----

----

| Delaware                 |   | 98-0511645               |
|--------------------------|--------|--------------------------|
| (State of incorporation) |   | (IRS Employer ID Number) |

| Large accelerated filer                       | o      | Accelerated filer          | o |
|-----------------------------------------------|--------|---------------------------------|---|
| Non-accelerated filer               | o      | Smaller reporting company  | x |
| (Do not check if a smaller reporting company) |   |                            |

----

----

|   | • |   | Part I, Item 1. Financial Statements |
|--------|---------|--------|--------------------------------------|

|   | • |   | Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|--------|---------|--------|-------------------------------------------------------------------------------------------------------------|

|   | • |   | Part I, Item 4T. Controls and Procedures |
|--------|---------|--------|------------------------------------------|

|   | • |   | Part II, Item 6. Exhibits |
|--------|---------|--------|---------------------------|

----

|                                                                                                | Page             |
|-----------------------------------------------------------------------------------------------------|------------------|
| PART I                                                                                              |             |
| Item 1. Financial Statements                                                                        | F-1 – F-31 |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 1                |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk                                  | 7                |
| Item 4(T). Controls and Procedures                                                                  | 7                |
| PART II                                                                                             |             |
| Item 1. Legal Proceedings                                                                           | 8                |
| Item IA. Risk Factors                                                                               | 8                |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                                 | 8                |
| Item 3. Defaults Upon Senior Securities                                                             | 9                |
| Item 4. Removed and Reserved                                                                        | 9                |
| Item 5. Other Information                                                                           | 9                |
| Item 6. Exhibits                                                                                    | 9                |

----

| Restated Consolidated Financial Statements-                                                                       |   |
|-------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                              |   |
| Consolidated Balance Sheets as of June 30, 2010 (unaudited), and December 31, 2009                           | F-1    |
|                                                                                                              |   |
| Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2010, and 2009 (unaudited) | F-3    |
|                                                                                                              |   |
| Consolidated Statements of Cash Flows for Six Months Ended  June 30, 2010, and 2009                     | F-4    |
|                                                                                                              |   |
| Notes to Consolidated Financial Statements June 30, 2010, and 2009                                                | F-6    |

----

----

| ASSETS                                 |   | June 30,  |      |   | December 31, |   |
|----------------------------------------|--------|-----------|-----------|--------|--------------|--------|
|                                   |   | 2010      |      |   | 2009         |   |
|                                   |   | Unaudited |      |   | Audited      |   |
|                                   |   | Restated  |      |   | Restated     |   |
| Current Assets:                        |   |      |      |   |         |   |
| Cash and cash equivalents              |   | $         | 286,344   |   |         | $      | 701,931 |   |
| Restricted cash                        |   |      | 115,827   |   |         |   | 15,827 |   |
| Inventory                              |   |      | 39,797    |   |         |   | 55,281 |   |
| Prepaid expenses and other receivables |   |      | 132,737   |   |         |   | 65,343 |   |
|    Total current assets |   |      | 574,705   |   |         |   | 838,382 |   |
|                                   |   |      |      |   |         |   |   |   |
| Property and Equipment:                |   |      |      |   |         |   |   |   |
| Computer and other equipment           |   |      | 41,101    |   |         |   | 30,034 |   |
| Less - Accumulated depreciation        |   |      | (20,592   | )      |         |   | (17,534 | ) |
| Property and equipment, net            |   |      | 20,509    |   |         |   | 12,500 |   |
|                                   |   |      |      |   |         |   |   |   |
| Other Assets:                          |   |      |      |   |         |   |   |   |
| Severance pay fund                     |   |      | 82,139    |   |         |   | 45,563 |   |
| Long term prepaid expenses             |   |      | 12,891    |   |         |   | 10,578 |   |
| Goodwill                               |   |      | 1,333,214 |   |         |   | 1,333,214 |   |
|    Total other assets   |   |      | 1,428,244 |   |         |   | 1,389,355 |   |
| Total Assets                           |   | $         | 2,023,458 |   |         | $      | 2,240,237 |   |

----

----

| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                             |   | June 30,  |       |   | December 31, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|------------|--------|--------------|--------|
|                                                                                                                                                                                             |   | 2010      |       |   | 2009         |   |
|                                                                                                                                                                                             |   | Unaudited |       |   | Audited      |   |
|                                                                                                                                                                                             |   | Restated  |       |   | Restated     |   |
| Current Liabilities:                                                                                                                                                                             |   |      |       |   |         |   |
| Accounts payable - Trade                                                                                                                                                                         |   | $         | 17,664     |   |         | $      | 9,175 |   |
| Accrued liabilities                                                                                                                                                                              |   |      | 276,137    |   |         |   | 161,161 |   |
| Advances from customers                                                                                                                                                                          |   |      | 117,460    |   |         |   | 919,400 |   |
| Deferred revenues                                                                                                                                                                                |   |      | 216,453    |   |         |   | 55,631 |   |
| Due to related parties                                                                                                                                                                           |   |      | 217,191    |   |         |   | 111,541 |   |
|    Total current liabilities                                                                                                                                                      |   |      | 844,905    |   |         |   | 1,256,908 |   |
|                                                                                                                                                                                             |   |      |       |   |         |   |   |   |
| Long-term Debt:                                                                                                                                                                                  |   |      |       |   |         |   |   |   |
| Accrued severance pay                                                                                                                                                                            |   |      | 82,139     |   |         |   | 84,315 |   |
|    Total Liabilities                                                                                                                                                              |   |      | 927,044    |   |         |   | 1,341,223 |   |
|                                                                                                                                                                                             |   |      |       |   |         |   |   |   |
| Commitments and Contingencies                                                                                                                                                                    |   |      |       |   |         |   |   |   |
|                                                                                                                                                                                             |   |      |       |   |         |   |   |   |
| Stockholders' Equity:                                                                                                                                                                            |   |      |       |   |         |   |   |   |
| Common stock, par value $0.0001 per share 250,000,000 shares authorized; 74,055,493 and  71,822,893 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively |   |      | 7,405      |   |         |   | 7,182 |   |
| Additional paid-in capital                                                                                                                                                                       |   |      | 3,221,603  |   |         |   | 2,580,553 |   |
| Common stock subscribed                                                                                                                                                                          |   |      | -          |   |         |   | 25,000 |   |
| Accumulated (deficit)                                                                                                                                                                            |   |      | (2,305,379 | )      |         |   | (1,779,820 | ) |
|                                                                                                                                                                                             |   |      | 923,629    |   |         |   | 832,895 |   |
| Less - Noncontrolling interest                                                                                                                                                                   |   |      | 172,785    |   |         |   | 66,119 |   |
|    Total Stockholders' Equity                                                                                                                                                     |   |      | 1,096,414  |   |         |   | 899,014 |   |
|                                                                                                                                                                                             |   |      |       |   |         |   |   |   |
| Total Liabilities and Stockholders' Equity                                                                                                                                                       |   | $         | 2,023,458  |   |         | $      | 2,240,237 |   |

