**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      DC 20549**





**FORM
      10-QSB**





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


**For
      the Quarterly Period and Nine Months Ended August 31, 2007**


**or**


**[
      ]**  **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.**


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





**Nevada**
            **200452700**(State
                or other jurisdiction of
              incorporation
                or organization)
            (I.R.S.
                Employer Identification No.)**1475
                Veterans Blvd, Redwood City**
            **94063**(Address
                of principal executive offices)
            (Zip
                Code)




**Issuer’s
      telephone number: (650) 641-2349**





**1800
                Wyatt Drive, Suite 2, Santa Clara,
                CA, 95054**(Former
                Name, Former Address and Former Fiscal
                Year, if ChangesSince
                Last
                Report




Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to the filing requirements
      for
      the past 90 days. Yes T No o





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





Indicate
      the number of shares outstanding of each of the issuer's classes of common
      stock, as of the latest practicable date.





Class
            
            Outstanding
                at October 12, 2007Common
                Stock, $0.001 par value per share
            
            411,822,670
                shares





Transitional
      Small Business Disclosure Format (check one):   o Yes T No


-1-


**NANOSENSORS,
      INC.**





**INDEX**




Page(s)**PART
                I. FINANCIAL INFORMATION****ITEM
                1. CONDENSED FINANCIAL STATEMENTS**
            3Balance
                Sheets - August 31, 2007 (unaudited) and November 30, 2006
            3Statements
                of Operations for the Periodfrom
                date of inception to August 31, 2007 and the nine and three month
                periods
                ended August 31, 2007 and
                August 31, 2006 (unaudited)
            4Statements
                of Cash Flows for the Periodfrom
                date of inception to August 31, 2007 and the nine month periods ended
                August 31, 2007 and
                August 31, 2006 (unaudited)
            5Statement
                of Shareholders’ Deficit for the Periodfrom
                the date of inception to August 31, 2007 (unaudited)
            6Notes
                to Financial Statements (unaudited)
            7**ITEM
                2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF****FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS**
            15**ITEM
                3. CONTROLS AND PROCEDURES**
            22**PART
                II. OTHER INFORMATION****ITEM
                1. LEGAL PROCEEDINGS**.
            23**ITEM
                2. CHANGES IN SECURITIES**
            23**ITEM
                3. DEFAULTS UPON SENIOR SECURITIES**
            23**ITEM
                4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
                HOLDERS**
            23**ITEM
                5. OTHER INFORMATION**
            23**ITEM
                6. EXHIBITS**
            23Signatures
            
            24





Certifications




-2-


**PART
      I. FINANCIAL INFORMATION**


**ITEM
      1. FINANCIAL STATEMENTS**





**NANOSENSORS,
      INC.**


**(A
      Development Stage Company)**


**CONDENSED
      BALANCE SHEETS**


**August
                  31, 2007**
              
              **November
                  30, 2006****(Unaudited)****ASSETS****CURRENT
                  ASSETS:**Cash
              
              $
              95,848
              
              $
              244,915Cash
                  held in escrow
              
              
              -
              
              
              715,000Notes
                  receivable
              
              
              40,000
              
              
              -Other
                  current assets
              
              
              6,210
              
              
              28,426**TOTAL
                  CURRENT ASSETS**
              
              
              142,058
              
              
              988,341**PROPERTY
                  AND EQUIPMENT - net of accumulated depreciation****of
                  $0 and $5,440 for August 31, 2007 and November 30, 2006,
                  respectively**
              
              
              -
              
              
              14,030**OTHER
                  ASSETS:**Deposit
                  and other assets - net of amortization
              
              
              5,083
              
              
              6,333**TOTAL
                  ASSETS**
              
              $
              147,141
              
              $
              1,008,704**LIABILITIES
                  AND SHAREHOLDERS' DEFICIT****CURRENT
                  LIABILITIES:**Accounts
                  payable and accrued expenses
              
              $
              282,994
              
              $
              281,338Accounts
                  payable - related party
              
              
              6,250
              
              
              37,500Derivative
                  liability from warrants issued
              
              
              553,440
              
              
              2,106,300Accrued
                  employee benefits
              
              
              10,317
              
              
              7,987Client
                  escrow funds
              
              
              -
              
              
              715,000**TOTAL
                  CURRENT LIABILITIES**
              
              
              853,001
              
              
              3,148,125**COMMITMENTS
                  AND CONTINGENCIES****SHAREHOLDERS'
                  DEFICIT:******Preferred
                  stock, $.001 par value; 20,000,000 sharesauthorized;
                  no shares issued
              
              
              -
              
              
              -Common
                  stock, $.001 par value; 950,000,000 and 500,000,000 sharesauthorized;
                  406,726,698 and 332,226,698 shares issuedand
                  outstanding in 2007 and 2006, respectively
              
              
              406,727
              
              
              332,227Additional
                  paid-in capital
              
              
              872,836
              
              
              714,250Deficit
                  accumulated during the development stage
              
              
              (1,985,423
              )
              
              (3,185,898
              )(705,860
              )
              
              (2,139,421
              )**TOTAL
                  LIABILITIES AND SHAREHOLDERS' DEFICIT**
              
              $
              147,141
              
              $
              1,008,704




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


-3-


**NANOSENSORS,
      INC.**


**(A
      Development Stage Company)**


**STATEMENTS
      OF OPERATIONS**


**(Unaudited)**


**For
                      the Cumulative Period from Inception (December 23, 2003) to
                      August 31,
                      2007**
                  
                  
                  **Nine
                      Months Ended August 31, 2007**
                  
                  
                  **Three
                        Months Ended August 31, 2007**
                  
                  
                  **Three
                      Months Ended August 31, 2007**
                  
                  
                  **Three
                      Months Ended August 31, 2006****NET
                      SALES**
                  
                  $
                  11,688
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  -**COSTS
                      AND EXPENSES:**General
                      and administrative expense
                  
                  
                  1,961,464
                  
                  
                  849,680
                  
                  
                  318,865
                  
                  
                  324,124
                  
                  
                  190,052Research
                      and development
                  
                  
                  638,438
                  
                  
                  83,479
                  
                  
                  30,200
                  
                  
                  15,000
                  
                  
                  30,200Depreciation
                      and amortization
                  
                  
                  42,871
                  
                  
                  2,513
                  
                  
                  2,517
                  
                  
                  958
                  
                  
                  884Write-off
                      of licenses
                  
                  
                  61,750
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -**TOTAL
                      COSTS AND EXPENSES**
                  
                  
                  2,704,523
                  
                  
                  935,672
                  
                  
                  351,582
                  
                  
                  340,082
                  
                  
                  221,136**LOSS
                      FROM OPERATIONS**
                  
                  
                  (2,692,835
                  )
                  
                  (935,672
                  )
                  
                  (351,582
                  )
                  
                  (340,082
                  )
                  
                  (221,136
                  )**OTHER
                      INCOME (EXPENSE)**Write-off
                      of acquistion cost
                  
                  
                  (67,255
                  )
                  
                  (67,255
                  )
                  
                  -
                  
                  
                  (67,255
                  )Income
                      (expense) related to fair value of warrant liability
                  
                  
                  801,686
                  
                  
                  2,196,360
                  
                  
                  (4,241,344
                  )
                  
                  (69,180
                  )
                  
                  (2,737,107
                  )Interest
                      expense
                  
                  
                  (40,742
                  )
                  
                  (638
                  )
                  
                  (21,500
                  )
                  
                  (385
                  )
                  
                  (21,500
                  )Interest
                      income
                  
                  
                  13,723
                  
                  
                  7,680
                  
                  
                  3,205
                  
                  
                  1,080
                  
                  
                  3,170**INCOME
                      (LOSS) BEFORE INCOME TAXES**
                  
                  
                  (1,985,423
                  )
                  
                  1,200,475
                  
                  
                  (4,611,221
                  )
                  
                  (475,822
                  )
                  
                  (2,976,573
                  )Provision
                      (credit) for income taxes
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -**NET
                      INCOME (LOSS)**
                  
                  $
                  (1,985,423
                  )
                  $
                  1,200,475
                  
                  $
                  (4,611,221
                  )
                  $
                  (475,822
                  )
                  $
                  (2,976,573
                  )**BASIC
                      AND DILUTED NET INCOME (LOSS) PER SHARE**
                  
                  $
                  (0.01
                  )
                  $
                  0.00
                  
                  $
                  (0.02
                  )
                  $
                  (0.00
                  )
                  $
                  (0.01
                  )**WEIGHTED
                      AVERAGE NUMBER OF**
                  
                  
                  247,370,746
                  
                  
                  398,936,552
                  
                  
                  233,941,005
                  
                  
                  406,726,698
                  
                  
                  287,800,929**COMMON
                      SHARES OUTSTANDING**


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


-4-


**NANOSENSORS,
      INC.**


**(A
      Development Stage Company)**


**STATEMENTS
      OF CASH FLOWS**


**(Unaudited)**


For
                  the Cumulative Period fromInception
                  (December 23, 2003)
              
              Nine
                  Months Ended
              
              Nine
                  Months Endedto
                  August 31, 2007
              
              August
                  31, 2007
              
              August
                  31, 2006**CASH
                  FLOWS FROM OPERATING ACTIVITIES:**Net
                  Income (loss)
              
