**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: June 30,
                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 August 2, 2007, the issuer had
      55,798,088 outstanding shares of Common Stock.





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






2


**STRIKEFORCE
          TECHNOLOGIES, INC.**
 
 **INDEX
          TO FINANCIAL STATEMENTS**
 
 **FOR
          THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006**
 
 **(UNAUDITED)**
 
 
   Contents
                  Page(s)Balance
                      Sheet at June 30, 2007
                  F-2Statement
                      of Operations for the Three and Six Months Ended June 30, 2007
                      and
                      2006
                  F-3Statement
                      of Stockholders’ Deficiency for the Six Months Ended June 30,
                      2007
                  F-4Statement
                      of Cash Flows for the Six Months Ended June 30, 2007 and
                      2006
                  F-5Notes
                      to the Financial Statements
                  F-6
                      to F-19
 F-1
    **STRIKEFORCE
          TECHNOLOGIES, INC.**
 **BALANCE
          SHEET**
 **(UNAUDITED)**
   **ASSETS****June
                  30,****2007****Current
                  Assets:**Cash
                  and cash equivalents
              
              $
              25,553Accounts
                  receivable
              
              
              304,591Current
                  portion of deferred royalties
              
              
              305,953Prepaid
                  expenses and other current assets
              
              
              22,541**Total
                  current assets**
              
              
              658,638Property
                  and equipment, net
              
              
              22,904Deferred
                  royalties, net of current portion
              
              
              1,580,756Website
                  development cost, net
              
              
              6,957Patents
              
              
              4,329Security
                  deposit
              
              
              8,684**Total
                  Assets**
              
              $
              2,282,268**LIABILITIES
                  AND STOCKHOLDERS' DEFICIENCY****Current
                  Liabilities:**Convertible
                  secured notes payable
              
              $
              1,129,096Derivative
                  financial instruments
              
              
              1,001,431Current
                  portion of convertible notes payable
              
              
              227,000Convertible
                  notes payable - related parties
              
              
              478,000Notes
                  payable
              
              
              243,750Notes
                  payable - related parties
              
              
              651,000Capital
                  leases payable
              
              
              35,253Accounts
                  payable
              
              
              757,733Accrued
                  expenses
              
              
              974,823Payroll
                  taxes payable
              
              
              53,374Due
                  to employees
              
              
              61,807**Total
                  current liabilities**
              
              
              5,613,267Convertible
                  notes payable, net of discount of $114,873
              
              
              1,060,127**Total
                  Liabilities**
              
              
              6,673,394**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;46,827,284
                  shares issued and outstanding
              
              
              4,683Additional
                  paid-in capital
              
              
              9,825,473Accumulated
                  deficit
              
              
              (14,221,282
              )**Total
                  Stockholders' Deficiency**
              
              
              (4,391,126
              )**Total
                  Liabilities and Stockholders' Deficiency**
              
              $
              2,282,268




See
        accompanying notes to the financial statements.




F-2




**STRIKEFORCE
        TECHNOLOGIES, INC.**
 **STATEMENT
        OF OPERATIONS**
 **FOR
        THE SIX MONTHS ENDED JUNE  30, 2007 AND
        2006**
 **(UNAUDITED)**






**For
                  the three months**
              
              
              **For
                  the six months****ended
                  June 30,**
              
              
              **ended
                  June 30,****2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006**Revenues
              
              $
              54,932
              
              
              $
              127,750
              
              
              $
              553,332
              
              
              $
              142,339Cost
                  of sales
              
              
              3,598
              
              
              
              14,531
              
              
              
              18,553
              
              
              
              16,538Gross
                  profit
              
              
              51,334
              
              
              
              113,219
              
              
              
              534,779
              
              
              
              125,801Operating
                  expenses:Selling,
                  general and administrative expenses
              
              
              548,954
              
              
              
              974,850
              
              
              
              1,102,486
              
              
              
              2,214,613Research
                  and development
              
              
              92,962
              
              
              
              60,380
              
              
              
              181,502
              
              
              
              164,975Total
                  operating expenses
              
              
              641,916
              
              
              
              1,035,230
              
              
              
              1,283,988
              
              
              
              2,379,588Loss
                  from operations before other (income) expense
              
              
              (590,582
              )
              
              
              (922,011
              )
              
              
              (749,209
              )
              
              
              (2,253,787
              )Other
                  (income) expense:Interest
                  expense
              
              
              2,684
              
              
              
              2,373
              
              
              
              5,589
              
              
              
              4,513Financing
                  expense
              
              
              24,100
              
              
              
              253,806
              
              
              
              350,463
              
              
              
              422,342Derivative
                  instruments (income) expense, net
              
              
              721,456
              
              
              
              (399,707
              )
              
              
              737,973
              
              
              
              (419,855
              )Total
                  other (income) expense
              
              
              748,240
              
              
              
              (143,528
              )
              
              
              1,094,025
              
              
              
              7,000Net
                  loss
              
              $
              (1,338,822
              )
              
              $
              (778,483
              )
              
              $
              (1,843,234
              )
              
              $
              (2,260,787
              )Net
                  loss per common share - basic and diluted
              
              $
              (0.04
              )
              
              $
              (0.04
              )
              
              $
              (0.06
              )
              
              $
              (0.11
              )Weighted
                  average number of common shares outstanding - basic and
                  diluted
              
              
              36,100,752
              
              
              
              21,923,861
              
              
              
              33,318,493
              
              
              
              20,859,626






See
        accompanying notes to the financial statements.




F-3




**STRIKEFORCE
        TECHNOLOGIES, INC.**
 **STATEMENT
        OF STOCKHOLDERS' DEFICIENCY**
 **FOR
        THE SIX MONTHS ENDED JUNE  30, 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
              
              
              2,273,154
              
              
              
              227
              
              
              
              69,064
              
              
              
              -
              
              
              
              69,291Issuance
                  of shares of common stock for conversions of
              
              
              10,691,154
              
              
              
              1,069
              
              
              
              240,657
              
              
              
              -
              
              
              
              241,726notes
                  payable and accrued interestIssuance
                  of shares of common stock for consulting services
              
              
              856,643
              
              
              
              87
              
              
              
              38,224
              
              
              
              -
              
              
              
              38,311Issuance
                  of shares of common stock for financing
              
              
              4,161,839
              
              
              
              416
              
              
              
              119,990
              
              
              
              -
              
              
              
              120,406Issuance
                  of warrants in connection with convertible notes payable
              
              
              -
              
              
              
              -
              
              
              
              55,352
              
              
              
              -
              
              
              
              55,352Issuance
                  of warrants in connection with consulting services
              
              
              -
              
              
              
              -
              
              
              
              8,417
              
              
              
              -
              
              
              
              8,417Employee
                  stock option compensation
              
              
              -
              
              
              
              -
              
              
              
              209,916
              
              
              
              -
              
              
              
              209,916Net
                  loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,843,234
              )
              
              
              (1,843,234
              )Balance
                  at June 30, 2007
              
              
              46,827,284
              
              
              $
              4,683
              
              
              $
              9,825,473
              
              
              $
              (14,221,282
              )
              
              $
              (4,391,126
              )




See
        accompanying notes to the financial statements.






