**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, 2007





[
                 ]
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT





For
      the
      transition period from _______to_______





Commission
      file number: 333-122113





**STRIKEFORCE
      TECHNOLOGIES, INC.**


(Exact
      name of small business issuer as specified in its charter)




**NEW
                JERSEY**
            **22-3827597**(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)







**1090
      King Georges Post Road, Suite 108**


**Edison,
      NJ 08837**


(Address
      of principal executive offices)





**(732)
      661-9641**


(Issuer’s
      telephone number)





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 [X ] No [
      ]





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





**APPLICABLE
      ONLY TO ISSUERS INVOLVED IN BANKRUPTCY**


**PROCEEDINGS
      DURING THE PRECEDING FIVE YEARS**





Check
      whether the registrant filed all documents and reports required to be filed
      by
      Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
      under a plan confirmed by a court.    Yes
      [ ]
      No [ ]





**APPLICABLE
      ONLY TO CORPORATE ISSUERS**





State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date: As of May 18, 2007, the issuer had 39,031,943
      outstanding shares of Common Stock.





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









**STRIKEFORCE
        TECHNOLOGIES, INC.**
 
 **INDEX
        TO FINANCIAL STATEMENTS**
 
 **FOR
        THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**
 
 **(UNAUDITED)**
 
 Contents
                Page(s)Balance
                    Sheet at March 31, 2007
                F-2Statements
                    of Operations for the Three Months Ended March 31, 2007 and
                    2006
                F-3Statements
                    of Stockholders’ Deficiency for the Three Months Ended March 31,
                    2007
                F-4Statements
                    of Cash Flows for the Three Months Ended March 31, 2007 and
                    2006
                F-5Notes
                    to the Financial Statements
                F-6
                    to F-20




F-1






**STRIKEFORCE
        TECHNOLOGIES, INC.**


BALANCE
          SHEET
 **(UNAUDITED)**




**ASSETS****March
                  31,****2007****Current
                  Assets:**Cash
                  and cash equivalents
              
              $
              73,920Accounts
                  receivable
              
              
              290,425Current
                  portion of deferred royalties
              
              
              304,660Prepaid
                  expenses and other current assets
              
              
              13,830**Total
                  current assets**
              
              
              682,835Property
                  and equipment, net
              
              
              25,455Deferred
                  royalties
              
              
              1,650,243Website
                  development cost, net
              
              
              7,600Patents
              
              
              4,329Security
                  deposit
              
              
              8,684**Total
                  Assets**
              
              $
              2,379,146**LIABILITIES
                  AND STOCKHOLDERS' DEFICIENCY****Current
                  Liabilities:**Current
                  portion of convertible notes payable
              
              $
              175,000Convertible
                  notes payable - related parties
              
              
              478,000Notes
                  payable
              
              
              200,000Notes
                  payable - related parties
              
              
              651,000Capital
                  leases payable
              
              
              34,508Accounts
                  payable
              
              
              772,062Accrued
                  expenses
              
              
              802,074Payroll
                  taxes payable
              
              
              53,374Due
                  to employees
              
              
              60,135**Total
                  current liabilities**
              
              
              3,226,153Secured
                  convertible notes payable, net of discount of $160,935
              
              
              1,395,531Derivative
                  financial instruments
              
              
              324,502Convertible
                  notes payable, net of discount of $76,359
              
              
              913,641**Total
                  Liabilities**
              
              
              5,859,827**Commitments
                  and contingencies****Stockholders'
                  Deficiency**Preferred
                  stock at $0.10 par value; 10,000,000 shares authorized;none
                  issued and outstanding
              
              
              -Common
                  stock at $0.0001 par value; 100,000,000 shares authorized;34,847,209
                  shares issued and outstanding
              
              
              3,485Additional
                  paid-in capital
              
              
              9,398,293Accumulated
                  deficit
              
              
              (12,882,459
              )**Total
                  Stockholders' Deficiency**
              
              
              (3,480,681
              )**Total
                  Liabilities and Stockholders' Deficiency**
              
              $
              2,379,146






See
        accompanying notes to the financial statements.




F-2




STRIKEFORCE
          TECHNOLOGIES, INC.
 **STATEMENT
          OF** **OPERATIONS**
 FOR
          THE
          THREE MONTHS ENDED MARCH  31, 2007 AND 2006
 **(UNAUDITED)**
 
 **2007**
              
              **2006**Revenues
              
              $
              498,400
              
              $
              14,589Cost
                  of sales
              
              
              14,955
              
              
              2,007Gross
                  profit
              
              
              483,445
              
              
              12,582Operating
                  expenses:Selling,
                  general and administrative expenses
              
              
              553,532
              
              
              1,239,763Research
                  and development
              
              
              88,540
              
              
              104,595Total
                  operating expenses
              
              
              642,072
              
              
              1,344,358Loss
                  from operations before other (income) expense
              
              
              (158,627
              )
              
              (1,331,776
              )Other
                  (income) expense:Interest
                  expense
              
              
              4,087
              
              
              2,852Financing
                  expense
              
              
              325,180
              
              
              167,823Derivative
                  instruments (income) expense, net
              
              
              16,517
              
              
              (20,148
              )Total
                  other (income) expense
              
              
              345,784
              
              
              150,527Net
                  loss
              
              $
              (504,411
              )
              $
              (1,482,303
              )Net
                  loss per common share - basic and diluted
              
              $
              (0.02
              )
              $
              (0.07
              )Weighted
                  average number of common shares outstanding - basic and
                  diluted
              
              
              30,505,321
              
              
              19,803,844


See
        accompanying notes to the financial statements.


F-3




STRIKEFORCE
        TECHNOLOGIES, INC.
 **STATEMENT
        OF STOCKHOLDERS' D** **EFICIENCY**
 **FOR
        THE THREE MONTHS ENDED MARCH 31, 2007**
 **(UNAUDITED)**


Additional
            
            
            
            TotalCommon
                Stock
            
            
            Paid-in
            
            
            Accumulated
            
            
            Stockholders'Shares
            
            
            Amount
            
            
            Capital
            
            
            Deficit
            
            
            DeficiencyBalance
                at December 31, 2006
            
            
            28,844,494
            
            $
            2,884
            
            $
            9,083,853
            
            $
            (12,378,048
            )
            $
            (3,291,311
            )Sale
                of shares of common stock including warrants
            
            
            1,544,877
            
            
            155
            
            
            53,536
            
            
            -
            
            
            53,691Issuance
                of shares of common stock for conversions of
            
            
            2,428,695
            
            
            243
            
            
            67,642
            
            
            -
            
            
            67,885notes
                payable and accrued interestIssuance
                of shares of common stock for consulting services
            
            
            799,143
            
            
            80
            
            
            37,133
            
            
            -
            
            
            37,213Issuance
                of shares of common stock for financing
            
            
            1,230,000
            
            
            123
            
            
            49,779
            
            
            -
            
            
            49,902Issuance
                of warrants in connection with convertible notes payable
            
            
            -
            
            
            -
            
            
            3,758
            
            
            -
            
            
            3,758Issuance
                of warrants in connection with consulting services
            
            
            -
            
            
            -
            
            
            7,935
            
            
            -
            
            
            7,935Employee
                stock option compensation
            
            
            -
            
            
            -
            
            
            94,657
            
            
            -
            
            
            94,657Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (504,411
            )
            
            (504,411
            )Balance
                at March 31, 2007
            
            
            34,847,209
            
            $
            3,485
            
            $
            9,398,293
            
            $
            (12,882,459
            )
            $
            (3,480,681
            )




See
        accompanying notes to the financial statements.


F-4




STRIKEFORCE
        TECHNOLOGIES, INC.
 **STATEMENTS
        OF** **CASH
        FLOWS**
 FOR
        THE
        THREE MONTHS ENDED MARCH 31, 2007 AND 2006
 (UNAUDITED)





**2007**
            
            **2006****Cash
                flows from operating activities:**Net
                loss
            
            $
            (504,411
            )
            $
            (1,482,303
            )Adjustments
                to reconcile net loss to net cashused
                in operating activities:Depreciation
                and amortization
            
            
            4,741
            
            
            6,626Amortization
                of deferred financing costs
            
            
            10,284
            
            
            3,721Consulting
                services paid through issuance of common stock, options and
                warrants
            
            
            45,148
            
            
            422,342Amortization
                of discount on convertible notes
            
            
            187,520
            
            
            136,217Amortization
                of deferred royalties
            
            
            70,659
            
            
            83,570Mark
                to market on derivative financial instruments
            
            
            16,517
            
            
            (20,148
            )Employee
                stock option compensation
            
            
            94,657
            
            
            46,609Financing
                expense paid through issuance of common stock, options and
                warrants
            
            
            49,902
            
            
            -Changes
                in assets and liabilities affecting operations:Accounts
                receivable
            
            
            (271,349
            )
            
            (12,035
            )Prepaid
                expenses and other current assets
            
            
            (2,520
            )
            
            1,800Accounts
                payable
            
            
            58,793
            
            
            86,003Accrued
                expenses
            
            
            115,702
            
            
            108,400Payroll
                taxes payable
            
            
            -
            
            
            (12,122
            )Due
                to employees
            
            
            778
            
            
            6,180**Net
                cash used in operating activities**
            
            
            (123,579
            )
            
            (625,140
            )**Cash
                flows from investing activities:**Investment
                in website
            
            
            (565
            )
            
            (750
            )Purchases
                of property and equipment
            
            
            (1,689
            )
            
            (1,820
            )**Net
                cash used in investing activities**
            
            
            (2,254
            )
            
            (2,570
            )**Cash
                flows from financing activities:**Proceeds
                from sale of common stock and warrants
            
            
            53,691
            
            
            156,000Proceeds
                from convertible notes payable
            
            
            172,000
            
            
            100,000Proceeds
                from convertible notes payable - related parties
            
            
            -
            
            
            113,000Payments
                of notes payable
            
            
            (50,000
            )
            
            -Proceeds
                from notes payable - related parties
            
            
            22,000
            
            
            185,000Payments
                on capital leases
            
            
            (5,393
            )
            
            (1,896
            )**Net
                cash provided by financing activities**
            
            
            192,298
            
            
            552,104**Net
                increase (decrease) in cash**
            
            
            66,465
            
            
            (75,606
            )**Cash
                and cash equivalents at beginning of period**
            
            
            7,455
            
            
            77,094**Cash
                and cash equivalents at end of period**
            
            $
            73,920
            
            $
            1,488**Supplemental
                disclosure of cash flow information:**Interest
                expense
            
            $
            14,633
            
            $
            41,845Income
                taxes
            
            $
            -
            
            $
            -**Supplemental
                schedule of non-cash activities:**Revaluation
                of stock options issued for deferred royalties
            
            $
            -
            
            $
            (218,186
            )Issuance
                of shares of common stock for services to be provided
            
            $
            -
            
            
            36,400Issuance
                of warrants in connection with notes payable
            
            $
            3,758
            
            $
            -Issuance
                of warrants in connection with consulting services
            
            $
            -
            
            $
            20,363Conversion
                of convertible promissory notes payable into common stock
            
            $
            67,885
            
            $
            114,784




See
        accompanying notes to the financial statements.
  F-5
  **STRIKEFORCE
        TECHNOLOGIES, INC.**
 **NOTES
        TO THE FINANCIAL STATEMENTS**
 **FOR
        THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**
 **(UNAUDITED)**
 
 **NOTE
        1 -**  **NATURE
        OF OPERATIONS**
 
 StrikeForce
        Technical Services Corporation was incorporated in August 2001 under the
        laws of
        the State of New Jersey. On September 3, 2004, the stockholders approved
        an
        amendment to the Certificate of Incorporation to change the name to StrikeForce
        Technologies, Inc. (the “Company”). Prior to December 2002, the Company was a
        reseller of computer hardware, software products, and telecommunications
        equipment and services. In December 2002, the Company began to acquire the
        rights to intangible technology, which upon the consummation changed the
        direction of the Company’s business. The Company is a software development and
        services company. The Company owns the exclusive right to license and develop
        various identification protection software products that were developed to
        protect computer networks from unauthorized access and to protect network
        owners
        and users from identity theft. The Company has developed a suite of products
        based upon the licenses and the Company is seeking to commercially exploit
        the
        products in the areas of eCommerce, corporate, government and consumer sectors.
        The technology developed by the Company and used in the Company’s ProtectIDTM and
        GuardedID® products is the subject of two pending patent applications. The
        Company’s firewall product, which is in the research and design phase, is the
        subject of a pending provisional patent application. A fourth patent application
        relating to the Company’s ProtectIDTM product was combined into the first
        ProtectIDTM pending patent application and was allowed to lapse. The Company’s
        operations are based in Edison, New Jersey.
 
 **NOTE
        2 -**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES**
  Interim
                  period
 
 The
        accompanying unaudited financial statements have been prepared in accordance
        with accounting principles generally accepted in the United States of America
        for interim financial information, the instructions to Form 10-QSB and Items
        303
        and 310(B) of Regulation S-B. In the opinion of management, the unaudited
        financial statements have been prepared on the same basis as the annual
        financial statements and reflect all adjustments, which include only normal
        recurring adjustments, necessary to present fairly the financial position
        as of
        March 31, 2007, the results of operations for the three months ended March
        31,
        2007, changes in stockholders’ deficiency and cash flows for the three months
        ended March 31, 2007. The results of operations for the three months ended
        March
        31, 2007, are not necessarily indicative of the results to be expected for
        any
        subsequent quarter or the entire fiscal year ending December 31,
        2007.
 
 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 the
        Securities and Exchange Commission’s (“SEC”) rules and regulations.
 
 These
        unaudited financial statements should be read in conjunction with the Company’s
        audited financial statements and notes thereto for the year ended December
        31,
        2006 as included in the Company’s report on Form 10-KSB/A as amended and filed
        on April 18, 2007.
 
 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 reporting amounts of revenues and expenses
        during the reported period. Significant estimates include, but are not limited
        to, the estimated useful lives of property and equipment and website development
        costs. Actual results could differ from those estimates .
 
 Reclassification
  Certain
        amounts in the prior period financial statements have been reclassified to
        conform to the current period presentation .
        These
        reclassifications had no effect on reported losses.
 
 F-6
 **STRIKEFORCE
          TECHNOLOGIES, INC.**
 **NOTES
          TO THE FINANCIAL STATEMENTS**
 **FOR
          THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**
 **(UNAUDITED)**
 Cash
        and cash equivalents
 
 The
        Company considers all highly liquid investments with maturities of three
        months
        or less at the time of purchase to be cash equivalents
  Net
        loss per common share
 
 Net
        loss
        per common share is computed pursuant to SFAS No. 128, “Earnings Per Share”.
        Basic loss per share is computed by taking net loss divided by the weighted
        average number of common shares outstanding for the period. Diluted loss
        per
        share is computed
        by dividing net loss by the weighted average number of shares of common stock
        and potentially outstanding shares of common stock during each
        period to
        reflect the potential dilution that could occur from common shares issuable
        through stock options, warrants, and convertible debt, which
        excludes 9,850,753 shares of stock options, 3,957,579 shares of common stock
        issuable under warrants and 9,128,682 shares of common stock issuable under
        the
        conversion feature of the convertible notes payable for the three months
        ended
        March 31, 2007. These potential shares of common stock were not included
        as it
        was anti-dilutive.
  New
        accounting pronouncements
 
 In
        March
        2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial
        Assets—an amendment of FASB Statement No. 140” (“SFAS 156”), that provides
        guidance on accounting for separately recognized servicing assets and servicing
        liabilities. In accordance with the provisions of SFAS 156, separately
        recognized servicing assets and servicing liabilities must be initially measured
        at fair value, if practicable. Subsequent to initial recognition, the Company
        may use either the amortization method or the fair value measurement method
        to
        account for servicing assets and servicing liabilities within the scope of
        this
        Statement. The Company will adopt SFAS 156 in fiscal year 2007. The adoption
        of
        this Statement is not expected to have a material effect on the Company’s
        financial condition and results of operations.
 
 In
        July
        2006, the FASB issued FASB Interpretation Number 48, “Accounting for Uncertainty
        in Income Taxes, an Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48
        prescribes a recognition threshold and measurement attribute for the financial
        statement recognition and measurement of a tax position taken in a tax return.
        The Company must determine whether it is “more-likely-than-not” that a tax
        position will be sustained upon examination, including resolution of any
        related
        appeals or litigation processes, based on the technical merits of the position.
        Once it is determined that a position meets the more-likely-than-not recognition
        threshold, the position is measured to determine the amount of benefit to
        recognize in the financial statements. FIN 48 applies to all tax positions
        related to income taxes subject to SFAS 109 *.* The
        interpretation clearly scopes out income tax positions related to FASB Statement
        No. 5, “Accounting for Contingencies” *.* The
        Company will adopt the provisions of this statement on July 1, 2007. The
        cumulative effect of applying the provisions of FIN 48, if any, will be reported
        as an adjustment to the opening balance of retained earnings on July 1, 2007.
        The Company does not anticipate that the adoption of this statement will
        have a
        material effect on the Company’s financial condition and results of
        operations.
  On
        September 15, 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
        ("SFAS 157").  SFAS 157 defines fair value, establishes a framework
        for measuring fair value and expands disclosures about fair value
        measurements.  SFAS 157 is effective as of the beginning of the first
        fiscal year beginning after November 15, 2007. The
        Company does not anticipate that the adoption of this statement will have
        a
        material effect on the Company’s financial condition and results of
        operations .
 
 In
        September 2006, FASB issued SFAS No. 158, “Employers' Accounting for Defined
        Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements
        No 87, 88, 106 and 132(R)” (“SFAS 158”) *.* SFAS 158
        requires the recognition of the overfunded or underfunded status of a defined
        benefit postretirement plan as an asset or liability in the statement of
        financial position and the recognition of changes in that funded status in
        the
        year in which the changes occur through comprehensive income. SFAS 158 also
        requires the measurement of the funded status of a plan as of the date of
        the
        year-end statement of financial position. The
        Company does not anticipate that the adoption of this statement will have
        a
        material effect on the Company’s financial condition and results of
        operations.
 
