UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





**FORM
      10-KSB**





(Mark
      One)





x
            Annual
                Report Under Section 13 or 15(d) of the Securities Exchange Act of
                1934
                for the Fiscal Year ended December 31,
                2007




o
            Transition
                Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934




Commission
      File Number 0-31927




LASERLOCK
                TECHNOLOGIES, INC.(Exact
                name of registrant as specified in its charter)




NEVADA
            
            
            23-3023677(State
                or other jurisdiction ofIncorporationor
                Organization)
            
            
            (IRS
                Employer
              Identification
                No.)




837
                Lindy Lane, Bala Cynwyd, PA 19004
              (Address
                of Principal Executive offices) (Zip Code)




610-668-1952


(Issuer’s
      Telephone Number, Including Area Code)




Securities
      Registered under Section 12(b) of the Exchange Act: None.




Securities
      registered under Section 12(g) of the Exchange Act:




Common
      stock of $.001 par value per share.




Registrant's
      telephone number with area code: (610) 668-1952




Securities
      registered pursuant to Section 12(b) of the Act: None.




Securities
      registered pursuant to Section 12(g) of the Act: Common stock of $0.001 par
      value per share.




Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act


Yes o No x




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 twelve months (or for such shorter period that the registrant was
      required to file such reports), and (2) has been subject to such filing
      requirements for the past 90 days.  Yes x No o




Check
      if
      there is no disclosure of delinquent filers in response to item 405 of
      Regulation S-B in this form, and no disclosure will be contained, to the best
      of
      Registrant's knowledge, in definitive proxy or information statements
      incorporated by reference in part III of this Form 10-KSB or any amendment
      to
      this Form 10-KSB. o




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




State
      Issuer's Revenues for its most recent fiscal year: $302,188. Aggregate market
      value of the voting stock held by non-affiliates of registrant: $491,458 as
      of
      February 29, 2008.




Number
      of
      shares outstanding as of February 29, 2008: 73,440,506




Transitional
      Small Business Issuer Format Yes o No x










**PART
      I**





**ITEM
      1** **DESCRIPTION
      OF BUSINESS**




ORGANIZATION
      AND CHARTER




LaserLock
      Technologies, Inc. (LaserLock) is a corporation formed under the laws of Nevada
      on November 10, 1999. Our objective is to develop and market technologies that
      will allow for easy product and document authentication and prevent product
      and
      document counterfeiting. Our initial authorized capitalization was 40,000,000
      shares of common stock, $0.001 par value per share (the “Common Shares”), and
      10,000,000 shares of preferred stock, $0.001 par value per share (the “Preferred
      Shares”).




On
      December 17, 2003, our stockholders approved an amendment and restatement of
      our
      Articles of Incorporation, which increased the authorized number of Common
      Shares from 40,000,000 to 175,000,000, and the authorized number of Preferred
      Shares from 10,000,000 to 75,000,000 and also provides our board of directors
      with the authority to designate rights of, and to issue without further action
      by our stockholders, the 75,000,000 Preferred Shares.




In
      May
      2007, in connection with a private placement of up to $400,000 principal amount
      of 10% Convertible Promissory Notes due August 31, 2008 described below, our
      board of directors approved and the Company filed a Certificate of Designation
      of Series A Preferred Stock with the Secretary of State of the State of Nevada
      designating 75,000,000 shares of the Company’s preferred stock as Series A
      Preferred Stock. The Series A Preferred Stock is non-voting. In the event of
      any
      liquidation, dissolution or winding up of the affairs of the Company, before
      any
      payment is made to the holders of the Company’s common stock, the holders of
      Series A Preferred Stock will be entitled to receive an amount equal to $0.0213
      per share out of the assets available for distribution by the Company. This
      preference amount is subject to adjustment for any stock dividends, combinations
      or splits with respect to shares of Series A Preferred Stock. At any time after
      the earlier of May 18, 2009 or the date the Company becomes insolvent, each
      share of Series A Preferred Stock is convertible at the option of the holder
      into one share of the Company’s common stock, in each case as adjusted for any
      stock dividends, combinations or splits with respect to such shares. The
      Certificate of Designation is effective as of May 17, 2007.





As
      a
      reporting company under the Securities Exchange Act of 1934, as amended, we
      are
      required to file quarterly and annual reports and certain event triggered
      reports with the Securities and Exchange Commission, or the Commission. These
      reporting requirements add to the expense and timeliness of certain business
      transactions which we may endeavor to undertake in the future, such as a merger
      or any other material business undertaking.




Our
      Common Shares trade on the OTC Bulletin Board (OTC: BB) under the trading symbol
      "LLTI."




The
      public may read and copy this document, and any other materials that we file
      with the Commission, at the Commission's Public Reference Room, 450 Fifth
      Street, N.W., Washington, D.C. 20549. Information is available from the Public
      Reference Room by calling the Commission at 1-800-SEC-0330. Additionally, the
      Commission maintains a website (http://www.sec.gov) that contains all reports,
      proxy and information statements, and other information that we file
      electronically. Our website is www.laserlocktech.com .




BUSINESS
      OF THE COMPANY




BACKGROUND




We
      plan
      to develop and market technologies in a variety of applications in the fields
      of
      product and document authentication and security. We believe that the
      technologies we own will enable businesses to reconstruct their overall
      approaches to corporate security - from counterfeit identification to employee
      or customer monitoring. Potential applications of our technologies are available
      in different types of products and industries - e.g., gaming, apparel, tobacco,
      perfume, compact disks, pharmaceuticals, event and transportation tickets,
      driver's licenses, insurance cards, passports, computer software, DVDs, and
      credit cards. We intend to generate sales through licenses of our technology or
      through direct sales of our technology to end-users.




We
      have
      filed a total of five patent applications relating to our technology. To date,
      four of these patents have been issued. Several of our patents utilize
      technology developed by our founder, Norman A. Gardner. These patents seek
      to
      accomplish non-intrusive document and product authentication in order to reduce
      losses caused by unpermitted document reproduction or by product counterfeiting.
      The technologies involve the utilization of invisible or color shifting/changing
      inks, which are compatible with today's printing machines. The inks may be
      used
      with certain printing systems such as offset, flexographic, silkscreen, gravure,
      and laser. Based upon Mr. Gardner's experience, we believe that the ink
      technologies may be incorporated into existing manufacturing processes. We
      believe that some of our patents may have non-security applications and we
      are
      attempting to commercialize these opportunities.







Since
      inception, the Company focused exclusively on the casino gaming industry.
      Through a partnership with Gaming Partners International (GPI), many of the
      larger casinos opened since 2005 used the Company’s technology to protect chips
      and dice against fraud. We believe, however, that the casino market alone will
      not support sufficient growth for the Company. Therefore, in 2004, the Company
      developed and applied for patent protection for a new technology that could
      have
      the potential to penetrate broader markets. The technology takes advantage
      of
      the worldwide movement towards energy efficient light bulbs and offers
      application to both the security market and the significantly larger retail
      consumer market. The Company has launched a targeted initiative to market this
      new technology as an entertainment device to the apparel industry.





ANTI-COUNTERFEITING
      TECHNOLOGIES AND PRODUCTS




Recent
      developments in copying and printing technologies have made it easier to
      counterfeit a wide variety of documents. Currency, lottery tickets, gift
      certificates, credit cards, event and transportation tickets, casino slot
      tickets, and travelers' checks are all susceptible to counterfeiting. We believe
      that losses from such counterfeiting have increased substantially with
      improvements in counterfeiting technology. Counterfeiting has long caused losses
      to manufacturers of brand name products, and we believe that these losses have
      increased as the counterfeiting of labeling and packaging has become
      easier.




We
      believe that our document authentication technologies are useful to businesses
      desiring to authenticate a wide variety of printed materials and products.
      Our
      technologies include (1) a technology utilizing invisible ink that can be
      revealed by use of laser light for authentication purposes, (2) an inkjet ink
      technology, which allows invisible codes to be printed, and (3) a color shifting
      technology that is activated by certain types of lights. All of those
      technologies are intended to be substantially different than pen systems that
      are currently in the marketplace. Pen systems also rely on invisible ink that
      is
      activated by a special marker. If the item is an original and not an invisible
      print, then the ink will be activated and show a visible mark as a different
      color than on an illegitimate copy. We believe that our technologies are
      superior to the pen system technology because, in the case of its laser and
      color shifting technologies, it will not result in a permanent mark on the
      merchandise. Permanent marks generally lead to the disposal of the merchandise
      or its sale as a "second" rather than best-quality product. In the case of
      rubbed ink technology, no special tools are required to distinguish the
      counterfeit. Other possible variations of our laser based technology involve
      multiple color responses from a common laser, visible marks of one color that
      turn another color with a second laser, or visible and invisible marks that
      turn
      into a multicolored image. These technologies provide users with the ability
      to
      authenticate products and detect counterfeit documents. Applications include
      the
      authentication of documents having intrinsic value, such as currency, checks,
      travelers' checks, gift certificates and event tickets, and the authentication
      of product labeling and packaging. When applied to product labeling and
      packaging, our technologies can be used to detect counterfeit products with
      labels and/or in packaging that do not contain the authenticating marks
      invisibly printed on the packaging or labels of legitimate products, as well
      as
      to combat product diversion (i.e., the sale of legitimate products through
      unauthorized distribution channels or in unauthorized markets). We believe
      that
      our technologies also could be used in a manner, which permits manufacturers
      and
      distributors to track the movement of products from production to ultimate
      consumption when coupled with proprietary software.




We
      have
      focused on the widespread problem of counterfeiting in the gaming industry.
      We
      have incorporated our technology into traditional gaming accessories such as
      playing cards, casino chips, and dice as well as gaming-based machinery such
      as
      slot machines with cashless gaming systems. This is accomplished during the
      regular manufacturing and printing processes. The protected items can be viewed
      with a laser to reveal the authenticity of the item. These covert authenticating
      technologies are also intended to be marketed to manufacturers of compact discs
      (“CDs”) to identify CDs produced by those manufacturers. We believe that this
      technology can provide CD manufacturers and publishers with a tool to combat
      the
      significant losses sustained as a result of illegal pirating and counterfeiting
      of data, music and videodiscs.







MARKETING




In
      developing our marketing approach, we have attempted to achieve sufficient
      flexibility in our products and technologies so as to provide cost-effective
      solutions to a wide variety of counterfeiting problems. We intend to generate
      revenues primarily by collecting license fees from manufacturers who incorporate
      our technologies into their manufacturing processes and their products as well
      as through the sale of inks.




We
      have
      identified a number of key markets for our technologies and products, including
      gaming, document security printers, manufacturers of labels for the apparel
      industry, manufacturers of packaging materials and distributors of brand name
      products. Within each market, key potential users have been identified. Within
      North America, South America and Europe, sales are intended to be effected
      via
      direct selling by our personnel or consultants to create end-user demand and
      utilization of licensee sales forces with support from our personnel. We have
      determined that technical sale support by our personnel will be of great
      importance to increasing our licensees' sales of products incorporating our
      technologies.





As
      continued improvements in color copier and desktop publishing technology make
      counterfeiting and fraud opportunities less expensive, and as the Internet
      makes
      these technologies more available, we intend to maintain an interactive product
      development and enhancement program. We will utilize our research and
      development and marketing skills in order to constantly upgrade and improve
      on
      our technology with the combined efforts of marketing, applications engineering
      and research and development. We believe that these methodologies - whereby
      we
      develop a product, deliver it to the client, receive feedback from the client,
      and change the product based on consumer feedback - will lead to faster
      development cycles for our products. Our objective is to concentrate our efforts
      on developing market-ready products with the most beneficial ratios of market
      potential to development time and cost.





We
      are
      developing a marketing approach for the non-security commercial applications
      of
      our color shifting technologies. We have identified several markets and related
      companies with whom we are working to commercialize applications. It is possible
      that during the next 12 months we will make our first sale for a test of a
      non-security application.




We
      are
      utilizing the extensive contacts of our president, Norman A. Gardner, in the
      counterfeit prevention and detection and gaming industries in an effort to
      effectuate sales.




MANUFACTURING




We
      do not
      have manufacturing facilities. We acquire components from various suppliers,
      which are manufactured to our specifications and reprocess these components.
      We
      intend to subcontract the manufacturing of our ink technology to third-party
      manufacturers. Applications of our technology are expected to be effected mainly
      through printing and coating of products with both visible and invisible ink.
      These inks will be custom manufactured for us by a third party. Because some
      of
      the processes that we intend to use in our applications are based on relatively
      common manufacturing techniques, there is no technical or economic reason for
      us
      to invest our own capital in manufacturing facilities at this
      stage.




We
      have
      established a quality-control program that includes laboratory analysis of
      developed technologies. We intend to include as part of this quality control
      program a specially trained technician on site at third-party production
      facilities to monitor the manufacturing process when warranted.




REGULATION




We
      are
      not currently aware of any regulations affecting our products; however, our
      technology is dependent upon an ink-based product. Therefore, it is possible
      that our products will be subject to environmental regulations in the
      future.









PATENTS
      AND LICENSES




When
      a
      new product or process is developed, we may seek to preserve the economic
      benefit of the product or process by applying for a patent in each jurisdiction
      in which the product or process is likely to be exploited. Generally, for a
      patent to be granted, the product or process must be new and be inventively
      different from what has been previously patented or otherwise known anywhere
      in
      the world. Patents generally have a life span of 20 years from the date of
      application depending on the relevant jurisdiction, after which time any person
      is free to exploit the product or process covered by a patent. A person who
      is
      the owner of a patent has, within the jurisdiction in which the patent is
      granted, the exclusive right to exclude others from practicing the subject
      matter defined in the patent claims.




We
      intend
      to extend our patent filings to other countries where doing so is economically
      reasonable, considering the expense of foreign patent applications and the
      increasing level of our activity. Currently, we believe that we will be filing
      for patent protection in Europe, Australia and one or more countries in the
      Far
      East and South America. The granting of a patent does not prevent a third party
      from seeking a judicial determination that the patent is invalid. Such
      challenges to the validity of a patent are not uncommon and are occasionally
      successful. There can be no assurance that a challenge will not be filed to
      one
      or more of our patents, if granted, and that, if filed, such a challenge will
      not be successful. The granting of a U.S. patent does not ensure that patents
      will be granted in other countries where protection is sought. Standards for
      granting patents vary and there is a possibility that prior art not yet
      discovered could arise and could prevent the grant of a foreign patent and
      cast
      into question the validity of a U.S. patent.




We
      continue to develop new anti-counterfeiting technologies and to apply for patent
      protection for these technologies wherever possible. Our current patent
      portfolio consists of four granted patents (one granted in 2002, two granted
      in
      2004 and one granted in 2005) and one patent pending. We believe that some
      of
      the patents that have been granted may have commercial application in the future
      but will require additional capital and/or a strategic partner in order to
      reach
      the potential markets.




Additionally,
      in September 2006, we elected not to renew the license to use the "Rub &
Reveal" technology via a renewable license agreement with NoCopi Technologies,
      Inc.




RESEARCH
      AND DEVELOPMENT




We
      have
      been involved in research and development, or R&D, since our inception and
      intend to continue our R&D activities, funds permitting. We hope to expand
      our technology into new areas of implementation and to develop unique customer
      applications.




For
      the
      period from inception at November 10, 1999 to December 31, 2007, we incurred
      costs of $807,730 on R&D. For the year ended December 31, 2007, we incurred
      costs of $23,068 (of which $1,524 represents costs associated with the granting
      of non employee stock options) on R&D. At the current time, we have not
      projected our R & D expenditures for the 2008 fiscal year.




We
      currently have R&D operations in Glen Mills, Pennsylvania at the facilities
      of our R&D consultant. We operate our quality control program in Raleigh,
      North Carolina at the facilities of our technical consultant. The consulting
      fees we pay cover all costs associated with facility and equipment
      usage.




PRODUCT
      DEVELOPMENT




To
      date,
      we have made only very limited sales of our products. For both our
      anti-counterfeiting technology and non-security applications we have completed
      independent testing and commercial trials with several manufacturers for our
      technologies.




We
      also
      have developed what we believe to be a proprietary trade secret enabling us
      to
      offer our clients the ability to change the combination lock on our lasers
      to
      prevent any breach of security by counterfeiters. This is accomplished by
      changing the reaction between our uniquely formulated code markings in our
      products, and the laser, which works to read such markings. The changes are
      made
      via our direct interaction with the client to make slight modifications to
      our
      products. We believe that we are the only company offering such a protection
      to
      our product line.









DESCRIPTION
      OF THE INDUSTRY




Recent
      developments in printing technologies have made it easier to counterfeit a
      wide
      variety of documents. Lottery tickets, gift certificates, event and
      transportation tickets and travelers' checks are all susceptible to
      counterfeiting, and we believe that losses from such counterfeiting have
      increased substantially due to improvements in technology. Counterfeiting has
      long caused losses to manufacturers of brand name products, and we believe
      that
      these losses have increased as the counterfeiting of labeling and packaging
      has
      become easier.




Other
      possible variations of our technologies involve multiple color responses from
      a
      common laser, visible marks of one color that turn another color with a laser
      or
      other generally available light sources or visible and invisible marks that
      turn
      into a multicolored image. These technologies provide users with the ability
      to
      authenticate documents and detect counterfeit products. Applications include
      the
      authentication of documents having intrinsic value, such as checks, travelers'
      checks, currency, tax stamps, gift certificates and event tickets, and the
      authentication of product labeling and packaging. When applied to product labels
      and packaging, such technologies can be used to detect counterfeit products
      whose labels and packaging would not contain the authenticating marks invisibly
      printed on the packaging or labels of the legitimate product, as well as to
      combat product diversion (i.e., the sale of legitimate products through
      unauthorized distribution channels or in unauthorized markets).




We
      believe that the technology could also be used in a manner permitting
      manufacturers and distributors to track the movement of products from production
      to ultimate consumption when coupled with proprietary software.




We
      focus
      on the widespread problem of fraud in the gaming industry. Our products use
      ink
      that is incorporated into dice and casino chips that can be viewed with a laser
      to reveal the authenticity of the item. However, as we elected not to renew
      our
      license to use the “Rub & Reveal” technology in September 2006, we will no
      longer pursue the business of authenticating of a slot ticket prior to
      redemption using the “Rub & Reveal” technology.





Non-security
      commercial applications of our color shifting inks that are activated by certain
      types of light are numerous. At the current time we cannot project or predict
      if
      and/or when commercial uses will be adopted by manufacturers or
      retailers.




COMPETITION




In
      the
      area of document and product authentication and serialization, we are aware
      of
      other competing technologies, both covert and overt surface-marking techniques,
      requiring decoding elements or analytical methods to reveal the relevant
      information. These technologies are offered by other companies for the same
      anti-counterfeiting and anti-diversion purposes for which we market our covert
      technologies. These include, among others, biological DNA codes, microtaggants,
      thermochromic, UV and infrared inks, as well as encryption, 2D symbology and
      laser engraving. We are aware of at least twenty-five companies, which will
      be
      competing with us in these markets. However, we believe that we have proprietary
      technologies, which provide a unique and cost-effective solution to the problem
      of counterfeiting and gray marketing. We are aware of a limited number of
      competitors, which are attempting similar approaches to addressing the same
      problems that our products address. Other indirect competitors are marketing
      products utilizing the hologram and "copy void" technologies. The hologram,
      which has been incorporated into credit cards to foil counterfeiting, is
      considerably more costly than our technology. Copy void technologies are
      security devices, which have been developed to indicate whether a document
      has
      been photocopied.





The
      use
      of our color shifting technology in commercial applications exposes us to a
      much
      broader spectrum of competition, which is too extensive to
      quantify.




We
      have
      limited resources, and there can be no assurance that businesses with greater
      resources will not enter the market and compete with us.