F-4




**STRIKEFORCE
          TECHNOLOGIES, INC.**
 **STATEMENT
          OF CASH FLOWS**
 **FOR
          THE SIX MONTHS ENDED JUNE  30, 2007 AND
          2006**
 **(UNAUDITED)**







**2007**
              
              
              **2006****Cash
                  flows from operating activities:**Net
                  loss
              
              $
              (1,843,234
              )
              
              $
              (2,260,787
              )Adjustments
                  to reconcile net loss to net cashused
                  in operating activities:Depreciation
                  and amortization
              
              
              9,598
              
              
              
              13,015Amortization
                  of deferred financing costs
              
              
              12,335
              
              
              
              19,412Amortization
                  of discount on convertible notes
              
              
              353,253
              
              
              
              276,610Amortization
                  of deferred royalties
              
              
              138,853
              
              
              
              167,139Mark
                  to market on derivative financial instruments
              
              
              737,973
              
              
              
              (419,855
              )Employee
                  stock option compensation
              
              
              209,916
              
              
              
              70,042Issuance
                  of common stock, options and warrants for consulting
                  services
              
              
              46,728
              
              
              
              516,964Issuance
                  of common stock, options and warrants for financing
                  expense
              
              
              124,045
              
              
              
              28,000Changes
                  in assets and liabilities affecting operations:Accounts
                  receivable
              
              
              (387,068
              )
              
              
              (111,732
              )Prepaid
                  expenses and other current assets
              
              
              1,352
              
              
              
              3,014Accounts
                  payable
              
              
              44,506
              
              
              
              316,260Accrued
                  expenses
              
              
              82,054
              
              
              
              242,712Payroll
                  taxes payable
              
              
              -
              
              
              
              (3,741
              )Due
                  to employees
              
              
              2,453
              
              
              
              12,029**Net
                  cash used in operating activities**
              
              
              (467,236
              )
              
              
              (1,130,918
              )**Cash
                  flows from investing activities:**Investment
                  in website
              
              
              (1,135
              )
              
              
              (113
              )Purchases
                  of property and equipment
              
              
              (2,782
              )
              
              
              (9,992
              )**Net
                  cash used in investing activities**
              
              
              (3,917
              )
              
              
              (10,105
              )**Cash
                  flows from financing activities:**Proceeds
                  from sale of common stock and warrants
              
              
              69,291
              
              
              
              166,000Proceeds
                  from convertible notes payable
              
              
              409,000
              
              
              
              300,000Proceeds
                  from convertible notes payable - related parties
              
              
              -
              
              
              
              113,000Proceeds
                  from notes payable
              
              
              -
              
              
              
              100,000Proceeds
                  from notes payable - related parties
              
              
              22,000
              
              
              
              447,000Payments
                  of convertible notes payable - related parties
              
              
              -
              
              
              
              (43,500
              )Payments
                  of notes payable
              
              
              (6,250
              )
              
              
              -Payments
                  of notes payable - related parties
              
              
              -
              
              
              
              (7,000
              )Payments
                  on capital leases
              
              
              (4,790
              )
              
              
              (2,033
              )**Net
                  cash provided by financing activities**
              
              
              489,251
              
              
              
              1,073,467**Net
                  increase (decrease) in cash**
              
              
              18,098
              
              
              
              (67,556
              )**Cash
                  and cash equivalents at beginning of period**
              
              
              7,455
              
              
              
              77,094**Cash
                  and cash equivalents at end of period**
              
              $
              25,553
              
              
              $
              9,538**Supplemental
                  disclosure of cash flow information:**Interest
                  expense
              
              $
              8,661
              
              
              $
              5,381Income
                  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
              
              $
              55,352
              
              
              $
              81,622Common
                  stock issued in connection with notes payable
              
              $
              -
              
              
              $
              25,200Common
                  stock issued in connection with accrued interest
              
              $
              3,497
              
              
              $
              -Conversion
                  of convertible promissory notes payable into common stock
              
              $
              160,780
              
              
              $
              246,610


See
        accompanying notes to the financial statements.




F-5




**STRIKEFORCE
        TECHNOLOGIES, INC.**
 **NOTES
        TO THE FINANCIAL STATEMENTS**
 **FOR
        THE SIX MONTHS ENDED JUNE 30, 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
        (“US GAAP”) for interim financial information and 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 June 30, 2007, the results of operations for the three and six months
        ended June 30, 2007, changes in stockholders’ deficiency and cash flows for the
        six months ended June 30, 2007. The results of operations for the three and
        six
        months ended June 30, 2007, are not necessarily indicative of the results
        to be
        expected for any subsequent quarter or the entire year ending December 31,
        2007.
 
 Certain
        information and footnote disclosures normally included in financial statements
        prepared in accordance with US GAAP have been condensed or omitted pursuant
        to
        the Securities and Exchange Commission’s (“SEC”) rules and
        regulations.
 
 The
        accompanying 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 SIX MONTHS ENDED JUNE 30, 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 17,616,435 shares of stock
        options, 7,722,439 shares of common stock issuable under warrants and 18,857,492
        shares of common stock issuable under the conversion feature of the convertible
        notes payable for the six months ended June 30, 2007. These potential
        shares of common stock were not included as they were
        anti-dilutive.
 
 New
                  accounting pronouncements
 
 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.
 
 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.
    F-7
  **STRIKEFORCE
          TECHNOLOGIES, INC.**
 **NOTES
          TO THE FINANCIAL STATEMENTS**
 **FOR
          THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006**
 **(UNAUDITED)**
 **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 $14,221,282 and a working capital deficiency of
        $4,954,629 at June 30, 2007 and had a net loss and cash used in operations
        of
        $1,843,234 and $467,236 for the six months ended June 30, 2007, respectively.
        These conditions raise substantial doubt about its ability to continue as
        a
        going concern.
 
 While
        the
        Company is attempting to increase 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
        December 2, 2004, the Company issued NetLabs, 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 for
        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.
 
 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**
              **June
                  30, 2007**Market
                share price
              $0.900
              $0.050
              $0.022Expected
                volatility
              29.00%
              152.00%
              389.00%Risk-free
                interest rate
              4.35%
              4.96%
              5.03%Expected
                life
              5
                  years
              5
                  years
              5
                  years
 
  As
        of
        June 30, 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 June 30, 2007 at $264,160. The total value
        of
        the deferred royalties, net of accumulated amortization of $972,978, is
        $1,886,709.  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 six months ended June 30, 2007 and 2006, $138,853 and
        $167,139 of royalties were expensed, respectively.
 
 The
        following table summarizes the annual amounts of deferred royalties that
        are
        amortized to general and administrative expenses over the next five (5)
        years and thereafter.
 
 2007
              
              $
              164,9812008
              
              303,8342009
              
              303,8342010
              
              303,8342011
                  and beyond
              
              810,226Total
                  deferred royalties
              
              1,886,709Less
                  current portion
              
              (305,953
              )Deferred
                  royalties, net of current portion
              
              $
              1,580,756
   F-8
  **STRIKEFORCE
          TECHNOLOGIES, INC.**
 **NOTES
          TO THE FINANCIAL STATEMENTS**
 **FOR
          THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006**
 **(UNAUDITED)**
 **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 six months ended June 30, 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 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 six months ended June 30, 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.  In June 2007, the maturity date of the note was extended to
        September 30, 2007 and the Company issued to the individual an additional
        aggregate of 150,000 shares of the Company’s common stock, valued at $0.022 per
        share.  The Company’s shares of common stock issued in connection with
        the convertible note and the note extension have Rule 144 piggyback registration
        rights. For the six months ended June 30, 2007, the Company expensed $9,150
        in
        financing expenses related to the issuance of the shares.  In June
        2007, the individual converted the interest owed on the note through June
        30,
        2007 of $3,513.70 into 159,714 shares of the Company’s common stock, valued at
        $0.022 per share.
 