 On
        February 15, 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
        Financial Assets and Financial Liabilities: Including an amendment of FASB
        Statement No. 115” (“SFAS 159”). SFAS 159 permits all entities to elect to
        measure many financial instruments and certain other items at fair value
        with
        changes in fair value reported in earnings. SFAS 159 is effective as of the
        beginning of the first fiscal year that begins after November 15, 2007, with
        earlier adoption permitted. The
        Company does not anticipate that the adoption of this statement will have
        a
        material effect on the Company’s financial condition and results of
        operations .
   F-7
  **STRIKEFORCE
          TECHNOLOGIES, INC.**
 **NOTES
          TO THE FINANCIAL STATEMENTS**
 **FOR
          THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**
 **(UNAUDITED)**
 Management
        does not believe that any other recently issued, but not yet effective
        accounting pronouncements, if adopted, would have a material effect on the
        accompanying consolidated financial statements.
 
 **NOTE
        3 -**  **GOING
        CONCERN**
  The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern, which contemplates continuity of operations,
        realization of assets, and liquidation of liabilities in the normal course
        of
        business. As reflected in the accompanying financial statements, the Company
        had
        an accumulated deficit of $12,882,459 and a working capital deficiency of
        $2,543,318 at March 31, 2007 and had a net loss and cash used in operations
        of
        $504,411 and $123,579 for the three months ended March 31, 2007, respectively. These
        conditions raise substantial doubt about its ability to continue as a going
        concern.
  While
        the
        Company is attempting to produce sufficient sales, the Company’s cash position
        may not be sufficient to support the Company’s daily operations. Management
        intends to attempt to raise additional funds by way of a public or private
        offering. While the Company believes in the viability of its strategy to
        produce
        sales volume and in its ability to raise additional funds, there can be no
        assurances to that effect. The ability of the Company to continue as a going
        concern is dependent upon the Company’s ability to further implement its
        business plan and generate sufficient revenues. The financial statements
        do not
        include any adjustments that might be necessary if the Company is unable
        to
        continue as a going concern. Management believes that the actions presently
        being taken to further implement its business plan and generate revenues
        provide
        the opportunity for the Company to continue as a going concern.
 
 **NOTE
        4 -** **DEFERRED
        ROYALTIES**
 
 On
        September 11, 2003, the Company signed an Asset Purchase Agreement with NetLabs.
        The Agreement required the Company to pay NetLabs a royalty of 10% of the
        net
        revenues received by the Company on sales of the software products, as defined
        in the Agreement. The royalties would apply to net revenues received during
        a
        period of five years beginning September 11, 2003 and continuing through
        August
        31, 2008. The Agreement was amended on September 2, 2004 and made effective
        as
        of its original effective date to extend the royalty period from five years
        to
        ten years, through August 31, 2013. In February 2006, the Agreement was further
        amended in order to provide clarity to the original Agreement by revising
        its
        title to “Royalty Agreement” whereby NetLabs has taken all measures required to
        provide the Company with the exclusive rights to the intellectual property
        related to the patents pending for its “Out-of-Band” technology and firewall
        solutions, while clarifying that NetLabs still retains ownership.
 
 On
        December 2, 2004, as a condition to the Company obtaining additional financing,
        the Company and NetLabs agreed to replace the cash royalty provisions of
        the
        Agreement. The Company and NetLabs agreed, that NetLabs would instead be
        issued,
        as advance royalties, options to purchase 7,600,000 shares of the Company’s
        common stock at a price of $0.36 per share to vest as follows: 2,530,000
        shares
        at September 11, 2004, 2,530,000 shares at September 11, 2005 and 2,540,000
        shares at September 11, 2006. The fair values for these options are measured
        at
        the end of each reporting period and are fixed at each vesting date using
        the
        Black-Scholes Option Pricing Model.
 
 Measurement
        is based upon the Black-Scholes Model using the following
        assumptions:
 
  December
                  31, 2005
              
              December
                  31, 2006
              
              March
                  31, 2007Market
                  share price
              
              
              0.900
              
              
              $0.050
              
              
              $0.025Expected
                  volatility
              
              
              29.00%
              
              
              152.00%
              
              
              174.00%Risk-free
                  interest rate
              
              
              4.35%
              
              
              4.96%
              
              
              4.54%Expected
                  life
              
              
              5
                  years
              
              
              5
                  years
              
              
              5
                  years
   
 F-8
 **STRIKEFORCE
          TECHNOLOGIES, INC.**
 **NOTES
          TO THE FINANCIAL STATEMENTS**
 **FOR
          THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**
 **(UNAUDITED)**
 As
        of
        March 31, 2007 the options to purchase 2,530,000 shares that vested at September
        11, 2004 are valued (as fixed) at $1,066,395, the options to purchase 2,530,000
        shares that vested at September 11, 2005 are valued (as fixed) at $1,529,132,
        and the options to purchase the final 2,540,000 shares (which vested on
        September 11, 2006) are valued at March 31, 2007 at $264,160. The total value
        of
        the deferred royalties, net of accumulated amortization of $904,784, is
        $1,954,903. The deferred royalties are being amortized over the term of the
        original NetLabs Agreement (10 years) which will terminate on August 31,
        2013.
        For the three months ended March 31, 2007 and 2006, $70,659 and $83,887 of
        royalties were expensed, respectively.
 
 The
        following table summarizes the annual amounts of these fees that are amortized
        to general and administrative expenses over the next five (5) years and
        thereafter:
  2007
                  
                  $
                  233,1752008
                  
                  303,8342009
                  
                  303,8342010
                  
                  303,8342011
                      and beyond
                  
                  810,226Total
                      deferred royalties
                  
                  1,954,903Less
                      current portion
                  
                  (304,660
                  )Deferred
                      royalties, net of current portion
                  
                  $
                  1,650,243
   **NOTE
        5 -**  **CONVERTIBLE
        NOTES PAYABLE**
 
 In
        June
        2005, the Company executed a non-interest bearing convertible note in the
        amount
        of $33,000 with a public relations firm for services rendered. The holder
        is
        entitled, at its option, to convert, the debenture into shares of the Company’s
        common stock at $0.90 per share. If not converted, the entire principal amount
        shall be due to the holder on the first year anniversary of the note. In
        January
        2007, the Company and the public relations firm reached an informal agreement
        whereby the Company has agreed to make periodic payments in order to repay
        the
        note in full by June 30, 2008.
 
 In
        March
        2006, the Company extended the maturity date of a convertible debenture,
        executed with an investor in the amount of $125,000, to January 26, 2007.
        In
        January 2007, the Company extended the maturity date of the convertible
        debenture to January 26, 2008.  In connection with the extensions, the
        Company issued the investor 45,000 warrants with an exercise price of $0.20
        per
        share and an expiration date of January 26, 2009, relating to the first
        extension, and 100,000 restricted shares of the Company’s common stock at $0.05
        per share, relating to the second extension. The fair value of the warrants
        issued using the Black-Scholes Option Pricing Model was $4,878. For the three
        months ended March 31, 2007, the Company recorded $488 in financing expense
        related to the issuance of these warrants.
  In
        February 2007, in relation to the January 2007 term sheet executed with an
        investment firm (see Note 14), the Company sold a total of six units to six
        individuals, each unit consisting of an 18% convertible note payable in the
        amount of $16,667 and 66,667 bonus shares of the Company’s common stock, valued
        at $0.03988, for a total of $100,000 and 400,000 shares of common stock,
        with
        principal due August 31, 2007. The holder is entitled, at its option, to
        convert, the debenture, plus accrued interest, into shares of the Company’s
        common stock at the price of $0.05 per share. Six months of prorated prepaid
        interest, for a total of $8,729, was due at closing and was paid directly
        to the
        note holders by the Company. The Company paid a placement agent fee of $10,000
        and issued 80,000 shares of the Company’s common stock, valued at $0.03988, in
        March 2007, relating to the convertible notes. The Company also paid an escrow
        agent fee of $500 and a legal fee of $1,000 relating to the convertible notes.
        All of the Company’s shares of common stock issued in connection with the
        convertible notes have Rule 144 piggyback registration rights. For the three
        months ended March 31, 2007, the Company expensed $19,142 of financing expenses
        related to the issuance of the shares.
 
 In
        March
        2007, the Company executed an 18% convertible promissory note in the amount
        of
        $75,000 with an individual. The holder is entitled, to convert the debenture,
        plus accrued interest, into shares of the Company’s common stock at the market
        value of the Company’s common stock at the date of note maturity, June 30, 2007.
        If not converted, the entire principal amount and all accrued interest shall
        be
        due to the holder on June 30, 2007. In connection with the convertible
        promissory note payable, the Company issued to the individual an aggregate
        of
        150,000 shares of the Company’s common stock, valued at $0.039 per share. The
        Company’s shares of common stock issued in connection with the convertible note
        have Rule 144 piggyback registration rights. For the three months ended March
        31, 2007, the Company expensed $5,850 in financing expenses related to the
        issuance of the shares.
  Financing
          expense for the convertible notes payable for the three months ended March
          31,
          2007 and 2006 was $21,625 and $10,410, respectively.
 
 F-9
 **STRIKEFORCE
          TECHNOLOGIES, INC.**
 **NOTES
          TO THE FINANCIAL STATEMENTS**
 **FOR
          THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**
 **(UNAUDITED)**
 
 **NOTE
        6 -**  **CONVERTIBLE
        NOTES PAYABLE - RELATED PARTIES**
 
 Convertible
        notes payable - related parties at March 31, 2007, consisted of convertible
        promissory notes that the Company executed with the Chief Executive Officer
        (“CEO”), the Vice President of Technical Services (“VPTS”), relatives of a
        former officer of the Company, a relative of the Chief Financial Officer,
        the
        President, a Software Developer who is also a relative of the Chief Technology
        Officer and the Office Manager.
 
 The
        terms
        of the convertible promissory notes state that principal is payable in full
        in
        immediately available funds of $1,000,000 or more through any sales or
        investment. With the exception of the notes issued to the CEO, all of the
        notes
        bear interest at a rate of prime, which was posted as 8.25% on March 31,
        2007 by
        the Wall Street Journal print edition, plus 2%, prime plus 4%, a straight
        8% per
        year or a straight 21.90% per year. The notes issued to the CEO bear interest
        equal to the CEO’s private banking account monthly lending rate ranging between
        8.625% and 11.00%. In September 2006, the variable interest rate for the
        notes
        issued to the CEO was revised to a fixed rate of 8%, effective August 1,
        2006.
        In April 2007, the convertible promissory notes were amended to change the
        interest calculation from simple to compound effective April 1, 2007.
 
 Interest
        is payable at such time as the principal on the note is due. Each individual
        shall have the right to convert the then outstanding principal amount, and
        all
        accrued interest thereon, into shares of the common stock of the Company,
        determined by dividing the amount of principal and interest then outstanding
        by
        a conversion price of either $0.75 or $1.00, depending on the note.
 
 At
        March
        31, 2007, accrued interest due for the convertible notes - related parties
        was
        $55,406 and is included in accrued expenses in the accompanying balance sheet.
        Financing expense for convertible notes payable - related parties for the
        three
        months ended March 31, 2007 and 2006 was $9,659 and $11,619, respectively.
 
 **NOTE
        7 -**  **NOTES
        PAYABLE**
 
 In
        July
        2006, the Company sold a total of six units to six individuals, with each
        unit
        consisting of a 12% promissory note payable in the amount of $25,000 and
        250,000
        shares of the Company’s common stock for a total of $150,000 and 1,500,000
        shares of common stock. The principal shall be payable in full by January
        10,
        2007. Per the terms of the notes, if any of the notes are deemed unenforceable,
        then the remaining outstanding principal and accrued interest shall be
        convertible into shares of common stock of the Company at the sole option
        of the
        note holder, at a conversion price equal to $0.085 per share, **** in
        addition to any other remedies or enforcement actions that the note holder
        may
        take to enforce collection of the note. Six months of prepaid interest, for
        a
        total of $9,000, was due at closing, of which $6,750 was withheld by the
        escrow
        agent and $2,250 was paid directly to the note holder by the Company. The
        Company paid a placement agent fee of $15,000 and issued 150,000 shares of
        the
        Company’s common stock, in August 2006, relating to the promissory notes. In
        addition, the Company paid an escrow agent fee of $3,000 and a due diligence
        fee
        of $7,500 plus 50,000 shares of the Company’s common stock issued to the
        placement agent in July 2006 in connection with the promissory notes. All
        of the
        Company’s shares of common stock issued in relation to the promissory notes have
        Rule 144 piggyback registration rights. In January 2007, the Company extended
        the maturity date of five of the promissory notes, totaling $100,000, to
        March
        10, 2007, inclusive of a ten day grace period. In connection with the
        extensions, the Company has agreed to increase the interest rate of the
        promissory notes to 20% per annum and the Company has issued to the note
        holders
        100,000 shares of the Company’s common stock at $0.0435 per share for the month
        of February 2007. Additionally, the Company issued 10,000 shares of the
        Company’s common stock at $0.0435 per share to the placement agent for the month
        of February 2007. The note holders and the placement agent are entitled to
        the
        aforementioned issuances on a pro-rated basis for every month that the notes
        are
        extended. The Company paid $500 to the placement agent’s attorney for document
        review related to the extensions. The remaining promissory note in the amount
        of
        $50,000 was paid in full in February 2007. The Company has issued to the
        note
        holders 100,000 shares of the Company’s common stock at $0.025 per share for the
        month of March 2007. Additionally, the Company issued 10,000 shares of the
        Company’s common stock at $0.025 per share to the placement agent for the month
        of March 2007. In March 2007, the Company partially repaid the five remaining
        notes in the amount of $50,000. The Company has issued to the note holders
        50,000 shares of the Company’s common stock at $0.035 per share for the month of
        April 2007. Additionally, the Company issued 5,000 shares of the Company’s
        common stock at $0.035 per share to the placement agent for the month of
        April
        2007. All of the Company’s shares of common stock issued in relation to the
        extensions have Rule 144 piggyback registration rights. For the three months
        ended March 31, 2007, the Company expensed $7,535 of financing expenses related
        to the issuance of the shares relating to the note extensions. In April 2007,
        the Company and the remaining note holders reached an informal agreement
        whereby
        the note holders have agreed to extend the notes on a month-to month basis.
 
 In
        January 2007, the Company executed a promissory note with an individual in
        the
        amount of $50,000. The note is non-interest bearing with principal due February
        15, 2007. Upon repayment, the Company shall make an additional lender’s fee
        payment of $3,000 to the individual. In connection with the promissory note,
        the
        Company issued 30,000 restricted shares of common stock to the individual
        at a
        price of $0.045 per share. In March 2007, the note was repaid in full along
        with
        the lender’s fee payment. For the three months ended March 31, 2007, the Company
        expensed $1,350 of financing expenses related to the issuance of the
        shares.
 
 In
        February 2007, the Company executed a promissory note with an unrelated
        individual in the amount of $50,000. The note bears interest at 18% per annum
        with principal due June 5, 2007. Upon repayment, the Company shall make an
        additional lender’s fee payment of $4,000 to the individual. In connection with
        the promissory note, the Company issued 150,000 restricted shares of common
        stock to two individuals at $0.04 per share and paid a legal fee of $500
        to the
        lender’s attorney. In addition, the Company’s CEO executed a Personal Guaranty
        Agreement guarantying $25,000 of the promissory note in the event the Company
        defaults on the note. For the three months ended March 31, 2007, the Company
        expensed $6,525 of financing expenses related to the issuance of the
        shares.
 
 Interest
        and financing expense for notes payable for the three months ended March
        31,
        2007 was $5,030.
  F-10
 
 **STRIKEFORCE
          TECHNOLOGIES, INC.**
 **NOTES
          TO THE FINANCIAL STATEMENTS**
 **FOR
          THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**
 **(UNAUDITED)**
 
 
 **NOTE
        8 -**  **NOTES
        PAYABLE - RELATED PARTIES**
 
 Notes
        payable - related parties at March 31, 2007 consisted of the
        following:
  Nine
        notes payable with its CEO aggregating $626,000:
 
 ·
            Three
                notes, aggregating $189,000, with interest at a per annum rate equal
                to
                the CEO’s private account monthly lending rate were extended to March 31,
                2007 and the interest rate was revised to a fixed rate of 8%, effective
                August 1, 2006. The notes have been extended to May 31, 2007. ·
            Two
                notes, aggregating $160,000 with interest at a rate equal to 8% per
                annum
                were extended to May 31, 2007. ·
            Two
                notes, in the amount of $5,000 and $150,000 bearing interest at a
                per
                annum rate equal to the CEO’s private account monthly lending rate having
                maturity dates of September 30, 2006 were extended to May 31, 2007
                and the
                interest rate was revised to a fixed rate of 8%, effective August
                1,
                2006. ·
            One
                note in the amount of $100,000 bearing interest at a rate equal to
                9% per
                annum with a maturity date of September 30, 2006 was extended to
                May 31,
                2007. ·
            The
                remaining note was executed in February 2007 in the amount of $22,000.
                The
                note bears interest at a rate equal to 8% per annum with principal
                due
                July 31, 2007. 
 For
        the
        seven months ended July 31, 2006, the interest rate ranged between 8.625%
        and
        11% per annum. In connection with the $100,000 note and the $22,000 note,
        the
        Company issued warrants exercisable in the aggregate into 288,000 shares
        of the
        Company’s common stock at an exercise price of $0.05 per share for 88,000
        warrants and $0.13 per share for 200,000 warrants to the CEO. These warrants
        are
        exercisable for a period of five years from issuance. The fair value of the
        warrants issued using the Black-Scholes Option Pricing Model was $28,058.
        For
        the three months ended March 31, 2007, the Company recorded $1,879 in notes
        payable discount related to the issuance of the February 2007
        warrants.
 
 At
        March
        31, 2007, the Company had executed four notes payable with its President
        due May
        31, 2007 aggregating $25,000. Notes totaling $10,000 are non-interest bearing.
        Notes totaling $15,000 bear interest at a rate equal to 8% per annum.
 
 Financing
        expense for notes payable - related parties for the three months ended March
        31,
        2007 and 2006 was $12,891 and $5,856, respectively.
 
 **NOTE
        9 -**  **ACCRUED
        EXPENSES**
 
 Accrued
        expenses consisted of the following at March 31, 2007:
 
 Interest
              
              $
              368,475Commitment
                  fees
              
              
              32,697Professional
                fees
              
              
              153,146Other
              
              
              247,756Total
                  accrued expenses
              
              $
              802,074
    F-11
 **STRIKEFORCE
          TECHNOLOGIES, INC.**
 **NOTES
          TO THE FINANCIAL STATEMENTS**
 **FOR
          THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**
 **(UNAUDITED)**
 **NOTE
        10 -**  **SECURED
        CONVERTIBLE NOTES PAYABLE**
 
 Prior
        to
        the maturity date of both secured convertible promissory notes, the Company
        notified Cornell and Highgate that it is currently evaluating available maturity
        options regarding the convertible notes.  Cornell and Highgate have agreed
        to extend the maturity date until the options afforded the company have been
        concluded.
 
