**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      DC 20549**

**FORM      10-QSB / A**

| x | **Quarterly                Report Under Section 13 or 15(** **d** **)                of the Securities Exchange Act of                1934.** |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------|

**For      the Quarterly Period and Six Months Ended May 31, 2006**

**or**

| o | **Transition                Report Under Section 13 or 15(d) of the Securities Exchange Act of                1934.** |
|---|-----------------------------------------------------------------------------------------------------------------------|

**For      the Transition Period From ____________________ To      __________________**

**Commission      File Number: 000-51007**

**NANOSENSORS,      INC.**

| **Nevada**                                                                                  | **200452700**                                       |
|---------------------------------------------------------------------------------------------|-----------------------------------------------------|
| (State                or other jurisdiction ofincorporation                or organization) | (I.R.S.                Employer Identification No.) |
|                                                                                        |                                                |
| **1800                Wyatt Drive, Suite #2****Santa                Clara, CA**             | **95054**                                           |
| (Address                of principal executive offices)                                     | (Zip                Code)                           |

**Issuer’s      telephone number: (408) 855-0051**

**N/A**

| Class                                                  |   | Outstanding                at July 17, 2006 |
|--------------------------------------------------------|--------|---------------------------------------------|
| Common                Stock, $.001 par value per share |   | 300,278,978                shares           |

  o      YesT      No

----

**EXPLANATORY      NOTE**

----

**NANOSENSORS,      INC.**

**INDEX**

|                                                                                                                                                                                                                                   | Page(s) |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|
| PART                  I. FINANCIAL                  INFORMATION                                                                                                                                                                        |    |
|                                                                                                                                                                                                                                   |    |
| ITEM                  1. CONDENSED FINANCIAL                  STATEMENTS                                                                                                                                                               | 4       |
|                                                                                                                                                                                                                                   |    |
| Balance                  Sheets - May 31, 2006 (unaudited) and                  November 30, 2005                                                                                                                                      | 4       |
| Statements                  of Operations for the Period                  from date of inception to May 31, 2006 and the six and three month                  periods                  ended May 31, 2006 and May 31, 2005 (unaudited) | 5       |
| Statements                  of Cash Flows for the Period from                  date of inception to May 31, 2006 and the six month periods ended                  May 31,                  2006 and May 31, 2005 (unaudited)           | 6       |
| Statement                  of Shareholders’ Equity                  for the Period from the date of inception to May 31, 2006                  (unaudited)                                                                       | 7       |
| Notes                  to Financial Statements                  (unaudited)                                                                                                                                                            | 8       |
|                                                                                                                                                                                                                                   |    |
| ITEM                  2. MANAGEMENT’S DISCUSSION AND                  ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                  OPERATIONS                                                                                 | 15      |
|                                                                                                                                                                                                                                   |    |
| ITEM                  3. CONTROLS AND                  PROCEDURES                                                                                                                                                                      | 19      |
|                                                                                                                                                                                                                                   |    |
| PART                  II. OTHER                  INFORMATION                                                                                                                                                                           |    |
|                                                                                                                                                                                                                                   |    |
| ITEM                  1. LEGAL                  PROCEEDINGS.                                                                                                                                                                           | 21      |
|                                                                                                                                                                                                                                   |    |
| ITEM                  2. CHANGES IN                  SECURITIES                                                                                                                                                                        | 21      |
|                                                                                                                                                                                                                                   |    |
| ITEM                  3. DEFAULTS UPON SENIOR                  SECURITIES                                                                                                                                                              | 22      |
|                                                                                                                                                                                                                                   |    |
| ITEM                  4. SUBMISSION OF MATTERS TO A                  VOTE OF SECURITY HOLDERS                                                                                                                                          | 22      |
|                                                                                                                                                                                                                                   |    |
| ITEM                  5. OTHER                  INFORMATION                                                                                                                                                                            | 22      |
|                                                                                                                                                                                                                                   |    |
| ITEM                  6. EXHIBITS                                                                                                                                                                                                      | 23      |
|                                                                                                                                                                                                                                   |    |
| Signatures                                                                                                                                                                                                                             | 23      |
|                                                                                                                                                                                                                                   |    |
| Certifications                                                                                                                                                                                                                         |    |

----

**PART      I. FINANCIAL      INFORMATION**

**ITEM      1. FINANCIAL      STATEMENTS**

**NANOSENSORS,      INC.**

**(A      Development Stage Company)**

**CONDENSED      BALANCE SHEETS**

|                                                                                                                                                                                                                       |   | **May                31, 2006**    |       | **November                30, 2005** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|------------|--------------------------------------|--------|
|                                                                                                                                                                                                                       |   | **(Unaudited****and****Restated)** |       |                                 |   |
| **ASSETS**                                                                                                                                                                                                                 |   |                               |       |                                 |   |
|                                                                                                                                                                                                                       |   |                               |       |                                 |   |
| **CURRENT                ASSETS:**                                                                                                                                                                                         |   |                               |       |                                 |   |
| Cash                                                                                                                                                                                                                       |   | $                                  | 122,641    |                                 | $      | 191,940 |   |
| Cash                held in escrow                                                                                                                                                                                         |   |                               | 940,000    |                                 |   | — |   |
| Accounts                Receivable                                                                                                                                                                                         |   |                               | 82         |                                 |   | — |   |
| Prepaid                Expense                                                                                                                                                                                             |   |                               | 1,443      |                                 |   | — |   |
| **TOTAL                CURRENT ASSETS**                                                                                                                                                                                    |   |                               | 1,064,166  |                                 |   | 191,940 |   |
|                                                                                                                                                                                                                       |   |                               |            |                                 |   |  |   |
| **PROPERTY                  AND EQUIPMENT - net of accumulated **depreciation                  of $4,000 and $3,200,                  respectively****                                                                     |   |                               | 4,000      |                                 |   | 4,800 |   |
|                                                                                                                                                                                                                       |   |                               |            |                                 |   |  |   |
| **OTHER                ASSETS:**                                                                                                                                                                                           |   |                               |            |                                 |   |  |   |
| Website                development - net of amortization                                                                                                                                                                   |   |                               | 4,167      |                                 |   | — |   |
| Deposit                                                                                                                                                                                                                    |   |                               | 3,000      |                                 |   | 3,000 |   |
|                                                                                                                                                                                                                       |   |                               | 7,167      |                                 |   | 3,000 |   |
| **TOTAL                ASSETS**                                                                                                                                                                                            |   | $                                  | 1,075,332  |                                 | $      | 199,740 |   |
|                                                                                                                                                                                                                       |   |                               |            |                                 |   |  |   |
| **LIABILITIES                AND SHAREHOLDERS' DEFICIT**                                                                                                                                                                   |   |                               |            |                                 |   |  |   |
|                                                                                                                                                                                                                       |   |                               |            |                                 |   |  |   |
| **CURRENT                LIABILITIES:**                                                                                                                                                                                    |   |                               |            |                                 |   |  |   |
| Accounts                payable and accrued expenses                                                                                                                                                                       |   | $                                  | 208,762    |                                 | $      | 246,830 |   |
| Accounts                payable - related party                                                                                                                                                                            |   |                               | 126,165    |                                 |   | 163,757 |   |
| Liability                for warrants issued                                                                                                                                                                               |   |                               | 1,590,400  |                                 |   | — |   |
| Client                escrow funds                                                                                                                                                                                         |   |                               | 940,000    |                                 |   | — |   |
| **TOTAL                CURRENT LIABILITIES**                                                                                                                                                                               |   |                               | 2,865,327  |                                 |   | 410,587 |   |
|                                                                                                                                                                                                                       |   |                               |            |                                 |   |  |   |
| **COMMITMENTS                AND CONTINGENCIES**                                                                                                                                                                           |   |                               |            |                                 |   |  |   |
|                                                                                                                                                                                                                       |   |                               |            |                                 |   |  |   |
| **SHAREHOLDERS'                DEFICIT:**                                                                                                                                                                                  |   |                               |            |                                 |   |  |   |
| Common                  stock, $.001 par value; 500,000,000 shares authorized;                  224,225,000 and 205,025,000 shares issued and                  outstanding in 2006 and 2005,                  respectively |   |                               | 224,225    |                                 |   | 205,025 |   |
| Additional                paid-in capital                                                                                                                                                                                  |   |                               | 696,052    |                                 |   | 659,752 |   |
| Deficit                accumulated during the development stage                                                                                                                                                            |   |                               | (2,710,272 | )                                    |   | (1,075,624 | ) |
|                                                                                                                                                                                                                       |   |                               | (1,789,995 | )                                    |   | (210,847 | ) |
|                                                                                                                                                                                                                       |   |                               |       |                                 |   |   |   |
| **TOTAL                LIABILITIES AND SHAREHOLDERS' DEFICIT**                                                                                                                                                             |   | $                                  | 1,075,332  |                                 | $      | 199,740 |   |

