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 SEPTEMBER 30, 2005

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

                         FOR THE TRANSITION PERIOD FROM __________ TO __________
                         COMMISSION FILE NUMBER ________________________________


                         STRIKEFORCE TECHNOLOGIES, INC.
                 (Name of small business issuer in its charter)

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


                     1090 King Georges Post Road, Suite 108
                                Edison, NJ 08837
                    (Address of principal executive offices)

                    Issuer's telephone Number: (732) 661-9641

                                 WITH COPIES TO:

                            Richard A. Friedman, Esq.
                       Sichenzia Ross Friedman Ference LLP
                           1065 Avenue of the Americas
                            New York, New York 10018
                                 (212) 930-9700
                               Fax: (212) 930-9725

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing  requirements for the past 90 days. Yes [ ] No [
X ]

                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 [ ]

     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 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 November 17, 2005, the
issuer had 18,032,525 outstanding shares of Common Stock.

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


<PAGE>
                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                       Page
                         PART I - FINANCIAL INFORMATION

<S>                                                                                    <C>
Item 1.       Financial Statements
                      Consolidated Balance Sheets...............................        1
                      Consolidated Statement of Operations......................        2
                      Consolidated Statements of Cash Flows.....................        3
                      Notes to Consolidated Financial Statements................        7

Item 2.       Management's Discussion and Analysis or Plan of Operation.........       32

Item 3.       Controls and Procedures...........................................       42

                           PART II - OTHER INFORMATION

Item 1.       Legal Proceedings.................................................       42

Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds.......       43

Item 3.       Defaults Upon Senior Securities...................................       43

Item 4.       Submission of Matters to a Vote of Security Holders...............       43

Item 5.       Other Information.................................................       43

Item 6.       Exhibits .........................................................       43

SIGNATURES......................................................................       45
</TABLE>


<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.



                         STRIKEFORCE TECHNOLOGIES, INC.

                              FINANCIAL STATEMENTS

              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004

                                   (UNAUDITED)




<PAGE>



                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)

<TABLE>
<CAPTION>


                                                                                                 Page Number

<S>                                                                                                 <C>
Financial Statements

Balance sheet at September 30, 2005 and December 31, 2004 (Audited)                                   2

Statement of operations for the three and nine months ended September 30, 2005 and 2004               3

Statement of stockholders' equity for the nine months ended
   September 30, 2005                                                                                 4

Statement of cash flows for the nine months ended September 30, 2005 and 2004                         5

Notes to financial statements                                                                       6 - 31

</TABLE>
<PAGE>
                        STRIKEFORCE TECHNOLOGIES, INC.
                                 BALANCE SHEET
<TABLE>
<CAPTION>

                                     ASSETS
                                                                              September 30,             December 31,
                                                                                 2005                       2004
                                                                             (Unaudited)                 (Audited)
                                                                         ----------------------   ----------------------
<S>                                                                      <C>                      <C>
Current Assets:
   Cash and cash equivalents                                             $               17,708   $              103,745
   Accounts receivable, net                                                              11,511                   12,698
   Prepaid expenses                                                                     604,359                  574,839
                                                                         ----------------------   ----------------------
     Total current assets                                                               633,578                  691,282

Property and equipment, net                                                              44,803                   33,706
Long-term portion of deferred royalties                                               3,272,250                2,798,792
Intangible assets, net                                                                   10,495                   13,852
Security deposit                                                                          8,684                    8,684
                                                                         ----------------------   ----------------------
Total Assets                                                             $            3,969,810   $            3,546,316
                                                                         ======================   ======================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
   Convertible notes payable                                             $              158,000   $              500,000
   Convertible notes payable - related parties                                          407,500                  247,500
   Notes payable - related parties                                                      191,200                  203,700
   Capital leases payable                                                                24,662                   23,046
   Accounts payable                                                                     199,349                  121,731
   Accrued expenses                                                                     153,183                  134,057
   Payroll taxes payable                                                                 45,513                   52,930
   Due to related party                                                                  17,500                        -
   Due to employees                                                                       7,594                    3,993
                                                                         ----------------------   ----------------------
     Total current liabilities                                                        1,204,501                1,286,957

Secured convertible notes payable                                                     1,409,329                        -
Convertible notes payable                                                               385,000                        -
Long-term portion of capital leases payable                                              32,700                   50,780
                                                                         ----------------------   ----------------------
     Total Liabilities                                                                3,031,530                1,337,737
                                                                         ----------------------   ----------------------

Commitments and contingencies

Stockholders' Equity
   Preferred stock, par value $0.10 - 10,000,000 shares authorized,
    -0- issued and outstanding                                                                -                        -
   Common stock, par value $0.0001 - 100,000,000 shares
    authorized, 17,657,190 issued and outstanding                                         1,766                    1,716
   Additional paid-in capital                                                         8,024,367                6,290,961
   Accumulated deficit                                                               (7,087,853)              (4,004,237)
                                                                         ----------------------   ----------------------
     Total Stockholders' Equity                                                         938,280                2,288,440
                                                                         ----------------------   ----------------------
Total Liabilities and Stockholders' Equity                               $            3,969,810   $            3,626,177
                                                                         ======================   ======================
</TABLE>
                     See notes to the financial statements.

                                       2
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                            STATEMENT OF OPERATIONS
           FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
                                  (UNAUDITED)
<TABLE>
<CAPTION>
                                                                For the three months                      For the nine months
                                                                 ended September 30,                      ended September 30,
                                                              2005                2004                 2005                 2004
                                                      ------------------   -----------------   ------------------  -----------------
<S>                                                   <C>                  <C>                 <C>                 <C>
Revenues                                              $          14,620    $         27,528    $          26,373   $         55,621

Cost of sales                                                     4,169               7,820                8,425              7,820
                                                      ------------------   -----------------   ------------------  -----------------

Gross profit                                                     10,451              19,708               17,948             47,801
                                                      ------------------   -----------------   ------------------  -----------------

Operating expenses:
Selling, general and administrative expenses                    747,581             608,183            2,594,837          2,104,110
Research and development                                         89,303              60,436              263,767            132,747
                                                      ------------------   -----------------   ------------------  -----------------
Total operating expenses                                        836,884             668,619            2,858,604          2,236,857
                                                      ------------------   -----------------   ------------------  -----------------

Loss from operations before other expense                      (826,433)           (648,911)          (2,840,656)        (2,189,056)
                                                      ------------------   -----------------   ------------------  -----------------

Other expense:
Interest and financing expense                                   90,746               4,640              242,960             34,274
                                                      ------------------   -----------------   ------------------  -----------------
Total other expense                                              90,746               4,640              242,960             34,274
                                                      ------------------   -----------------   ------------------  -----------------

Net loss                                              $        (917,179)   $       (653,551)   $      (3,083,616)  $     (2,223,330)
                                                      ==================   =================   ==================  =================

Basic and diluted loss per common share               $           (0.05)   $          (0.04)   $           (0.18)  $          (0.15)
                                                      ==================   =================   ==================  =================

Weighted average number of common shares outstanding         17,547,605          16,098,152           17,400,272         14,884,374
                                                      ==================   =================   ==================  =================
</TABLE>
                     See notes to the financial statements.

                                       3
<PAGE>
                          STRIKEFORCE TECHNOLOGIES, INC.
                       STATEMENT OF STOCKHOLDERS' EQUITY
                     FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005
                                  (UNAUDITED)
<TABLE>
<CAPTION>


                                                   Common Stock         Additional                    Total
                                               ----------------------    Paid-in    Accumulated   Stockholders'
                                      Date        Shares      Amount     Capital      Deficit       Equity
                                    -------    ----------    --------  -----------  ------------  --------------
<S>                                            <C>           <C>       <C>          <C>           <C>
Balance at December 31, 2004                   17,160,313    $  1,716  $ 6,290,961  $ (4,004,237) $    2,288,440

Sale of shares for cash              Jan-05        95,209          10       68,540             -          68,550

Beneficial conversion value
of secured debenture                 Jan-05             -           -      125,000             -         125,000

Issuance of shares for
consulting services                  Mar-05        33,333           3       29,997             -          30,001

Revaluation of stock
options granted for
future royalties                     Mar-05             -           -      954,175             -         954,175

Shares issued for
financing expense
related to secured debentures        Apr-05       150,000          15      134,985             -         135,000

Beneficial conversion value
of secured debenture                 Apr-05             -           -       93,750             -          93,750

Beneficial conversion value
of secured debenture                 May-05             -           -       93,750             -          93,750

Net effect of beneficial
conversion value of
consolidation and newly
issued secured debenture             Jun-05             -           -       37,469             -          37,469

Revaluation of stock options
granted for future royalties         Jun-05             -           -      (34,476)            -         (34,476)

Issuance of shares for
consulting services                  Jul-05       100,000          10       89,990             -          90,000

Issuance of stock options
for recruiting fees                  Jul-05             -           -        4,160             -           4,160

Sale of shares for cash              Aug-05        51,112           5       45,995             -          46,000

Sale of shares for cash              Sep-05        67,223           7       60,493             -          60,500

Issuance of warrants in
connection with convertible notes    Sep-05             -           -        3,959             -           3,959

Revaluation of stock options
granted for future royalties         Sep-05             -           -       25,619             -          25,619

Net loss                                                -           -            -    (3,083,616)     (3,083,616)
                                    -------     ----------    --------  -----------  ------------  --------------

Balance at September 30, 2005                   17,657,190    $ 1,766  $ 8,024,367  $ (7,087,853) $      938,280
                                                ==========    ========  ===========  ============  ==============
</TABLE>
                     See notes to the financial statements.

                                       4
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC
                            STATEMENT OF CASH FLOWS
                 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
                                  (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                        2005                        2004
                                                                                --------------------        --------------------
<S>                                                                             <C>                         <C>
Cash flows from operating activities:
Net loss                                                                        $         (3,083,616)       $         (2,223,330)
Adjustments to reconcile net loss to net
  cash provided by operating activities:
    Depreciation and amortization                                                             19,983                      14,532
    Amortization of deferred financing costs                                                 105,950                           -
    Professional fees through issuance of common stock and stock options                     192,250                     683,200
    Financing costs paid through issuance of common stock and warrants                       136,937                       6,477
    Royalty expense paid through issuance of stock options                                   363,825                           -
    Recruiting fees paid through issuance of stock options                                     4,160                           -
    Settlement paid through issuance of stock options                                              -                       7,160
    Amortization of unearned services                                                              -                      51,994
Changes in assets and liabilities affecting operations:
  Accounts receivable, net                                                                     1,187                        (580)
  Prepaid expenses                                                                              (378)                     (5,351)
  Accounts payable                                                                            77,617                     111,742
  Accrued expenses                                                                            61,502                      91,201
  Payroll taxes payable                                                                       (7,417)                          -
  Due to factor                                                                                    -                      (3,969)
  Due to related party                                                                             -                      18,000
  Due to employees                                                                             3,601                      (4,167)
                                                                                --------------------        --------------------
Net cash used in operating activities                                                     (2,124,399)                 (1,253,091)
                                                                                --------------------        --------------------
Cash flows from investing activities:
 Investment in website                                                                             -                      (2,100)
 Purchases of property and equipment                                                         (27,724)                     (3,957)
                                                                                --------------------        --------------------
Net cash used in investing activities                                                        (27,724)                     (6,057)
                                                                                --------------------        --------------------
Cash flows from financing activities:
 Proceeds from sale of common stock                                                          175,050                   1,029,225
 Proceeds from convertible notes payable                                                   1,920,000                           -
 Proceeds from convertible notes payable - related parties                                         -                     215,000
 Proceeds from notes payable - related parties                                                     -                     129,380
 Payments on convertible notes payable - related parties                                           -                     (20,000)
 Payments on notes payable - related parties                                                 (12,500)                     (9,000)
 Payments on note payable                                                                          -                      (2,000)
 Principal payments for capital leases                                                       (16,464)                    (16,053)
                                                                                --------------------        --------------------
Net cash provided by financing activities                                                  2,066,086                   1,326,552
                                                                                --------------------        --------------------
Net increase in cash                                                                         (86,037)                     67,404

Cash, beginning of period                                                                    103,745                       4,285
                                                                                --------------------        --------------------
Cash, end of period                                                             $             17,708        $             71,689
                                                                                ====================        ====================
Supplemental disclosure of cash flow information:
 Interest expense                                                               $             23,641        $             23,708
                                                                                ====================        ====================
 Income taxes                                                                   $                  -        $                  -
                                                                                ====================        ====================
Supplemental schedule of non-cash activities:
 Financing cost related to beneficial conversion
 value of secured debenture                                                     $            349,969        $                  -
                                                                                ====================        ====================
 Revaluation of stock options issued for prepaid royalties                      $            945,319        $                  -
                                                                                ====================        ====================
 Consulting services for convertible note                                       $             33,000        $                  -
                                                                                ====================        ====================
 Accrued interest converted into convertible note                               $             24,876        $                  -
                                                                                ====================        ====================
 Warrants issued in connection with convertible notes                           $              3,958        $              2,099
                                                                                ====================        ====================
 Issuance of shares for consulting services                                     $                  -        $            971,200
                                                                                ====================        ====================
 Issuance of options for consulting services                                    $                  -        $              7,160
                                                                                ====================        ====================
</TABLE>
                     See notes to the financial statements.

                                       5
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)

NOTE  1 - NATURE OF OPERATIONS

          StrikeForce  Technical  Services  Corporation was  incorporated in the
          state of New  Jersey,  in August  2001.  On  September  3,  2004,  the
          shareholders approved an amendment to the Certificate of Incorporation
          to change the name from StrikeForce  Technical Services Corporation 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  purchased  intangible  technology,  as described in
          Note 15  (Asset  Purchase  Agreement),  which  upon  the  consummation
          changed the  direction  of the  Company's  business.  The Company is a
          software  development  and services  company.  The Company owns and is
          seeking to  commercially  exploit  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 is seeking to develop a market for a suite
          of products in the areas of eCommerce,  corporate and government.  The
          Company's   products  are  the  subject  of  various   pending  patent
          applications. The Company's operations are based in Edison, NJ.

NOTE 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     a)   Interim period
          --------------

          The accompanying  unaudited financial statements have been prepared in
          accordance with accounting principles generally accepted in the United
          States of America for interim financial information,  the instructions
          to Form  10-QSB and Items 303 and  310(B) of  Regulation  S-B.  In the
          opinion of management,  the unaudited  financial  statements have been
          prepared  on the same basis as the  annual  financial  statements  and
          reflect  all   adjustments,   which  include  only  normal   recurring
          adjustments,  necessary to present fairly the financial position as of
          September 30, 2005 and the results of the operations for the three and
          nine months ended September 30, 2005, changes in stockholders'  equity
          and cash flows for the nine  months  ended  September  30,  2005.  The
          results for the three and nine months ended  September  30, 2005,  are
          not  necessarily  indicative  of the  results to be  expected  for any
          subsequent quarter or the entire fiscal year ending December 31, 2005.

          Certain  information  and footnote  disclosures  normally  included in
          financial statements prepared in accordance with accounting principles
          generally accepted in the United States of America have been condensed
          or  omitted  pursuant  to the  Securities  and  Exchange  Commission's
          ("SEC") rules and regulations.

          These  unaudited  financial  statements  should be read in conjunction
          with the Company's audited financial  statements and notes thereto for
          the year ended  December 31, 2004 as included in the Company's  report
          on amended Form SB-2 filed on July 28, 2005.

     b)   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  and cash
          equivalents.  The Company  maintains  balances in  accounts,  which at
          times,  may  exceed  Federal  Deposit  Insurance  Corporation  insured
          limits.  The Company  believes  that such risk is minimal based on the
          reputation of the financial institution.