 In
        April
        2007, in connection with 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.  For the six months ended June 30,
        2007, the Company expensed $2,736 in financing expenses related to the issuance
        of the shares.
 
 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 date of issuance.  The fair value of the warrants issued
        using the Black-Scholes Option Pricing Model was $10,114.  For the six
        months ended June 30, 2007, the Company recorded $843 in financing expense
        related to the issuance of these warrants.
 
 F-9
  **STRIKEFORCE
          TECHNOLOGIES, INC.**
 **NOTES
          TO THE FINANCIAL STATEMENTS**
 **FOR
          THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006**
 **(UNAUDITED)**
   In
        June
        2007, the Company executed a 9% convertible promissory note in the amount
        of
        $15,000 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 a price of $0.015 per
        share.  If not converted, the entire principal amount and all accrued
        interest shall be due to the holder on June 21, 2009.  In connection
        with the convertible promissory note payable, the Company issued to the
        individual 1,200,000 warrants with an exercise price of $0.03 per
        share.  The warrants are exercisable for a period of two years from
        date of issuance.  The fair value of the warrants issued using the
        Black-Scholes Option Pricing Model was $17,880.  For the six months
        ended June 30, 2007, the Company recorded $745 in financing expense related
        to
        the issuance of these warrants.
 
 In
        June
        2007, the Company executed two 8% convertible promissory notes in the amounts
        of
        $50,000 each 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 a price of $0.02 per
        share.  If not converted, the entire principal amount and all accrued
        interest shall be due to the holder on June 29, 2009.  In connection
        with the convertible promissory note payable, the Company issued to the
        individual 1,000,000 warrants with an exercise price of $0.04 per
        share.  The warrants are exercisable for a period of two years from
        date of issuance.  The fair value of the warrants issued using the
        Black-Scholes Option Pricing Model was $21,800.  For the six months
        ended June 30, 2007, the Company recorded $908 in financing expense related
        to
        the issuance of these warrants.
 
 Interest
        expense for the convertible notes payable for the six months ended June 30,
        2007
        and 2006 was $52,504 and $23,662, respectively.
 
 **NOTE
        6 -           CONVERTIBLE
        NOTES PAYABLE – RELATED PARTIES**
 
 Convertible
        notes payable - related parties at June 30, 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 outstanding principal amount,
        and
        all accrued interest thereon, into shares of the Company’s common stock,
        determined by dividing the amount of principal and interest outstanding by
        a
        conversion price of either $0.75 or $1.00, depending on the note.
 
 At
        June
        30, 2007, accrued interest due for the convertible notes – related parties was
        $65,369 and is included in accrued expenses in the accompanying balance sheet.
        Interest expense for convertible notes payable – related parties for the six
        months ended June 30, 2007 and 2006 was $19,622 and $23,147,
        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 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.  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.  The Company 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. In May 2007, the Company repaid one of the remaining
        notes
        in the amount of $6,250.  In May and June, 2007, the Company issued
        50,000 shares at $0.03 per share and 43,750 shares at $0.022 per share of
        the
        Company’s common stock, respectively, to the remaining note holders as bonus
        extension shares.  Additionally, the Company issued 5,000 shares at
        $0.03 per share and 4,375 shares at $0.022 per share, of the Company’s common
        stock, respectively, to the placement agent for the months of May and June,
        2007.  In May and June, 2007, the Company issued 150,000 shares per
        month of the Company’s common stock at $0.03 and $0.022 per share, respectively,
        to all of the original note holders as penalty shares per the terms of the
        notes.  Additionally, the Company issued 10,000 shares per month of
        the Company’s common stock at $0.03 and $0.022 per share, respectively, to the
        placement agent for the months of May and June, 2007 relating to the bonus
        shares. All of the Company’s shares of common stock issued in connection with
        the extensions and penalty have Rule 144 piggyback registration rights. For
        the
        six months ended June 30, 2007, the Company expensed $7,535 of financing
        expenses related to the issuance of the shares relating to the note extensions.
        In July, 2007, the Company issued 31,250 shares of the Company’s common stock to
        the remaining note holders as bonus extension shares.  Additionally,
        the Company issued 3,125 shares of the Company’s common stock to the placement
        agent for the month of July 2007.  In July, 2007, the Company issued
        150,000 shares of the Company’s common stock to all of the original note holders
        as penalty shares per the terms of the notes.  Additionally, the
        Company issued 10,000 shares of the Company’s common stock to the placement
        agent for the month of July 2007 relating to the bonus shares.
    F-10
   **STRIKEFORCE
          TECHNOLOGIES, INC.**
 **NOTES
          TO THE FINANCIAL STATEMENTS**
 **FOR
          THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006**
 **(UNAUDITED)**
 
 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 valued at $0.045 per share. In March 2007, the note was repaid
        in
        full along with the lender’s fee payment. For the six months ended June 30,
        2007, the Company expensed $1,350 of financing expenses in connection with
        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.  In May 2007, the
        Company issued 2,000,000 pledge shares, per the terms of the note, of the
        Company’s common stock valued at $0.024 per share.  The pledge shares
        are being held by the note holder’s attorney.  For the six months
        ended June 30, 2007, the Company expensed $54,525 of financing expenses related
        to the issuance of the shares.  In July 2007, the note was extended to
        December 31, 2007.  In connection with the extension, the Company
        issued 50,000 restricted shares of the Company’s common stock valued at $0.04
        per share to the individual in July 2007.  In July 2007, the Company
        assigned the pending proceeds from its inclusion in the New Jersey Technology
        Business Certificate program towards repayment of this note and the July
        2007
        note executed with the same individual (see Note 16).
 
 In
        June
        2007, the Company executed a promissory note with an unrelated individual
        in the
        amount of $50,000. The note bears interest at 9% per annum with principal
        due
        December 14, 2007.  In connection with the promissory note, the
        Company issued to the individual 100,000 warrants with an exercise price
        of
        $0.05 per share.  The warrants are exercisable for a period of five
        (5) years from date of issuance.  The fair value of the warrants
        issued using the Black-Scholes Option Pricing Model was $1,800.  For
        the six months ended June 30, 2007, the Company recorded $300 in financing
        expense related to the issuance of these warrants.
 
 Interest
        expense for notes payable for the six months ended June 30, 2007 and 2006
        was
        $12,610 and $29,504, respectively.
 
 **NOTE
                  8 -**
              **NOTES
                  PAYABLE – RELATED PARTIES**
 
 Notes
        payable – related parties at June 30, 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
                  of 8%,
                  effective August 1, 2006 have been extended to August 31,
                  2007.
 ·
              Two
                  notes, aggregating $160,000 with interest at a rate equal to 8%
                  per annum
                  were extended to August 31, 2007.
 ·
              Two
                  notes, in the amount of $5,000 and $150,000 were extended to August
                  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
                  August
                  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.  The note was extended
                  to August 31, 2007.
 
 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.  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 six months ended June 30, 2007, the Company recorded
        $1,879 in notes payable discount related to the issuance of the February
        2007
        warrants.
 
 At
        June
        30, 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. The
        notes
        were extended to August 31, 2007.
 
 Interest
        expense for notes payable - related parties for the six months ended June
        30,
        2007 and 2006 was $25,925 and $18,306, respectively.
 