              $
              (1,985,423
              )
              $
              1,200,475
              
              $
              (4,611,221
              )Adjustment
                  to reconcile net income (loss) to net cash utilized inoperating
                  activities:Write-off
                  of licenses
              
              
              61,750
              
              
              -
              
              
              -Depreciation
                  and amortization
              
              
              42,871
              
              
              2,513
              
              
              2,517Stock
                  based compensation and warrants issued
              
              
              276,738
              
              
              203,086
              
              
              38,583Expenses
                  (income) related to fair value of warrant liability
              
              
              (801,686
              )
              
              (2,196,360
              )
              
              4,241,344Change
                  in operating assets and operating liabilities:Prepaid
                  expenses and other assets
              
              
              (6,210
              )
              
              22,216
              
              
              (26,007
              )Accrued
                  employee benefits
              
              
              2,747
              
              
              2,330
              
              
              1,269Accounts
                  payable and accrued expenses
              
              
              424,925
              
              
              (25,482
              )
              
              (194,195
              )**Net
                  cash used by operating activities**
              
              
              (1,984,288
              )
              
              (791,222
              )
              
              (547,710
              )**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Purchase
                  of equipment
              
              
              (19,470
              )
              
              -
              
              
              (1,332
              )Proceeds
                  from return of equipment
              
              
              8,655
              
              
              8,655
              
              
              -Purchase
                  of license
              
              
              (90,000
              )
              
              -
              
              
              -Deposit
                  and other deferred costs
              
              
              (8,000
              )
              
              -
              
              
              (5,000
              )Notes
                  receivable
              
              
              (40,000
              )
              
              (40,000
              )
              
              -**Net
                  cash used in investment activities**
              
              
              (148,815
              )
              
              (31,345
              )
              
              (6,332
              )**CASH
                  FLOW FROM FINANCING ACTIVITIES:**Net
                  proceeds from issuance of common stock and warrants
              
              
              2,228,951
              
              
              673,500
              
              
              652,576**Net
                  cash provided by financing activities**
              
              
              2,228,951
              
              
              673,500
              
              
              652,576**NET
                  INCREASE (DECREASE) IN CASH**
              
              
              95,848
              
              
              (149,067
              )
              
              98,534Cash
                  at beginning of period
              
              
              -
              
              
              244,915
              
              
              191,940**CASH
                  AT END OF PERIOD**
              
              $
              95,848
              
              $
              95,848
              
              $
              290,474**SUPPLEMENTAL
                  CASH FLOW INFORMATION:****Cash
                  paid during the period for:**Interest
              
              
              26,284
              
              
              7,680
              
              
              18,604**NON
                  CASH FLOWS FROM OPERATING & FINANCING
                  ACTIVITIES:**Issuance
                  of 116,350,000 common shares for services
              
              
              12,902
              
              
              -
              
              
              -Cashless
                  exercise of warrants into common stock
              
              
              24,352
              
              
              -
              
              
              14,071Warrants
                  issued recorded as liability
              
              
              1,355,126
              
              
              643,500
              
              
              531,626Dividend
                  expenses on induced conversion of warrants
              
              
              203,200
              
              
              -
              
              
              162,300Release
                  of escrow funds and related liabilitiy
              
              
              1,729,500
              
              
              715,000
              
              
              -Transfer
                  of fixed assets in payment of liability
              
              
              124,000
              
              
              6,250
              
              
              -
  The
        accompanying notes are an integral part of these financial
        statements.


-5-


**NANOSENSORS,
      INC.**


**(A
      Development Stage Company)**


**STATEMENT
      OF SHAREHOLDERS’ DEFICIT**


**(Unaudited)**


CommonShares
                
                
                Amount
                
                
                AdditionalPaid-inCapital
                
                
                DeficitAccumulatedDuring
                    the Development Stage
                
                
                Total**BALANCE
                    AT DECEMBER 23, 2003 ( INCEPTION)**
                
                
                
                
                $
                -
                
                $
                -
                
                $
                -
                
                $
                -Issuance
                    of common stock for license at $0.0001
                
                
                50,000,000
                
                
                50,000
                
                
                (45,000
                )
                
                -
                
                
                5,000Issuance
                    of common stock for services and expenses
                
                
                114,500,000
                
                
                114,500
                
                
                (103,050
                )
                
                -
                
                
                11,450at
                    $0.0001 per shareIssuance
                    of common stock for cash at $0.005 per share
                
                
                95,000
                
                
                95
                
                
                380
                
                
                -
                
                
                475Issuance
                    of common stock for cash at $0.020 per share-
                
                
                27,500,000
                
                
                27,500
                
                
                435,500
                
                
                -
                
                
                463,000net
                    of issuance costsIssuance
                    of common stock for note receivable - at
                
                
                880,000
                
                
                880
                
                
                3,520
                
                
                -
                
                
                4,400$0.005
                    per share - paid in June 2004Issuance
                    of common stock for payment of debt
                
                
                6,200,000
                
                
                6,200
                
                
                117,800
                
                
                -
                
                
                124,000at
                    $0.020 per shareIssuance
                    of common stock for expenses at $0.00078 per share
                
                
                1,850,000
                
                
                1,850
                
                
                (398
                )
                
                -
                
                
                1,452Net
                    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 $0.020 per share
                
                
                1,500,000
                
                
                1,500
                
                
                28,500
                
                
                -
                
                
                30,000Issuance
                    of common stock for cash at $0.10 per share, net
                
                
                2,500,000
                
                
                2,500
                
                
                222,500
                
                
                -
                
                
                225,000of
                    issuance costsNet
                    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 $0.025 per share
                
                
                500,000
                
                
                500
                
                
                12,000
                
                
                -
                
                
                12,500Issuance
                    of common stock for cash at $0.030 per share
                
                
                900,000
                
                
                900
                
                
                26,100
                
                
                -
                
                
                27,000Issuance
                    of common stock for cash at $0.01 per share
                
                
                16,000,000
                
                
                16,000
                
                
                -
                
                
                -
                
                
                16,000net
                    of fees and fair value of warrant liabilityCashless
                    exercise of 2,250,000 warrants into common
                
                
                1,800,000
                
                
                1,800
                
                
                (1,800
                )
                
                -
                
                
                -stock
                    net of fees and warrant liabilityAdjustment
                    resulting from warrant modification
                
                
                -
                
                
                -
                
                
                66,750
                
                
                -
                
                
                66,750Deemed
                    dividends re: induced conversion of warrants
                
                
                -
                
                
                -
                
                
                (66,750
                )
                
                -
                
                
                (66,750
                )Issuance
                    of common stock for cash at $0.01 shares
                
                
                65,450,000
                
                
                65,450
                
                
                -
                
                
                -
                
                
                65,450net
                    of fees and fair value of warrant liabilityCashless
                    exercise of 14,150,000 warrants into common
                
                
                12,270,645
                
                
                12,271
                
                
                (12,271
                )
                
                -
                
                
                -stockAdjustment
                    resulting from warrant modification
                
                
                -
                
                
                -
                
                
                95,550
                
                
                -
                
                
                95,550Deemed
                    dividends re: induced conversion of warrants
                
                
                -
                
                
                -
                
                
                (95,550
                )
                
                -
                
                
                (95,550
                )-Issuance
                    of common stock for cash at $0.01 shares
                
                
                20,000,000
                
                
                20,000
                
                
                (20,000
                )
                
                -
                
                
                -net
                    of fees and fair value of warrant liabilityCashless
                    exercise of 12,950,000 warrants into common
                
                
                10,281,053
                
                
                10,281
                
                
                (10,281
                )
                
                -
                
                
                -stockStock
                    Based Compensation
                
                
                -
                
                
                -
                
                
                60,750
                
                
                -
                
                
                60,750Adjustment
                    resulting from warrant modification
                
                
                -
                
                
                -
                
                
                40,900
                
                
                -
                
                
                40,900Deemed
                    dividends re: induced conversion of warrants
                
                
                -
                
                
                -
                
                
                (40,900
                )
                
                -
                
                
                (40,900
                )Net
                    Loss
                
                
                -
                
                
                -
                
                
                -
                
                
                (2,110,274
                )
                
                (2,110,274
                )**BALANCE
                    AS OF NOVEMBER 30, 2006**
                
                
                332,226,698
                
                
                332,227
                
                
                714,250
                
                
                (3,185,898
                )
                
                (2,139,421
                )Issuance
                    of common stock for cash at $0.01 shares
                
                
                71,500,000
                
                
                71,500
                
                
                (71,500
                )
                
                -
                
                
                -net
                    of fees and fair value of warrant liabilityIssuance
                    of common stock for cash at $0.01 per share
                
                
                3,000,000
                
                
                3,000
                
                
                27,000
                
                
                -
                
                
                30,000Stock
                    Based Compensation
                
                
                -
                
                
                -
                
                
                203,086
                
                
                -
                
                
                203,086Net
                    Income
                
                
                -
                
                
                -
                
                
                -
                
                
                1,200,475
                
                
                1,200,475**BALANCE
                    AS OF AUGUST 31, 2007**
                
                
                406,726,698
                
                $
                406,727
                
                $
                872,836
                
                $
                (1,985,423
                )
                $
                (705,860
                )


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


-6-




**NANOSENSORS,
      INC.**


**(A
      Development Stage Company)**


**NOTES
      TO FINANCIAL STATEMENTS**


**August
      31, 2007**


**(Unaudited)**








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 effected a 10:1 stock split as of January 5, 2006. All share and per
      share information presented herein for the periods prior to this date have
      been
      restated to give effect to this stock split as if the split occurred at the
      date
      of inception. During December 2006 the Company increased its authorized common
      shares from 500,000,000 to 950,000,000.