 Conversions
        to Common Stock
 
 For
        the
        three months ended March 31, 2007, Cornell converted $35,000.00 of the April
        27,
        2005 debenture into 1,838,235 shares of the Company’s common stock, pursuant to
        the terms of the Securities Purchase Agreement. The conversion price ranged
        from
        $0.012 to $0.034 per share.
 
 For
        the
        three months ended March 31, 2007, Highgate converted $20,279.64 of the May
        6,
        2005 debenture into 590,460 shares of the Company’s common stock, pursuant to
        the terms of the Securities Purchase Agreement. The conversion price was
        $0.034
        per share.
 
 **NOTE
        11 -**  **FINANCIAL
        INSTRUMENTS**
 
 The
        secured convertible notes payable are hybrid instruments which contain an
        embedded derivative feature which would individually warrant separate accounting
        as a derivative instrument under SFAS 133. The embedded derivative feature
        has
        been bifurcated from the debt host contract, referred to as the "Compound
        Embedded Derivative Liability". The embedded derivative feature includes
        the
        conversion feature within the note and an early redemption option. The value
        of
        the embedded derivative liability was bifurcated from the debt host contract
        and
        recorded as a derivative liability, which resulted in a reduction of the
        initial
        carrying amount (as unamortized discount) of the notes. The unamortized discount
        is amortized to interest expense using the effective interest method over
        the
        life of the notes, or 12 months.
 
 The
        secured convertible debentures issued to Cornell and Highgate have been
        accounted for in accordance with SFAS 133 and EITF 00-19.The Company has
        identified the above instruments having derivatives that require evaluation
        and
        accounting under the relevant guidance applicable to financial derivatives.
        These compound embedded derivatives have been bifurcated from their respective
        host debt contracts and accounted for as derivative liabilities in accordance
        with EITF 00-19. When multiple derivatives exist within convertible notes,
        they
        have been bundled together as a single hybrid compound instrument in accordance
        with SFAS 133 Derivatives Implementation Group Implementation Issue No. B-15,
        “Embedded Derivatives: Separate Accounting for Multiple Derivative Features
        Embedded in a Single Hybrid Instrument”. The compound embedded derivatives
        within the secured convertible notes have been recorded at fair value at
        the
        date of issuance; and are marked-to-market each reporting period with changes
        in
        fair value recorded to the Company’s statement of operations as “Derivative
        instrument expense, net”. The Company has utilized a third party valuation
        consultant to fair value the compound embedded derivatives using a layered
        discounted probability-weighted cash flow approach. The fair value of the
        derivative liabilities are subject to the changes in the trading value of
        the
        Company’s common stock, as well as other factors. As a result, the Company’s
        financial statements may fluctuate from quarter-to-quarter based on factors,
        such as the price of the Company’s stock at the balance sheet date and the
        amount of shares converted by note holders. Consequently, the financial position
        and results of operations may vary from quarter-to-quarter based on conditions
        other than operating revenues and expenses.
 
 **NOTE
        12 -**  **STOCKHOLDERS’
        DEFICIENCY**
 
 Issuance
        of Stock for Services
 
 In
        August
        2005, the Company entered into a retainer agreement with an attorney, whereas
        the attorney will act as in house counsel for the Company with respect to
        all
        general corporate matters. The agreement is at will and requires a payment
        of
        10,000 shares of common stock, valued at $0.90 per share, due upon execution.
        The certificate for the 10,000 shares of common stock was issued in October
        2005. Commencing on September 1, 2005, the fee structure also includes a
        monthly
        cash fee of $1,000 and the monthly issuance of 2,500 shares of common stock,
        valued at market. For the three months ended March 31, 2007, the Company
        issued
        7,500 shares of common stock, valued at $331 all of which has been expensed
        as
        legal fees related to the agreement.
 
 F-12
 
 **STRIKEFORCE
          TECHNOLOGIES, INC.**
 **NOTES
          TO THE FINANCIAL STATEMENTS**
 **FOR
          THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**
 **(UNAUDITED)**
 
  In
        February 2006, the Company executed an agreement with an individual advisor
        whereby the advisor shall serve as a member of the Company’s Advisory Board and
        provide consulting, guidance and advice to the Company. The advisor shall
        also
        assist the Company in obtaining revenues and financing. As compensation for
        the
        advisory services, the advisor received 350,000 shares of the Company’s common
        stock valued at $0.18 per share. The shares are restricted and have piggyback
        registration rights upon the next registration statement filed by the Company.
        The advisor also received warrants to purchase 240,000 shares of the Company’s
        common stock at an exercise price of $0.30 per share with a term of six months
        from the effective date for 120,000 shares and twelve months from the effective
        date for 120,000 shares. The fair value of all the warrants issued using
        the
        Black-Scholes Option Pricing Model was $63,096.
 The
        advisor shall also receive a quarterly payment of $5,000 effective June 2006,
        a
        10% commission on gross revenues for introduced customers and commission
        on
        introduced financing as follows:
 Gross
                    Proceeds
                
                Cash
                    Commission
                
                Equity
                    Commission$
                    500,000 to $ 999,999
                
                $
                25,000
                
                
                200,000
                    shares$1,000,000
                    to $1,999,999
                
                $
                50,000
                
                
                400,000
                    shares$2,000,000
                    to $2,999,999
                
                $
                100,000
                
                
                800,000
                    shares$3,000,000
                    to $3,499,999
                
                $
                150,000
                
                
                1,000,000
                    shares$3,500,000
                    to $3,999,999
                
                $
                175,000
                
                
                1,200,000
                    shares$4,000,000
                    and up
                
                $
                200,000
                
                
                1,600,000
                    shares
 
  The
        term
        of the agreement is perpetual with thirty day written termination rights
        retained by both the Company and the advisor. In February 2007, the Company
        executed two amendments to the agreement. The first amendment authorizes
        the
        Company to compensate the advisor 333,333 shares of the Company’s common stock,
        in lieu of cash, at $0.045 per share for all compensation owed to the advisor
        as
        of the date of the amendment. The shares are restricted and have piggy back
        registration rights upon the next registration statement filed by the Company.
        In connection with the amendment, the Company issued to the advisor an aggregate
        of 50,000 two year warrants to purchase shares of the Company’s common stock at
        an exercise price of $0.10 per share. Per the terms of the second amendment,
        the
        Company issued 100,000 restricted shares of the Company’s common stock at $0.045
        per share in consideration for services rendered to date. For the three months
        ended March 31, 2007, the Company expensed $19,500 of financing expenses
        related
        to the issuance of the shares.
 
 In
        February 2006, the Company executed an agreement with a firm to provide business
        development services to expand the Company’s sales and marketing efforts
        primarily in South America and Mexico (see Note 14). As compensation for
        the
        services, the firm shall receive a fee of $10,000 per month beginning on
        February 15, 2006. For the initial four months of the agreement, the fee
        will be
        in the form of the Company’s common stock. For the second four months of the
        agreement, the fee shall be paid as $5,000 cash and $5,000 in the Company’s
        common stock. The stock price will be calculated based upon the ten days
        average
        bid price, prior to the 15 th of each
        month, with the lowest bid price no lower than $0.25 per share. The shares
        are
        restricted and have piggyback registration rights upon the next registration
        statement filed by the Company. There shall be no fee for the last four months
        of the agreement’s first year. The firm shall also receive a commission of 10%
        of the net sales from introduced customers. The term of the agreement is
        perpetual with thirty day written termination rights retained by both the
        Company and the firm. In March 2006, the agreement was amended to expand
        the
        territory outside of South America and Mexico on a case by case basis with
        written approval required by both the Company and the firm. For the three
        months
        ended March 31, 2007, $25,000 of fees related to this agreement are included
        in
        accrued liabilities.
 
 In
        April
        2006, the Company entered into a consulting agreement with an advisory firm,
        to
        provide review and advice concerning the technical design of existing and
        planned products or services, business development, sales assistance, financing
        advice, consulting services, market development and public relations, advising
        on issues regarding corporate structure, stock option plans and introducing
        the
        Company to potential investors. The term of this agreement was one year,
        ending
        March 31, 2007. The agreement calls for compensation in the amount of 350,000
        shares of the Company’s common stock valued at $0.19 per share.
   F-13
 **STRIKEFORCE
        TECHNOLOGIES, INC.**
 **NOTES
        TO THE FINANCIAL STATEMENTS**
 **FOR
        THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**
 **(UNAUDITED)**
 
 In
                  January 2007, the Company executed a consulting agreement with
                  an investor
                  relations firm whereby the firm shall provide public and investor
                  relations services to the Company. As consideration for the services,
                  the
                  firm shall receive 250,000 shares of the Company’s common stock, at $0.055
                  per share. The shares shall be restricted and have piggyback registration
                  rights upon the next registration statement filed by the Company.
                  The term
                  of the agreement is for ninety days and it can be renewed by the
                  mutual
                  consent of the Company and the firm. For the three months ended
                  March 31,
                  2007, the Company expensed $13,750 of consulting expenses related
                  to this
                  agreement.
 
 In
                  February 2007, the Company issued 62,500 shares of its restricted
                  common
                  stock at $0.04 per share to a trade vendor as partial remuneration,
                  in the
                  amount of $2,500, of the Company’s open indebtedness to the vendor.
 
 In
                  March 2007, the Company issued 45,810 shares of its restricted
                  common
                  stock at $0.0247 per share to a trade vendor as remuneration, in
                  the
                  amount of $1,132, of the Company’s open indebtedness to the
                  vendor.
 
 Issuance
        of Stock for Financing
  In
        December 2006, in accordance with a letter of understanding executed with
        an
        investment firm, the Company issued 100,000 restricted shares of its common
        stock valued at $0.05 per share to the firm. The remaining 100,000 restricted
        shares of the Company’s common stock owed to the firm per the terms of the
        letter were issued in January 2007 at $0.045 per share (see Note 14). For
        the
        three months ended March 31, 2007, the Company expensed $5,000 of financing
        expenses related to the issuance of the shares.
 
 In
        January 2007, in accordance with a term sheet executed with an investment
        firm,
        the Company issued 100,000 shares of common stock, valued at $0.045 per share,
        to the investment firm, per their distribution instructions, as additional
        consideration for services rendered (see Note 14). The Company’s shares of
        common stock issued have Rule 144 piggyback registration rights. For the
        three
        months ended March 31, 2007, the Company expensed $4,500 of financing expenses
        related to the issuance of the shares.
  Issuance
        of Warrants for Services
 
 In
        January 2007, in accordance with a consulting agreement executed with a sales
        consultant, the consultant received warrants to purchase 150,000 shares of
        the
        Company’s common stock at an exercise price of $0.10 per share with a term of
        two years from the effective date. For the three months ended March 31, 2007,
        the Company recorded $6,375 of consulting expense related to the warrants
        (see
        Note 14).
 
 In
        February 2007, in accordance with an amendment to the advisory board agreement
        executed with an advisor, the advisor received warrants to purchase 50,000
        shares of the Company’s common stock at an exercise price of $0.10 per share
        with a term of two years from the effective date. For the three months ended
        March 31, 2007, the Company recorded $1,560 of consulting expense related
        to the
        warrants (see Note 12 above).
  Issuance
        of Options for Employment Services
 
 In
        January 2007, the Company issued stock options to purchase 643,079 shares
        of
        common stock to ten employees. The options were issued in accordance with
        the
        Company’s 2004 Equity Incentive Plan. The option shares are exercisable at $0.05
        per share and expire in January 2017. The shares vest after a one year
        period.
 
 In
        February 2007, the Company issued stock options to purchase 1,158,890 shares
        of
        common stock to nine employees. The options were issued in accordance with
        the
        Company’s 2004 Equity Incentive Plan. Options totaling 558,120 shares are
        exercisable at $0.045 per share and options totaling 600,770 shares are
        exercisable at $0.05 per share. All of the options expire in February 2017.
        The
        shares vest after a one year period.
 
 In
        March
        2007, the Company issued stock options to purchase 1,704,231 shares of common
        stock to eleven employees. The options were issued in accordance with the
        Company’s 2004 Equity Incentive Plan. Options totaling 785,255 shares are
        exercisable at $0.024 per share and options totaling 918,976 shares are
        exercisable at $0.0375 per share. All of the options expire in March 2017.
        The
        shares vest after a one year period.
  Sales
        of Common Stock
 
 In
        January 2007, the Company sold to two individuals certain units which contained
        common stock and warrants. The Company issued 104,167 shares of its common
        stock
        at $0.048 per share and 20,833 warrants with an exercise price of $0.096
        per
        share, and 421,053 shares of its common stock at $0.0475 per share and 84,211
        warrants with an exercise price of $0.095 per share to two individuals,
        respectively, all of which are exercisable for a period of two years from
        date
        of issuance.
 
 F-14
 
 **STRIKEFORCE
          TECHNOLOGIES, INC.**
 **NOTES
          TO THE FINANCIAL STATEMENTS**
 **FOR
          THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**
 **(UNAUDITED)**
 
  In
        February 2007, the Company sold to an individual 20,000 shares of common
        stock,
        at $0.05 per share.
 
 In
        March
        2007, the Company sold to two individuals certain units which contained common
        stock and warrants. The Company issued 384,615 shares of common stock at
        $0.0325
        per share and 76,923 warrants with an exercise price of $0.065 per share
        all of
        which are exercisable for a period of two years from the date of
        issuance.
 
 In
        March
        2007, the Company sold to five individuals 615,042 shares of common stock,
        at
        $0.0247 per share.
 
 Warrant
        Agreements
 
 At
        March
        31, 2007, the Company has warrants issued related to its convertible notes
        payable. The warrant agreements entitle the note holders to purchase the
        Company’s common stock at: $0.55 per share for 66,667 warrants, $0.25 per share
        for 400,000 warrants, $0.20 per share for 45,000 warrants and $0.16 per share
        for 562,500 warrants. The agreements have an exercise term of two years for
        66,667 warrants, three years for 45,000 warrants and five years for 962,500
        warrants.
 
 At
        March
        31, 2007, the Company has warrants issued related to its convertible notes
        payable - related parties. The warrants entitle the note holders to purchase
        the
        Company’s common stock at $1.00 per share and have an exercise term of ten
        years. At March 31, 2007, 31,000 warrants expire in the year 2013, 16,500
        expire
        in the year 2014, 21,700 in the year 2015 and 11,300 expire in the year 2016.
 
 At
        March
        31, 2007, the Company has warrants issued related to its notes payable -
        related
        parties. The warrants entitle the note holder to purchase the Company’s common
        stock at $0.05 per share for a total of 88,000 warrants and $0.13 per share
        for
        a total of 200,000 warrants and have an exercise term of five years.
 
 **NOTE
        13 -**  **STOCK
        BASED COMPENSATION**
 
 In
        September 2004, the stockholders approved the Equity Incentive Plan for its
        employees (“Incentive Plan”), effective April 1, 2004. Of the
        total authorized for issuance at March 31, 2007, 5,149,247 shares were available
        for future issuance. Stock options granted under the Incentive Plan are
        typically granted with an exercise price equal to the market price of the
        Company’s stock at the date of grant. Options also generally vest over a period
        of one or three years with respect to grants made to employees. Options
        typically expire ten years from the date of grant.
 
 2004
        Equity Incentive Plan
 
 The
        Incentive Plan provides 5,000,000 shares of common stock to be offered from
        either authorized and unissued shares or issued and reacquired shares as
        treasury stock by the Company. Officers
        and key employees, who in the judgment of the Company render significant
        service
        to the Company, are eligible to participate. The Incentive Plan provides
        for the
        award of a broad variety of stock-based compensation alternatives such as
        non-qualified stock options, incentive stock options, restricted stock,
        performance awards and stock appreciation rights. The number of shares
        authorized for issuance under the Incentive Plan was increased to 10,000,000
        in
        September 2006 and 15,000,000 in March 2007 by unanimous consent of the Board
        of
        Directors. Option shares totaling 4,605,000 vest equally over a three year
        period beginning one-year from the date of grant and option shares totaling
        5,245,753 vest over a one-year period from the date of grant.
 
 The
        table
        below summarizes the Company’s Incentive Plan stock option activity through
        March 31, 2007:
  **Number of**
                  **Option Shares**
                
                **Exercise Price Range**
                  **Per Share**
                
                **Weighted Average**
                  **Exercise Price**
                
                **Weighted**
                  **Average**
                  **Remaining**
                  **Contractual Term**
                  **(in years)**
                
                **Aggregate**
                  **Intrinsic**
                  **Value**
                  **(in thousands)**Granted
                
                
                4,514,553
                
                
                $0.0698
                      - 0.10
                
                
                $0.0920
                
                
                
                
                $
                ---Canceled
                
                
                ---
                
                
                ---
                
                
                
                
                
                
                
                
                ---Exercised
                
                
                ---
                
                
                ---
                
                
                
                
                
                
                
                
                ---Expired
                
                
                ---
                
                
                ---
                
                
                
                
                
                
                
                
                ---Balance,
                    December 31, 2006
                
                
                6,344,553
                
                
                $0.0698
                      - 0.10
                
                
                $0.3540
                
                
                
                
                $
                ---Granted
                
                
                3,506,200
                
                
                $0.024
                      - 0.050
                
                
                $0.0401
                
                
                
                
                $
                ---Canceled
                
                
                ---
                
                
                ---
                
                
                
                
                
                
                
                
                ---Exercised
                
                
                ---
                
                
                ---
                
                
                
                
                
                
                
                
                ---Expired
                
                
                ---
                
                
                ---
                
                
                
                
                
                
                
                
                ---Balance,March 31,
                    2007
                
                
                9,850,753
                
                
                $0.024
                      - 1.00
                
                
                $0.2422
                
                
                
                
                $
                ---Vested
                    and Exercisable, March 31, 2007
                
                
                4,240,734
                
                
                
                
                
                $0.2422
                
                
                
                
                $
                ---
   F-15
 
 **STRIKEFORCE
          TECHNOLOGIES, INC.**
 **NOTES
          TO THE FINANCIAL STATEMENTS**
 **FOR
          THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**
 **(UNAUDITED)**
  As
        of
        March 31, 2007, an aggregate of 9,850,753 options were outstanding under
        the
        incentive plan. The exercise price for 1,830,000 options is $1.00, for 2,775,000
        options is $0.10, for 348,096 options is $0.099, for 405,432 options is $0.085,
        for 492,309 options is $0.07, for 493,716 options is $0.0698, for 1,243,850
        is
        $0.05, for 558,119 is $0.045, for 918,976 is $0.0375 and for 785,255 is $0.024.
        As of March 31, 2006, an aggregate of 1,830,000 options, with an exercise
        price
        of $1.00, were outstanding under the incentive plan. At March 31, 2007, there
        were 4,240,734 vested incentive plan stock options outstanding of which 196,314
        options are exercisable at $0.024, 229,744 options are exercisable at $0.0375,
        139,530 options are exercisable at $0.045, 310,963 options are exercisable
        at
        $0.05, 288,001 options are exercisable at $0.0698, 287,180 options are
        exercisable at $0.07, 236,502 options are exercisable at $0.085, 203,056
        options
        are exercisable at $0.099, 652,083 options are exercisable at $0.10 and
        1,697,361 options are exercisable at $1.00.
 