----

----

|                                                                                |   | Three months endedJune 30, |       |   | Six months ended June 30, |   |
|-------------------------------------------------------------------------------------|--------|--------------------------------------|------------|--------|-------------------------------------|--------|
|                                                                                |   | 2010                                 |       |   | 2009                                |   |   | 2010 |   |   | 2009 |   |
|                                                                                |   | Restated                             |       |   | Restated                            |   |   | Restated |   |   | Restated |   |
|                                                                                |   |                                 |       |   |                                |   |   |   |   |   |   |   |
| Revenues, net                                                                       |   | $                                    | 717,403    |   |                                | $      | 254,759 |   |   | $ | 1,337,602 |   |   | $ | 423,741 |   |
|                                                                                |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Cost of Goods Sold                                                                  |   |                                 | 31,409     |   |                                |   | 14,729 |   |   |   | 69,748 |   |   |   | 52,186 |   |
|                                                                                |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Gross Profit                                                                        |   |                                 | 685,994    |   |                                |   | 240,030 |   |   |   | 1,267,854 |   |   |   | 371,555 |   |
|                                                                                |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Expenses:                                                                           |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Research and development                                                            |   |                                 | 177,671    |   |                                |   | 32,683 |   |   |   | 209,861 |   |   |   | 72,430 |   |
| Selling, general and administrative                                                 |   |                                 | 733,421    |   |                                |   | 408,049 |   |   |   | 1,458,546 |   |   |   | 912,140 |   |
| Total operating expenses                                                            |   |                                 | 911,022    |   |                                |   | 440,732 |   |   |   | 1,668,407 |   |   |   | 984,570 |   |
|                                                                                |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) from Operations                                                              |   |                                 | (225,098   | )      |                                |   | (200,702 | ) |   |   | (400,553 | ) |   |   | (613,015 | ) |
|                                                                                |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Interest income (expense), net                                                      |   |                                 | (15,242    | )      |                                |   | 1,407 |   |   |   | (18,340 | ) |   |   | 7,041 |   |
|                                                                                |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss)                                                                          |   |                                 | (240,340   | )      |                                |   | (199,295 | ) |   |   | (418,893 | ) |   |   | (605,974 | ) |
|                                                                                |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Net loss (income) Attributable to Noncontrolling Interest                           |   |                                 | (20,919    | )      |                                |   | (7,159 | ) |   |   | (106,666 | ) |   |   | 84,062 |   |
|                                                                                |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) attributable to Suspect Detection Systems Inc.                           |   | $                                    | (261,559   | )      |                                | $      | (206,454 | ) |   | $ | (525,559 | ) |   | $ | (521,912 | ) |
|                                                                                |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) Per Common Share:                                                            |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) per common share - Basic and Diluted                                         |   | $                                    | (0.00      | )      |                                | $      | (0.00 | ) |   | $ | (0.01 | ) |   | $ | (0.01 | ) |
|                                                                                |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Weighted Average Number of Common Shares  Outstanding - Basic and Diluted |   |                                 | 66,309,668 |   |                                |   | 60,781,113 |   |   |   | 66,039,668 |   |   |   | 56,659,441 |   |

----

----

|                                                |   | Six months endedJune 30, |     |
|-----------------------------------------------------|--------|------------------------------------|----------|
|                                                |   | 2010                               |     |   | 2009 |   |
|                                                |   | Restated                           |     |   | Restated |   |
| Operating Activities:                               |   |                               |     |   |   |   |
| Net (loss)                                          |   | $                                  | (418,893 | ) |   | $ | (605,974 | ) |
| Adjustments to reconcile net (loss) to net cash     |   |                               |     |   |   |   |   |   |
| (used in) operating activities:                     |   |                               |     |   |   |   |   |   |
| Common stock issued for officers' compensation      |   |                               | 23,000   |   |   |   | 25,500 |   |
| Stock options issued to directors                   |   |                               | 136,351  |   |   |   | - |   |
| Stock options issued to sales agents                |   |                               | 163,054  |   |   |   | - |   |
| Stock warrants issued to a consultant               |   |                               | 49,888   |   |   |   | - |   |
| Common stock issued for consulting services         |   |                               | 149,000  |   |   |   | 135,000 |   |
| Depreciation                                        |   |                               | 3,058    |   |   |   | 2,859 |   |
| Changes in Assets and Liabilities-                  |   |                               |     |   |   |   |   |   |
| Inventory                                           |   |                               | 15,484   |   |   |   | 41,260 |   |
| Prepaid expenses and other receivables              |   |                               | (67,394  | ) |   |   | 103,314 |   |
| Accounts payable -trade                             |   |                               | 8,489    |   |   |   | (46,551 | ) |
| Prepaid expenses, non-current                       |   |                               | (2,313   | ) |   |   | 5,837 |   |
| Accrued liabilities                                 |   |                               | 114,976  |   |   |   | (40,277 | ) |
| Advances from customers                             |   |                               | (801,940 | ) |   |   | (277,762 | ) |
| Deferred revenues                                   |   |                               | 160,822  |   |   |   | - |   |
| Due to related parties                              |   |                               | 105,650  |   |   |   | 13,466 |   |
| Accrued severance pay                               |   |                               | (38,752  | ) |   |   | (6,975 | ) |
| Net Cash (Used in) Operating Activities             |   |                               | (399,520 | ) |   |   | (650,303 | ) |
|                                                |   |                               |     |   |   |   |   |   |
| Investing Activities:                               |   |                               |     |   |   |   |   |   |
| Cash acquired in business combination (a)           |   |                               | -        |   |   |   | 702,147 |   |
| Increase in restricted cash                         |   |                               | (100,000 | ) |   |   | - |   |
| Purchases of Property and Equipment                 |   |                               | (11,067  | ) |   |   | (1,850 | ) |
| Net Cash Provided by (Used in) Investing Activities |   |                               | (111,067 | ) |   |   | 700,297 |   |
|                                                |   |                               |     |   |   |   |   |   |
| Financing Activities:                               |   |                               |     |   |   |   |   |   |
| Issuance of common stock for cash                   |   |                               | 95,000   |   |   |   | 55,000 |   |
| Net Cash Provided by Financing Activities           |   |                               | 95,000   |   |   |   | 55,000 |   |

----

----

|                                            |   | Six months endedJune 30, |     |
|-------------------------------------------------|--------|------------------------------------|----------|
|                                            |   | 2010                               |     |   | 2009 |   |
|                                            |   | Restated                           |     |   | Restated |   |
|                                            |   |                               |     |   |   |   |
| Net Increase (Decrease) in Cash                 |   |                               | (415,587 | ) |   |   | 104,994 |   |
| Cash and Cash Equivalents - Beginning of Period |   |                               | 701,931  |   |   |   | 179,565 |   |
| Cash and Cash Equivalents - End of Period       |   | $                                  | 286,344  |   |   | $ | 284,559 |   |
|                                            |   |                               |     |   |   |   |   |   |

| Supplemental Disclosure of Cash Flow Information: |   |   |   |   |   |   |
|---------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Cash paid during the period for:                  |   |   |   |   |   |   |
| Interest                                          |   | $      | -      |   |   | $      | - |   |
|                                              |   |   |   |   |   |   |   |   |
| Income taxes                                      |   | $      | -      |   |   | $      | - |   |

| (a) Cash acquired in acquisition of 51% interest in SDS - Israel Ltd.: |   |   |   |   |   |   |
|------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                                   |   |   |   |   |   |   |
| Working capital deficiency, excluding cash and cash equivalents        |   | $      | -      |   |   | $      | 541,442 |   |
| Property and equipment, net                                            |   |   | -      |   |   |   | (16,019 | ) |
| Accrued severance pay, net                                             |   |   | -      |   |   |   | 6,975 |   |
| Long term prepaid expenses                                             |   |   | -      |   |   |   | (28,360 | ) |
| Intercompany balance                                                   |   |   | -      |   |   |   | 1,100,000 |   |
| Acquisition costs                                                      |   |   |   |   |   |   | 35,000 |   |
| Goodwill                                                               |   |   | -      |   |   |   | (1,333,214 | ) |
| Noncontrolling Interest                                                |   |   | -      |   |   |   | 396,323 |   |
|                                                                   |   | $      | -      |   |   | $      | 702,147 |   |