The
      Company was organized for the purpose of the development and marketing of
      sensors to detect explosives, chemicals, and biological agents. To date, the
      Company has been unsuccessful
      at advancing its research programs and as a result, effective as of September
      12, 2007, subsequent to the balance sheet date, the Company’s board of directors
      determined to cease further operations pursuant to their business plan and
      currently the Company has no business operations. Since this date, all of the
      Company’s scientific staff, consisting of employees and consultants have been
      eliminated, all of the Company’s research and development activities have been
      terminated and the Company has terminated all of its license and technical
      consulting agreements. The Company’s board of directors and management are now
      focused on redeploying the remaining assets and seek to identify potential
      business opportunities.




The
      Company has elected November 30 as its fiscal year end.





2.
            GOING
                CONCERN:





The
      Company has incurred recurring operating losses in each of the periods since
      Inception (December 23, 2003) to August 31, 2007 aggregating
      $1,985,423 **** and
      has a working capital deficit of $710,943 as of August 31, 2007. Excluding
      the
      income related to the fair value of warrant liability and liability for warrants
      accounted for as a derivative, the operating loss since inception is $2,787,109
      and net working capital deficit of $157,503. The recurring operating losses
      are
      due to the Company being in the development stage, and that it has yet to
      establish commercial operations. The Company has no cash flows from revenues
      and
      has been utilizing the proceeds from the sale of its securities primarily on
      research and development activities and administrative costs.





The
      Company will need additional capital for its 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 the exercising of outstanding warrants for cash, and the proceeds
      from additional common stock offerings or debt financings.





Th e
      Company expects that its cash used in operations will decrease since the board
      of directors decided to terminate all research and development activities and
      is
      now focused on redeploying the remaining assets (See Note 9). The Company will
      need to raise additional capital as it looks to identify potential business
      opportunities. The Company will pursue equity financing alternatives or other
      financing in order to raise needed funds. There
      can be no assurance that such funds, if available at all, can be obtained on
      terms reasonable to the Company. If
      the Company is unsuccessful in raising additional capital, it will go out of
      business.





3.
            SUMMARY
                OF SIGNIFICANT ACCOUNTING POLICIES:





*Basis
      of Presentation*





The
      interim financial information, as of August 31, 2007 and for the nine and
      three-month periods ended August 31, 2007 and 2006 and for the cumulative period
      from inception (December 23, 2003) to August 31, 2007, 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,
      2006, previously filed with the SEC.


-7-


In
      the opinion of management, all adjustments (which include normal recurring
      adjustments) necessary to present a fair statement of financial position as
      of
      August 31, 2007, and results of operations, statement of shareholders’ deficit
      and cash flows for the nine and three months ended August 31, 2007 and 2006,
      and
      for the cumulative period from inception (December 23, 2003) to August 31,
      2007
      as applicable, have been made. The results of operations for the nine and three
      months ended August 31, 2007 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 (loss) 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 (loss) per common share are calculated
      by dividing net income (loss) by the weighted average number of common shares
      outstanding during each period. The calculation of diluted earnings (loss)
      per
      common share is similar to that of basic earnings (loss) 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. Outstanding options and warrants held by employees, non-employees and investors
      are anti-dilutive and therefore excluded from earnings per share and aggregated
      279,661,348 and 146,365,000, as of August 31, 2007 and 2006,
      respectively. All per common share calculations 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 those
      contracts or 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, the fair value of the warrants is marked-to-market each balance
      sheet date and recorded as a liability. The change in fair value of the warrants
      is recorded in the Statement of Operations as other income or expense. Upon
      conversion or exercise of a derivative instrument, the instrument is marked
      to
      fair value at the conversion 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 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 our
      common stock, risk free interest rate and the market price of our common stock.





In
      February 2006, the Financial Accounting Standards Board issued SFAS No. 155
      -
“Accounting for Certain Hybrid Financial Instruments” which amends certain
      sections of SFAS No. 133. The Company has adopted this standard which did not
      have a material effect on its financial statements.





*Non-employee
      Compensation*





The
      Company measures compensation expense for its non-employee stock-based
      compensation under FASB 123 and the Financial Accounting Standards Board (FASB)
      Emerging Issues Task Force (EITF) Issue No. 96-18, “Accounting for Equity
      Instruments that are Issued to Other Than Employees for Acquiring, or in
      Conjunction with Selling, Goods or Services”. The fair value of the options and
      warrants issued is used to measure the transaction, as this is more reliable
      than the fair value of the services received. The fair value is measured as
      the
      value of the options and warrants on the earlier of the date that the commitment
      for performance by the counterparty has been reached or the counterparty's
      performance is complete. The fair value of the equity instrument is charged
      directly to compensation expense and credited to additional paid-in
      capital.


-8-


The
      valuation of the options and warrants 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 our
      common stock, risk free interest rate and the market price of our common stock
      on the date of vesting.




*Stock
      Based Compensation: Employees and Directors*





Effective
      March 1, 2006, the Company adopted the fair value recognition provisions of
      SFAS
      No. 123 (Revised 2004), “Share-Based Payment,” (FAS 123R). The fair value
      of stock options granted is determined using the Black-Scholes option-pricing
      formula and a single option award approach. This fair value is then amortized
      on
      a straight-line basis over the requisite service periods of the awards, which
      is
      generally the vesting period. Although the Company’s Board of Directors approved
      the grant of options to certain employees and directors during the 2006 fiscal
      year, these awards which totaled 34,621,348 options were granted subject to
      shareholder approval, which occurred on December 13, 2006 (See Note 4).
      Accordingly, no options were deemed granted to employees or directors during
      the
      year ended November 30, 2006. During the quarter ended August 31, 2007, the
      Company issued 2,000,000 options to Mr. Robert Coutu who joined the board of
      directors on July 17, 2007. As of August 31, 2007, the Company has issued a
      total of 36,621,348 options to officers and directors.







4.
            STOCK
                BASED COMPENSATION:




**Accounting
      for Employee Awards:**




On
      December 13, 2006 the Company’s stockholders’ approved the NanoSensors Equity
      Incentive Plan (“2006 Equity Incentive Plan”). The 2006 Incentive Plan permits
      the Company to provide a broad range of stock awards to its employees, directors
      and consultants. The 2006 Incentive Plan serves as the Company’s primary equity
      incentive plan for its employees and directors.




The
      Company accounts for all employee awards in accordance with the recognition
      and
      measurement provisions of Statement of Financial Accounting Standards No. 123
      (revised 2004), Share-Based Payment ("FAS 123(R)"), which replaces SFAS No.
      123,
      Accounting for Stock-Based Compensation ("FAS 123"), and supersedes Accounting
      Principles Board Opinion No. 25 ("APB 25"), Accounting for Stock Issued to
      Employees, and related interpretations. FAS 123(R) requires compensation costs
      related to share-based payment transactions, including employee stock options,
      to be recognized in the financial statements. In addition, the Company will
      utilize the guidance set forth within Securities and Exchange Commission ("SEC")
      Staff Accounting Bulletin No. 107, which provides the Staff's views regarding
      the interaction between FAS 123(R) and certain SEC rules and regulations and
      provides interpretations with respect to the valuation of share-based payments
      for public companies.




-9-


*Employee
      and Director Option Grants*





During
      the quarter ended August 31, 2007 the Company issued 2,000,000 options to Mr.
      Robert Coutu (non-executive director) under its 2006 Equity Incentive Plan.
      As
      of the end of the quarter, 25,801,348 options had vested and 10,820,000 remain
      unvested. In connection with the separation agreement that the Company entered
      into on September 12, 2007 with Dr. Ted Wong, all of his unvested options
      accelerated and vested as of August 31, 2007 (See Note 9).





Name
            
            Total
                Amount
            
            Vested
                as of August 31, 2007
            
            Unvested
                as of August 31, 2007Dr.
                Ted Wong
            
            
            18,000,000
            
            
            18,000,000
            
            
            -----------------------Joshua
                Moser
            
            
            14,200,000
            
            
            6,380,000
            
            
            7,820,000Robert
                Baron
            
            
            2,421,348
            
            
            1,421,348
            
            
            1,000,000Robert
                Coutu
            
            
            2,000,000
            
            
            -------------------------
            
            
            2,000,000**Totals**
            
            
            **36,621,348**
            
            
            **25,801,348**
            
            
            **10,820,000**




**Accounting
      for Non-employee Awards:**




The
      Company accounts for options and warrants granted to its non-employee
      consultants using the fair value cost in accordance with FAS 123 and EITF No.
      96-18. The adoption of FAS 123(R) and SAB 107 as of March 1, 2006 had no
      material impact on the accounting for non-employee awards. The Company continues
      to consider the additional guidance set forth in EITF Issue No. 96-18 ("EITF
      96-18"), “Accounting for Equity Instruments That Are Issued to Other Than
      Employees”.