EMPLOYEES




We
      currently have a five-year employment agreement in place with our president
      and
      chief executive officer, Norman A. Gardner, dated November 5, 2003. Pursuant
      to
      the terms of the employment agreement, Mr. Gardner is entitled to receive (a)
      $150,000 annual base salary payable in semi-monthly installments for each of
      the
      first two 12-month periods and (b) $180,000 annual base salary payable in
      semi-monthly installments for each of the last three 12-month periods. In
      addition to his base salary, Mr. Gardner is eligible to receive a bonus not
      to
      exceed $125,000 in any year during the five-year employment period within which
      our net income (before taxes) exceeds $350,000. In connection with his
      employment agreement, our board of directors granted an option to Mr. Gardner
      to
      purchase up to 2,000,000 Common Shares, at an option price equal to the last
      sale price at which our Common Shares were sold on the date of the grant ($.20).
      The option originally vested as follows: 500,000 Common Shares vest on December
      31, 2003; 250,000 Common Shares vest on the date that is one year from the
      effective date of the employment agreement; 250,000 Common Shares vest on the
      date that is two years from the effective date of the employment agreement;
      500,000 Common Shares vest on the date that is three years from the effective
      date of the employment agreement; and 500,000 Common Shares vest on the date
      that is four years from the effective date of the employment agreement. On
      December 13, 2005, our board of directors approved an amendment to this option
      to reduce the option price to the last sale price at which our Common Shares
      were sold on December 13, 2005 ($.03), extend the expiration date to December
      13, 2015 and provide for vesting of the Common Shares subject to the option
      in
      36 equal monthly installments beginning December 15, 2005. Also on December
      13,
      2005, our board of directors approved an amendment to two options granted to
      Mr.
      Gardner on January 1, 2001 and January 2, 2001, respectively, to purchase an
      aggregate of 500,000 Common Shares pursuant to our original stock option plan
      in
      order to make the option price, term and vesting provisions identical to those
      of the amended 2,000,000 share option granted to Mr. Gardner in connection
      with
      his employment agreement. In addition, in April 2004, Mr. Gardner was granted
      an
      option to purchase 2,500,000 Common Shares at an exercise price of $.06. The
      option expires in June 2009 and vests in 27 equal monthly installments from
      April 2004 to June 2006. Pursuant to a resolution passed our board of directors,
      on April 21, 2005, Mr. Gardner was granted options to purchase 450,000 Common
      Shares at the last sale price at which our Common Shares were sold on April
      21,
      2005 ($.075). The option expires April 21, 2010 and was exercisable immediately.
      On December 15, 2005, our board granted Mr. Gardner 3,000,000 Common Shares
      in
      consideration for services provided to us. We issued these Common Shares on
      January 3, 2006.







If
      and
      when we hire full time employees other than our president, Norman A. Gardner,
      all full-time employees shall be entitled to health, life, accident and
      disability insurance plans and any profit-sharing or retirement plans and stock
      option plans that we make available. We also employ a secretary on a part-time
      basis.




INDEPENDENT
      CONTRACTORS




We
      are
      using part time consultants to assist us with our marketing and sales strategy,
      marketing, financial planning and finance, R & D, technical assistance and
      distribution services.


RISK
      FACTORS




STATEMENT
      REGARDING FORWARD-LOOKING STATEMENTS




The
      Private Securities Litigation Reform Act of 1995 (the “Reform Act”) provides a
      "safe harbor" for forward-looking statements. We desire to take advantage of
      certain "safe harbor" provisions of the Reform Act and are including this
      special note to enable us to do so. This document contains forward-looking
      statements that reflect our views with respect to future events and financial
      performance. These forward-looking statements are subject to uncertainties
      and
      other factors that could cause actual results to differ materially from such
      statements. These uncertainties and other factors include, but are not limited
      to, the words "anticipates," "believes," "estimates," "expects," "plans,"
      "projects," "targets," and similar expressions that identify forward-looking
      statements. Readers are cautioned not to place undue reliance on these
      forward-looking statements, which speak only as of the date the statement,
      was
      made. We undertake no obligation to update or revise any forward-looking
      statements, whether as a result of new information, future events or
      otherwise.




ABSENCE
      OF TRADING MARKET




There
      is
      no active trading market for our Common Shares and there is no assurance that
      such a market will develop, or if such a market develops, that it will be
      maintained. Holders of the shares may, therefore, have difficulty in selling
      their Common Shares should they desire to do so and should be able to withstand
      the risk of holding their shares indefinitely.









PENNY
      STOCK RULES




We
      believe that our Common Shares will be subject to the Penny Stock Rules
      promulgated under the Securities Exchange Act of 1934, as amended, due to its
      price being less than $5.00 per share. If we were to meet the requirements
      to
      exempt its securities from application of the Penny Stock Rules, there can
      be no
      assurance that such price will be maintained if a market develops and thus
      the
      Penny Stock Rules may come into effect.




These
      rules regulate broker-dealer practices in connection with transactions in "penny
      stocks." Penny stocks generally are equity securities with a price of less
      than
      $5.00 (other than securities registered on certain national securities exchanges
      or quoted on the NASDAQ system, provided that current price and volume
      information with respect to transactions in such securities is provided by
      the
      exchange or system). The Penny Stock Rules require a broker-dealer, prior to
      a
      transaction in a penny stock not otherwise exempt from the rules, to deliver
      a
      standardized risk disclosure document prepared by the Commission that provides
      information about penny stocks and the nature and level of risks in the penny
      stock market. The broker-dealer also must provide the customer with current
      bid
      and offer quotations for the penny stock, the compensation of the broker-dealer
      and its salesperson in the transaction, and monthly account statements showing
      the market value of each penny stock held in the customer's account. The bid
      and
      offer quotations and the broker-dealer and salesperson compensation information,
      must be given to the customer orally or in writing prior to effecting the
      transaction and must be given to the customer in writing before or with the
      customer's confirmation.




In
      addition, the Penny Stock Rules require that prior to a transaction in a penny
      stock not otherwise exempt from such rules, the broker-dealer must make a
      special written determination that the penny stock is a suitable investment
      for
      the purchaser and receive the purchaser's written agreement to the transaction.
      These disclosure requirements may have the effect of reducing the level of
      trading activity in the secondary market for our securities. While our Common
      Shares remain subject to the Penny Stock Rules, investors may find it more
      difficult to sell our securities.




NEED
      FOR
      SUBSEQUENT FUNDING; NO ASSURANCE OF FUTURE OFFERING




In
      order
      to finance our current operations and expansion of our business operations,
      to
      attempt to patent our technologies, and to implement our business plans, we
      need
      to raise more capital. Our ability to continue the business and effectively
      implement our plans depends upon our ability to raise additional funds. There
      is
      no assurance that additional funding will be obtainable in amounts or on terms
      favorable or acceptable to us. The capital resources required to develop each
      new product are significant.




We
      completed an offshore placement raising approximately $1,400,000 in 2003 and
      a
      Regulation D and offshore placement raising approximately $960,000 in
      2004.




In
      February 2006 we commenced a private placement of up to $800,000 principal
      amount of 10% senior secured convertible promissory notes due twelve months
      from
      the date of issue to certain of our shareholders and other accredited investors.
      Purchasers of Notes were issued 10-year warrants exercisable into LaserLock’s
      equity securities at an exercise price of $0.01 per share. Additionally, if
      an
      equity financing with total proceeds of more than $5,000,000 occurs while any
      Notes are outstanding, holders of Notes will have the right, at their option,
      to
      convert the outstanding principal and interest of the Notes into shares at
      a
      discount of 30% of the price per share in the qualified financing. The Notes
      are
      secured by a first priority lien on all of the tangible and intangible personal
      property of LaserLock. The private placement relied upon applicable exemptions
      from registration under Section 4(2) of the Securities Exchange Act of 1934,
      as
      amended, and Section 506 of Regulation D promulgated thereunder.









We
      completed the private placement on August 6, 2006 selling a total of $800,000
      in
      notes and issuing exercisable into 8,000,000 shares. .





On
      May 7,
      2007, we entered into an agreement with the holders of the notes whereby the
      parties extended the due date of the notes to August 31, 2008. The interest
      rate
      was increased to 12% during the extended period.





In
      May
      2007 we commenced a private placement of up to $400,000 principal amount of **** 10%
      Convertible Promissory Notes due August 31, 2008 (the “Notes”). Holders of Notes
      will have the right, at their option, to convert the outstanding principal
      and
      interest of the Notes into shares of the Company’s Series A Preferred Stock at
      any time and from time to time at the option of the holder at the initial
      conversion price of $0.005333 per share. The Notes are unsecured.





As
      of
      January 31, 2008 we completed the sale of all the notes to Nob Hill Capital
      Partners LP and Clydesdale Partners II, LLC. The Notes were issued in reliance
      upon applicable exemptions from registration under Section 4(2) of the
      Securities Exchange Act of 1934, as amended, and Section 506 of Regulation
      D
      promulgated thereunder.





As
      of May
      17, 2007, the Company filed a Certificate of Designation of Series A Preferred
      Stock with the Secretary of State of the State of Nevada designating 75,000,000
      shares of the Company’s preferred stock as Series A Preferred Stock. The Series
      A Preferred Stock is non-voting. In the event of any liquidation, dissolution
      or
      winding up of the affairs of the Company, before any payment is made to the
      holders of the Company’s common stock, the holders of Series A Preferred Stock
      will be entitled to receive an amount equal to $0.0213 per share out of the
      assets available for distribution by the Company. This preference amount is
      subject to adjustment for any stock dividends, combinations or splits with
      respect to shares of Series A Preferred Stock. At any time after the earlier
      of
      May 18, 2009 or the date the Company becomes insolvent, each share of Series
      A
      Preferred Stock is convertible at the option of the holder into one share of
      the
      Company’s common stock, in each case as adjusted for any stock dividends,
      combinations or splits with respect to such shares.





The
      Company also borrowed $70,000 in unsecured loan as of December 31, 2007. These
      notes are due on demand.





In
      addition to the above, in order to implement our strategy, it will be necessary
      for us to raise additional capital and/or enter into strategic alliances or
      partnerships. There can be no assurances that such capital or strategic
      alliances or partnerships will be available and, if available, that we will
      be
      able to secure such capital or arrangements on acceptable terms.




LACK
      OF
      DIVIDENDS




We
      have
      not paid any cash dividends since our inception and do not intend to pay
      dividends in the foreseeable future. We intend to retain all earnings, if any,
      for use in our business operations.




RISKS
      ASSOCIATED WITH OUR BEING A NEW BUSINESS




Our
      operations are subject to all of the risks inherent in a new business
      enterprise. We currently have limited revenue, limited operating history, and
      limited salable product. We are subject to the same types of risks that many
      new
      businesses face - like shortages of cash, under-capitalization, and expenses
      of
      new product development. We do not anticipate positive cash flow from operations
      on a monthly basis during the balance of the current fiscal year and we cannot
      give assurances that we will be operating at break-even levels in the future.
      Various problems, expenses, complications and delays may be encountered in
      connection with our development, both in terms of our products and our business.
      Future growth beyond present capacity will require significant expenditures
      for
      expansion, marketing, research and development. These expenses must be paid
      either out of the proceeds of future offerings of our securities or debt or
      out
      of our generated revenues and profits, if any. The availability of funds from
      either of these sources cannot be ensured.




GENERAL
      RISKS OF THE COUNTERFEIT PREVENTION INDUSTRY




The
      industry in which we intend to compete is subject to the traditional risks
      faced
      by any industry of adverse changes in general economic conditions, the
      availability and expense of liability insurance, and adverse changes in local
      markets. However, we will also be subject to industry specific risks such as
      counterfeiters learning how to circumvent new and existing technologies;
      evolving consumer preference and federal, state and local chemical processing
      controls; consumer product liability claims; and risks of product
      tampering.




COMPETITION
      IN OUR INDUSTRY




In
      the
      area of document security and product authentication and serialization, we
      are
      aware of other companies and other similar technologies, including both covert
      and overt surface marking techniques, which require decoding elements or
      analytical methods to reveal the relevant information. These technologies are
      offered by other companies for the same anti-counterfeiting and anti-diversion
      purposes for which we plan to market our technologies.









Other
      competitors are marketing products utilizing the hologram and copy void
      technologies. The hologram, which has been incorporated into credit cards to
      foil counterfeiting, is considerably more costly than our technology. Copy
      void
      is a security device, which has been developed to indicate whether a document
      has been photocopied.




It
      is
      anticipated that a significant number of companies of varying sizes, which
      may
      ultimately include divisions or subsidiaries of larger companies, will be vying
      for the same market segment as we are. A number of these competitors may have
      substantially greater financial and other resources available to them. There
      can
      be no assurance that we can compete successfully with such other companies.
      Competitive pressures or other factors could cause us to lose market share
      if it
      develops at all, or result in significant price erosion, either of which would
      have a material adverse effect on our results of operations.









GOVERNMENTAL
      REGULATION OF OUR FIELDS




Our
      operations may be subject to varying degrees to federal, state or local laws
      and
      regulations. Operations such as those we intend to conduct may be subject to
      federal, state and local laws and regulations controlling the development of
      technologies related to privacy protection, to the protection of the environment
      from materials that we may use in our inks, and advanced algorithm formulations
      or encryption tactics that we may develop. Any of these regulations may have
      a
      material adverse effect upon our operations.




TECHNOLOGY
      STAFFING




We
      anticipate that staffing will represent one of our largest expenses. We will
      compete with other copy security prevention technologies in attracting and
      retaining qualified and skilled personnel. A shortage of trained personnel
      or
      general economic inflationary pressures may require us to enhance our wage
      and
      benefits package in order to compete with other employers. There can be no
      assurance that our labor costs will be sustainable. Our failure to attract
      and
      retain qualified employees, to control our labor costs or to match increases
      in
      our labor expenses with corresponding increases in revenues could have a
      material adverse effect on the business. If we are unable to hire or maintain
      similarly positioned staff again in the future, we could experience material
      adverse effects.




RAPIDLY
      CHANGING MARKET




We
      believe that the market for our products is rapidly changing with evolving
      industry standards. Our future success will depend in part upon our ability
      to
      introduce new products and features to meet changing customer requirements
      and
      emerging industry standards. There can be no assurance that we will successfully
      complete the development of future products or that our current or future
      products will achieve market acceptance. Any delay or failure of these products
      to achieve market acceptance would adversely affect our business. In addition,
      there can be no assurance that products or technologies developed by others
      will
      not render our products or technologies non-competitive or
      obsolete.




PATENTS;
      INTELLECTUAL PROPERTY




Pursuant
      to an employment agreement signed in 1999 with our president, Norman A. Gardner,
      we have received all rights in a pending U.S. patent application and any
      improvements, and we have additionally filed four patent applications in the
      United States. The initial application and three of the other applications
      have
      been allowed and a corresponding international, or Patent Cooperation Treaty
      (“PCT”) application has been found to meet the PCT requirements for novelty,
      inventive step and industrial applicability. There can be no assurance that
      any
      patent, or any other patents which we may obtain or apply for in the future,
      will be granted or will be granted with claims of commercially useful breadth,
      or will be safe from challenge. Until such time as a patent is issued, we will
      not have the right to bring a patent infringement action against a third party
      who makes a product or uses a process identical or similar to a product or
      process that we employ. Even if patents were granted, there is no assurance
      that
      such patents would not be attacked by third parties or that, if any such attack
      were made, it would not be successful. The costs involved in defending a patent
      or prosecuting a patent infringement action could be substantial. At present
      we
      do not have the resources to pursue or defend such an action.




We
      plan
      to rely on confidentiality, non-compete and licensing agreements to establish
      and protect our rights in any proprietary technologies. While we intend to
      actively protect these rights, our technologies could possibly be compromised
      through reverse engineering or other means. There can be no assurance that
      we
      will be able to protect the basis of our technologies from discovery by
      unauthorized third parties, thus adversely affecting our customer and license
      relationships.




PRIOR
      RELATIONSHIPS OF OUR PRESIDENT




Norman
      A.
      Gardner, our president, founded NoCopi Technologies, Inc. (“NoCopi”), and served
      as its president and chief executive officer from October 1985 until October
      1997 and as its chairman of the board until March 1998. Currently, Mr. Gardner
      has no relationship with NoCopi.




We
      view
      NoCopi as one of our competitors in our marketplace in that we plan to develop
      and sell technology to clients and prospective clients that we believe is
      completely different from, but competitive with, that sold by NoCopi to the
      same
      or similar clients and prospective clients. Mr. Gardner's termination agreement
      with NoCopi does not impose a post-termination restrictive covenant upon Mr.
      Gardner, and Mr. Gardner has assured us that he has not divulged, furnished
      or
      made accessible, and will not divulge, furnish, or make accessible, to anyone
      any confidences or secrets of NoCopi in violation of the agreement. Furthermore,
      we had a business relationship with NoCopi, and had licensed certain
      technologies from NoCopi, which we elected not to renew in September
      2006.









RULE
      144
      SHARES




A
      majority of our shares outstanding as of December 31, 2007 (approximately
      51,459,983 shares, or 70.1%) were issued on the date of our inception or later
      and are considered "restricted securities." These shares may be publicly resold
      in compliance with Rule 144 adopted under the Securities Act of 1933, as
      amended. Rule 144 provides, in part, that after holding restricted securities
      for a period of one year non-affiliated shareholders (affiliates include
      officers, directors, and ten percent or greater shareholders) may sell, during
      any three months, in a brokerage transaction, or to a market maker, an amount
      equal to the greater of one percent (1%) of our shares, or the average weekly
      trading volume, if any, of our shares during the four calendar weeks preceding
      the filing of a Form 144 relating to such sale. After two (2) years,
      non-affiliated shareholders (who have been non-affiliates for at least three
      months) may sell an unlimited amount of shares. Rule 144 also provides that
      after holding restricted securities for a period of two (2) years, our
      affiliates may sell every third month in a brokerage transaction, or to a market
      maker, an amount equal to the greater of one percent (1%) of our shares, or
      the
      average weekly trading volume, if any, in our shares during the four calendar
      weeks preceding the filing of a Form 144 relating to such a sale. Such sales,
      if
      made under certain circumstances, would depress the market price and render
      difficult the sale of our securities purchased hereunder. Certain of the
      outstanding shares were to be eligible for sale pursuant to Rule 144 as of
      November 2000.




DEPENDENCE
      ON KEY PERSONNEL




We
      will
      be dependent on our current management for the foreseeable future. The loss
      of
      the services of any member of these persons would have a material adverse effect
      on our operations and prospects. Our success will be dependent to a substantial
      degree on our chief executive officer and president, Norman A. Gardner. Mr.
      Gardner's continued involvement is particularly critical to us. In the event
      Mr.
      Gardner is unavailable, it would have a material adverse effect on our
      operations. At this time, we have an employment agreement with Mr. Norman A.
      Gardner, our chief executive officer and president. The expansion of our
      business will be largely contingent on our ability to attract and retain a
      highly qualified management team. There is no assurance that we will be able
      to
      find suitable management personnel or that we will have the financial resources
      to attract or retain such people, if found.




INDEMNIFICATION




Our
      by-laws include provisions that indemnify any director or officer made a party
      to any action, suit or proceeding for negligence or misconduct in the
      performance of his duties made in good faith, by reason of the fact that he
      is
      or was a director, officer or employee of LaserLock, against reasonable
      expenses, including legal fees, actually or necessarily incurred by him in
      connection with the defense of such action, suit or proceedings or in connection
      with any appeal thereof. Currently, we spend $9,500 annually on our directors
      and officers liability insurance for a policy, which has a limit of
      $1,000,000




DEPENDENCE
      UPON THIRD PARTIES




We
      intend
      to pursue a policy of licensing our technologies for incorporation into products
      made and distributed by third parties. Although we plan to negotiate guaranteed
      minimum royalties in our licensing arrangements, our revenues will be
      substantially dependent on the sale of products incorporating our technologies
      by third parties. We intend to provide technical marketing support to our
      licensees. However, the successful marketing of such products and, therefore,
      our revenues and operating income, depend substantially on the marketing efforts
      of such third parties, over which we will have little, if any,
      control.