 As
        of
        March 31, 2007, there was $381,952 of total unrecognized compensation cost
        related to unvested share-based compensation arrangements that is expected
        to be
        recognized over a weighted-average period of 12 months.
 
 The
        following table summarizes information concerning outstanding and exercisable
        Incentive Plan options as of March 31, 2007:
  **Options
                  Outstanding**
              
              **Options
                  Exercisable****Range
                  of Exercise Prices**
              
              
              **Number
                  Outstanding**
              
              
              **Average
                  Remaining Contractual Life (in years**)****
              
              
              **Weighted-Average
                  Exercise Price**
              
              
              **Number
                  Exercisable**
              
              
              **Weighted-Average
                  Exercise Price**$1.0000
              
              
              1,830,000
              
              
              7.00
              
              
              $1.0000
              
              
              1,697,361
              
              
              $1.0000$0.0698
                  - $0.10
              
              
              4,514,553
              
              
              9.00
              
              
              0.0920
              
              
              1,666,822
              
              
              0.0920$0.0240
                  - $0.05
              
              
              3,506,200
              
              
              10.00
              
              
              0.0401
              
              
              876,551
              
              
              0.04019,850,753
              
              
              8.67
              
              
              $0.2422
              
              
              4,240,734
              
              
              $0.2422
 
 Non-Incentive
        Plan Stock Option Grants
 
 As
        of
        March 31, 2007, the Company had outstanding an aggregate of 7,618,889 non-plan,
        non-qualified options for non-employees and no outstanding incentive options
        outside of the Plan.
  The
        table
        below summarizes the Company’s non-incentive plan stock option activity through
        March 31, 2007:
  **Number
                    of****Option Shares**
                
                
                **Exercise
                    Price Range****Per Share**
                
                
                **Weighted
                    Average****Exercise Price**
                
                
                **Weighted
                    Average Remaning Contracutal Term**
                  **(in years)**
                
                
                **Aggregate
                    Intrinsic Value (in thousands)**Balance,
                    December 31, 2005
                
                
                7,618,889
                
                
                $0.36
                      - $ 0.90
                
                
                $0.361
                
                
                
                
                $
                ---Granted
                
                
                ---
                
                
                ---
                
                
                
                
                
                
                
                
                ---Canceled
                
                
                ---
                
                
                ---
                
                
                
                
                
                
                
                
                ---Exercised
                
                
                ---
                
                
                ---
                
                
                
                
                
                
                
                
                ---Expired
                
                
                ---
                
                
                ---
                
                
                
                
                
                
                
                
                ---Balance,
                  December 31, 2006
                
                
                7,618,889
                
                
                $0.36
                    - 0.90
                
                
                $0.361
                
                
                
                
                $
                ---Granted
                
                
                ---
                
                
                ---
                
                
                
                
                
                
                
                
                ---Canceled
                
                
                ---
                
                
                ---
                
                
                
                
                
                
                
                
                ---Exercised
                
                
                ---
                
                
                ---
                
                
                
                
                
                
                
                
                ---Expired
                
                
                ---
                
                
                ---
                
                
                
                
                
                
                
                
                ---Balance,March 31,
                  2007
                
                
                7,618,889
                
                
                $0.36
                    - 0.90
                
                
                $0.361
                
                
                
                
                $
                ---Vested
                  and Exercisable, March 31, 2007
                
                
                7,618,889
                
                
                
                
                
                $0.361
                
                
                
                
                $
                ---
  At
        March
        31, 2007 and 2006, there were 7,618,889 non-incentive plan stock options
        outstanding of which 7,600,000 options were exercisable at $0.36 and 18,889
        options were exercisable at $0.90. At March 31, 2007, there were 7,618,889
        vested non-incentive plan stock options outstanding of which 7,600,000 options
        are exercisable at $0.36 and 18,889 options are exercisable at
        $0.90.
   F-16
 
 **STRIKEFORCE
            TECHNOLOGIES, INC.**
 **NOTES
            TO THE FINANCIAL STATEMENTS**
 **FOR
            THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**
 **(UNAUDITED)**
 
 The
        following table summarizes information concerning outstanding and exercisable
        Non-Incentive Plan options as of March 31, 2007:
  **Options
                  Outstanding**
              
              **Options
                  Exercisable****Range
                  of Exercise Prices**
              
              **Number****Outstanding**
              
              **Average
                  Remaining Contractual Life**
                **(in****years)**
              
              **Weighted-Average
                  Exercise****Price**
              
              **Number****Exercisable**
              
              **Weighted-Average
                  Exercise****Price**$0.90
              
              
              18,889
              
              
              9
              
              
              $0.900
              
              
              18,889
              
              
              $0.900$0.36
              
              
              7,600,000
              
              
              7
              
              
              0.360
              
              
              7,600,000
              
              
              0.3607,618,889
              
              
              8
              
              
              $0.361
              
              
              7,618,889
              
              
              $0.361
 
 **NOTE
        14 -**  **COMMITMENTS
        AND CONTINGENCIES**
 
 Lease
        Commitments
 
 The
        Company has a non-cancelable operating lease for office space that expires
        in
        February 2008. The lease does not contain a renewal option and requires the
        Company to pay all executory costs such as maintenance and insurance.
        Additionally, the Company leases equipment under non-cancelable operating
        leases.
 
 The
        approximate future annual minimum rentals under non-cancelable operating
        leases
        in effect on March 31, 2007 are as follows:
 ****
 
 **Space**
              
              
              **Equipment**
              
              
              **Office**2007
              
              
              57,043
              
              
              2,5282008
              
              
              6,299
              
              
              1,966$
              63,342
              
              $
              4,494
  Rent
        expense charged to operations for office space for the three months ended
        March
        31, 2007 and 2006 amounted to $17,238 and $17,238, respectively. The expense
        charged to operations for equipment rental for the three months ended March
        31,
        2007 and 2006 amounted to $843 and $550, respectively.
 
 Payroll
        Taxes
 
 As
        of
        March 31, 2007, the Company owes $53,374 of payroll taxes, of which
        approximately $45,000 are delinquent from the year ended December 31, 2003.
        The
        Company has also recorded $32,462 of related estimated penalties and interest
        on
        the delinquent payroll taxes. Although the Company has not entered into any
        formal repayment agreements with the respective tax authorities, management
        plans to make payment as funds become available.
  Panasonic
 
 In
        October 2005, the Company and Panasonic amended the Network Services Agreement
        to clarify the Minimum Payment Guarantee terms, beginning in 2006, from annual
        remittances due by the last day of each calendar year to quarterly payments
        due
        on a net 30 days basis from the date of the Panasonic invoice issued for
        each
        previous calendar quarter, as adjusted for payments made to Panasonic for
        client
        activity during the quarter.
 
 As
        of
        March 31, 2007, the approximate future annual minimum commitment fees under
        this
        agreement as amended are as follows:
  2007
              
              $
              37,5002008
              
              
              37,500Total
              
              $
              75,000
  
 As
        of
        March 31, 2007 the Company had a balance due of $45,000. In February 2007,
        the
        Company and Panasonic reached an informal agreement whereby the Company has
        agreed to make periodic payments in order to repay any past due balance in
        full
        by May 31, 2007.
 
 F-17
 **STRIKEFORCE
          TECHNOLOGIES, INC.**
 **NOTES
          TO THE FINANCIAL STATEMENTS**
 **FOR
          THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**
 **(UNAUDITED)**
  Consulting
        Agreements
 
 In
        May
        2006, the Company executed a consultant agreement with a sales consulting
        firm
        to act as a global sales consultant and provide an individual to serve as
        the
        manager of the Company’s sales department. The firm received warrants to
        purchase 200,000 shares of the Company’s common stock at an exercise price of
        $0.20 per share over a term of three years. The fair value of the warrants
        issued using the Black-Scholes Option Pricing Model was $23,120. The firm
        will
        receive a 10% commission on net revenues resulting from a direct introduction,
        a
        5% commission on net revenues from introduced integrators, resellers or
        distributors and a 2% commission on net sales made by the Company’s internal
        sales representatives if the firm was instrumental in closing the sale.
        Additionally, for the direct introduction, the firm shall receive 200,000
        warrants for each $1,000,000 in sales booked by the Company up to a maximum
        of
        1,000,000 warrants. The warrants shall have an exercise price of $0.25 per
        share, $0.30 per share, $0.35 per share, $0.40 per share and $0.45 per share,
        respectively, for each $1,000,000 in direct sales earned. All of the warrants
        shall have a term of three years. In January 2007, the Company executed an
        amendment to the consultant agreement. Per the terms of the amendment, the
        firm,
        in consideration for services rendered, received warrants to purchase an
        additional 150,000 shares of the Company’s common stock at an exercise price of
        $0.10 per share and a term of two years from the date of signing. As of March
        31, 2007, the fair value of the warrants issued using the Black-Scholes Option
        Pricing Model of $6,375 was included in consulting expense.
 
 Letter
        of Understanding
 
 In
        December 2006, the Company executed a Letter of Understanding with an investment
        firm whereby the Company and the firm agreed to pursue further agreements
        on an
        ongoing best efforts basis in order for the Company to obtain financing of
        $3
        million to $5 million. Per the letter, the Company will pay to the investment
        firm a retainer fee in cash of $40,000 payable as $2,500 upon execution of
        the
        letter, paid in December 2006, and $37,500 upon closing of the funding
        transaction. Also upon closing of the funding transaction, the Company will
        pay
        the firm an expense fee of $5,000 per month and a finder’s fee equal to $400,000
        in cash and $400,000 in equity on a pro-rated basis assuming a total funding
        transaction of $5 million. In connection with the letter, the firm received
        200,000 restricted shares of the Company’s common stock at $0.05 per share. Per
        the terms of the letter, 100,000 shares were issued in December 2006 and
        100,000
        shares were issued in January 2007 (see Note 12).
 
 Term
        Sheet with Investment Firm
 
 In
        January 2007, the Company executed a term sheet with an investment firm whereby
        the firm will assist the Company on an ongoing best efforts basis in order
        for
        the Company to obtain financing of up to $100,000. Per the term sheet, the
        Company will pay to the investment firm a placement agent fee in cash equal
        to
        10% of the amount of convertible notes sold and in shares of the Company’s
        common stock in a number equal to 20% of the total bonus shares issued to
        the
        note holders. Also, the Company will pay a legal fee of $1,000 to the placement
        agent’s attorney for document review and $500 to the escrow agent upon the
        closing and transfer of funds related to the term sheet. All of the Company’s
        shares of common stock issued in relation to the term sheet will have Rule
        144
        piggyback registration rights. The notes were executed in February 2007 and
        the
        closing and transfer of funds occurred in March 2007 (see Note 5).
        In January 2007, the Company issued 100,000 shares of common stock, valued
        at $0.045 per share, to the investment firm, per their distribution
        instructions, as additional consideration for services rendered (see Note
        12).
        The Company’s shares of common stock issued have Rule 144 piggyback registration
        rights.
 
 F-18
 **STRIKEFORCE
            TECHNOLOGIES, INC.**
 **NOTES
            TO THE FINANCIAL STATEMENTS**
 **FOR
            THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**
 **(UNAUDITED)**
  In
        February 2007, the Company executed a term sheet with an investment firm
        whereby
        the firm will assist the Company on an ongoing best efforts basis in order
        for
        the Company to obtain financing of up to $3,000,000, including short term
        bridge
        financing in the amount of $500,000 within sixty to ninety days of the date
        of
        the term sheet. In connection with the term sheet, the Company paid an
        engagement fee to the firm in the amount of $3,750. An additional $3,750
        is due
        to the firm thirty days from the effective date of the term sheet. The balance
        of the engagement fee in the amount of $7,500 will be due to the firm upon
        the
        closing of a financing deal, relating to the term sheet, of $500,000 or greater.
        The Company will also pay the firm a performance fee of 5% of any
        non-convertible debt financing, upon closing, and 8% of any equity or
        convertible debt financing, upon closing, as a result of introduction to
        the
        Company of the lender or investor by the firm.
 
 Factoring
        Agent
 
 In
        March
        2007, the Company entered into a sale and subordination agreement with a
        factoring agent whereby the Company sold its rights to two invoices, from
        February 2007 and March 2007, totaling $470,200 to the agent. Upon signing
        the
        agreement and providing the required disclosures, the factoring agent remitted
        65%, or $144,440, of the February 2007 invoice and a partial percentage of
        $53,010 of the March 2007 invoice to the Company. The Company paid a $500
        credit
        review fee to the agent relating to the agreement. Per the terms of the
        agreement, once the Company’s client remits the invoice amount to the factoring
        agent, the agent deducts a discount fee from the remaining balance of the
        factored invoices and forwards the net proceeds to the Company. The discount
        fee
        is computed as a percentage of the face amount of the invoice as follows:
        2.25%
        fee for invoices paid within 30 days of the down payment date with an additional
        1.125% for each 15 day period thereafter.
  **NOTE
        15 -**  **CONCENTRATION
        OF CREDIT RISK**
 
 (i)*Customers
                  and Credit Concentrations*
 
 Three
        customers accounted for 94.3%, 2.7% and 2.2%of net sales for the three months
        ended March 31, 2007 and 93.9%, 2.7% and 2.5% of the total accounts receivable
        as of March 31, 2007, respectively. Five customers accounted for 34.3%, 27.8%,
        16.1%, 13.7% and 4.6%of net sales for the three months ended March 31, 2006
        and
        35.9%, 29.1%, 14.6%, 14.4% and 3.1% of the total accounts receivable as of
        March
        31, 2006, respectively.
 
 **NOTE
        16 -**  **SUBSEQUENT
        EVENTS**
 
 Conversions
        to Common Stock
 
 In
        April
        2007, Cornell converted $40,000 of the April 27, 2005 debenture into 2,452,153
        shares of the Company’s common stock, pursuant to the terms of the Securities
        Purchase Agreement. The conversion price ranged from $0.0152 to $0.0176 per
        share.
 
 In
        May
        2007, Cornell converted $20,000 of the April 27, 2005 debenture into 1,470,588
        shares of the Company’s common stock, pursuant to the terms of the Securities
        Purchase Agreement. The conversion price was $0.0136 per share.
 
 Convertible
        Notes Payable
 
 In
        April
        2007, in relation to the April 2007 term sheet executed with an investment
        firm,
        the Company sold a total of one unit to one individual, consisting of an
        18%
        convertible note payable in the amount of $25,000 and 120,000 bonus shares
        of
        the Company’s common stock, valued at $0.019, with principal due October 24,
        2007. The holder is entitled, to convert, the debenture, plus accrued interest,
        into shares of the Company’s common stock at the price of $0.05 per share. Six
        months of prorated prepaid interest, for a total of $2,250, was due at closing,
        in May 2007, and was withheld from the net proceeds remitted to the Company
        by
        the placement agent. The Company paid a placement agent fee of $3,209 and
        issued
        24,000 shares of the Company’s common stock, valued at $0.019, in May 2007,
        relating to the convertible note. The Company also paid an escrow agent fee
        of
        $660, including expenses, relating to the convertible note. All of the Company’s
        shares of common stock issued in connection with the convertible notes have
        Rule
        144 piggyback registration rights.
 
 In
        May
        2007, the Company executed a 9% convertible promissory note in the amount
        of
        $100,000 with an individual. The holder is entitled, to convert, the debenture,
        plus accrued interest, into shares of the Company’s common stock at $0.035 per
        share. If not converted, the entire principal amount and all accrued interest
        shall be due to the holder on the second year anniversary of the debenture.
        In
        connection with the convertible promissory note payable, the Company issued
        to
        the individual 571,429 warrants with an exercise price of $0.07 per share.
        The
        warrants are exercisable for a period of two years from issuance.
 
 Term
        Sheet with Investment Firm
 
 F-19
 **STRIKEFORCE
            TECHNOLOGIES, INC.**
 **NOTES
            TO THE FINANCIAL STATEMENTS**
 **FOR
            THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**
 **(UNAUDITED)**
  In
        April
        2007, the Company executed a term sheet with an investment firm whereby the
        firm
        will assist the Company on an ongoing best efforts basis in order for the
        Company to obtain financing of up to $50,000. Per the term sheet, the Company
        will pay to the investment firm a placement agent fee in cash equal to 10%
        of
        the amount of convertible notes sold and in shares of the Company’s common stock
        in a number equal to 20% of the total bonus shares issued to the note holders.
        Also, the Company will pay a legal fee of $1,000 to the placement agent’s
        attorney for document review and $500 plus expenses to the escrow agent upon
        the
        closing and transfer of funds related to the term sheet. All of the Company’s
        shares of common stock issued in relation to the term sheet will have Rule
        144
        piggyback registration rights. A note was executed in April 2007 in the amount
        of $25,000 and the closing and transfer of funds occurred in May 2007. The
        Company’s shares of common stock issued have Rule 144 piggyback registration
        rights.
 
