offering by the Company, whichever occurs earlier.

     During the three months ended March 31, 2006, the Company sold 37,499
shares of Common Stock, and granted 18,751 warrants, pursuant to the September
15, 2005 private offering raising gross proceeds of $225,000 and net cash
proceeds of $172,500.

     Convertible Preferred Stock

     During the three months ended March 31, 2006, The Company sold 25 shares of
Convertible Preferred Stock for gross proceeds of $25,000 and net cash proceeds
of $22,500.

     Debentures

     On September 1, 2005, the Company initiated a private placement to
accredited investors of debentures with warrants to purchase Common Stock. These
debentures have a six month term from the date of investment and bear interest
at 12% annually and are to be repaid from proceeds from any subsequent offering.
For each $3.00 of debentures purchased, the Company issued one warrant to
purchase one share of Holdings Common Stock at $6.00 per share. The warrants
issued in this offering were initially exercisable for a period of one year from
the date of investment or upon an initial public offering by the Company,
whichever occurred earlier. In December 2005, the Company amended the Debenture
offering to increase the offering amount from $1.125 million to $1.650 million,
in addition to extending the exercisable period on the warrants from a period of
one year from date of investment or upon an initial public offering by the
Company, whichever occurs earlier, to a period of two years from date of
investment or within one year from any initial public offering by the Company,
whichever occurs earlier. In February 2006, the Company amended the Debenture
offering to increase the offering amount from $1.650 million to $2.0 million
($2.2 million in the case of over subscription). In April 2006, the Company
amended the Debenture offering to increase the offering amount from $2.0 million
to $3.0 million ($3.3 million in the case of over subscription). In May 2006,
the Debenture offering raised an additional gross proceeds amount of $450,000,
and the Company granted warrants to acquire 150,000 shares of Common Stock. The
fair value of the warrants was calculated using the Black-Scholes Option
Valuation Model. The Company recorded a debt discount of $110,000 which will
accrete to interest expense over the life of the debt. The Company incurred fees
of approximately $36,000 for the acquisition of the debentures. These costs have
been capitalized and will be amortized to interest expense over the life of the
debt.

                                       30
<PAGE>

     Each of the above issuances was made pursuant to Section 4(2) of the
Securities Act of 1933 and pursuant to Regulation D promulgated thereunder.


ITEM 5 Other Information

     On June 23, 2006, the Company filed a Form 15 with the Securities and
Exchange Commission effectively terminating the Company's requirement to file
reports under the Securities Exchange Act of 1934. At the time of filing the
Form 15, the Company had approximately 52 record holders of the class of
securities covered by the Company's registration statement. The Company's stock
has never been listed on any Exchange nor has it been publicly traded. After
serious consideration, the Company concluded that the advantages to the Company
of being a reporting company under the 1934 Act do not offset the costs, both
direct expenses and indirect costs.


ITEM 6 Exhibits

Exhibit No.                          Exhibit Description
-----------                          -------------------

3.1                 Certificate of Incorporation dated June 12, 2002
                    (incorporated by reference to Exhibit 3(i).1 to Registrant's
                    Form 10-SB filed on December 11, 2003).

3.2                 Certificate of Amendment to Certificate of Incorporation
                    dated October 28, 2003 (incorporated by reference to Exhibit
                    3(ii).2 to Registrant's Form 10-SB filed on December 11,
                    2003).

3.3                 Bylaws (incorporated by reference to Exhibit 3(ii) to
                    Registrant's Form 10-SB filed on December 11, 2003).

4.1                 Statement of Designations and Preferences of AssureTec
                    Systems, Inc. Series A-1 Preferred Stock (incorporated by
                    reference to Exhibit 2.1 to Amendment 1 of Registrant's Form
                    10-SB/A filed on December 9, 2005).

4.2                 Amended Debenture with Warrant Agreement dated April 7, 2006
                    between AssureTec Holdings, Inc. and the Accredited
                    Investors named therein.

4.3                 Amended Securities Purchase with Warrant Agreement dated
                    March 31, 2006 between AssureTec Holdings, Inc. and the
                    Accredited Investors named therein.


                                       31
<PAGE>

Exhibit No.                           Exhibit Description
-----------                           -------------------

10.1                Employment Agreement between AssureTec Systems, Inc. and R.
                    Bruce Reeves dated October 2, 2001 (incorporated by
                    reference to Exhibit 10.1 to Registrant's Form 10-SB filed
                    on December 11, 2003).

10.2                Employment Agreement between AssureTec Systems, Inc. and
                    Robert C. Babbitt dated January 20, 2003 (incorporated by
                    reference to Exhibit 10.2 to Registrant's Form 10-SB filed
                    on December 11, 2003).

10.3                Employment Agreement between AssureTec Systems, Inc. and
                    Bruce C. Monk dated October 10, 2001 (incorporated by
                    reference to Exhibit 10.3 to Registrant's Form 10-SB filed
                    on December 11, 2003).

10.4                Consultant Agreement between Thomas Colatosti and AssureTec
                    Systems, Inc. dated July 1, 2003 (incorporated by reference
                    to Exhibit 10.4 to Registrant's Form 10-SB filed on December
                    11, 2003).

10.5                Employment Agreement between AssureTec Systems, Inc. and
                    Glenn Larson, Sr. dated November 25, 2002 (incorporated by
                    reference to Exhibit 10.5 to Registrant's Form 10-SB filed
                    on December 11, 2003).

10.6                Form of Deferred Compensation Letter Agreement (incorporated
                    by reference to Exhibit 10.6 to Registrant's Form 10-SB
                    filed on December 11, 2003).

10.7                Lease agreement between Perimeter Realty and AssureTec
                    Systems, Inc. dated July 1, 2002 (incorporated by reference
                    to Exhibit 10.1 to Amendment 1 of Registrant's Form 10-SB/A
                    filed on December 9, 2005).

10.8                Amended lease agreement between Perimeter Realty and
                    AssureTec Systems, Inc. dated December 5, 2003 (incorporated
                    by reference to Exhibit 10.2 to Amendment 1 of Registrant's
                    Form 10-SB/A filed on December 9, 2005).

10.9                Amended lease agreement between Perimeter Realty and
                    AssureTec Systems, Inc. dated March 23, 2006.

21                  Subsidiaries of the Registrant (incorporated by reference to
                    Exhibit 21 to Registrant's Form 10-SB filed on December 11,
                    2003).

31.1                Principal Executive and Financial Officer Certification
                    pursuant to section 302 of the Sarbanes-Oxley Act of 2002.

32.1                Principal Executive and Financial Officer Certification
                    pursuant to section 906 of the Sarbanes-Oxley Act of 2002.


                                       32
<PAGE>



                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, hereunto duly authorized.

                                   ASSURETEC HOLDINGS, INC.



Date: July 7, 2006                 By: /s/ R. Bruce Reeves
                                       -------------------
                                       R. Bruce Reeves, Ph.D.
                                       President, CEO, Director, and
                                       Principal Financial Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:

                                   ASSURETEC HOLDINGS, INC.



Date:  July 7, 2006                By: /s/ R. Bruce Reeves
                                       -------------------
                                       R. Bruce Reeves, Ph.D.
                                       President, CEO, Director, and
                                       Principal Financial Officer







                                       33