 **NOTE
                  9 -**
              **ACCRUED
                  EXPENSES**
 
 Accrued
        expenses consisted of the following at June 30, 2007:
 
 Interest
              
              $
              451,505Commitment
                  fees
              
              
              32,697Professional
                  fees
              
              
              153,146Other
              
              
              337,475Total
                  accrued expenses
              
              $
              974,823
 
 **NOTE
                  10 -**
              **CONVERTIBLE
                  SECURED NOTES PAYABLE**
 
 Prior
        to
        the maturity date of both convertible secured 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.  In August 2007, the Company was notified by Cornell of its
        legal name change to YA Global Investments, LP.
  
 F-11
 **STRIKEFORCE
            TECHNOLOGIES, INC.**
 **NOTES
            TO THE FINANCIAL STATEMENTS**
 **FOR
            THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006**
 **(UNAUDITED)**
   Conversions
        to Common Stock
 
 For
        the
        six months ended June 30, 2007, Cornell converted $140,500.00 of the April
        27,
        2005 debenture into 10,100,694 shares of the Company’s common stock, pursuant to
        the terms of the Securities Purchase Agreement. The conversion price ranged
        from
        $0.0096 to $0.034 per share.
 
 For
        the
        six months ended June 30, 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.
 
 Interest
        expense for convertible secured notes payable for the six months ended June
        30,
        2007 and 2006 was $47,264 and $59,325, respectively.
 
 **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
        six months ended June 30, 2007, the Company issued 15,000 shares of common
        stock, valued at $479 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 SIX MONTHS ENDED JUNE 30, 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 six months ended June 30, 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.  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 15th 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. In May 2007,
        the
        firm exercised its right to terminate the agreement.
 
 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.
 
 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 six months ended June 30, 2007, the Company
                  expensed $13,750 of consulting expenses related to this
                  agreement.
   F-13
 **STRIKEFORCE
            TECHNOLOGIES, INC.**
 **NOTES
            TO THE FINANCIAL STATEMENTS**
 **FOR
            THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006**
 **(UNAUDITED)**
 
 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.
 
 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.  For the six months ended June 30, 2007, the Company expensed
        $950 of consulting expenses related to this agreement.
 
 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 and 100,000 restricted shares
        were
        issued in January 2007 at $0.045 per share (see Note 14).  For the six
        months ended June 30, 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 as additional consideration for services rendered
        (see
        Note 14).  The shares have Rule 144 piggyback registration
        rights.  For the six months ended June 30, 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 six months ended June 30,
        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 six months
        ended June 30, 2007, the Company recorded
 $1,560
        of
        consulting expense related to the warrants (see Note 12 above).
 
 In
        May
        2007, in accordance with a consulting agreement executed with an individual
        software developer, the developer received warrants to purchase 19,500 shares
        of
        the Company’s common stock at an exercise price of $0.025 per share for 3,000
        shares, $0.035 per share for 3,000 shares, $0.045 for 6,000 shares, $0.05
        for
        3,000 shares and $0.08 per share for 4,500 shares, with a term of two years
        from
        the effective date.  For the six months ended June 30, 2007, the
        Company recorded $482 of consulting expense related to the warrants (see
        Note
        14).
 
 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.
 
 F-14
  **STRIKEFORCE
            TECHNOLOGIES, INC.**
 **NOTES
            TO THE FINANCIAL STATEMENTS**
 **FOR
            THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006**
 **(UNAUDITED)**
   In
        April
        2007, the Company issued stock options to purchase 1,551,842 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
        May
        2007, the Company issued stock options to purchase 1,648,081 shares of common
        stock to twelve employees.  The options were issued in accordance with
        the Company’s 2004 Equity Incentive Plan. The options are exercisable at $0.02
        per share and expire in May 2017.  The shares vest after a one year
        period.
 
 In
        June
        2007, the Company issued stock options to purchase 4,465,759 shares of common
        stock to twelve employees.  The options were issued in accordance with
        the Company’s 2004 Equity Incentive Plan. Options totaling 2,597,435 shares are
        exercisable at $0.015 per share and options totaling 1,868,324 shares are
        exercisable at $0.017 per share. All of the options expire in June
        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, respectively, all of
        which
        are exercisable for a period of two years from date of issuance.
 
 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.
 
 In
        May
        2007, the Company sold to one individual certain units which contained common
        stock and warrants. The Company issued 166,667 shares of common stock at
        $0.03
        per share and 200,000 warrants with an exercise price of $0.06 per share
        all of
        which are exercisable for a period of two years from the date of
        issuance.
 
 In
        June
        2007, the Company sold to three individuals certain units which contained
        common
        stock and warrants. The Company issued 526,316 shares of its common stock
        at
        $0.019 per share and 35,294 shares of its common stock at $0.017 per share.
        In
        connection with the issuance of these shares, the Company issued 631,579
        warrants with an exercise price of $0.038 per share and 42,352 warrants with
        an
        exercise price of $0.034, all of which are exercisable for a period of two
        years
        from the date of issuance.
 
 Warrants
 
 At
        June
        30, 2007, the Company issued warrants related to its convertible notes
        payable.  The warrants entitle the note holders to purchase the
        Company’s common stock at: 66,667 warrants with an exercise price of $0.55 per
        share, 400,000 warrants with an exercise price of $0.25 per share, 45,000
        warrants with an exercise price of $0.20 per share, 562,500 warrants with
        an
        exercise price of $0.16 per share,  571,429 warrants with an exercise
        price of $0.07 per share,  1,000,000 warrants with an exercise price
        of $0.04 per share and 1,200,000 warrants with an exercise price of $0.03
        per
        share.  2,838,096 warrants have an two year exercise term, 45,000
        warrants has three year  exercise term and 962,500 warrants have five
        year exercise term.
 
 At
        June
        30, 2007, the Company issued warrants 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 June 30, 2007, 31,000 warrants will expire in the year
        2013, 16,500 warrants expire in the year 2014, 21,700 warrants in the year
        2015
        and 11,300 warrants in the year 2016.
 
 F-15
  **STRIKEFORCE
            TECHNOLOGIES, INC.**
 **NOTES
            TO THE FINANCIAL STATEMENTS**
 **FOR
            THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006**
 **(UNAUDITED)**
   At
        June
        30, 2007, the Company issued warrants related to its notes
        payable.  The warrants entitle the note holder to purchase the
        Company’s common stock at $0.05 per share for 100,000 warrants with an exercise
        term of five years.
 
 At
        June
        30, 2007, the Company issued warrants 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 88,000 warrants and $0.13 per
        share for a 200,000 warrants with 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 June 30, 2007, 2,383,565 shares were available
        for
        future issuance.
 
 2004
        Equity Incentive Plan
 
 The
        number of shares authorized for issuance under the Incentive Plan was increased
        to 10,000,000 in September 2006, 15,000,000 in March 2007 and 20,000,000
        in June
        2007, by unanimous consent of the Board of Directors. Option shares totaling
        4,705,000 vest equally over a three year period beginning one-year from the
        date
        of grant and option shares totaling 12,911,435 vest over a one-year period
        from
        the date of grant.
 