TECHNICAL
      OBSOLESCENCE




The
      value
      of our technology and any products derived from our technology could be
      substantially reduced as new or modified techniques for combating document
      and
      product counterfeiting and product diversion are developed and become widely
      accepted. We cannot guarantee that future technological developments will not
      result in the obsolescence of our technologies.









DEPENDENCE
      UPON MARKETING




While
      we
      believe that our products will meet unsatisfied market demand, our ability
      to
      generate sales will depend upon developing and implementing a marketing
      strategy. There can be no assurance that we will be able to successfully
      develop, promote and maintain an active market for our products.




MANAGEMENT
      OF GROWTH




If
      we are
      successful in increasing demand for our products, of which there can be no
      assurance, our growth could create certain additional risks. Rapid growth can
      be
      expected to place a substantial burden on our management resources and financial
      controls. Our ability to manage growth effectively will require us to continue
      to implement and refine our operational, financial and information management
      systems and to train, motivate and manage our employees. Our ability to attract
      and retain qualified personnel will have a significant effect on our ability
      to
      establish and maintain our position in our various markets, and our failure
      to
      manage our growth effectively could have material adverse effects on our results
      of operations.




RISKS
      ASSOCIATED WITH OUR ABILITY TO CONTINUE AS A GOING CONCERN




We
      have
      no operating history, have limited sales, have incurred operating losses since
      inception and require additional capital to continue our operations and to
      implement our business plans. Our certifying accountants have issued a going
      concern qualification in their report for the year ended December 31, 2007.
      Although we intend to raise money, implement sales, and become profitable,
      if we
      fail to achieve any one of these goals, then it is unlikely that we will be
      successful, and very likely that we will become insolvent or otherwise forced
      to
      close its doors. If this occurs, it will have a material adverse effect on
      our
      business and any results of operations.





RISKS
      ASSOCIATED WITH INABILITY TO REPAY INDEBTEDNESS DUE AUGUST 31, 2008





If
      we
      fail to raise additional capital, we may be unable to repay indebtedness
      outstanding under our convertible notes due August 31, 2008. If we are unable
      repay or refinance these borrowings, our lenders could foreclose on our assets.
      If this were to occur, the Company would need to consider all options available
      to it, which could include a possible bankruptcy filing. The Company is in
      discussions with certain of its creditors regarding these matters. There can
      be
      no assurance that the Company will be successful in raising additional capital
      or otherwise refinancing these borrowings or that, if achieved, these will
      be
      achieved at a sufficient level and on sufficient terms to allow the Company
      to
      operate effectively in future periods.




LACK
      OF
      DIVERSIFICATION




Our
      proposed operations, even if successful, will in all likelihood result in our
      engaging in a business, which is concentrated in only one industry.
      Consequently, our activities will be limited to the anti-counterfeiting
      industry. Our inability to diversify our activities into a number of areas
      may
      subject us to economic fluctuations within a particular business or industry
      and, therefore, increase the risks associated with our operations.





**ITEM
      2.** **DESCRIPTION
      OF PROPERTY**




Our
      office is presently located in approximately 1000 sq. ft. in space owned by
      its
      president, Norman A. Gardner, at 837 Lindy Lane, Bala Cynwyd, PA 19004. We
      pay
      no rent for the use of this space.




We
      have
      been assigned each patent and the rights to the additional patent application
      submitted by our president, Norman A. Gardner and our various consultants.
      We
      believe that the granting of our patent application will enhance our position
      in
      the market place, but that even if not granted, we will be able to compete
      effectively in the market place by utilizing non-competition and confidentiality
      terms in contracts it will enter into with future employees or consultants,
      and
      non-disclosure and non-analysis agreements given to all of our potential
      suppliers and customers.




Our
      patents generally relate to anti-counterfeiting and product authentication.
      The
      patents may be used in anti-counterfeiting, product authentication or other
      areas. In general, our technologies relate to color shifting of inks or the
      use
      of invisible inks that appear though the use of various types of light
      sources.





**ITEM
      3.** **LEGAL
      PROCEEDINGS**




There
      are
      no material legal proceedings pending or, to our knowledge, threatened
      us.










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




Not
      applicable





**PART
      II**





**ITEM
      5.**  **MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS**





MARKET
      INFORMATION




Our
      Common shares are quoted on the OTC Bulletin Board under the symbol "LLTI."
      The
      following table sets forth the high and low bid prices as reported by the
      National Association of Securities Dealers (NASD) for the periods ending
      December 31, 2007 and December 31, 2006. These quotations reflect inter-dealer
      prices, without retail mark-up, markdown or commissions, and may not reflect
      actual transactions.




2007
            
            High
            
            LowFourth
                Quarter
            
            $
            .025
            
            $
            .006Third
                Quarter
            
            $
            .012
            
            $
            .008Second
                Quarter
            
            $
            .032
            
            $
            .012First
                Quarter
            
            $
            .043
            
            $
            .03





2006
            
            High
            
            LowFourth
                Quarter
            
            $
            .046
            
            $
            .018Third
                Quarter
            
            $
            .09
            
            $
            .04Second
                Quarter
            
            $
            .11
            
            $
            .035First
                Quarter
            
            $
            .09
            
            $
            .025





HOLDERS




As
      of
      December 31, 2007, we had 73 stockholders of record of our Common Shares. We
      derived such number of record holders from the records maintained by our
      transfer agent, Interwest Stock Transfer Company, Inc.




DIVIDENDS




To
      date,
      we have not declared or paid any cash dividends and do not intend to do so
      in
      the foreseeable future. We intend to retain all earnings, if any, to finance
      the
      continued development of our business. Any future payment of dividends will
      be
      determined solely by our board of directors.










**ITEM
      6.** **MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS**




The
      following Management’s Discussion and Analysis should be read in conjunction
      with our audited financial statements and notes thereto contained elsewhere
      in
      this report on Form 10-KSB.




This
      discussion, analysis and other sections of this report contain, in addition
      to
      historical information, forward-looking statements within the meaning of the
      Private Securities Litigation Reform Act of 1995. Forward-looking statements
      involve known and unknown risks, uncertainties and other factors, which may
      cause our actual results, performance or achievements expressed or implied
      by
      these forward-looking statements to differ materially from such forward-looking
      statements. The forward-looking statements included in this report may prove
      to
      be inaccurate. These statements are based on a number of assumptions concerning
      future events, and are subject to a number of uncertainties and other factors,
      many of which are outside our control. Actual results may differ materially
      from
      such statements for a number of reasons, including the effects of regulation
      and
      changes in capital requirements and funding. In light of the significant
      uncertainties inherent in these forward-looking statements, you should not
      consider this information to be a guarantee by us or any other person that
      our
      objectives and plans will be achieved. We do not undertake to publicly update
      or
      revise its forward-looking statements even if experience or future changes
      make
      it clear that any projected results (expressed or implied) will not be
      realized.




OVERVIEW





We
      are a
      technology licensing company which licenses our technology to both third parties
      who incorporate it into their products for resale to their customers, and to
      end
      users who incorporate the technology into their products at their manufacturing
      facilities. We receive royalties on volume usage of our technology from third
      parties who sell products incorporating such technologies. We intend to require,
      whenever possible, minimum annual royalties to enter into these licensing
      agreements.




Our
      initial focus involved offering security solutions to the gaming industry
      through third parties that supply various products and services to the gaming
      industry. We license our technology to these third-party product and service
      suppliers who, in turn, incorporate our technology into the products they sell.
      We receive a royalty on each license. As part of these security solutions,
      we
      sell inks and pigments used to detect counterfeit products and documents to
      these same third-party product and service suppliers. By the end of fiscal
      year
      2003, we had signed agreements to provide technology for the protection of
      playing cards, dice, and casino chips from fraud with Gaming Partners
      International and CoPAG U.S.A. Inc. (“CoPAG”). The agreement with Gaming
      Partners International is still in effect. The agreement with CoPAG expired
      in
      September 2005 and was not renewed.




In
      February 2005 we entered into a six-month agreement with the Nicolette
      Consulting Group Limited (“NCG”) utilizing the services of Thomas A. Nicolette,
      its principal. The agreement anticipated that NCG would mainly provide sales
      and
      marketing services to LaserLock. During the initial term these services were
      expanded to include strategic planning and the longer-term objectives. In July
      2005, February 2006 and August 2006, the contract was extended for further
      six
      month periods with the understanding that Mr. Nicolette would, in addition
      to
      his sales and marketing services, provide services similar to those of a senior
      executive, although he would not be an officer of LaserLock. This agreement
      expired on January 31, 2007.





On
      December 13, 2005 we signed a Letter of Intent (“LOI”) to acquire a minimum of
      95% of the outstanding shares of ExaqtWorld S.A.R.L. (“Exaqt”) based in Paris,
      France for 36.6% of the outstanding shares of LaserLock (assuming 100% of the
      shares of Exaqt are tendered). With the acquisition of Exaqt we would own the
      worldwide rights in the security sector of a fundamental patent to manufacturer
      multi-tech Electronic Article Surveillance (“EAS”) systems, which simultaneously
      detect multiple EAS frequencies (RF, EM, AM and RFID). The multi-tech EAS
      systems allow the seamless integration of source tagging of products at the
      manufacturing level of the supply chain of the retail industry. The LOI was
      subject to the signing of a definitive agreement between Exaqt and us. The
      standstill agreement contained in the LOI expired June 13, 2006. In the first
      quarter of 2007 we elected not to pursue the acquisition of Exaqt.




We
      continue to develop new anti-counterfeiting technologies and to apply for patent
      protection for these technologies wherever possible. Our current patent
      portfolio consists of four granted patents (one granted in 2002, two granted
      in
      2004 and one granted in 2005) and one patent pending. Management believes that
      some of the patents that have been granted may have commercial application
      in
      the future but will require additional capital and/or a strategic partner in
      order to reach the potential markets.




We
      are
      currently exploring the uses of our technologies in general industry and
      government. Whenever possible, we will license our technology to strategic
      partners that currently service those industries and charge them royalty fees
      and/or a share of the revenues/profits from their use of our
      technology.




In
      February 2006 we commenced a private placement of up to $800,000 principal
      amount of 10% senior secured convertible promissory notes due twelve months
      from
      the date of issue to certain of our shareholders and other accredited investors.
      Purchasers of notes were issued 10-year warrants exercisable into LaserLock’s
      equity securities at an exercise price of $0.01 per share. Additionally, if
      an
      equity financing with total proceeds of more than $5,000,000 occurs while any
      notes are outstanding, holders of notes will have the right, at their option,
      to
      convert the outstanding principal and interest of the notes into shares at
      a
      discount of 30% of the price per share in the qualified financing. The notes
      are
      secured by a first priority lien on all of the tangible and intangible personal
      property of LaserLock. The private placement relied upon applicable exemptions
      from registration under Section 4(2) of the Securities Exchange Act of 1934,
      as
      amended, and Section 506 of Regulation D promulgated thereunder.  We
      completed the private placement on August 10, 2006. In total, we sold $800,000
      of notes and issued warrants for the purchase of 8,000,000 shares of our common
      stock in the private placement. On May 7, 2007, we entered into an agreement
      with the holders of the notes whereby the parties extended the due date of
      the
      notes to August 31, 2008. Interest under the notes was increased to 12% during
      the extended period.







In
      October 2006 we entered into an agreement with UTEK Corporation (“UTEK”) a
      publicly traded company located in Tampa, Florida to conduct a study of our
      intellectual property portfolio. The study focused on potential uses of our
      intellectual property portfolio for non-security applications. The approximate
      cost of the study was $55,000. We issued 1,200,000 restricted Common Shares
      to
      UTEK to pay the costs of the study. The shares had a market price of $.045.
      UTEK
      completed its initial study in December 2006 and provided a report, which,
      indicated that there was significant opportunity for licensing our intellectual
      property for non-security applications.





On
      November 2, 2006, we entered into an agreement with Athanor Capital Partners
      Limited, based in London, United Kingdom ("Athanor"), under which Athanor will
      act as a corporate advisor and broker to us. With Athanor's guidance, we
      intended to form a new holding company in the United Kingdom ("Newco") and
      raise
      up to $5,000,000 through the issuance of Newco's shares on the London Stock
      Exchange's AIM market ("AIM"). Under the terms of the agreement, Athanor would
      provide corporate finance advice and capital raising assistance to us in
      connection with a proposed application for the admission of Newco's shares
      to
      trade on the AIM. The proceeds of the offering would be used to complete the
      acquisition of the assets of ExaqtWorld S.A.R.L. (“ExaqtWorld”), including
      ExaqtWorld's patent portfolio, fund the global sales and marketing operations
      of
      the combined product lines, and exchange all outstanding shares of LaserLock
      for
      shares in Newco. On signing the agreement, we paid Athanor a $10,000
      non-refundable fee and granted them options to purchase 1,000,000 Common Shares
      at $.0001 per share. This option was promptly exercised. In the first quarter
      of
      2007 we elected not to pursue the acquisition of Exaqt and the listing on
      AIM.





On
      February 28, 2007, we entered into a commercialization agreement with UTEK
      under
      which it will market on our behalf the non-security applications of our
      intellectual property. Upon execution of the agreement, we paid UTEK an initial
      fee of $5,000, which will be credited against future commissions payable to
      UTEK
      under the commercialization agreement. Commissions payable to UTEK are based
      on
      the net revenues of LaserLock attributable to licenses and/or sales of the
      non-security applications of our intellectual property during the term of the
      agreement. The agreement has an initial term of six months, which will be
      automatically extended in the event contact is made during the initial term
      with
      any prospective licensees or purchasers of the non-security applications of
      our
      intellectual property.





On
      March
      9, 2007, we entered into a non-exclusive sales and marketing agreement with
      RCD
      Technologies Inc. (“RCD”). RCD is a security technology company, which
      specializes in RFID technology. During the initial six-month period of the
      agreement, RCD has agreed to market the LaserLock technologies using its
      in-house sales force and to share the net revenues with LaserLock on a 50-50
      basis. This agreement was not extended.





In
      May
      2007 we commenced a private placement of up to $400,000 principal amount of **** 10%
      Convertible Promissory Notes due August 31, 2008 (the “Notes”). Holders of Notes
      will have the right, at their option, to convert the outstanding principal
      and
      interest of the Notes into shares of the Company’s Series A Preferred Stock at
      any time and from time to time at the option of the holder at the initial
      conversion price of $0.005333 per share. The Notes are unsecured.





As
      of
      December 31, 2007 we have sold $375,000 in notes to Nob Hill Capital Partners
      LP
      and Clydesdale Partners II, LLC. In January 2008 we sold an additional $25,000
      in Notes completing the sales for a total of $400,000. The Notes were issued
      in
      reliance upon applicable exemptions from registration under Section 4(2) of
      the
      Securities Exchange Act of 1934, as amended, and Section 506 of Regulation
      D
      promulgated thereunder.





As
      of May
      17, 2007, the Company filed a Certificate of Designation of Series A Preferred
      Stock with the Secretary of State of the State of Nevada designating 75,000,000
      shares of the Company’s preferred stock as Series A Preferred Stock. The Series
      A Preferred Stock is non-voting. In the event of any liquidation, dissolution
      or
      winding up of the affairs of the Company, before any payment is made to the
      holders of the Company’s common stock, the holders of Series A Preferred Stock
      will be entitled to receive an amount equal to $0.0213 per share out of the
      assets available for distribution by the Company. This preference amount is
      subject to adjustment for any stock dividends, combinations or splits with
      respect to shares of Series A Preferred Stock. At any time after the earlier
      of
      May 18, 2009 or the date the Company becomes insolvent, each share of Series
      A
      Preferred Stock is convertible at the option of the holder into one share of
      the
      Company’s common stock, in each case as adjusted for any stock dividends,
      combinations or splits with respect to such shares.





In
      addition to the above, in order to implement our strategy, it will be necessary
      for us to raise additional capital and/or enter into strategic alliances or
      partnerships. There can be no assurances that such capital or strategic
      alliances or partnerships will be available and, if available, that we will
      be
      able to secure such capital or arrangements on acceptable terms.





RESULTS
      OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2007 AS COMPARED TO THE YEAR
      ENDED
      DECEMBER 31, 2006





Since
      we
      were and currently still are in our startup stages it is difficult for us to
      forecast our revenue or earnings accurately. We believe that period-to-period
      comparisons of our operating results may not be meaningful. We believe that
      we
      will start generating larger amounts of revenue in the future due to our
      attempts to cultivate business relationships over the past years.









As
      a
      result of our limited operating history, we do not have meaningful historical
      financial data on which to base planned operating expenses. Thus, annual revenue
      and results of operation are difficult to project.





For
      the
      year ended December 31, 2007, we had sales and royalty revenues of $302,188
      as
      compared to $123,104 for the year ending December 31, 2006. During the period,
      sales were $226,919 as compared to $21,110 for last year. The substantial
      increase results from an order from a casino that changed the placement of
      the
      inks on the casino chips so that the ability to authenticate the chip is
      enhanced. The change requires the use of more ink than the prior application.
      Royalty revenues were $75,269 as compared to $ 101,994, last year, due to the
      use of our security system on a reduced number of casino chips than in
      2006.





Our
      cost
      of goods sold were $202,641 for the year ended December 31, 2007 as compared
      to
      $21,051 for the year ended December 31, 2006. For the 2007 period the costs
      were
      89.3% of sales as compared to 99.7% for the 2006 year. The decrease in cost
      of
      sales results from repricing the selling price of pigment to our customers
      to
      better reflect cost structure.





Our
      research and development costs aggregated $23,068 for the year ended December
      31, 2007 as compared to $33,268 for the year ended December 31, 2006, a decrease
      of $10,200. The decrease results from a reduction in the cost for research
      and
      development consultants.





Our
      patent costs for the year ended December 31, 2007 were $2,900 as compared to
      $612 for the year ended December 31, 2006. This expense is the cost for
      maintaining the patents that have been issued to the Company.





Our
      legal
      and accounting costs aggregated $118,041 for the year ended December 31, 2007
      as
      compared to $197,893 for the year ended December 31, 2006, a decrease of
      $79,852. Legal fees for the 2007 period decreased to $59,571 from $132,613
      in
      the prior year. The decrease principally results from costs for legal work
      in
      the 2006 period in connection with the potential listing on AIM and the related
      acquisition of Exaqt. In the first quarter of 2007 we elected not to pursue
      both
      the AIM listing and the acquisition of Exaqt. In addition, during 2006 there
      were legal costs in connection with the issuance of the $800,000 in Notes.
      Also,
      accounting fees were reduced to $58,470 in the 2007 period from $65,280 for
      the
      same period last year.





Our
      sales
      and marketing costs aggregated $402,566 for the year ended December 31, 2007
      as
      compared to $781,350 for the year ended December 31, 2006, a decrease of
      $378,784. The reduction in the costs result primarily from reduced charges
      for
      the issuance of stock options of approximately $200,000, and reduced fees and
      costs paid to consultants of approximately $185,000. In addition, in the 2006
      period we incurred a cost of $6,000 for the settlement of a terminated marketing
      agreement.





Our
      general and administrative costs aggregated $260,235 for the year ended December
      31, 2007 as compared to $391,191 for the year ended December 31, 2006, a
      decrease of $130,956. The decrease is principally the result of reduced
      salaries, employee stock options and related items of $42,000, lower consulting
      fees $40,000, reduced charges for insurance $7,000, costs incurred in 2006
      related to the raising additional funds of $16,000 and non-employee stock
      options of $21,300.





Our
      interest expense for the year ended December 31, 2007 was $258,926 as compared
      to $308,360 for the year ended December 31, 2006, a decrease of $49,434. Accrued
      interest on the Company’s debt was $118,325 for the year ended December 31, 2007
      as compared to $56,167 for the 2006 period. The increase results from an
      increase in the average amount of debt outstanding and an increase in the
      interest rate from 10% to 12%. The amortization of the deferred finance charges
      related to the issuance of warrants related to the Notes was $140,407 for the
      year ended December 31, 2007 as compared to $251,969 for the same period last
      year.