                                        6
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)

NOTE 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (cont'd)

     c)   Accounts receivable
          -------------------

          Accounts  receivable  are recorded at the  outstanding  amounts net of
          each respective allowance for doubtful accounts.  The Company utilizes
          the  allowance  method  for  recognizing  the  collectibility  of  its
          accounts receivables. The allowance method recognizes bad debt expense
          based on review of the individual accounts  outstanding as well as the
          surrounding facts.

     d)   Property and equipment
          ----------------------

          Property  and  equipment  is  recorded  at  cost.   Depreciation   and
          amortization  of  property  and  equipment  is  provided  for  by  the
          straight-line method over the estimated useful lives of the respective
          assets. The estimated useful lives of furniture and fixtures are seven
          years,  and office  equipment  and  machinery  and  equipment are five
          years.  Computer  equipment  and software are  depreciated  over three
          years.

     e)   Long-lived assets
          ------------------

          Reviews  are  regularly  performed  to  determine  whether  facts  and
          circumstances  exist which indicate that the carrying amount of assets
          may not be recoverable  or the useful life is shorter than  originally
          estimated.  The Company assesses the  recoverability  of its assets by
          comparing the projected  undiscounted  net cash flows  associated with
          the  related  asset or group of  assets  over  their  remaining  lives
          against their  respective  carrying  amounts.  Impairment,  if any, is
          based on the  excess of the  carrying  amount  over the fair  value of
          those  assets.  If assets are  determined to be  recoverable,  but the
          useful lives are shorter than originally estimated, the net book value
          of the  assets  is  depreciated  over the newly  determined  remaining
          useful lives.

     f)   Income taxes
          ------------

          The  Company   accounts  for  income  taxes  in  accordance  with  the
          "liability  method"  of  accounting  for  income  taxes.  Accordingly,
          deferred  tax  assets  and  liabilities  are  determined  based on the
          difference between the financial statement and tax bases of assets and
          liabilities,  using  enacted tax rates in effect for the year in which
          the  differences  are  expected to reverse.  Current  income taxes are
          based on the respective  periods' taxable income for federal and state
          income tax reporting purposes.

     g)   Revenue recognition
          -------------------

          The  Company's  revenues  are  derived  principally  from the sale and
          installation  of  its  various   identification   protection  software
          products and related  hardware and  services.  The Company  recognizes
          revenue  when it is realized  or  realizable  and earned.  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  provided to the customer,  that the
          sales price is fixed or determinable, and collectibility is reasonably
          assured.  The Company reduces revenue for estimated  customer returns.
          In addition to the  aforementioned  general policy,  the following are
          the specific revenue  recognition  policies for each major category of
          revenue:

                                        7
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)


NOTE 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (cont'd)

     g)   Revenue recognition - (cont'd)
          ------------------------------

          Hardware - Revenue from hardware sales is recognized  when the product
          is shipped to the customer and there are either no unfulfilled company
          obligations  or any  obligations  that will not affect the  customer's
          final acceptance of the arrangement.  Any cost of these obligations is
          accrued when the  corresponding  revenue is  recognized.  For the nine
          months ended September 30, 2005 and 2004, total hardware  revenues for
          products  shipped  or  delivered  were  $7,929  (which  was 30%  total
          revenues) and $20,636 (which was 37% total revenues), respectively.

          Software - Revenue from delivered elements of one-time charge licensed
          software is recognized at the inception of the license term,  provided
          the Company has  vendor-specific  objective evidence of the fair value
          of  each  delivered  element.  Revenue  is  deferred  for  undelivered
          elements.  The Company  recognizes  revenue  from the sale 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.
          The  Company  assesses  collection  based  on  a  number  of  factors,
          including  past   transaction   history  with  the  customer  and  the
          creditworthiness  of  the  customer.  The  Company  does  not  request
          collateral from customers.  If the Company  determines that collection
          of a fee is not  reasonably  assured,  the Company  defers the fee and
          recognizes revenue at the time collection becomes reasonably  assured,
          which is generally upon receipt of cash. Revenue from monthly software
          licenses is recognized on a  subscription  basis.  For the nine months
          ended  September  30,  2005 and  2004,  total  software  revenues  for
          software  shipped or  delivered  were  $5,500  (which was 21% of total
          revenues) and $6,875 (which was 12% of total revenues), respectively.

          Services - Revenue from time and service  contracts is  recognized  as
          the services are provided.  The Company offers an Application  Service
          Provider  hosted  service  whereby  customer  usage  transactions  are
          invoiced monthly on a cost per transaction  basis. The service is sold
          via the execution of a Customer  Agreement between the Company and the
          Company's end user. Initial set-up fees are recognized upon completion
          of service.  For the nine months  ended  September  30, 2005 and 2004,
          total  revenues for services  provided were $12,944  (which was 49% of
          total  revenues)  and  $24,430  (which  was  44% of  total  revenues),
          respectively.

          Revenue from fixed price  long-term  service  contracts is  recognized
          over the contract  term based on the  percentage  of services that are
          provided during the period compared with the total estimated  services
          to be  provided  over the  entire  contract.  Losses  on  fixed  price
          contracts  are  recognized  during  the period in which the loss first
          becomes  apparent.  Revenue from  maintenance  is recognized  over the
          contractual period or as the services are performed. Revenue in excess
          of billings on service  contracts is recorded as unbilled  receivables
          and is included in trade  accounts  receivable.  Billings in excess of
          revenue  that is  recognized  on service  contracts  are  recorded  as
          deferred income until the aforementioned  revenue recognition criteria
          are met.

          Commissions  - In 2001 the Company  became a reseller of Nextel and XO
          Communication cellular services. These sales provided both commissions
          on the sale of Nextel  phones and residual  commission  income from XO
          Communications  beginning in January  2002.  For the nine months ended
          September  30,  2005 and 2004,  commission  income  was $0 and  $3,680
          (which was 7% of total revenues), respectively. The commission revenue
          varied  from  month to  month,  dependent  on the  utilization  of the
          services by the customer and the terms of their  contracts.  Effective
          August 2004, the Company no longer received these

                                       8
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)

NOTE 2  - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (cont'd)

     g)   Revenue recognition - (cont'd)
          ------------------------------

          commissions  due to the  conclusion of the residual  terms between the
          Company  and XO  Communications,  and the  Company  ceasing  to resell
          Nextel  phones.  All revenue  from  commissions  was  recognized  when
          received.

     h)   Software development costs
          --------------------------

          Statement  of  Financial   Accounting   Standards   ("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.  Total research and development costs for the nine months
          ended  September  30,  2005  and  2004  were  $263,767  and  $132,747,
          respectively.

          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 the Company.

     i)   Comprehensive income
          --------------------

          The  Company  adopted  SFAS No.  130,  "Accounting  for  Comprehensive
          Income."  This  statement  establishes  standards  for  reporting  and
          disclosing  of  comprehensive  income  and its  components  (including
          revenues,  expenses,  gains and losses) in full set of general-purpose
          financial statements. The items of other comprehensive income that are
          typically required to be disclosed are foreign currency items, minimum
          pension  liability  adjustments  and  unrealized  gains and  losses on
          certain investments in debt and equity securities.  The Company had no
          items  or  other  comprehensive  income  for  the  nine  months  ended
          September 30, 2005 and 2004.

     j)   Stock-based compensation
          ------------------------

          In December 2004, the Financial  Accounting  Standards  Board ("FASB")
          issued  Statement No. 123 (revised 2004) ("123R") Share Based Payment.
          Statement 123R supersedes  Accounting Principles Board ("APB") Opinion
          No.  25,  and its  related  implementation  guidance.  This  statement
          establishes  standards for the accounting for transactions in which an
          entity  exchanges its equity  instruments  for goods and services.  It
          also addresses  transactions in which an entity incurs  liabilities in
          exchange  for goods and  services  that are based on the fair value of
          the entity's equity instruments or that may be settled by the issuance
          of those equity instruments.  123R focuses primarily on accounting for
          transactions  in  which  an  entity  obtains   employee   services  in
          share-based  payment  transactions.  The Company will be  considered a
          small business issuer for which the implementation of 123R is required
          as of the  beginning of the first interim or annual  reporting  period
          after  December  15, 2005.  The Company is required to implement  123R
          beginning in the fiscal year beginning  January 1, 2006. The effect of
          this pronouncement on the Company cannot be determined at this time.

                                       9
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)


NOTE 2  - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (cont'd)

     j)   Stock-based compensation - (cont'd)
          -----------------------------------

          The Company currently accounts for its employee incentive stock option
          plans  using  the  intrinsic  value  method  in  accordance  with  the
          recognition  and  measurement   principles  of  APB  Opinion  No.  25,
          "Accounting  for Stock Issued to Employees",  as permitted by SFAS No.
          123. During the nine months ended  September 30, 2005 and 2004,  there
          was  no  stock-based  employee   compensation  cost  included  in  the
          determination  of  net  loss  reported.  Had  the  Company  determined
          compensation  expense  based on the fair value at the grant  dates for
          those awards consistent with the method of SFAS No. 123, the Company's
          net loss per share  would have been  increased  to the  following  pro
          forma amounts for the nine months ended September 30, 2005 and 2004:

<TABLE>
<CAPTION>
                                                                             2005                     2004
                                                                        -------------           --------------
<S>                                                                           <C>                     <C>
     Net loss as reported                                               $ (3,083,616)           $  (2,223,330)

     Deduct: total stock based employee compensation
     expense determined under fair value based methods
     for all awards, net of related tax effects                             (131,057)                (123,274)
                                                                        -------------           --------------
     Pro forma net loss                                                 $ (3,214,673)           $  (2,346,604)
                                                                        =============           ==============


     Basic and diluted net loss per share as reported                   $      (0.18)           $       (0.15)
     Pro forma basic and diluted net loss per share                     $      (0.19)           $       (0.16)

</TABLE>
          The  above  pro  forma  disclosure  may not be  representative  of the
          effects on reported  net  operations  for future years as options vest
          over three  years and the Company  may  continue  to grant  options to
          employees.

          The fair market value of each option grant is estimated at the date of
          grant using the Black-Scholes  option-pricing model with the following
          weighted-average assumptions:

                          Dividend yield                              0.00%
                          Expected volatility                6.00% - 17.00%
                          Risk-free interest rate                      3-5%
                          Expected life                        5 -10 years

     k)   Loss per common share
          ---------------------

          Loss per common share is computed pursuant to SFAS No. 128,  "Earnings
          Per  Share."  Basic loss per share is  computed  as net income  (loss)
          available  to common  shareholders  divided  by the  weighted  average
          number of common shares  outstanding for the period.  Diluted loss per
          share  reflects the  potential  dilution  that could occur from common
          shares issuable through stock options, warrants, and convertible debt.
          As of September 30, 2005 and 2004,  options and warrants were excluded
          from the diluted loss per share computation,  as their effect would be
          anti-dilutive.

                                       10
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)

NOTE 2  - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (cont'd)

     l)   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 the  disclosure  of contingent
          assets and liabilities at the date of the financial statements and the
          reported amounts of revenues and expenses during the reporting period.
          Actual results could differ from those estimates.

     m)   Fair value disclosure
          ---------------------

          The carrying value for cash,  receivables,  accounts and notes payable
          approximate  fair  values  because  of  the  immediate  or  short-term
          maturities of these financial instruments. The carrying amounts of the
          Company's long-term debt also approximate fair values based on current
          rates for similar debt.

     n)   New accounting pronouncements
          -----------------------------

          The FASB issued Staff Position FIN46(R)-5, Implicit Variable Interests
          Under FASB  Interpretation  No. 46 (revised  December  2003), in March
          2005.  It addresses  whether a reporting  enterprise  should  consider
          whether it holds an implicit  variable interest in a variable interest
          entity  ("VIE") or potential VIE when specific  conditions  exist.  In
          2005, the Company has adopted this pronouncement.

          The FASB issued Staff  Position  FIN 47,  Accounting  for  Conditional
          Asset Retirement Obligations,  and an interpretation of FASB Statement
          No. 143, in March 2005. The  Interpretation is effective no later than
          the end of fiscal years ending after  December 15, 2005. The statement
          clarifies the term "conditional  asset retirement  obligation" as used
          in FASB 143.  The Company  believes  that it is already in  compliance
          with the  statement  and does  not  expect  any  impact  on  financial
          position or results of operations when adopted.

          In December 2004, the FASB issued FSP FAS No. 109-1,  "Application  of
          FASB  Statement  No. 109,  Accounting  for Income  Taxes,  for the Tax
          Deduction  Provided to U.S. Based  Manufacturers  by the American Jobs
          Creation Act of 2004" ("FSP FAS No. 109-1").  This statement  requires
          the  qualified  production  activities  deduction  as  defined  in the
          American  Jobs  Creation  Act of 2004 (the "Jobs Act") to be accounted
          for  as  a  special   deduction  in  accordance  with  SFAS  No.  109,
          "Accounting  for Income  Taxes." The statement  also requires that the
          special  deduction  should be considered in measuring  deferred  taxes
          when  graduated tax rates are a significant  factor and when assessing
          whether a valuation  allowance  is  necessary.  FSP FAS No.  109-1 was
          effective   upon   issuance.   In   accordance   with  the  Jobs  Act,
          determination of the qualified production  activities deduction is not
          required  until 2005. Due to the projected tax losses for the next few
          years,  management  does not believe that this  statement  will have a
          material  effect on the  Company's  results of  operations,  financial
          condition and liquidity.

          The FASB issued Statement of Financial  Accounting  Standards No. 154,
          Accounting  Changes  and Error  Corrections  -- a  replacement  of APB
          Opinion  No. 20 and FASB  Statement  No. 3 ("SFAS  154").  SFAS 154 is
          effective,  and will be adopted, for accounting changes made in fiscal
          years  beginning  after  December  15,  2005  and  is  to  be  applied
          retrospectively.  SFAS 154 requires that retroactive  application of a
          change in accounting principle be limited to the direct effects of the
          change.  Adoption  is not  expected  to have a material  effect on the
          Company's financial position or results of operations.

                                       11
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)

NOTE 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (cont'd)

     n)   New accounting pronouncements - (cont'd)
          ----------------------------------------

          In  December  2004,  the  FASB  issued  SFAS  No.  153  "Exchanges  of
          Non-monetary  Assets--an  amendment  of  APB  Opinion  No.  29."  This
          Statement  amended APB Opinion No. 29 to eliminate  the  exception for
          non-monetary  exchanges of similar  productive  assets and replaces it
          with a general exception for exchanges of non-monetary  assets that do
          not have commercial substance.  A non-monetary exchange has commercial
          substance  if the future  cash flows of the  entity  are  expected  to
          change  significantly  as a result of the  exchange.  The  Company  is
          currently  evaluating  the impact of this new  standard,  but believes
          that it will not have a material  impact upon the Company's  financial
          position, results of operations or cash flows.

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

     o)   Reclassifications
          -----------------

          Certain  reclassifications  have been made to all periods presented in
          the   financial   statements   to  conform  to  the  current   periods
          presentation.  The Company, in the period  reclassified,  deferred and
          prepaid  financing  cost  related  to the  secured  convertible  notes
          payable.  These costs have now been  reclassified  and included in the
          netting  of the  discount  for the value of the debt (see Note 8). The
          result  of this  reclassification  has no  material  income  statement
          effect to prior periods.