 The
        table
        below summarizes the Company’s Incentive Plan stock option activity through June
        30, 2007:
   **Number of**
                **Option Shares**
              
              
              **Exercise Price Range**
                **Per Share**
              
              
              **Weighted Average**
                **Exercise Price**
              
              **Weighted**
                **Average**
                **Remaining**
                **Contractual Term**
              
              **Aggregate**
                **Intrinsic**
                **Value****(in years)**
              
              **(in thousands)**Balance,
                December 31, 2005
              
              
              1,830,000
              
              
              $
              1.00
              
              
              $
              1.0000
              
              
              
              $
              ---Granted
              
              
              4,514,553
              
              
              $
              0.0698
                  - $ 0.10
              
              
              $
              0.0920
              
              
              
              $
              ---Balance,
                December 31, 2006
              
              
              6,344,553
              
              
              $
              0.0698
                  - $ 0.10
              
              
              $
              0.3540
              
              
              
              $
              ---Granted
              
              
              11,271,882
              
              
              $
              0.015
                  - $ 0.50
              
              
              $
              0.0293
              
              
              
              $
              ---Balance,June
                30, 2007
              
              
              17,616,435
              
              
              $
              0.015
                  -  $ 1.00
              
              
              $
              0.1462
              
              
              
              $
              ---Vested
                  and Exercisable,  June 30, 2007
              
              
              6,849,459
              
              
              
              
              
              
              $
              0.1462
              
              
              
              $
              ---
 
  As
        of
        June 30, 2007, an aggregate of 17,616,435 options were outstanding under
        the
        incentive plan.  The exercise price for 1,830,000 options is $1.00,
        for 100,000 options is $0.50, 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, for 785,255 is $0.024, for 1,551,842 options is $0.023,
        for 1,648,081 options is $0.02, for 1,868,324 options is $0.017 and for
        2,597,435 options is $0.015.  As of June 30, 2006, an aggregate of
        1,830,000 options, with an exercise price of $1.00, were outstanding under
        the
        incentive plan. At June 30, 2007, there were 6,849,459 vested incentive plan
        stock options outstanding of which 216,453 options are exercisable at $0.015,
        155,694 options are exercisable at $0.017, 274,680 options are exercisable
        at
        $0.02, 387,961 options are exercisable at $0.023, 392,627 options are
        exercisable at $0.024, 459,488 options are exercisable at $0.0375, 279,059
        options are exercisable at $0.045, 621,926 options are exercisable at $0.05,
        411,430 options are exercisable at $0.0698, 410,257 options are exercisable
        at
        $0.07, 337,860 options are exercisable at $0.085, 290,080 options are
        exercisable at $0.099, 883,333 options are exercisable at $0.10, 8,333 options
        are exercisable at $0.50 and 1,720,278 options are exercisable at
        $1.00.
 
 As
        of
        June 30, 2007, there was $409,569 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.
 
 F-16
  **STRIKEFORCE
            TECHNOLOGIES, INC.**
 **NOTES
            TO THE FINANCIAL STATEMENTS**
 **FOR
            THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006**
 **(UNAUDITED)**
     The
        following table summarizes information concerning outstanding and exercisable
        Incentive Plan options as of June 30, 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
              
              
              
              1,720,278
              
              
              $
              1.0000$
              0.0698
                  - $0.50
              
              
              
              4,614,553
              
              
              
              9.00
              
              
              
              0.1008
              
              
              
              2,341,293
              
              
              
              0.1008$
              0.0150 -
                  $0.05
              
              
              
              11,171,882
              
              
              
              10.00
              
              
              
              0.0251
              
              
              
              2,787,888
              
              
              
              0.025117,616,435
              
              
              
              8.67
              
              
              $
              0.1462
              
              
              
              6,849,459
              
              
              $
              0.1462
 
 Non-Incentive
        Plan Stock Option Grants
 
 Since
        December 31, 2005, the Company has outstanding an aggregate of 7,618,889
        non-plan, non-qualified options for non-employees with 7,600,000 exercisable
        at
        $0.36 and 18,889 exercisable at $0.90 yielding a weighted average exercise
        price
        of $0.361 and no outstanding incentive options outside of the Plan.
 
 **NOTE
        14  -       COMMITMENTS AND
        CONTINGENCIES**
 
 Payroll
        Taxes
 
 As
        of
        June 30, 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.
 
 Consulting
        Agreements
 
 In
        January 2007, the Company executed an amendment to a consulting
        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 June 30, 2007,
        the fair value of the warrants issued using the Black-Scholes Option Pricing
        Model of $6,375 was included in consulting expense.
 
 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. In May 2007, in
        accordance with the agreement, the developer received warrants to purchase
        19,500 shares of the Company’s common stock at an exercise price of $0.025 per
        share for 3,000 shares, $0.035 per share for 3,000 shares, $0.045 for 6,000
        shares, $0.05 for 3,000 shares and $0.08 per share for 4,500
        shares.  The warrants are exercisable for a period of two years from
        issuance.  For the six months ended June 30, 2007, the Company
        recorded $482 of consulting expense related to the warrants.
 
 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).
 
 F-17
 **STRIKEFORCE
            TECHNOLOGIES, INC.**
 **NOTES
            TO THE FINANCIAL STATEMENTS**
 **FOR
            THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006**
 **(UNAUDITED)**
   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. The notes were executed in February 2007 and the closing
        and transfer of funds occurred in March 2007 (see Notes 5 and 12).
 
 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.
 
 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.
 
 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*
 
 Five
        customers accounted for 33.7%, 16.6%, 13.9%, 10.3% and 10.1% of net sales
        for
        the six months ended June 30, 2007 and one customer accounted for 89.5% of
        the
        total accounts receivable as of June 30, 2007.  Four customers
        accounted for 44.6%, 18.0%, 11.1% and 9.0% of net sales for the six months
        ended
        June 30, 2006 and three customers accounted for 56.8%, 23.1% and 14.2% of
        the
        total accounts receivable as of June 30, 2006.
 
 
 **NOTE
        16 -         SUBSEQUENT
        EVENTS**
 
 Conversions
        to Common Stock
 
 In
        July
        2007, Cornell converted $73,500.00 of the April 27, 2005 debenture into
        5,825,368 shares of the Company’s common stock, pursuant to the terms of the
        Securities Purchase Agreement. The conversion price ranged from $0.0112 to
        $0.016 per share.
   F-18
 **STRIKEFORCE
            TECHNOLOGIES, INC.**
 **NOTES
            TO THE FINANCIAL STATEMENTS**
 **FOR
            THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006**
 **(UNAUDITED)**
  
 In
        August
        2007, Cornell converted $45,000.00 of the April 27, 2005 debenture into
        2,556,818 shares of the Company’s common stock, pursuant to the terms of the
        Securities Purchase Agreement. The conversion price was $0.0176 per
        share.
 
 Convertible
        Notes Payable
 
 In
        July
        2007, the Company executed an 8% 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
        the market value of the Company’s common stock at $0.02 per share.  If
        not converted, the entire principal amount and all accrued interest shall
        be due
        to the holder on July 2, 2009.  In connection with the convertible
        promissory note payable, the Company issued to the individual 1,000,000 warrants
        with an exercise price of $0.04 per share.  The warrants are
        exercisable for a period of two years from date of issuance.
 
 Notes
        Payable
 
 In
        July
        2007, the Company executed a promissory note with an unrelated individual
        in the
        amount of $100,000. The note bears interest at 18% per annum with principal
        due
        December 31, 2007.The Company has
        assigned the pending proceeds from its inclusion in the New Jersey Technology
        Business Certificate program towards repayment of this note and the February
        2007 note executed with the same individual (see Note 7).  The Company
        issued 2,000,000 shares of its common stock, issued in May 2007, to serve
        as
        collateral to the February 2007 note and this note.  In connection
        with the promissory note, the Company issued 300,000 restricted shares of
        common
        stock to the individual valued at $0.04 per share.
 
 Term
        Sheet with Investment Firm
 
 In
        July
        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 $5,000,000 with a term of 24 months
        from
        the date of the term sheet.  In connection with the term sheet, the
        Company paid a due diligence fee to the firm in the amount of
        $75,000.  Upon closing of funds, the Company will owe a 5% closing
        fee, a $150,000 success fee, a collateral management fee of $3,000 per month
        and
        7,000,000 warrants at $0.01 per share.
 