The
      net
      loss for the year ended December 31, 2007 was $965,162 or $0.01 per share.
      This
      compares to a net loss of $1,607,017 or $0.02 per share for the same period
      in
      2006, a decrease in the net loss of $641,855. Included in the net loss for
      the
      2007 period was $255,750 that represents the expense portion of the fair value
      of stock options and warrants issued compared to $602,529 in the 2006 period,
      a
      decrease of $346,779.





LIQUIDITY
      AND CAPITAL RESOURCES





Our
      cash
      balance at December 31, 2007 of $348 was $1,710 less than the $2,058 as of
      December 31, 2006. Working capital at December 31, 2007 was a negative $
      1,855,145 representing a decrease in working capital of $853,317 from the
      negative $1,001,828 at December 31, 2006. This decrease in working capital
      relates principally to the cash portion of our net loss for the year ended
      December 31, 2007, $375,000 of short-term borrowings due August 31, 2008 and
      a
      short-term loan for $70,000, all of which were partially offset by the increase
      in accounts payable and accrued expenses.




Our
      cash
      flow from operations, since inception, has been and continues to be negative.
      We
      continue to attempt to solicit customers and expect to continue to expend funds
      in excess of our revenues in the near future.









Future
      capital requirements and the adequacy of available funds will depend on numerous
      factors, including the successful commercialization of our existing products,
      cost of filing, prosecuting, defending and enforcing any current and future
      patent claims and other intellectual property rights, competing technological
      and marketing of our products. In the event our plans change or our assumptions
      change or prove to be inaccurate or the funds available prove to be insufficient
      to fund operations at the planned level (due to further unanticipated expenses,
      delays, problems or otherwise), we could be required to obtain additional funds
      through equity or debt financing, through strategic alliances with corporate
      partners and others, or through other sources in order to bring our products
      through to commercialization. We do not have any committed sources of additional
      financing, and there can be no assurance that additional funding, if necessary,
      will be available on acceptable terms, if at all. If adequate funds are not
      available, we may be required to further delay, scale back, or eliminate certain
      aspect of our operations or attempt to obtain funds through arrangements with
      collaborative partners or others that may require us to surrender rights to
      certain of our technologies, product development projects, certain products
      or
      existing markets. Specifically, if we are unable to consummate sales, we may
      have to delay our anticipated marketing and delivery dates, scale back our
      third-party production capabilities or eliminate certain areas of further
      research and development. If adequate funds are not available, our business,
      financial condition, and results of operations will be materially and adversely
      affected.




In
      February 2006 we commenced a private placement of up to $800,000 principal
      amount of 10% senior secured convertible promissory notes due twelve months
      from
      the date of issue to certain of our shareholders and other accredited investors.
      Purchasers of notes were issued 10-year warrants exercisable into LaserLock’s
      equity securities at an exercise price of $0.01 per share. Additionally, if
      an
      equity financing with total proceeds of more than $5,000,000 occurs while any
      notes are outstanding, holders of notes will have the right, at their option,
      to
      convert the outstanding principal and interest of the notes into shares at
      a
      discount of 30% of the price per share in the qualified financing. The notes
      are
      secured by a first priority lien on all of the tangible and intangible personal
      property of LaserLock. The private placement relied upon applicable exemptions
      from registration under Section 4(2) of the Securities Exchange Act of 1934,
      as
      amended, and Section 506 of Regulation D promulgated thereunder.  We
      completed the private placement on August 10, 2006. In total, we sold $800,000
      of notes and issued warrants for the purchase of 8,000,000 shares of our common
      stock in the private placement. On May 7, 2007, we entered into an agreement
      with the holders of the notes whereby the parties extended the due date of
      the
      notes to August 31, 2008. Interest under the notes was increased to 12% during
      the extended period.




On
      November 2, 2006, we entered into an agreement with Athanor, under which Athanor
      will act as a corporate advisor and broker to us. With Athanor's guidance,
      we
      intended to form Newco and raise up to $5,000,000 through the issuance of
      Newco's shares on AIM. Under the terms of the agreement, Athanor would provide
      corporate finance advice and capital raising assistance to us in connection
      with
      a proposed application for the admission of Newco's shares to trade on the
      AIM.
      The proceeds of the offering would be used to complete the acquisition of the
      assets of ExaqtWorld, including ExaqtWorld's patent portfolio, fund the global
      sales and marketing operations of the combined product lines, and exchange
      all
      outstanding shares of LaserLock for shares in Newco. On signing the agreement,
      we paid Athanor a $10,000 non-refundable fee and granted them options to
      purchase 1,000,000 Common Shares at $.0001 per share. This option was promptly
      exercised. In the first quarter of 2007 we elected not to pursue the acquisition
      of Exaqt and the listing on AIM.





In
      May
      2007 we commenced a private placement of up to $400,000 principal amount of **** 10%
      Convertible Promissory Notes due August 31, 2008 (the “Notes”). Holders of Notes
      will have the right, at their option, to convert the outstanding principal
      and
      interest of the Notes into shares of the Company’s Series A Preferred Stock at
      any time and from time to time at the option of the holder at the initial
      conversion price of $0.005333 per share. The Notes are unsecured.





As
      of
      January 31, 2008 we have sold $400,000 in notes to Nob Hill Capital Partners
      LP
      and Clydesdale Partners II, LLC. The Notes were issued in reliance upon
      applicable exemptions from registration under Section 4(2) of the Securities
      Exchange Act of 1934, as amended, and Section 506 of Regulation D promulgated
      thereunder.





As
      of May
      17, 2007, the Company filed a Certificate of Designation of Series A Preferred
      Stock with the Secretary of State of the State of Nevada designating 75,000,000
      shares of the Company’s preferred stock as Series A Preferred Stock. The Series
      A Preferred Stock is non-voting. In the event of any liquidation, dissolution
      or
      winding up of the affairs of the Company, before any payment is made to the
      holders of the Company’s common stock, the holders of Series A Preferred Stock
      will be entitled to receive an amount equal to $0.0213 per share out of the
      assets available for distribution by the Company. This preference amount is
      subject to adjustment for any stock dividends, combinations or splits with
      respect to shares of Series A Preferred Stock. At any time after the earlier
      of
      May 18, 2009 or the date the Company becomes insolvent, each share of Series
      A
      Preferred Stock is convertible at the option of the holder into one share of
      the
      Company’s common stock, in each case as adjusted for any stock dividends,
      combinations or splits with respect to such shares.





In
      addition to the above, in order to implement our strategy, it will be necessary
      for us to raise additional capital and/or enter into strategic alliances or
      partnerships. There can be no assurances that such capital or strategic
      alliances or partnerships will be available and, if available, that we will
      be
      able to secure such capital or arrangements on acceptable terms.





Our
      actual research and development and related activities may vary significantly
      depending on numerous factors, including changes in the costs of such activities
      from current estimates, the results of our research and development programs,
      the results of clinical studies, the timing of regulatory submissions,
      technological advances, determinations as to commercial potential, the status
      of
      competitive products and the availability of sufficient funds to achieve our
      goals. At this time we cannot project our cash expenditures on our research
      and
      development program for fiscal year 2008. Our research and development plans
      over the next year are uncertain but may include the application of our product
      to additional materials, as well as improving our existing products in
      conjunction with client feedback and the commercialization of new products.
      The
      focus and direction of our operations also will be dependent upon the
      establishment of collaborative arrangements with other companies.









Our
      current policy is to invest our cash reserves in bank deposits, certificates
      of
      deposit, commercial paper, corporate notes, U.S. government instruments or
      other
      investment-grade quality instruments.




There
      can
      be no assurance that we will be able to commercialize our technologies or that
      profitability will ever be achieved. We expect that our operating results will
      fluctuate significantly from year to year in the future and will depend on
      a
      number of factors, most of which are beyond our control.





OFF
      BALANCE SHEET ARRANGEMENTS




As
      of
      December 31, 2007, we did not have any off-balance sheet arrangements as defined
      in Item 303(c) of Regulation S-B.









**ITEM
      7.****FINANCIAL
      STATEMENTS**




LaserLock
      Technologies, Inc. and Subsidiaries


(A
      Development Stage Company)





Consolidated
      Financial Statements





December
      31, 2007 and 2006







LaserLock
      Technologies, Inc. and
      Subsidiaries


(A
        Development Stage Company)
  CONTENTS
 PAGEMANAGEMENT’S REPORT
                  ON
                  INTERNAL CONTROL OVER FINANCIAL REPORTING
                1REPORT
                    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                2CONSOLIDATED
                    BALANCE SHEETS
                3CONSOLIDATED
                    STATEMENTS OF OPERATIONS
                4CONSOLIDATED
                    STATEMENTS OF STOCKHOLDERS' DEFICIT
                5-7CONSOLIDATED
                    STATEMENTS OF CASH FLOWS
                8-9NOTES
                    TO CONSOLIDATED FINANCIAL STATEMENTS
                10-20
  
 MANAGEMENT’S
          REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 
 Our
          management is responsible for establishing and maintaining adequate internal
          control over financial reporting for the company. Internal control over
          financial reporting is a process designed to provide reasonable assurance
          regarding the reliability of financial reporting and the preparation of
          financial statements for external purposes in accordance with generally
          accepted
          accounting principles. Our system of internal control over financial reporting
          includes those policies and procedures that (i) pertain to the maintenance
          of
          records that, in reasonable detail, accurately and fairly reflect the
          transactions and dispositions of the assets of the company; (ii) provide
          reasonable assurance that transactions are recorded as necessary to permit
          preparation of financial statements in accordance with generally accepted
          accounting principles, and that receipts and expenditures of the company
          are
          being made only in accordance with authorizations of management and directors
          of
          the company; and (iii) provide reasonable assurance regarding prevention
          or
          timely detection of unauthorized acquisition, use or disposition of the
          company’s assets that could have a material effect on the financial statements.
 
 Because
          of its inherent limitations, internal control over financial reporting
          may not
          prevent or detect misstatements. Also, projections of any evaluation of
          effectiveness to future periods are subject to the risk that controls may
          become
          inadequate because of changes in conditions, or that the degree of compliance
          with the policies or procedures may deteriorate.
 
 Management
          performed an assessment of the effectiveness of our internal control over
          financial reporting as of December 31, 2007 based upon criteria in Internal
          Control — Integrated Framework issued by the Committee of Sponsoring
          Organizations of the Treadway Commission (“COSO”). Based on this assessment,
          management has concluded that the Company’s internal control over financial
          reporting was not effective as of December 31, 2007 because of the material
          weaknesses described below.
 
 A
          material weakness is a control deficiency, or combination of control
          deficiencies, that results in more than a remote likelihood that a material
          misstatement of the financial statements would not be prevented or detected.
          A
          material weakness in the Company’s internal controls exists in that there is
          limited segregation of duties amongst the Company’s employees with respect
          to
 the
          Company’s preparation and review of the Company’s financial statements. This
          material weakness is a result of the Company’s limited number of personnel. This
          material weakness may affect management’s ability to effectively review and
          analyze elements of the financial statement closing process and prepare
          financial statements in accordance with U.S. GAAP.
 
 This
          annual report does not include an attestation report of the company’s registered
          public accounting firm regarding internal control over financial reporting.
          Management’s report was not subject to attestation by the company’s registered
          public accounting firm pursuant to temporary rules of the Securities and
          Exchange Commission that permit the company to provide only management’s report
          in this annual report.
 
 This
          report shall not be deemed “filed” for purposes of Section 18 of the Securities
          Exchange Act of 1934, as amended, or otherwise subject to the liability
          of that
          section. Further, this report shall not be deemed to be incorporated by
          reference into any filing under the Securities Act of 1933, as amended,
          or the
          Securities Exchange Act of 1934, as amended.
  /s/ Norman
                  A.
                  GardnerNorman
                  A. GardnerPresident
                    and Chief Executive Officer
  -1-
 REPORT
        OF
        INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To
        the
        Board of Directors
 LaserLock
        Technologies, Inc.
 (A
        Development Stage Company)
 Bala
        Cynwyd, Pennsylvania
 
 We
        have
        audited the accompanying consolidated balance sheets of LaserLock Technologies,
        Inc. and Subsidiaries (a development stage company) as of December 31, 2007 and 2006 ,
        and the
        related consolidated statements of operations, changes in stockholders' deficit
        and cash flows for the years then ended and for the period November 10, 1999
        (date of inception) to December 31, 2007. These consolidated financial
        statements are the responsibility of the Company's management. Our
        responsibility is to express an opinion on these consolidated financial
        statements based on our audits. The Company's financial statements as of
        and for
        the year ended December 31, 2001, and for the period November 10, 1999 (date
        of
        inception) through December 31, 2001 were audited by other auditors whose
        report, dated March 26, 2002, on those statements included an explanatory
        paragraph that described the substantial doubt about the Company's ability
        to
        continue as a going concern. The financial statements for the period November
        10, 1999 (date of inception) through December 31, 2001 reflect total revenues
        and net loss of $11,803 and $1,474,241, respectively, of the related totals.
        The
        other auditors' report has been furnished to us, and our opinion, insofar
        as it
        relates to the amounts included for such prior period, is based solely on
        the
        report of such other auditors.
 
 We
        conducted our audits in accordance with the standards of the Public Company
        Oversight Board (United States). Those standards require that we plan and
        perform the audits to obtain reasonable assurance about whether the financial
        statements are free of material misstatement. The company is not required
        to
        have, nor were we engaged to perform, an audit of its internal control over
        financial reporting. Our audit included consideration of internal control
        over
        financial reporting as a basis for designing audit procedures that are
        appropriate in the circumstances, but not for the purpose of expressing an
        opinion on the effectiveness of the company’s internal control over financial
        reporting. Accordingly, we express no such opinion. An audit includes examining,
        on a test basis, evidence supporting the amounts and disclosures in the
        consolidated financial statements. An audit also includes assessing the
        accounting principles used and significant estimates made by management,
        as well
        as evaluating the overall financial statement presentation. We believe that
        our
        audits provide a reasonable basis for our opinion.
 
 In
        our
        opinion, based on our audits and the report of other auditors, the consolidated
        financial statements referred to above present fairly, in all material respects,
        the consolidated financial position of LaserLock Technologies, Inc. and
        Subsidiaries (a development stage company) as of December 31, 2007 and 2006 and the
        consolidated results of their operations and their cash flows for the years
        then
        ended and for the period November 10, 1999 (date of inception) to December
        31,
        2007, in conformity with accounting principles generally accepted in the
        United
        States.
 
 The
        accompanying consolidated financial statements have been prepared assuming
        that
        the Company will continue as a going concern. As discussed in Note 2 to the
        consolidated financial statements, the Company's losses from development
        stage
        activities raise substantial doubt about its ability to continue as a going
        concern. The consolidated financial statements do not include any adjustments
        that might result from the outcome of this uncertainty.
 
 
 /s/
        MORISON COGEN LLP
 
 Bala
        Cynwyd, Pennsylvania
 April
        14,
        2008
 
 -2-
 LaserLock
        Technologies, Inc. and Subsidiaries
 (A
        Development Stage Company)
 Consolidated
        Balance Sheets
 December
        31, 2007 and
        2006
 2007
                
                2006ASSETSCURRENT
                    ASSETSCash
                    and cash equivalents
                
                $
                348
                
                $
                2,058Accounts
                    receivable, net of allowance of $0 atDecember
                    31, 2007 and 2006
                
                
                1,994
                
                
                6,540Inventory
                
                
                28,726
                
                
                43,225Deferred
                    finance charges
                
                
                -
                
                
                140,407TOTAL
                    CURRENT ASSETS
                
                
                31,068
                
                
                192,230PROPERTY
                    AND EQUIPMENT, NetCapital
                    equipment
                
                
                32,604
                
                
                32,604Less
                    accumulated depreciation
                
                
                22,543
                
                
                18,58810,061
                
                
                14,016Patent
                    costs, net of accumulated amoritization of$36,318
                    and $23,416 as of December 31, 2007 andand
                    2006
                
                
                147,601
                
                
                140,148TOTAL
                    ASSETS
                
                $
                188,730
                
                $
                346,394LIABILITIES
                    AND STOCKHOLDERS' DEFICITCURRENT
                    LIABILITIESAccounts
                    payable and accrued expenses
                
                
                641,213
                
                
                389,058Loan
                    payable, officer
                
                
                -
                
                
                5,000Senior
                    secured convertible notes payable
                
                
                800,000
                
                
                800,000Convertible
                    notes payable
                
                
                375,000
                
                
                -Notes
                    payable
                
                
                70,000
                
                
                -TOTAL
                    CURRENT LIABILITIES
                
                
                1,886,213
                
                
                1,194,058STOCKHOLDERS'
                    DEFICITPreferred
                    Stock, $ .001 par value; 75,000,000 shares authorized;no
                    shares issued and outstanding
                
                
                -
                
                
                -Common
                    stock, $ .001 par value; 175,000,000 shares authorized;73,440,506
                    shares issued and oustanding at December 31, 2007and
                    2006
                
                
                73,440
                
                
                73,440Additional
                    paid in capital
                
                
                7,251,687
                
                
                7,136,344Deficit
                    accumulated during the development stage
                
                
                (9,022,610
                )
                
                (8,057,448
                )STOCKHOLDERS'
                    DEFICIT
                
                
                (1,697,483
                )
                
                (847,664
                )TOTAL
                    LIABILITIES AND STOCKHOLDERS' DEFICIT
                
                $
                188,730
                
                $
                346,394
  The
        accompanying notes are an integral part of these consolidated financial
        statements.
 
 -3-
 LaserLock
        Technologies, Inc. and Subsidiaries
 (A
        Development Stage Company)
 Consolidated
        Statements of Operations
 For
        the
        Years Ended December
        31, 2007 and
        2006
 And
        for
        the Period November 10, 1999 (Date of Inception) to December
        31, 2007
 Year
                
                YearCumulative
                
                Ended
                
                EndedSince
                
                December
                    31,
                
                December
                    31,Inception
                
                2007
                
                2006NET
                    REVENUESSales
                
                $
                429,322
                
                $
                226,919
                
                $
                21,110Royalties
                
                
                513,538
                
                
                75,269
                
                
                101,994TOTAL
                    NET REVENUE
                
                
                942,860
                
                
                302,188
                
                
                123,104COST
                    OF SALES
                
                
                401,320
                
                
                202,641
                
                
                21,051GROSS
                    PROFIT
                
                
                541,540
                
                
                99,547
                
                
                102,053OPERATING
                    EXPENSESResearch
                    and development
                
                
                807,730
                
                
                23,068
                
                
                33,268Patent
                    costs
                
                
                59,876
                
                
                2,900
                
                
                612Legal
                    and Accounting
                
                
                1,014,117
                
                
                118,041
                
                
                197,893Sales
                    and Marketing
                
                
                4,545,294
                
                
                402,566
                
                
                781,350General
                    and administrative
                
                
                2,773,883
                
                
                260,235
                
                
                391,191Total
                    operating expenses
                
                
                9,200,900
                
                
                806,810
                
                
                1,404,314LOSS
                    BEFORE OTHER INCOME
                
                
                (8,659,360
                )
                
                (707,263
                )
                
                (1,302,261
                )OTHER
                    INCOME (EXPENSE)Interest
                    income
                
                
                63,584
                
                
                1,027
                
                
                3,604Interest
                    expense
                
                
                (596,556
                )
                
                (258,926
                )
                
                (308,360
                )Gain
                    on disposition of assets
                
                
                4,722
                
                
                -
                
                
                -(528,250
                )
                
                (257,899
                )
                
                (304,756
                )LOSS
                    BEFORE INCOME TAX BENEFIT
                
                
                (9,187,610
                )
                
                (965,162
                )
                
                (1,607,017
                )INCOME
                    TAX BENEFIT
                
                
                (165,000
                )
                
                -
                
                
                -NET
                    LOSS
                
                $
                (9,022,610
                )
                $
                (965,162
                )
                $
                (1,607,017
                )BASIC
                    AND DILUTED NET LOSS PERCOMMON
                    SHARE
                
                
                
                
                $
                (0.01
                )
                $
                (0.02
                )BASIC
                    AND DILUTED WEIGHTED AVERAGECOMMON
                    SHARES OUTSTANDING
                
                
                
                
                
                73,440,506
                
                
                68,644,673
 
 The
        accompanying notes are an integral part of these consolidated financial
        statements.
 