----

**NANOSENSORS,      INC.**

**(A      Development Stage Company)**

**STATEMENTS      OF OPERATIONS**

**(Unaudited)**

|                                                                       |   | **For                the Cumulative**         |        |                                          |   |                                     |   |                                          |        |                                     |   |
|----------------------------------------------------------------------------|--------|-----------------------------------------------|-------------|-----------------------------------------------|--------|------------------------------------------|--------|-----------------------------------------------|-------------|------------------------------------------|--------|
|                                                                       |   | **Period                from Inception**      |        |                                          |   |                                     |   |                                          |        |                                     |   |
|                                                                       |   | **(December                23, 2003) to**     |        | **Six                  Months Ended**         |   | **Six                  Months**          |   | **Three                  Months Ended**       |        | **Three                    Months**      |   |
|                                                                       |   | **May                31, 2006****(Restated)** |        | **May                31, 2006****(Restated)** |   | **Ended****May                31, 2005** |   | **May                31, 2006****(Restated)** |        | **Ended****May                31, 2005** |   |
|                                                                       |   |                                          |        |                                          |   |                                     |   |                                          |        |                                     |   |
| **NET                SALES**                                               |   | $                                             | 11,688      |                                          | $      | 0                                        |   | $                                             | 0           |                                     | $      | 0 |   | $ | 0 |   |
|                                                                       |   |                                          |             |                                          |   |                                          |   |                                          |             |                                     |   |  |   |   |  |   |
| **COSTS                AND EXPENSES:**                                     |   |                                          |             |                                          |   |                                          |   |                                          |             |                                     |   |  |   |   |  |   |
| General                and Administrative Expense                          |   |                                          | 622,518     |                                          |   | 128,813                                  |   |                                          | 28,187      |                                     |   | 36,959 |   |   | 8,849 |   |
| Research                and Development                                    |   |                                          | 477,450     |                                          |   | 0                                        |   |                                          | 101,788     |                                     |   | 0 |   |   | 0 |   |
| Depreciation                and Amortization                               |   |                                          | 38,084      |                                          |   | 1,633                                    |   |                                          | 10,300      |                                     |   | 816 |   |   | 5,150 |   |
| Write-off                of Licences                                       |   |                                          | 61,750      |                                          |   | 0                                        |   |                                          | 0           |                                     |   | 0 |   |   | 0 |   |
| **TOTAL                COSTS AND EXPENSES**                                |   |                                          | 1,199,802   |                                          |   | 130,446                                  |   |                                          | 140,275     |                                     |   | 37,775 |   |   | 13,999 |   |
|                                                                       |   |                                          |             |                                          |   |                                          |   |                                          |             |                                     |   |  |   |   |  |   |
| **LOSS                FROM OPERATIONS**                                    |   |                                          | (1,188,114  | )                                             |   | (130,446                                 | )      |                                          | (140,275    | )                                        |   | (37,775 | ) |   | (13,999 | ) |
|                                                                       |   |                                          |             |                                          |   |                                          |   |                                          |             |                                     |   |  |   |   |  |   |
| **OTHER                INCOME(EXPENSE)**                                   |   |                                          |             |                                          |   |                                          |   |                                          |             |                                     |   |  |   |   |  |   |
| Expense                related to fair value of warrant liability          |   |                                          | (1,504,237  | )                                             |   | (1,504,237                               | )      |                                          | 0           |                                     |   | (1,504,237 | ) |   | 0 |   |
| Interest                expense                                            |   |                                          | (18,604     | )                                             |   | 0                                        |   |                                          | 0           |                                     |   | 0 |   |   | 0 |   |
| Interest                income                                             |   |                                          | 683         |                                          |   | 35                                       |   |                                          | 4           |                                     |   | 29 |   |   | 0 |   |
| **LOSS                BEFORE INCOME TAXES**                                |   |                                          | (2,710,272  | )                                             |   | (1,634,648                               | )      |                                          | (140,271    | )                                        |   | (1,541,983 | ) |   | (13,999 | ) |
|                                                                       |   |                                          |             |                                          |   |                                          |   |                                          |             |                                     |   |  |   |   |  |   |
| Income                Tax Expense                                          |   |                                          | 0           |                                          |   | 0                                        |   |                                          | 0           |                                     |   | 0 |   |   | 0 |   |
|                                                                       |   |                                          |             |                                          |   |                                          |   |                                          |             |                                     |   |  |   |   |  |   |
| **NET                LOSS**                                                |   |                                          | ($2,710,272 | )                                             |   | ($1,634,648                              | )      |                                          | ($140,271   | )                                        |   | ($1,541,983 | ) |   | ($13,999 | ) |
|                                                                       |   |                                          |             |                                          |   |                                          |   |                                          |             |                                     |   |  |   |   |  |   |
| **BASIC                AND DILUTED NET LOSS **PER                SHARE**** |   |                                          |        |                                          |   | ($0.00                                   | )      |                                          | ($0.00      | )                                        |   | ($0.00 | ) |   | ($0.00 | ) |
|                                                                       |   |                                          |             |                                          |   |                                          |   |                                          |             |                                     |   |  |   |   |  |   |
| **WEIGHTED                AVERAGE NUMBER OF COMMON SHARES OUTSTANDING**    |   |                                          |        |                                          |   | 206,715,110                              |   |                                          | 202,129,400 |                                     |   | 207,644,565 |   |   | 202,525,000 |   |