 Issuance
        of Options for Employment Services
 
 In
        July
        2007, the Company issued stock options to purchase 779,234 shares of common
        stock to twelve employees.  The options were issued in accordance with
        the Company’s 2004 Equity Incentive Plan. The options are exercisable at $0.05
        per share and expire in July 2017.  The shares vest after a one year
        period.
 
 Sales
        of Common Stock
 
 In
        July
        2007, the Company sold to two individuals 31,250 shares of common stock,
        at
        $0.04 per share.




F-19





**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/A 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 have had
      increasing 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.






3





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 six months ended June 30, 2006, we generated $69,837 of our 2006 revenues
      from the sales of our security products and for the six months ended June 30,
      2007 we generated all of our 2007 revenues of $553,332 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 to 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 continue
      to
      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 filed on April 18, 2007.





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, product
      reviews and 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 or Plan of Operations are based upon our financial
      statements, which have been prepared in accordance with accounting principles
      generally accepted in the United States of America. 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.





**Results
      of Operations**





**THREE
      MONTHS ENDED JUNE 30, 2007 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
      2006**





Revenues
      for the three months ended June 30, 2007 were $54,932 compared to $127,750
      for
      the three months ended June 30, 2006, a decrease of $72,818 or 57%. The decrease
      in revenues was primarily due to the change in the Company’s sales focus from
      the resale of biometric technology to our own suite of security software
      products.





Revenues
      generated consisted of hardware sales, software sales, revenue from sign on
      fees
      and transaction revenues. Hardware sales for the three months ended June 30,
      2007 were $8,333 compared to $72,503 for the three months ended June 30, 2006,
      a
      decrease of $64,170. The decrease in hardware revenues was primarily due to
      the
      change in the Company’s sales focus from the resale of biometric technology to
      our own suite of security software products.  Software sales for the
      three months ended June 30, 2007 were $30,406 compared to $14,475 for the three
      months ended June 30, 2006, an increase of $15,931. The resultant increase
      in
      software revenues was primarily due to an increase in the sales of our
      technology platform, ProtectIDTM. Sign on fees for our ASP transaction model
      amounted to $0 for the three months ended June 30, 2007 compared to $4,000
      for
      the three months ended June 30, 2006, a decrease of $4,000. The decrease was
      due
      to the lack of signing up new clients for the hosted service, as the Company
      focused its attention on its new product, GuardedID®. Transaction revenues from
      the ASP hosting model and the implementation of new technology projects were
      $16,193 for the three months ended June 30, 2007 and $36,772 for the three
      months ended June 30, 2006, a decrease of $20,579. The decrease was due
      primarily to the timing of several technology projects that were completed
      in
      the second quarter of 2006.




4





Cost
      of
      revenues for the three months ended June 30, 2007 was $3,598 compared to $14,531
      for the three months ended June 30, 2006, a decrease of $10,933, or 75.2%.
      The
      decrease resulted primarily from a reduction in purchases resulting from the
      change in the Company’s sales focus from the resale of biometric technology to
      our own suite of security software products.





Gross
      profit for the three months ended June 30, 2007 was $51,334 compared to $113,219
      for the three months ended June 30, 2006, a decrease of $61,885, or 54.7%.
      The
      decrease was primarily due to the change in the Company’s sales focus from
      biometric technology to our own suite of security products and
      software.  Gross profit as a percentage of sales increased from 88.6%
      to 93.5% due to the increase in the sales of our own software products which
      entail a higher gross margin and the decrease in our resale of biometric
      hardware technology which has a lower gross margin.





Research
      and development expenses for the three months ended June 30, 2007 were $92,962
      compared to $60,380 for the three months ended June 30, 2006, an increase of
      $32,582, or 35%. The increase is primarily attributable to the increase in
      resources relating to the latest version of our GuardedID® keyboard encryption
& anti-keylogger technology. 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 June 30, 2007
      were $548,954 compared to $974,850 for the three months ended June 30, 2006,
      a
      decrease of $425,896 or 43.7%.  The net decrease was due primarily to
      decreases in our staffing, promotion and marketing and professional fees which
      occurred in the second quarter of 2007. Selling, general and administrative
      expenses 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 and stock options
      to non-employees and other general corporate expenses.





Other
      expense (income) for the three months ended June 30, 2007 was $748,240 as
      compared to $(143,528) for the three months ended June 30, 2006, representing
      an
      increase in other expenses of $891,768, or 621%. The increase was primarily
      due
      to interest charges for notes payable of $24,100 and net, mark to market changes
      of $721,456 in the fair value of derivative financial instruments relating
      to
      the convertible secured promissory notes.





Derivative
      expense (gain) represents the change in the fair value of the net derivative
      liability at quarter end, using a layered discounted probability-weighted cash
      flow approach. Interest expense derivatives represent the amortization of
      discount on the initial valuation of the derivatives, or the amortization of
      the
      change after any modification of debt. The change represents the amortization
      for both the Cornell and Highgate debentures.





Our
      net
      loss for the three months ended June, 30, 2007 was $1,338,822 compared to a
      net
      loss of $778,483 for the three months ended June 30, 2006, an increase of
      $560,339, or 72%. The increase was primarily due to an increase in net mark
      to
      market changes in the fair value of derivative instruments relating to the
      convertible promissory notes.





**SIX
      MONTHS ENDED JUNE 30, 2007 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
      2006**





Revenues
      for the six months ended June 30, 2007 were $553,332 compared to $142,339 for
      the six months ended June 30, 2006, an increase of $410,993 or 289%. The
      increase in revenues was primarily due to the sales of our newly developed
      GuardedID® keyboard encryption and anti-keylogger technology.





Revenues
      generated consisted of hardware sales, software sales, revenue from sign on
      fees
      and transaction revenues. Hardware sales for the six months ended June 30,
      2007
      were $8,333 compared to $72,503 for the six months ended June 30, 2006, a
      decrease of $64,170. The resultant decrease in hardware revenues was primarily
      due to the change in the Company’s sales focus from biometric technology to our
      own suite of security products and software. Software sales for the six months
      ended June 30, 2007 were $500,606 compared to $14,475 for the six months ended
      June 30, 2006, an increase of $486,131. The resultant increase in software
      revenues was primarily due to the sales of our unique “Out-of-Band” GuardedID®
keystroke encryption and anti-keylogger product. Sign on fees for our ASP
      transaction model amounted to $0 for the six months ended June 30, 2007 compared
      to $4,000 for the six months ended June 30, 2006, a decrease of $4,000. The
      decrease was due to the lack of signing up new eCommerce clients as the Company
      focused its attention on its new product, GuardedID®. Transaction revenues from
      the ASP hosting model were $44,393 for the six months ended June 30, 2007 and
      $51,361 for the six months ended June 30, 2006, a decrease of $6,968. The
      decrease was due primarily to the timing of several technology projects that
      were completed in the second quarter of 2006 and lower volumes from our
      eCommerce clients.





Cost
      of
      revenues for the six months ended June 30, 2007 was $18,553 compared to $16,538
      for the six months ended June 30, 2006, an increase of $2,015, or 12.2%.
      The increase was primarily due to the processing fees incurred as a result
      of the increase in transactions relating to our ASP hosting
      service.