 -4-
 LaserLock
        Technologies, Inc. and Subsidiaries
 (A
        Development Stage Company)
 Consolidated
        Statements of Changes in Stockholders’ Equity (Deficit)
 For
        the
        Period November 10, 1999 (Date of Inception) to December
        31, 2007
 DeficitCommon
                
                
                
                
                
                AccumulatedStock
                
                
                
                Additional
                
                During
                    theNumber
                    of
                
                
                
                Consulting
                
                Paid-In
                
                DevelopmentShares
                
                Amount
                
                Fees
                
                Capital
                
                Stage
                
                Total
 Issuance
                    of initial 4,278,000 shares on November 10, 1999
                
                
                4,278,000
                
                $
                4,278
                
                $
                -
                
                $
                16,595
                
                $
                -
                
                $
                20,873Issuance
                    of shares of common stock in exchange for services
                
                
                1,232,000
                
                
                1,232
                
                
                -
                
                
                35,728
                
                
                -
                
                
                36,960Issuance
                    of shares of common stock
                
                
                2,090,000
                
                
                2,090
                
                
                -
                
                
                60,610
                
                
                -
                
                
                62,700Stock
                    issuance costs
                
                
                -
                
                
                -
                
                
                -
                
                
                (13,690
                )
                
                -
                
                
                (13,690
                )Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (54,113
                )
                
                (54,113
                )Balance,
                    December 31, 1999
                
                
                7,600,000
                
                
                7,600
                
                
                -
                
                
                99,243
                
                
                (54,113
                )
                
                52,730Issuance
                    of shares of common stock
                
                
                5,449,999
                
                
                5,450
                
                
                -
                
                
                921,050
                
                
                -
                
                
                926,500Issuance
                    of shares of common stock in exchange for services
                
                
                240,000
                
                
                240
                
                
                (40,800
                )
                
                40,560
                
                
                -
                
                
                -Stock
                    issuance costs
                
                
                -
                
                
                -
                
                
                -
                
                
                (16,335
                )
                
                -
                
                
                (16,335
                )Fair
                    value of non-employee stock options grants
                
                
                -
                
                
                -
                
                
                -
                
                
                50,350
                
                
                -
                
                
                50,350Amortization
                    of deferred consulting fees
                
                
                -
                
                
                -
                
                
                20,117
                
                
                -
                
                
                -
                
                
                20,117Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (367,829
                )
                
                (367,829
                )Balance,
                    December 31, 2000
                
                
                13,289,999
                
                
                13,290
                
                
                (20,683
                )
                
                1,094,868
                
                
                (421,942
                )
                
                665,533Issuance
                    of shares of common stock
                
                
                217,500
                
                
                218
                
                
                -
                
                
                77,723
                
                
                -
                
                
                77,941Issuance
                    of shares of common stock and stock options foracquisition
                    of subsidiary
                
                
                2,000,000
                
                
                2,000
                
                
                -
                
                
                736,000
                
                
                -
                
                
                738,000Issuance
                    of stock options
                
                
                -
                
                
                -
                
                
                -
                
                
                15,000
                
                
                -
                
                
                15,000Exercise
                    of options
                
                
                1,450,368
                
                
                1,450
                
                
                -
                
                
                230,609
                
                
                .
                
                
                232,059Fair
                    value of non-employee stock options
                
                
                -
                
                
                -
                
                
                -
                
                
                323,250
                
                
                -
                
                
                323,250Amortization
                    of deferred consulting fees
                
                
                -
                
                
                -
                
                
                20,683
                
                
                -
                
                
                -
                
                
                20,683Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (1,052,299
                )
                
                (1,052,299
                )Balance,
                    December 31, 2001
                
                
                16,957,867
                
                
                16,958
                
                
                -
                
                
                2,477,450
                
                
                (1,474,241
                )
                
                1,020,167
 
 The
        accompanying notes are an integral part of these consolidated financial
        statements.
  -5-
 LaserLock
        Technologies, Inc. and
        Subsidiaries
 (A
        Development Stage Company)
 Consolidated
        Statements of Changes in Stockholders’ Equity (Deficit) (Continued)
 For
        the
        Period November 10, 1999 (Date of Inception) to December
        31, 2007
 DeficitCommon
                  
                  
                  
                  
                  
                  AccumulatedStock
                  
                  
                  
                  Additional
                  
                  During
                      theNumber
                      of
                  
                  
                  
                  Consulting
                  
                  Paid-In
                  
                  DevelopmentShares
                  
                  Amount
                  
                  Fees
                  
                  Capital
                  
                  Stage
                  
                  Total
 Issuance
                    of shares of common stock
                
                
                3,376,875
                
                
                3,377
                
                
                -
                
                
                687,223
                
                
                -
                
                
                690,600Fair
                    value of non-employee stock options
                
                
                -
                
                
                -
                
                
                -
                
                
                94,000
                
                
                -
                
                
                94,000Salary
                    due to shareholder contributed capital
                
                
                -
                
                
                -
                
                
                -
                
                
                15,000
                
                
                -
                
                
                15,000Return
                    of shares of common stock related to purchase priceadjustment
                
                
                (1,000,000
                )
                
                (1,000
                )
                
                -
                
                
                (353,000
                )
                
                -
                
                
                (354,000
                )Net
                    loss
                
                
                -
                
                
                -
                
                
                
                
                
                -
                
                
                (1,195,753
                )
                
                (1,195,753
                )Balance,
                    December 31, 2002
                
                
                19,334,742
                
                
                19,335
                
                
                -
                
                
                2,920,673
                
                
                (2,669,994
                )
                
                270,014Issuance
                    of shares of common stock
                
                
                22,512,764
                
                
                22,512
                
                
                -
                
                
                1,387,109
                
                
                -
                
                
                1,409,621Fair
                    value of non-employee stock options
                
                
                -
                
                
                -
                
                
                -
                
                
                213,300
                
                
                
                
                
                213,300Issuance
                    of shares of common stock in exchange for services
                
                
                143,000
                
                
                143
                
                
                -
                
                
                23,857
                
                
                
                
                
                24,000Stock
                    issuance costs
                
                
                -
                
                
                -
                
                
                -
                
                
                (49,735
                )
                
                
                
                
                (49,735
                )Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (1,107,120
                )
                
                (1,107,120
                )Balance,
                    December 31, 2003
                
                
                41,990,506
                
                
                41,990
                
                
                -
                
                
                4,495,204
                
                
                (3,777,114
                )
                
                760,080Stock
                    issuance costs
                
                
                -
                
                
                -
                
                
                -
                
                
                (25,000
                )
                
                -
                
                
                (25,000
                )Fair
                    value of non-employee stock options
                
                
                -
                
                
                -
                
                
                -
                
                
                493,600
                
                
                -
                
                
                493,600Issuance
                    of shares of common stock
                
                
                18,600,000
                
                
                18,600
                
                
                -
                
                
                939,881
                
                
                -
                
                
                958,481Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (1,406,506
                )
                
                (1,406,506
                )Balance,
                    December 31, 2004
                
                
                60,590,506
                
                
                60,590
                
                
                -
                
                
                5,903,685
                
                
                (5,183,620
                )
                
                780,655
 
 The
        accompanying notes are an integral part of these consolidated financial
        statements.
 
 -6-
 LaserLock
        Technologies, Inc. and
        Subsidiaries
 (A
        Development Stage Company)
 Consolidated
        Statements of Changes in Stockholders’ Equity (Deficit) (Continued)
 For
        the
        Period November 10, 1999 (Date of Inception) to December
        31, 2007
 DeficitCommon
                
                
                
                
                
                AccumulatedStock
                
                
                
                Additional
                
                During
                    theNumber
                    of
                
                
                
                Consulting
                
                Paid-In
                
                DevelopmentShares
                
                Amount
                
                Fees
                
                Capital
                
                Stage
                
                Total
 Fair
                    value of non-employee stock options
                
                
                -
                
                
                -
                
                
                -
                
                
                286,762
                
                
                -
                
                
                286,762Issuance
                    of shares of common stock
                
                
                3,000,000
                
                
                3,000
                
                
                -
                
                
                102,000
                
                
                -
                
                
                105,000Net
                    loss for the year ended December 31, 2005
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (1,266,811
                )
                
                (1,266,811
                )Balance
                    at December 31, 2005
                
                
                63,590,506
                
                
                63,590
                
                
                -
                
                
                6,292,447
                
                
                (6,450,431
                )
                
                (94,394
                )Fair
                    value of non-employee stock options
                
                
                -
                
                
                -
                
                
                -
                
                
                215,463
                
                
                -
                
                
                215,463Fair
                    value of employee stock options
                
                
                -
                
                
                -
                
                
                -
                
                
                135,098
                
                
                -
                
                
                135,098Fair
                    value of warrants issued for deferred finance charges
                
                
                -
                
                
                -
                
                
                -
                
                
                392,376
                
                
                -
                
                
                392,376Exercise
                    of warrants
                
                
                5,550,000
                
                
                5,550
                
                
                -
                
                
                49,950
                
                
                -
                
                
                55,500Exercise
                    of options
                
                
                4,300,000
                
                
                4,300
                
                
                -
                
                
                (3,870
                )
                
                -
                
                
                430Shares
                    retired upon cancellation of consulting agreements
                
                
                (1,200,000
                )
                
                (1,200
                )
                
                -
                
                
                1,080
                
                
                -
                
                
                (120
                )Issuance
                    of shares for services
                
                
                1,200,000
                
                
                1,200
                
                
                
                
                
                53,800
                
                
                
                
                
                55,000Net
                    loss for the year ended December 31, 2006
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (1,607,017
                )
                
                (1,607,017
                )Balance
                    at December 31, 2006
                
                
                73,440,506
                
                $
                73,440
                
                $
                -
                
                $
                7,136,344
                
                $
                (8,057,448
                )
                $
                (847,664
                )Fair
                    value of non-employee stock options
                
                
                -
                
                
                -
                
                
                -
                
                
                47,692
                
                
                -
                
                
                47,692Fair
                    value of employee stock options
                
                
                -
                
                
                -
                
                
                -
                
                
                67,651
                
                
                -
                
                
                67,651Net
                    loss for the year ended December 31, 2007
                
                
                -
                
                
                -
                
                
                -
                
                
                
                
                
                (965,162
                )
                
                (965,162
                )Balance
                    at December 31, 2007
                
                
                73,440,506
                
                
                73,440
                
                
                -
                
                
                7,251,687
                
                
                (9,022,610
                )
                
                (1,697,483
                )
  The
        accompanying notes are an integral part of these consolidated financial
        statements.
 
 -7-
 LaserLock
        Technologies, Inc. and Subsidiaries
 (A
        Development Stage Company)
 Consolidated
        Statements of Cash Flows
 For
        the
        Years Ended December
        31, 2007 and
        2006
 And
        for
        the Period November 10, 1999 (Date of Inception) to December
        31, 2007
 Year
                
                YearCumulative
                
                Ended
                
                EndedSince
                
                December
                    31,
                
                December
                    31,Inception
                
                2007
                
                2006CASH
                    FLOWS FROM OPERATING ACTIVITIESNet
                    loss
                
                $
                (9,022,610
                )
                $
                (965,162
                )
                $
                (1,607,017
                )Adjustments
                    to reconcile net loss to net cashused
                    in operating activitiesFair
                    value of options issued in exchange for services
                
                
                1,927,166
                
                
                115,343
                
                
                350,561Amortization
                    of deferred finance charges
                
                
                392,375
                
                
                140,407
                
                
                251,968Salary
                    due to stockholder contributed to capital
                
                
                15,000
                
                
                -
                
                
                -Amortization
                    and depreciation
                
                
                463,990
                
                
                16,856
                
                
                12,567Gain
                    on disposition of assets
                
                
                (4,722
                )
                
                -
                
                
                -Stock
                    issued in exchange for services
                
                
                220,960
                
                
                -
                
                
                55,000Financing
                    expenses paid directly from stock proceeds
                
                
                5,270
                
                
                -
                
                
                -Amortization
                    of deferred consulting fees
                
                
                40,800
                
                
                -
                
                
                -(Increase)
                    decrease in assetsReceivables
                
                
                (1,994
                )
                
                4,546
                
                
                15,238Inventory
                
                
                (28,726
                )
                
                14,499
                
                
                15,595Increase
                    in liabilitiesAccounts
                    payable and accrued expenses
                
                
                641,213
                
                
                252,155
                
                
                55,772Net
                    cash used in operating activities
                
                
                (5,351,278
                )
                
                (421,356
                )
                
                (850,316
                )CASH
                    FLOWS FROM INVESTING ACTIVITIESPurchase
                    of property and equipment
                
                
                (35,749
                )
                
                -
                
                
                -Purchase
                    of intangibles
                
                
                (20,000
                )
                
                -
                
                
                -Purchase
                    of patent costs
                
                
                (183,919
                )
                
                (20,354
                )
                
                (15,141
                )Loan
                    payable, officer
                
                
                -
                
                
                (5,000
                )
                
                5,000Proceeds
                    from sale of assets
                
                
                6,738
                
                
                -
                
                
                -Net
                    cash used in investing activities
                
                
                (232,930
                )
                
                (25,354
                )
                
                (10,141
                )CASH
                    FLOWS FROM FINANCING ACTIVITIESProceeds
                    from issuance of common stock
                
                
                4,091,447
                
                
                -
                
                
                -Proceeds
                    from exercise of stock options
                
                
                232,369
                
                
                -
                
                
                310Proceeds
                    from issuance of stock options
                
                
                15,000
                
                
                -
                
                
                -Proceeds
                    from exercise of warrants
                
                
                55,500
                
                
                -
                
                
                55,500Proceeds
                    from issuance of notes
                
                
                1,395,000
                
                
                545,000
                
                
                800,000Repayments
                    of notes
                
                
                (100,000
                )
                
                (100,000
                )
                
                -Stock
                    issuance costs
                
                
                (104,760
                )
                
                -
                
                
                -Net
                    cash provided by financing activities
                
                
                5,584,556
                
                
                445,000
                
                
                855,810NET
                    DECREASE IN CASH ANDCASH
                    EQUIVALENTS
                
                
                348
                
                
                (1,710
                )
                
                (4,647
                )CASH
                    AND CASH EQUIVALENTS - BEGINNING OF PERIOD
                
                
                -
                
                
                2,058
                
                
                6,705CASH
                    AND CASH EQUIVALENTS - END OF PERIOD
                
                $
                348
                
                $
                348
                
                $
                2,058
 The
        accompanying notes are an integral part of these consolidated financial
        statements.
 
 -8-
 LaserLock
        Technologies, Inc. and Subsidiaries
 (A
        Development Stage Company)
 Consolidated
        Statements of Cash Flows (Continued)
 For
        the
        Years Ended December
        31, 2007 and
        2006
 And
        for
        the Period November 10, 1999 (Date of Inception) to December
        31, 2007
 Year
                
                YearCumulative
                
                Ended
                
                EndedSince
                
                December
                    31,
                
                December
                    31,Inception
                
                2007
                
                2006
 SUPPLEMENTAL
                    DISCLOSURE OF NON-CASHINVESTING
                    AND FINANCING ACTIVITIES:Cash
                    paid during the year for:Interest
                
                $
                29,610
                
                $
                340
                
                $
                -Income
                    taxes
                
                $
                -
                
                $
                -
                
                $
                -Return
                    of shares of common stock related topurchase
                    price adjustmentCommon
                    stock
                
                
                (1,000
                )
                
                -
                
                
                -Additional
                    paid-in capital
                
                
                (353,000
                )
                
                -
                
                
                -Intangible
                    assets
                
                $
                (354,000
                )
                $
                -
                
                $
                -Issuance
                    of common stock and stock optionsfor
                    acquisition of subsidiary
                
                $
                738,000
                
                $
                -
                
                $
                -Proceeds
                    from common stock sales applied directlyto
                    debt and financing expenses repayment
                
                $
                55,270
                
                $
                -
                
                $
                -Fair
                    value of warrants issued for deferred finance charges
                
                $
                392,376
                
                $
                -
                
                $
                392,376
  The
        accompanying notes are an integral part of these consolidated financial
        statements.
 
 -9-
 LaserLock
        Technologies, Inc. and
        Subsidiaries
 (A
        Development Stage Company)
 Notes
        to
        Consolidated Financial Statements
 
 **NOTE
        1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 ***Nature
        of the Business***
 The
        company is a development stage enterprise incorporated in the state of Nevada
        on
        November 10, 1999. Since inception, substantially all of the efforts of the
        company have been developing technologies for the prevention of product and
        document counterfeiting. The Company is in the development stage of raising
        capital, financial planning, establishing sources of supply, and acquiring
        property, plant and equipment. The Company anticipates establishing markets
        for
        its technologies in North America and Europe.
 
 ***Principle
        of Consolidation***
 The
        accompanying consolidated financial statements include the accounts of LaserLock
        Technologies, Inc. and its wholly-owned subsidiaries, LL Security Products,
        Inc.
        and EDS Marketing, Inc. All inter-company transactions have been eliminated
        in
        consolidation.
 
 ***Use
        of Estimates***
 The
        preparation of consolidated financial statements in conformity with accounting
        principles generally accepted in the United States requires management to
        make
        estimates and assumptions that affect the reported amounts of assets and
        liabilities and disclosure of contingent assets and liabilities at the date
        of
        the financial statements and the reported amounts of revenues and expenses
        during the reporting period. Actual results could differ from these
        estimates.
 
 ***Comprehensive
        Income***
 The
        company follows the Statement of Financial Accounting Standard (“SFAS”) No. 130,
“Reporting Comprehensive Income.” Comprehensive income is a more inclusive
        financial reporting methodology that includes disclosure of certain financial
        information that historically has not been recognized in the calculation
        of net
        income. Since the Company has no items of other comprehensive income,
        comprehensive income (loss) is equal to net income (loss).
 
 ***Fair
        Value of Financial Instruments***
 The
        Company’s financial instruments consist of cash, receivables, notes payable and
        accounts payable and accrued expenses. The carrying values of cash, receivables
        and accounts payable approximate fair value, because of their short maturities.
        The carrying value of notes payable approximates fair value since the interest
        rate associated with the debt approximates the current market interest rate.
 
 ***Concentration
        of Credit Risk Involving Cash***
 The
        Company has deposits with a financial institution which at times exceed Federal
        Depository Insurance limits. This financial institution has a strong credit
        rating and management believes that credit risk related to these deposits
        is
        minimal.
 
 ***Cash
        and Cash Equivalents***
 For
        purposes of reporting cash flows, the Company considers all cash accounts,
        which
        are not subject to withdrawal restrictions or penalties, and certificates
        of
        deposit and commercial paper with original maturities of 90 days or less
        to be
        cash or cash equivalents.
 
 ***Receivables***
 The
        company considers the receivables to be fully collectible; accordingly, no
        allowance for doubtful accounts is required. If amounts become uncollectible,
        they will be charged to operations when that determination is made.
 
 ***Inventory***
 Inventory
        principally consists of penlights and pigments and is stated at the lower
        cost
        (determined by the first-in, first-out method) or market.
 
 -10-
 LaserLock
        Technologies, Inc. and
        Subsidiaries
 (A
        Development Stage Company)
 Notes
        to
        Consolidated Financial Statements
 
 **NOTE
        1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**
 
 ***Property
        and Equipment***
 Capital
        equipment is stated at cost. Depreciation is computed using applicable methods
        over the estimated useful lives of the assets, principally five to seven
        years.
        Maintenance and repairs of property are charged to operations, and major
        improvements are capitalized. Upon retirement, sale, or other disposition
        of
        property and equipment, the costs and accumulated depreciation are eliminated
        from the accounts, and any resulting gain or loss is included in operations.
        Depreciation for 2007 and 2006 was $3,955 and $5,385.
 