----

**NANOSENSORS,      INC.**

**(A      Development Stage Company)**

**STATEMENTS      OF CASH FLOWS**

**(Unaudited)**

|                                                                                                             |   | For                the CumulativePeriod                fromInception(December                23, 2003) |       | Six                Months Ended |   | Six                Months Ended |   |
|------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------|------------|---------------------------------|--------|---------------------------------|--------|
|                                                                                                             |   | to                May 31, 2006                                                                         |       | May                31, 2006     |   | May                31, 2005     |   |
|                                                                                                             |   | (Restated)                                                                                             |       | (Restated)                      |   |                            |   |
| **CASH                FLOWS FROM OPERATING ACTIVITIES:**                                                         |   |                                                                                                   |       |                            |   |                            |   |
| Net                Loss                                                                                          |   |                                                                                                   | (2,710,272 | )                               |   | (1,634,648                      | )      |   | (140,271 | ) |
| Adjustment                  to reconcile net loss to net cash utilized in operating                  activities: |   |                                                                                                   |            |                            |   |                                 |   |   |  |   |
| Depreciation                and Amortization                                                                     |   |                                                                                                   | 38,084     |                            |   | 1,633                           |   |   | 10,300 |   |
| Write-off                of Licenses                                                                             |   |                                                                                                   | 61,750     |                            |   | —                         |   |   | — |   |
| Issuance                of common stock for expenses                                                             |   |                                                                                                   | 12,902     |                            |   | —                         |   |   | — |   |
| Expense                related to fair value of warrant liability                                                |   |                                                                                                   | 1,504,237  |                            |   | 1,504,237                       |   |   | __ |   |
| Change                in operating assets and operating liabilities:                                             |   |                                                                                                   |            |                            |   |                                 |   |   |  |   |
| Other                Accounts Receivable                                                                         |   |                                                                                                   | (82        | )                               |   | (82                             | )      |   | — |   |
| Prepaid                Expenses                                                                                  |   |                                                                                                   | (1,443     | )                               |   | (1,443                          | )      |   | — |   |
| Accounts                payable and accrued expenses                                                             |   |                                                                                                   | 458,927    |                            |   | (75,659                         | )      |   | 79,500 |   |
| **Net                cash used in operating activities**                                                         |   |                                                                                                   | (635,897   | )                               |   | (205,962                        | )      |   | (50,471 | ) |
| **CASH                FLOWS FROM INVESTING ACTIVITIES**                                                          |   |                                                                                                   |            |                            |   |                                 |   |   |  |   |
| Purchase                of equipment                                                                             |   |                                                                                                   | (8,000     | )                               |   | —                         |   |   | — |   |
| Purchase                of License                                                                               |   |                                                                                                   | (90,000    | )                               |   | —                         |   |   | — |   |
| Website                Development Costs                                                                         |   |                                                                                                   | (5,000     | )                               |   | (5,000                          | )      |   | — |   |
| Deposit                                                                                                          |   |                                                                                                   | (3,000     | )                               |   | —                         |   |   | — |   |
| **Net                cash used in investment activities**                                                        |   |                                                                                                   | (106,000   | )                               |   | (5,000                          | )      |   | 0 |   |
| **CASH                FLOW FROM FINANCING ACTIVITIES:**                                                          |   |                                                                                                   |            |                            |   |                                 |   |   |  |   |
|                                                                                                             |   |                                                                                                   |            |                            |   |                                 |   |   |  |   |
| Net                proceeds from issuance of common stock                                                        |   |                                                                                                   | 864,538    |                            |   | 141,663                         |   |   | 30,000 |   |
| Advances                from officers                                                                            |   |                                                                                                   | —    |                            |   | —                         |   |   | 7,100 |   |
| **Net                cash provided by financing activities**                                                     |   |                                                                                                   | 864,538    |                            |   | 141,663                         |   |   | 37,100 |   |
|                                                                                                             |   |                                                                                                   |            |                            |   |                                 |   |   |  |   |
| **NET                INCREASE IN CASH**                                                                          |   |                                                                                                   | 122,641    |                            |   | (69,299                         | )      |   | (13,371 | ) |
| Cash                at beginning of period                                                                       |   |                                                                                                   | —    |                            |   | 191,940                         |   |   | 13,558 |   |
| **CASH                EQUIVALENTS AT END OF PERIOD**                                                             |   | $                                                                                                      | 122,641    |                            | $      | 122,641                         |   | $ | 187 |   |
|                                                                                                             |   |                                                                                                   |            |                            |   |                                 |   |   |  |   |
|                                                                                                             |   |                                                                                                   |            |                            |   |                                 |   |   |  |   |
| **SUPPLEMENTAL                CASH FLOW INFORMATION:**                                                           |   |                                                                                                   |            |                            |   |                                 |   |   |  |   |
| **Cash                paid during the period for:**                                                              |   |                                                                                                   |            |                            |   |                                 |   |   |  |   |
| Interest                                                                                                         |   |                                                                                                   | 18,604     |                            |   | —                         |   |   | — |   |
| **SUPPLEMENTAL                NON-CASH FINANCING ACTIVITIES**                                                    |   |                                                                                                   |            |                            |   |                                 |   |   |  |   |
| Issuance                of 116,350,000 common shares for services                                                |   |                                                                                                   | 12,902     |                            |   | —                         |   |   | — |   |
| Receipt                of escrow funds reflected as asset and liability                                          |   |                                                                                                   | 940,000    |                            |   | 940,000                         |   |   | — |   |
| Cashless                exercise of warrants into common stock                                                   |   |                                                                                                   | 1,800      |                            |   | 1,800                           |   |   | — |   |
| Warrants                liability charged to additional paid-in capital                                          |   |                                                                                                   | 86,163     |                            |   | 86,163                          |   |   | — |   |
| Dividend                expense on induced conversion of warrants                                                |   |                                                                                                   | 66,750     |                            |   | 66,750                          |   |   | — |   |