Stock-based
      compensation expense related to NanoSensors’ share-based compensation
      arrangements is being recorded as a component of general and administrative
      expense and research and development expense in accordance with the guidance
      of
      Staff Accounting Bulletin 107, Topic 14, paragraph F, *Classification
      of Compensation Expense Associated with Share-Based Payment
      Arrangements* .




Stock
      based compensation expense related to employee and non-employee stock options
      and warrants recognized in the operating results for the three and nine months
      ended August 31, 2007 and 2006, and for the period from December 23, 2003
      (inception), through August 31, 2007 is summarized as follows:




**Inception
                    through**
                
                
                **Nine
                    Months Ended August 31,**
                
                
                **Three
                    Months Ended August 31,****Stock based compensation expense**
                
                
                **August
                    31,****2007**
                
                
                **2007**
                
                
                **2006**
                
                
                **2007**
                
                
                **2006**Employee
                    - research and development
                
                $
                0
                
                $
                0
                
                $
                0
                
                $
                0
                
                $
                0Non-employee
                    — research and development
                
                
                0
                
                
                0
                
                
                0
                
                
                0
                
                
                0Employee
                    — general and administrative
                
                
                188,670
                
                
                188,670
                
                
                0
                
                
                91,132
                
                
                0Non-employee
                    - general and administrative
                
                
                53,666
                
                
                14,416
                
                
                17,083
                
                
                3,666
                
                
                17,083Total
                    stock based compensation expense
                
                $
                242,336
                
                
                203,086
                
                $
                17,083
                
                $
                94,798
                
                $
                17,083







The
      weighted average fair value of each employee stock option and warrant granted
      during the nine months ended August 31, 2007 was $0. As
      of August 31, 2007, there was $82,448 of total unrecognized compensation cost
      related to non-vested stock options and warrants.  That cost is expected to
      be recognized over a weighted average period of 8.25 years.





The
      fair
      value of options and warrants at the date of grant was estimated using the
      Black-Scholes option pricing model. The expected volatility is based upon
      historical volatility of our stock and other contributing factors. The expected
      term is the contractual term of the options and warrants.




-10-




The
      assumptions made in calculating the fair values of employee and non-employee
      options and warrants are as follows:





**Nine
                Months  Ended August 31, 2007**Expected
                volatility
            
            168
                - 175
            %Expected
                dividend yield
            
            0
            %Risk-free
                interest rate
            
            4.24
                - 4.92
            %Expected
                term (in years)
            
            2
                -
                5




The
      following table represents all our stock options and warrants granted,
      exercised, and forfeited during the nine months ended as of August 31,
      2007.





Weighted
            WeightedAverage
            Average
            AggregateNumber
            Exercise
            Remaining
            IntrinsicStock
                Options
            of
                Shares
            Price
            Contractual
            Value&
                Warrants
            
            per
                Share
            TermOutstanding
                at December 1, 2006
            160,315,000
            
            
            $0.031
            
            4.7Granted
            122,421,348
            
            
            $0.039Cancelled
            -
            
            
            $0.00Exercised
            (3,000,000)
            
            
            $0.010Forfeited/expired
            (75,000)
            
            
            $0.020Outstanding
                at August 31, 2007
            279,661,348
            
            
            $0.03
            
            4.53
                years
            
            $
                0Exercisable
                at August 31, 2007
            265,299,664
            
            
            $0.03
            
            4.35
                years
            
            $
                0








5.
            WARRANT
                DERIVATIVE LIABILITY:





On
      December 27, 2006, the Company received the final release of funds ($715,000)
      that were being held in escrow in connection with its private placement that
      commenced on May 11, 2006. In total the Company issued an aggregate of
      172,950,000 shares of common stock and warrants to purchase 172,950,000 shares
      of common stock to the investors. In addition, the Company issued 34,590,000
      Unit Warrants to the selling agents (which, on a fully-diluted basis, results
      in
      the issuance of an aggregate of 69,180,000 shares of common stock upon exercise)
      and paid commissions to the selling agents of $172,950. The
      securities issued 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 Registrant 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. The resale of the shares of common stock
      issued in the closing and issuable upon exercise of warrants, are covered by
      a
      Registration Statement on Form SB-2, which was declared effective by the
      Securities and Exchange Commission on December 19, 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.


-11-


The
      Company valued the warrants under the Black Scholes option-pricing model with
      the following assumptions: an expected life equal to the remaining contractual
      term of the warrants (four years); no dividends; a risk free rate of
      4.24% **** which
      equals the five-year yield on Treasury bonds at constant (or fixed) maturity;
      and volatility ranging between 163% and 168%.





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 be recorded 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. Liquidated damages
      under the registration rights agreement will be expensed as incurred and will
      be
      included in non-operating expenses. As of August 31, 2007, the 172,950,000
      Investor Warrants and the 69,180,000 Agent Warrants were revalued and the change
      in the fair value of these warrants from their value as of November 30, 2006
      created Other Income of $2,196,260 and Other Expense of $69,180 for the nine
      and
      three-month periods ended August 31, 2007, respectively.




6.
            RELATED
                PARTY TRANSACTIONS:





As
      of the end of the quarter ended August 31, 2007, accounts and advances payable
      to related parties consist of consulting fees payable to Dr. Ted Wong in the
      amount of $6,250. The reduction of $6,250 in accounts and advances payable
      to
      Dr. Ted Wong from the previous quarter is attributed to the separation agreement
      that Dr. Wong and the Company entered into subsequent to the quarter ended
      August 31, 2007. Pursuant to this agreement the Company transferred fixed assets
      that were valued at $4,653 as of August 31, 2007 (See Note 9).





The
      remaining portion of this liability of $6,250 was settled in the fourth quarter
      through the issuance of 1,364,629 restricted shares of common stock under the
      Company’s 2006 Equity Incentive Plan. See Note 9 for a more detailed description
      of the terms of the separation agreement.








7.
            COMMITMENTS
                AND CONTINGENCIES:




The
      following table lists the future payments required on the Company’s commitments
      for the remaining two quarters of fiscal 2007 and fiscal years ending in 2008
      and thereafter:




Obligations
            
            
            2007
            
            
            2008
            
            
            2009Office
                Lease
            
            $
            1,200
            
            $
            ---------
            
            $
            ----------Michigan
                State Technology License
            
            
            --------
            
            
            10,000
            
            
            ----------Employment
                Agreements
            
            
            66,000
            
            
            156,000
            
            
            80,000Technical
                Advisory Board
            
            
            22,500
            
            
            ---------
            
            
            ----------Accrescent
                Research
            
            
            9,000
            
            
            ---------
            
            
            ----------**Totals**
            
            
            **98,700**
            
            **$**
            **166,000**
            
            **$**
            **80,000**





With
      respect to our office lease at 1800 Wyatt Drive, Santa Clara, CA, the Company
      assigned and transferred this to Dr. Wong (See Note 9). Subsequent to the
      balance sheet date of August 31, 2007, the Company entered into a month-to-month
      office lease at 1475 Veterans Boulevard, Redwood City, CA. The monthly rent
      is
      $400.


-12-





8.
            SIGNIFICANT
                EVENTS:





*Extension
      and Expiration of Letter of Intent for the Acquisition of DKL International,
      Inc.*





On
      January 31, 2007, the Company entered into a non-binding letter of intent to
      acquire substantially all of the tangible and intangible assets of
      privately-held DKL International, Inc. DKL is a provider of passive detection
      technology and related products to the homeland security, defense, military,
      law
      enforcement, security, safety, and rescue markets. The Letter of Intent provided
      that the Company will pay a purchase price comprised of issuing common stock
      to
      DKL International, assuming certain liabilities of DKL International, and making
      commitments to provide additional capital at closing to fund the operations
      of
      DKL. In connection with the execution of the Letter of Intent, the Company
      provided DKL with an initial bridge loan of $40,000. Although the Company may
      provide DKL with additional operating funds pursuant to the bridge loan, the
      Company has no further obligation unless the parties execute a definitive
      transaction agreement. The full amount of the bridge loan is secured by a lien
      on DKL’s assets. In the event the acquisition is completed, the bridge loan will
      be applied to the purchase price. In the event that the Acquisition does not
      close as a result of DKL or the Company terminating the Letter of Intent, the
      bridge loan shall convert into a two-year loan maturing on the second
      anniversary date of the last advance of the bridge loan and will bear interest
      at a rate of 10% per annum , payable semi-annually, together with principal
      payments of $25,000 and a balloon payment of the remaining principal and
      interest due at the end of the two years.





On
      June
      20, 2007, the Company entered into an agreement with DKL International, Inc.,
      to
      extend the duration of the Letter of Intent through August 31, 2007 for the
      acquisition by the Company of DKL International, Inc. Due to the Company’s
      decision to cease its current business operations, the Company’s board of
      directors decided that it was in the best interests of the Company’s
      shareholders to allow this letter of intent to expire (See Note 9). Accordingly,
      the bridge loan of $40,000 is recorded as a current asset on the balance sheet
      as of August 31, 2007.





*New
      Director*





Effective
      July 17, 2007, the Board of Directors increased the Board size to three members
      and elected Mr. Robert Coutu as a non-executive director.