 ***Patents***
 Patents
        are capitalized and amortized over an estimated useful life of 17 years.
        Patent
        amortization expense for 2007 and 2006 was $12,901and $7,182.
 
 ***Revenue
        Recognition***
 In
        accordance with Securities and Exchange Commission (“SEC”) Staff Accounting
        Bulletin (“SAB”) No. 104, *Revenue
        Recognition* ,
        the
        Company recognizes revenue when (i) persuasive evidence of a customer or
        distributor arrangement exists or acceptance occurs, (ii) a retailer,
        distributor or wholesaler receives the goods, (iii) the price is fixed or
        determinable, and (iv) collectibility of the sales revenues is reasonably
        assured. Subject to these criteria, the Company will generally recognize
        revenue
        from the sale of counterfeiting prevention technology when shipped. Revenue
        from
        licensing fees will be recognized proportionately over the period of the
        licensing agreement.
 
 ***Income
        Taxes***
 The
        Company follows SFAS No. 109, “Accounting for Income Taxes,” which requires an
        asset and liability approach to financial accounting and reporting for income
        taxes. Deferred income tax assets and liabilities are computed annually for
        temporary differences between the financial statements and tax bases of assets
        and liabilities that will result in taxable or deductible amounts in the
        future
        based on enacted tax laws and rates applicable to the periods in which the
        differences are expected to affect taxable income. Valuation allowances are
        established when necessary to reduce deferred tax assets to the amount expected
        to be realized. Income tax expense is the tax payable or refundable for the
        period plus or minus the change during the period in deferred tax assets
        and
        liabilities.
 
 ***Loss
        Per Share***
 The
        Company follows SFAS No. 128, “Earnings Per Share” resulting in the presentation
        of basic and diluted earnings per share. Because the Company reported a net
        loss
        in 2007 and 2006, common stock equivalents, including stock options and warrants
        were anti-dilutive; therefore, the amounts reported for basic and dilutive
        loss
        per share were the same.
 
 ***Stock
        Based Compensation***
 In
        December 2004, the Financial Accounting Standards Board (“FASB”) issued
        Statement of Financial Accounting Standard SFAS 123 (revised 2004), *Share-Based
        Payment* (“SFAS
        123R”). SFAS 123(R) supersedes APB Opinion No. 25, *Accounting
        for Stock Issued to Employees* ,
        and
        amends SFAS No. 95, *Statement
        of Cash Flows* .
        Generally, the approach in SFAS 123(R) is similar to the approach described
        in
        SFAS 123. However, SFAS 123(R) requires share-based payments to employees,
        including grants of employee stock options, to be recognized in the income
        statement based on their fair values at the date of grant. Pro forma disclosure
        is no longer an alternative.
 
 On
        January 1, 2006, the Company adopted SFAS 123(R) using the modified prospective
        method as permitted under SFAS 123(R). Under this transition method,
        compensation cost recognized in the first quarter of 2006 includes compensation
        cost for all share-based payments granted prior to but not yet vested as
        of
        December 31, 2005, based on the grant-date fair value estimated in accordance
        with the provisions of SFAS 123. In accordance with the modified prospective
        method of adoption, the Company’s results of operations and financial position
        for prior periods have not been restated.
 
 -11-
 LaserLock
        Technologies, Inc. and
        Subsidiaries
 (A
        Development Stage Company)
 Notes
        to
        Consolidated Financial Statements
 
 **NOTE
        1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**
 
 ***Stock
        Based Compensation (Continued)***
 
 The
        Company uses the Black-Scholes option pricing model to calculate the grant-date
        fair value of an award, with the following assumptions: no dividend yield,
        expected volatility of 169%, risk-free interest rate between 3.6% and 4.5%
        and
        expected option life of five to ten years.
 
 During
        the year ended December
        31, 2007 and
        2006, the Company’s net income was approximately $115,000 and $351,000 lower as
        a result of stock-based compensation expense resulting from the adoption
        of SFAS
        123(R). As of December
        31, 2007 ,
        there
        was approximately $11,000 of unrecognized compensation expense related to
        non-vested market-based share awards that is expected to be recognized through
        November 2009.
 
 ***Research
        and Development Costs***
 Research
        and development costs are expensed when incurred. Total amount expensed for
        2007
        and 2006 was $23,068 and $33,268 respectively.
 
 ***Recently
        Issued Pronouncements***
 In
        June
        2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation
        No. 48 (“FIN 48”), *Accounting
        for Uncertainty in Income Taxes* .
        FIN 48
        prescribes detailed guidance for the financial statement recognition,
        measurement and disclosure of uncertain tax positions recognized in an
        enterprise’s financial statements in accordance with FASB Statement
        No. 109, *Accounting
        for Income Taxes* .
        Tax
        positions must meet a more-likely-than-not recognition threshold at the
        effective date to be recognized upon the adoption of FIN 48 and in subsequent
        periods. FIN 48 was effective for fiscal years beginning after December 15,
        2006, and became effective for the Company beginning with the first quarter
        of
        2007, and the provisions of FIN 48 will be applied to all tax positions under
        Statement No. 109 upon initial adoption. The cumulative effect of applying
        the provisions of this interpretation will be reported as an adjustment to
        the
        opening balance of retained earnings for that fiscal year. The Company adopted
        FIN 48 effective January 1, 2007. The adoption of FIN 48 did not require
        an
        adjustment to the opening balance of retained earnings as of January 1, 2007.
  In
        September 2006, the FASB issued SFAS No. 157, *Fair
        Value Measurements* ).
        SFAS
        No. 157 establishes a framework for measuring fair value and expands
        disclosures about fair value measurements. The changes to current practice
        resulting from the application of SFAS No. 157 relate to the definition of
        fair
        value, the methods used to measure fair value and the expanded disclosures
        about
        fair value measurement. SFAS No. 157 is effective for fiscal years beginning
        after November 15, 2007 and interim periods within those fiscal years. The
        Company does not believe that the adoption of the provisions of SFAS No.
        157
        will impact the amounts reported in the financial statements, however,
        additional disclosures will be required about the inputs used to develop
        the
        measurements of fair value and the effect of certain measurements reported
        on
        the Statement of Operations.
  In
        February 2007, the FASB issued SFAS No. 159, *The
        Fair Value Option for Financial Assets and Financial
        Liabilities* .
        SFAS
        No. 159 permits entities to choose to measure many financial instruments
        and
        certain other items at fair value that are not currently required to be measured
        at fair value. The objective is to improve financial reporting by providing
        entities with the opportunity to mitigate volatility in reported earnings
        caused
        by measuring related assets and liabilities differently without having to
        apply
        complex hedge accounting provisions. SFAS No. 159 also establishes presentation
        and disclosure requirements designed to facilitate comparisons between entities
        that choose different measurement attributes for similar types of assets
        and
        liabilities. SFAS No. 159 is effective for financial statements issued for
        fiscal years beginning after November 15, 2007 and will become effective
        for us
        beginning with the first quarter of 2008. The Company has not yet determined
        the
        impact of the adoption of SFAS No. 159 on its financial statements and footnote
        disclosures.
  -12-
 LaserLock
        Technologies, Inc. and Subsidiaries
 (A
        Development Stage Company)
 Notes
        to
        Consolidated Financial Statements
 
 **NOTE
        1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**
 
 ***Recently
        Issued Pronouncements (Continued)***
 
 On
        December 4, 2007, the FASB issued SFAS No.141R, *Business
        Combinations* (SFAS
        No.
        141R). SFAS No. 141R requires the acquiring entity in a business combination
        to
        recognize all the assets acquired and liabilities assumed, establishes the
        acquisition date fair value as the measurement objective for all assets acquired
        and liabilities assumed, and requires the acquirer to expand disclosures
        about
        the nature and financial effect of the business combination. SFAS No. 141R
        is
        effective for business combinations for which the acquisition date is on
        or
        after the beginning of the first annual reporting period beginning on or
        after
        December 15, 2008. Since the standard is generally applicable only for
        acquisitions completed in the future, we are unable to determine the effect
        this
        standard would have on the accounting for such acquisitions
 
 ***Reclassifications***
 Certain
        amounts in the 2006 financial statements have been reclassified in order
        for
        them to be in conformity with the 2007 presentation.
 
 **NOTE
        2 - GOING CONCERN**
 
 The
        accompanying consolidated financial statements have been prepared assuming
        that
        the Company will continue as a going concern. The Company has incurred
        significant losses and experienced negative cash flow during the development
        stage. These conditions raise substantial doubt about the Company’s ability to
        continue as a going concern. The consolidated financial statements do not
        include any adjustments that might result from the outcome of this
        uncertainty.
 
 The
        Company is in the development stage at December 31, 2007. Successful completion
        of the Company’s development program and, ultimately the attainment of
        profitable operations is dependent upon future events, including obtaining
        adequate financing to fulfill its development activities and achieving a
        level
        of sales adequate to support the Company’s cost structure. However, there can be
        no assurances that the Company will be able to secure additional equity
        investment or achieve an adequate sales level.
 
 **NOTE
        3 - SENIOR SECURED CONVERTIBLE NOTES PAYABLE**
 
 In
        February 2006, the Company commenced a private placement of up to $800,000
        principal amount of 10% senior secured convertible promissory notes due twelve
        months from the date of issue to certain of our shareholders and other
        accredited investors. On May 7, 2007, the due date of these notes was extended
        to August 31, 2008 and the interest rate increased to 12% during the extension
        period. Purchasers of the notes were issued 10-year warrants exercisable
        into
        the Company’s shares at an exercise price of $0.01 per share. In addition, if an
        equity financing with total proceeds of more than $5,000,000 occurs while
        any
        notes are outstanding, holders of notes will have the right, at their option,
        to
        convert the outstanding principal and interest of the notes into shares at
        a
        discount of 30% of the price per share in the qualified financing. In accordance
        with Emerging Issue Task Force No. 98-5, *Accounting
        for Convertible Securities with Beneficial Conversion Features or Contingently
        Adjustable Conversion Ratios,* the
        contingent beneficial conversion feature is not recognized unless the triggering
        event occurs and the contingency is resolved. The notes are secured by a
        first
        priority lien on all of the tangible and intangible personal property of
        the
        Company.
 
 As
        of
        December 31, 2006, the Company sold $800,000 principal amount of the notes
        and
        issued 8,000,000 warrants. In accordance with FAS 123(R), warrants were valued
        at $392,376 and recorded as deferred finance charges. The Company uses the
        Black-Scholes option pricing model to calculate the grant-date fair value
        of the
        warrants, with the following assumptions: no dividend yield, expected volatility
        of 169% and 284%, risk-free interest rate between 3.6% and 4.5% and expected
        warrant life of ten years. The deferred finance charges were amortized over
        one
        year, which is the term of the convertible notes. As of December 31, 2007
        the
        Company received $55,500 for the exercise of 5,550,000 of the warrants. Accrued
        interest at December 31, 2007 and 2006 amounted to $145,700 and
        $56,167.
 
 -13-
 LaserLock
        Technologies, Inc. and
        Subsidiaries
 (A
        Development Stage Company)
 Notes
        to
        Consolidated Financial Statements
 
 **NOTE
        4 - CONVERTIBLE NOTES PAYABLE**
 
 During
        2007, the Company commenced a private placement of up to $400,000 principal
        amount of **** 10%
        Convertible Promissory Notes due August 31, 2008 (the “Notes”). Holders of Notes
        will have the right, at their option, to convert the outstanding principal
        and
        interest of the Notes into shares of the Company’s Series A Preferred Stock at
        any time and from time to time at the option of the holder at the initial
        conversion price of $0.005333 per share. The Notes are unsecured. In accordance
        with Emerging Issue Task Force No. 00-27, *Application
        of Issue No. 98-5 to Certain Convertible Instruments,* there is
        no intrinsic value to the embedded conversion option since the conversion
        price
        is higher than the fair value as determined by management. During 2007 the
        Company issued notes payable under the private placement totaling $375,000.
        The
        notes are payable on demand and bear interest at 10%. Accrued interest at
        December 31, 2007 amounted to $18,542.
 
 During
        2008, the Company issued an additional $25,000 of the notes payable to complete
        the private placement.
 
 **NOTE
        5 - NOTES PAYABLE**
 
 During
        2007, the Company issued $70,000 of unsecured notes payable, which are payable
        on demand and bear interest at the rate of 10%. Accrued interest at December
        31,
        2007 amounted to $10,250.
 
 During
        2008, the Company issued another $115,000 of these unsecured notes
        payable.
 
 **NOTE
        6 - INCOME TAXES**
 
 Under
        the
        provisions of SFAS No. 109, “Accounting for Income Taxes,” an entity recognizes
        deferred tax assets and liabilities for future tax consequences or events
        that
        have been previously recognized in the Company’s consolidated financial
        statements or tax returns. The measurement of deferred tax assets and
        liabilities is based on provisions of the enacted tax law. The effects of
        future
        changes in tax laws or rates are not anticipated.
 
 Deferred
        tax liabilities would arise principally from intangible assets in the
        consolidated financial statements as compared to the tax treatment of such
        costs
        (these assets have no tax basis).
 
 At
        December 31, 2007, the Company has a net operating loss (“NOL”) that
        approximates $6,101,000. Consequently, the Company had NOL carry forwards
        available for federal income tax purposes, which begin to expire in 2019.
        Deferred tax assets would arise from the recognition of anticipated utilization
        of these net operating losses to offset future taxable income.
 
 Finally,
        valuation allowances are provided against both deferred tax assets and
        liabilities in assessing the likelihood of ultimate realization of the deferred
        tax consequence or benefit.
 
 The
        income tax benefit (provision) consists of the following:
 Year
                    Ended
                
                Year
                    EndedDecember
                    31,
                
                December
                    31,2007
                
                2006Current
                
                $
                -
                
                $
                -Deferred
                
                
                400,000
                
                
                665,000Change
                    in valuation allowance
                
                
                (400,000
                )
                
                (665,000
                )$
                -
                
                $
                -
 
 -14-
 LaserLock
        Technologies, Inc. and
        Subsidiaries
 (A
        Development Stage Company)
 Notes
        to
        Consolidated Financial Statements
 
 **NOTE
        6 - INCOME TAXES (Continued)**
 
 The
        following is a reconciliation of the tax derived by applying the U.S. Federal
        Statutory Rate of 35% to the earnings before income taxes and comparing that
        to
        the recorded tax provisions.
  2007
                
                2006Amount
                
                %
                
                Amount
                
                %U.S
                      federal income tax benefit atFederal statutory rate
                
                $
                (338,000
                )
                
                (35
                )
                $
                (562,000
                )
                
                (35
                )State
                    tax, net of federal tax effect
                
                
                (62,000
                )
                
                (6
                )
                
                (103,000
                )
                
                (6
                )Change
                    in valuation allowance
                
                
                400,000
                
                
                41
                
                
                665,000
                
                
                41$
                -
                
                
                -
                
                $
                -
                
                
                -
 
 The
        primary components of the Company’s 2007 and 2006 deferred tax assets,
        liabilities and the related valuation allowances are as follows:
 December
                    31,
                
                December
                    31,2007
                
                2006Deferred
                    tax asset for NOL carryforwards
                
                $
                2,001,000
                
                $
                2,401,000Deferred
                    tax liability for intangibles
                
                
                (165,000
                )
                
                (165,000
                )Valuation
                    allowance
                
                
                (1,836,000
                )
                
                (2,236,000
                )$
                -
                
                $
                -
  Management
        has determined that the realization of the net deferred tax asset is not
        assured
        and has created a valuation allowance for the entire amount of such
        benefits.
 
 As
        previously mentioned in Note 1, on January 1, 2007, we adopted FIN 48, which
        provides guidance for the recognition and measurement of certain tax positions
        in an enterprise’s financial statements. Recognition involves a determination
        whether it is more likely than not that a tax position will be sustained
        upon
        examination with the presumption that the tax position will be examined by
        the
        appropriate taxing authority having full knowledge of all relevant information.
        The adoption of FIN 48 did not have a material impact on our consolidated
        financial position, results of operations, or cash flows.
 
 Our
        policy is to record interest and penalties associated with unrecognized tax
        benefits as additional income taxes in the statement of operations. As of
        January 1, 2007, we had no unrecognized tax benefits, and accordingly, we
        have
        not recognized any interest or penalties during 2007 related to unrecognized
        tax
        benefits. We did not accrue for interest or penalties as of December 31,
        2007.
        We do not have an accrual for uncertain tax positions as of December 31,
        2007.
 
 We
        file
        U.S. income tax returns and state tax returns. With few exceptions, the U.S.
        and
        state income tax returns filed for the tax years ending on December 31, 2004
        and
        thereafter are subject to examination by the relevant taxing
        authorities.
 
 -15-
 LaserLock
        Technologies, Inc. and
        Subsidiaries
 (A
        Development Stage Company)
 Notes
        to
        Consolidated Financial Statements
 
 **NOTE
        7 - COMMON STOCK**
 
 In
        October 2006, the Company issued 1,200,000 shares to a consulting firm for
        services. The fair value of the shares at the grant date was
        $55,000.
 
 **NOTE
        8 - STOCK OPTIONS AND WARRANTS**
 
 During
        1999, the Board of Directors (“Board”) of the Company adopted, with the approval
        of the stockholders, a Stock Option Plan. In 2000, the Board superseded that
        plan and created a new Stock Option Plan, pursuant to which it is authorized
        to
        grant options to purchase up to 1.5 million shares of common stock. On December
        17, 2003, the Board, with approval of the stockholders, superseded this plan
        and
        created the 2003 Stock Option Plan (the “Plan”). Under the Plan the Company is
        authorized to grant options to purchase up to 18,000,000 shares of common
        stock
        to the Company’s employees, officers, directors, consultants, and other agents
        and advisors. The Plan is intended to permit stock options granted to employees
        under the Plan to qualify as incentive stock options under Section 422 of
        the
        Internal Revenue Code of 1986, as amended (“Incentive Stock Options”). All
        options granted under the Plan, which are not intended to qualify as Incentive
        Stock Options, are deemed to be non-qualified options (“Non-Statutory Stock
        Options”). As of December 31, 2007, there are 3,100,000 options that have been
        issued and exercised, 14,006,662 options that have been issued and are
        unexercised, and 893,338 options that are available to be issued under the
        Plan.
 
 The
        Plan
        is administered by a committee of the Board of Directors (“Stock Option
        Committee”) which determines the persons to whom awards will be granted, the
        number of awards to be granted and the specific terms of each grant, including
        the vesting thereof, subject to the provisions of the plan.
 
 In
        connection with Incentive Stock Options, the exercise price of each option
        may
        not be less than 100% of the fair market value of the common stock on the
        date
        of the grant (or 110% of the fair market value in the case of a grantee holding
        more than 10% of the outstanding stock of the Company). The aggregate fair
        market value (determined at the time of the grant) of stock for which an
        employee may exercise Incentive Stock Options under all plans of the company
        shall not exceed $1,000,000 per calendar year. If any employee shall have
        the
        right to exercise any options in excess of $100,000 during any calendar year,
        the options in excess of $100,000 shall be deemed to be Non-Statutory Stock
        Options, including prices, duration, transferability and limitations on
        exercise.
 
 The
        Company issued non-statutory stock options pursuant to contractual agreements
        to
        non-employees. Options granted under the agreements are expensed when the
        related service or product is provided.
 
 In
        conjunction with a 2002 contractual agreement, the Company granted options
        to a
        customer. The number of options to be granted is contingent upon the gross
        amount of product sales during each of the four years in the period ended
        December 31, 2006, at exercise prices ranging from $1.25 to $2.25. The
        contingent issuable options will be valued in accordance with EITF 96-18,
        “Accounting for Equity Instruments That Are Issued To Other than Employee
        For
        Acquiring, Or In Conjunction With Selling, Goods or Services,” which generally
        will be at the end of each reporting date when the amount of the product
        sales
        is known. As of December 31, 2006, the contingencies of this contract were
        not
        met and no options were granted.
 