----

**NANOSENSORS,      INC.**

**(A      Development Stage Company)**

**STATEMENT      OF SHAREHOLDERS’ EQUITY**

**(Unaudited      and Restated)**

|                                                                                                                                     |   |   |        |   |   |                     |   | Deficit                   |     |   |   |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------------------------|--------|---------------------------|----------|--------|--------|
|                                                                                                                                     |   |   |        |   |   |                     |   | Accumulated               |     |   |   |
|                                                                                                                                     |   |   |        |   |   | Additional               |   | During                the |     |   |   |
|                                                                                                                                     |   |   |        |   |   | Paid                - in |   | Development               |     |   |   |
|                                                                                                                                     |   | Shares |        | Amount |   | Capital                  |   |  Stage               |     | Total  |   |
| **BALANCE                AT DECEMBER 23, 2003****(INCEPTION)**                                                                           |   |   |             |   | $      | —                  |   | $                         | —  |   | $      | — |   | $ | — |   |
|                                                                                                                                     |   |   |             |   |   |                          |   |                      |          |   |   |  |   |   |  |   |
| Issuance                of common stock for license at $.0001                                                                            |   |   | 50,000,000  |   |   | 50,000                   |   |                      | (45,000  | )      |   | — |   |   | 5,000 |   |
| Issuance                of common stock for services and expenses at $.0001 per                share                                     |   |   | 114,500,000 |   |   | 114,500                  |   |                      | (103,050 | )      |   | — |   |   | 11,450 |   |
| Issuance                of common stock for cash at $.005 per share                                                                      |   |   | 95,000      |   |   | 95                       |   |                      | 380      |   |   | — |   |   | 475 |   |
| Issuance                of common stock for cash at $.020 per share- net of issuance                costs                                |   |   | 27,500,000  |   |   | 27,500                   |   |                      | 435,500  |   |   | — |   |   | 463,000 |   |
| Issuance                of common stock for note receivable - at $.005 per share - paid in                June                2004       |   |   | 880,000     |   |   | 880                      |   |                      | 3,520    |   |   | — |   |   | 4,400 |   |
| Issuance                of common stock for payment of debt at                $.020 per share                                            |   |   | 6,200,000   |   |   | 6,200                    |   |                      | 117,800  |   |   | — |   |   | 124,000 |   |
| Issuance                of common stock for expenses at $.00078 per share                                                                |   |   | 1,850,000   |   |   | 1,850                    |   |                      | (398     | )      |   | — |   |   | 1,452 |   |
| Net                Loss                                                                                                                  |   |   | —     |   |   | —                  |   |                      | —  |   |   | (741,499 | ) |   | (741,499 | ) |
| **BALANCE                AS OF NOVEMBER 30, 2004**                                                                                       |   |   | 201,025,000 |   | $      | 201,025                  |   | $                         | 408,752  |   |   | ($741,499 | ) |   | ($131,722 | ) |
|                                                                                                                                     |   |   |             |   |   |                          |   |                      |          |   |   |  |   |   |  |   |
| Issuance                of common stock for cash at $.020 per share                                                                      |   |   | 1,500,000   |   |   | 1,500                    |   |                      | 28,500   |   |   | — |   |   | 30,000 |   |
| Issuance                of common stock for cash at $0.10 per share, net of issuance                costs                                |   |   | 2,500000    |   |   | 2,500                    |   |                      | 222,500  |   |   | — |   |   | 225,000 |   |
|                                                                                                                                     |   |   |        |   |   |                     |   |                      |     |   |   |  |   |   |  |   |
| Net                Loss                                                                                                                  |   |   | —     |   |   | —                  |   |                      | —  |   |   | (334,125 | ) |   | (334,125 | ) |
| **BALANCE                AS OF NOVEMBER 30, 2005**                                                                                       |   |   | 205,025,000 |   | $      | 205,025                  |   | $                         | 659,752  |   |   | ($1,075,624 | ) |   | ($210,847 | ) |
|                                                                                                                                     |   |   |             |   |   |                          |   |                      |          |   |   |  |   |   |  |   |
| Issuance                of common stock for cash at $.025 per share                                                                      |   |   | 500,000     |   |   | 500                      |   |                      | 12,000   |   |   | ____ |   |   | 12,500 |   |
| Issuance                of common stock for cash at $.030 per share                                                                      |   |   | 900,000     |   |   | 900                      |   |                      | 26,100   |   |   | ____ |   |   | 27,000 |   |
|                                                                                                                                     |   |   |        |   |   |                     |   |                      |     |   |   |  |   |   |  |   |
| Net                Loss                                                                                                                  |   |   | —     |   |   | —                  |   |                      | —  |   |   | (92,665 | ) |   | (92,665 | ) |
| **BALANCE                AS OF February 28, 2006 (Unaudited)**                                                                           |   |   | 206,425,000 |   | $      | 206,425                  |   | $                         | 697,852  |   |   | ($1,168,289 | ) |   | ($264,012 | ) |
|                                                                                                                                     |   |   |             |   |   |                          |   |                      |          |   |   |  |   |   |  |   |
| Issuance                of common stock for cash at $.01 per share, net of fees and warrant                liability                     |   |   | 16,000,000  |   |   | 16,000                   |   |                      | __       |   |   | __ |   |   | 16,000 |   |
| Cashless                exercise of 2,250,000 warrants into common stock net of fees and                warrant                liability |   |   | 1,800,000   |   |   | 1,800                    |   |                      | (1,800   | )      |   | — |   |   | — |   |
| Dividends                expensed on induced conversion of warrants - $66,750                                                            |   |   | —     |   |   | —                  |   |                      | —  |   |   | — |   |   | — |   |
| Net                Loss                                                                                                                  |   |   | —     |   |   | —                  |   |                      | —  |   |   | ($1,541,983 | ) |   | ($1,541,983 | ) |
| **BALANCE                AS OF MAY 31, 2006 (Unaudited)**                                                                                |   |   | 224,225,000 |   | $      | 224,225                  |   | $                         | 696,052  |   |   | ($,2,710,272 | ) |   | ($1,789,995 | ) |

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**NANOSENSORS,      INC.**

**(A      Development Stage Company)**

**NOTES      TO FINANCIAL STATEMENTS**

**May      31, 2006**

| 1. | ORGANIZATION: The                  Company was incorporated under the laws of the State of Nevada                  on December                  23, 2003 with authorized common stock of 500,000,000 shares at                  $.001 par                  value.The                  Company was organized for the purpose of the development and marketing                  of                  sensors to detect explosives, chemicals, and biological agents.                  The                  Company is in the development stage and has not started any significant                  commercial operations.The                  Company has elected November 30 as its fiscal year                  end. |
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| 2. | RESTATEMENT: The                      Company’s condensed financial statements for the three and six months                      ended May 31, 2006 and for the cumulative period from inception                      (December                      23, 2003) to May 31, 2006 have been restated to reflect the                      correction of                      the following errors:The                      Company had valued the Unit Warrants issued to the selling                      agents                      incorrectly and the fair value of all warrants issued to the                      investors and                      the selling agents in the private placement (see Note 8) that                      commenced                      during this quarter was accounted incorrectly. The Company                      has now                      properly valued the fair value of the agent warrants at $1,590,400                      resulting in an increase of $300,800. Further, the Company                      has also                      corrected the accounting for the fair value of all warrants                      issued in the                      private placement. Originally, the Company had recorded the                      old fair value                      of the warrant of $1,289,600 as a charge to additional paid-in                      capital.                      The Company has now revised the accounting for the value of                      the warrant of                      $1,590,400 (as revised) by restricting the charge to additional                      paid-in                      capital to the extent of the net proceeds from the issue of                      common stock                      of $102,163 less $16,000 being the par value of the common                      stock issued or                      $86,163 and the excess amount of $1,504,237 ($1,590,400 less                      $86,163) has                      been expensed in the Statement of Operations for the three                      and six months                      periods ended May 31, 2006 and for the cumulative period from                      Inception                      (December 23, 2003) to May 31, 2006. See note 8 for further                      details on the                      accounting of this financing transaction.In                      addition, the Company has revised the Statement of Shareholders’ Equity to                      give effect to the 10:1 stock split (January 5, 2006) retroactive                      to                      December 23, 2003 (date of inception). As a result, for activity                      from date                      of inception till January 5, 2006, the shares in the “Shares” column has                      increased ten-fold, the per share issue price has reduced to                      10% of                      original issue price and adjustments have been made to additional                      paid-in                      capital, where necessary to retain the par value of the common                      stock.                      The                      restatement had no impact on earnings per share for the restated                      periods.                      The combined impact of the restatement is presented below in                      a tabular                      format:Impact                      on Condensed Balance                      Sheet: |
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| **Line                  item description**                        | **                   Amount reported originally** | **                   Restated amount** | **                   Increase (Decrease)** |
|-------------------------------------------------------------------|--------------------------------------------------------|---------------------------------------------|-------------------------------------------------|
| Liability                  for warrants issued                    | 1,289,600                                              | 1,590,400                                   | 300,800                                         |
| Total                  Current Liabilities                        | 2,564,527                                              | 2,865,327                                   | 300,800                                         |
| Additional                  paid-in capital                       | (507,385)                                              | 696,052                                     | 1,203,437                                       |
| Deficit                  accumulated during the development stage | (1,206,035)                                            | (2,710,272)                                 | 1,504,237                                       |
| Total                  shareholders’ deficit                | (1,489,195)                                            | (1,789,995)                                 | 300,800                                         |