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.  At September 30, 2005,
          the Company's accumulated deficit was $7,087,853,  its working capital
          deficiency was $570,923 and approximately 98% of its assets consist of
          prepaid expenses and deferred  charges.  In addition,  the Company had
          net losses of $3,083,616 for the nine months ended September 30, 2005.

          Currently, the Company is aggressively attempting to increase revenues
          and improve profit margins by  implementing a revised sales  strategy.
          In principle,  the Company is redirecting  its sales focus from direct
          sales to companies using an internal sales force, to selling through a
          distribution  channel of Value Added Resellers and Original  Equipment
          Manufacturers.  The profit margin for this approach is more  lucrative
          than selling direct due to the increase in sales volume.  This revised
          sales  approach  should  increase the Company's  sales and revenues in
          order to mitigate  future losses.  In addition,  management has raised
          funds through  convertible  debt instruments and the sale of equity in
          order to alleviate the working capital deficiency.  Additionally,  the
          Company  raised an additional  $750,000  through two separate  Secured
          Convertible Debentures of $375,000 each executed in April 2005 and May
          2005 (see Note 8).  Through  the  utilization  of the  public  capital
          markets,  the Company plans to raise the funds  necessary to continue,
          expand and enhance its growth, however, there can be no assurance that
          this will be able to increase  revenues or raise  additional  capital.
          The  Securities  and  Exchange   Commission   declared  the  Company's
          registration  statement on Form SB-2  effective on August 3, 2005.  In
          October 2005, the Company engaged the investment  banking  services of
          H.  C.   Wainwright  &  Company   ("HCW")  as  placement  agent  on  a
          best-efforts  basis  to  arrange  the  sale  of  senior  debt  and  or
          equity-linked  securities including  convertible debt on behalf of the
          Company in an amount of $5,000,000 dollars (see Note 19).

                                       12
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)


NOTE 3  - GOING CONCERN - (cont'd)

          These factors raise  substantial  doubt about the Company's ability to
          continue as a going concern.  The financial  statements do not include
          adjustments  relating to the  recoverability and realization of assets
          and  classification  of liabilities that might be necessary should the
          Company be unable to continue in operation.

NOTE 4 -  PREPAID EXPENSES

          At September 30, 2005, prepaid expenses consist of the following:

              Short term portion of royalties             $         473,096
              Consulting services                                   128,750
              Other                                                   2,513
                                                          ------------------
                                                          $         604,359
                                                          ==================

          Prepaid  royalties  were derived from an agreement on December 2, 2004
          with NetLabs.Com,  Inc. (see Note 15). The prepaid royalties are being
          amortized over the term of the agreement which  terminates  August 31,
          2013.  For the nine  months  ended  September  30,  2005,  $363,825 of
          royalties was expensed,  $473,096 was classified as short-term prepaid
          royalties and the remainder of $3,272,250  was classified as long-term
          assets on the balance sheet.

          Prepaid consulting services were derived from certain agreements.  The
          first agreement  relates to an agreement in June 2004 with an advisory
          firm in which  the  advisor  was  compensated  with  stock  valued  at
          $252,000  (see Note 15), in May 2005 with a public  relations  firm in
          which  the firm was  compensated  in the  form of a  convertible  note
          valued  at  $33,000  (see  Note 9) and in July 2005 with a law firm in
          which the firm was compensated  with stock valued at $90,000 (see Note
          15).  The  consulting  costs  are  valued  at  $375,000  and are being
          amortized over the term of the  agreements  which  terminate  December
          2005, May 2006 and July 2006, respectively.  For the nine months ended
          September  30, 2005,  the Company has recorded  $162,250 of consulting
          expense related to the agreements.

NOTE 5  - PROPERTY AND EQUIPMENT, NET

          At September 30, 2005, property and equipment, at cost, consist of the
          following:

          Computer equipment and software          $            66,793
          Furniture and fixtures                                10,157
          Office equipment                                      15,906
                                                   --------------------
          Total property and equipment                          92,856
          Less:  accumulated depreciation                      (48,053)
                                                   --------------------

          Property and equipment, net              $            44,803
                                                   ====================

          Depreciation  expense for the nine months ended September 30, 2005 and
          2004 amounted to $16,627 and $12,588, respectively.

                                       13
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)

NOTE 6  - INTANGIBLE ASSETS

          At September 30, 2005, intangible assets, consist of the following:

           Website                                $            13,426
           Technology                                           4,329
                                                  --------------------
           Total intangible assets                             17,755

           Less:  accumulated amortization                     (7,260)
                                                  --------------------

           Intangible assets, net                 $            10,495
                                                  ====================

          Amortization  expense for the nine months ended September 30, 2005 and
          2004 amounted to $3,357 and $1,944, respectively.

NOTE 7  - ACCRUED EXPENSES

          Accrued expenses consist of the following at September 30, 2005:

          Interest                                $           113,683
          Commitment fees                                      18,750
          Professional fees                                    20,750
                                                  --------------------

          Total accrued expenses                  $           153,183
                                                  ====================

NOTE 8  - SECURED CONVERTIBLE NOTES PAYABLE

          In December  2004,  the Company  entered  into a  Securities  Purchase
          Agreement for the sale of an aggregate of $1,000,000  principal amount
          of convertible  debentures  with Cornell.  The terms of the Securities
          Purchase Agreement provide for the first secured convertible debenture
          of  $500,000  to be issued  upon  signing of the  Securities  Purchase
          Agreement and the second  secured  convertible  debenture to be issued
          with the same terms as the first secured  convertible  debenture  five
          business  days after a  registration  statement is filed with the SEC.
          The convertible debentures are due and payable, bearing interest at 8%
          per  annum,  three  years  from the date of  issuance,  unless  sooner
          converted into shares of our common stock. The holder is entitled,  at
          its option, to convert, and sell on the same day, at any time and from
          time to time, until payment in full of this debenture, all or any part
          of the principal amount of the debenture,  plus accrued interest, into
          shares of the  Company's  common stock at the price per share equal to
          the lesser of an amount  equal to 120% of the  initial bid price or an
          amount equal to 80% of the lowest volume weighted average price of the
          Company's  common  stock for the last five  trading  days  immediately
          preceding  the  conversion  date.  If not  converted  at the  holder's
          option,  the entire principal amount and all accrued interest shall be
          due to the holder on the third year anniversary of the debenture.  The
          Company,  at its option, may redeem, with fifteen days advance written
          notice, a portion or the entire outstanding convertible debenture. The
          redemption  price shall be 110% of the amount  redeemed  plus  accrued
          interest.  The convertible debentures are secured by the assets of the
          Company and accrued interest payable is due at the end of the term.

          In  December  2004,  in  accordance   with  the  Securities   Purchase
          Agreement,  upon signing the Security  Purchase  Agreement the Company
          issued an 8% secured  convertible  debenture in the amount of $500,000
          with Cornell.

                                       14
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)

NOTE 8  - SECURED CONVERTIBLE NOTES PAYABLE  - (cont'd)

          In January  2005,  the  Company  executed  an 8%  secured  convertible
          debenture  in the  amount of  $500,000  with  Cornell.  The  holder is
          entitled,  at its option, to convert, and sell on the same day, at any
          time and from time to time,  until payment in full of this  debenture,
          all or any part of the principal amount of the debenture, plus accrued
          interest, convertible into shares of the Company's common stock at the
          price per share equal to the lesser of an amount  equal to 120% of the
          initial  bid  price or an  amount  equal to 80% of the  lowest  volume
          weighted average price of the Company's common stock for the last five
          trading  days  immediately  preceding  the  conversion  date.  If  not
          converted at the holder's option,  the entire principal amount and all
          accrued  interest  shall  be due  to the  holder  on  the  third  year
          anniversary of the debenture.  The Company, at its option, may redeem,
          with fifteen days advance written notice, a portion or all outstanding
          convertible  debenture.  The  redemption  price  shall  be 110% of the
          amount redeemed plus accrued interest.

          On April 27, 2005, the Company entered into an amended and restated 8%
          secured   convertible   debenture  with  Cornell   ("Amended   Cornell
          Debenture")  in the amount of  $1,024,876,  which  terminated  the two
          $500,000  debentures  entered into with  Cornell in December  2004 and
          January 2005. The new debenture  entitles  Cornell,  at its option, to
          convert,  and sell on the same day, at any time and from time to time,
          until  payment  in  full  of this  debenture,  all or any  part of the
          principal amount of the debenture, plus accrued interest,  convertible
          into shares of the Company's common stock at the price per share equal
          to the lesser of (i) the  greater of $0.25 or an amount  equal to 120%
          of the initial bid price or (ii) an amount  equal to 80% of the lowest
          volume  weighted  average price of the Company's  common stock for the
          last five trading days  immediately  preceding the conversion date. If
          not converted at Cornell's option, the entire principal amount and all
          accrued  interest  shall  be due to the  Cornell  on the  second  year
          anniversary of the debenture.  The Company, at its option, may redeem,
          with fifteen days advance written notice, a portion or all outstanding
          convertible  debenture.  The  redemption  shall be 110% of the  amount
          redeemed plus accrued  interest  remaining for the first six months of
          the executed  debenture and after that time the  redemption is 120% of
          the amount redeemed plus accrued interest remaining.

          On April 27, 2005,  the Company  entered  into a  Securities  Purchase
          Agreement  with  Highgate  pursuant to which the Company is to receive
          $750,000  in  exchange  for  two  7%  secured  convertible  debentures
          amounting  to  $750,000  that mature in 2 years,  and the  issuance of
          150,000 shares of the Company's common stock. The Securities  Purchase
          Agreement  provides  for the  execution  of funding  under two secured
          convertible debentures.  The first debenture funding occurred upon the
          signing of the  aforementioned  Securities  Purchase Agreement and the
          second  debenture  and  funding  occurred  upon the filing of the Form
          SB-2. The Company issued the aforementioned securities to the investor
          pursuant  to  Rule  506  of  Regulation  D as  promulgated  under  the
          Securities  Act of 1933, as amended (the "Act"),  and/or Section 4 (2)
          of the Act.  In  addition,  the  Company  has  agreed to  reserve  for
          issuance an  aggregate  of 2,000,000  shares of the  Company's  common
          stock,  which may be adjusted  from time to time as agreed upon by the
          parties,  to be issued to the  debenture  holder  upon  conversion  of
          accrued  interest  and  liquidated   damages  into  common  stock  and
          additional  shares  of  common  stock  required  to be  issued  to the
          debenture holder in accordance with the Securities Purchase Agreement.
          The   2,000,000   shares  were  not   registered  in  the  Form  SB-2.
          Additionally,  in accordance with the Securities  Purchase  Agreement,
          the Company is required  to maintain in escrow and  register  with the
          SEC five  times the  number of shares of common  stock  that  would be
          needed  to  satisfy  the  full  conversion  of  all  such  Convertible
          Debentures  outstanding (currently 6,510,000 shares in reserve) and to
          issue  additional  shares as needed if the  number of shares in escrow
          becomes  less  than  that  required.  Further,  following  a notice of
          conversion,  the investors may sell escrowed  shares in the registered
          distribution  before they are actually  delivered,  but, the investors
          will not engage in short sales.

                                       15
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)


NOTE 8  - SECURED CONVERTIBLE NOTES PAYABLE  - (cont'd)

          The aforementioned  debentures bear interest at a rate of 7% per annum
          and expire 2 years  after the date of  issuance.  The  debentures  are
          convertible  into  shares of our common  stock at a  conversion  price
          equal to the lesser of (i) 120% of the  average  closing bid price for
          the 5 trading days immediately preceding the closing date; or (ii) 80%
          of the lowest  closing  bid price for the 5 trading  days  immediately
          preceding  the date of  conversion.  In addition,  the Company has the
          right to redeem the  debentures,  at any time  prior to its  maturity,
          upon  3  business  days  prior  written  notice  to  the  holder.  The
          redemption  price is equal to 120% of the face  amount  redeemed  plus
          accrued interest. In the event that the Company redeems the debentures
          within 180 days after the date of issuance, the redemption price shall
          be 110% of the face amount  redeemed plus accrued  interest.  Interest
          expense  for the three  secured  convertible  debentures  for the nine
          months ended September 30, 2005 was approximately $80,764.

          The Security  Agreement  contains certain negative covenants that will
          remain  in effect  until the  repayment  obligations  pursuant  to the
          convertible  debenture  have been  satisfied.  In accordance  with the
          agreement,  the Company may not, without  Highgate's  written consent,
          directly  or  indirectly  permit  to exist any  assignment,  transfer,
          pledge, mortgage, security interest or other lien or encumbrance in or
          against any part of the pledged property, assign, pledge or in any way
          transfer or encumber  Highgate's  right to receive any income or other
          distribution  from any part of the  pledged  property,  enter into any
          sale-leaseback  financing respecting any part of the pledged property,
          materially  change  our  ownership,  executive  staff  or  management,
          including the CEO and CFO; declare or pay any dividend of any kind, in
          cash or in property,  on any class of our capital  stock,  or make any
          distribution of any kind in respect  thereof,  or make any payments in
          respect of any pension,  profit  sharing,  retirement,  stock  option,
          stock bonus, incentive compensation or similar plan, without the prior
          written  consent  of  Highgate.  In  addition,  the  Company  may  not
          guarantee or be liable in any manner,  whether directly or indirectly,
          or become contingently liable after the date of the Security Agreement
          in connection with the indebtedness of any person,  except for (i) the
          indebtedness  currently secured by the liens identified on the pledged
          property and (ii) the endorsement of negotiable instruments payable to
          us for  deposit or  collection  in the  ordinary  course of  business.
          Further,  the Company may not: make any loan,  advance or extension of
          credit to any person other than in the normal  course of our business,
          and  create,  incur,  or assume  any  additional  indebtedness  of any
          description  whatsoever  in an aggregate  amount in excess of $25,000,
          excluding trade accounts payable and accrued expenses  incurred in the
          ordinary course of business. In addition,  the Company may continue to
          accept  debt  and/or  convertible  debt  investments  from  accredited
          investors fora maximum total of up to  $2,000,000,  providing no terms
          are better than the Cornell and Highgate convertible  debenture terms.
          The Company has paid  $75,000 for  structuring  fees and  expenses and
          $5,000  for  commitment  fees  related  to  this  Securities  Purchase
          Agreement.

          The  debentures  have  included a  beneficial  conversion  value.  The
          beneficial conversion value represents the difference between the fair
          market  value of the common stock on the date the  debenture  was sold
          and the price at which the  debenture  could be converted  into common
          stock.  The Company has  allocated a portion of the proceeds  from the
          debentures  between the underlying  debt instrument and the beneficial
          conversion  value,  and has recorded a discount on the debt instrument
          totaling  $443,719.   This  deferred  charge  is  being  amortized  to
          financing expense over the life of the related debt instrument,  which
          is approximately two years at a rate of approximately 15.5% per annum.
          For the nine months ended September 30, 2005, the Company has recorded
          $105,950  of  financing  expense  related to the  amortization  of the
          beneficial  conversion  value. At September 30, 2005,  $221,860 of the
          beneficial conversion value remains.

                                       16
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)

NOTE 9  - CONVERTIBLE NOTES PAYABLE

          In January 2005, the Company  executed an 8% convertible  debenture in
          the  amount  of  $125,000  with an  investor.  At any time  after  the
          effective date of the Company's registration statement,  the holder is
          entitled,  at its option, to convert, and sell on the same day, at any
          time and from time to time,  until  payment in full of the  debenture,
          all or any part of the principal amount of the debenture, plus accrued
          interest,  into shares of the  Company's  common stock at the price of
          $0.90 per share. If not converted at the holder's  option,  the entire
          principal  amount and all accrued  interest shall be due to the holder
          on the first year anniversary of the debenture.  This note is included
          in current liabilities on the balance sheet at September 30, 2005.