 In
        March
        2006, in conjunction with a consulting contract, the Company granted options
        to
        purchase 1,200,000 shares of common stock at an exercise price of $0.0001
        per
        share, expiring two days after they become vested. The options vest 200,000
        at
        April 30, 2006 and 100,000 each month thereafter from May 31, 2006 through
        February 2007. The 1,200,000 options were fully exercised in April 2006,
        with
        400,000 shares issued. In accordance with the fair value method as described
        in
        accounting requirements of SFAS No. 123(R), the Company used the Black-Scholes
        option pricing model to calculate the grant-date fair value of an award.
        The
        fair market value of the options was $108,000. The Company had appropriately
        recorded the expense associated with the consulting contract monthly. The
        agreement, however, was cancelled in the third quarter of 2006 along with
        800,000 unvested shares held in escrow. Accordingly, the Company recognized
        consulting expenses of $35,960 for the year ended December 31,
        2006.
  -16-
 LaserLock
        Technologies, Inc. and
        Subsidiaries
 (A
        Development Stage Company)
 Notes
        to
        Consolidated Financial Statements
 
 **NOTE
        8 - STOCK OPTIONS AND WARRANTS (Continued)**
 
 In
        May
        2006, in conjunction with a consulting contract, the Company granted options
        to
        purchase 600,000 shares of common stock at an exercise price of $0.0001 per
        share. The options were exercisable immediately. The 600,000 options were
        fully
        exercised in May 2006, with 100,000 shares issued and with the remaining
        500,000
        shares to be issued 100,000 at July 31, 2006 and 100,000 each month thereafter
        from August 31, 2006 through November 30, 2006. In accordance with the fair
        value method as described in accounting requirements of SFAS No. 123(R),
        the
        Company used the fair market value to calculate the grant-date fair value
        of an
        award, because these options were exercised immediately. The fair market
        value
        of the options was $36,000. The agreement was cancelled in the third quarter
        of
        2006. However, 100,000 additional shares were issued prior to cancellation.
        Accordingly, the Company recognized consulting expenses of $12,000 for the
        year
        ended December 31, 2006. The remaining 400,000 shares held in escrow were
        cancelled.
 
 In
        May
        2006, in conjunction with a consulting contract, the Company granted options
        to
        purchase 1,500,000 shares of common stock at an exercise price of $0.0001
        per
        share. The options were exercisable immediately. In accordance with the fair
        value method as described in accounting requirements of SFAS No. 123(R),
        the
        Company used the fair market value to calculate the grant-date fair value
        of an
        award, because these options were exercised immediately. The fair market
        value
        of the options was $90,000. Accordingly, the Company recognized consulting
        expenses of $37,500 and $52,500 for the years ended December
        31, 2007 and
        2006. The 1,500,000 options were fully exercised in June 2006, with 583,333
        shares issued and with the remaining 916,667 shares to be issued 83,333 at
        July
        31, 2006 and 83,333 each month thereafter from August 31, 2006 through May
        31,
        2007. As of December 31, 2007 all of the shares have been issued.
 
 In
        August
        2006, in conjunction with a two month consulting contract, the Company granted
        options to purchase 300,000 shares of common stock at an exercise price of
        $0.01
        per share. The options were exercisable 150,000 at the end of each month
        of the
        contract. In accordance with the fair value method as described in accounting
        requirements of SFAS No. 123(R), the Company used the Black-Scholes option
        pricing model to calculate the grant-date fair value of an award, with the
        following assumptions: no dividend yield, expected volatility of 172%, risk-free
        interest rate of 5% and expected option life of one to two months. The fair
        market value of the options was $17,000. Accordingly, the Company recognized
        consulting expenses of $17,000 for the year ended December 31, 2006. The
        options
        expired unexercised.
 
 In
        November 2006, in conjunction with a consulting contract, the Company granted
        options to purchase 1,000,000 shares of common stock at an exercise price
        of
        $0.0001 per share. The options were exercisable immediately. The 1,000,000
        options were fully exercised in November 2006. In accordance with the fair
        value
        method as described in accounting requirements of SFAS No. 123(R), the Company
        used the fair market value to calculate the grant-date fair value of an award,
        because these options were exercised immediately. The fair market value of
        the
        options was $30,000. Accordingly, the Company recognized consulting expenses
        of
        $30,000 for the year ended December 31, 2006. The agreement was cancelled
        in
        December 2006.
 
 In
        conjunction with the issuance of $800,000 of convertible notes payable, the
        Company issued 8,000,000 warrants. In accordance with FAS 123(R), warrants
        were
        valued at $392,376 and recorded as deferred finance charges. The Company
        uses
        the Black-Scholes option pricing model to calculate the grant-date fair value
        of
        the warrants, with the following assumptions: no dividend yield, expected
        volatility of 169% and 284%, risk-free interest rate between 3.6% and 4.5%
        and
        expected warrant life of ten years. As of December 31, 2006 the Company received
        $55,500 for the exercise of 5,550,000 of the warrants.
 
 -17-
 LaserLock
        Technologies, Inc. and
        Subsidiaries
 (A
        Development Stage Company)
 Notes
        to
        Consolidated Financial Statements
 
 **NOTE
        8 - STOCK OPTIONS AND WARRANTS (Continued)**
 
 A
        summary
        of non-statutory stock option and warrant transactions for non-employees
        during
        2007 and 2006 are as follows:
 Weighted
                    AverageOption/Warrant
                
                Exercise
                
                ExerciseShares
                
                Price
                
                PriceOutstanding,
                    December 31, 2005
                
                
                11,251,294
                
                $
                .06
                    to $.40
                
                $
                0.08Granted
                
                
                12,600,000
                
                
                .0001
                    to .01
                
                
                .03
                    to .08Exercised
                
                
                (9,850,000
                )
                
                .01
                    to.35
                
                
                .01
                    to .35Expired
                
                
                (749,632
                )
                
                .01
                    to .35
                
                
                .01
                    to .35Outstanding,
                    December 31, 2006
                
                
                13,251,662
                
                $
                .01
                    to $.40
                
                $
                0.09Granted
                
                
                -
                
                
                -
                
                
                -Exercised
                
                
                -
                
                
                -
                
                
                -Expired
                
                
                (395,000
                )
                
                .40
                
                
                .40Outstanding,
                    December 31, 2007
                
                
                12,856,662
                
                $
                .01
                    to $.28
                
                $
                0.06Exercisable,
                    December 31, 2007
                
                
                12,523,330
                
                $
                .01
                    to $.28
                
                $
                0.08Weighted
                    Average Remaining Life,Exercisable,
                    December 31, 2007 (years)
                
                
                5.1
  Total
        expense recognized by the Company during 2007 and 2006 for non-statutory
        stock
        options granted to non-employees during the years was $47,692 and $215,463.
        The
        2007 and 2006 fair value amounts of non-statutory stock options were estimated
        using the Black-Scholes options pricing model with the following assumptions:
        no
        dividend yield, expected volatility ranging from 60% to 334%, risk free interest
        rate of approximately 3% to 5% and expected option life of 2 months to ten
        years.
 
 There
        were no employee options granted during 2007 and 2006.
 
 A
        summary
        of incentive stock option transactions for employees during 2007 and 2006
        are as
        follows:
 Weighted
                    AverageOption
                
                Exercise
                
                ExerciseShares
                
                Price
                
                PriceOutstanding,
                    December 31, 2006 and 2005
                
                
                6,570,000
                
                $
                .03
                    to $.28
                
                $
                0.11Granted
                
                
                -
                
                
                -
                
                
                -Exercised
                
                
                -
                
                
                -
                
                
                -Expired
                
                
                (20,000
                )
                $
                0.17
                
                $
                0.17Outstanding,
                    December 31, 2007
                
                
                6,550,000
                
                $
                .03
                    to $.28
                
                $
                0.12Exercisable,
                    December 31, 2007
                
                
                6,100,000
                
                $
                .03
                    to $.28
                
                $
                0.12Weighted
                    Average Remaining Life,Exercisable,
                    December 31, 2007
                
                
                4.7
  -18-
 LaserLock
        Technologies, Inc. and
        Subsidiaries
 (A
        Development Stage Company)
 Notes
        to
        Consolidated Financial Statements
 
 **NOTE
        8 - STOCK OPTIONS AND WARRANTS (Continued)**
 
 Total
        expense recognized by the Company during 2007 and 2006 for non-statutory
        stock
        options granted to employees during the years was $67,651 and $135,098. The
        2007
        and 2006 fair value amounts of non-statutory stock options were estimated
        using
        the Black-Scholes options pricing model with the following assumptions: no
        dividend yield, expected volatility ranging from 60% to 334%, risk free interest
        rate of approximately 3% to 5% and expected option life of 2 months to ten
        years.
 
 **NOTE
        9 - RELATED PARTY TRANSACTIONS**
 
 Six
        shareholders of the Company hold $680,000 of the Senior secured convertible
        notes payable, one shareholder holds $140,000 of the convertible notes payable
        and one shareholder holds $50,000 of the notes payable as of December 31,
        2007.
 
 The
        Company maintains its office at the home of its President. No formal lease
        agreement exists and no direct rent expense has been incurred. However, related
        occupancy costs of $4,821 and $5,505 were incurred during the years ended
        December 31, 2007 and 2006.
 
 In
        December 2006, the President of the Company loaned the Company $5,000, which
        was
        repaid during the year ended December 31, 2007.
 
 At
        December 31, 2007 and 2006, the Company had accrued salary to the President
        in
        the amount of $99,750 and $48,000.
 
 **NOTE
        10 - COMMITMENTS**
 
 The
        Company has entered into certain commission agreements. Under the terms of
        the
        contracts expiring on various dates, the representatives are entitled to
        commissions based on certain percentage of sales, as defined in agreements
        which
        may be renewed annually. The commissions from sales will be expensed as sales
        are generated.
 
 **NOTE
        11 - LICENSING AGREEMENT**
 
 On
        occasion the Company enters into licensing agreements for the sale of its
        products. These agreements can either be exclusive or non-exclusive in regards
        to territories and industries.
 
 **NOTE
        12 - PATENTS**
 
 The
        Company has four issued patents and one patent pending for anti-counterfeiting
        technology.
 
 **NOTE
        13 - MAJOR CUSTOMERS AND VENDORS**
 
 During
        the years ended December 31, 2007 and 2006, the Company earned a substantial
        portion of its revenue from one and three customers. During 2007 and 2006,
        revenue from those customers aggregated $300,863 and $122,821. At December
        31,
        2007 and 2006, amounts due from those customers included in trade accounts
        receivable were $1,994 and $5,727. If these customers were lost, it is unlikely
        that the company would be able to replace the lost revenue in the near
        term.
 
 -19-
 LaserLock
        Technologies, Inc. and
        Subsidiaries
 (A
        Development Stage Company)
 Notes
        to
        Consolidated Financial Statements
 
 **NOTE
        13 - MAJOR CUSTOMERS AND VENDORS (Continued)**
 
 During
        the year ended December 31, 2007, the Company purchased a substantial portion
        of
        inventory from one vendor. During 2007, purchases from that vendor aggregated
        $149,830. At December 31, 2007, amounts due to that vendor included in trade
        accounts payable were $29,087.
 
 **NOTE
        14 - GEOGRAPHIC INFORMATION**
 
 The
        Company’s revenue by geographic region is as follows:
  North
                America
              
              $
              1,325Europe
              
              $
              300,863




-20-




**ITEM
      8.**  **CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE**




None





**ITEM
      8A.**  **CONTROLS
      AND PROCEDURES**




EVALUATION
      OF DISCLOSURE CONTROLS AND PROCEDURES




As
      of
      December 31, 2007, our board of directors carried out an evaluation of the
      effectiveness of the design and operation of our "disclosure controls and
      procedures" (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities
      Exchange Act of 1934, as amended (the “Exchange Act”)) under the supervision and
      with the participation of our management, including Norman Gardner, our
      president and chief executive officer. Based upon that evaluation, Mr. Gardner
      concluded that our disclosure controls and procedures are not effective based
      on
      material weaknesses identified by management as described in Management’s Report
      on
      Internal Control over Financial Reporting set forth in Item 7 of this
      report.




Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed in our reports filed or
      submitted under the Exchange Act are recorded, processed, summarized and
      reported, within the time periods specified in the Securities and Exchange
      Commission's (the “SEC”) rules and forms. Disclosure controls and procedures
      include, without limitation, controls and procedures designed to ensure that
      information required to be disclosed in our reports filed under the Exchange
      Act
      is accumulated and communicated to management to allow timely decisions
      regarding required disclosure.




MANAGEMENT’S
      REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING





The
      report of management on our internal control over financial reporting is set
      forth in Item 7 of this report and is incorporated herein by reference.





CHANGES
      IN INTERNAL CONTROLS




There
      were no significant changes in our internal controls or, to our knowledge,
      in
      other factors that could significantly affect our disclosure controls and
      procedures subsequent to the date we carried out this evaluation.





**ITEM
      8B.** **OTHER
      INFORMATION**




In
      October 2006 we entered into an agreement with UTEK Corporation (“UTEK”) a
      publicly traded company located in Tampa, Florida to conduct a study of our
      intellectual property portfolio. The study focused on potential uses of our
      intellectual property portfolio for non-security applications. The approximate
      cost of the study was $55,000. We issued 1,200,000 restricted Common Shares
      to
      UTEK to pay the costs of the study. The shares had a market price of $.045.
      The
      issuance of restricted Common Shares to UTEK was a private placement exempt
      from
      registration under Section 4(2) of the Exchange Act and Section 506 of
      Regulation D promulgated thereunder.







**PART
      III**





**ITEM
      9.** **DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS OF REGISTRANT; COMPLIANCE
      WITH
      SECTION 16(a) OF THE EXCHANGE ACT**




Our
      board
      of directors is comprised of only one class of directors. Each director is
      elected to hold office until the next annual meeting of shareholders and until
      his successor has been elected and qualified. Officers are elected annually
      by
      the board of directors and hold office until successors are duly elected and
      qualified. The following is a brief account of the business experience of each
      of our directors and executive officers. The positions held by each officer
      and
      director are shown on the following table. Directors Norman A. Gardner and
      Michael J. Prevot were first elected in November 1999. All directors will serve
      for one year or until our next annual shareholder meeting and until a successor
      is elected and has qualified.





Name
            
            Age
            
            PositionNorman
                A. Gardner
            
            65
            
            President,
                Chief Executive Officer and Chairman of the Board of
                DirectorsMichael
                J. Prevot
            
            52
            
            Director





NORMAN
      A.
      GARDNER




Norman
      A.
      Gardner has been our president since inception on November 11, 1999. From 1974
      to 1985 Mr. Gardner served as president of Polymark Management, Ltd., a Canadian
      public relations firm. In 1982, Mr. Gardner founded NoCopi Technologies, Inc.
      of
      West Conshohocken, PA, a publicly traded company. He served as president and
      chief executive officer of NoCopi from 1985 until 1997, and as chairman of
      its
      board until March 1998. Mr. Gardner received his B.A. in English from McGill
      University in 1963.




MICHAEL
      J. PREVOT




Michael
      Prevot has been a sales consultant for LaserLock and one of our directors since
      inception. Since 2005 Mr. Prevot has served as Principal of Prevot &
Associates, a California based company that markets commercial insurance
      products. In addition, since 1975 he has been a licensed Real Estate Agent
      in
      California. From 1985 to 2005, Mr. Prevot served as president of Vista Security
      Papers, a California based company that markets security products. Mr. Prevot
      studied business at the College of San Mateo in San Mateo, California, and
      at
      Skyline College in San Bruno, California.









SECTION
      16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE




Section
      16(a) of the Securities Exchange Act of 1934, as amended, requires our executive
      officers, directors and ten percent or greater stockholders to file reports
      of
      ownership and changes in ownership with the SEC. The same persons are required
      to furnish us with copies of all Section 16(a) forms they file. On July 18,
      2006, Norman Gardner transferred, by bona fide gift, 1,000,000 Common Shares.
      Mr. Gardner did not report this change in beneficial ownership on Form 4 with
      the SEC in 2006, but reported the change on a Form 5 filed with the SEC on
      April
      2, 2007.




We
      do not
      have a designated audit committee. We do not have an audit committee financial
      expert because none of our directors qualify as a financial expert.




CODE
      OF
      ETHICS




We
      expect
      all of our employees to conduct themselves honestly and ethically, particularly
      in handling actual and apparent conflicts of interest and providing full,
      accurate, and timely disclosure to the public. Although we have not adopted
      a
      formal code of ethics that applies to our senior executive officers, we are
      developing a code that we expect will be approved by our board of directors
      in
      the near future. The delay in the preparation of the code of ethics is the
      result of having only one full time and one part time employee, coupled with
      the
      limited resources for developing such code.










**ITEM
      10.** **EXECUTIVE
      COMPENSATION**




The
      following table sets forth the compensation paid during the fiscal year ended
      December 31, 2007, 2006 and 2005 to our chief executive officer. No other person
      received compensation equal to or exceeding $100,000 in fiscal 2007, 2006 and
      2005 and no bonuses were awarded during fiscal 2007, 2006 and
      2005.


Annual Compensation
            
            Long Term CompensationName and PrincipalPosition
            
            Year
            
            Salary ($)
            
            Bonus ($)
            
            OtherAnnualCompen-sation ($)
            
            RestrictedStockAward(s) ($)
            
            SecuritiesUnderlyingOptions/SAR (#)
            
            LTIPPayouts ($)
            
            AllOtherCompensation($)Norman A. Gardner
                (1)
              President
                &CEO
            
            
            2007
              2006
              2005
            
            $
            180,000
              180,000157,500
            (4)
              (4)
              (4)
            
            —
              —
              —
            
            $
            25,773
              20,180
              22,854
            (2)
              (2)
              (2)
            
            
            
            
            —
              —
              —
            
            
            450,000
            (3)
            
            —
              —
              —
            
            
            
            
            
            —
              —
              —





(1)
            We
                currently have a five-year employment agreement in place with our
                president and chief executive officer, Norman A. Gardner, dated November
                5, 2003. Pursuant to the terms of the employment agreement, Mr. Gardner
                is
                entitled to receive (a) $150,000 annual base salary payable in
                semi-monthly installments for each of the first two 12-month periods
                and
                (b) $180,000 annual base salary payable in semi-monthly installments
                for
                each of the last three 12-month periods. In addition to his base
                salary,
                Mr. Gardner is eligible to receive a bonus not to exceed $125,000
                in any
                year during the five-year employment period within which our net
                income
                (before taxes) exceeds $350,000. In connection with his employment
                agreement, our board of directors granted an option to Mr. Gardner
                to
                purchase up to 2,000,000 Common Shares, at an option price equal
                to the
                last sale price at which our Common Shares were sold on the date
                of the
                grant ($.20). The option originally vested as follows: 500,000 Common
                Shares vest on December 31, 2003; 250,000 Common Shares vest on the
                date
                that is one year from the effective date of the employment agreement;
                250,000 Common Shares vest on the date that is two years from the
                effective date of the employment agreement; 500,000 Common Shares
                vest on
                the date that is three years from the effective date of the employment
                agreement; and 500,000 Common Shares vest on the date that is four
                years
                from the effective date of the employment agreement. On December
                13, 2005,
                our board of directors approved an amendment to this option to reduce
                the
                option price to the last sale price at which our Common Shares were
                sold
                on December 13, 2005 ($.03), extend the expiration date to December
                13,
                2015 and provide for vesting of the Common Shares subject to the
                option in
                36 equal monthly installments beginning December 15, 2005. Also on
                December 13, 2005, our board of directors approved an amendment to
                two
                options granted to Mr. Gardner on January 1, 2001 and January 2,
                2001,
                respectively, to purchase an aggregate of 500,000 Common Shares pursuant
                to our original stock option plan in order to make the option price,
                term
                and vesting provisions identical to those of the amended 2,000,000
                share
                option granted to Mr. Gardner in connection with his employment agreement.
                In addition, in April 2004, Mr. Gardner was granted an option to
                purchase
                2,500,000 Common Shares at an exercise price of $.06. The option
                expires
                in June 2009 and vests in 27 equal monthly installments from April
                2004 to
                June 2006. Pursuant to a resolution passed our board of directors,
                on
                April 21, 2005, Mr. Gardner was granted options to purchase 450,000
                Common
                Shares at the last sale price at which our Common Shares were sold
                on
                April 21, 2005 ($.075). The option expires April 21, 2010 and was
                exercisable immediately. Our board granted Mr. Gardner 3,000,000
                Common
                Shares in consideration for services provided to us on December 15,
                2005.2.
            Company
                car, insurance, repairs and expenses.3.
            The
                above does not include the 3,000,000 Common Shares approved by the
                Board
                on December 15, 2005 and issued to Mr. Gardner on January 3, 2006.
                At the
                time of its approval by the Board, these shares had a fair market
                value of
                between $90,000 and $105,000 at the time of issuance.4.
            Includes
                $99,750, $48,000 and $45,000 that was unpaid and accrued as of December
                31, 2007, 2006 and 2005,
                respectively.