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| **Line                  item description**                          | **                   Amount reported originally** | **                   Restated amount** | **                   Increase (Decrease)** |
|---------------------------------------------------------------------|--------------------------------------------------------|---------------------------------------------|-------------------------------------------------|
| Expense                  related to fair value of warrant liability | 0                                                      | 1,504,237                                   | 1,504,237                                       |
| Loss                  before income taxes                           | 37,746                                                 | 1,541,983                                   | 1,504,237                                       |
| Net                  loss                                           | 37,746                                                 | 1,541,983                                   | 1,504,237                                       |

| **Line                  item description**                          | **                   Amount reported originally** | **                   Restated amount** | **                   Increase (Decrease)** |
|---------------------------------------------------------------------|--------------------------------------------------------|---------------------------------------------|-------------------------------------------------|
| Expense                  related to fair value of warrant liability | 0                                                      | 1,504,237                                   | 1,504,237                                       |
| Loss                  before income taxes                           | 130,411                                                | 1,634,648                                   | 1,504,237                                       |
| Net                  loss                                           | 130,411                                                | 1,634,648                                   | 1,504,237                                       |

| **Line                  item description**                          | **                   Amount reported originally** | **                   Restated amount** | **                   Increase (Decrease)** |
|---------------------------------------------------------------------|--------------------------------------------------------|---------------------------------------------|-------------------------------------------------|
| Expense                  related to fair value of warrant liability | 0                                                      | 1,504,237                                   | 1,504,237                                       |
| Loss                  before income taxes                           | 1,206,035                                              | 2,710,272                                   | 1,504,237                                       |
| Net                  loss                                           | 1,206,035                                              | 2,710,272                                   | 1,504,237                                       |