          In March 2005, the Company executed an 8% convertible debenture in the
          amount of $235,000 with an investor group.  Now that the Form SB-2 has
          been declared  effective,  the holder is entitled,  at its option,  to
          convert,  and sell on the same day, at any time and from time to time,
          until  payment  in  full  of the  debenture,  all or any  part  of the
          principal amount of the debenture,  plus accrued interest, into shares
          of the Company's  common stock at the price of $0.90 per share. If not
          converted at the holder's option,  the entire principal amount and all
          accrued  interest  shall  be due  to the  holder  on  the  third  year
          anniversary  of the  debenture.  This  note  is  included  in  current
          liabilities on the balance sheet at September 30, 2005.

          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.  At any time prior to repayment of all outstanding
          principle, the holder is entitled, at its option, to convert, and sell
          on the same day, at any time and from time to time,  until  payment in
          full of the debenture,  all or any part of the principal amount of the
          debenture  into shares of the  Company's  common stock at the price of
          $0.90 per share. If not converted at the holder's  option,  the entire
          principal  amount  shall  be due  to the  holder  on  the  first  year
          anniversary of the note. This note is included in current  liabilities
          on the balance sheet at September 30, 2005.

          In June 2005, the Company executed an 8% convertible  debenture in the
          amount of $10,000 with an individual.  Now that the Form SB-2 has been
          declared effective, the holder is entitled, at its option, to convert,
          and sell on the same  day,  at any time and from  time to time,  until
          payment  in full of the  debenture,  all or any part of the  principal
          amount of the  debenture,  plus accrued  interest,  into shares of the
          Company's  common  stock  at the  price  of $0.90  per  share.  If not
          converted at the holder's option,  the entire principal amount and all
          accrued  interest  shall  be due  to the  holder  on  the  third  year
          anniversary  of the  debenture.  This  note  is  included  in  current
          liabilities on the balance sheet at September 30, 2005.

          In  July  2005,  the  Company   executed  8%  convertible   debentures
          aggregating $140,000 with four individuals. At any time after the Form
          SB-2 is deemed  effective,  the holder is entitled,  at its option, to
          convert,  and sell on the same day, at any time and from time to time,
          until  payment  in  full  of the  debenture,  all or any  part  of the
          principal amount of the debenture,  plus accrued interest, into shares
          of the Company's  common stock at the price of $0.90 per share. If not
          converted at the holder's option,  the entire principal amount and all
          accrued  interest  shall  be due  to the  holder  on  the  third  year
          anniversary of the debentures, July 2008.

          Interest expense for the convertible notes payable for the nine months
          ended September 30, 2005 was approximately $18,799.

                                       17
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)

NOTE 10 - CONVERTIBLE NOTES PAYABLE - RELATED PARTIES

          Convertible  notes  payable - related  parties at September  30, 2005,
          consist 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 and a relative
          of the Chief Technology Officer..

          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  by the end of  December  31, 2004 or
          later if agreed upon by each individual and the Company, as was agreed
          upon. All notes not issued to the CEO bear interest at a rate of prime
          plus 2%, 4% or a  straight  8% per year and the  remaining  notes bear
          interest equal to the CEO's private  banking  account  monthly lending
          rate. Interest is payable at such time as the principal on the note is
          due. At any time prior to repayment of all  outstanding  principal and
          accrued interest  hereunder,  at the election of each individual,  the
          individual  shall  have the  right  to  convert  the then  outstanding
          principal  amount of this note, and all outstanding  accrued  interest
          thereon,  into  that  number  of  shares  of the  common  stock of the
          Company,  determined  by dividing the amount of principal and interest
          then  outstanding  hereon by a  conversion  price of  either  $0.72 or
          $1.00, depending on the note.

          At September 30, 2005, the Company has two convertible  notes with its
          VPTS that mature  December 31, 2005. The first note is for $50,000 and
          bears  interest  at prime  plus 2% per annum.  The second  note is for
          $7,500 and bears interest at prime plus 4% per annum.

          At September 30, 2005, the Company has three convertible notes payable
          aggregating  $230,000 with its CEO. All the convertible  notes payable
          bear  interest  equal to the CEO's  private  banking  account  monthly
          lending rate and are convertible  into the Company's common stock at a
          price of $.72 and  $1.00 per  share.  The  maturity  date of the notes
          payable is December 31, 2005.

          In November  2004,  the Company  received  $50,000 from three separate
          individuals  who are  relatives  of a former  officer for  convertible
          promissory  notes.  The  notes  are due on  April  30,  2006  and bear
          interest at prime plus 2% per year.

          In August and  September  2005,  the Company  executed 8%  convertible
          promissory  notes in the amounts of $10,000 and $5,000 with a relative
          of the Chief Technology Officer.  The principal due hereunder shall be
          payable in full in immediately  available funds of one million dollars
          or more  through any sales or  investment  by the end of December  31,
          2005 or later if agreed upon by the  individual  and the  Company.  On
          October 17, 2005, the related party became an employee of the Company.

          In August 2005, the Company executed an 8% convertible promissory note
          in the  amount  of  $50,000  with its  President.  The  principal  due
          hereunder  shall be payable in full in immediately  available funds of
          one million dollars or more through any sales or investment by the end
          of December 31, 2005 or later if agreed upon by the  President and the
          Company.

          In September 2005, the Company  executed an 8% convertible  promissory
          note in the amount of $5,000  with a relative  of the Chief  Financial
          Officer.  The  Principal  due  hereunder  shall be  payable in full in
          immediately available funds of one million dollars or more through any
          sales or investment by the end of December 31, 2005 or later if agreed
          upon by the individual and the Company.

          In connection  with several of the  convertible  notes payable entered
          into, the Company issued to the individual's  warrants  exercisable in
          the aggregate into 63,500 shares of the Company's common stock at

                                       18
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)

NOTE 10 - CONVERTIBLE NOTES PAYABLE - RELATED PARTIES - (cont'd)

          an exercise price of $1.00 per share.  The warrants were issued at the
          ratio of one warrant for each $10 of convertible notes payable.  These
          warrants are exercisable for a period of ten years from issuance.  The
          fair value of all the warrants issued using the  Black-Scholes  Option
          Pricing  Model was $16,524.  For the nine months ended  September  30,
          2005 and 2004, the Company  recorded $1,937 and $3,959,  respectively,
          in financing expense related to the issuance of these warrants.

          At September 30, 2005,  accrued interest due for the convertible notes
          - related  parties was $6,423 and is  included in accrued  expenses in
          the accompanying balance sheet. Interest expense for convertible notes
          payable - related parties for the nine months ended September 30, 2005
          and 2004 was approximately $15,368 and $18,289, respectively.

NOTE 11 - NOTES PAYABLE - RELATED PARTIES

          Notes  payable - related  parties at September 30, 2005 consist of the
          following:

          In July 2002,  advances from a former  officer were  converted  into a
          promissory  note in the amount of $8,700.  The note is a  non-interest
          bearing  demand  note.  At  September  30, 2005 the balance due on the
          promissory note was $2,200.

          At September 30, 2005, the Company had executed notes payable with its
          CEO aggregating $189,000. The notes are due December 31, 2005 and bear
          interest  at a per  annum  rate  equal to the  CEO's  private  account
          monthly lending rate. For the nine months ended September 30, 2005 the
          interest ranged between 6.375% and 8.125% per annum.

          Interest  expense  for notes  payable - related  parties  for the nine
          months ended September 30, 2005 and 2004 was approximately $10,191 and
          $4,276, respectively.

NOTE 12 - OBLIGATIONS UNDER CAPITAL LEASES

          In May 2004,  the  Company  and a lessor  signed an amended  agreement
          consolidating  six of the  Company's  capital  leases into one monthly
          payment and  restructuring  the term of the  agreement.  This  amended
          agreement  cured a prior  default  for  non-payment.  The terms of the
          agreement   called  for  one  payment   upon  signing  of  $8,052  and
          subsequently 43 monthly  payments of $2,020.  The balance at September
          30, 2005, reflects the amended changes to these capital leases.

                                       19
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)

NOTE 12 - OBLIGATIONS UNDER CAPITAL LEASES - (cont'd)

          At September 30, 2005, the aggregate  future minimum  remaining  lease
          payments under capital leases are as follows:
<TABLE>
<CAPTION>
          Period Ending
          December 31,
          -------------
<S>                                                                             <C>
            2005                                                          $         8,289
            2006                                                                   28,702
            2007                                                                   26,552
                                                                          ----------------
              Total                                                                63,543
            Less: amount representing interest                                     (6,182)
                                                                          ----------------
            Net present value of capital lease obligations                         57,361
            Current portion                                                       (24,662)
                                                                          ----------------
            Long-term portion                                             $        32,699
                                                                          ================
</TABLE>
          The  capital  leases  listed  above  include  net assets  relating  to
          property and equipment in the amount of $11,830.

NOTE 13 - COMMITMENTS AND CONTINGENCIES

          Lease Commitments
          -----------------

          The Company has a non-cancelable operating lease for office space that
          expires in February  2008. The lease does not contain a renewal option
          and  requires  the  Company  to  pay  all  executory   costs  such  as
          maintenance and insurance.  Additionally, the Company leases equipment
          under non-cancelable operating leases.

          In January 2005,  the Company  became a third party  beneficiary  of a
          settlement in a bankruptcy suit between the lessor and supplier of the
          Company's  telephony  equipment and carrier  services.  The settlement
          between the lessor and supplier reduced the remaining lease commitment
          of approximately  $43,000 by 85%, to a balance of $6,467. This balance
          is to be paid in 24 installments of $270 per month effective March 30,
          2005.  The  settlement  has  been  reflected  in the  following  lease
          commitment schedule.

          The approximate future minimum rentals under non-cancelable  operating
          leases in effect on  September  30, 2005 are as follows:

                                       Office Space       Equipment
                                        ----------      ------------
           2005                         $   18,621      $    2,752
           2006                             74,483           6,604
           2007                             74,483           3,910
           2008                              6,207           1,966
                                        ----------      ------------
                                        $  173,794      $   15,232
                                        ==========      ==========

                                       20
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)

NOTE 13 - COMMITMENTS AND CONTINGENCIES - (cont'd)

          Lease Commitments - (cont'd)
          ---------------------------

          Rent  expense  charged to  operations  for  office  space for the nine
          months ended  September  30, 2005 and 2004  amounted to  approximately
          $51,759 and $29,131,  respectively.  The expense charged to operations
          for equipment  rental for the nine months ended September 30, 2005 and
          2004 amounted to approximately $4,414 and $18,169, respectively.

          Payroll Taxes
          -------------

          As of September 30, 2005,  the Company owes $45,513 of payroll  taxes,
          of which  approximately  $45,000  are  delinquent  from the year ended
          December 31, 2003.  The Company has also  recorded  $27,245 of related
          estimated  penalties  and interest on the  delinquent  payroll  taxes,
          which are  included  in  accrued  liabilities  on the  balance  sheet.
          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.

          Nature of Business
          ------------------

          The  Company is subject to risks and  uncertainties  common to growing
          technology  companies,  including  rapid  technological  developments,
          reliance on continued  development  and  acceptance  of the  Internet,
          intense competition and a limited operating history.

          Significant Customers
          ----------------------

          Financial instruments,  which may expose the Company to concentrations
          of credit  risk,  consist  primarily  of  accounts  receivable.  As of
          September  30, 2005 and 2004,  two customers  represented  96% and one
          customer   represented   100%  of  the  total   accounts   receivable,
          respectively.  For the nine  months  ended  September  30,  2005,  the
          Company had two  unrelated  customers,  which  accounted for 51% total
          revenue.

          Employment Agreements
          ---------------------

          In May 2003, the Company entered into an employment agreement with its
          CEO.  The term of the  agreement  is from May 20, 2003 through June 1,
          2006. As part of the agreement, the CEO committed to making a $300,000
          capital investment in the Company.  The Company is required to pay the
          CEO a salary of $75,000 per year until the  closing  date of the first
          $2,000,000  in funding,  and  $150,000 per year  thereafter.  In April
          2004, the agreement was amended to pay the CEO $111,000 per year as of
          April 2004.  The  agreement  also  granted the CEO options to purchase
          1,000,000  shares of the Company's  common stock on a fully converted,
          fully diluted basis after the  completion  of the funding  round.  The
          options have an exercise  price of $1.00,  a term of 10 years from the
          vesting date,  and shall vest over a three year period  beginning June
          1, 2004. The agreement  also provides the CEO with severance  payments
          in the event the  Company  terminates  his  employment  for any reason
          other than for cause, as defined in the agreement,  or other than as a
          result of the CEO's death or disability,  or if the CEO terminates his
          employment  with  the  Company  for good  reason,  as  defined  in the
          agreement.

          During 2003, the Company  entered into various  three-year  employment
          agreements  with employees of the Company,  commencing  June 16, 2003,
          and expiring at various dates through October 14, 2006. The Company is
          required to pay salaries  and  severance  payments,  as defined in the
          individual employment

                                       21
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)

NOTE 13 - COMMITMENTS AND CONTINGENCIES - (cont'd)

          Employment Agreements - (cont'd)
          --------------------------------

          agreements. In addition, two of the agreements each provide options to
          purchase  100,000  shares  of the  Company's  common  stock on a fully
          converted,  fully  diluted  basis after the  completion of the funding
          round. The options have an exercise price of $1.00, a term of 10 years
          from the  vesting  date,  and  shall  vest over a three  year  period,
          beginning one year from the anniversary  date. One agreement  provides
          options to purchase  130,000 shares of the Company's common stock on a
          fully  converted,  fully  diluted  basis after the  completion  of the
          funding round.  The options have an exercise price of $1.00, a term of
          10 years  from the  vesting  date,  and shall  vest over a three  year
          period, beginning one year from the anniversary date.

          Panasonic
          ---------

          In August 2003,  the Company  entered into a five year  agreement with
          Panasonic in which Panasonic is an Authorized Service Provider ("ASP")
          for the Company's  products.  As an authorized ASP, Panasonic operates
          the Company's products in their data center for the benefit of clients
          who  contract   with  Company  for  their   security   products.   The
          relationship  can be terminated by either party on six months  notice.
          Panasonic  is   compensated   by  the  Company   based  on  contracted
          percentages of the client's fees to the Company as to be documented in
          each client contract.

          In May 2005,  the Company and  Panasonic  revised the ASP agreement to
          state that the Company has fulfilled its contractual  requirements for
          the years prior to 2005.

          As of  September  30,  2005,  the  contract  requires  yearly  minimum
          commitment fees from the Company beginning in 2005 as follows:

           Year ending
            December 31,
           --------------
                2005                             $    25,000
                2006                                  50,000
                2007                                  50,000
                2008                                  50,000
                                                 ------------
                Total                            $   175,000
                                                 ============

          As of September 30, 2005 the Company has accrued  $18,750  against the
          balance due for the  December 31, 2005 period.  In October  2005,  the
          Company and Panasonic agreed to amend the Network  Services  Agreement
          dated August 2003 and revised in May 2005 (see Note 19).

          Finder's Agreement
          ------------------

          In May 2005, the Company entered into a consulting  finder's agreement
          with an investment  advisory firm, whereas the services to be provided
          by the advisory firm involve the  introduction of potential  investors
          to the Company.  No fee is due to the advisory firm unless a financial
          arrangement between the investor and the Company is consummated. If an
          arrangement  is  accepted  and  concluded  with  the  Company  and  an
          introduced investor, then the advisory firm is entitled to a fee equal
          to ten percent of the investment. This fee may be in the form of cash,
          equity or a combination  of both. The term of the agreement is for one
          year,  is non  exclusive  and may be cancelled by either party upon 30
          days written notice.