9.
            SUBSEQUENT
                EVENTS:





*Cessation
      of Operations.*





On
      August
      16, 2007, the board of directors convened a special meeting to discuss the
      termination of the Company’s employment relationship with Dr. Ted Wong (Chief
      Executive Officer, President, Chief Financial Officer and Chairman of the
      Board), and the termination of the technical advisory board, license agreements
      with Michigan State University and Pohang University, and certain other
      consulting agreements. On September 12, 2007, the Company’s board of directors
      took the following actions: (1) approving the separation agreement entered
      into
      between the Company and Dr. Wong, (2) the dissolution of the Technical Advisory
      Board, (3) the termination of the consulting agreements with the members of
      the
      Technical Advisory Board; and (4) the appointment of the Messrs. Baron and
      Moser
      as the Company’s new interim Chief Executive and interim Chief Financial
      Officers, respectively. Thereafter, the Company provided notice of termination
      to its consultants and licensors on September 12, 2007 and these agreements
      will
      terminate in between 60 and 360 days from the date of the notice, in accordance
      with their terms. Also, our non-binding letter of intent with DKL International,
      Inc. expired on August 31, 2007 (See Note 8).





In
      addition, on September
      9, 2007, the Company entered into a separation agreement with Dr. Wong, the
      Company’s Chief Executive Officer, President, Chief Financial Officer and
      Chairman of its board of directors. Pursuant to the separation agreement, Dr.
      Wong agreed to resign from all positions with the Company, including as a member
      of the board of directors effective as of August 31, 2007. Pursuant to the
      separation agreement the Company entered into with Dr. Wong, we agreed to pay
      or
      provide him with the following: (a) a severance payment equal to six months
      of
      his base salary, which amount shall equal $72,000, payable in accordance with
      the Company’s regularly scheduled pay dates for employees, (b) an additional
      amount of $5,125 for unused vacation benefits, (c) a restricted stock award
      of
      1,364,629 shares of common stock under our 2006 Equity Incentive Plan and fixed
      assets for the settlement of a liability that totaled $12,500 (See Note 6),
      and
      (d) the accelerated vesting of all options granted to him under our 2006 Equity
      Compensation Plan, along with the continuation of the exercise period for the
      duration of the original term of such options. In consideration of the
      foregoing, Dr. Wong provided the Company with a general release and agreed
      to
      comply with the restrictive covenants of his employment agreement (dated August
      3, 2006), subject to a modification of the covenant against competition.
      However, in the event the Company elects to commence an action against Dr.
      Wong,
      he will thereafter have the option to repay the severance amounts provided
      him
      and void the general release.


-13-


In
      light
      of the departure of Dr. Wong, the Company appointed Mr. Robert A. Baron, a
      director, to serve as its interim Chief Executive Officer and President and
      Chairman of the board of directors and also appointed Mr. Joshua Moser, the
      Company’s Chief Operating Officer to also serve as interim Chief Financial
      Officer. The compensation arrangement the Company agreed to in connection with
      Mr. Baron’s appointment as an officer of the Company is described below under
      the caption “ *Executive
      Compensation* .”
Mr.
      Moser will assume the additional responsibilities as the Company’s interim Chief
      Financial Officer without any modifications to his current employment
      arrangement.





Furthermore,
      on September 12, 2007, the Company’s board of directors voted to terminate
      current operations and to utilize its corporate assets as a vehicle for the
      acquisition of an operating business. The Company will not be limited to any
      particular industry or geographic location in its efforts to identify
      prospective target businesses.





*Executive
      Compensation*





On
      September 12, 2007, the Company appointed Mr. Robert A. Baron, one of our
      directors, as interim Chief Executive Officer and President and as Chairman
      of
      the Company’s board of directors. Although the Company has not entered into a
      written agreement with Mr. Baron, the Company has agreed to provide Mr. Baron
      with additional compensation in consideration of his agreement to serve in
      these
      capacities. Specifically, the Company agreed to pay Mr. Baron a salary at the
      rate of $15,000 per annum during his service in this capacity. In addition,
      the
      Company granted Mr. Baron a restricted stock award of 3,731,343 shares of common
      stock under its 2006 Equity Incentive Plan which will be recorded as additional
      compensation in the subsequent period. These shares were granted as fully vested
      and are not subject to forfeiture upon the termination of his
      employment.





*Assignment
      and Transfer of Office Lease*





On
      September 7, 2007, the Company transferred its office lease at 1800 Wyatt Drive,
      Santa Clara, CA to Dr. Ted Wong, and entered into a month-to-month office lease
      at 1475 Veterans Boulevard, Redwood City, CA. The monthly rent is $400.




-14-


**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.*




Unless
      the context requires otherwise, references in this Quarterly Report to
“NanoSensors”, “the Company”, “we”, “our” and “us” refer to NanoSensors, Inc.





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





*This* M *anagement’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,
      unless otherwise noted, give retroactive effect to the 10 for 1 forward split
      declared by us on January 12, 2006.*





*Certain
      of these risks are set forth under “Risk Factors” in our Annual Report on Form
      10-KSB and our periodic reports filed with the SEC. Our expectations, beliefs
      and projections are expressed in good faith and are believed by us to have
      a
      reasonable basis, including without limitation, management’s examination of
      historical operating trends, data contained in our records and other data
      available from third parties, but there can be no assurance that management’s
      expectations, beliefs or projections will result or be achieved or accomplished.
      Accordingly, to the extent that this Report contains forward-looking statements
      regarding the financial condition, operating results, business prospects or
      any
      other aspect of our company, please be advised that our actual financial
      condition, operating results and business performance may differ materially
      from
      that projected or estimated by us in forward-looking
      statements.*





**Overview**





We
      are a
      development stage Nevada
      corporation that was formed on December 23, 2003. Historically, our principal
      business was the development, manufacture and marketing of nanoscale sensors
      and
      instruments, along with the management of intellectual property derived
      therefrom. We had designed sensors to detect specified levels of targeted
      specific biological, chemical and explosive (herein referred to as “BCX”) agents
      in a number of settings, including areas that are a risk in the post 9/11-era.
      We utilized nano-technology, which operates in the nanoscale (the measurement
      of
      matter where a nano meter is the millionth part of a millimeter) of ten to
      the
      minus ninth meters and is sensitive to the presence of nano-scale size molecules
      of B-C-X agents using nano-scale surface structures to detect the presence
      of
      these molecules at nano concentrations (one part of the agent in a billion
      parts
      of air). Our principal business focus was the development, manufacturing and
      marketing of sensors and instruments to detect biological, chemical and
      explosive agents, principally a sensor device to detect e.coli and salmonella
      in
      food and water.





We
      have
      been unsuccessful at advancing our research programs and as a result, effective
      as of September 12, 2007, our board of directors determined to cease further
      operations pursuant to our business plan and we currently have no business
      operations. Since this date, all of our scientific staff, consisting of
      employees and consultants, have been eliminated, all of our research and
      development activities have been terminated and we have terminated all of our
      license and technical consulting agreements. Our board of directors and
      management are now focused on redeploying our remaining assets and seek to
      identify potential business opportunities. We will not be limited to any
      particular industry or geographic location in our efforts to identify
      prospective target businesses.


-15-


We
      will
      seek to capitalize on the significant strength of our management team, which
      is
      experienced in sourcing, structuring, financing and consummating business
      combinations in a variety of industry sectors. We believe that we have extensive
      contacts and sources, ranging from public and private company contacts, private
      equity funds, and investment bankers to attorneys, accountants and business
      brokers, from which to generate acquisition opportunities. We believe that
      our
      extensive contacts, relationships and sources will help us identify and
      structure attractive acquisition opportunities for our investors.





*Cessation
      of Operations.*





On
      August
      16, 2007, our board of directors convened a special meeting to discuss the
      termination of our employment relationship with Dr. Ted Wong (Chief Executive
      Officer, President, Chief Financial Officer and Chairman of the Board), and
      the
      termination of the technical advisory board, license agreements with Michigan
      State University and Pohang University, and certain other consulting agreements.
      On September 12, 2007, our board of directors took the following actions: (1)
      approving the separation agreement entered into between the company and Dr.
      Wong, (2) the dissolution of the Technical Advisory Board, (3) the termination
      of the consulting agreements with the members of the Technical Advisory Board;
      and (4) the appointment of the Messrs. Baron and Moser as our new interim Chief
      Executive and interim Chief Financial Officers, respectively. Thereafter, we
      provided notice of termination to its consultants and licensors on September
      12,
      2007 and these agreements will terminate in between 60 and 360 days from the
      date of the notice, in accordance with their terms. Also, our non-binding letter
      of intent with DKL International, Inc. expired on August 31, 2007.