 Consultant
        Agreements
 
 In
        May
        2007, the Company executed a consulting agreement with an individual software
        developer whereby the consultant will provide systems analysis, design, computer
        programming and engineering services to the Company as an independent
        contractor. The term of the agreement is perpetual with thirty day written
        termination rights retained by both the Company and the consultant. Per the
        terms of the agreement, billable projects shall be defined through the
        completion of a task order. Upon execution of the agreement, the Company
        agreed
        to record a prorated fee for the period October 15, 2006 to April 30,
        2007  for
        $1,500 plus 3,000 warrants per month. The warrants shall be valued at the
        closing market value of the Company’s common stock on the last day of each
        month. The warrants are exercisable for a period of two years from issuance.
 
 Issuance
        of Stock for Services
 
 In
        April
        2007, the Company executed a consulting agreement with an investor relations
        firm to provide public and investor relations services to the Company. As
        compensation for the services, the firm shall receive a monthly retainer
        in the
        amount of $5,500 and 50,000 shares of the Company’s common stock, valued at
        $0.019 per share. The shares shall be restricted and have piggyback registration
        rights upon the next registration statement filed by the Company. The term
        of
        the agreement is for three months and can be renewed provided the Company
        and
        the firm both agree in writing.
  Issuance
        of Options for Employment Services
 
 In
        April
        2007, the Company issued stock options to purchase 1,551,840 shares of common
        stock to eleven employees. The options were issued in accordance with the
        Company’s 2004 Equity Incentive Plan. The option shares are exercisable at
        $0.023 per share and expire in April 2017. The shares vest after a one year
        period.
 
 In
        April
        2007, the Company issued stock options to purchase 100,000 shares of common
        stock to one employee. The options were issued in accordance with the Company’s
        2004 Equity Incentive Plan. The option shares are exercisable at $0.50 per
        share
        and expire in April 2017. The shares vest annually over a three year
        period.


F-20




**ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**





**Forward-Looking
      Statements**




The
      information in this quarterly report contains forward-looking statements within
      the meaning of the Private Securities Litigation Reform Act of 1995. This Act
      provides a “safe harbor" for forward-looking statements to encourage companies
      to provide prospective information about themselves so long as they identify
      these statements as forward looking and provide meaningful cautionary statements
      identifying important factors that could cause actual results to differ from
      the
      projected results. All statements other than statements of historical fact
      made
      in this report are forward looking. In particular, the statements herein
      regarding industry prospects and future results of operations or financial
      position are forward looking statements. Forward-looking statements reflect
      management's current expectations and are inherently uncertain. Our actual
      results may differ significantly from management's expectations. Important
      factors that could cause actual results to differ materially from our
      expectations are disclosed in this quarterly report as well as in our annual
      report on Form 10-KSB for the fiscal year ended December 31, 2006.




The
      following discussion and analysis should be read in conjunction with the
      financial statements of StrikeForce Technologies, Inc., included herewith.
      This
      discussion should not be construed to imply that the results discussed herein
      will necessarily continue into the future, or that any conclusion reached herein
      will necessarily be indicative of actual operating results in the future. Such
      discussion represents only the best present assessment of our management.





**Background**





We
      are a
      software development and services company that offers a suite of integrated
      computer network security products using proprietary technology. We were
      organized in August 2001 under New Jersey law as Strike Force Technical
      Services, Inc. We initially conducted operations as an integrator and reseller
      of computer hardware and telecommunications equipment and services. In December
      2002, and formally memorialized by an agreement in September 2003, we acquired
      certain intellectual property rights and patent pending technology from
      NetLabs.com including the rights to further develop and sell their principal
      technology and certain officers of NetLabs.com joined StrikeForce as officers
      and directors of our Company. We subsequently changed our name to StrikeForce
      Technologies, Inc., under which we had conducted our business since August
      2001.
      Our strategy is to develop and exploit our suite of network security products
      for customers in the corporate, financial, government, e-commerce and consumer
      sectors. We plan to grow our business through internally generated sales, rather
      than by acquisitions. We have no subsidiaries and we conduct our operations
      from
      our corporate office in Edison, New Jersey.





We
      began
      our operations in 2001 as a reseller and integrator of computer hardware and
      iris biometric technology. We derived the majority of our revenues as an
      integrator from the time we started our operations through the first half of
      2003. In December 2002, upon the acquisition of the licensing rights to certain
      intellectual property and patent pending technology from NetLabs.com, we shifted
      the focus of our business to developing and marketing our own suite of security
      products. Based upon the acquired licensing rights the Company has now developed
      various identification protection software products to protect computer networks
      from unauthorized access and to protect network owners and users from identity
      theft. The Company is seeking to commercially exploit the products in the
      areas of eCommerce, corporate, government and consumer sectors. We are a
      development stage business and have had nominal revenues since our formation.
      We
      have maintained our relationship with Panasonic and LG as a reseller, primarily
      for the resale of biometric identification equipment, such as iris scanners,
      that can be used with our software products. We generated nominal revenues
      from
      our activities as a reseller during 2006 and 2005. On August 3, 2005 the
      Company’s registration statement on Form SB-2 was declared effective by the
      Securities and Exchange Commission and on December 14, 2005 the Company received
      its clearance for quotation on the Over-The-Counter Bulletin Board.





2


We
      completed most of the development of our suite of security products at the
      end
      of 2006 and we began to make these products available to the marketplace. For
      the three months ended March 31, 2006, we generated all of our 2006 revenues
      of
      $14,589 from the sales of our security products and for the three months ended
      March 31, 2007 we generated all of our 2007 revenues of $498,400 from the sales
      of our security products. We seek to locate customers in a variety of ways.
      These include contracts with value added resellers, direct sales calls initiated
      by our sales staff, exhibitions at security and technology trade shows, through
      the media, consulting agreements and through word of mouth. Our sales generate
      revenue either as an Original Equipment Manufacturer (OEM) model, through a
      Hosting/License agreement, or through direct purchase by customers. We price
      our
      products for consumer transactions based on the number of transactions in which
      our software products are utilized and we price our products for business
      applications based on the number of users. We also expect that we may generate
      revenue from annual maintenance contracts, renewal fees and the execution of
      international agreements.





We
      have
      incurred substantial operating losses since commencing operations. We believe
      that our products provide a cost-effective and technologically competitive
      solution to address the problems of network security and identity theft in
      general. There can be no assurance, however, that our products will gain
      acceptance in the commercial marketplace or that one of our competitors will
      not
      introduce a technically superior product. The products that we offer to
      customers are discussed in Item 1, Description of Business of our annual
      report on Form 10-KSB/A.





Management,
      in late 2004, introduced procedures that assess our business performance through
      a number of financial and non-financial indicators. Since we are still in the
      process of introducing our products to the commercial marketplace, we attempt
      to
      assess our performance principally through indications of past, present and
      potential sales. These include the following:





o
      Number
      of contracts signed, or projected to be signed within 30 and 90 day
      periods;





o
      Number
      of prospects in our sales pipeline;





o
      Number
      of Requests for Information and Requests for Proposal in which we are invited
      to
      participate; and





o
      The
      frequency with which we are mentioned in trade or consumer publications or
      other
      media.





We
      also
      assess the number of problems that are reported with each product and over
      specific time frames, e.g. monthly, quarterly. We review our revenues generated
      in the aggregate per quarter and the average revenue generated per
      customer.





**Use
      of Estimates**





Management's
      Discussion and Analysis of Financial Condition and Results of Operations are
      based upon our financial statements, which have been prepared in accordance
      with
      generally accepted accounting principles in the United States. When preparing
      our financial statements, we make estimates and judgments that affect the
      reported amounts on our balance sheets and income statements, and our related
      disclosure about contingent assets and liabilities. We continually evaluate
      our
      estimates, including those related to revenue, allowance for doubtful accounts,
      reserves for income taxes, and litigation. We base our estimates on historical
      experience and on various other assumptions, which we believe to be reasonable
      in order to form the basis for making judgments about the carrying values of
      assets and liabilities that are not readily ascertained from other sources.
      Actual results may deviate from these estimates if alternative assumptions
      or
      conditions are used.





3


**Results
      of Operations**





**THREE
      MONTHS ENDED MARCH 31, 2007 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2006**





Revenues
      for the three months ended March 31, 2007 were $498,400 compared to $14,589
      for
      the three months ended March 31, 2006, an increase of $483,811 or 3,316%. The
      resultant increase in revenues was primarily due to the sales of our newly
      developed GuardedID® keyboard encryption and anti-keylogger
      technology.





Revenues
      generated consisted of software sales, revenue from sign on fees, transaction
      revenues, consulting revenues and commissions. Software sales for the three
      months ended March 31, 2007 were $470,200 compared to $0 for the three months
      ended March 31, 2006, an increase of $470,200. The resultant increase in
      software revenues was primarily due to the sales of our unique “Out-of-Band”
GuardedID® keystroke encryption product. Sign on fees for our ASP transaction
      model amounted to $0 for the three months ended March 31, 2007 compared to
      $4,000 for the three months ended March 31, 2006, a decrease of $4,000. The
      decrease was due to the lack of signing up new clients as the Company focused
      its attention on its new product, GuardedID®. Transaction revenues from the ASP
      hosting model were $28,200 for the three months ended March 31, 2007 and $10,589
      for the three months ended March 31, 2006, an increase of $17,611. The increase
      was due primarily to the activity generated by our existing clients.





Cost
      of
      revenues for the three months ended March 31, 2007 was $14,955 compared to
      $2,007 for the three months ended March 31, 2006, an increase of $12,948, or
      645%. The increase was primarily due to the processing fees incurred as a
      result of the increase in transactions relating to our ASP hosting
      service.




Gross
      profit for the three months ended March 31, 2007 was $483,445 compared to
      $12,582 for the three months ended March 31, 2006, an increase of $470,863,
      or
      3,743%. The resultant increase in gross profit was primarily due to the sales
      of
      our GuardedID® keyboard encryption and anti-keylogger technology.




Research
      and development expenses for the three months ended March 31, 2007 were $88,540
      compared to $104,595 for the three months ended March 31, 2006, a decrease
      of
      $16,055, or 15.4%. The decrease is primarily attributable to a decrease in
      compensation costs as a result of decreases in research and development
      personnel as our suite of products enters the marketplace with concentration
      more focused on support. The salaries, benefits and overhead costs of personnel
      conducting research and development of our software products comprise research
      and development expenses.




Selling,
      general and administrative expenses for the three months ended March 31, 2007
      were $553,532 compared to $1,239,763 for the three months ended March 31, 2006,
      a decrease of $686,231 or 55.4%.





Selling,
      general and administrative expenses at March 31, 2007 and March 31, 2006 consist
      primarily of salaries, benefits and overhead costs for executive and
      administrative personnel, insurance, fees for professional services, including
      consulting, legal, and accounting fees, travel costs, non-cash stock
      compensation expense for the issuance of stock to non-employees and other
      general corporate expenses. Effective January 1, 2006 employees’ stock option
      grants are accounted for under FAS 123R for new options granted to
      employees.




The
      net
      decrease was due primarily to decreases in our sales department staffing,
      advertising, promotion and marketing, legal and accounting, and overhead.




4


Other
      expense for the three months ended March 31, 2007 was $345,784 as compared
      to a
      restated amount of $150,527 for the three months ended March 31, 2006,
      representing an increase in other expenses of $195,257, or 130%. The increase
      was primarily due to interest charges for notes payable and net, mark to market
      changes in the fair value of derivative financial instruments relating to the
      secured convertible promissory notes.





Our
      net
      loss for the three months ended March, 31, 2007 was $504,411 compared to a
      restated net loss of $1,482,303 for the three months ended March 31, 2006,
      a
      decrease of $977,892, or 66.0%. The resultant decrease in our net loss was
      primarily due to the increase in revenues generated from the sales of our
      GuardedID® keyboard encryption technology.





**Liquidity
      and Capital Resources**





Our
      total
      current assets at the three months ended March 31, 2007 were $682,835, including
      $73,920 in cash as compared with $365,263 in total current assets at the three
      months ended March 31, 2006, which included cash of $1,488. Additionally, we
      had
      a stockholders’ deficiency in the amount of $3,480,681 at the three months ended
      March 31, 2007 as compared to a shareholders’ deficiency of $2,538,663 at the
      three months ended March 31, 2006. The increase in the deficiency is a result
      of
      the Company’s net losses and funding through an increased debt position from
      convertible debentures and promissory notes rather than the sale of stock.
      We
      have historically incurred losses and have financed our operations through
      loans, principally from affiliated parties such as our directors, and from
      the
      proceeds of debt and equity financing. The liabilities include a computed
      liability for the fair value of derivatives of $324,502, which will only be
      realized on the conversion of the derivatives, or settlement of the debentures.





We
      financed our operations during the three months ended March 31, 2007 through
      debt and equity financing and sales of our GuardedID® keystroke encryption
      technology. We expect that we will rely, at least in the near future, on a
      substantial percentage of the sales of our GuardedID® product and a limited
      number of customers for our other products revenues and may continue to have
      customer concentrations. Inherently, as time progresses and corporate exposure
      in the market grows, we will attain greater numbers of customers and the
      concentrations will diminish. Until this is accomplished, we will continue
      to
      attempt to secure additional financing through both the public and private
      market sectors to meet our continuing commitments of capital expenditures and
      until our sales revenue can provide greater liquidity.





The
      number of common shares outstanding increased from 21,269,565 shares at the
      period ended March 31, 2006 to 34,847,209 at the period ended March 31, 2007,
      an
      increase of 63.8%.





We
      do not
      expect to sell a significant amount of biometric iris equipment over the next
      twelve months.





We
      have
      historically incurred losses and we anticipate that we will not generate any
      significant revenues until the second quarter of 2007. Our operations presently
      require funding of approximately $150,000 per month. Our current forecast and
      potential pipeline substantiates our becoming profitable by the end of the
      2007
      calendar year based on some key potential clients contracting with the Company
      in the financial industry, technology, enterprise, government and consumer
      sectors in the United States, Latin America, Europe and Asia. There can be
      no
      assurance, however, that the sales anticipated will materialize or that we
      will
      achieve the profitability we have forecasted.





On
      December 20, 2004, we entered into a securities purchase agreement with Cornell
      for the sale of $1,000,000 in secured convertible debentures, of which $500,000
      was received by us on December 22, 2004 and $500,000 was received by us on
      January 25, 2005. The secured debentures issued pursuant to the December 2004
      Securities Purchase Agreement bear interest at 8% and mature three years from
      the date of issuance.





On
      April
      27, 2005, we entered into an amendment to the secured debentures with Cornell.
      Pursuant to said amendment, we revised the conversion price of the secured
      debentures to an amount equal to the lesser of: (i) the greater of $0.25 or
      an
      amount equal to 120% of the average closing bid price for the 5 trading days
      immediately preceding the closing date (the “Cornell Fixed Conversion Price”
and, together with the Highgate Fixed Conversion Price, the “Fixed Conversion
      Price”); or (ii) 80% of the lowest closing bid price of the common stock during
      the five days preceding the conversion date. In addition, the amended secured
      debenture was issued to Cornell in a principal amount of $1,024,876,
      representing $1,000,000 of the original principal amount of the secured
      debentures issued to Cornell on December 20, 2004, plus $24,876 in accrued
      interest from the date of original issuance to April 27, 2005. In July, 2006,
      the Fixed Conversion Price was reduced to $0.085 in connection with an
      anti-dilution adjustment.





5


On
      March
      31, 2007, $989,876 in aggregate principal amount of the Cornell debentures
      was
      issued and outstanding.





On
      December 20, 2004, we also entered into an Investor Registration Rights
      Agreement with Cornell under which we agreed to file a registration statement
      no
      later than 45 days from December 20, 2004. On April 27, 2005 we entered into
      an
      amendment and consent with Cornell pursuant to which we agreed to file a
      registration statement no later than 30 calendar days after the closing date
      of
      the amendment and consent, registering the shares of our common stock issuable
      upon conversion of the secured debentures. In addition, we have agreed to use
      our best efforts to ensure that such registration statement is declared
      effective by the Securities and Exchange Commission within 120 calendar days
      after the date of filing the SB2. In the event that the registration statement
      is not declared effective within 120 calendar days from the date of filing,
      we
      shall make a cash payment to the investor, as liquidated damages and not as
      a
      penalty, or shall issue to the investor shares of our common stock, at our
      sole
      election, within 3 business days from the end of the month, in an amount equal
      to 2% (two percent) per month of the outstanding principal amount of the secured
      debentures. Under the amendment and consent, Cornell also agreed to permit
      us to
      register 500% of the shares of common stock issuable upon conversion of the
      Highgate secured debenture and the 150,000 shares of common stock issued to
      Highgate on April 27, 2005, on the same registration statement which we are
      filing covering the share of common stock issuable upon conversion of the
      Cornell secured debenture.





In
      addition, in accordance with the Securities Purchase Agreement with Cornell,
      the
      Company has reserved for issuance an aggregate of 2,000,000 shares of the
      Company’s common stock, which may be adjusted from time to time as agreed upon
      by the parties, to be issued to the debenture holder upon conversion of accrued
      interest and liquidated damages into common stock. The 2,000,000 shares were
      not
      required to be registered in the registration statement on Form SB-2. Also,
      the
      Company has reserved for issuance an aggregate of 8,680,000 shares of the
      Company’s common stock, which may be adjusted from time to time as agreed upon
      by the parties, to be issued to the debenture holder upon conversion of the
      secured debenture into common stock. The 8,680,000 shares were not required
      to
      be registered in the registration statement on Form SB-2.





In
      addition, we entered into a Security Agreement with Cornell dated as of December
      20, 2004 pursuant to which we granted Cornell a secured interest in all of
      our
      assets. Such secured interest shall be first in priority to the secured interest
      which we granted to Highgate on April 27, 2005, as further described
      below.





In
      May
      2006, we sold a unit to Cornell consisting of a 9% promissory note payable
      in
      the amount of $100,000 and 200,000 shares of the Company’s common stock. The
      principal due shall be payable in full in immediately available funds of
      $200,000 or more through any funding transaction, even if the funding is with
      Cornell, or by August 28, 2006. If the note is not fully repaid within a twenty
      (20) day grace period after the maturity date, then the remaining outstanding
      principal and accrued and unpaid interest under the note shall be convertible
      into shares of common stock of the Company at the sole option of Cornell, in
      whole or in part at any time and from time to time at a conversion price equal
      to the lesser of (a) $0.22 or (b) ninety percent (90%) of the lowest Volume
      Weighted Average Price of the common stock during the thirty trading days
      immediately preceding the date of conversion as quoted by Bloomberg, LP. The
      Company paid a placement agent fee of $7,000 relating to the promissory note.
      As
      of September 17, 2006, the company considers the note as convertible debt per
      the terms stated herein





On
      April
      27, 2005, we entered into a securities purchase agreement with Highgate pursuant
      to which we sold a principal amount $750,000 7% secured convertible debentures,
      and 150,000 shares of our common stock, par value $0.0001 per share. We received
      $375,000 from Highgate on the date of the first closing, April 27, 2005, and
      we
      held a second closing on May 10, 2005 in which we received the remaining
      $375,000 in funds from Highgate. We issued the aforementioned securities to
      the
      investor pursuant to Rule 506 of Regulation D as promulgated under the
      Securities Act of 1933, as amended (the "Act"), and/or Section 4(2) of the
      Act.