|   | Impact                    on Condensed Statements of Cash Flows:The                    increase in net loss for the six months ended May 31, 2006 and                    for the                    Cumulative Period from Inception (December 23, 2003) to May 31,                    2006 was                    restated to amounts as reflected above and this increase was                    offset by the                    add-back of non-cash charge for “expense related to fair value of warrant                    liability”, with no net impact on the cash flows from operating                    activities. Impact                    on Statement of Shareholders’ Equity:As                    stated above in this footnote.In                    addition, the Company included within Note 3 in its accounting policy                    for Accounting for Warrants and Freestanding Derivative Financial                    Instruments. |
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| 3. | SUMMARY                OF SIGNIFICANT ACCOUNTING POLICIES: *Basis                  of Presentation* The                  interim financial information, as of May 31, 2006 and for the six                  and                  three-month periods ended May 31, 2006 and 2005 and for the cumulative                  period from inception (December 23, 2003) to May 31, 2006, has                  been                  prepared without audit, pursuant to the rules and regulations of                  the                  Securities and Exchange Commission (the "SEC"). Certain information                  and                  footnote disclosures normally included in financial statements                  prepared in                  accordance with generally accepted accounting principles have been                  condensed or omitted pursuant to such rules and regulations, although                  we                  believe that the disclosures made are adequate to provide for fair                  presentation. These financial statements should be read in conjunction                  with the financial statements and the notes thereto, included in                  the                  Company's Annual Report on Form 10-KSB for the fiscal year ended                  November                  30, 2005, previously filed with the                  SEC. |
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|   | In                    the opinion of management, all adjustments (which include normal                    recurring                    adjustments) necessary to present a fair statement of financial                    position                    as of May 31, 2006, and results of operations, statement of shareholders’                    deficit and cash flows for the six and three months ended May                    31, 2006 and                    2005, and for the cumulative period from inception (December                    23, 2003) to                    May 31, 2006 as applicable, have been made. The results of operations                    for                    the six months ended May 31, 2006 are not necessarily indicative                    of the                    operating results for the full fiscal year or any future                    periods. *Basic                    and Diluted Net Income (Loss) Per Share* The                    Company presents “basic” and, if applicable, “diluted” earnings per common                    share pursuant to the provisions of Statement of Financial Accounting                    Standards No. 128, “Earnings per Share” (“SFAS 128”) and certain other                    financial accounting pronouncements. Basic earnings per common                    share are                    calculated by dividing net income by the weighted average number                    of common                    shares outstanding during each period. The calculation of diluted                    earnings                    per common share is similar to that of basic earnings per common                    share,                    except that the denominator is increased to include the number                    of                    additional common shares that would have been outstanding if                    all                    potentially dilutive common shares, such as those issuable upon                    the                    exercise of warrants, were issued during the period. Due                    to a net loss for all periods, the effect of warrants in the                    calculation                    of diluted loss per share is anti-dilutive and has been excluded.                    Outstanding warrants as of May 31, 2006 and 2005 aggregated 76,375,000                    and                    58,325,000, respectively.                    (All earnings per common share calculation reflect the 10:1 stock                    split                    made effective as of January 5, 2006). *Accounting                    for Warrants and Freestanding Derivative Financial                    Instruments* The                    Company evaluates its warrants and other contracts to determine                    if the                    warrants or the embedded components of those contracts qualify                    as                    derivatives to be separately accounted for under Statement of                    Financial                    Accounting Standards 133 “Accounting for Derivative Instruments and                    Hedging Activities” (“FAS 133”) and related interpretations including                    EITF 00-19 “Accounting for Derivative Financial Instruments Indexed to,                    and Potentially Settled in, a Company's Own Stock” (“EITF 00-19”).                     If the warrant is determined to be a derivative or the embedded                    feature is                    required to be bifurcated, the fair value of the warrants or                    the embedded                    feature is recorded as a liability and marked-to-market each                    balance sheet                    date. The change in fair value of the warrants or the embedded                    feature, if                    any, at each balance sheet date is recorded in the Statement                    of Operations                    as other income or expense. Upon conversion or exercise of a                    warrant or                    other convertible instruments, the derivative asset or liability                    is marked                    to fair value at the conversion/exercise date and then that fair                    value is                    reclassified to equity. Equity instruments that are initially                    classified                    as equity that become subject to reclassification under FAS 133                    later are                    reclassified to liability at the fair value of the instrument                    on the                    reclassification date. In the event that the warrants are determined                    to be                    equity, no value is assigned for financial reporting purposes.                     The                    valuation of the warrant liability is based on a Black Scholes                    model and                    may vary significantly, based on factors such as the exercise                    price,                    remaining time left to exercise the warrants, recent volatility                    (change)                    in the price of Company’s common stock, risk free interest rate and the                    market price of our common stock. |
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| 4. | SHAREHOLDERS’                EQUITY: The                  Company commenced a private placement of its equity securities                  during the                  quarter ended May 31, 2006, and issued 16,000,000 shares of Common                  Stock                  and 16,000,000 Warrants at $0.01 per each share and warrant for                  gross                  proceeds of $160,000 (see Note 7. Significant Event). Fees associated                  with                  this offering and recorded into Additional Paid in Capital totaled                  $57,837. During                  the current quarter, the Company reduced the exercise price on                  750,000 and                  1,500,000 warrants held by one investor from $.02 and $.03 respectively                  to                  $.01 if these were exercised within 30 days and on a cashless basis.                  The                  investor exercised the warrants at the reduced price on a cashless                  basis                  and the Company issued a total of 1,800,000 shares of common stock.                  The                  Company recorded this as modification of the warrant and the resulting                  difference between the fair value of the warrant immediately prior                  to                  modification and the fair value of the modified warrant was recorded                  as                  dividend expense. Due to cumulative deficit, the dividend expense                  of                  $66,750 was recorded against additional paid-in capital resulting                  in no                  impact on additional paid-in capital. The cashless exercise was                  recorded                  by accounting for the issue of 1.8 million shares at the par value                  in                  “common stock” with an offset to “Additional Paid in                  Capital”. |
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| 5. | RELATED                PARTY TRANSACTIONS: During                the year ended November 30, 2005, the                President and Chief Executive Officer of the Company made advances                to the                Company in the aggregate amount of $9,658. These advances are non-interest                bearing and are payable upon demand. As of May 31, 2006, accounts                and                advances payable to related parties include consulting fees payable                to Dr.                Ted Wong and Dr. Mathew Zuckerman in the amounts of **$**                93,775 ** **                and $32,391 (see Part II Other Information - Item 1. Legal Proceedings),                respectively. |
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| 6. | GOING                CONCERN: The                  Company has incurred recurring operating losses in each of the                  periods                  since Inception (December 23, 2003) to May 31, 2006 aggregating                  $2,710,272                  ** **                  and has a working capital deficit of $1,801,161 as of May 31, 2006.                  The                  recurring operating losses are due to the Company being in the                  development                  stage and since we have not yet established commercial operations.                  The                  Company has no cash flows from revenues and has been spending available                  cash on research and development activities and administrative                  costs.The                  Company will need additional capital for its future planned activity                  and                  for payment of its current liabilities, which raises substantial                  doubt                  about its ability to continue as a going concern. Continuation                  of the                  Company as a going concern is dependent upon sales, the exercising                  of                  outstanding warrants, and the proceeds from additional common stock                  offerings or debt financings. The net proceeds from these sources                  are                  expected to meet the Company’s need for the coming year.If                  the Company does not obtain additional capital from these sources,                  other                  funds will be needed in order to produce other products currently                  in                  development. If additional funds are required earlier than anticipated                  there can be no assurance that the Company will be able to                  obtain such funds from financial institutions, government funding,                  the                  exercise of the warrants, and otherwise on a basis deemed                  acceptable. |
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| 7. | COMMITMENTS                AND CONTINGENCIES: The                Company leases office space in Santa Clara,                California under an operating lease, with a two year commitment expiring                February 29, 2008. The monthly payments of base rent plus operating                expenses totaled $16,404 for the six months ended on May 31, 2006                and                $8,986 for the three months ended on May 31, 2006. The Company’s remaining                obligations under this lease are $55,641 for period from June 1,                2006 to                February 28, 2008.  |
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| 8. | SIGNIFICANT                EVENT: *Private                  Placement*On                  May 11, 2006 the Company commenced a private offering of its securities                  consisting of shares of Common stock and Common Stock Purchase                  Warrants.                  The terms and conditions of various agreements provide for certain                  key                  features related to this offering, which are briefly summarized                  as                  follows: |
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|   | The                    Securities Purchase Agreement provides that each unit is at $.01                    with a                    minimum investment of $50,000. Each unit entitles the investor                    to one                    common share (par value of $.001) and one warrant (“Investor Warrant”).                    The offering is for 1,000,000 units with an additional 750,000                    units as                    oversubscription amount. Pursuant to this agreement, the Company                    agreed                    that 60% of the gross proceeds will remain in escrow until the                    registration statement contemplated by the Registration                    Rights Agreement is declared effective by the Securities and Exchange                    Commission and the Company obtains shareholder approval to increase                    its                    authorized capital. Investor Warrants are exercisable at $0.04                    per share                    for a period of five years from the date of issuance. Investor                    Warrants                    have provision for cashless exercise at option of holder, redemption                    feature at option of the Company, transfer restrictions, registration                    rights and exercise limitations. The agreement also provides                    for                    appointment to its Board of Directors (the “Board”) of one independent                    director nominated for election by purchasers of a majority of                    the units                    subscribed for and nominate such individual for reelection to                    the Board                    for at least two subsequent years. The                    Company is required to pay to a Selling Agent, under a Selling                    Agent                    Agreement, a 10% commission on gross proceeds received by the                    Company and                    a 3% non-accountable expense reimbursement. The 10% commission                    is                    initially payable only on the non-escrowed funds and on the escrowed                    funds                    it is payable when they are released to the Company. Also the                    Company is                    required to issue to the Selling Agent, warrants (“Agent Warrant”) equal                    to 20% of total number of shares sold in the private placement.                    Each Agent                    Warrant is to be issued to the Selling Agent for $.0001 and the                    warrant is                    exercisable into one common share and one warrant at $.01 each.                    The                    additional warrant is further convertible into common shares                    at $.01 each.                    