In
      addition, on September
      9, 2007, we entered into a separation agreement with Dr. Ted Wong, our Chief
      Executive Officer, President, Chief Financial Officer and Chairman of our its
      board of directors. Pursuant to the separation agreement, Dr. Wong agreed to
      resign from all positions with us, including as a member of the board of
      directors effective as of August 31, 2007. Pursuant to the separation agreement
      we entered into with Dr. Wong, we agreed to pay or provide him with the
      following: (a) a severance payment equal to six months of his base salary,
      which
      amount shall equal $72,000, payable in accordance with our regularly scheduled
      pay dates for employees, (b) an additional amount of $5,125 for unused vacation
      benefits, (c) a restricted stock award of 1,364,629 shares of common stock
      under
      our 2006 Equity Incentive Plan and fixed assets for the settlement of a
      liability that totaled $12,500, and (d) the accelerated vesting of all options
      granted to him under our 2006 Equity Compensation Plan, along with the
      continuation of the exercise period for the duration of the original term of
      such options. In consideration of the foregoing, Dr. Wong provided us with
      a
      general release and agreed to comply with the restrictive covenants of his
      employment agreement with us (dated August 3, 2006), subject to a modification
      of the covenant against competition. However, in the event we elect to commence
      an action against Dr. Wong, he will thereafter have the option to repay the
      severance amounts provided him and void the general release.





In
      light
      of the departure of Dr. Wong from our company, we appointed Mr. Robert Baron,
      a
      director, to serve as our interim Chief Executive Officer and President and
      Chairman of our board of directors and also appointed Mr. Joshua Moser, our
      Chief Operating Officer to also serve as our interim Chief Financial Officer.
      Mr. Moser will assume the additional responsibilities as our interim Chief
      Financial Officer without any modifications to his current employment
      arrangement.





Although
      we have not entered into a written agreement with Mr. Baron, we have agreed
      to
      provide Mr. Baron with additional compensation in consideration of his agreement
      to serve in these capacities. Specifically, we agreed to pay Mr. Baron a salary
      at the rate of $15,000 per annum during his service in this capacity. In
      addition, we granted Mr. Baron a restricted stock award of 3,731,343 shares
      of
      common stock under our 2006 Equity Incentive Plan. These shares were granted
      as
      fully vested and are not subject to forfeiture upon the termination of his
      employment.





Furthermore,
      our board of directors voted to terminate current operations and to utilize
      our
      corporate assets as a vehicle for the acquisition of an operating business.
      We
      are currently engaged in discussions with one potential candidate with respect
      to a business opportunity. Although discussions between representatives of
      the
      parties continue, no transaction terms have been agreed upon and no letter
      of
      intent, term sheet or acquisition agreement of any kind has been executed by
      either party and no assurance can be given that any agreement will be executed
      or any transaction completed. The completion of this, or any, transaction would
      be subject to the negotiation of and execution of a definitive transaction
      agreement and the satisfaction of numerous closing conditions, including without
      limitation, the completion of due diligence by the parties, compliance with
      state and federal securities laws and regulations, the approval of the Board
      of
      Directors and shareholders of each entity, if required under applicable state
      law, and several other conditions. As a result of the foregoing uncertainties,
      there can be no assurance that a definitive agreement will be executed or that,
      if it is, the transaction will be completed. With the exception of the foregoing
      matter, we do not have any specific merger, stock exchange, asset acquisition,
      reorganization or other business combination under consideration or
      contemplation and we have not, nor has anyone on our behalf, contacted any
      potential target business or had any discussions, formal or otherwise, with
      respect to such a transaction. We will not be limited to any particular industry
      or geographic location in our efforts to identify prospective target
      businesses.


-16-





From
      December 1, 2006 through August 31, 2007, we did not generate any revenue from
      operations. As we do not expect to generate meaningful revenues or profits
      over
      the next fiscal year, management of cash flow is extremely important. During
      the
      year ended November 30, 2006, research and development expenses were $77,509.
      For the
      three months ended August 31, 2007, our research and development expenses were
      $15,000, whereas for the three months ended August 31, 2006, our research and
      development expenses were $30,200. For the
      nine months ended August 31, 2007, our research and development expenses were
      $83,479, whereas for the nine months ended August 31, 2006, our research and
      development expenses were $30,200.





To
      date,
      we have relied solely upon selling equity securities in private placements
      to
      generate cash to implement our plan of operations which is to utilize our
      corporate assets as a vehicle for the acquisition of an operating business. We
      will be required to raise additional capital as we look to acquire an operating
      business. We will pursue equity financing alternatives or other financing in
      order to raise needed funds. To raise additional funds, we intend to either
      undertake private placements of our securities, either as a self-offering or
      with the assistance of registered broker-dealers, or negotiate a private sale
      of
      our securities to one or more institutional investors. However, we currently
      have no firm agreements with any third-parties for any financing arrangements
      and no assurances can be given that we will be successful in raising additional
      capital from any proposed financings. Further, we cannot assure you that any
      additional financing will be available or, even if it is available that it
      will
      be on terms acceptable to us. If we raise additional funds by selling shares
      of
      common stock or convertible securities, the ownership of our existing
      shareholders will be diluted. Further, if additional funds are raised though
      the
      issuance of equity or debt securities, such additional securities may have
      powers, designations, preferences or rights senior to our currently outstanding
      securities. Any inability to obtain required financing on sufficiently favorable
      terms could have a material adverse effect on our business, results of
      operations and financial condition. If we are unsuccessful in raising additional
      capital we will go out of business.   Further, if expenditures required to
      achieve our plans are greater than projected we will need to raise a greater
      amount of funds than currently expected.





On
      December 13, 2006, our stockholders approved an amendment to our Articles of
      Incorporation in order to increase our number of authorized shares of shares
      of
      common stock to 950,000,000 shares, and we filed the Certificate of Amendment
      to
      our Articles of Incorporation with the State of Nevada on such date.





*Forward
      Stock Split*





On
      December 16, 2005, a Definitive Information Statement on Schedule 14C was mailed
      to shareholders of record as of December 5, 2005, to notify shareholders of
      (i)
      the amendment to our Articles of Incorporation to increase in the number of
      authorized shares from 50 million to 500 million shares of Common Stock and
      to
      authorize 20 million shares of Preferred Stock, $.001 par value, and (ii) our
      decision to effect a 10 for 1 forward stock split in which we would issue ten
      (10) shares of Common Stock (consisting of 9 additional shares) for every one
      share of Common Stock outstanding as of January 12, 2006. We effected this
      forward stock split as of January 26, 2006 and it was effective on the OTCBB
      as
      of January 27, 2006. Upon the effectiveness of the forward split, the number
      of
      shares of Common Stock deemed to be issued and outstanding increased from
      20,642,500 to 206,425,000.





**Critical
      Accounting Policies**





In
      December 2001, the Securities and Exchange Commission requested that all
      registrants discuss their “critical accounting policies” in management’s
      discussion and analysis of financial condition and results of operations. The
      SEC indicated that a “critical accounting policy” is one that is both important
      to the portrayal of the company’s financial condition and results and that
      requires management’s most difficult, subjective or complex judgments. Such
      judgments are often the result of a need to make estimates about the effect
      of
      matters that are inherently uncertain. NanoSensors’ believes that other than the
      adoption of SFAS No. 123 (revised 2004,) “Share-Based Payment and the accounting
      policy related to Warrants and Freestanding Derivative Financial
      Instruments”,
      there have been no significant changes during the nine months ended August
      31,
      2007 to the items that were disclosed as our significant accounting policies
      in
      Note 2 of our Annual Report on Form 10-KSB for November 30, 2006. We currently
      believe the following accounting policies to be critical:


-17-


*Development
      Stage Company*





NanoSensors
      is considered to be in the development stage as defined in Statement of
      Financial Accounting Standards (SFAS) No. 7, "Accounting and Reporting by
      Development Stage Enterprises." NanoSensors has devoted substantially all of
      its
      efforts to business planning, research and development, recruiting management
      and technical staff, acquiring operating assets and raising
      capital.





*Research
      and Development*





Research
      and development costs are related primarily to our developing early prototypes.
      Research and development costs are expensed as incurred.





*Income
      Taxes*





The
      income tax benefit is computed on the pre-tax loss based on current tax law.
      Deferred income taxes are recognized for the tax consequences in future years
      of
      differences between the tax basis of assets and liabilities and their financial
      reporting amounts at each year-end based on enacted tax laws and statutory
      tax
      rates. No benefit is reflected for deferred tax assets arising from net loss
      carry-forwards since management cannot determine that it is likely that such
      assets will be realized.





*Accounting
      for Warrants and Freestanding Derivative Financial Instruments*





NanoSensors
      evaluates its warrants and other contracts to determine if those contracts
      or
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, the fair
      value of the warrants is marked-to-market each balance sheet date and recorded
      as a liability. The change in fair value of the warrants is recorded in the
      Statement of Operations as other income or expense. Upon conversion or exercise
      of a derivative instrument, the instrument is marked to fair value at the
      conversion 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 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 our
      common stock, risk free interest rate and the market price of our common stock.





*Non-employee
      Compensation*





NanoSensors
      measures compensation expense for its non-employee stock-based compensation
      under FASB 123 and the Financial Accounting Standards Board (FASB) Emerging
      Issues Task Force (EITF) Issue No. 96-18, “Accounting for Equity Instruments
      that are Issued to Other Than Employees for Acquiring, or in Conjunction with
      Selling, Goods or Services”. The fair value of the options and warrants issued
      is used to measure the transaction, as this is more reliable than the fair
      value
      of the services received. The fair value is measured as the value of the options
      and warrants on the earlier of the date that the commitment for performance
      by
      the counterparty has been reached or the counterparty's performance is complete.
      The fair value of the equity instrument is charged directly to compensation
      expense and credited to additional paid-in capital.