6


At
      March
      31, 2007, $244,720.36 in aggregate principal amount of the Highgate debentures
      remained outstanding.





Pursuant
      to the terms of the Highgate securities purchase agreement, we are prohibited
      from utilizing the funds which we received from Highgate in a manner which
      would
      deviate from those specified in the securities purchase agreement.





The
      secured debentures bear simple interest at a rate of 7% per annum and mature
      2
      years after the date of issuance. The secured debentures were originally
      convertible into shares of our common stock at a conversion price equal to
      the
      lesser of (i) 120% of the average closing bid price for the 5 trading days
      immediately preceding the closing date (the “Highgate Fixed Conversion Price”);
      or (ii) 80% of the lowest closing bid price for the 5 trading days immediately
      preceding the date of conversion. In July, 2006, the Highgate Fixed Conversion
      Price was reduced to $0.085 in connection with an anti-dilution adjustment.
      In
      addition, we have the right to redeem the secured debentures, at any time prior
      to its maturity, upon 3 business day’s prior written notice to the holder. In
      the event that we redeem the secured debentures within 180 days after the date
      of issuance, the redemption price shall be 110% of the remaining balance of
      the
      secured debentures plus accrued interest. After 180 days the secured debentures
      may be redeemed at 120% of the remaining balance of the secured debentures
      plus
      accrued interest.





In
      addition, we entered into an Investor Registration Rights Agreement with
      Highgate dated as of April 27, 2005 pursuant to which we agreed to file a
      registration statement no later than 30 calendar days after the closing date
      registering the 150,000 shares issued to Highgate and 500% of the shares of
      our
      common stock issuable upon conversion of the secured debentures. In addition,
      we
      have agreed to use our best efforts to ensure that such registration statement
      is declared effective by the Securities and Exchange Commission within 120
      calendar days after the date of filing. In the event that the registration
      statement is not declared effective within 120 calendar days from the date
      of
      filing, we shall make a cash payment to the investor, as liquidated damages
      and
      not as a penalty, or shall issue to the investor shares of our common stock,
      at
      our sole election, within 3 business days from the end of the month, in an
      amount equal to 2% (two percent) per month of the outstanding principal amount
      of the secured debentures.





We
      entered into an Escrow Shares Escrow Agreement with Highgate and Gottbetter
      & Partners, LLP, as escrow agent, pursuant to which we issued 6,510,000
      shares of our common stock issuable upon conversion of the secured debentures
      to
      be held in escrow until such time as Highgate converts all or a portion of
      the
      secured debentures.





In
      addition, we entered into a Security Agreement with Highgate dated as of April
      27, 2005 pursuant to which we granted Highgate a secured interest in all of
      our
      assets. Such secured interest shall be second in priority to the secured
      interest which we granted to Cornell on December 20, 2004, as further described
      below. The Security Agreement contains certain negative covenants that will
      remain in effect until our repayment obligations pursuant to the convertible
      debenture have been satisfied. In accordance with such agreement, we may not,
      without Highgate's written consent, directly or indirectly:





o
      permit
      to exist any assignment, transfer, pledge, mortgage, security interest or other
      lien or encumbrance in or against any part of the pledged property,





o
      assign,
      pledge or in any way transfer or encumber Highgate's right to receive any income
      or other distribution from any part of the pledged property,





o
      enter
      into any sale-leaseback financing respecting any part of the pledged
      property,





7


o 
      materially change our ownership, executive staff or management, including Mark
      L. Kay and Mark Corrao;




o 
      declare or pay any dividend of any kind, in cash or in property, on any class
      of
      our capital stock, or make any distribution of any kind in respect thereof,
      or




o
            make
                any payments in respect of any pension, profit sharing, retirement,
                stock
                option, stock bonus, incentive compensation or similar plan, without
                the
                prior written consent of Highgate.







In
      addition, we may not guarantee or be liable in any manner, whether directly
      or
      indirectly, or become contingently liable after the date of the Security
      Agreement in connection with the indebtedness of any person, except for (i)
      the
      indebtedness currently secured by the liens identified on the pledged property
      and (ii) the endorsement of negotiable instruments payable to us for deposit
      or
      collection in the ordinary course of business.





Further,
      we may not:





o
      make
      any loan, advance or extension of credit to any person other than in the normal
      course of our business, and create, incur, or assume any additional indebtedness
      of any description whatsoever in an aggregate amount in excess of $25,000
      (excluding trade accounts payable and accrued expenses incurred in the ordinary
      course of business. However, the Company may continue to accept debt and/or
      convertible debt investments from accredited investors for a maximum total
      of up
      to $2,000,000, providing no terms are better than the Cornell and Highgate
      convertible debenture terms.





Prior
      to
      the maturity date of both secured convertible promissory notes, the Company
      notified Cornell/Highgate that it is currently evaluating available maturity
      options regarding the convertible notes.  Cornell/Highgate have agreed to
      extend the maturity date until the options afforded the company have been
      concluded.





During
      the period ended March 31, 2007, the Company sold units for an aggregate total
      of $53,692 to nine individuals which contained common stock and warrants. The
      issuance is exempt from registration under the Securities Act of 1933 and the
      rules and regulations promulgated thereunder. The individuals purchased and
      the
      Company issued a total of 1,544,877 shares of common stock from the Company
      at a
      price ranging from $0.0247 to $0.05 per share and three of the individuals
      received an aggregate of 181,967 warrants with an exercise price ranging from
      $0.065 to $0.096 per share which are exercisable for a period of two years
      from
      issuance.





Additionally,
      the Company issued unsecured convertible notes payable during the period ended
      March 31, 2007 in an aggregate total of $175,000 to seven unrelated
      parties.





The
      Company issued unsecured notes payable during the period ended March 31, 2007
      in
      an aggregate total of $100,000 to two unrelated parties. Additionally, during
      the period ended March 31, 2007, the Company repaid a total of $150,000 of
      unsecured notes payable to seven unrelated parties.





The
      Company issued unsecured notes payable during the period ended March 31, 2007
      in
      an aggregate total of $22,000 to one related party.





*Summary
      of Funded Debt*





As
      of
      March 31, 2007 the Company’s open unsecured promissory note balance was
      $200,000, listed as follows:





o
            $100,000
                to Cornell (this note by its terms became convertible into shares
                of
                common stock as of September 17, 2006 at the lesser of $0.22per
                share or 90% of VWAP thirty day average prior to the date of
                conversion)


o
      $50,000
      to five unrelated individuals through investment firm placement


o
      $50,000
      to one unrelated firm





8


As
      of
      March 31, 2007 the Company’s open unsecured related party promissory note
      balances were $651,000, listed as follows:





o
      $626,000 to our CEO


o
      $25,000
      to our President





As
      of
      March 31, 2007 the Company’s open convertible note balances were $2,399,596, net
      of discount on convertible notes of $76,359 and net of discount on secured
      convertible notes of $160,935, listed as follows:





o
      $989,876 to Cornell (04/05 amended secured debenture)


o
      $125,000 to an unrelated individual (01/05 unsecured debenture)


o
      $235,000 to an unrelated company (03/05 unsecured debenture)


o
      $244,720 to Highgate (05/05 secured debenture)


o
      $30,000
      to an unrelated company (06/05 unsecured debenture)


o
      $10,000
      to an unrelated individual (06/05 unsecured debenture)


o
      $140,000 to four unrelated individuals (07/05 unsecured debentures)


o
      $100,000 to an unrelated individual (03/06 unsecured debenture)


o
      $200,000 to an unrelated individual (06/06 unsecured debenture)


o
      $150,000 to an unrelated individual (09/06 unsecured debenture)


o
      $100,000 to six unrelated individuals (02/07 unsecured debentures) - current
      portion


o
      $75,000
      to an unrelated individual (03/07 unsecured debenture) - current
      portion





As
      of
      March 31, 2007 the Company’s open convertible note balances - related parties
      were $478,000, listed as follows:





o
      $268,000 to our CEO


o
      $
      57,500 to our VP of Technical Services


o
      $
      30,000 to a relative of our CTO & one of our Software
      Developers


o
      $
      50,000 to our President


o
      $ 5,000
      to a relative of our CFO


o
      $
      67,500 to our Office Manager





It
      is
      unlikely that we will be able to generate sufficient funds internally to sustain
      our operations until the end of 2007. We will seek to raise additional funds
      to
      continue our operations. It is management’s plan to seek additional funding
      through the sale of common stock and the issuance of notes and debentures,
      including notes and debentures convertible into common stock. If we issue
      additional shares of common stock, the value of shares of existing stockholders
      is likely to be diluted.





However,
      the terms of the secured convertible debentures issued to certain of the
      existing stockholders require that we obtain the consent of such stockholders
      prior to our entering into subsequent financing arrangements. No assurance
      can
      be given that we will be able to obtain additional financing, that we will
      be
      able to obtain additional financing on terms that are favorable to us or that
      the holders of the secured debentures will provide their consent to permit
      us to
      enter into subsequent financing arrangements.





Our
      future revenues and profits, if any, will primarily depend upon our ability
      to
      secure sales of our suite of network security products. We do not presently
      generate significant revenue from the sales of our products. Although management
      believes that our products are competitive for customers seeking a high level
      of
      network security, we cannot forecast with any reasonable certainty whether
      our
      products will gain acceptance in the marketplace and if so by when. In addition,
      we are a reseller and potential distributor for various security and
      telecommunications related products, for which we anticipate that we will not
      generate any significant revenues until the second quarter of 2007.





9


Except
      for the limitations imposed upon us respective to the secured convertible
      debentures of Cornell and Highgate, there are no material or known trends that
      will restrict either short term or long-term liquidity.





**Off-Balance
      Sheet Arrangements**




We
      do not
      have any off balance sheet arrangements that are reasonably likely to have
      a
      current or future effect on our financial condition, revenues, results of
      operations, liquidity or capital expenditures.




**Going
      Concern**





We
      are
      assuming that we will continue as a going concern, which contemplates the
      realization of assets and the satisfaction of liabilities in the normal course
      of business. We have incurred net operating losses of $504,411 for the three
      months ended March 31, 2007, compared to a net operating loss of $1,482,303
      for
      the three months ended March 31, 2006. At March 31, 2007, the Company's
      accumulated deficit was $12,882,459, its working capital deficiency was
      $2,543,318 and approximately 82% of its assets consist of deferred royalties.
      Additionally, for the three months ended March 31, 2007, we had negative cash
      flows from operating activities of $123,579. Since our inception, we have
      incurred losses, had an accumulated deficit, and have experienced negative
      cash
      flows from operations. The expansion and development of our business may require
      additional capital. These conditions raise substantial doubt about our ability
      to continue as a going concern.





We
      have
      issued three-year and two-year secured debentures in 2004 and 2005 that are
      convertible into shares of our common stock to Cornell Capital Partners, LP
      and
      Highgate House Funds, Ltd. respectively. Under the terms of the secured
      debentures, we are restricted in our ability to issue additional securities
      as
      long as any portion of the principal or interest on the secured debentures
      remains outstanding.





Currently,
      the Company is aggressively attempting to increase revenues and improve profit
      margins by implementing a revised sales strategy. In principle, the Company
      is
      redirecting its sales focus from direct sales to companies using an internal
      sales force, to selling through a distribution channel of Value Added Resellers
      and Original Equipment Manufacturers. The profit margin from this approach
      is
      more lucrative than selling direct due to the increase in sales volume. This
      revised sales approach should increase the Company’s sales and revenues in order
      to mitigate future losses. In addition, management has raised funds through
      convertible debt instruments and the sale of equity in order to alleviate the
      working capital deficiency. Through the utilization of the public capital
      markets, the Company plans to raise the funds necessary to continue to expand
      and enhance its growth; however, there can be no assurance that we will be
      able
      to increase revenues or raise additional capital. The Company is currently
      in
      negotiations with other investors to conclude the necessary working capital
      needs of the Company.





Our
      management expects cash flows from operating activities to improve by the end
      of
      2007, primarily as a result of an increase in sales, and plans to raise
      financing through various methods to achieve the business plans, although there
      can be no assurance thereof. The accompanying consolidated financial statements
      do not include any adjustments that might be necessary should we be unable
      to
      continue as a going concern. If we fail to generate positive cash flows or
      obtain additional financing when required, we may have to modify, delay or
      abandon some or all of our business and expansion plans.





**Critical
      Accounting Policies**




In
      accordance with generally accepted accounting principles (“GAAP”), we record
      certain assets at the lower of cost and/or fair value. In determining the fair
      value of certain of our assets, we must make judgments, estimates and
      assumptions regarding circumstances or trends that could affect the value of
      theses assets, such as economic conditions. Those judgments, estimates and
      assumptions are made based on current information available to us at that time.
      Many of those conditions, trends and circumstances are outside our control
      and
      if changes were to occur in the events, trends or other circumstances on which
      our judgments or estimates were based, we may be required under GAAP to adjust
      those of our earlier estimates that are affected by those changes. Changes
      in
      such estimates may require that we reduce the carrying value of the affected
      assets on our balance sheet (which are commonly referred to as “write downs” of
      the assets involved).





10


It
      is our
      practice to establish reserves or allowances to record downward adjustments
      or
“write-downs” in the carrying value of assets, such as accounts receivable. Such
      write-downs are recorded as charges to income or increases in the expense in
      our
      statement of operations in the periods when such reserves or allowances are
      established or increased to take account of changed conditions or events. As
      a
      result, our judgments, estimates and assumptions about future events can and
      will affect not only the amounts at which we record such assets on our balance
      sheet but also our results of operations.





In
      making
      our estimates and assumptions, we follow GAAP and accounting practices
      applicable to our business and those that we believe will enable us to make
      fair
      and consistent estimates of the fair value of assets and establish adequate
      reserves or allowances. Set forth below is a summary of the accounting policies
      that we believe are material to an understanding of our financial condition
      and
      results of operations.





**Derivative
      Financial Instruments**





We
      do not
      use derivative instruments to hedge exposures to cash flow, market, or foreign
      currency risks.





We
      review
      the terms of convertible debt and equity instruments that we issue to determine
      whether there are embedded derivative instruments, including the embedded
      conversion option, that are required to be bifurcated and accounted for
      separately as a derivative financial instrument. When the risks and rewards
      of
      any embedded derivative instrument are not “clearly and closely” related to the
      risks and rewards of the host instrument, the embedded derivative instrument
      is
      generally required to be bifurcated and accounted for separately. If the
      convertible instrument is debt, or has debt-like characteristics, the risks
      and
      rewards associated with the embedded conversion option are not “clearly and
      closely” related to that debt host instrument. The conversion option has the
      risks and rewards associated with an equity instrument, not a debt instrument,
      because its value is related to the value of our common stock. Nonetheless,
      if
      the host instrument is considered to be “conventional convertible debt” (or
“conventional convertible preferred stock”), bifurcation of the embedded
      conversion option is generally not required. However, in certain circumstances,
      if the instrument is not considered to be conventional convertible debt (or
      conventional convertible preferred stock), bifurcation of the embedded
      conversion option may be required. Generally, where the ability to physical
      or
      net-share settle the conversion option is deemed to be not within our control,
      the embedded conversion option is required to be bifurcated and accounted for
      as
      a derivative financial instrument liability.





In
      connection with the sale of convertible debt and equity instruments, we may
      also
      issue freestanding options or warrants. Additionally, we may issue options
      or
      warrants to non-employees in connection with consulting or other services they
      provide. Although the terms of the options and warrants may not provide for
      net-cash settlement, in certain circumstances, physical or net-share settlement
      may be deemed to be out of our control and, accordingly, we may be required
      to
      account for these freestanding options and warrants as derivative financial
      instrument liabilities, rather than as equity.





Derivative
      financial instruments are required to be initially measured at their fair value.
      For derivative financial instruments that shall be accounted for as liabilities,
      the derivative instrument is initially recorded at its fair value and is then
      re-valued at each reporting date, with changes in the fair value reported as
      charges or credits to income.





In
      circumstances where the embedded conversion option in a convertible instrument
      may be required to be bifurcated and there are also other embedded derivative
      instruments in the convertible instrument that are required to be bifurcated,
      the bifurcated derivative instruments are accounted for as a single, compound
      derivative instrument.





If
      the
      embedded derivative instrument is to be bifurcated and accounted for as a
      liability, the total proceeds received will be first allocated to the fair
      value
      of the bifurcated derivative instrument. If freestanding options or warrants
      were also issued and are to be accounted for as derivative instrument
      liabilities (rather than as equity), the proceeds are next allocated to the
      fair
      value of those instruments. The remaining proceeds, if any, are then allocated
      to the convertible instrument itself, usually resulting in that instrument
      being
      recorded at a discount from its face amount. In circumstances where a
      freestanding derivative instrument is to be accounted for as an equity
      instrument, the proceeds are allocated between the convertible instrument and
      the derivative equity instrument, based on their relative fair
      values.





11


The
      identification of, and accounting for, derivative instruments is complex.
      Derivative instrument liabilities are re-valued at the end of each reporting
      period, with changes in fair value of the derivative liability recorded as
      charges or credits to income in the period in which the changes occur. For
      options, warrants and bifurcated conversion options that are accounted for
      as
      derivative instrument liabilities, we determine the fair value of these
      instruments using the Black-Scholes option pricing model, binomial stock price
      probability trees, or other valuation techniques, sometimes with the assistance
      of a valuation consultant. These models require assumptions related to the
      remaining term of the instruments and risk-free rates of return, our current
      common stock price and expected dividend yield, and the expected volatility
      of
      our common stock price based on not only the history of our stock price but
      also
      the experience of other entities considered comparable to us. The identification
      of, and accounting for, derivative instruments and the assumptions used to
      value
      them can significantly affect our financial statements.