----

----

----

|                       |   | Fair Value Measurements at June 30, 2010 |    |
|----------------------------|--------|-----------------------------------------------|---------|
|                       |   |                                          |    |   | Quoted Prices in Active |   |   | Significant Other |   |   | Significant |   |
|                       |   |                                          |    |   | Markets for Identical Assets |   |   | Observable Inputs |   |   | Unobservable Inputs |   |
|                       |   | Total                                         |    |   | (Level 1) |   |   | (Level 2) |   |   | (Level 3) |   |
|                       |   |                                          |    |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents  |   | $                                             | 286,344 |   |   | $ | 286,344 |   |   | $ | - |   |   | $ | - |   |
| Restricted Cash            |   |                                          | 115,827 |   |   |   | 115,827 |   |   |   | - |   |   |   | - |   |
| Total assets at fair value |   | $                                             | 402,171 |   |   | $ | 402,171 |   |   | $ | - |   |   | $ | - |   |

|                       |   | Fair Value Measurements at December 31, 2009 |    |
|----------------------------|--------|---------------------------------------------------|---------|
|                       |   |                                              |    |   | Quoted Prices in Active |   |   | Significant Other |   |   | Significant |   |
|                       |   |                                              |    |   | Markets for Identical Assets |   |   | Observable Inputs |   |   | Unobservable Inputs |   |
|                       |   | Total                                             |    |   | (Level 1) |   |   | (Level 2) |   |   | (Level 3) |   |
|                       |   |                                              |    |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents  |   | $                                                 | 701,931 |   |   | $ | 701,931 |   |   | $ | - |   |   | $ | - |   |
| Restricted Cash            |   |                                              | 15,827  |   |   |   | 15,827 |   |   |   | - |   |   |   | - |   |
| Total assets at fair value |   | $                                                 | 717,758 |   |   | $ | 717,758 |   |   | $ | - |   |   | $ | - |   |

----

----

| Balance sheet:                                                                 |   |   |    |
|--------------------------------------------------------------------------------|--------|--------|---------|
| Decrease in cash and cash equivalents                                          |   | $      | 100,000 |   |
| Increase in restricted cash                                                    |   |   | 100,000 |   |
| Increase in prepaid expenses and other receivables                             |   |   | 73,500  |   |
| Decrease in prepaid expenses, non current                                      |   |   | 49,595  |   |
| Increase in Goodwill                                                           |   |   | 7,560   |   |
| Increase in due to related parties                                             |   |   | 78,809  |   |
| Increase in the additional paid-in capital                                     |   |   | 171,537 |   |
| Decrease in accumulated deficit                                                |   |   | 703,916 |   |
| Increase in noncontrolling interest                                            |   |   | 483,725 |   |
| Statement of operations for the three months ended June 30, 2010:              |   |   |    |   |
| Increase in general and administrative expenses                                |   | $      | 140,978 |   |
| Increase in interest expense, net                                              |   |   | 15,365  |   |
| Increase in  net loss attributable to Suspect Detection Systems Inc. |   | $      | 156,343 |   |
| Statement of operations for the six months ended June 30, 2010:                |   |   |    |   |
| Increase in general and administrative expenses                                |   | $      | 339,128 |   |
| Increase in interest expense, net                                              |   |   | 18,463  |   |
| Increase in net loss attributable to Suspect Detection Systems Inc.            |   | $      | 357,591 |   |

----

| Balance sheet:                                                                          |   |   |    |
|-----------------------------------------------------------------------------------------|--------|--------|---------|
|        Increase in prepaid expenses and other receivables |   | $      | 5,000   |   |
|        Increase in goodwill                               |   |   | 7,560   |   |
|        Increase in due to related parties                 |   |   | 12,000  |   |
|        Decrease in additional paid-in capital             |   |   | 136,840 |   |
|        Decrease in accumulated deficit                    |   |   | 346,325 |   |
|        Increase in noncontrolling interest                |   | $      | 483,725 |   |

| Statement of operations for the three months ended June 30, 2009:              |   |   |    |
|--------------------------------------------------------------------------------|--------|--------|---------|
| Increase in general and administrative expenses                                |   | $      | 123,750 |   |
| Increase in interest expense, net                                              |   |   | 15,320  |   |
| Increase in  net loss attributable to Suspect Detection Systems Inc. |   | $      | 139,070 |   |
| Statement of operations for the six months ended June 30, 2009:                |   |   |    |   |
| Increase in general and administrative expenses                                |   | $      | 135,000 |   |
| Increase in  net loss attributable to Suspect Detection Systems Inc. |   | $      | 135,000 |   |

----

|                                          |   | Previously |      |   | Net Change |   |     |   |   |   | Restated |   |
|-----------------------------------------------|--------|------------|-----------|--------|------------|--------|----------|--------|--------|--------|----------|--------|
|                                          |   | reported   |      |   |       |   |     |   |   |   |     |   |
| Current Assets:                               |   |       |      |   |       |   |     |   |   |   |     |   |
| Cash and cash equivalents                     |   | $          | 386,344   |   |       | $      | (100,000 | )      |   |   | a        |   |   | $ | 286,344 |   |
| Restricted cash                               |   |       | 15,827    |   |       |   | 100,000  |   |   |   | a        |   |   |   | 115,827 |   |
| Inventory                                     |   |       | 39,797    |   |       |   |     |   |   |   |     |   |   |   | 39,797 |   |
| Prepaid expenses and other receivables        |   |       | 59,237    |   |       |   | 73,500   |   |   |   | b,c,d    |   |   |   | 132,737 |   |
|    Total current assets        |   |       | 501,205   |   |       |   |     |   |   |   |     |   |   |   | 574,705 |   |
|                                          |   |       |      |   |       |   |     |   |   |   |     |   |   |   |   |   |
| Property and Equipment:                       |   |       |      |   |       |   |     |   |   |   |     |   |   |   |   |   |
| Computer and other equipment                  |   |       | 41,101    |   |       |   |     |   |   |   |     |   |   |   | 41,101 |   |
| Less - Accumulated depreciation               |   |       | (20,592   | )      |       |   |     |   |   |   |     |   |   |   | (20,592 | ) |
|    Property and equipment, net |   |       | 20,509    |   |       |   |     |   |   |   |     |   |   |   | 20,509 |   |
|                                          |   |       |      |   |       |   |     |   |   |   |     |   |   |   |   |   |
| Other Assets:                                 |   |       |      |   |       |   |     |   |   |   |     |   |   |   |   |   |
| Severance pay fund                            |   |       | 82,139    |   |       |   |     |   |   |   |     |   |   |   | 82,139 |   |
| Prepaid expenses, non-current                 |   |       | 63,796    |   |       |   | (49,595  | )      |   |   | e        |   |   |   | 12,891 |   |
| Goodwill                                      |   |       | 1,333,214 |   |       |   | 7,560    |   |   |   | f,g      |   |   |   | 1,333,214 |   |
|                                          |   |       |      |   |       |   |     |   |   |   |     |   |   |   |   |   |
|    Total other assets          |   |       | 1,471,589 |   |       |   |     |   |   |   |     |   |   |   | 1,428,244 |   |
|                                          |   |       |      |   |       |   |     |   |   |   |     |   |   |   |   |   |
| Total Assets                                  |   | $          | 1,993,303 |   |       |   |     |   |   |   |     |   |   | $ | 2,023,458 |   |