The
      valuation of the options and warrants 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 our
      common stock, risk free interest rate and the market price of our common stock
      on the date of vesting.


-18-


*Stock
      Based Compensation: Employees and Directors*





Effective
      March 1, 2006, NanoSensors adopted the fair value recognition provisions of
      SFAS
      No. 123 (Revised 2004), “Share-Based Payment”. The fair value of stock
      options granted is determined using the Black Scholes option-pricing formula
      and
      a single option award approach. This fair value is then amortized on a
      straight-line basis over the requisite service periods of the awards, which
      is
      generally the vesting period.





The
      valuation of the options 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 our common
      stock, risk free interest rate and the market price of our common stock on
      the
      date of vesting.





**Results
      of Operations for the Three Months Ended August 31, 2007 as Compared to the
      Three Months Ended August 31, 2006.**





For
      the three months ended August 31, 2007 and August 31, 2006, we did not have
      sales. We are still in the development stage. During the three months ended
      August 31, 2007, our total costs and expenses increased 54% to $340,082, whereas
      for the three months ended August 31, 2006, we recorded total costs and expenses
      of $221,136. Our increase in total costs and expenses primarily resulted from
      consulting fees and salaries paid to our Technical Advisory Board, Dr. Wong,
      Joshua Moser, and one other consultant, along with expenses incurred for
      terminating our employment relationship with Dr. Wong, and increases in legal
      and accounting fees.





During
      the three months ended August 31, 2007, our total research and development
      expenses for the three months ended August 31, 2007 were $15,000, whereas for
      the three months ended August 31, 2006, we recorded research and development
      expenses of $30,200. All research and development costs are expensed as
      incurred. Our decrease in research and development expenses resulted from us
      terminating all development activities for our biosensor product.





Depreciation
      and amortization expense for the three month periods ended August 31, 2007
      and
      August 31, 2006 were $958 and $884, respectively.





Other
      Income and (Expense) consists of income and (expense) related to fair value
      of
      warrant liability and interest (expense) and income. For the three month period
      ended August 31, 2007 we had other expense of ($135,740), whereas for the three
      months ended August 31, 2006, we recorded other expense of ($2,755,437). For
      the
      three month period ended on August 31, 2007, we wrote off acquisition expenses
      in connection with the termination of our Letter of Intent to acquire DKL
      International, Inc., that aggregated ($67,255). For the three month period
      ended
      August 31, 2007 we had fair value of warrant liability expense of ($69,180),
      interest expense of ($385) and interest income of $1,080, whereas for the three
      months ended August 31, 2006 we had we had fair value of warrant liability
      expense of ($2,737,107), interest expense of ($21,500) and interest income
      of
      $3,170. Fair value of warrant liability is a non-cash item for the warrants
      we
      issued to investors and placement agents in our recent private placement (See
      Note 5 to Financial Statements).




Net
      loss
      for the three month period ended August 31, 2007 was $475,822, whereas for
      the
      three months ended August 31, 2006, we had a net loss of $2,976,573. Excluding
      the amount of the change in fair value of warrant liabilities during the three
      month period ended August 31, 2007 and 2006, we had a net loss of $406,642
      and
      $239,466, respectively.





**Results
      of Operations for the Nine Months Ended August 31, 2007 as Compared to the
      Nine
      Months Ended May 31, 2006.**





For
      the nine months ended August 31, 2007 and August 31, 2006, we did not have
      sales. We are still in the development stage. During the nine months ended
      August 31, 2007, our total costs and expenses increased 166% to $935,672,
      whereas for the nine months ended August 31, 2006, we recorded total costs
      and
      expenses of $351,582. Our increase in total costs and expenses primarily
      resulted from consulting fees and salaries paid to our Technical Advisory Board,
      Dr. Wong, Joshua Moser, and one other consultant, along with expenses incurred
      for terminating our employment relationship with Dr. Wong, and increases in
      legal and accounting fees.





Research
      and development expenses for the nine months ended August 31, 2007, aggregated
      to $83,479, whereas for the nine months ended August 31, 2006, we recorded
      research and development expenses of $30,200. All research and development
      costs
      are expensed as incurred. Our increase in research and development expenses
      are
      attributable to the development of our biosensor product. On or around September
      12, 2007 our board of directors decided that it was in the best interests of
      our
      shareholders to terminate the development of our biosensor product.





Depreciation
      and amortization expense for the nine month periods ended August 31, 2007 and
      August 31, 2006 were $2,513 and $2,517, respectively.


-19-


Other
      Income **** and
      (Expense) consists of income and (expense) related to fair value of warrant
      liability and interest (expense) and income. For the nine month period ended
      August 31, 2007 we had other income of $2,136,147, whereas for the nine months
      ended August 31, 2006, we recorded other expense of ($4,259,639). For the nine
      month period ended August 31, 2007 we had fair value of warrant liability income
      of $2,196,360, interest expense of ($638), interest income of $7,680 and the
      write-off of acquisition costs of ($67,255) in connection with our terminated
      transaction with DKL International, Inc., where as for the nine months ended
      August 31, 2006 we had fair value of warrant liability expense of ($4,241,344),
      interest expense of ($21,500) and interest income of $3,205. Fair value of
      warrant liability is a non-cash item for the warrants we issued to investors
      and
      placement agents in our recent private placement (See Note 5 to Financial
      Statements).





Net
      income for the nine month period ended August 31, 2007 was $1,200,475, whereas
      for the nine month period ended August 31, 2006, we had a net loss of
      $4,611,221. Excluding
      the amount of the change in fair value of warrant liabilities during the nine
      month period ended August 31, 2007 and 2006, we had a net loss of $995,885
      and
      $369,877, respectively.





**Liquidity
      and Capital Resources at August 31, 2007**





To
      date we have relied on financing from investors to support our operations.
      As of
      August 31, 2007, we had unrestricted cash on hand of $95,848, as compared with
      $244,915 on deposit at November 30, 2006.





We
      had a working capital deficit of $710,943 at August 31, 2007 and $2,159,784
      at
      November 30, 2006. Excluding the liability for warrants accounted for as a
      derivative, we had a net working capital deficit of $157,503 as of August 31,
      2007 and a net working capital deficit of **** $53,484
      at November 30, 2006





Our
      currently available funds resulted from a private placement of units that
      commenced on May 11, 2006. In June 2006, we completed this private placement
      and
      raised gross proceeds of $1,729,500 from the sale of a total number of units
      consisting of 172,950,000 shares of common stock and five-year warrants to
      purchase 172,950,000 shares of common stock at an exercise price of $0.04 per
      share. Each unit was sold at a price of $50,000. On December 27, 2006 we
      received the final net proceeds of $643,500. In total from this financing we
      received net proceeds of $1,406,000 after giving effect to the release of funds
      previously held in escrow related to this private placement.





The
      following is a summary of our cash flows from operating, investing, and
      financing activities for the periods presented:




***Nine
                months ended August 31,*****2007**
            
            **2006****Operating
                activities**
            
            $
            (791,222
            )
            $
            (547,710
            )**Investing
                activities**
            
            
            (31,345
            )
            
            (6,332
            )**Financing
                activities**
            
            
            673,500
            
            
            652,576**Net
                effect on cash**
            
            $
            (149,067
            )
            $
            98,534








**Nine
      Months Ended August 31, 2007**





Net
      cash
      used in operating activities was $791,222 for the nine month period ended August
      31, 2007, primarily attributable to the net income adjusted for non-cash
      items (stock based compensation expense of $203,086, depreciation and
      amortization expense of $2,513 and fair value of warrant liability income of
      ($2,196,360), and a decrease in accounts payable and accrued expenses of $25,482
      which includes $69,862 of accrued severance costs in connection with the
      separation agreement with Dr. Wong. Additional uses of cash in operating
      activities resulted from an increase in prepaid expenses of $22,216, and an
      increase in accrued payroll and employee benefits of $2,330.





Net
      cash
      used in investing activities was $31,345 representing a bridge loan in the
      amount of $40,000 to DKL and proceeds from the return of equipment in the amount
      of $8,655.





Net
      cash
      provided by financing activities was $673,500. On December 27, 2006 we received
      net proceeds of $643,500 from escrow after satisfying covenants we agreed to
      in
      connection with our Private Placement of units, which closed in June 2006 (See
      Note 5). In addition, o n
      February 6, 2007, we issued 3,000,000 shares of common stock on the exercise
      of
      warrants at $0.01 per share for proceeds of $30,000.


-20-


The
      accompanying financial statements have been prepared on a going concern basis,
      which contemplates the realization of assets and the settlement of liabilities
      and commitments in the normal course of business. During the nine months ended
      August 31, 2007, we had net income of $1,200,475, whereas for the nine months
      ended August 31, 2006, we recorded a net loss of $4,611,221. Excluding the
      amount of the change in fair value of warrant liabilities during the nine months
      ended August 31, 2007 and 2006, we had a net loss of $995,885 and $369,877,
      respectively. The Auditor’s Report in our Annual Report on Form 10-KSB for the
      year ended November 30, 2006 includes an explanatory paragraph which states
      that
      due to history of operating losses, as we have not yet commenced commercial
      operations and based on our needs for additional funds in Fiscal 2007 for our
      planned activity and to service debt, there is a substantial doubt about our
      ability to continue as a going concern. See Note 2 of Notes to 2006 Financial
      Statements.