The
      derivatives (convertible debentures) issued on December 20, 2004 and January
      18,
      2005 (amended April 27, 2005) and on April 27, 2005 and May 6, 2005 have been
      accounted for in accordance with SFAS 133 and EITF No. 00-19, “Accounting for
      Derivative Financial Instruments Indexed to, and Potentially Settled in, a
      Company’s Own Stock”.





The
      Company has identified the Cornell and Highgate debentures have compound
      embedded derivatives. These compound embedded derivatives have been bifurcated
      from their respective host debt contracts and accounted for as derivative
      liabilities in accordance with EITF 00-19. When multiple derivatives exist
      within the Convertible Notes, they have been bundled together as a single hybrid
      compound instrument in accordance with SFAS No. 133 Derivatives Implementation
      Group Implementation Issue No. B-15, Embedded Derivatives: Separate Accounting
      for Multiple Derivative Features Embedded in a Single Hybrid
      Instrument”.





The
      compound embedded derivatives within the Convertible Notes have been recorded
      at
      fair value at the date of issuance; and are marked-to-market each reporting
      period with changes in fair value recorded to the Company’s Statement of
      Operations as “Net change in fair value of derivative liabilities”. The Company
      has utilized a third party valuation consultant to fair value the embedded
      derivatives using layered discounted probability-weighted cash flow approach.
      We
      have developed a financial model to value the compound embedded derivatives
      analyzing the conversion features, redemption options and penalty provisions.
      Additionally, our model has been developed to incorporate management’s
      assessment of the various potential outcomes relating to the specific features
      and provisions contained in the convertible debt instruments.





The
      six
      primary events that can occur which will affect the value of the compound
      embedded derivatives are (a) payments made in cash, (b) payments made with
      stock, (c) the holder converts the note(s), (d) the company redeems the note(s),
      (e) the company fails to register the common shares related to the convertible
      debt and (f) the company defaults on the note (s).





The
      primary factors driving the economic value of the embedded derivatives are
      the
      same as the Black-Scholes factors, except that they are incorporated
      intrinsically into the binomial calculations for this purpose. Those factors
      are
      stock price, stock volatility, trading volume, outstanding shares issued,
      beneficial shares owned by the holder, interest rate, whether or not a timely
      registration has been obtained, change in control, event of default, and the
      likelihood of obtaining alternative financing. We assigned probabilities to
      each
      of these potential scenarios over the initial term, and at each quarter, the
      remaining term of the underlying financial instrument. The financial model
      generates a quarterly cash flow over the remaining life of the underlying
      debentures and assigns a risk-weighted probability to the resultant cash flow.
      We then assigned a discounted weighted average cash flow over the potential
      scenarios which were compared to the discounted cash flow of the debentures
      without the subject embedded derivatives. The result is a value for the compound
      embedded derivatives at the point of issue and at subsequent
      quarters.





12


The
      fair
      value of the derivative liabilities are subject to the changes in the trading
      value of the Company’s common stock, as well as other factors. As a result, the
      Company’s financial statements may fluctuate from quarter-to-quarter based on
      factors, such as the price of the Company’s stock at the balance sheet date and
      the amount of shares converted by the Cornell and Highgate. Consequently, our
      financial position and results of operations may vary from quarter-to-quarter
      based on conditions other than our operating revenues and expenses.








**Software
      Development Costs**




SFAS
      No.
      86, “Accounting for the Costs of Computer Software to be Sold, Leased, or
      Otherwise Marketed,” requires capitalization of software development costs
      incurred subsequent to establishment of technological feasibility and prior
      to
      the availability of the product for general release to customers. Systematic
      amortization of capitalized costs begins when a product is available for general
      release to customers and is computed on a product-by-product basis at a rate
      not
      less than straight-line basis over the product’s remaining estimated economic
      life. To date, all costs have been accounted for as research and development
      costs and no software development cost has been capitalized.




Management
      will evaluate the net realizable value of software costs capitalized by
      comparing estimated future gross revenues reduced by the estimated future costs
      of completing, disposing of and maintaining the software. These costs also
      include the costs of performing maintenance and customer support required by
      us.




**Revenue
      Recognition**




Sales
      transactions are recorded automatically and posted to the general ledger from
      the invoice produced when shipment of the product is completed. Invoices and
      sales returns are reconciled monthly. Each customer completes a credit
      application and a credit check is completed before credit is granted. Credit
      terms vary between thirty (30) and sixty (60) days and are dependent on the
      size
      and location of the customer and the agreement with the individual customer.
      The
      sales transaction is recorded when the product is delivered to the customer.





We
      recognize revenue from the sales of software licenses when persuasive evidence
      of an arrangement exists, the product has been delivered, the fee is fixed
      and
      determinable and collection of the resulting receivable is reasonably assured.
      Delivery generally occurs when the product is delivered to a common
      carrier.





We
      assess
      collection based on a number of factors, including past transaction history
      with
      the customer and the creditworthiness of the customer. We do not request
      collateral from our customers. If we determine that collection of a fee is
      not
      reasonably assured, we defer the fee and recognize revenue at the time
      collection becomes reasonably assured, which is generally upon the receipt
      of
      cash.





For
      technology arrangements with multiple obligations (for example, undelivered
      software, maintenance and support), we allocate revenue to each component of
      the
      arrangement using the residual value method based on the fair value or the
      fixed
      agreement of the undelivered elements. Accordingly, we defer technology revenue
      in the amount equivalent to the fair value or the fixed agreement of the
      undelivered elements.





We
      recognize revenue for maintenance services ratably over the contract term.
      Our
      training and consulting services are billed at hourly rates and we generally
      recognize revenue as these services are performed. However, upon execution
      of a
      contract, we determine whether any services included within the arrangement
      require us to perform significant work either to alter the underlying software
      or to build additional complex interfaces so that the software performs as
      the
      customer requests. If these services are included as part of an arrangement,
      we
      recognize the fee using the percentage of completion method. We determine the
      percentage of completion based on our estimate of costs incurred to date
      compared with the total costs budgeted to complete the project.





13


**Impairment
      of Intangible Assets**





We
      operate in an industry that is rapidly evolving and extremely competitive.
      It is
      reasonably possible that our accounting estimates with respect to the useful
      life and ultimate recoverability of our carrying basis of intangible assets
      could change in the near term and that the effect of such changes on the
      financial statements could be material. In accordance with Statement of
      Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets”,
      we complete a test for impairment of certain other intangible assets annually
      and whenever events or circumstances indicate a potential impairment.





**Stock
      Based Transactions**





We
      have
      concluded various transactions where we paid the consideration in shares of
      our
      common stock and/or warrants or options to purchase shares of our common stock.
      These transactions include:


-
              Acquiring
                  the services of various professionals who provided us with a range
                  of
                  corporate consultancy services, including developing business and
                  financial models, financial advisory services, strategic planning,
                  development of business plans, investor presentations and advice
                  and
                  assistance with investment funding;
  -
              Retaining
                  the services of our Advisory Board to promote the business of the
                  Company;
  -
              Settlement
                  of our indebtedness; and
  -
              Providing
                  incentives to attract, retain and motivate employees who are important
                  to
                  our success.


When
      our
      stock is used in transactions, the transactions are generally valued using
      the
      price of the shares being transferred at the time the shares are issued for
      the
      services provided. If the value of the asset or service being acquired is
      available and is believed to fairly represent its market value, the transaction
      is valued using the value of the asset or service being provided.





When
      options or warrants to purchase our stock are used in transactions with third
      parties, the transaction is valued using the Black-Scholes valuation method.
      The
      Black-Scholes valuation method is widely used and accepted as providing the
      fair
      market value of an option or warrant to purchase stock at a fixed price for
      a
      specified period of time. Black-Scholes uses five (5) variables to establish
      market value of stock options or warrants:





-
            strike
                price (the price to be paid for a share of our
                stock);





-
            price
                of our stock on the day options or warrants are
                granted;





-
            number
                of days that the options or warrants can be exercised before they
                expire;





-
            trading
                volatility of our stock; and





-
            annual
                interest rate on the day the option or warrant is
                granted.





The
      determination of expected volatility requires management to make an estimate
      and
      the actual volatility may vary significantly from that estimate. Accordingly,
      the determination of the resulting expense is based on a management estimate.
      Prior to December 31, 2005, when options or warrants to purchase our stock
      are
      used as incentives for employees, officers or directors, we use the intrinsic
      value method in accordance with the recognition and measurement principles
      of
      Accounting Principles Board Opinion No. 25 “Accounting for Stock Issued to
      Employees”, as permitted by Statement of Financial Accounting Standards “SFAS”
No. 123. The intrinsic value method calculates the value of the option or
      warrant at the difference between the strike price and the price of the stock
      on
      the day the option or warrant is granted, except that such value is zero if
      the
      strike price is higher than the price of the stock. In December 2004, the
      Financial Accounting Standards Board (“FASB”) issued Statement No. 123 (revised
      2004) (“123R”) *Share
      Based Payment* .
      Statement 123R supersedes Accounting Principles Board (“APB”) Opinion No. 25,
      and its related implementation guidance. This statement establishes standards
      for the accounting for transactions in which an entity exchanges its equity
      instruments for goods and services. It also addresses transactions in which
      an
      entity incurs liabilities in exchange for goods and services that are based
      on
      the fair value of the entity’s equity instruments or that may be settled by the
      issuance of those equity instruments. 123R focuses primarily on accounting
      for
      transactions in which an entity obtains employee services in share-based payment
      transactions.





14


If
      the
      Company determined compensation expense based on the fair value at the dates
      for
      those awards consistent with the method of SFAS No. 123 and not the intrinsic
      value method, the effect on the historical financial statements for the periods
      presented would be as follows:





Period
            
            Restated
                Loss as OriginallyReported
            
            Additional
                Employee CompensationExpense
            
            Adjusted
                Loss For ThePeriodFor
                the three months ended December 31, 2005
            
            $
            5,174,926
            
            $
            177,665
            
            $
            5,352,591








When
      the
      Company offers incentives to our employees, officers or directors, through
      the
      issuance of options or warrants, the Company calculates the fair value of the
      instruments at the time of the negotiations as part of our evaluation of the
      compensation package offered to the parties. At the time the fair value of
      the
      instruments is evaluated all variables used to establish fair value are also
      re-evaluated.





When
      the
      instruments are provided for past services or are provided fully vested and
      are
      not subject to return, the shares are valued at the market price at the time
      the
      instrument is delivered. When the instrument is provided for future services,
      the expense is based on the fair market value of the instruments when the
      services are provided.





Once
      the
      transaction value is determined, GAAP requires us to record the transaction
      value as an expense or asset as determined by the transaction and to record
      an
      increase in our paid in capital.





Effective
      January 1, 2006, we adopted Statement of Financial Accounting Standards No.
      123
      (revised 2004), “Share-Based Payment” (“SFAS 123R”), using the modified
      prospective method. Under this method, compensation cost in the first half
      of
      2006 included the portion vesting in the period for (1) all share-based payments
      granted prior to, but not vested as of January 1, 2006, based on the grant
      date
      fair value estimated in accordance with the original provisions of SFAS No.
      123
      and (2) all share-based payments granted subsequent to January 1, 2006, based
      on
      the grant date fair value estimated in accordance with the revised provisions
      of
      SFAS 123R. Prior to adoption of SFAS 123R, we accounted for stock based
      compensation under the recognition and measurement principles of Accounting
      Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to
      Employees,” and related interpretations, the disclosure-only provisions of SFAS
      No. 123, “Accounting for Stock-Based Compensation” and the disclosures required
      by SFAS No. 148, “Accounting for Stock- Based Compensation-Transition and
      Disclosure.” In accordance with APB Opinion No. 25, no stock-based compensation
      cost was reflected in prior year net income for grants of stock options to
      employees because we granted stock options with an exercise price equal to
      the
      market value of the stock on the date of grant.





The
      adoption of SFAS No. 123R increased the Company’s first quarter 2007 reported
      operating loss and net loss by $94,657. The expense is classified as selling,
      general and administrative expense on the statement of operations. The expense
      is classified as selling, general and administrative expense on the statement
      of
      operations.





**Recent
      Accounting Pronouncements**





In
      February 2006, the Financial
      Accounting Standards Board (“FASB”) issued
      SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments” (“SFAS
      155”), which amends SFAS No. 133, “Accounting for Derivative Instruments and
      Hedging Activities” (“SFAS 133”) and SFAS No. 140, “Accounting for Transfers and
      Servicing of Financial Assets and Extinguishments of Liabilities” (“SFAS 140”).
      This statement amends SFAS 133 to permit fair value remeasurement for any hybrid
      instrument that contains an embedded derivative that otherwise would require
      bifurcation. This statement also eliminates the interim guidance in SFAS 133
      Implementation Issue D-1, which provides that beneficial interests in
      securitized financial assets are not subject to the provisions of SFAS 133.
      Finally, this statement amends SFAS 140 to eliminate the restriction on the
      passive derivative instruments that a qualifying special-purpose entity may
      hold. This statement is effective for all financial instruments acquired or
      issued in first fiscal years beginning after September 15, 2006. Management
      believes the adoption of SFAS 155 will not have any impact on the Company’s
      financial condition and results of operations.





15


In
      March
      2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial
      Assets—an amendment of FASB Statement No. 140” (“SFAS 156”), that provides
      guidance on accounting for separately recognized servicing assets and servicing
      liabilities. In accordance with the provisions of SFAS 156, separately
      recognized servicing assets and servicing liabilities must be initially measured
      at fair value, if practicable. Subsequent to initial recognition, the Company
      may use either the amortization method or the fair value measurement method
      to
      account for servicing assets and servicing liabilities within the scope of
      this
      Statement. The Company will adopt SFAS 156 in fiscal year 2007. The adoption
      of
      this Statement is not expected to have a material effect on the Company’s
      financial condition and results of operations.





In
      April
      2006, the FASB issued FSP FIN 46R-6, “Determining the Variability to Be
      Considered in Applying FASB Interpretation No. 46R” which requires the
      variability of an entity to be analyzed based on the design of the entity.
      The
      nature and risks in the entity, as well as the purpose for the entity’s creation
      are examined to determine the variability in applying FIN 46R, “Consolidation of
      Variable Interest Entities” ** (“FIN
      46R”). The variability is used in applying FIN 46R to determine whether an
      entity is a variable interest entity, which interests are variable interests
      in
      the entity, and who is the primary beneficiary of the variable interest entity.
      This statement is effective for all reporting periods beginning after June
      15,
      2006. Management does not expect this statement to have a significant impact
      on
      the Company’s financial condition and results of operations.





In
      July
      2006, the FASB issued FASB Interpretation Number 48, “Accounting for Uncertainty
      in Income Taxes, an Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48
      prescribes a recognition threshold and measurement attribute for the financial
      statement recognition and measurement of a tax position taken in a tax return.
      The Company must determine whether it is “more-likely-than-not” that a tax
      position will be sustained upon examination, including resolution of any related
      appeals or litigation processes, based on the technical merits of the position.
      Once it is determined that a position meets the more-likely-than-not recognition
      threshold, the position is measured to determine the amount of benefit to
      recognize in the financial statements. FIN 48 applies to all tax positions
      related to income taxes subject to SFAS 109 *.* The
      interpretation clearly scopes out income tax positions related to FASB Statement
      No. 5, “Accounting for Contingencies” *.* The
      Company will adopt the provisions of this statement on July 1, 2007. The
      cumulative effect of applying the provisions of FIN 48, if any, will be reported
      as an adjustment to the opening balance of retained earnings on July 1, 2007.
      The Company does not anticipate that the adoption of this statement will have
      a
      material effect on the Company’s financial condition and results of
      operations.





On
      September 15, 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
      ("SFAS 157").  SFAS 157 defines fair value, establishes a framework
      for measuring fair value and expands disclosures about fair value
      measurements.  SFAS 157 is effective as of the beginning of the first
      fiscal year beginning after November 15, 2007. The
      Company does not anticipate that the adoption of this statement will have a
      material effect on the Company’s financial condition and results of
      operations .





In
      September 2006, FASB issued SFAS No. 158, “Employers' Accounting for Defined
      Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements
      No 87, 88, 106 and 132(R)” (“SFAS 158”) *.* SFAS 158
      requires the recognition of the overfunded or underfunded status of a defined
      benefit postretirement plan as an asset or liability in the statement of
      financial position and the recognition of changes in that funded status in
      the
      year in which the changes occur through comprehensive income. SFAS 158 also
      requires the measurement of the funded status of a plan as of the date of the
      year-end statement of financial position. The
      Company does not anticipate that the adoption of this statement will have a
      material effect on the Company’s financial condition and results of
      operations.





16


On
      February 15, 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities: Including an amendment of FASB
      Statement No. 115” (“SFAS 159”). SFAS 159 permits all entities to elect to
      measure many financial instruments and certain other items at fair value with
      changes in fair value reported in earnings. SFAS 159 is effective as of the
      beginning of the first fiscal year that begins after November 15, 2007, with
      earlier adoption permitted. The
      Company does not anticipate that the adoption of this statement will have a
      material effect on the Company’s financial condition and results of
      operations .





The
      Company does not believe that any other of the recently issued and adopted,
      but
      not yet effective, accounting standards would have a material effect on the
      accompanying financial statements.




**ITEM
      3. CONTROLS AND PROCEDURES**




(a)
            Evaluation
                of disclosure controls and procedures.




Our
      principal executive officer and our principal financial officer evaluated the
      effectiveness of our disclosure controls and procedures as of the end of the
      period covered by this report. Such disclosure controls and procedures are
      designed to ensure that information required to be disclosed by the Company
      is
      accumulated and communicated to the appropriate management, including the
      principal executive and financial officers, on a basis that permits timely
      decisions regarding timely disclosure. Based on that evaluation, such principal
      executive officer and principal financial officer concluded that, the Company’s
      disclosure controls and procedures as of the end of the period covered by this
      report have been designed and are functioning effectively, except for the
      ability to identify and analyze derivatives and formation of an Audit Committee
      including an independent member, to provide reasonable assurance that the
      information required to be disclosed by the Company in reports filed under
      the
      Securities Exchange Act of 1934 is recorded, processed, summarized and reported
      within the time periods specified in the SEC’s rules and forms.





(b)
            Change
                in Internal Control over Financial
                Reporting.





No
      change
      in our internal control over financial reporting occurred during our most recent
      fiscal quarter that has materially affected, or is reasonably likely to
      materially affect, our internal control over financial reporting.