                                       22
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)

NOTE 13 - COMMITMENTS AND CONTINGENCIES - (cont'd)

          Finder's Agreement - (cont'd)
          ----------------------------

          In July 2005, the Company entered into a consulting  agreement with an
          independent  consultant  whereas  the  services  to be provided by the
          consultant  involve the  introduction  of  potential  investors to the
          Company  and  the  potential  sale of  products.  No fee is due to the
          consultant unless a financial  arrangement between an investor and the
          Company is  consummated  or a sale of product  is  consummated.  If an
          arrangement  is  accepted  and  concluded  with  the  Company  and  an
          introduced investor, then the consultant is entitled to a fee equal to
          seven  percent  of  the  investment.  If a  sale  is  consummated  the
          consultant is entitled to a fee equal to ten percent of the sale. If a
          sale is made by a third  party,  based  upon the  introduction  by the
          consultant, the consultant is entitled to a fee of five percent of the
          sale.  The term of the  agreement is for six months,  is non exclusive
          and may be cancelled by either party upon 30 days written notice.

NOTE 14 - REGISTRATION STATEMENT AND MARKET

          On  January  18,  2005,  the  Company  filed a Form SB-2  Registration
          Statement  with the SEC. The SEC declared the  Company's  Registration
          Statement on Form SB-2 effective on August 3, 2005.

          In August 2005,  the Company  retained the services of a broker dealer
          to assist in obtaining the necessary clearance from the NASD (approval
          of filing  Form  15c2-11)  and a stock  symbol,  which will permit the
          Company the ability to trade its common stock. Currently,  the Company
          is awaiting clearance from the NASD.

NOTE 15 - STOCKHOLDERS' EQUITY

          Issuance of Stock for Services
          ------------------------------

          In June 2004,  the  Company  retained a financial  advisory  firm as a
          business  consultant  to  assist  in a variety  of areas  relating  to
          financing,  strategic and related  development  growth of the Company.
          The term of the engagement is fourteen months and can be terminated by
          either party prior to June 30, 2005.  Transactions  consummated within
          the subsequent  period following the termination of this agreement may
          have fees due and payable to the financial  advisory  firm.  Under the
          terms of the  agreement the Company has issued  800,000  shares of the
          Company's  common  stock as a  commencement  bonus.  The  value of the
          services  is not stated in the  agreement,  therefore  the Company has
          determined the services shall be measured based upon the fair value of
          the shares  issued,  which was  $576,000  and has been  recorded  as a
          consulting  expense  for  the  year  ended  December  31,  2004.  This
          commencement bonus is fully paid for, non-assessable,  non-refundable,
          non-apportionable  and  non-ratable  and is not a repayment for future
          services.  The Company included all shares issued to the consultant in
          the  registration  statement  filed  by  the  Company  with  the  SEC.
          Additionally,  if the  consultant  introduces the Company to a lender,
          equity purchaser or merger/acquisition candidate, not already having a
          preexisting  relationship with the Company,  the Company agrees to pay
          the  consultant  a finder's fee of 5% of the total gross  funding,  in
          payment for the  consultant's  services to help secure the  financing.
          Also,  if the  consultant,  through  an  intermediary,  establishes  a
          financing  arrangement  for the Company,  then the consultant  will be
          entitled to a 2.5% finder's fee.

          In January 2005, the Company entered into a consulting  agreement with
          an  unrelated   corporation  that  will  provide  financial   advisory
          services.  The  consultant  was paid an  engagement  fee of  $5,000 in
          February,  2005 and issued 33,333 shares of common stock. The value of
          the services is not stated in the

                                       23
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)


NOTE 15 - STOCKHOLDERS' EQUITY - (cont'd)

          Issuance of Stock for Services - (cont'd)
          -----------------------------------------

          agreement,  therefore the Company has determined the services shall be
          measured  based upon the fair value of the shares  issued,  which is a
          per share price of $0.90 in March 2005. In addition to the  engagement
          fee,  the  consultant  shall be paid a cash success fee equal to 7% of
          the total funds  raised in each round of  investments  and warrants in
          the  Company  (priced at the  current  round which is set at $0.90 per
          share) and equal to 7% of the total funds  raised in each  round.  The
          warrants shall have an expiration  date of five years from the closing
          of the  warrants  in the  Company.  Out-of-pocket  expenses  regarding
          travel and  incidentals  shall be reimbursed to the  consultant by the
          Company  at a cost not to  exceed  $2,000  per month  unless  approved
          previously by the Company.

          In March 2005, the Company cancelled 500 shares of common stock issued
          in November 2004 to a consultant.  The  consultant did not provide the
          service,  therefore  negating the  reciprocity of  consideration.  The
          Company  recorded the  cancellation  of this stock  transaction in the
          year ended December 31, 2004.

          In July 2005,  the Company  entered into an agreement  with a law firm
          whereas the law firm is to provide  representation  for the Company on
          certain  general  corporate  matters  and  provide  advisory  services
          respective   to   government   filings  for  the  term  of  one  year.
          Additionally,  the  agreement  provides for the law firm to assist the
          Company in raising funds. In accordance  with this agreement,  the fee
          structure  includes  both a cash  fee of  $3,500  per  month  and  the
          issuance of common stock in the amount of $1,500 per month. The common
          stock is to be valued at a 20% discount of the prevailing bid price on
          the  last  day  of  the  immediately  preceding  month.  Moreover,  in
          September 2005, the law firm received an additional  100,000 shares of
          common stock, valued at $0.90 per share, for legal fees in conjunction
          with certain future  negotiations  of business  transactions  over the
          term of the  contract.  The  shares to be issued to the law firm shall
          have   piggyback   registration   rights  with  respect  to  the  next
          registration statement on Form S-8 the Company files. At September 30,
          2005,  the  Company  has  accrued  $10,500  of legal  fees,  which are
          included in accrued expenses.

          In August 2005, the Company entered into a retainer  agreement with an
          attorney,  whereas the attorney  will act as special 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. At September 30, 2005, the Company has
          accrued $3,750 of legal fees, which are included in accrued expenses.

          Issuance of Stock for Financing
          -------------------------------

          In April 2005,  the Company  issued  150,000 shares of common stock to
          Highgate,  in connection with the Securities  Purchase  Agreement (see
          Note 8).

          Issuance of Options for Services
          --------------------------------

          In January 2005, the Company  issued stock options to purchase  25,000
          shares  of common  stock to a new  employee  pursuant  to his terms of
          employment as a Software  Developer.  These options are exercisable at
          $1.00 per share and  expire on  January  11,  2015.  The  shares  vest
          annually  over a three year  period.  This  issuance  was exempt  from
          registration requirements pursuant to Section 4(2) of the Act.

                                       24
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)

NOTE 15 - STOCKHOLDERS' EQUITY - (cont'd)

          Issuance of Options for Services - (cont'd)
          ------------------------------------------

          In February 2005, the Company issued stock options to purchase  25,000
          shares  of common  stock to a new  employee  pursuant  to his terms of
          employment as a Software  Developer.  These options are exercisable at
          $1.00 per share and  expire on  February  8,  2015.  The  shares  vest
          annually  over a three year  period.  This  issuance  was exempt  from
          registration requirements pursuant to Section 4(2) of the Act.

          In July 2005,  the Company  issued  stock  options to purchase  25,000
          shares  of common  stock to a new  employee  pursuant  to his terms of
          employment as a sales person.  These options are  exercisable at $1.00
          per share and expire on July 6, 2015.  The shares vest annually over a
          three  year  period.   This  issuance  was  exempt  from  registration
          requirements pursuant to Section 4(2) of the Act.

          In July 2005,  the Company  issued stock  options to purchase  100,000
          shares of common stock to four  existing  employees at 25,000  options
          each.  These options are  exercisable at $1.00 per share and expire on
          July 6, 2015. The shares vest annually over a three year period.  This
          issuance was exempt from registration requirements pursuant to Section
          4(2) of the Act.

          In July 2005,  the Company  issued  stock  options to purchase  25,000
          shares  of common  stock to a new  employee  pursuant  to his terms of
          employment as a software  developer.  These options are exercisable at
          $1.00 per share and expire on July 29, 2015.  The shares vest annually
          over a three year period.  This issuance was exempt from  registration
          requirements pursuant to Section 4(2) of the Act.

          In July  2005,  in  accordance  with an  agreement  with an  executive
          recruitment  firm executed in February 2005, the Company issued 18,889
          options to purchase  common  stock at an  exercise  price of $0.90 per
          share,  which  expire  seven  years  from the  effective  date and the
          options have been expensed at a value of $4,160.

          Sales of Common Stock
          ---------------------

          In January 2005,  the Company  issued 95,209 shares of common stock to
          eleven  individuals  at a price  of  $0.72  per  share  for a total of
          $68,550.  This  issuance  was exempt  from  registration  requirements
          pursuant to Regulation D.

          In August 2005,  seven  individuals  purchased 51,112 shares of common
          stock  from the  Company  at a price of $0.90 per share for a total of
          $46,000. In September 2005, ten individuals purchased 67,223 shares of
          common  stock  from the  Company  at a price of $0.90  per share for a
          total of $60,500.  The August and September  2005 issuances are exempt
          from  registration  under the Securities Act of 1933 and the rules and
          regulations  promulgated  thereunder.  The  shares  purchased  both in
          August  and  September  2005  are  reflected  as  issuances  prior  to
          September  30, 2005,  although  the  transfer  agent issued the shares
          subsequently.

          Asset Purchase Agreement
          ------------------------

          In July 2002,  the Company  entered  into  pending  negotiations  with
          NetLabs,  and the  Sellers,  to  purchase  NetLabs'  COBAS  technology
          product.  In December 2002, in accordance with the  negotiations,  the
          Sellers and the Company  informally  agreed to a payment of  7,516,998
          shares of the Company's common stock, valued at $3,758, to the Sellers
          for the  transfer  of  NetLabs  intellectual  property  and the  COBAS
          product to the Company,  net of  subscriptions.  Concurrently with the
          agreement, the Company issued

                                       25
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)

NOTE 15 - STOCKHOLDERS' EQUITY - (cont'd)

          Asset Purchase Agreement - (cont'd)
          -----------------------------------

          600,000  shares of its common stock to the Sellers.  Upon  issuance of
          these  shares,  the  Sellers  became  a  controlling  interest  in the
          Company. The remaining 6,916,998 common shares due, in accordance with
          the agreement,  were issued in March 2003, after approval by the State
          of New  Jersey  to  increase  the  Company's  authorized  shares  from
          1,000,000 shares to 20,000,000  shares.  In February 2003, the Company
          agreed to issue an additional  1,140,000 shares of its common stock to
          the Sellers as consideration for all of NetLabs intellectual  property
          rights,  technology  and the COBAS  product  which has been  valued at
          $570.  These  shares were  issued in March 2003 after  approval by the
          State of New Jersey to increase the Company's  authorized  shares from
          1,000,000 shares to 20,000,000  shares. In total,  8,656,998 shares of
          the Company's common stock were issued to the Sellers.

          On September 11, 2003, the Company signed the Asset Purchase Agreement
          with  NetLabs  whereby the Company  received  all of the  intellectual
          property  rights to COBAS  inclusive  of the  additional  intellectual
          property received in the December 2002 informal  agreement.  The Asset
          Purchase  Agreement also required the Company to pay NetLabs a royalty
          of 10% of the net  revenues  received  by the Company for the sales of
          its  products,  as  defined  in  the  Asset  Purchase  Agreement.  The
          royalties would apply to net revenues received during a period of five
          years  beginning  September 1, 2003 and continuing  through August 31,
          2008.  The Asset  Purchase  Agreement was amended on September 2, 2004
          and made  effective  as of the  Effective  Date to extend the  royalty
          period from five years to ten years, through August 31, 2013.

          On December 2, 2004,  the Company and NetLabs  agreed to terminate the
          royalty  portion of the Asset  Purchase  Agreement for the issuance to
          NetLabs of  options  to  purchase  7,600,000  shares of the  Company's
          common  stock  at a price  of  $0.36.  The  options  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 and the fair value
          of the options are $4,113,972 using the  Black-Scholes  Option Pricing
          Model. The options are considered payments in lieu of future royalties
          and beginning December 2, 2004,  $4,113,972 of prepaid royalty expense
          are being  amortized over the remaining term of the royalty  provision
          of the  agreement,  which expires August 31, 2013. The fair values for
          these  options are to be measured as follows:  at the time the options
          vest,  the fair value of the options will be fixed.  Prior to vesting,
          the options  fair value will be measured at the end of each  reporting
          period.

          At September 30, 2005 (the end of the  reporting  period) the unvested
          options were  remeasured  and the value of the options  decreased from
          $2,127,879  at December 2, 2004 to $1,544,066 at September 30, 2005, a
          decrease of  $583,813.  Measurement  for each period is based upon the
          Black-Scholes Model using the following assumptions:

                                       December 31, 2004      September 30, 2005
                                       -----------------      ------------------

          Market share price                       $0.72            $0.90
          Expected volatility                      10.00%            6.00%
          Risk-free interest rate                   3.63%            4.18%
          Expected life                          5 years           5 years

                                       26
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)


NOTE 15 - STOCKHOLDERS' EQUITY - (cont'd)

          Warrant Agreements
          ------------------

          At September 30, 2005, the Company has warrants  issued related to its
          convertible notes payable - related parties.  All the warrants entitle
          the  noteholders  to purchase the Company's  common stock at $1.00 per
          share  for each  warrant  received  and have an  exercise  term of ten
          years.  At September  30, 2005,  the warrants  outstanding  are 31,000
          which  expire in the year 2013,  16,500  which expire in the year 2014
          and  16,000  which  expire in the year  2015.  In the  event  that any
          portion of the warrants remain  unexercised as of the expiration date,
          and  the  market  price  of  the  Company's  common  stock  as of  the
          expiration  date  is  greater  than  the  exercise  price  as  of  the
          expiration  date,  then  the  warrant  will be  deemed  to  have  been
          exercised   automatically  for  the  maximum  number  of  shares  then
          purchasable.

          Standby Equity Distribution Agreement
          -------------------------------------

          On December  20,  2004,  the  Company  entered  into a Standby  Equity
          Distribution  Agreement  with Cornell.  Pursuant to the Standby Equity
          Distribution   Agreement,   the  Company   may,  at  its   discretion,
          periodically  sell shares of common stock,  for a maximum draw down of
          $500,000,  per advance,  once registration is determined  effective by
          the SEC, for a total  purchase  price of up to  $10,000,000.  For each
          share of common stock purchased under the Standby Equity  Distribution
          Agreement,  the investor  will pay 98% of the lowest  volume  weighted
          average price of the common stock during the five consecutive  trading
          days immediately following the notice date. In addition,  Cornell will
          retain  5% of each  advance  under  the  Standby  Equity  Distribution
          Agreement.  The Company's  obligation  to issue shares is  essentially
          limitless.  Cornell  received  540,000  shares  of  common  stock as a
          commitment fee.

          In February  2005,  the Company  and  Cornell  terminated  the Standby
          Equity Distribution Agreement,  the Registration Rights Agreement, the
          Placement Agent Agreement and the Escrow Agreement. As a result of the
          terminations,  all  respective  rights or  obligations  granted to the
          Company and Cornell under or with respect to the  Agreements  are also
          terminated. Cornell has returned the 540,000 shares of common stock to
          the  Company.  The  Company  has  recorded  the  termination  of  this
          transaction in the year ended December 31, 2004.