5




Gross
      profit for the six months ended June 30, 2007 was $534,779 compared to $125,801
      for the six months ended June 30, 2006, an increase of $408,978, or 325%. The
      increase in gross profit was primarily due to the sales of our GuardedID®
keyboard encryption and anti-keylogger technology. Gross profit as a percentage
      of sales increased to 96.7% from 88.4% due to the increase in the sales of
      our
      own software products which entail a higher gross margin and the decrease in
      our
      resale of biometric hardware technology which has a lower gross
      margin.




Research
      and development expenses for
      the six months ended June 30, 2007 were $181,502 compared to $164,975 for the
      six months ended June 30, 2006, an increase of $16,527, or 10%. The increase
      is
      primarily attributable to the increase in resources relating to the latest
      release version of our GuardedID® keyboard encryption and anti-keylogger
      technology.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 six months ended June 30, 2007
      were
      $1,102,486 compared to $2,214,613 for the six months ended June 30, 2006, a
      decrease of $1,112,127 or 50.2%. The net decrease was due primarily to decreases
      in our staffing, promotion and marketing and professional fees which occurred
      in
      the second quarter of 2007. Selling, general and administrative expenses 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.





Other
      expense for the six months ended June 30, 2007 was $1,094,025 as compared to
      $7,000 for the six months ended June 30, 2006, representing an increase in
      other
      expenses of $1,087,025, or 15,529%. The increase was primarily due to interest
      charges for notes payable of $350,463 and net, mark to market changes of
      $737,973 in the fair value of derivative financial instruments relating to
      the
      convertible secured promissory notes.





Our
      net
      loss for the six months ended June 30, 2007 was $1,843,234 compared to a net
      loss of $2,260,787 for the six months ended June 30, 2006, a decrease of
      $417,553, or 18.5%. The 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 June 30, 2007 were $658,638, including $25,553 in cash as
      compared with $543,724 in total current assets at the six months ended June
      30,
      2006, which included cash of $9,538. Additionally, we had a stockholders’
deficiency in the amount of $4,391,126 at June 30, 2007 as compared to a
      stockholders’ deficiency of $3,005,897 at June 30, 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 recurring 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
      $1,001,431, which will only be realized on the conversion of the derivatives,
      or
      settlement of the debentures.






6





We
      financed our operations during the six months ended June 30, 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 23,592,081 shares at the
      period ended June 30, 2006 to 46,827,284 at the period ended June 30, 2007,
      an
      increase of 98.5%.





We
      do not
      expect to resell a significant amount of biometric iris equipment over the
      next
      twelve months as we concentrate more on our core authentication and keyboard
      encryption and anti-keylogger software products.





We
      have
      historically incurred losses and we anticipate that we will not generate any
      significant revenues until the fourth quarter of 2007. Our operations presently
      require funding of approximately $135,000 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
      June
      30, 2007, $884,376 in aggregate principal amount of the Cornell debentures
      was
      issued and outstanding.





At
      June
      30, 2007, $244,720.36 in aggregate principal amount of the Highgate debentures
      remained outstanding.





Prior
      to
      the maturity date of both convertible secured 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.  In August 2007, the Company was notified by Cornell of its
      legal name change to YA Global Investments, LP.





During
      the period ended June 30, 2007, the Company sold units for an aggregate total
      of
      $69,292 to twelve individuals which contained common stock and warrants. The
      issuance is exempt from registration under the Securities Act of 1933. The
      individuals purchased a total of 2,273,154 shares of common stock from the
      Company at prices ranging from $0.017 to $0.05 per share and six of the
      individuals received an aggregate of 1,055,898 warrants with exercise prices
      ranging from $0.034 to $0.096 per share which are exercisable for a period
      of
      two years from issuance.





Additionally,
      the Company issued unsecured convertible notes during the six month period
      ended
      June 30, 2007 in an aggregate total of $415,000 to eleven unrelated parties.
      Additionally, during the period ended June 30, 2007, the Company repaid a total
      of $6,000 of unsecured notes to one unrelated party.





The
      Company issued unsecured notes during the six month period ended June 30, 2007
      in an aggregate total of $150,000 to three unrelated parties. Additionally,
      during the period ended June 30, 2007, the Company repaid a total of $156,250
      of
      unsecured notes to seven unrelated parties. In accordance with the terms of
      six
      of the notes the Company is issuing restricted common shares as bonus extension
      shares and penalty shares on a monthly basis to the note holders.





The
      Company issued unsecured notes during the six month period ended June 30, 2007
      in an aggregate total of $22,000 to one related party.





*Summary
      of Funded Debt*





As
      of
      June 30, 2007 the Company’s open unsecured promissory note balance was $243,750,
      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 $0.22 per share or 90%
      of
      VWAP thirty day average prior to the date of conversion)


o
      $43,750 to four unrelated individuals
      through investment firm placement


o
      $50,000 to one unrelated
      individual


o
      $50,000
      to one unrelated individual





As
      of
      June 30, 2007 the Company’s open unsecured related party promissory note
      balances were $651,000, listed as follows:









7


o
      $626,000 to our CEO


o
      $25,000 to our President





As
      of
      June 30, 2007 the Company’s open convertible secured note balances were
      $1,129,096, listed as follows:





o
      $884,376 to Cornell (04/05 amended
      secured debenture)


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





As
      of
      June 30, 2007 the Company’s open convertible note balances were $1,287,127, net
      of discount on convertible notes of $114,873, listed as follows:





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


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


o
      $27,000 to an unrelated company
      (06/05 unsecured debenture) – current portion


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


o
      $25,000
      to an unrelated individual (04/07 unsecured debenture) – current
      portion


o
      $100,000 to an unrelated individual (05/07 unsecured debenture)


o
      $15,000
      to an unrelated individual (06/07 unsecured debenture)


o
      $100,000 to an unrelated individual (06/07 unsecured debentures)





As
      of
      June 30, 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 convertible secured 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 fourth quarter of 2007.






8





Except
      for the limitations imposed upon us respective to the convertible secured
      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 $1,843,234 for the six
      months ended June 30, 2007, compared to a net operating loss of $2,260,787
      for
      the six months ended June 30, 2006. At June 30, 2007, the Company's accumulated
      deficit was $14,221,282, its working capital deficiency was $4,954,629 and
      approximately 83% of its assets consist of deferred royalties. Additionally,
      for
      the six months ended June 30, 2007, we had negative cash flows from operating
      activities of $467,236. 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 gross
      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 allowing
      us 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 accounting principles generally accepted in the United States
      of
      America (“US 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 based on 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 US GAAP to adjust those 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).





It
      is our
      practice to establish reserves or allowances to record 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. 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.








9





In
      making
      our estimates and assumptions, we follow US GAAP 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.





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.






10





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.





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.






11




**Revenue
      Recognition**




The
      Company considers revenue realized or realizable and earned when it has
      persuasive evidence of an arrangement that the product has been shipped or
      the
      services have been rendered to the customer, the sales price is fixed or
      determinable, and collectibility is reasonably assured. In addition to the
      aforementioned general policy, the following are the specific revenue
      recognition policies for each major category of revenue:





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.





**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, the transactions are valued using the price of the shares on
      the
      date they are issued or 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 or our employees, 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:







12


-
      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.





**Recent
      Accounting Pronouncements**





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.





The
      Company does not believe that any other 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.






13





(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.





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 was for ninety days. The Company and the firm executed a new agreement
      in April 2007.





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.





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,
      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.





14


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, 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, 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 July 2007, the
      note was extended to December 31, 2007.  In connection with the
      extension, the Company issued 50,000 restricted shares of the Company’s common
      stock valued at $0.04 per share to the individual.  In July 2007, the
      Company assigned the pending proceeds from its inclusion in the New Jersey
      Technology Business Certificate program towards repayment of this note and
      the
      July 2007 note executed with the same individual.