We
      believe that a controls system, no matter how well designed and operated, can
      not provide absolute assurance that the objectives of the controls system are
      met, and no evaluation of controls can provide absolute assurance that all
      control issues and instances of fraud, if any, within a company have been
      detected.





**PART
      II - OTHER INFORMATION**





**ITEM
      1. LEGAL PROCEEDINGS**





The
      Company is not currently a party to, nor is any of its property currently the
      subject of, any pending legal proceeding. None of the Company's directors,
      officers or affiliates is involved in a proceeding adverse to the Company's
      business or has a material interest adverse to the Company's business.





**ITEM
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS**





In
      January 2007, the Company executed a promissory note with an individual in
      the
      amount of $50,000. The note is non-interest bearing with principal due February
      15, 2007. Upon repayment, the Company shall make an additional lender’s fee
      payment of $3,000 to the individual. In connection with the promissory note,
      the
      Company issued 30,000 restricted shares of common stock to the individual at
      a
      price of $0.045 per share. In March 2007, the note was repaid in full along
      with
      the lender’s fee payment.





17


In
      January 2007, the Company executed a consulting agreement with an investor
      relations firm whereby the firm shall provide public and investor relations
      services to the Company. As consideration for the services, the firm shall
      receive 250,000 shares of the Company’s common stock, at $0.055 per share. The
      shares shall be restricted and have piggyback registration rights upon the
      next
      registration statement filed by the Company. The term of the agreement is for
      ninety days and it can be renewed by the mutual consent of the Company and
      the
      firm.





In
      January 2007, in accordance with a letter of understanding executed with an
      investment firm, the Company issued 100,000 restricted shares of its common
      stock valued at $0.05 per share to the firm.


In January
        2007, in accordance with a term sheet executed with an investment firm, the
        Company issued 100,000 shares of common stock, valued at $0.45 per share,
        to the
        investment firm, per their distribution instructions, as additional
        consideration for services rendered. The Company’s shares of common stock issued
        have Rule 144 piggyback registration rights.





In
      January 2007, in accordance with a consulting agreement executed with a sales
      consultant, the consultant received warrants to purchase 150,000 shares of
      the
      Company’s common stock at an exercise price of $0.10 per share with a term of
      two years from the effective date.





In
      January 2007, the Company issued stock options to purchase 643,079 shares of
      common stock to ten employees. The options were issued in accordance with the
      Company’s 2004 Equity Incentive Plan. The option shares are exercisable at $0.05
      per share and expire in January 2017. The shares vest after a one year
      period.





In
      January 2007, the Company sold to two individuals certain units which contained
      common stock and warrants. The Company issued 104,167 shares of its common
      stock
      at $0.048 per share and 20,833 warrants with an exercise price of $0.096 per
      share, and 421,053 shares of its common stock at $0.0475 per share and 84,211
      warrants with an exercise price of $0.095 per share to two individuals,
      respectively, all of which are exercisable for a period of two years from date
      of issuance.





In
      February 2007, in relation to the January 2007 term sheet executed with an
      investment firm (see Note 19), the Company sold a total of six units to six
      individuals, each unit consisting of an 18% convertible note payable in the
      amount of $16,667 and 66,667 bonus shares of the Company’s common stock, valued
      at $0.03988, for a total of $100,000 and 400,000 shares of common stock, with
      principal due August 31, 2007. The holder is entitled, at its option, to
      convert, the debenture, plus accrued interest, into shares of the Company’s
      common stock at the price of $0.05 per share. Six months of prorated prepaid
      interest, for a total of $8,729, was due at closing and was paid directly to
      the
      note holders by the Company. The Company paid a placement agent fee of $10,000
      and issued 80,000 shares of the Company’s common stock, valued at $0.03988, in
      March 2007, relating to the convertible notes. The Company also paid an escrow
      agent fee of $500 and a legal fee of $1,000 relating to the convertible notes.
      All of the Company’s shares of common stock issued in connection with the
      convertible notes have Rule 144 piggyback registration rights.





In
      February 2007, the Company executed a promissory note with an unrelated
      individual in the amount of $50,000. The note bears interest at 18% per annum
      with principal due June 5, 2007. Upon repayment, the Company shall make an
      additional lender’s fee payment of $4,000 to the individual. In connection with
      the promissory note, the Company issued 150,000 restricted shares of common
      stock to two individuals at $0.04 per share and paid a legal fee of $500 to
      the
      lender’s attorney. In addition, the Company’s CEO executed a Personal Guaranty
      Agreement guarantying $25,000 of the promissory note in the event the Company
      defaults on the note.





In
      February 2007, the Company executed a promissory note with its CEO in the amount
      of $22,000. The note bears interest at 8% per annum with principal due July
      31,
      2007. In connection with the promissory note, the Company issued warrants
      exercisable in the aggregate into 88,000 shares of the Company’s common stock to
      its CEO at an exercise price of $0.05 per share. The warrants are exercisable
      for a period of five years from issuance.





In
      February 2007, Cornell converted $20,000 of the April 27, 2005 debenture into
      588,235 shares of the Company’s common stock, pursuant to the terms of the
      Securities Purchase Agreement. The conversion was made on February 14, 2007
      at a
      conversion price of $0.034 per share.





In
      February 2007, Highgate converted $20,280 of the May 6, 2005 debenture into
      590,460 shares of the Company’s common stock, pursuant to the terms of the
      Securities Purchase Agreement. The conversion was made on February 14, 2007
      at a
      conversion price of $0.034 per share.





In
      February 2007, the Company executed two amendments to an advisory board
      agreement executed in February 2006. The first amendment authorizes the Company
      to compensate the advisor 333,333 shares of the Company’s common stock, in lieu
      of cash, at $0.045 per share for all compensation owed to the advisor as of
      the
      date of the amendment. The shares are restricted and have piggy back
      registration rights upon the next registration statement filed by the Company.
      In connection with the amendment, the Company issued to the advisor an aggregate
      of 50,000 two year warrants to purchase shares of the Company’s common stock at
      an exercise price of $0.10 per share. Per the terms of the second amendment,
      the
      Company issued 100,000 restricted shares of the Company’s common stock at $0.045
      per share in consideration for services rendered to date.





18


In
      February 2007, the Company issued 62,500 shares of its restricted common stock
      at $0.04 per share to a trade vendor as partial remuneration, in the amount
      of
      $2,500, of the Company’s open indebtedness to the vendor.





In
      February 2007, the Company issued stock options to purchase 1,158,890 shares
      of
      common stock to nine employees. The options were issued in accordance with
      the
      Company’s 2004 Equity Incentive Plan. Options totaling 558,120 shares are
      exercisable at $0.045 per share and options totaling 600,770 shares are
      exercisable at $0.05 per share. All of the options expire in February 2017.
      The
      shares vest after a one year period.





In
      February 2007, the Company sold to an individual 20,000 shares of common stock,
      at $0.05 per share.




In
      March
      2007, the Company executed an 18% convertible promissory note in the amount
      of
      $75,000 with an individual. The holder is entitled, at its option, to convert
      the debenture, plus accrued interest, into shares of the Company’s common stock
      at the market value of the Company’s common stock at the date of note maturity,
      June 30, 2007. If not converted, the entire principal amount and all accrued
      interest shall be due to the holder on June 30, 2007. In connection with the
      convertible promissory note payable, the Company issued to the individual an
      aggregate of 150,000 shares of the Company’s common stock, valued at $0.039 per
      share. The Company’s shares of common stock issued in connection with the
      convertible note have Rule 144 piggyback registration rights.





In
      March
      2007, Cornell converted $15,000 of the April 27, 2005 debenture into 1,250,000
      shares of the Company’s common stock, pursuant to the terms of the Securities
      Purchase Agreement. The conversion was made on March 22, 2007 at a conversion
      price of $0.012 per share.





In
      March
      2007, the Company issued 7,500 shares of its common stock, valued at $0.05
      per
      share for 2,500 shares, $0.045 for 2,500 shares and $0.0375 for 2,500 shares,
      issuable to a law firm as compensation for general counsel legal services
      rendered.





In
      March
      2007, the Company issued 45,810 shares of its restricted common stock at $0.0247
      per share to a trade vendor as remuneration, in the amount of $1,132, of the
      Company’s open indebtedness to the vendor.





In
      March
      2007, the Company issued stock options to purchase 1,704,231 shares of common
      stock to eleven employees. The options were issued in accordance with the
      Company’s 2004 Equity Incentive Plan. Options totaling 785,255 shares are
      exercisable at $0.024 per share and options totaling 918,976 shares are
      exercisable at $0.0375 per share. All of the options expire in March 2017.
      The
      shares vest after a one year period.





In
      March
      2007, the Company sold to two individuals certain units which contained common
      stock and warrants. The Company issued 384,615 shares of common stock at $0.0325
      per share and 76,923 warrants with an exercise price of $0.065 per share all
      of
      which are exercisable for a period of two years from the date of
      issuance.





In
      March
      2007, the Company sold to five individuals 615,042 shares of common stock,
      at
      $0.0247 per share.





19


In
      April
      2007, in relation to the April 2007 term sheet executed with an investment
      firm,
      the Company sold a total of one units to one individuals, each unit consisting
      of an 18% convertible note payable in the amount of $25,000 and 120,000 bonus
      shares of the Company’s common stock, valued at $0.019, with principal due
      October 24, 2007. The holder is entitled, at its option, to convert, the
      debenture, plus accrued interest, into shares of the Company’s common stock at
      the price of $0.05 per share. Six months of prorated prepaid interest, for
      a
      total of $2,250, was due at closing, in May 2007, and was withheld from the
      net
      proceeds remitted to the Company by the placement agent. The Company paid a
      placement agent fee of $3,209 and issued 24,000 shares of the Company’s common
      stock, valued at $0.019, in May 2007, relating to the convertible note. The
      Company also paid an escrow agent fee of $660, including expenses, relating
      to
      the convertible note. All of the Company’s shares of common stock issued in
      connection with the convertible notes have Rule 144 piggyback registration
      rights.





In
      April
      2007, Cornell converted $40,000.00 of the April 27, 2005 debenture into
      2,452,153 shares of the Company’s common stock, pursuant to the terms of the
      Securities Purchase Agreement. The conversion price ranged from $0.0152,
      converted on April 26, 2007, to $0.0176, converted on April 17, 2007, per
      share.





In
      April
      2007, the Company issued stock options to purchase 1,551,840 shares of common
      stock to eleven employees. The options were issued in accordance with the
      Company’s 2004 Equity Incentive Plan. The option shares are exercisable at
      $0.023 per share and expire in April 2017. The shares vest after a one year
      period.





In
      April
      2007, the Company issued stock options to purchase 100,000 shares of common
      stock to one employee. The options were issued in accordance with the Company’s
      2004 Equity Incentive Plan. The option shares are exercisable at $0.50 per
      share
      and expire in April 2017. The shares vest annually over a three year
      period.





In
      April
      2007, the Company executed a consulting agreement with an investor relations
      firm to provide public and investor relations services to the Company. As
      compensation for the services, the firm shall receive a monthly retainer in
      the
      amount of $5,500 and 50,000 shares of the Company’s common stock, valued at
      $0.019 per share. The shares shall be restricted and have piggyback registration
      rights upon the next registration statement filed by the Company. The term
      of
      the agreement is for three months and can be renewed provided the Company and
      the firm both agree in writing.





In
      May
      2007, the Company executed a 9% convertible promissory note in the amount of
      $100,000 with an individual. The holder is entitled, at its option, to convert,
      the debenture, plus accrued interest, into shares of the Company’s common stock
      at $0.035 per share. If not converted, the entire principal amount and all
      accrued interest shall be due to the holder on the second year anniversary
      of
      the debenture. In connection with the convertible promissory note payable,
      the
      Company issued to the individual 571,429 warrants with an exercise price of
      $0.07 per share. The warrants are exercisable for a period of two years from
      issuance.





In
      May
      2007, Cornell converted $20,000.00 of the April 27, 2005 debenture into
      1,470,588 shares of the Company’s common stock, pursuant to the terms of the
      Securities Purchase Agreement. The conversion was made on May 14, 2007 at a
      conversion price of $0.0136 per share.





In
      May
      2007, the Company executed a consulting agreement with an individual software
      developer whereby the consultant will provide systems analysis, design, computer
      programming and engineering services to the Company as an independent
      contractor. The term of the agreement is perpetual with thirty day written
      termination rights retained by both the Company and the consultant. Per the
      terms of the agreement, billable projects shall be defined through the
      completion of a task order. Upon execution of the agreement, the Company agreed
      to record a prorated fee for the period October 15, 2006 to April 30, 2007
      for
      $1,500 plus 3,000 warrants per month. The warrants shall be valued at the
      closing market value of the Company’s common stock on the last day of each
      month. The warrants are exercisable for a period of two years from issuance.




All
      of
      the above offerings and sales were deemed to be exempt under Rule 506 of
      Regulation D and Section 4(2) of the Securities Act of 1933, as amended.





**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**





Not
      applicable.





**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**





Not
      applicable.





**ITEM
      5. OTHER INFORMATION**





Not
      applicable.






20





**ITEM
      6. EXHIBITS**





Exhibit
                Number
            Description3.1
            Amended
                and Restated Certificate of Incorporation of StrikeForce Technologies,
                Inc.(1)3.2
            By-laws
                of StrikeForce Technologies, Inc. (1)10.1
            2004
                Stock Option Plan. (1)10.2
            Securities
                Purchase Agreement dated December 20, 2004, by and among StrikeForce
                Technologies, Inc. and Cornell Capital Partners, LP.
                (1)10.3
            Secured
                Convertible Debenture with Cornell Capital Partners, LP.
                (1)10.4
            Investor
                Registration Rights Agreement dated December 20, 2004, by and between
                StrikeForce Technologies, Inc. and Cornell Capital Partners, LP in
                connection with the Securities Purchase Agreement.(2)10.5
            Escrow
                Agreement, dated December 20, 2004, by and between StrikeForce
                Technologies, Inc. and Cornell Capital Partners, LP in connection
                with the
                Securities Purchase Agreement. (2)10.6
            Security
                Agreement dated December 20, 2004, by and between StrikeForce
                Technologies, Inc. and Cornell Capital Partners, LP in connection
                with the
                Securities Purchase Agreement. (1)10.7
            Secured
                Convertible Debenture with Cornell Capital Partners, LP dated January
                18,
                2005. (1)10.8
            Royalty
                Agreement with NetLabs.com, Inc. and Amendments. (1)10.9
            Employment
                Agreement dated as of May 20, 2003, by and between StrikeForce
                Technologies, Inc. and Mark L. Kay. (1)10.10
            Amended
                and Restated Secured Convertible Debenture with Cornell Capital Partners,
                LP dated April 27, 2005. (1)10.11
            Amendment
                and Consent dated as of April 27, 2005, by and between StrikeForce
                Technologies, Inc. and Cornell Capital Partners, LP.
                (1)10.12
            Securities
                Purchase Agreement dated as of April 27, 2005 by and between StrikeForce
                Technologies, Inc. and Highgate House Funds, Ltd. (1)10.13
            Investor
                Registration Rights Agreement dated as of April 27, 2005 by and between
                StrikeForce Technologies, Inc. and Highgate House Funds, Ltd.
                (2)10.14
            Secured
                Convertible Debenture with Highgate House Funds, Ltd. dated April
                27,
                2005. (2)10.15
            Escrow
                Agreement dated as of April 27, 2005 by and between StrikeForce
                Technologies, Inc., Highgate House Funds, Ltd. and Gottbetter &
                Partners, LLP. (1)10.16
            Escrow
                Shares Escrow Agreement dated as of April 27, 2005 by and between
                StrikeForce Technologies, Inc., Highgate House Funds, Ltd. and Gottbetter
                & Partners, LLP. (1)10.17
            Security
                Agreement dated as of April 27, 2005 by and between StrikeForce
                Technologies, Inc. and Highgate House Funds, Ltd. (1)10.18
            Network
                Service Agreement with Panasonic Management Information Technology
                Service
                Company dated August 1, 2003 (and amendment). (1)10.19
            Client
                Non-Disclosure Agreement. (1)10.20
            Employee
                Non-Disclosure Agreement. (1)10.21
            Secured
                Convertible Debenture with Highgate House Funds, Ltd. dated May 6,
                2005.
                (2)10.22
            Termination
                Agreement with Cornell Capital Partners, LP dated February 19, 2005.
                (1)10.23
            Securities
                Purchase Agreement with WestPark Capital, Inc. (4)10.2
            Form
                of Promissory Note with WestPark Capital, Inc. (4)10.25
            Investor
                Registration Rights Agreement with WestPark Capital, Inc.
                (4)31.1
            Certification
                by Chief Executive Officer, required by
                Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act, promulgated
                pursuant
                to Section 302 of the Sarbanes-Oxley Act of 2002.
                (3)31.2
            Certification
                by Chief Financial Officer, required by
                Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act, promulgated
                pursuant
                to Section 302 of the Sarbanes-Oxley Act of 2002.
                (3)32.1
            Certification
                by Chief Executive Officer, required by
                Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section
                1350 of
                Chapter 63 of Title 18 of the United States Code, promulgated pursuant
                to
                Section 906 of the Sarbanes-Oxley Act of 2002. (3)32.2
            Certification
                by Chief Financial Officer, required by
                Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section
                1350 of
                Chapter 63 of Title 18 of the United States Code, promulgated pursuant
                to
                Section 906 of the Sarbanes-Oxley Act of 2002.
                (3)


(1)  Filed
      as
      an exhibit to the Registrant’s Form SB-2 dated as of May 11, 2005 and
      incorporated herein by reference.


(2)  Filed
      as
      an exhibit to the Registrant’s Amendment No. 1 to Form SB-2 dated as of June 27,
      2005 and incorporated herein by reference.


(3)  Filed
      herewith.


(4)  Filed
      as
      an exhibit to the Registrant’s Form 8-K dated August 1, 2006 and incorporated
      herein by reference.







21













**SIGNATURES**





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






**STRIKEFORCE
      TECHNOLOGIES, INC.**


*Dated:
                May21, 2007*
            *By:
                /s/ Mark L. Kay**Mark
                L. Kay**Chief
                Executive Officer**Dated:
                May21, 2007*
            *By:
                /s/ Mark Joseph Corrao**Mark
                Joseph Corrao**Chief
                Financial Officer and Principal Accounting Officer*