          Placement Agent
          ----------------

          In  February  2005,  the  Company's  Agreement  with its  unaffiliated
          registered  broker-dealer  was  terminated  in  conjunction  with  the
          termination  of  the  Standby  Equity  Distribution   Agreement.   The
          Placement  Agent  Agreement was  co-terminus  with the Standby  Equity
          Distribution Agreement.

NOTE 16 - INCOME TAXES

          Income taxes are provided for the tax effects of transactions reported
          in the financial  statements,  and consist of taxes currently due plus
          deferred taxes related to differences  between the financial statement
          and tax bases of assets and  liabilities  for financial  statement and
          income tax  reporting  purposes.  Deferred tax assets and  liabilities
          represent  the  future  tax  return  consequences  of these  temporary
          differences,  which will either be taxable or  deductible  in the year
          when the assets or liabilities are recovered or settled.  Accordingly,
          measurement of the deferred tax assets and liabilities attributable to
          the book-tax basis differentials are computed at a rate of 34% federal
          and 7% state.

          As of  September  30,  2005,  the Company had  deferred  tax assets of
          approximately  $2,475,000 resulting from temporary differences and net
          operating loss carry-forwards of approximately $6,407,000, which

                                       27
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)

NOTE 16 - INCOME TAXES - (cont'd)

          are available to offset future taxable income,  if any,  through 2025.
          As utilization of the net operating loss  carry-forwards and temporary
          difference  is not  assured,  the  deferred  tax asset has been  fully
          reserved through the recording of a 100% valuation allowance.

          The tax effects of temporary differences,  loss carry-forwards and the
          valuation  allowance  that give rise to deferred  income tax assets at
          September 30, 2005 are as follows:
<TABLE>
<CAPTION>
          Temporary differences:
<S>                                                                                    <C>
                    Fair value of warrants and options                         $         341,000
                    Net operating losses                                               2,475,000
                    Less valuation allowance                                          (2,816,000)
                                                                               ------------------
                      Deferred tax assets                                      $               -
                                                                               ==================
          The  reconciliation of the effective income tax rate to
             the federal statutory rate for the period ended
             September 30, 2005 is as follows:
                    Federal income tax rate                                                39.0%
                    Change in valuation allowance on net operating
                       loss carry-forwards                                                (39.0)%
                                                                               -------------------
                    Effective income tax rate
                                                                                            0.0 %
                                                                               ===================
</TABLE>
NOTE 17 - RELATED PARTY TRANSACTIONS

          Agreements
          ----------

          In September  2003,  the Company  entered into a consulting  agreement
          with the spouse of the Company's Chief Technology Officer ("CTO"). The
          consulting  agreement calls for payments every two weeks in the amount
          of $1,500 in  consideration of services to be rendered to the Company.
          Effective February 2005, the terms of the agreement were amended where
          the payments were  increased to $5,000 per month in  consideration  of
          services to be rendered to the Company.  The term of the  agreement is
          predicated  upon a  determination  by the  Company as to when  certain
          product lines are completed.  For the nine months ended  September 30,
          2005 and 2004,  $32,500 and $27,000,  respectively,  were  recorded as
          consulting   expense  and  is   included   in  selling,   general  and
          administrative  expenses on the statement of operations.  At September
          30,  2005,  the  Company has a balance  due to this  related  party of
          $17,500.  On October 17, 2005, the related party became an employee of
          the Company.

NOTE 18 - STOCK OPTIONS

          2004 Equity Incentive Plan
          --------------------------

          The  shareholders  approved the 2004 Equity Incentive Plan ("Incentive
          Plan") in September  2004.  The Incentive  Plan is effective  April 1,
          2003. Officers,  key employees and non-employees,  who in the judgment
          of the Company render significant service to the Company, are eligible
          to  participate.  The Incentive Plan provides for the award of a broad
          variety of stock-based compensation alternatives such as non-qualified
          stock options, incentive stock options,  restricted stock, performance
          awards and stock  appreciation  rights.  The  Incentive  Plan provides
          5,000,000 shares of common stock to be offered from either  authorized
          and unissued  shares or issued shares,  which have been  reacquired by
          the Company. All

                                       28
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)

NOTE 18 - STOCK OPTIONS - (cont'd)

          2004 Equity Incentive Plan - (cont'd)
          -------------------------------------

          options vest equally over a three year period beginning  one-year from
          the grant.

          As of  September  30, 2005,  an  aggregate  of 1,805,000  options were
          outstanding under the Incentive Plan. The exercise price for all these
          options is $1.00.

          Non-Incentive Plan Stock Option Grants

          As of September 30, 2005, the Company had  outstanding an aggregate of
          7,618,889 and no options  outside of the Incentive  Plan. The exercise
          price  for  7,600,000  of the  options  is $0.36  (see Note 15 - Asset
          Purchase  Agreement)  and for 18,889 of the options is $0.90 (see Note
          15 - Issuance of Options for Services).

          The table below  summaries the Company's stock option activity for the
          nine months ended September 30, 2005:
<TABLE>
<CAPTION>
                                                                                   Non-Plan
                                           Incentive        Non-Qualified        Non-Qualified
                                            Options            Options              Options               Total
                                          -----------    ------------------    -----------------    -----------------
<S>                                           <C>                  <C>                <C>                  <C>
Outstanding at December 31, 2004                   -             1,605,000            7,600,000            9,205,000
     Granted                                       -               200,000               18,889              218,889
     Exercised                                     -                     -                    -                    -
     Forfeited                                     -                     -                    -                    -
                                          -----------    ------------------    -----------------    -----------------
Outstanding at September 30, 2005                  -             1,805,000            7,618,889            9,423,889
                                          ===========    ==================    =================    =================
Vesting for the year ended:
     Vested at December 31, 2004                   -               820,694            2,771,428            3,592,122
                                          -----------    ------------------    -----------------    -----------------
     December 31, 2005                             -               559,305            3,879,841            4,439,146
                                          -----------    ------------------    -----------------    -----------------
     December 31, 2006                             -               298,611              967,619            1,266,230
                                          -----------    ------------------    -----------------    -----------------
     December 31, 2007                             -               100,694                    -              100,694
                                          -----------    ------------------    -----------------    -----------------
     December 31, 2008                             -                25,696                    -               25,696
                                          -----------    ------------------    -----------------    -----------------
</TABLE>
          The  weighted  average fair value of options  granted  during the nine
          months ended September 30, 2005 amounted to $0.72.

          For the nine months  ended  September  30, 2005 and 2004,  the Company
          recorded  $923,585 and $0,  respectively,  of royalties (as more fully
          described  in  Note  15)  and  recruiting  fees,  and no  compensation
          expense, in connection with granting of options.

NOTE 19 - SUBSEQUENT EVENTS

          Panasonic Commitment Fees
          -------------------------

          In October 2005, the Company and Panasonic agreed to amend the Network
          Services  Agreement  dated  August 2003 and  revised in May 2005.  The
          October  amendment  clarifies  the Minimum  Payment  Guarantee  terms,
          beginning in 2006, from annual remittances due by the last day of each
          calendar year to quarterly  payments due within thirty days of the end
          of each  calendar  quarter as adjusted for payments  made to Panasonic
          for client activity during the quarter.

                                       29
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)

NOTE 19 - SUBSEQUENT EVENTS - (cont'd)

          Consulting Agreement
          --------------------

          In October 2005, the Company engaged the investment  banking  services
          of H. C.  Wainwright  & Company as placement  agent on a  best-efforts
          basis  to  arrange  the  sale  of  senior  debt  and or  equity-linked
          securities  including  convertible debt on behalf of the Company in an
          amount  of  $5,000,000.  The  financing  schedule  requires  the first
          $250,000  to be variable  depending  on the  commencement  of trading,
          $1,250,000  within  thirty  to sixty  days  from the  commencement  of
          trading and the balance of million  five  $3,500,000  before March 31,
          2006.  The terms of the agreement  provide for HCW to act on behalf of
          the Company as its  exclusive  placement  agent with an  authorization
          period  of one  year  unless  extended  by  the  Company.  During  the
          authorization  period of the  agreement,  the Company shall not permit
          its affiliates or representatives to directly or indirectly, offer any
          securities for sale to, or otherwise  contact,  discuss,  negotiate or
          engage with respect to any offer or sale of any  securities  with, any
          person  or  organization  on  behalf  of the  Company.  The  Agreement
          requires  the Company to pay to HCW a  non-refundable  retainer fee of
          common  stock  warrants to purchase  400,000  shares of the  Company's
          common  stock at an exercise  price of $0.75 per share that shall have
          the same rights and  privileges  associated  with the placement  agent
          warrants. The Company shall also pay to HCW a cash placement fee equal
          to 7.5% of any gross  proceeds  received by the Company in  connection
          with an equity or equity linked  financing  transaction.  In addition,
          the Company shall pay to HCW a non-accountable  cash allowance of 1.0%
          on any gross proceeds  received by the Company in connection  with the
          financings.  The Agreement provides for HCW to act as the solicitation
          agent on behalf of the  Company in  connection  with the  exercise  of
          investor  warrants  issued (in  connection  with the  financings)  and
          requires  the  Company  to  pay a  cash  fee  of 4% of  the  aggregate
          consideration  received by the  Company.  The  Agreement  requires the
          Company to issue to HCW on each closing date of a financing, Placement
          Agent  Warrants  equal to 8.5% of the  aggregate  number  of shares of
          common stock of the Company  issued by the Company in connection  with
          the financing.  The Warrants  shall provide for cashless  exercise and
          have terms and conditions identical to the Securities purchased by the
          Purchaser  and shall have an  exercise  price  equal to the  effective
          price  per  share  paid  by  the  Purchaser.  The  Warrants  shall  be
          exercisable after the date of issuance and shall expire five (5) years
          after  the date of  issuance,  unless  extended  by the  Company.  The
          Warrants include anti-dilution  protection rights, are not callable or
          redeemable and include piggyback  registration  rights.  The Agreement
          also  requires  the  Company to  reimburse  HCW for all  out-of-pocket
          expenses,  not to exceed  $10,000  without the written  consent of the
          Company incurred in connection with its engagement, including the fees
          and  disbursement  of council  for HCW and the  expenses of any travel
          that  may be  necessary.  The  Company  has  the  right,  at its  sole
          discretion  to satisfy this amount in the form of either cash,  Common
          Stock or a Common  Stock  purchase  warrant  that  shall have the same
          terms,  rights and  privileges  associated  with the  Placement  Agent
          Warrants.  During the Authorization period and for twelve months after
          the tail period of the agreement (with any introductions made by HCW),
          HCW may act as the  financial  advisor to the Company  with respect to
          any potential business combination,  including mergers or acquisitions
          involving  the  Company.  If  any  form  of  business  combination  is
          concluded  with the Company,  the Company  shall pay HCW a Transaction
          Fee that shall be mutually agreed upon in good faith,  payable in cash
          and subject to a minimum  Transaction  Fee of  $25,000,  except no fee
          shall be payable  if the  combination  transaction  value is less than
          $2,000,000.

          Notes Payable - Related Parties
          -------------------------------

          In October 2005, the Company  executed a promissory  note with its CEO
          in the amount of $10,000.  The note is due November 19, 2005 and bears
          interest  at a per  annum  rate  equal to the  CEO's  private  account
          monthly lending rate.

                                       30
<PAGE>
                         STRIKEFORCE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (UNAUDITED)

NOTE 19 - SUBSEQUENT EVENTS - (cont'd)

          Notes Payable - Related Parties - (cont'd)
          ------------------------------------------

          In October  2005,  the  Company  executed a  promissory  note with its
          President in the amount of $38,000.  The note is due November 19, 2005
          and bears  interest  at a rate equal to eight (8%)  percent per annum.
          The note was satisfied on October 28, 2005 and no interest was charged
          to the Company.

          Sales of Common Stock
          ---------------------

          In October 2005,  eighteen  individuals  purchased  342,000  shares of
          common  stock  from the  Company  at a price of $0.90  per  share  for
          142,000  shares for a total of $127,800 and a price of $0.75 per share
          for 200,000  shares for a total of $150,000.  This  issuance is exempt
          from  registration  under the Securities Act of 1933 and the rules and
          regulations promulgated thereunder.

          Issuance of Options for Services
          --------------------------------

          In October 2005, the Company  issued stock options to purchase  25,000
          shares of  common  stock to a new  employee,  a  relative  of the CTO,
          pursuant to her terms of  employment  as a Software  Developer.  These
          options are  exercisable  at $1.00 per share and expire on October 17,
          2015. The shares vest annually over a three year period. This issuance
          was exempt from registration  requirements pursuant to Section 4(2) of
          the Act.

                                       31
<PAGE>
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 these
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.

     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 which was formally  memorialized  by an agreement  in  September  2003,  we
acquired  certain  assets  from  NetLabs.com  which  included  the  intellectual
property rights to their principal  products 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  and  e-commerce  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 office in Edison, New Jersey.

     We  began  our  operations  in 2001 as a  reseller  of  computer  hardware,
primarily products manufactured by LG Electronics USA and Panasonic Corporation.
We derived  the  majority  of our  revenues  from our  activities  as a reseller
through  the  first  half  of  2003.  Beginning  with  the  acquisition  of  the
intellectual  property  assets of  NetLabs.com  in December 2002, we shifted the
focus of our business  from the resale of hardware to  developing  and marketing
the suite of security  products that we acquired from  NetLabs.com.  Although we
have maintained our relationship with Panasonic as a reseller,  we do not expect
to generate significant revenues from such sales, which consist primarily of the
sale of biometric  identification  equipment,  such as Panasonic's iris scanner,
that can be used with our software products.  We generated nominal revenues from
our activities as a reseller during 2004.

     We expect to generate  substantially  all of our revenue in the future from
sales of our suite of security products and related service  contracts.  For the
period  ended  September  30,  2004,  we  generated  $55,621  from the  sales of
biometric  products and our security products and for the period ended September
30, 2005 we generated $26,373 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 and through  word of
mouth. Our sales generate revenue either as an Original  Equipment  Manufacturer
(OEM) model, or through a Hosting/License  agreement.  We price our products for
consumer  transactions based on the number of transactions in which our software
products are utilized and we price our products for business  applications based
on the number of users. We also expect that we may generate  revenue from annual
maintenance contracts.

     We have incurred substantial operating losses since commencing  operations.
We  believe  that our  products  provide a  cost-effective  and  technologically
competitive  suite of  products to problems  of network  security  and  identity
theft.  There  can  be no  assurance,  however,  that  our  products  will  gain
acceptance in the commercial marketplace or that one of our competitors will not
introduce  a  technically  superior  product.  The  products  that we  offer  to
customers are discussed in more detail below.