(a)
                Name
              
              (b)
                Number of Securities
                Underlying
                Options/SARs
                Granted (#)
              
              (c)
                % of Total
                Options/SARs  Granted
                to Employees in Fiscal
                Year
              
              (d)
                Exercise or Base
                Price ($/Sh)
              
              (e)
                Expiration DateNorman
                  A. Gardner
                President
                  & CEO
              
              
              450,000
              (1)
              
              81.8
              %
              $
              0.075/Sh
              
              
              April
                  21, 2010




1.
                This amount does not include the option exercisable into 2,500,000
                shares
                of the company that was repriced on December 13,
                2005









Number of
                Securities to be
                issued upon exercise
                of outstanding
                options, warrants
                and rights
                (a)
              
              Weighted average
                exercise price of
                outstanding options,
                warrants and rights
                (b)
              
              Number of securities
                remaining available for
                future issuance under
                equity compensation
                plans (excluding
                securities reflected in
                column (a))
                (c)Equity
                  compensation plans approved by security holders
              
              
              14,006,662
              (1)
              $
              .05
              
              
              893,338Equity
                  compensation plans not approved by security holders
              
              
              2,950,000
              (2)
              $
              .15
              
              
              —Warrants
                  issued in connection with Bridge Loan
              
              
              2,450,000
              
              $
              .03
              
              
              —Total
              
              
              19,406,662
              
              $
              .06
              
              
              893,338




(1)
              The
                  stockholders approved the LaserLock Technologies, Inc. 2003 Stock
                  Option
                  Plan at the special meeting of stockholders on December 17,
                  2003.(2)
              These
                  options were granted by the company to certain consultants and
                  advisors
                  upon approval from the Board of
                  Directors.




Our
      consolidated financial statements, which are attached to this report, contain
      a
      description of LaserLock’s equity compensation plans not approved by our
      security holders.




COMPENSATION
      OF DIRECTORS




Each
      director, with the exception of Norman A. Gardner (see table above for a
      description of Mr. Gardner's compensation), received a one-time option grant
      to
      purchase 250,000 Common Shares at the per share market price in effect on the
      grant date. Messrs. Prevot and Goldfinger were each granted options to purchase
      250,000 Common Shares at the market price on December 17, 2003. On January
      6,
      2005, Messrs. Prevot and Goldfinger were each granted options to purchase
      250,000 Common Shares at the market price. On December 22, 2005 Mr. Prevot
      was
      granted options to purchase 250,000 Common Shares at the market
      price.




EMPLOYMENT
      CONTRACTS




We
      currently have a five-year employment agreement in place with our president
      and
      chief executive officer, Norman A. Gardner, dated November 5, 2003. Pursuant
      to
      the terms of the employment agreement, Mr. Gardner is entitled to receive (a)
      $150,000 annual base salary payable in semi-monthly installments for each of
      the
      first two 12-month periods and (b) $180,000 annual base salary payable in
      semi-monthly installments for each of the last three 12-month periods. In
      addition to his base salary, Mr. Gardner is eligible to receive a bonus not
      to
      exceed $125,000 in any year during the five-year employment period within which
      our net income (before taxes) exceeds $350,000. In connection with his
      employment agreement, our board of directors granted an option to Mr. Gardner
      to
      purchase up to 2,000,000 Common Shares, at an option price equal to the last
      sale price at which our Common Shares were sold on the date of the grant ($.20).
      The option originally vested as follows: 500,000 Common Shares vest on December
      31, 2003; 250,000 Common Shares vest on the date that is one year from the
      effective date of the employment agreement; 250,000 Common Shares vest on the
      date that is two years from the effective date of the employment agreement;
      500,000 Common Shares vest on the date that is three years from the effective
      date of the employment agreement; and 500,000 Common Shares vest on the date
      that is four years from the effective date of the employment agreement. On
      December 13, 2005, our board of directors approved an amendment to this option
      to reduce the option price to the last sale price at which our Common Shares
      were sold on December 13, 2005 ($.03), extend the expiration date to December
      13, 2015 and provide for vesting of the Common Shares subject to the option
      in
      36 equal monthly installments beginning December 15, 2005. Also on December
      13,
      2005, our board of directors approved an amendment to two options granted to
      Mr.
      Gardner on January 1, 2001 and January 2, 2001, respectively, to purchase an
      aggregate of 500,000 Common Shares pursuant to our original stock option plan
      in
      order to make the option price, term and vesting provisions identical to those
      of the amended 2,000,000 share option granted to Mr. Gardner in connection
      with
      his employment agreement. In addition, in April 2004, Mr. Gardner was granted
      an
      option to purchase 2,500,000 Common Shares at an exercise price of $.06. The
      option expires in June 2009 and vests in 27 equal monthly installments from
      April 2004 to June 2006. Pursuant to a resolution passed our board of directors,
      on April 21, 2005, Mr. Gardner was granted options to purchase 450,000 Common
      Shares at the last sale price at which our Common Shares were sold on April
      21,
      2005 ($.075). The option expires April 21, 2010 and was exercisable immediately.
      On January 3, 2006, pursuant to resolutions passed by the board of directors
      on
      December 15, 2005, we granted Mr. Gardner 3,000,000 Common Shares in
      consideration for services provided to us.









OPTION
      REPRICING





On
      December 13, 2005, our board of directors approved an amendment to Mr. Gardner’s
      option to reduce the option price to the last sale price at which our Common
      Shares were sold on December 13, 2005 ($.03), extend the expiration date to
      December 13, 2015 and provide for vesting of the Common Shares subject to the
      option in 36 equal monthly installments beginning December 15, 2005. Also on
      December 13, 2005, the Board approved an amendment to two options granted to
      Mr.
      Gardner on January 1, 2001 and January 2, 2001, respectively, to purchase an
      aggregate of 500,000 Common Shares pursuant to our original stock option plan
      in
      order to make the option price, term and vesting provisions identical to those
      of the amended 2,000,000 share option granted to Mr. Gardner in connection
      with
      his employment agreement.




**ITEM
      11. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL
      OWNERS**




The
      following table sets forth certain information known to us regarding the
      beneficial ownership of our Common Shares as of December 31, 2007, by (i) each
      of our directors, (ii) each of our executive officers, (iii) all directors
      and
      executive officers as a group, and (iv) each person known to us to be the
      beneficial owner of more than 5% of our outstanding Common
      Shares.


Shares Beneficially OwnedTitle of Class
              
              Name and Address of Beneficial Owner
              
              Amount of Shares Held
              
              Percentage Owned (1)Common
              
              
              Californian
                  Securities S.A.
                60
                  West Randolph Street, Suite 200
                Chicago,
                  Il 60601
              
              
              17,976,831
              
              
              24.48
              %Common
              
              
              Pacific
                  Continental Securities
                Nominees
                  Limited
                111
                  Cannon Street
                London
                  EC4N5AR, England
              
              
              17,795,903
              
              
              24.23
              %Common
              
              
              Norman
                  A. Gardner
                837
                  Lindy Lane
                Bala
                  Cynwyd, PA 19004
              
              
              8,881,339
              (2)
              
              11.35
              %Common
              
              
              Howard
                  Goldberg
                117
                  Cheltenham Ave.
                Linwood,
                  NJ 08221
              
              
              6,456,662
              (3),
              
              8.21
              %Common
              
              
              Michael
                  J. Prevot
                12920
                  Atherton Ct.
                Los
                  Altos Hills, CA 94022
              
              
              800,672
              (4)
              
              1.08
              %Common
              
              
              All
                  Directors and Officers as a Group
              
              
              9,682,011
              (2)(4)(5)
              
              12.26
              %





(1)
            Percentage
                of ownership is based on 73,440,506 Common Shares issued and outstanding
                as of December 31, 2007(2)
            Includes
                4,825,000 shares issuable upon the exercise of stock options exercisable
                within 60 days(3)
            Includes
                5,206,662 shares issuable upon the exercise of stock options exercisable
                within 60 days.(4)
            Includes
                687,500 shares issuable upon the exercise of a stock option exercisable
                within 60 days. Does not include 19,034 owned by Sandra Prevot, his
                wife,
                as to which he disclaims beneficial
                interest.







**ITEM
      12.****CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS**




TRANSACTIONS
      WITH MANAGEMENT AND OTHERS




In
      April
      and June of 2004, pursuant to a Regulation S Stock Purchase agreement dated
      March 10, 2004, in a private placement transaction, without registration under
      the Securities Act of 1933, as amended, in reliance upon exemptions provided
      by
      Regulations S promulgated under the Securities Act, California Securities,
      S.A.
      purchased from us an aggregate of 14,500,000 Common Shares, for an aggregate
      purchase price of approximately $713,235. At the time of such sale and issuance,
      California Securities, S.A. was known to us to own of record or beneficially
      more than five percent of our outstanding Common Shares.




On
      January 3, 2006, pursuant to resolutions passed by the Board on December 15,
      2005, we granted Mr. Gardner 3,000,000 Common Shares in consideration for
      services provided to us.




In
      February 2006 we commenced a private placement of $800,000 principal amount
      of
      10% senior secured convertible promissory notes due twelve months from the
      date
      of issue to certain of our shareholders and other accredited investors. The
      Notes are secured by a first priority lien on all of LaserLock’s tangible and
      intangible personal property pursuant to a security agreement between LaserLock
      and the purchasers. In connection with the private placement, on March 13,
      2006,
      a note in the principal amount of $100,000 was issued to Howard Goldberg. We
      issued a warrant exercisable into 1,000,000 shares to Mr. Goldberg and Mr.
      Goldberg joined the security agreement as a secured party. Mr. Goldberg
      exercised the warrant on March 13, 2006. At the time of such sale and issuance,
      Mr. Goldberg was known to us to own of record or beneficially more than five
      percent of our Common Shares.




There
      have been no other material transactions, series of similar transactions, or
      currently proposed transactions, to which we were or are a party, in which
      the
      amount involved exceeds $60,000 and in which any director or executive officer,
      or any security holder who is known to us to own of record or beneficially
      more
      than five percent of the our Common Shares, or any member of the immediate
      family of any of the foregoing persons, had a material interest.





**ITEM
      13.**  **EXHIBITS,
      FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K**




EXHIBITS





3.1 Amended
      and Restated Articles of Incorporation of the Company dated December 17, 2003
      (filed with the Company's Annual Report on Form 10-KSB on March 30, 2004 and
      incorporated herein by reference).





3.2 Amended
      and Restated Bylaws of the Company dated December 17, 2003 (filed with the
      Company's Annual Report on Form 10-KSB on March 30, 2004 and incorporated herein
      by reference).





10.1 Employment
      Agreement by and between the Company and Norman Gardner dated November 5, 2003
      (filed with the Company's Annual Report on Form 10-KSB on March 30, 2004 and
      incorporated herein by reference).





10.2 Engagement
      Agreement by and between the Company and Howard Goldberg dated October 8, 2003
      (filed with the Company's Annual Report on Form 10-KSB on March 30, 2004 and
      incorporated herein by reference)





10.3 Engagement
      Agreement by and between the Company and Harvey Goldberg dated October 29,
      2003
      (filed with the Company's Annual Report on Form 10-KSB on March 30, 2004 and
      incorporated herein by reference)





10.4 License
      Agreement by and between The Bud Jones Company, Inc. and Bourgogne et Grasset
      and the Company dated October 15, 2001 (filed with the Company's Annual Report
      on Form 10-KSB on March 30, 2004 and incorporated herein by
      reference).









10.5 Marketing
      and Supply Agreement between Translucent Technologies, LLC and the Company
      dated
      October 2002 (filed with the Company's Annual Report on Form 10-KSB on March
      30,
      2004 and incorporated herein by reference).





10.6 License
      Agreement regarding the use of the Company's technology with plastic playing
      cards between the Company and CoPAG U.S.A. Inc. dated November 1, 2003 (filed
      with the Company's Annual Report on Form 10-KSB on March 30, 2004 and
      incorporated herein by reference).





10.7 Advertising
      and Promotions Agreement, dated June 17, 2003 by and between the Company and
      GMR
      Marketing, Inc. (filed with the Company's Quarterly Report on Form 10-QSB on
      November 14, 2003 and incorporated herein by reference).





10.8 Stock
      Loan Agreement by and among Norman Gardner, Californian Securities, SA and
      Pacific Continental Securities (UK) Nominees Limited and the Company (filed
      with
      the Company's Quarterly Report on Form 10-QSB on November 14, 2003 and
      incorporated herein by reference).





10.9 Regulations
      S Stock Purchase Agreement, dated May 2, 2003, by and between the Company and
      Californian Securities, S.A. (filed with the Company's Quarterly Report on
      Form
      10-QSB on August 14, 2003 and incorporated herein by reference).





10.10 Bridge
      Loan Commitment Letter, dated May 2, 2003 from LaRoch Limited to the Company
      (filed with the Company's Quarterly Report on Form 10-QSB on August 14, 2003
      and
      incorporated herein by reference).





10.11 Demand
      Promissory Note dated May 2, 2003 from the Company, as Maker, to LaRoch Limited,
      as Payee (filed with the Company's Quarterly Report on Form 10-QSB on August
      14,
      2003 and incorporated herein by reference).





10.12 Amendment
      to Regulation S Stock Purchase Agreement by and between the Company and
      Californian Securities, S.A., dated October 15, 2003 (filed with the Company's
      Quarterly Report on Form 10-QSB on November 14, 2003 and incorporated herein
      by
      reference).





10.13 License
      Agreement by and between NoCopi Technologies, Inc. and LL Security Products,
      Inc. dated September 20, 2001 (filed with the Company's Annual Report on Form
      10-KSB on March 30, 2004 and incorporated herein by reference).





10.14 Regulations
      S Stock Purchase Agreement, dated March 10, 2004, by and between the Company
      and
      California Securities, S.A. (filed with the Company's Quarterly Report on Form
      10-QSB on May 17, 2004 and incorporated herein by reference).





10.15 Senior
      Secured Convertible Note and Warrant Purchase Agreement, dated February 13,
      2006, among the Company and Nob Hill Capital Partners, L.P. (filed on the
      Company’s Form 8-K on February 17, 2006 and incorporated herein by
      reference).





10.16 Schedule
      of Purchasers who have entered into the Senior Secured Convertible Note and
      Warrant Purchase Agreement (filed on Form 8-K on February 17, 2006 and
      incorporated herein by reference).





10.17 Senior
      Secured Convertible Promissory Note, dated February 17, 2006, by the Company
      in
      favor of Nob Hill Capital Partners, L.P. in the amount of $100,000 (filed on
      Form 8-K on February 17, 2006 and incorporated herein by
      reference).





10.18 Schedule
      of Payees who have entered into a senior secured convertible promissory note
      substantially identical to the Senior Secured Convertible Promissory Note (filed
      on Form 8-K on February 17, 2006 and incorporated herein by
      reference).





10.19 Warrant,
      issued by the Company in favor of Nob Hill Capital Partners, L.P., dated
      February 13, 2006 (filed on Form 8-K on February 17, 2006 and incorporated
      herein by reference).





10.20 Schedule
      of Holders to whom the Company has issued a warrant substantially identical
      to
      the Warrant (filed on Form 8-K on February 17, 2006 and incorporated herein
      by
      reference).









10.21 
      Security Agreement, dated February 13, 2006, by and between the Company and
      Nob
      Hill Capital Partners, L.P. (filed on Form 8-K on February 17, 2006 and
      incorporated herein by reference).





10.22 Schedule
      of Secured Parties who have entered into a security agreement substantially
      identical to the Security Agreement (filed on Form 8-K on February 17, 2006
      and
      incorporated herein by reference).





10.23 Grant
      of 3,000,000 shares of the Company to Norman A. Gardner on January 3,2006 in
      consideration for services provided to the Company (filed on Form 8-K on January
      18, 2006 and incorporated herein by reference).





10.24 Non-binder
      letter of intent, entered into on January 10, 2006, pursuant to which the
      Company will acquire a minimum of 95% of the shares of ExaqtWorld S.A.R.L.
      (filed on Form 8-K on January 11, 2006 and incorporated herein by
      reference).





10.25
      Letter Agreement re: Proposed Admission through an Introduction of LaserLock
      Technologies, Inc. to trading on the London Stock Exchange plc’s AIM, entered
      into on November 2, 2006 by LaserLock Technologies, Inc. and Athanor Capital
      Partners Limited (filed on Form 8-K on November 11, 2006 and incorporated herein
      by reference).





17.1 Director
      resignation letter from Joel A. Pinsky, dated December 23, 2003 (filed with
      the
      Company's Annual Report on Form 10-KSB on March 30, 2004 and incorporated herein
      by reference).





17.2 Director
      resignation of Julius Goldfinger, dated September 30, 2005 (filed on Form 8-K
      on
      October 3, 2005 and incorporated herein by reference).





31.1 Certification
      of Chief Executive Officer and principal financial officer pursuant to Section
      302 of the Sarbanes-Oxley Act of 2002 (filed herewith).





32.1 Certification
      of Chief Executive Officer and principal financial officer pursuant to Section
      906 of the Sarbanes-Oxley Act of 2002 (filed herewith).





99.1 LaserLock
      Technologies, Inc. 2003 Stock Option Plan adopted on December 19, 2003 (filed
      with the Company's Annual Report on Form 10-KSB on March 30, 2004 and
      incorporated herein by reference).




**ITEM
      14.** **PRINCIPAL
      ACCOUNTANT FEES AND SERVICES**




As
      of
      October 10, 2002, we have retained the public accounting firm of Morison Cogen
      LLP (formerly Cogen Sklar, LLP), whose principal business address is 150
      Monument Rd., Suite 500, Bala Cynwyd, PA 19004, to perform our annual audit
      for
      inclusion in our report in Form 10-KSB, and perform SAS 100 reviews of quarterly
      information in connection with Form 10-QSB filings.




AUDIT
      FEES


During
      fiscal years 2007 and 2006, the aggregate fees billed for professional services
      rendered by our principal accountant for the audit of our annual financial
      statements and review of our quarterly financial statements was $38,000 and
      $41,500.




AUDIT-RELATED
      FEES




During
      fiscal years 2007 and 2006, our principal accountant did not render assurance
      and related services reasonably related to the performance of the audit or
      review of financial statements.




TAX
      FEES




During
      fiscal years 2007 and 2006, the aggregate fees billed for professional services
      rendered by our principal accountant for tax compliance, tax advice and tax
      planning was $4,950 and $6,170.


ALL
      OTHER
      FEES




During
      fiscal years 2007 and 2006, there were no fees billed for products and services
      provided by the principal accountant other than those set forth
      above.




AUDIT
      COMMITTEE APPROVAL




We
      do not
      presently have a designated audit committee. All of the services listed above
      were approved by Norman A. Gardner, our chief executive officer.










SIGNATURES





In
      accordance with Section 13 or 15(d) of the Securities Exchange Act, as amended,
      the registrant caused this report to be signed on its behalf by the undersigned,
      thereunto duly authorized.




LASERLOCK
                TECHNOLOGIES, INC.By:
            /s/
                Norman GardnerNorman
                Gardner, President and CEO
              Date:
                April 14, 2008