Both warrants are exercisable for five years. The terms of the                    Agent                    Warrants are generally similar to Investor Warrants, except for                    initial                    payment of $.0001 for each Agent Warrant compared to none for                    Investor                    Warrant; exercise price of $.01 compared to $.04; consideration                    is one                    common share and one warrant for each Agent Warrant as compared                    to just                    one common share for the Investor Warrant and the Agent Warrants                    have a                    cashless exercise at any time, while the Investor Warrants have                    a cashless                    exercise, if after 180 days following the final closing of the                    offering,                    an effective registration statement is not available for the                    resale of all                    of the warrant shares to be issued against the warrant. The                    Registration Rights Agreement provides for preparing and filing                    with SEC a                    Registration Statement covering the resale of all Registrable                    Securities                    not already covered by an existing and effective Registration                    Statement                    for an offering to be made on a continuous basis pursuant to                    Rule 415.                    Each of the following events of non-compliance, (i) late filing                    of a                    Registration Statement, (ii) the Registration Statement is not                    declared                    effective by SEC prior to the 100th                    day or 120th                    day (as the case may be) or (iii) if after the effective date,                    the                    Registration Statement ceases to be effective for any reason,                    would result                    in a penalty of 2% per month of purchase price paid by each Investor                    up to                    a maximum of 6 months for each penalty event. The Company at                    its option                    may, instead of cash, issue shares for the 2% penalty based on                    the                    five-day average of closing bid price of the Company’s Common Stock for                    five trading days immediately preceding the penalty Event. As                    of May 31, 2006, in the first closing, the Company received $400,000                    of                    gross proceeds of which $240,000 have been held in escrow. The                    amount held                    in escrow has been reflected as a current liability as no shares                    have been                    issued, pending the satisfaction of conditions by the Company.                    For the                    balance $160,000 received by the Company, it has issued 16,000,000                    each of                    common shares and warrants. Expenses and fees totaling $57,837,                    including                    commission and non-accountable expense reimbursement to the Agent,                    have                    been recorded against additional paid-in capital. The Company                    also                    received $700,000 in additional deposits towards the second closing                    of the                    private placement, all of which were held in escrow as of May                    31,                    2006. The                    company has accounted for the warrants issued to the investors                    and agent                    as follows: Under provisions of Statement of Financial Accounting                    Standards No. 133, Accounting for Derivative Instruments and                    Hedging                    Activities, an embedded conversion option should be bifurcated                    and                    accounted for separately as a derivative instrument, unless the                    specific                    requirements for equity classification of the embedded conversion                    option,                    as stated in EITF 00-19: Accounting for Derivative Financial                    Instruments                    Indexed to, and Potentially Settled in, a Company's Own Stock                    (“EITF                    00-19”) are met. EITF   00-19 provides that an equity classification                    is appropriate if the settlement criteria set forth therein for                    such                    classification are met and that the additional conditions necessary                    for                    equity classification, set forth therein, are also met. Since                    the                    liquidated damages under the Registration Rights Agreement could                    in some                    cases exceed a reasonable discount for delivering unregistered                    shares                    these warrants have been classified as a liability until the                    earlier of                    the date the warrants are exercised or expire, as required per                    paragraphs                    14 to 18 of EITF 00-19. Further, in accordance with EITF 00-19,                    the                    Company has allocated a portion of the offering proceeds to the                    warrants                    based on their fair                    value.  |
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|   | The                    company used the Black Scholes option-pricing model with the                    following                    assumptions: an expected life equal to the contractual term of                    the                    warrants (five years); no dividends; a risk free rate of return                    of 4.95%,                    which equals the five-year yield on Treasury bonds at constant                    (or fixed)                    maturity; and volatility of 201%. The warrants issued during                    the current                    quarter to investors and the Selling Agent (16,000,000 and 3,000,000,                    respectively) were initially valued on the date of issue at $1,590,400,                    which has been recorded as a debit to additional paid in capital                    for                    $86,163 being the net proceeds of $102,163 less $16,000 par value                    of                    common stock issued, and the excess of $1,504,237 has been expensed                    in the                    statement of operations.  EITF                    00-19 requires that the Company revalue the warrants as a derivative                    instrument periodically to compute the value in connection with                    changes in                    the underlying stock price and other assumptions, with the change                    in value                    recorded as interest expense or interest income. Upon the earlier                    of the                    warrant exercise or the expiration date, the warrant liability                    will be                    reclassified into shareholders’ equity. Until that time, the warrant                    liability will record at fair value based on the methodology                    described                    above. Changes in the fair value during each period will be recorded                    as                    other income or other expense. There was no adjustment required                    as of May                    31, 2006 for Change in Fair Value. Liquidated damages under the                    registration rights agreement will be expensed as incurred and                    will be                    included in operating expenses. The                    securities sold in the Offering have not been registered under                    the                    Securities Act of 1933, as amended, and were offered and sold                    in reliance                    upon the exemption from registration set forth in Section 4(2)                    thereof and                    Regulation D, promulgated under the Securities Act. The Company                    believes                    that the investors and the selling agent are “accredited investors,” as                    such term is defined in Rule 501(a) promulgated under the Securities                    Act.*Settlement                    Agreement and General Release*The                    Company has recorded a total liability of $119,500 for services                    rendered                    by three consultants for the period from March 2004 to February                    2005.                    Subsequent to end of current quarter, the Company settled with                    these                    consultants for a total amount of $56,500 to be paid in two installments.                    The difference of $63,000 between the recorded amount and settled                    amount                    of the liability was recorded in the current quarter as change                    in estimate                    based on the subsequent settlement. The first installment of                    $29,750 has                    been paid subsequent to May 31, 2006 and the balance amount is                    payable                    from the proceeds of the moneys held in escrow, when released                    (see under                    Private Placement in this Note). *Notice                    to Class A Warrant Holders*On                    May 9, 2006 the Company announced in a Report on Form 8-K that                    it intended                    to reduce the exercise price on all if its outstanding Class                    A Warrants.                    Subsequent to the end of current quarter, the Company sent a                    notice to all                    holders of its outstanding Class A Warrants notifying them that                    the                    Company has reduced the exercise price on all of its Class A                    Warrants, of                    which there are currently 26,600,000 outstanding, to $0.01 for                    a period of                    30 days. At the end of such 30 day period, the exercise price                    of the Class                    A Warrants will reset to its current price of $0.03 per share.                    The                    dividend expense, if any, on account of reduction of the exercise                    price of                    the warrants will be accounted in the next                    quarter. |
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| 9. | SUBSEQUENT                EVENTS: *Consulting                  Agreements*Subsequent                  to the end of current quarter, the Company entered into consulting                  agreements with five technical consultants. Under the terms of                  these                  consulting agreements the Company will pay each individual $1,500                  per                  month and issue each consultant warrants exercisable for 1,000,000                  shares                  of its common stock at a per share exercise price based on the                  Company’s                  closing price per share on the date each consulting agreement was                  executed. These warrants vest on a monthly basis over a twenty-four                  month                  period. The Company can terminate these agreements, without cause,                  by                  providing two months notice. If the Company terminates these agreements                  within twenty-four months, then the unvested warrants are cancelled.                  These                  warrants were issued in reliance upon the exemption from registration                  set                  forth in Section 4(2) of the Securities Act of 1933, as amended                  and the                  securities were issued without any form of general solicitation                  or general                  advertising . *Warrant                  Exercises*Subsequent                  to the end of current quarter, holders of an aggregate of 12,150,000                  Class                  A and Bridge warrants exercised those securities, on a cashless                  basis, at                  an exercise price of $0.01, pursuant to which the Company issued                  a total                  of 10,600,978 shares of Common Stock. These transactions were consummated                  in reliance upon the exemption from registration set forth in Section                  4(2)                  of the Securities Act of 1933, as                  amended. |
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|   | *Private                    Placement*In                    June 2006, the Company closed its private placement of units                    and has                    raised cumulative gross proceeds of $1,729,500 from three closings                    and the                    sale of a total number of units consisting of 172,950,000 shares                    of common                    stock and investor warrants to purchase 172,950,000 shares of                    common                    stock. Investors purchasing $204,500 of units in the third closing                    waived                    the escrow requirement and authorized the release of their entire                    investment to the Company. Of the escrow amount, $25,000 which                    represented                    excess moneys sent by one investor was refunded in June 2006.                    Accordingly,                    of the gross proceeds received, $915,000 is being retained in                    escrow until                    the Company satisfies post-closing covenants. On                    a cumulative basis to date, the aggregate offering proceeds released                    to                    the Company are $814,500, and the net proceeds to the Company,                    after                    payment of expenses and commissions, are approximately $645,000.                    The                    Company intends to use the offering proceeds for working capital                    and                    payment of accrued compensation. The Company paid cumulatively                    $81,450 to                    the selling agent and issued Agent Warrants to the selling agent                    to                    purchase 16,290,000 units of the Company’s securities, with each unit                    consisting of one share common stock and one common stock purchase                    warrant. In                    this private placement, the Company has issued an aggregate of                    81,450,000                    shares of common stock and investor warrants for 81,450,000 shares                    of                    common stock to the investors and will issue them additional                    91,500,000                    shares of common stock and investor warrants to purchase 91,500,000                    shares                    of common stock upon satisfaction of the post-closing covenants.                    In                    addition, assuming the Company is able to satisfy these post-closing                    covenants, the Company will issue an additional 18,300,000 Agent                    Warrants                    to the selling agent and pay commissions to the selling agents                    of $91,500                    upon the release of the remaining funds from escrow. The                    investors that agreed to waive the escrow requirement also agreed                    to a                    “lock-up” provision restricting the resale of the securities purchased                    in                    the Offering for a period commencing on the closing date and                    ending six                    months after the first to occur of either the date that the registration                    statement contemplated by the Registration Rights Agreement is                    declared                    effective by the Securities and Exchange Commission or the date                    that such                    securities may first be sold pursuant to Rule                    144. |
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**FACTORS      THAT MAY AFFECT FUTURE RESULTS**