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
      June 2007, the note was extended to August 31, 2007.





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
      $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
      $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.





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.





15


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, 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, the Company issued to the individual an
      aggregate of 150,000 shares of the Company’s common stock, valued at $0.039 per
      share.  In June 2007, the maturity date of the note was extended to
      September 30, 2007 and the Company issued to the individual an additional
      150,000 shares of the Company’s common stock, valued at $0.022 per share.
      Additionally, the individual converted the interest owed on the note through
      June 30, 2007 of $3,513.70 into 159,714 shares of the Company’s common stock,
      valued at $0.022 per share. The shares 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.





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
      April
      2007, the Company issued 50,000 shares of the Company’s common stock at $0.035
      per share to the five remaining note holders relating to promissory notes
      executed in July 2006, as bonus extension shares.  In connection with
      the issuance of these shares, the Company issued 5,000 shares of the Company’s
      common stock at $0.035 per share to the placement agent.





In
      April
      2007, Cornell converted $40,000.00 of the April 27, 2005 debenture into shares
      of the Company’s common stock, of which $20,000 was converted to 1,136,364
      shares of the Company’s common stock at $0.0176 per share on April 17, 2007 and
      $20,000 was converted to 1,315,789 shares of the Company’s common stock at
      $0.0152 per share on April 26, 2007, pursuant to the terms of the Securities
      Purchase Agreement.





16


In
      April
      2007, the Company issued stock options to purchase 1,551,842 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
      April
      2007, in relation to a retainer agreement executed with an attorney in August
      2005, the Company issued 2,500 shares of the Company’s common stock valued at
      $0.025 per share.





In
      May
      2007, the Company issued 50,000 shares of the Company’s common stock at $0.03
      per share to the five remaining note holders relating to promissory notes
      executed in July 2006, as bonus extension shares.  In connection with
      the issuance of these shares, the Company issued 5,000 shares of the Company’s
      common stock at $0.03 per share to the placement agent.





In
      May
      2007, the Company issued 150,000 shares of the Company’s common stock at $0.03
      per share to six note holders relating to promissory notes executed in July
      2006, as penalty shares.  In connection with the issuance of these
      shares, the Company issued 10,000 shares of the Company’s common stock at $0.03
      per share to the placement agent.





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 at $0.0135 per share on May 14,
      2007, pursuant to the terms of the Securities Purchase Agreement.





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. In accordance with the
      agreement, the developer received warrants to purchase 19,500 shares of the
      Company’s common stock at an exercise price of $0.025 per share for 3,000
      shares, $0.035 per share for 3,000 shares, $0.045 for 6,000 shares, $0.05 for
      3,000 shares and $0.08 per share for 4,500 shares. The warrants are exercisable
      for a period of two years from date of issuance.





In
      May
      2007, in connection with a retainer agreement executed with an attorney in
      August 2005, the Company issued 2,500 shares of the Company’s common stock
      valued at $0.018 per share.





In
      May
      2007, the Company issued stock options to purchase 1,648,081 shares of common
      stock to twelve employees.  The options were issued in accordance with
      the Company’s 2004 Equity Incentive Plan. The options are exercisable at $0.02
      per share and expire in May 2017.  The shares vest after a one year
      period.





17


In
      May
      2007, the Company sold to one individual certain units which contained common
      stock and warrants. The Company issued 166,667 shares of common stock at $0.03
      per share and 200,000 warrants with an exercise price of $0.06 per share all
      of
      which are exercisable for a period of two years from the date of
      issuance.





In
      June
      2007, the Company executed a 9% convertible promissory note in the amount of
      $15,000 with an individual.  The holder is entitled, to convert the
      debenture, plus accrued interest, into shares of the Company’s common stock at
      $0.015 per share.  If not converted, the entire principal amount and
      all accrued interest shall be due to the holder on June 21, 2009.  In
      connection with the convertible promissory note payable, the Company issued
      to
      the individual 1,200,000 warrants with an exercise price of $0.03 per
      share.  The warrants are exercisable for a period of two years from
      date of issuance.





In
      June
      2007, the Company executed two 8% convertible promissory notes in the amounts
      of
      $50,000 each 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 a price of $0.02 per
      share.  If not converted, the entire principal amount and all accrued
      interest shall be due to the holder on June 29, 2009.  In connection
      with the convertible promissory note payable, the Company issued to the
      individual 1,000,000 warrants with an exercise price of $0.04 per
      share.  The warrants are exercisable for a period of two years from
      date of issuance.





In
      June
      2007, the Company executed a promissory note with an unrelated individual in
      the
      amount of $50,000. The note bears interest at 9% per annum with principal due
      December 14, 2007.  In connection with the promissory note payable,
      the Company issued to the individual 100,000 warrants with an exercise price
      of
      $0.05 per share.  The warrants are exercisable for a period of five
      years from date of issuance.





In
      June
      2007, the Company issued 43,750 shares of the Company’s common stock at $0.022
      per share to the four remaining note holders relating to promissory notes
      executed in July 2006, as bonus extension shares.  In connection with
      the issuance of these shares, the Company issued 5,000 shares of the Company’s
      common stock at $0.022 per share to the placement agent.





In
      June
      2007, the Company issued 150,000 shares of the Company’s common stock at $0.022
      per share to six note holders relating to promissory notes executed in July
      2006, as penalty shares.  In connection with the issuance of these
      shares, the Company issued 10,000 shares of the Company’s common stock at $0.022
      per share to the placement agent.





In
      June
      2007, Cornell converted $45,500.00 of the April 27, 2005 debenture into shares
      of the Company’s common stock, of which $17,000 was converted to 1,370,968
      shares of the Company’s common stock at $0.0124 per share on June 6, 2007,
      $14,000 was converted to 1,458,333 shares of the Company’s common stock at
      $0.0096 per share on June 15, 2007 and $14,500 was converted to 1,510,417 shares
      of the Company’s common stock at $0.0096 per share on June 20, 2007, pursuant to
      the terms of the Securities Purchase Agreement.





In
      June
      2007, in connection with a retainer agreement executed with an attorney in
      August 2005, the Company issued 2,500 shares of the Company’s common stock
      valued at $0.016 per share.





In
      June
      2007, the Company issued stock options to purchase 4,465,759 shares of common
      stock to twelve employees.  The options were issued in accordance with
      the Company’s 2004 Equity Incentive Plan. Options totaling 2,597,435 shares are
      exercisable at $0.015 per share and options totaling 1,868,324 shares are
      exercisable at $0.017 per share. All of the options expire in June
      2017.  The shares vest after a one year period.





In
      June
      2007, the Company sold to three individuals certain units which contained common
      stock and warrants. The Company issued 561,610 shares of common stock, of which
      526,316 shares at $0.019 per share and 35,294 shares at $0.017 per
      share.  In connection with the issuance of these shares, the Company
      issued 673,931 warrants, of which 631,931 warrants with an exercise price of
      $0.038 per share and 42,352 warrants with an exercise price of $0.034. These
      warrants are exercisable for a period of two years from the date of
      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.






18




**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.






19





**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)10.24
            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.









20








**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:
                August 14,
                2007*
            *By:
                /s/ Mark L. Kay**Mark
                L. Kay**Chief
                Executive Officer**Dated:
                August 14,
                2007*
            *By:
                /s/ Mark Joseph Corrao**Mark
                Joseph Corrao**Chief
                Financial Officer and Principal Accounting Officer*








21