----

|                                               |   | Previously |       |   | Net Change |   |     |   |   | Restated              |   |
|----------------------------------------------------|--------|------------|------------|--------|------------|--------|----------|--------|--------|-----------------------|--------|
|                                               |   | reported   |       |   |       |   |     |   |   |                  |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY               |   |       |       |   |       |   |     |   |   |                  |   |
| Current Liabilities:                               |   |       |       |   |       |   |     |   |   |                  |   |
| Accounts payable - Trade                           |   | $          | 17,664     |   |       |   |     |   |   |                  | $      | 17,664 |   |
| Accrued liabilities                                |   |       | 276,137    |   |       |   |     |   |   |                  |   | 276,137 |   |
| Advances from customers                            |   |       | 117,460    |   |       |   |     |   |   |                  |   | 117,460 |   |
| Deferred revenues                                  |   |       | 216,453    |   |       |   |     |   |   |                  |   | 216,453 |   |
| Due to related parties                             |   |       | 138,382    |   |       |   | 78,809   |   |   |  h,I,j           |   |   | 217,191 |   |
|    Total current liabilities        |   |       | 766,096    |   |       |   |     |   |   |                  |   |   |   | 844,905 |   |
|                                               |   |       |       |   |       |   |     |   |   |                  |   |   |   |   |   |
| Long-term Debt:                                    |   |       |       |   |       |   |     |   |   |                  |   |   |   |   |   |
| Accrued severance pay                              |   |       | 82,139     |   |       |   |     |   |   |                  |   |   |   | 82,139 |   |
|    Total liabilities                |   |       | 848,235    |   |       |   |     |   |   |                  |   |   |   | 927,044 |   |
|                                               |   |       |       |   |       |   |     |   |   |                  |   |   |   |   |   |
| Commitments and Contingencies                      |   |       |       |   |       |   |     |   |   |                  |   |   |   |   |   |
|                                               |   |       |       |   |       |   |     |   |   |                  |   |   |   |   |   |
| Stockholders' Equity:                              |   |       |       |   |       |   |     |   |   |                  |   |   |   |   |   |
| Common stock                                       |   |       | 7,405      |   |       |   |     |   |   |                  |   |   |   | 7,405 |   |
| Additional paid-in capital                         |   |       | 3,050,066  |   |       |   | 171,537  |   |   | g,I,k,l,p,q           |   |   | 3,221,603 |   |
| Common stock subscribed                            |   |       | -          |   |       |   |     |   |   |                  |   |   |   | - |   |
| Accumulated (deficit)                              |   |       | (1,601,463 | )      |       |   | (703,916 | )      |   | b,c,d,e,g,h,i,j,l,p,q |   |   | (2,503,379 | ) |
|    Total stockholders’ equity |   |       | 1,456,068  |   |       |   |     |   |   |                  |   |   |   | 923,629 |   |
|                                               |   |       |       |   |       |   |     |   |   |                  |   |   |   |   |   |
| Less – Noncontrolling interest               |   |       | (310,940   | )      |       |   | 483,725  |   |   |  f,g,k           |   |   | 172,785 |   |
|    Total stockholders' equity, Net  |   |       | 986,880    |   |       |   |     |   |   |                  |   |   |   | 1,096,414 |   |
| Total Liabilities and Stockholders' Equity         |   | $          | 2,432,853  |   |       |   |     |   |   |                  |   |   | $ | 2,023,458 |   |

----

|                                                      |   | Previously |       |   | Net Change |   |       |   |   |                | Restated |   |
|-----------------------------------------------------------|--------|------------|------------|--------|------------|--------|------------|--------|--------|---------------------|----------|--------|
|                                                      |   | reported   |       |   |       |   |       |   |   |                |     |   |
|                                                      |   |       |       |   |       |   |       |   |   |                |     |   |
| Revenues, net                                             |   | $          | 1,337,602  |   |       |   |       |   |   |                |     | $      | 1,337,602 |   |
|                                                      |   |       |       |   |       |   |       |   |   |                |     |   |   |   |
| Cost of Goods Sold                                        |   |       | 69,748     |   |       |   |       |   |   |                |     |   | 69,748 |   |
|    Gross Profit                            |   |       | 1,267,854  |   |       |   |       |   |   |                |     |   | 1,267,854 |   |
|                                                      |   |       |       |   |       |   |       |   |   |                |     |   |   |   |
| Expenses:                                                 |   |       |       |   |       |   |       |   |   |                |     |   |   |   |
| Research and development                                  |   |       | 209,861    |   |       |   |       |   |   |                |     |   | 209,861 |   |
| Selling, general and administrative                       |   |       | 1,119,418  |   |       |   | 339,128    |   |   | b,c,d,e,h,i,l,p,q,r |     |   |   | 1,458,546 |   |
|    Total operating expenses                |   |       | 1,329,279  |   |       |   |       |   |   |                |     |   |   | 1,668,407 |   |
|                                                      |   |       |       |   |       |   |       |   |   |                |     |   |   |   |   |
| (Loss) from Operations                                    |   |       | (61,425    | )      |       |   |       |   |   |                |     |   |   | (400,553 | ) |
|                                                      |   |       |       |   |       |   |       |   |   |                |     |   |   |   |   |
| Interest expense                                          |   |       | 123        |   |       |   | (18,463    | )      |   |                | r        |   |   |   | (18,340 | ) |
|                                                      |   |       |       |   |       |   |       |   |   |                |     |   |   |   |   |   |
| Net (loss)                                                |   |       | (61,302    | )      |       |   |       |   |   |                |     |   |   |   | (418,893 | ) |
|                                                      |   |       |       |   |       |   |       |   |   |                |     |   |   |   |   |   |
| Net (loss) Attributable to Noncontrolling Interest        |   |       | (106,666   | )      |       |   |       |   |   |                |     |   |   |   | (106,666 | ) |
|                                                      |   |       |       |   |       |   |       |   |   |                |     |   |   |   |   |   |
| Net (loss) attributable to Suspect Detection Systems Inc. |   | $          | (167,968   | )      |       |   |       |   |   |                |     |   |   | $ | (525,559 | ) |
|                                                      |   |       |       |   |       |   |       |   |   |                |     |   |   |   |   |   |
| (Loss) Per Common Share:                                  |   |       |       |   |       |   |       |   |   |                |     |   |   |   |   |   |
| (Loss) per common share - Basic and Diluted               |   | $          | (0.01      | )      |       |   |       |   |   |                |     |   |   | $ | (0.01 | ) |
|                                                      |   |       |       |   |       |   |       |   |   |                |     |   |   |   |   |   |
| Weighted Average Number of Common Shares                  |   |       |       |   |       |   |       |   |   |                |     |   |   |   |   |   |
| Outstanding - Basic and Diluted                           |   |       | 73,483,285 |   |       |   | (7,443,617 | )      |   |                | s        |   |   |   | 66,039,668 |   |

----

----

----

|                                                      |   | Previously |       |   | Net Change |   |       |   |   |            | Restated |   |
|-----------------------------------------------------------|--------|------------|------------|--------|------------|--------|------------|--------|--------|-----------------|----------|--------|
|                                                      |   | reported   |       |   |       |   |       |   |   |            |     |   |
| Revenues, net                                             |   | $          | 717,403    |   |       |   |       |   |   |            |     | $      | 717,403 |   |
|                                                      |   |       |       |   |       |   |       |   |   |            |     |   |   |   |
| Cost of Goods Sold                                        |   |       | 31,409     |   |       |   |       |   |   |            |     |   | 31,409 |   |
|    Gross Profit                            |   |       | 685,994    |   |       |   |       |   |   |            |     |   | 685,994 |   |
|                                                      |   |       |       |   |       |   |       |   |   |            |     |   |   |   |
| Expenses:                                                 |   |       |       |   |       |   |       |   |   |            |     |   |   |   |
| Research and development                                  |   |       | 177,671    |   |       |   |       |   |   |            |     |   | 177,671 |   |
| Selling, general and administrative                       |   |       | 527,607    |   |       |   | 160,814    |   |   | b,d,e,h,i,l,p,r |     |   |   | 733,421 |   |
|    Total operating expenses                |   |       | 750,278    |   |       |   |       |   |   |            |     |   |   | 911,022 |   |
|                                                      |   |       |       |   |       |   |       |   |   |            |     |   |   |   |   |
| (Loss) from Operations                                    |   |       | (64,284    | )      |       |   |       |   |   |            |     |   |   | (225,098 | ) |
|                                                      |   |       |       |   |       |   |       |   |   |            |     |   |   |   |   |
| Interest expense                                          |   |       | 123        |   |       |   | (15,365    | )      |   |            | r        |   |   |   | (15,242 | ) |
|                                                      |   |       |       |   |       |   |       |   |   |            |     |   |   |   |   |   |
| Net (loss)                                                |   |       | (64,161    | )      |       |   |       |   |   |            |     |   |   |   | (240,340 | ) |
|                                                      |   |       |       |   |       |   |       |   |   |            |     |   |   |   |   |   |
| Net (loss) Attributable to Noncontrolling Interest        |   |       | (20,919    | )      |       |   |       |   |   |            |     |   |   |   | (20,919 | ) |
|                                                      |   |       |       |   |       |   |       |   |   |            |     |   |   |   |   |   |
| Net (loss) attributable to Suspect Detection Systems Inc. |   | $          | (85,080    | )      |       |   |       |   |   |            |     |   |   | $ | (261,259 | ) |
|                                                      |   |       |       |   |       |   |       |   |   |            |     |   |   |   |   |   |
| (Loss) Per Common Share:                                  |   |       |       |   |       |   |       |   |   |            |     |   |   |   |   |   |
| (Loss) per common share - Basic and Diluted               |   | $          | (0.00      | )      |       |   |       |   |   |            |     |   |   | $ | (0.00 | ) |
|                                                      |   |       |       |   |       |   |       |   |   |            |     |   |   |   |   |   |
| Weighted Average Number of Common Shares                  |   |       |       |   |       |   |       |   |   |            |     |   |   |   |   |   |
| Outstanding - Basic and Diluted                           |   |       | 73,977,031 |   |       |   | (7,667,363 | )      |   |            | s        |   |   |   | 66,309,668 |   |