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

                                       32
<PAGE>
o    Number of contracts  signed, or projected to be signed within 30 and 90 day
     periods;

o    Number of prospects in our sales pipeline;

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

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

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

Use of Estimates

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

Results of Operations

THREE  MONTHS  ENDED  SEPTEMBER  30,  2005  COMPARED TO THE THREE  MONTHS  ENDED
SEPTEMBER 30, 2004

     Revenues  for the three  months  ended  September  30,  2005  were  $14,620
compared to $27,528 for the three months ended September 30, 2004, a decrease of
$12,908 or 46.89%.  The resultant  decrease in revenues was primarily due to the
refocusing of the Company's direction from a reseller of biometric technology to
becoming a developer of our own technology  designed to thwart  identity  theft.
The revenues generated consisted of hardware sales, software sales, revenue from
sign on fees, transaction revenues and commissions. Hardware sales for the three
months ended  September  30, 2005 were $7,100  compared to $13,336 for September
30, 2004, a decrease of $6,236.  The resultant decrease in hardware revenues was
primarily due to the  refocusing of the Company's  direction  from a reseller of
biometric  technology  to becoming a developer of our own  technology.  Software
sales for the three months ended  September  30, 2005 were $0 compared to $2,925
for the three  months  ended  September  30,  2004,  a decrease  of $2,925.  The
resultant  decrease in software  revenues was primarily due to the refocusing of
the Company's  direction  from a reseller of biometric  technology to becoming a
developer  of our own  technology.  Sign on fees for our ASP  transaction  model
amounted to $6,500 for the period ended  September  30, 2005  compared to $1,500
for the three  months  ended  September  30,  2004,  an increase of $5,000.  The
increase was due to signing up four new clients for the period  ended  September
30, 2005 as compared to signing up one new client for the period ended September
30, 2004.  Transaction  revenues  from the ASP hosting model were $1,020 for the
three  months  ended  September  30, 2005 and $8,434 for the three  months ended
September 30, 2004, a decrease of $7,414.  The decrease was due primarily to the
lack of ASP transactions and awaiting the ramp up of the new clients. Commission
income for the three months ended  September  30, 2005 was $0 compared to $1,333
for the three months ended September 30, 2004, a decrease of $1,333. In 2001 the
Company  became a reseller  of Nextel and XO  Communication  cellular  services.
These sales provided both  commissions on the sale of Nextel phones and residual
commission income from XO Communications beginning in January 2002. The residual
commission  revenue varied from month to month,  dependent on the utilization of
the services by the customer and the terms of their contracts.  Effective August
2004, the Company no longer received residual  commissions due to the conclusion
of the residual terms between the Company and XO Communications.

                                       33
<PAGE>
     Our principal expenses during the three months ended September 30, 2005 and
2004 were payroll expenses and professional  expenses. Our professional expenses
included  legal,  accounting,  public  relations and lobbying  consultants.  The
increased  level of expenses  being  incurred  by the Company  arises out of its
efforts to commercially exploit its suite of network security products.  Some of
the specifics  include  additional  sales  support and  contracting a new public
relations firm to concentrate on the government sector.

     Cost of  revenues  for three  months  ended  September  30, 2005 was $4,169
compared to $7,820 for the three months ended  September 30, 2004, a decrease of
$3,651.  The net decrease resulted primarily from the conversion from the resale
of hardware and biometric  devices to the  provision of the  Company's  identity
assurance software platform.

     Gross profit for three months ended September 30, 2005 was $10,451 compared
to $19,708 for the three months ended  September 30, 2004, a decrease of $9,257,
or 46.97%.  The decrease was primarily  due to  refocusing  the direction of the
Company  from being a reseller of  biometric  technology  to becoming a software
developer of our own security products.

     Research and development  expenses for the three months ended September 30,
2005 were $89,303  compared to $60,436 for the three months ended  September 30,
2004, an increase of $28,867, or 47.77%. The increase is primarily  attributable
to an increase in  compensation  costs as a result of  increases in research and
development personnel added after September 30, 2004. 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
September 30, 2005 were $747,581 compared to $608,183 for the three months ended
September 30, 2004, an increase of $139,398 or 22.92%.  The net increase was due
primarily to increases in our staffing,  advertising,  promotion and  marketing,
legal and accounting, consulting costs and overhead.

     Selling,  general and  administrative  expenses at  September  30, 2005 and
September 30, 2004 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 for the three months ended  September 30, 2005 was $90,746 as
compared to $4,640 for the three months ended  September 30, 2004,  representing
an  increase in other  expenses  of $86,106,  or  1,855.73%.  The  increase  was
primarily  due to interest  charges for notes  payable  and  deferred  financing
charges relating to the convertible promissory notes.

     Our net loss for the three  months  ended  September  30, 2005 was $917,179
compared to a net loss of $653,551 for three months ended September 30, 2004, an
increase of $263,628,  or 40.34%.  The increase  was  primarily  due to interest
charges  for notes  payable  and  deferred  financing  charges  relating  to the
convertible promissory notes.

                                       34
<PAGE>
NINE MONTH PERIOD ENDED  SEPTEMBER  30, 2005 COMPARED TO NINE MONTH PERIOD ENDED
SEPTEMBER 30, 2004

     Revenues for the nine months ended September 30, 2005 were $26,373 compared
to $55,621 for the nine months ended  September  30, 2004, a decrease of $29,248
or  52.58%.  The  resultant  decrease  in  revenues  was  primarily  due  to the
refocusing of the Company's direction from a reseller of biometric technology to
becoming a developer of our own technology.  The revenues generated consisted of
hardware sales, software sales, revenue from sign on fees,  transaction revenues
and  commissions.  Hardware  sales for the nine months ended  September 30, 2005
were $7,929  compared to $20,636 for  September 30, 2004, a decrease of $12,707.
The resultant  decrease in hardware revenues was primarily due to the refocusing
of the Company's direction from a reseller of biometric technology to becoming a
developer  of our own  technology.  Software  sales  for the nine  months  ended
September  30,  2005 were $5,500  compared  to $6,875 for the nine months  ended
September  30, 2004, an decrease of $1,375.  The resultant  decrease in software
revenues was primarily due to the  refocusing of the Company's  direction from a
reseller of biometric  technology to becoming a developer of our own technology.
Sign on fees for our ASP  transaction  model  amounted  to $10,700  for the nine
months  ended  September  30, 2005  compared to $1,500 for the nine months ended
September  30, 2004,  an increase of $9,200.  The increase was due to signing up
seven new clients for the period ended September 30, 2005 as compared to signing
up one new client for the period ended September 30, 2004.  Transaction revenues
from the ASP hosting  model were $2,244 for the nine months ended  September 30,
2005 and $22,929 for the nine months  ended  September  30,  2004, a decrease of
$20,685.  The decrease was due  primarily  to the lack of ASP  transactions  and
awaiting the ramp up of the new clients.  Commission  income for the nine months
ended  September  30, 2005 was $0  compared to $3,680 for the nine months  ended
September 30, 2004, a decrease of $3,680.  In 2001 the Company became a reseller
of Nextel and XO  Communication  cellular  services.  These sales  provided both
commissions on the sale of Nextel phones and residual  commission income from XO
Communications beginning in January 2002. The residual commission revenue varied
from  month to  month,  dependent  on the  utilization  of the  services  by the
customer and the terms of their contracts. Effective August 2004, the Company no
longer received residual commissions due to the conclusion of the residual terms
between the Company and XO Communications.

     Our principal  expenses during the nine months ended September 30, 2005 and
2004 were payroll expenses and professional  expenses. Our professional expenses
included  legal,  accounting,  public  relations and lobbying  consultants.  The
increased  level of expenses  being  incurred  by the Company  arises out of its
efforts to commercially exploit its suite of network security products.  Some of
the  specifics  include  additional  sales  support,  contracting  a new  public
relations  firm  and   contracting  a  lobbyist  group  in  Washington  D.C.  to
concentrate  on the government  sector.  The contract with the lobbyist group in
Washington D.C. was terminated in October 2005.

     Cost of  revenues  for nine  months  ended  September  30,  2005 was $8,425
compared to $7,820 for the nine months ended  September 30, 2004, an increase of
$605. The net increase  resulted  primarily from costs incurred by third parties
for transaction fees as customers began implementation of the platform,  related
to our ASP hosting service and transaction charges.

     Gross profit for nine months ended September 30, 2005 was $17,948  compared
to $47,801 for the nine months ended  September 30, 2004, a decrease of $29,853,
or 62.45%.  The decrease was primarily  due to  refocusing  the direction of the
Company  from being a reseller of  biometric  technology  to becoming a software
developer of our own security products.

     Research and  development  expenses for the nine months ended September 30,
2005 were $263,767  compared to $132,747 for the nine months ended September 30,
2004, an increase of $131,020, or 98.70%. The increase is primarily attributable
to an increase in  compensation  costs as a result of  increases in research and
development personnel added after September 30, 2004. 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 nine months  ended
September 30, 2005 were  $2,594,837  compared to $2,104,110  for the nine months
ended  September 30, 2004,  an increase of $490,727 or 23.32%.  The net increase
was due  primarily to  increases in our  staffing,  advertising,  promotion  and
marketing, legal and accounting, consulting costs and overhead.

     Selling,  general and  administrative  expenses at  September  30, 2005 and
September 30, 2004 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 for the nine months ended  September 30, 2005 was $242,960 as
compared to $34,274 for the nine months ended  September 30, 2004,  representing
an increase  in other  expenses  of  $208,686,  or  608.88%.  The  increase  was
primarily  due to interest  charges for notes  payable  and  deferred  financing
charges relating to the convertible promissory notes.

                                       35
<PAGE>
     Our net loss for the nine months ended  September  30, 2005 was  $3,083,616
compared to a net loss of $2,223,330  for nine months ended  September 30, 2004,
an increase of $860,286,  or 38.69%.  The increase was primarily due to interest
charges  for notes  payable  and  deferred  financing  charges  relating  to the
convertible promissory notes.

Liquidity and Capital Resources

     Our total  current  assets at September 30, 2005 were  $633,578,  including
$17,708 in cash as compared  with $94,231 in total  current  assets at September
30, 2004,  which included cash of $71,689.  Additionally,  we had a shareholders
equity  in  the  amount  $938,280  at  September  30,  2005  as  compared  to  a
shareholders  deficiency of  $1,032,078 at September 30, 2004.  The increases in
shareholders  equity  are a result of the  Company's  sales of common  stock and
conversions of debt instruments.  We have historically  incurred losses and have
financed our operations through loans,  principally from affiliated parties such
as our directors, and from the proceeds of the corporation selling shares of our
common stock privately.

     The number of common shares outstanding increased from 16,462,621 shares at
the third  quarter  of 2004 to  17,657,190  at the  third  quarter  of 2005,  an
increase  of 7.27%.  During that period our  shareholders'  deficit,  due to the
injection of capital,  was reversed  from a deficit of  $1,032,078  at the third
quarter of 2004 to an equity  position of $938,280 at the third quarter of 2005,
an increase of  approximately  190.91%.  We had $17,708 of cash at September 30,
2005,  compared to $71,689  cash at the nine months ended  September  30, 2004 a
decrease of approximately  75.30%.  We financed our operations  during the third
quarter of 2005 through unsecured loans, principally from unrelated parties, and
sales by us of our common  stock.  To date,  we have not  generated  significant
revenues and we anticipate  that we will not generate any  significant  revenues
until the first  quarter of 2006.  We expect that we will rely,  at least in the
near future, upon a limited number of customers for a substantial  percentage of
our 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 our sales revenue can provide greater liquidity.

     We do not expect to sell significant  equipment over the next twelve months
except within the demands of potential  acquisitions  that we may pursue or part
of our distribution or reseller business.

     We have historically incurred losses and expect to continue to incur losses
in  the  foreseeable  future.  Our  operations   presently  require  funding  of
approximately  $225,000 per month. Our current  forecast and potential  pipeline
substantiate our becoming profitable by the end of the 1st quarter of 2006 based
on some key  potential  clients  contracting  with the Company in the  financial
industry in the United States and in Asia.  There can be no assurance,  however,
that  the  sales  anticipated  will  materialize  or that we  will  achieve  the
profitability we have forecasted.

     From August 1, 2005 through  October 27, 2005,  the Company  issued  common
stock to certain  investors  pursuant to which it sold an  aggregate  of 460,335
shares of common stock for an aggregate purchase price of $384,300.  The Company
intends to continue to solicit  subscriptions to sell shares of its common stock
until the commencement of trading on the OTC Bulletin Board.

     On April 27,  2005,  the Company  entered  into an amended and  restated 8%
secured convertible  debenture with Cornell Capital Partners,  LP ("Cornell") in
the amount of $1,024,876,  which terminated the two $500,000  debentures entered
into with Cornell in December 2004 and January 2005. The new debenture  entitles
Cornell,  at its option,  to convert,  at any time and from time to time, all or
any part of the principal amount of the debenture,  plus accrued interest,  into
shares of the Company's  common stock at the price per share equal to the lesser
of (i) the greater of $0.25 or an amount  equal to 120% of the initial bid price
or (ii) an amount equal to 80% of the lowest  volume  weighted  average price of
the Company's common stock for the last five trading days immediately  preceding
the conversion  date. The debenture  matures on April 27, 2007. The Company,  at
its option,  may redeem,  with fifteen days advance written notice, a portion or
all  outstanding  convertible  debenture.  The  redemption  shall be 110% of the
amount redeemed plus accrued interest remaining for the first nine months of the
executed  debenture  and after  that time the  redemption  is 120% of the amount
redeemed plus accrued interest remaining.

                                       36
<PAGE>
     On April 27, 2005, the Company entered into a Securities Purchase Agreement
with Highgate House Funds, Ltd. ("Highgate") pursuant to which the Company is to
receive $750,000 in exchange for two 7% secured convertible debentures amounting
to $750,000  that mature in 2 years,  and the issuance of 150,000  shares of the
Company's  common stock.  The  Securities  Purchase  Agreement  provides for the
execution of funding  under two closings.  The first  closing  occurred upon the
signing  of the  aforementioned  Securities  Purchase  Agreement  and the second
closing  occurred upon the filing of a registration  statement on Form SB-2. The
Company issued the  aforementioned  securities to the investor  pursuant to Rule
506 of Regulation D as promulgated  under the Securities Act of 1933, as amended
(the "Act"), and/or Section 4 (2) of the Act.

     In  addition,  the Company  has  reserved  for  issuance  an  aggregate  of
2,000,000 shares of the Company's common stock,  which may be adjusted from time
to time as agreed upon by the parties, to be issued to the debenture holder upon
conversion of accrued  interest and  liquidated  damages into common stock.  The
2,000,000  shares  were  not  required  to be  registered  in  the  registration
statement on Form SB-2. Additionally, in accordance with the Securities Purchase
Agreement,  the Company is required  to maintain in escrow and  registered  five
times the number of shares of common  stock that would be needed to satisfy  the
full  conversion  of all  such  convertible  debentures  outstanding  (currently
6,510,000  shares in reserve)  and to issue  additional  shares as needed if the
number of shares in escrow becomes less than required.

     In accordance  with the use of proceeds,  the funds  received from Highgate
are to be used to:

     o    cover our current  monthly burn rate during the filing period,  o hire
          one to two additional junior sales persons and interns,
     o    purchase related technology equipment in order to meet our current and
          potential client requirements,
     o    cover our working  capital  requirements  dedicated to increasing  the
          sales and revenues of our Company.
     o    cover monthly payments for our public relations and investor relations
          firms  and our  Washington  D.C.  lobby  group o  stress  testing  our
          software,
     o    purchase strategic cold call listings,
     o    pay for  costs  relating  to our  SEC  filing  obligations,  financial
          audits,  quarterly  reviews and legal expenses  incurred during filing
          period, and
     o    cover expenses  associated with marketing events,  trade shows, travel
          and entertainment.

     Furthermore,  we are  prohibited  from  using  the  proceeds  to repay  any
indebtedness of any of our insiders.