*This      report contains forward-looking statements within the meaning of Section 27A      of      the Securities Act of 1933, as amended, and Section 21E of the Securities      Exchange Act of 1934, as amended. These forward-looking statements include,      but      are not limited to, statements concerning our plans to continue development      of      our current product candidates; address certain markets; engage third-party      manufacturers; and evaluate additional product candidates for subsequent      commercial development. In some cases, these statements may be identified by      terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,”“believe,” “estimate,” “predict,” “potential,” or “continue,” or the negative of      such terms and other comparable terminology. Although we believe that the      expectations reflected in the forward-looking statements contained herein are      reasonable, we cannot guarantee future results, levels of activity, performance      or achievements. These statements involve known and unknown risks and      uncertainties that may cause our or our industry’s results, levels of activity,      performance or achievements to be materially different from those expressed      or      implied by forward-looking statements. Factors that may cause or contribute      to      such differences include, among other things, those discussed under the captions      “Business,” “Risk Factors” and “Management’s Discussion and Analysis-Plan of      Operation” in our reports and registration statements filed with the Securities      and Exchange Commission.*

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

*Management’s      Discussion and Analysis of Financial Condition and Results of Operations should      be read together with our financial statements and related notes included      elsewhere in this Quarterly Report on Form 10-QSB. This Quarterly Report on      Form      10-QSB, including the following discussion, contains trend analysis and other      forward-looking statements within the safe harbor provisions of the Private      Securities Litigation Reform Act of 1995. Any statements in this Quarterly      Report on Form 10-QSB that are not statements of historical facts are      forward-looking statements. These forward-looking statements are based on a      number of assumptions and involve risks and uncertainties. Actual results may      differ materially from those set forth in such forward-looking statements as      a      result of factors set forth elsewhere in this Quarterly Report on Form 10-QSB.      All share and per share data in this section, as well as in the entire report,      other than the historical financial statements, unless otherwise noted, give      retroactive effect to the 10 for 1 forward split declared by us on January      12,      2006.*

**Restatement**

**Critical      Accounting Policies**

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*Development      Stage Company*

*Start-up      Costs*

*Research      and Development*

*Income      Taxes*

*Accounting      for Warrants and Freestanding Derivative Financial Instruments*

**Results      of Operations for the Three Months Ended May 31, 2006 as Compared to the Three      Months Ended May 31, 2005.**

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**Results      of Operations for the Six Months Ended May 31, 2006 as Compared to the Six      Months Ended May 31, 2005.**

**Liquidity      and Capital Resources at May 31, 2006**

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On      November 10, 2005, we closed on an offering of 250,000 units, or an aggregate      of      $250,000, with each Unit consisting of ten shares of common stock, par value      $.001 and one five year warrant expiring on November 30, 2010, to purchase      ten      shares of Common Stock at an exercise price of $.225 per share. As consideration      for acting as financial consultant to us in this offering, Meyers Associates,      L.P. received a lump sum financial advisory fee of $10,000 plus reimbursement      of      certain reasonable expenses in lieu of any and all other compensation which      had      been due under the Placement Agent Agreement dated April 2004. The $225,000      of      net proceeds are being used for working capital including the Chief Executive      Officer's salary and payment of certain past due accounts      payable.

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**Plan      of Operation**

**ITEM      3. CONTROLS AND PROCEDURES**

*Disclosure      Controls*

*Internal      Controls*

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**PART      II. OTHER INFORMATION**

**ITEM      1. LEGAL PROCEEDINGS.**

In      addition, we may be subject to other claims and litigation arising in the      ordinary course of business. Our management considers that any liability from      any reasonably foreseeable disposition of such other claims and litigation,      individually or in the aggregate, would not have a material adverse effect      on      our consolidated financial position, results of operations or cash      flows.

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

*Private      Placement*

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*Warrant      Issuances*

*Warrant      Exercises*

**ITEM      3. DEFAULTS UPON SENIOR      SECURITIES.**

None

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

None

**ITEM      5. OTHER INFORMATION.**

*Notice      to Class A Warrant Holders*

In      our Report of Form 8-K filed on May 9, 2006, we stated our      intention to reduce the exercise price on all of our outstanding Class A      Warrants. Subsequent to the quarter end, we sent a notice to all holders of      our      outstanding Class A Warrants notifying them that we have reduced the exercise      price on all of our Class A Warrants, of which there are currently 26,600,000      outstanding, to $0.01 for a period of 30 days. At the end of such 30 day period,      the exercise price of the Class A Warrants will reset to its current price      of      $0.03 per share.

*Lease      Extension*

On      June 1, 2006, we executed an amendment to our office lease      dated February 12, 2004, whereby we agreed to extend our lease to February      28,      2008. Our remaining obligations under this lease are $23,155 for the period      of      June 1, 2006 through February 28, 2007, and $32,486 for March 1, 2007 through      February 28, 2008.

*Formation      of Technical Advisory Board*

On      July 12, 2006, we announced the establishment of our      Technical Advisory Board, which consists of five experts in the nanotechnology      industry. We formed our advisory board to assist us in identifying patented      or      patent-pending technologies at universities and government laboratories. The      Technical Advisory Board includes Professor David Tomanek of Michigan State      University, Professor Evangelyn Alocilja of Michigan State University, Professor      Seunghun Hong of Seoul National University, Professor Hee Cheul Choi of Postech      University and Dr. Yung Doug Suh of Korea Research Institute of Chemical      Technology. Each of the advisory board members also entered into separate      two-year consulting agreements with us pursuant to which we will pay each of      these individuals a monthly retainer of $1,500 and grant them warrants to      purchase 1,000,000 shares of our common stock on the terms described in Item      2      of Part II of this Report on Form 10-QSB, above.

22

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**ITEM      6. EXHIBITS.**

|                          |   |                                                                                                                                                                                                                                       |   | Incorporated                by Reference |   |    |
|-------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|--------|---------|
| Exhibit                Number |   | Exhibit                Description                                                                                                                                                                                                         |   | Form                                     |   | Dated   |   | Exhibit |   | Filed                Herewith |
|                          |   |                                                                                                                                                                                                                                       |   |                                     |   |    |   |   |   |   |
| 4.1                           |   | Form                of Investor Warrant issued in connection with the sale of the Units                in                Private Placement                                                                                                 |   | 8-K                                      |   | 6/28/06 |   | 4.1 |   |   |
|                          |   |                                                                                                                                                                                                                                       |   |                                     |   |    |   |   |   |   |
| 4.2                           |   | Form                of Agent Warrant issued in connection with the sale of the Units                in                Private Placement                                                                                                    |   | 8-K                                      |   | 6/28/06 |   | 4.2 |   |   |
|                          |   |                                                                                                                                                                                                                                       |   |                                     |   |    |   |   |   |   |
| 10.1                          |   | Form                of Securities Purchase Agreement between NanoSensors, Inc. and                Investors                                                                                                                                |   | 8-K                                      |   | 6/28/06 |   | 10.1 |   |   |
|                          |   |                                                                                                                                                                                                                                       |   |                                     |   |    |   |   |   |   |
| 10.2                          |   | Form                of Registration Rights Agreement between NanoSensors, Inc. and                Investors                                                                                                                                |   | 8-K                                      |   | 6/28/06 |   | 10.2 |   |   |
|                          |   |                                                                                                                                                                                                                                       |   |                                     |   |    |   |   |   |   |
| 10.3                          |   | Amendment                to Lease dated June 1, 2006                                                                                                                                                                                       |   | 10-QSB                                   |   | 7/17/06 |   | 10.1 |   |   |
|                          |   |                                                                                                                                                                                                                                       |   |                                     |   |    |   |   |   |   |
| 31.1                          |   | Certification                of Chief Executive Officer and Chief Financial Officer pursuant to                Section 302 of the Sarbanes-Oxley Act of 2002                                                                          |   |                                     |   |    |   |   |   | X |
|                          |   |                                                                                                                                                                                                                                       |   |                                     |   |    |   |   |   |   |
| 32.1                          |   | Certification                of Chief Executive Officer and Chief Financial Officer pursuant to                18                U.S.C. Section 1350, as adopted pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002. |   |                                     |   |    |   |   |   | X |

**SIGNATURES**

|         |                                 |                                                                                                               |
|--------------|--------------------------------------|--------------------------------------------------------------------------------------------------------------------|
|         | **NANOSENSORS,                INC.** |
|    |                            |                                                                                                          |
|         | By:                                  | /s/                Ted Wong                                                                                        |
|         | Name:Title:                          | Ted                WongPresident,                Chief Executive Officer andChief                Financial Officer |

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