----

----

|                                                |   | Previously |     |   | Net Change |   |     | Restated |   |
|-----------------------------------------------------|--------|------------|----------|--------|------------|--------|----------|----------|--------|
|                                                |   | reported   |     |   |       |   |     |     |   |
| Operating Activities:                               |   |       |     |   |       |   |     |     |   |
| Net (loss)                                          |   | $          | (61,302  | )      |       | $      | (357,591 | )        |   | $ | (418,893 | ) |
| Adjustments to reconcile net (loss) to net cash     |   |       |     |   |       |   |     |     |   |   |   |   |
| Common stock issued for officers' compensation      |   |       | 18,000   |   |       |   | -        |     |   |   | 18,000 |   |
| Stock options issued to directors                   |   |       | 45,916   |   |       |   | 90,.435  |     |   |   | 136,351 |   |
| Stock options issued to agents                      |   |       | 163,054  |   |       |   | 194,135  |     |   |   | 163,054 |   |
| Stock warrants issued to a consultant               |   |       | -        |   |       |   | 49,888   |     |   |   | 49,888 |   |
| Common stock issued for consulting services         |   |       | 149,000  |   |       |   | -        |     |   |   | 149,000 |   |
| Depreciation                                        |   |       | 3,058    |   |       |   | -        |     |   |   | 3,058 |   |
| Changes in Assets and Liabilities-                  |   |       |     |   |       |   |     |     |   |   |   |   |
| Inventory                                           |   |       | (15,484  | )      |       |   | -        |     |   |   | (15,484 | ) |
| Prepaid expenses and other receivables              |   |       | (52,112  | )      |       |   | 15,282   |     |   |   | (67,394 | ) |
| Accounts payable - Trade                            |   |       | 8,489    |   |       |   | -        |     |   |   | 8,489 |   |
| Accrued liabilities                                 |   |       | 115,102  |   |       |   | -        |     |   |   | 115,102 |   |
| Advances from customers, net                        |   |       | (801,940 | )      |       |   | -        |     |   |   | (801,940 | ) |
| Deferred revenues                                   |   |       | 160,822  |   |       |   | -        |     |   |   | 160,822 |   |
| Due to related parties                              |   |       | -        |   |       |   | 110,650  |     |   |   | 100,650 |   |
| Accrued severance pay                               |   |       | (2,176   | )      |       |   | (36,576  | )        |   |   | (38,752 | ) |
|                                                |   |       |     |   |       |   |     |     |   |   |   |   |
| Net Cash (Used in) Operating Activities             |   |       | (401,785 | )      |       |   | 4,578    |     |   |   | (397,207 | ) |
|                                                |   |       |     |   |       |   |     |     |   |   |   |   |
| Investing Activities:                               |   |       |     |   |       |   |     |     |   |   |   |   |
| Increase in restricted cash                         |   |       | -        |   |       |   | (100,000 | )        |   |   | (100,000 | ) |
| Prepaid expenses, non-current                       |   |       | -        |   |       |   | (2,313   | )        |   |   | (2,313 | ) |
| Increase in severance pay fund                      |   |       | (36,576  | )      |       |   | 36,576   |     |   |   | - |   |
| Purchases of Property and Equipment                 |   |       | (11,067  | )      |       |   | -        |     |   |   | (11,067 | ) |
|                                                |   |       |     |   |       |   |     |     |   |   |   |   |
| Net Cash Provided by (Used in) Investing Activities |   |       | (47,643  | )      |       |   | (65,737  | )        |   |   | (113,380 | ) |

----

|                                              |   | Previously |     |   | Net Change |   |     | Restated |   |
|---------------------------------------------------|--------|------------|----------|--------|------------|--------|----------|----------|--------|
|                                              |   | reported   |     |   |       |   |     |     |   |
| Financing Activities:                             |   |       |     |   |       |   |     |     |   |
| Issuance of common stock for cash                 |   |       | 95,000   |   |       |   | -        |     |   |   | 95,000 |   |
| Due to related party                              |   |       | 38,841   |   |       |   | (38,841  | )        |   |   | - |   |
| Net Cash Provided by Financing Activities         |   |       | 133,841  |   |       |   | (38,841  | )        |   |   | 95,000 |   |
|                                              |   |       |     |   |       |   |     |     |   |   |   |   |
| Net Increase (Decrease) in Cash                   |   |       | (315,587 | )      |       |   | (100,000 | )        |   |   | (415,587 | ) |
| Cash and Cash Equivalents - Beginning of Period   |   |       | 717,758  |   |       |   |     |     |   |   | 701,931 |   |
| Cash and Cash Equivalents - End of Period         |   | $          | 386,344  |   |       |   | (15,827  | )        |   |   | 286,344 |   |
| Cash and Cash Equivalents - End of Period:        |   |       |     |   |       |   |     |     |   |   |   |   |
| Cash in bank                                      |   | $          | 701,931  |   |       |   |     |     |   | $ | 701,931 |   |
| Restricted cash                                   |   |       | 15,827   |   |       |   | (15,827  | )        |   |   | - |   |
| Total                                             |   | $          | 717,758  |   |       |   |     |     |   | $ | 701,931 |   |
| Supplemental Disclosure of Cash Flow Information: |   |       |     |   |       |   |     |     |   |   |   |   |
| Cash paid during the period for:                  |   |       |     |   |       |   |     |     |   |   |   |   |
| Interest                                          |   | $          | -        |   |       |   |     |     |   | $ | - |   |
| Income taxes                                      |   | $          | -        |   |       |   |     |     |   | $ | - |   |