     The  aforementioned  debentures bear interest at a rate of 7% per annum and
expire 2 years after the date of issuance.  The debentures are convertible  into
shares of our common stock at a conversion price equal to the lesser of (i) 120%
of the average  closing bid price for the 5 trading days  immediately  preceding
the closing date; or (ii) 80% of the lowest  closing bid price for the 5 trading
days immediately preceding the date of conversion.  In addition, the Company has
the right to redeem the  debentures,  at any time prior to its maturity,  upon 3
business day's prior written notice to the holder. The redemption price is equal
to 120% of the face amount redeemed plus accrued interest. In the event that the
Company redeems the debentures  within 180 days after the date of issuance,  the
redemption  price  shall  be 110%  of the  face  amount  redeemed  plus  accrued
interest.

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

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

                                       37
<PAGE>
     o assign,  pledge or in any way  transfer or encumber  Highgate's  right to
receive any income or other distribution from any part of the pledged property,

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

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

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

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

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

     Further,  we may not make any loan,  advance or  extension of credit to any
person other than in the normal course of our business,  and create,  incur,  or
assume any additional indebtedness of any description whatsoever in an aggregate
amount in excess of  $25,000  (excluding  trade  accounts  payable  and  accrued
expenses incurred in the ordinary course of business).  In addition, the Company
may continue to accept debt and/or  convertible debt investments from accredited
investors for a maximum total of up to $2,000,000, providing no terms are better
than the Cornell and Highgate convertible debenture terms.

     In October 2005, the Company engaged the investment  banking services of H.
C.  Wainwright & Company as placement  agent on a best-efforts  basis to arrange
the sale of senior debt and or equity-linked  securities  including  convertible
debt on behalf of the Company in an amount of $5,000,000. The financing schedule
requires  the first  $250,000 to be variable  depending on the  commencement  of
trading, $1,250,000 within thirty to sixty days from the commencement of trading
and the balance of million five  $3,500,000  before March 31, 2006. The terms of
the  agreement  provide for HCW to act on behalf of the Company as its exclusive
placement agent with an authorization  period of one year unless extended by the
Company. During the authorization period of the agreement, the Company shall not
permit its affiliates or  representatives  to directly or indirectly,  offer any
securities for sale to, or otherwise contact, discuss,  negotiate or engage with
respect to any offer or sale of any securities  with, any person or organization
on behalf of the  Company.  The  Agreement  requires the Company to pay to HCW a
non-refundable  retainer fee of common stock warrants to purchase 400,000 shares
of the Company's common stock at an exercise price of $0.75 per share that shall
have the  same  rights  and  privileges  associated  with  the  placement  agent
warrants.  The Company shall also pay to HCW a cash  placement fee equal to 7.5%
of any gross  proceeds  received by the Company in connection  with an equity or
equity linked financing transaction. In addition, the Company shall pay to HCW a
non-accountable  cash  allowance of 1.0% on any gross  proceeds  received by the
Company in connection with the financings. The Agreement provides for HCW to act
as the  solicitation  agent on  behalf of the  Company  in  connection  with the
exercise of investor  warrants  issued (in connection  with the  financings) and
requires  the  Company  to pay a cash fee of 4% of the  aggregate  consideration
received by the Company.  The Agreement  requires the Company to issue to HCW on
each closing date of a financing,  Placement Agent Warrants equal to 8.5% of the
aggregate  number of shares of common stock of the Company issued by the Company
in  connection  with the  financing.  The  Warrants  shall  provide for cashless
exercise and have terms and conditions  identical to the Securities purchased by
the Purchaser and shall have an exercise price equal to the effective  price per
share paid by the Purchaser. The Warrants shall be exercisable after the date of
issuance  and shall  expire  five (5) years after the date of  issuance,  unless
extended by the Company. The Warrants include  anti-dilution  protection rights,
are not callable or redeemable and include piggyback  registration  rights.  The
Agreement  also  requires  the Company to  reimburse  HCW for all  out-of-pocket
expenses,  not to exceed  $10,000  without  the  written  consent of the Company
incurred in connection with its engagement,  including the fees and disbursement
of council for HCW and the  expenses of any travel  that may be  necessary.  The
Company has the right, at its sole discretion to satisfy this amount in the form
of either cash,  Common Stock or a Common Stock purchase warrant that shall have
the same  terms,  rights and  privileges  associated  with the  Placement  Agent
Warrants.  During the Authorization  period and for twelve months after the tail
period of the agreement (with any introductions made by HCW), HCW may act as the
financial  advisor  to  the  Company  with  respect  to any  potential  business
combination,  including  mergers or acquisitions  involving the Company.  If any
form of business  combination is concluded  with the Company,  the Company shall
pay HCW a  Transaction  Fee that shall be  mutually  agreed  upon in good faith,
payable in cash and subject to a minimum  Transaction Fee of $25,000,  except no
fee  shall  be  payable  if the  combination  transaction  value  is  less  than
$2,000,000.

                                       38
<PAGE>
     In March 2005,  the Company  issued an aggregate of 33,000 shares of common
stock to a consultant as consideration for public relations  services  performed
on its behalf.

     Additionally,  the Company issued  unsecured  notes payable during the nine
months  ended  September  30,  2005 in an  aggregate  total of $510,000 to seven
unrelated parties.

     Additionally,  the Company issued  unsecured  notes payable during the nine
months  ended  September  30,  2005 in an  aggregate  total of  $160,000 to four
related parties.

     It is unlikely that we will be able to generate sufficient funds internally
to sustain our  operations  until the first  quarter 2006. We will seek to raise
additional  funds to continue our  operation.  It is  management's  plan to seek
additional  funding  through the sale of common  stock and the issuance of notes
and debentures, including notes and debentures convertible into common stock. If
we issue  additional  shares of common  stock,  the value of shares of  existing
stockholders is likely to be diluted.

     However, the terms of the secured convertible  debentures issued to certain
of the selling  stockholders  require that we obtain the consent of such selling
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 at
present generate  significant  revenue from the sales of our products.  Although
management  believes that our products area 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  minimal
revenues over the next twelve (12) months.

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

Off-Balance Sheet Arrangements

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

Going Concern

     We  are  assuming  that  we  will  continue  as  a  going  concern,   which
contemplates  the  realization of assets and the  satisfaction of liabilities in
the  normal  course  of  business.  We have  incurred  net  operating  losses of
approximately  $3,083,616 for the nine months ended September 30, 2005, compared
to  $2,223,330  for the nine months ended  September  30, 2004. At September 30,
2005, the Company's  accumulated  deficit was  $7,087,853,  its working  capital
deficiency was $570,923 and  approximately  98% of its assets consist of prepaid
expenses and deferred charges. Additionally, for the nine months ended September
30, 2005, we had negative cash flows from operating  activities of approximately
$2,124,399.  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.  This condition
raises  substantial doubt about our ability to continue as a going concern.  Our
management expects cash flows from operating  activities to improve in the first
quarter of fiscal 2006, 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.

                                       39
<PAGE>
Critical Accounting Policies

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

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

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

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

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

Revenue Recognition

     Sales  transactions  are recorded  automatically  and posted to the general
ledger  from the invoice  produced  when  shipment of the product is  completed.
Invoices and sales returns are  reconciled  monthly.  Each customer  completes a
credit  application  and a credit check is completed  before  credit is granted.
Credit terms vary between thirty (30) and forty five (45) days and are dependent
on the size of the customer and the agreement with the individual customer.  The
sales transaction is recorded when the product is delivered to the customer.

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

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

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

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

                                       40
<PAGE>
Impairment of Intangible Assets

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

Stock Based Transactions

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

     - Acquiring  the services of various  professionals  who provided us with a
range of  corporate  consultancy  services,  including  developing  business and
financial models, financial advisory services,  strategic planning,  development
of  business  plans,  investor  presentations  and  advice and  assistance  with
investment funding;

     -    Retaining  the services of our Advisory  Board to promote the business
          of the Company;

     -    Settlement of our indebtedness; and

     -    Providing incentives to attract, retain and motivate employees who are
          important to our success.

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

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

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

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

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

     -    trading volatility of our stock; and

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

     The  determination of expected  volatility  requires  management to make an
estimate and the actual  volatility may vary  significantly  from that estimate.
Accordingly, the determination of the resulting expense is based on a management
estimate. To date the Company's volatility has not fluctuated  significantly but
may in the future once there is a public market.

     When options or warrants to purchase our stock are used as  incentives  for
employees,  officers  or  directors,  we  use  the  intrinsic  value  method  in
accordance  with  the  recognition  and  measurement  principles  of  Accounting
Principles  Board Opinion No. 25 "Accounting for Stock Issued to Employees",  as
permitted by Statement of  Financial  Accounting  Standards  "SFAS" No. 123. The
intrinsic  value  method  calculates  the value of the  option or warrant at the
difference  between  the strike  price and the price of the stock on the day the
option or warrant is granted, except that such value is zero if the strike price
is higher than the price of the stock.

                                       41
<PAGE>
     If the Company determined  compensation  expense based on the fair value at
the dates for those  awards  consistent  with the method of SFAS No. 123 and not
the intrinsic value method,  the effect on the historical  financial  statements
for the periods presented would be as follows:

-------------------- --------------------- ----------------- -------------------
        Period        Loss as Originally     Additional        Adjusted Loss For
                         Reported            Employee             The Period
                                             Compensation
                                             Expense
-------------------- --------------------- ----------------- -------------------
Year Ended December  $            800,717  $        120,311  $          921,028
31, 2003
-------------------- --------------------- ----------------- -------------------
Year Ended December             2,993,529           163,985           3,157,514
31, 2004
-------------------- --------------------- ----------------- -------------------
Nine Months Ended
September 30, 2004              2,223,330           123,274           2,346,604
-------------------- --------------------- ----------------- -------------------
Nine Months Ended
September 30, 2005              3,083,616           131,057           3,214,673
-------------------- --------------------- ----------------- -------------------

     Additionally,  the  effect  on  shareholders'  equity  would  have  been  a
reduction from $938,280 to $807,223 at September 30, 2005.

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

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

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

Recent Accounting Pronouncements


     The FASB issued Staff  Position  FIN46(R)-5,  Implicit  Variable  Interests
Under FASB  Interpretation  No. 46 (revised  December  2003),  in March 2005. It
addresses  whether a reporting  enterprise  should consider  whether it holds an
implicit  variable  interest in a variable  interest entity ("VIE") or potential
VIE when  specific  conditions  exist.  In 2005,  the Company  has adopted  this
pronouncement.

     The FASB issued Staff  Position FIN 47,  Accounting for  Conditional  Asset
Retirement  Obligations,  and an  interpretation  of FASB  Statement No. 143, in
March 2005.  The  Interpretation  is  effective  no later than the end of fiscal
years  ending  after  December  15,  2005.  The  statement  clarifies  the  term
"conditional  asset  retirement  obligation"  as used in FASB 143.  The  Company
believes that it is already in compliance with the statement and does not expect
any impact on financial position or results of operations when adopted.

     In December 2004, the FASB issued FSP FAS No. 109-1,  "Application  of FASB
Statement No. 109,  Accounting for Income Taxes, for the Tax Deduction  Provided
to U.S. Based Manufacturers by the American Jobs Creation Act of 2004" ("FSP FAS
No.  109-1").  This  statement  requires  the  qualified  production  activities
deduction as defined in the American  Jobs Creation Act of 2004 (the "Jobs Act")
to be  accounted  for as a special  deduction in  accordance  with SFAS No. 109,
"Accounting  for Income  Taxes." The  statement  also  requires that the special
deduction  should be considered in measuring  deferred  taxes when graduated tax
rates are a significant factor and when assessing whether a valuation  allowance
is necessary.  FSP FAS No. 109-1 was effective upon issuance. In accordance with
the Jobs Act,  determination of the qualified production activities deduction is
not required until 2005. Due to the projected tax losses for the next few years,
management  does not believe that this statement will have a material  effect on
the Company's results of operations, financial condition and liquidity.

     The FASB  issued  Statement  of  Financial  Accounting  Standards  No. 154,
Accounting  Changes and Error Corrections -- a replacement of APB Opinion No. 20
and FASB  Statement  No.  3 ("SFAS  154").  SFAS 154 is  effective,  and will be
adopted,  for accounting  changes made in fiscal years  beginning after December
15,  2005  and  is  to  be  applied  retrospectively.  SFAS  154  requires  that
retroactive  application  of a change in accounting  principle be limited to the
direct effects of the change. Adoption is not expected to have a material effect
on the Company's financial position or results of operations.

     In December 2004,  the FASB issued SFAS No. 153 "Exchanges of  Non-monetary
Assets--an  amendment of APB Opinion No. 29." This Statement amended APB Opinion
No.  29 to  eliminate  the  exception  for  non-monetary  exchanges  of  similar
productive  assets and  replaces it with a general  exception  for  exchanges of
non-monetary  assets  that do not  have  commercial  substance.  A  non-monetary
exchange  has  commercial  substance  if the future cash flows of the entity are
expected to change  significantly  as a result of the  exchange.  The Company is
currently evaluating the impact of this new standard,  but believes that it will
not have a material  impact upon the Company's  financial  position,  results of
operations or cash flows.

Item 3. Controls and Procedures.

     As of the  end of the  period  covered  by this  report,  we  conducted  an
evaluation,  under  the  supervision  and with the  participation  of our  chief
executive  officer and chief  financial  officer of our disclosure  controls and
procedures  (as defined in Rule  13a-15(e)  and Rule  15d-15(e)  of the Exchange
Act).  Based  upon  this  evaluation,  our  chief  executive  officer  and chief
financial  officer  concluded  that our  disclosure  controls and procedures are
effective  to ensure  that  information  required to be  disclosed  by us in the
reports that we file or submit  under the  Exchange Act is recorded,  processed,
summarized and reported,  within the time periods  specified in the Commission's
rules  and  forms.  There was no change  in our  internal  controls  or in other
factors that could affect these controls during our last fiscal quarter that has
materially affected,  or is reasonably likely to materially affect, our internal
control over financial reporting.

                                       42
<PAGE>
PART II

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 July 2005,  the Company  issued an aggregate of 100,000 shares of common
stock to a  consultant  as  consideration  for legal  services  performed on its
behalf.

     From August 1, 2005 through  October 27, 2005,  the Company  issued  common
stock to certain  investors  pursuant to which it sold an  aggregate  of 460,335
shares of common stock for an aggregate purchase price of $384,300.  The Company
intends to continue to solicit  subscriptions to sell shares of its common stock
until the  commencement  of trading on the OTC  Bulletin  Board.

* 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.  No
advertising or general solicitation was employed in offering the securities. The
offerings and sales were made to a limited  number of persons,  all of whom were
accredited  investors,  business associates of StrikeForce or executive officers
of  StrikeForce,  and transfer was restricted by StrikeForce in accordance  with
the  requirements of the Securities Act of 1933. In addition to  representations
by the  above-referenced  persons, we have made independent  determinations that
all of the above-referenced  persons were accredited or sophisticated investors,
and  that  they  were  capable  of  analyzing  the  merits  and  risks  of their
investment, and that they understood the speculative nature of their investment.
Furthermore,  all of the  above-referenced  persons were provided with access to
our Securities and Exchange Commission filings.

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.

None.

Item 6. Exhibits.

Exhibit
Number                                   Description
--------------------------------------------------------------------------------

3.1     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    Asset Purchase Agreement with NetLabs.com, Inc. and Amendments. (1)

                                       43
<PAGE>
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)
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.

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<PAGE>

                                   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: November 21, 2005               By: /s/ Mark L. Kay
                                       ---------------------
                                       Mark L. Kay
                                       Chief Executive Officer


Dated: November 21, 2005               By: /s/ Mark Joseph Corrao
                                       ---------------------------
                                       Mark Joseph Corrao
                                       Chief Financial Officer and
                                       Principal Accounting Officer





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