To
      date, we have not invested in derivative securities or any other financial
      instruments that involve a high level of complexity or risk. We plan to invest
      any excess cash in investment grade interest bearing securities.





**Plan
      of Operation** ****





We
      believe that we will meet working capital requirements with the cash on hand
      as
      of October 12, 2007 for only the next 19 days without any additional funding.





On
      August
      16, 2007, our board of directors convened a special meeting to discuss the
      termination of our employment relationship with Dr. Ted Wong (Chief Executive
      Officer, President, Chief Financial Officer and Chairman of the Board), and
      the
      termination of the technical advisory board, license agreements with Michigan
      State University and Pohang University, and certain other consulting agreements.
      On September 12, 2007, our board of directors took the following actions: (1)
      approving the separation agreement entered into between the company and Dr.
      Wong, (2) the dissolution of the Technical Advisory Board, (3) the termination
      of the consulting agreements with the members of the Technical Advisory Board;
      and (4) the appointment of the Messrs. Baron and Moser as our new interim Chief
      Executive and interim Chief Financial Officers, respectively. Thereafter, we
      provided notice of termination to its consultants and licensors on September
      12,
      2007 and these agreements will terminate in between 60 and 360 days from the
      date of the notice, in accordance with their terms. Also, our non-binding letter
      of intent with DKL International, Inc. expired on August 31, 2007.





In
      light
      of the departure of Dr. Wong from our company, we appointed Mr. Robert A. Baron,
      a director, to serve as our interim Chief Executive Officer and President and
      Chairman of our board of directors and also appointed Mr. Joshua Moser, our
      Chief Operating Officer to also serve as our interim Chief Financial Officer.





Furthermore,
      our board of directors voted to terminate current operations and to utilize
      our
      corporate assets as a vehicle for the acquisition of an operating business.
      We
      are currently engaged in discussions with one potential candidate with respect
      to a business opportunity. Although discussions between representatives of
      the
      parties continue, no transaction terms have been agreed upon and no letter
      of
      intent, term sheet or acquisition agreement of any kind has been executed by
      either party no assurance can be given that any agreement will be executed
      or
      any transaction completed. The completion of this, or any, transaction would
      be
      subject to the negotiation of and execution of a definitive transaction
      agreement and the satisfaction of numerous closing conditions, including without
      limitation, the completion of due diligence by the parties, compliance with
      state and federal securities laws and regulations, the approval of the Board
      of
      Directors and shareholders of each entity, as may be required, and several
      other
      conditions. As a result of the foregoing uncertainties, there can be no
      assurance that a definitive agreement will be executed or that, if it is, the
      transaction will be completed.





To
      date,
      we have relied solely upon selling equity securities in private placements
      to
      generate cash to implement our plan of operations. We
      will pursue equity financing alternatives or other financing in order to raise
      needed funds. To raise additional funds, we intend to either undertake private
      placements of our securities, either as a self-offering or with the assistance
      of registered broker-dealers, or negotiate a private sale of our securities
      to
      one or more institutional investors. However, we currently have no firm
      agreements with any third-parties for any financing arrangements and no
      assurances can be given that we will be successful in raising additional capital
      from any proposed financings. Further, we cannot assure you that any additional
      financing will be available or, even if it is available that it will be on
      terms
      acceptable to us. If we raise additional funds by selling shares of common
      stock
      or convertible securities, the ownership of our existing shareholders will
      be
      diluted. Further, if additional funds are raised though the issuance of equity
      or debt securities, such additional securities may have powers, designations,
      preferences or rights senior to our currently outstanding securities. Any
      inability to obtain required financing on sufficiently favorable terms could
      have a material adverse effect on our business, results of operations and
      financial condition. If we are unsuccessful in raising additional capital and
      increasing revenues from operations, we will go out of business.   Further,
      if expenditures required to achieve our plans are greater than projected we
      will
      need to raise a greater amount of funds than currently
      expected.


-21-


Except
      for our employment agreements (see Note 7 to Financial Statements) we do not
      have any significant commitments for capital expenditures other than the
      obligations to our Technical Advisory Board, Accrescent Research, and Michigan
      State University. **** In view
      of our limited cash position and early stage of development, there is no
      assurance that we will perform in accordance with our plan of operation, or
      that
      we will continue as a going concern or that we will be able to utilize our
      corporate assets as a vehicle for the acquisition of an operating
      business.





**Off-Balance
      Sheet Arrangements**





We
      had no
      off-balance sheet arrangements as of August 31, 2007.





**ITEM
      3. CONTROLS AND PROCEDURES**





*Disclosure
      Controls*





** Management,
      including our Interim Chief Executive Officer and Interim Chief Financial
      Officer, have evaluated the effectiveness of our disclosure controls and
      procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of
      the
      end of the period covered by this report. Based upon that evaluation, our
      interim Chief Executive Officer and interim Chief Financial Officer concluded
      that the disclosure controls and procedures were effective to provide reasonable
      assurance that information required to be disclosed in the reports that we
      file
      and submit under the Exchange Act is (i) recorded, processed, summarized and
      reported as and when required and (ii) accumulated and communicated to our
      management, including our principal executive officer and principal financial
      officer, as appropriate to allow timely discussions regarding disclosure. In
      designing and evaluating the disclosure controls and procedures, management
      recognized that any controls and procedures, no matter how well designed and
      operated, can provide only reasonable assurance of achieving the desired control
      objectives, and management is required to apply its judgment in evaluating
      the
      cost-benefit relationship of possible controls and procedures.




*Internal
      Controls*





Although
      there was not any change in our internal control over financial reporting during
      our quarter ended August 31, 2007, that has materially affected, or is
      reasonably likely to materially affect, our internal control over financial
      reporting, subsequent to end of this fiscal quarter we appointed a new interim
      chief executive officer and a new interim chief financial officer. In connection
      with our decision to terminate current operations, we terminated the employment
      of Dr. Wong, who had served as our Chief Executive Officer and Chief Financial
      Officer effective as of September 1, 2007. In light of the departure of Dr.
      Wong
      from our company, we appointed Mr. Robert A. Baron, a director, to serve as
      our
      interim Chief Executive Officer and President and Chairman of our board of
      directors and also appointed Mr. Joshua Moser, our Chief Operating Officer
      to
      also serve as our interim Chief Financial Officer. Inherent with changes in
      management is a change in understanding of the control environment, the business
      processes and internal controls. Management believes that the changes to the
      Company’s management structure have been successful. Except for the changes
      described above, there have been no other changes in the internal control over
      financial reporting during the quarter ended August 31, 2007 that have
      materially affected, or are reasonably likely to materially affect, our internal
      control over financial reporting.




We
      do not
      expect that internal controls over financial reporting will prevent all errors
      or all instances of fraud. A control system, no matter how well designed and
      operated, can provide only reasonable, not absolute, assurance that the control
      system’s objectives will be met. Further, the design of a control system must
      reflect the fact that there are resource constraints, and the benefits of
      controls must be considered relative to their costs. Because of the inherent
      limitations in all control systems, no evaluation of controls can provide
      absolute assurance that all control issues and instances of fraud, if any,
      within its company have been detected. These inherent limitations include the
      realities that judgments in decision-making can be faulty, and that breakdowns
      can occur because of simple error or mistake. Controls can also be circumvented
      by the individual acts of some persons, by collusion of two or more people,
      or
      by management override of the controls. The design of any system of controls
      is
      based in part upon certain assumptions about the likelihood of future events,
      and any design may not succeed in achieving its stated goals under all potential
      future conditions. Over time, controls may become inadequate because of changes
      in conditions or deterioration in the degree of compliance with policies or
      procedures. Because of the inherent limitation of a cost-effective control
      system, misstatements due to error or fraud may occur and not be detected.


-22-


**PART
      II. OTHER INFORMATION**





**ITEM
      1. LEGAL PROCEEDINGS.**





We
      are
      not a party to any legal proceedings.





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





All
      sales
      of unregistered securities have been previously disclosed by the
      Company.





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





None





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





None





**ITEM
      5. OTHER INFORMATION.**





None





**ITEM
      6. EXHIBITS.**





The
      following exhibits are filed herewith or incorporated by reference.





Incorporated
                by ReferenceExhibitNumber
            
            Exhibit
                Description
            
            Form
            
            Dated
            
            Exhibit
            
            FiledHerewith10.1
            
            Separation
                Agreement with Ted L. Wong
            
            8-K
            
            9/13/07
            
            10.131.1
            
            Certification
                of Chief Executive Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002
            
            
            
            
            
            
            
            X31.2
            
            Certification
                of Chief Financial Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002
            
            
            
            
            
            
            
            X32.1
            
            Certification
                of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
            
            
            
            
            
            
            
            X32.2
            
            Certification
                of 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


-23-


**SIGNATURES**





In
      accordance with Section 13 and 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized, on this October 12, 2007.




**NanoSensors,
                Inc.**/s/ Robert
              BaronRobert
                BaronInterim
                Chief Executive Officer/s/
                Joshua MoserJoshua
                MoserInterim
                Chief Financial Officer





-24-