----

|                                          |   | Previously |      |   | Net Change |   |   |   |   |   | Restated |   |
|-----------------------------------------------|--------|------------|-----------|--------|------------|--------|--------|--------|--------|--------|----------|--------|
|                                          |   | reported   |      |   |       |   |   |   |   |   |     |   |
| Current Assets:                               |   |       |      |   |       |   |   |   |   |   |     |   |
| Cash and cash equivalents                     |   | $          | 701,931   |   |       |   |   |   |   |   |     | $      | 701,931 |   |
| Restricted cash                               |   |       | 15,827    |   |       |   |   |   |   |   |     |   | 15,827 |   |
| Accounts receivables                          |   |       | -         |   |       |   |   |   |   |   |     |   | - |   |
| Inventory                                     |   |       | 55,281    |   |       |   |   |   |   |   |     |   | 55,281 |   |
| Prepaid expenses and other receivables        |   |       | 60,343    |   |       |   | 5,000  |   |   |   | d        |   |   |   | 65,343 |   |
|    Total current assets        |   |       | 833,382   |   |       |   |   |   |   |   |     |   |   |   | 838,382 |   |
|                                          |   |       |      |   |       |   |   |   |   |   |     |   |   |   |   |   |
| Property and Equipment:                       |   |       |      |   |       |   |   |   |   |   |     |   |   |   |   |   |
| Computer and other equipment                  |   |       | 30,034    |   |       |   |   |   |   |   |     |   |   |   | 30,034 |   |
| Less - Accumulated depreciation               |   |       | (17,534   | )      |       |   |   |   |   |   |     |   |   |   | (17,534 | ) |
|    Property and equipment, net |   |       | 12,500    |   |       |   |   |   |   |   |     |   |   |   | 12,500 |   |
|                                          |   |       |      |   |       |   |   |   |   |   |     |   |   |   |   |   |
| Other Assets:                                 |   |       |      |   |       |   |   |   |   |   |     |   |   |   |   |   |
| Severance pay fund                            |   |       | 45,563    |   |       |   |   |   |   |   |     |   |   |   | 45,563 |   |
| Prepaid expenses, non-current                 |   |       | 10,578    |   |       |   |   |   |   |   |     |   |   |   | 10,578 |   |
| Goodwill                                      |   |       | 1,325,654 |   |       |   | 7,560  |   |   |   | a,b      |   |   |   | 1,333,214 |   |
|                                          |   |       |      |   |       |   |   |   |   |   |     |   |   |   |   |   |
|    Total other assets          |   |       | 1,381,795 |   |       |   |   |   |   |   |     |   |   |   | 1,389,355 |   |
|                                          |   |       |      |   |       |   |   |   |   |   |     |   |   |   |   |   |
| Total Assets                                  |   | $          | 2,227,677 |   |       |   |   |   |   |   |     |   |   | $ | 2,240,237 |   |
|                                          |   |       |      |   |       |   |   |   |   |   |     |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY          |   |       |      |   |       |   |   |   |   |   |     |   |   |   |   |   |
| Current Liabilities:                          |   |       |      |   |       |   |   |   |   |   |     |   |   |   |   |   |
| Accounts payable - Trade                      |   | $          | 9,175     |   |       |   |   |   |   |   |     |   |   | $ | 9,175 |   |
| Accrued liabilities                           |   |       | 161,161   |   |       |   |   |   |   |   |     |   |   |   | 161,161 |   |
| Advances from customers                       |   |       | 919,400   |   |       |   |   |   |   |   |     |   |   |   | 919,400 |   |
| Deferred revenues                             |   |       | 55,631    |   |       |   |   |   |   |   |     |   |   |   | 55,631 |   |
| Due to related parties                        |   |       | 99,541    |   |       |   | 12,000 |   |   |   | e        |   |   |   | 111,541 |   |
|    Total current liabilities   |   |       | 1,244,908 |   |       |   |   |   |   |   |     |   |   |   | 1,256,908 |   |

----

|                                                                  |   | Previously |       |   | Net Change |   |     |   |   |   |        | Restated |   |
|-----------------------------------------------------------------------|--------|------------|------------|--------|------------|--------|----------|--------|--------|--------|-------------|----------|--------|
|                                                                  |   | reported   |       |   |       |   |     |   |   |   |        |     |   |
| Long-term Debt:                                                       |   |       |       |   |       |   |     |   |   |   |        |     |   |
| Accrued severance pay                                                 |   |       | 84,315     |   |       |   |     |   |   |   |        |     |   | 84,315 |   |
|    Total liabilities                                   |   |       | 1,329,223  |   |       |   |     |   |   |   |        |     |   | 1,341,223 |   |
|                                                                  |   |       |       |   |       |   |     |   |   |   |        |     |   |   |   |
| Commitments and Contingencies                                         |   |       |       |   |       |   |     |   |   |   |        |     |   |   |   |
|                                                                  |   |       |       |   |       |   |     |   |   |   |        |     |   |   |   |
| Stockholders' Equity:                                                 |   |       |       |   |       |   |     |   |   |   |        |     |   |   |   |
| Common stock, par value $0.0001 per share, 250,000,000                |   |       |       |   |       |   |     |   |   |   |        |     |   |   |   |
| shares authorized; 76,554,893 and  71,822,893 shares issued |   |       |       |   |       |   |     |   |   |   |        |     |   |   |   |
| and outstanding in 2010 and 2009, respectively                        |   |       | 7,182      |   |       |   |     |   |   |   |        |     |   | 7,182 |   |
| Additional paid-in capital                                            |   |       | 2,717,373  |   |       |   | (136,840 | )      |   |   | b,c,d,f,g   |     |   |   | 2,580,533 |   |
| Common stock subscribed                                               |   |       | 25,000     |   |       |   |     |   |   |   |        |     |   |   | 25,000 |   |
| Accumulated (deficit)                                                 |   |       | (1,433,495 | )      |       |   | (346,325 | )      |   |   | b,c,d,e,f,g |     |   |   | (1,779,820 | ) |
|    Total stockholders' equity                          |   |       | 1,316,060  |   |       |   |     |   |   |   |        |     |   |   | 832,895 |   |
|                                                                  |   |       |       |   |       |   |     |   |   |   |        |     |   |   |   |   |
| Less - Noncontrolling interest                                        |   |       | (417,606   | )      |       |   | 483,725  |   |   |   | a,b         |     |   |   | 66,119 |   |
|    Total stockholders' equity, Net                     |   |       | 898,454    |   |       |   |     |   |   |   |        |     |   |   | 899,014 |   |
| Total Liabilities and Stockholders' Equity                            |   | $          | 2,227,677  |   |       |   |     |   |   |   |        |     |   | $ | 2,240,237 |   |

----

----

|                                                      |   | Previously |       |   | Net Change |   |       |   |   |   | Restated |   |
|-----------------------------------------------------------|--------|------------|------------|--------|------------|--------|------------|--------|--------|--------|----------|--------|
|                                                      |   | reported   |       |   |       |   |       |   |   |   |     |   |
|                                                      |   |       |       |   |       |   |       |   |   |   |     |   |
| Revenues, net                                             |   | $          | 423,741    |   |       |   |       |   |   |   |     | $      | 423,741 |   |
|                                                      |   |       |       |   |       |   |       |   |   |   |     |   |   |   |
| Cost of Goods Sold                                        |   |       | 52,186     |   |       |   |       |   |   |   |     |   | 52,186 |   |
|    Gross Profit                            |   |       | 371,555    |   |       |   |       |   |   |   |     |   | 371,555 |   |
|                                                      |   |       |       |   |       |   |       |   |   |   |     |   |   |   |
| Expenses:                                                 |   |       |       |   |       |   |       |   |   |   |     |   |   |   |
| Research and development                                  |   |       | 72,430     |   |       |   |       |   |   |   |     |   | 72,430 |   |
| Selling, general and administrative                       |   |       | 777,140    |   |       |   | 135,000    |   |   |   | a,b      |   |   |   | 912,140 |   |
|    Total operating expenses                |   |       | 849,570    |   |       |   |       |   |   |   |     |   |   |   | 984,570 |   |
|                                                      |   |       |       |   |       |   |       |   |   |   |     |   |   |   |   |   |
| (Loss) from Operations                                    |   |       | (478,015   | )      |       |   |       |   |   |   |     |   |   |   | (613,015 | ) |
|                                                      |   |       |       |   |       |   |       |   |   |   |     |   |   |   |   |   |
| Interest expense                                          |   |       | (7,041     | )      |       |   |       |   |   |   |     |   |   |   | (7,041 | ) |
|                                                      |   |       |       |   |       |   |       |   |   |   |     |   |   |   |   |   |
| Net (loss)                                                |   |       | (470,974   | )      |       |   |       |   |   |   |     |   |   |   | (605,974 | ) |
|                                                      |   |       |       |   |       |   |       |   |   |   |     |   |   |   |   |   |
| Net (loss) Attributable to Noncontrolling Interest        |   |       | 84,062     |   |       |   |       |   |   |   |     |   |   |   | 84,062 |   |
|                                                      |   |       |       |   |       |   |       |   |   |   |     |   |   |   |   |   |
| Net (loss) attributable to Suspect Detection Systems Inc. |   | $          | (386,912   | )      |       |   |       |   |   |   |     |   |   | $ | (521,912 | ) |
|                                                      |   |       |       |   |       |   |       |   |   |   |     |   |   |   |   |   |
| (Loss) Per Common Share:                                  |   |       |       |   |       |   |       |   |   |   |     |   |   |   |   |   |
| (Loss) per common share - Basic and Diluted               |   | $          | (0.01      | )      |       |   |       |   |   |   |     |   |   | $ | (0.01 | ) |
|                                                      |   |       |       |   |       |   |       |   |   |   |     |   |   |   |   |   |
| Weighted Average Number of Common Shares                  |   |       |       |   |       |   |       |   |   |   |     |   |   |   |   |   |
| Outstanding - Basic and Diluted                           |   |       | 66,592,909 |   |       |   | (9,933,468 | )      |   |   | c        |   |   |   | 56,659,441 |   |

----

|                                                      |   | Previously |       |   | Net Change |   |       |   |   |   | Restated |   |
|-----------------------------------------------------------|--------|------------|------------|--------|------------|--------|------------|--------|--------|--------|----------|--------|
|                                                      |   | reported   |       |   |       |   |       |   |   |   |     |   |
|                                                      |   |       |       |   |       |   |       |   |   |   |     |   |
| Revenues, net                                             |   | $          | 717,403    |   |       |   |       |   |   |   |     | $      | 254,759 |   |
|                                                      |   |       |       |   |       |   |       |   |   |   |     |   |   |   |
| Cost of Goods Sold                                        |   |       | 31,409     |   |       |   |       |   |   |   |     |   | 14.729 |   |
|    Gross Profit                            |   |       | 685,994    |   |       |   |       |   |   |   |     |   | 240.030 |   |
|                                                      |   |       |       |   |       |   |       |   |   |   |     |   |   |   |
| Expenses:                                                 |   |       |       |   |       |   |       |   |   |   |     |   |   |   |
| Research and development                                  |   |       | 177,671    |   |       |   |       |   |   |   |     |   | 32.683 |   |
| Selling, general and administrative                       |   |       | 299,926    |   |       |   | 108,123    |   |   |   | a,b,c    |   |   |   | 408,049 |   |
|    Total operating expenses                |   |       | 332,609    |   |       |   |       |   |   |   |     |   |   |   | 440,732 |   |
|                                                      |   |       |       |   |       |   |       |   |   |   |     |   |   |   |   |   |
| (Loss) from Operations                                    |   |       | (92,579    | )      |       |   |       |   |   |   |     |   |   |   | (200,702 | ) |
|                                                      |   |       |       |   |       |   |       |   |   |   |     |   |   |   |   |   |
| Interest expense                                          |   |       | 1,407      |   |       |   | (15,365    | )      |   |   | c        |   |   |   | 1407 |   |
|                                                      |   |       |       |   |       |   |       |   |   |   |     |   |   |   |   |   |
| Net (loss)                                                |   |       | (91,127    | )      |       |   |       |   |   |   |     |   |   |   | (199,295 | ) |
|                                                      |   |       |       |   |       |   |       |   |   |   |     |   |   |   |   |   |
| Net (loss) Attributable to Noncontrolling Interest        |   |       | (20,919    | )      |       |   |       |   |   |   |     |   |   |   | (7,159 | ) |
|                                                      |   |       |       |   |       |   |       |   |   |   |     |   |   |   |   |   |
| Net (loss) attributable to Suspect Detection Systems Inc. |   | $          | (98,331    | )      |       |   |       |   |   |   |     |   |   | $ | (206,454 | ) |
|                                                      |   |       |       |   |       |   |       |   |   |   |     |   |   |   |   |   |
| (Loss) Per Common Share:                                  |   |       |       |   |       |   |       |   |   |   |     |   |   |   |   |   |
| (Loss) per common share - Basic and Diluted               |   | $          | (0.00      | )      |       |   |       |   |   |   |     |   |   | $ | (0.00 | ) |
|                                                      |   |       |       |   |       |   |       |   |   |   |     |   |   |   |   |   |
| Weighted Average Number of Common Shares                  |   |       |       |   |       |   |       |   |   |   |     |   |   |   |   |   |
| Outstanding - Basic and Diluted                           |   |       | 66,002,708 |   |       |   | (5,221,595 | )      |   |   | d        |   |   |   | 60,781,113 |   |

----

|                                                |   | Previously |     |   | Net Change |   |     | Restated |   |
|-----------------------------------------------------|--------|------------|----------|--------|------------|--------|----------|----------|--------|
|                                                |   | reported   |     |   |       |   |     |     |   |
| Operating Activities:                               |   |       |     |   |       |   |     |     |   |
| Net (loss)                                          |   | $          | (228,795 | )      |       | $      | (461,292 | )        |   | $ | (605,974 | ) |
| Adjustments to reconcile net (loss) to net cash     |   |       |     |   |       |   |     |     |   |   |   |   |
| Common stock issued for officers' compensation      |   |       | 25,500   |   |       |   | -        |     |   |   | 25,500 |   |
| Common stock issued for consulting services         |   |       | -        |   |       |   | 135,000  |     |   |   | 135,000 |   |
| Depreciation                                        |   |       | 2,859    |   |       |   | -        |     |   |   | 2,859 |   |
| Changes in Assets and Liabilities-                  |   |       |     |   |       |   |     |     |   |   |   |   |
| Inventory                                           |   |       | 41,260   |   |       |   | -        |     |   |   | 41,260 |   |
| Prepaid expenses and other receivables              |   |       | 109,151  |   |       |   | (5,837   | )        |   |   | 103,314 |   |
| Accounts payable - Trade                            |   |       | (18,551  | )      |       |   | (28,000  | )        |   |   | (46,551 | ) |
| Accrued liabilities                                 |   |       | (349,218 | )      |       |   | 308,941  |     |   |   | (40,277 | ) |
| Advances from customers, net                        |   |       | -        |   |       |   | (277,762 | )        |   |   | (277,762 | ) |
| Due to related parties                              |   |       | -        |   |       |   | 13,466   |     |   |   | 13,466 |   |
| Accrued severance pay                               |   |       | -        |   |       |   | (6,975   | )        |   |   | (6,975 | ) |
|                                                |   |       |     |   |       |   |     |     |   |   |   |   |
| Net Cash (Used in) Operating Activities             |   |       | (659,973 | )      |       |   | 3,833    |     |   |   | (656,140 | ) |
|                                                |   |       |     |   |       |   |     |     |   |   |   |   |
| Investing Activities:                               |   |       |     |   |       |   |     |     |   |   |   |   |
| Cash acquired in business combination (b)           |   |       | -        |   |       |   | 702,147  |     |   |   | 702,147 |   |
| Prepaid expenses, non-current                       |   |       | -        |   |       |   | 5,837    |     |   |   | 5,837 |   |
| Increase in severance pay fund                      |   |       | 40,827   |   |       |   | (40,827  | )        |   |   | - |   |
| Purchases of Property and Equipment                 |   |       | (1,850   | )      |       |   | -        |     |   |   | (1,850 | ) |
|                                                |   |       |     |   |       |   |     |     |   |   |   |   |
| Net Cash Provided by (Used in) Investing Activities |   |       | 38,977   |   |       |   | 667,157  |     |   |   | 706,134 |   |
|                                                |   |       |     |   |       |   |     |     |   |   |   |   |

----

|                                              |   | Previously |     |   | Net Change |   |   | Restated |   |
|---------------------------------------------------|--------|------------|----------|--------|------------|--------|--------|----------|--------|
|                                              |   | reported   |     |   |       |   |   |     |   |
| Financing Activities:                             |   |       |     |   |       |   |   |     |   |
| Issuance of common stock for cash                 |   |       | 55,000   |   |       |   | -      |     |   |   | 55,000 |   |
| Due to related party                              |   |       | (3,155   | )      |       |   | (3,155 | )        |   |   | - |   |
| Net Cash Provided by Financing Activities         |   |       | 51,845   |   |       |   | (3,155 | )        |   |   | 95,000 |   |
|                                              |   |       |     |   |       |   |   |     |   |   |   |   |
| Net Increase (Decrease) in Cash                   |   |       | (565,151 | )      |       |   | -      |     |   |   | 104,994 |   |
| Cash and Cash Equivalents - Beginning of Period   |   |       | 869,537  |   |       |   |   |     |   |   | 179,565 |   |
| Cash and Cash Equivalents - End of Period         |   | $          | 300,386  |   |       |   |   |     |   | $ | 284,559 |   |
| Supplemental Disclosure of Cash Flow Information: |   |       |     |   |       |   |   |     |   |   |   |   |
| Cash paid during the period for:                  |   |       |     |   |       |   |   |     |   |   |   |   |
| Interest                                          |   | $          | -        |   |       |   |   |     |   | $ | - |   |
| Income taxes                                      |   | $          | -        |   |       |   |   |     |   | $ | - |   |

----

|                                                       |   | For the six months ended |       |
|------------------------------------------------------------|--------|--------------------------|------------|
|                                                       |   | June 30, 2010            |       |
|                                                       |   | Numberof warrants        |       |   | Weighted Average Exercise Price |   |
|                                                       |   |                     |       |   |   |   |
| Outstanding and exercisable at the beginning of the period |   |                     | 16,669,667 |   |   | $ | 0.317 |   |
| Granted                                                    |   |                     | 2,050,000  |   |   |   | 0.277 |   |
| Exercised                                                  |   |                     | -          |   |   |   | - |   |
| Forfeited                                                  |   |                     | 366,667    |   |   |   | 0.25 |   |
| Outstanding and exercisable at the end of the period       |   |                     | 18,383,000 |   |   |   | 0.314 |   |

|                                                       |   | For the six months ended |       |
|------------------------------------------------------------|--------|--------------------------|------------|
|                                                       |   | June 30, 2009       |       |
|                                                       |   | Numberof warrants        |       |   | Weighted Average Exercise Price |   |
|                                                       |   |                     |       |   |   |   |
| Outstanding and exercisable at the beginning of the period |   |                     | 9,522,999  |   |   | $ | 0.375 |   |
| Granted                                                    |   |                     | 1,183,334  |   |   |   | 0.251 |   |
| Exercised                                                  |   |                     | -          |   |   |   | - |   |
| Forfeited                                                  |   |                     | -          |   |   |   | - |   |
| Outstanding and exercisable at the end of the period       |   |                     | 10,706,333 |   |   | $ | 0.361 |   |

----

|                                |                                                              |   |
|-------------------------------------|-------------------------------------------------------------------|--------|
|                                | Options granted under 2009 Global Stock  Incentive Plan |   |
| annual dividends of                 | $0.00                                                             |   |
| expected volatility of              | 114.78-158.87%                                                    |   |
| risk-free interest rate of          | 2.3-2.77%                                                         |   |
| expected average options expiration | 3-5.32                                                            |   |

|                                                       |   | For the six months ended |      |
|------------------------------------------------------------|--------|--------------------------|-----------|
|                                                       |   | June 30, 2010            |      |
|                                                       |   | Numberof options         |      |   | Weighted Average Exercise Price |   |
|                                                       |   |                     |      |   |   |   |
| Outstanding and exercisable at the beginning of the period |   |                     | 1,550,000 |   |   | $ | 0.15 |   |
| Granted                                                    |   |                     | 2,000,000 |   |   |   | 0.15 |   |
| Exercised                                                  |   |                     | -         |   |   |   | - |   |
| Forfeited                                                  |   |                     | -         |   |   |   | - |   |
| Outstanding and exercisable at the end of the period       |   |                     | 3,550,000 |   |   | $ | 0.15 |   |

----

|                                                       |   | For the six months ended |    |
|------------------------------------------------------------|--------|--------------------------|---------|
|                                                       |   | June 30, 2009            |    |
|                                                       |   | Numberof options         |    |   | Weighted Average Exercise Price |   |
|                                                       |   |                     |    |   |   |   |
| Outstanding and exercisable at the beginning of the period |   |                     | -       |   |   |   | - |   |
| Granted                                                    |   |                     | 750,000 |   |   |   | 0.15 |   |
| Exercised                                                  |   |                     | -       |   |   |   | - |   |
| Forfeited                                                  |   |                     | -       |   |   |   | - |   |
| Outstanding and exercisable at the end of the period       |   |                     | 750,000 |   |   |   | 0.15 |   |

----

|            |   | Six months ended June 30, 2010 |      |
|-----------------|--------|--------------------------------|-----------|
|            |   | Revenues                       |      |   | % of total revenues |   |
| Customer A      |   | $                              | 1,006,411 |   |   |   | 75 | % |
| Customer B      |   |                           | 299,994   |   |   |   | 22 |   |
| Other customers |   |                           | 31,197    |   |   |   | 3 |   |
| Total Revenues  |   | $                              | 1,337,602 |   |   |   | 100 | % |

|            |   | Six months ended June 30, 2009 |    |
|-----------------|--------|--------------------------------|---------|
|            |   | Revenues                       |    |   | % of total revenues |   |
| Customer A      |   | $                              | 375,993 |   |   |   | 89 | % |
| Customer C      |   |                           | 32,990  |   |   |   | 8 |   |
| Other customers |   |                           | 14,758  |   |   |   | 3 |   |
| Total Revenues  |   | $                              | 423,741 |   |   |   | 100 | % |

----

----

----

----

----

|            |   | Six months ended June 30, 2010 |      |
|-----------------|--------|--------------------------------|-----------|
|            |   | Revenues                       |      |   | % of total revenues |   |
| Customer A      |   | $                              | 1,006,411 |   |   |   | 75 | % |
| Customer B      |   |                           | 299,994   |   |   |   | 22 |   |
| Other customers |   |                           | 31,197    |   |   |   | 3 |   |
| Total Revenues  |   | $                              | 1,337,602 |   |   |   | 100 | % |

|            |   | Six months ended June 30, 2009 |    |
|-----------------|--------|--------------------------------|---------|
|            |   | Revenues                       |    |   | % of total revenues |   |
| Customer A      |   | $                              | 375,993 |   |   |   | 89 | % |
| Customer C      |   |                           | 32,990  |   |   |   | 8 |   |
| Other customers |   |                           | 14,758  |   |   |   | 3 |   |
| Total Revenues  |   | $                              | 423,741 |   |   |   | 100 | % |

----

----

----

----

| Exhibit No. |   | Description                                                                                           |
|-------------|--------|-------------------------------------------------------------------------------------------------------|
|        |   |                                                                                                  |
| 31.1        |   | Rule 13a-14(a)/15d14(a) Certification of Principal Executive Officer (attached hereto)                |
|        |   |                                                                                                  |
| 31.2        |   | Rule 13a-14(a)/15d14(a) Certification of Principal Financial and Accounting Officer (attached hereto) |
|        |   |                                                                                                  |
| 32.1        |   | Section 1350 Certification of Principal Executive Officer (attached hereto)                           |
|        |   |                                                                                                  |
| 32.1        |   | Section 1350 Certification of Principal Financial and Accounting Officer (attached hereto)            |

----

|                                 | SUSPECT DETECTION SYSTEMS, INC. |                                                                                  |
|--------------------------------------|---------------------------------|---------------------------------------------------------------------------------------|
| Dated:  May 13, 2011  |                            |                                                                                  |   |
|                                 | By:                             | /s/ Gil Boosidan                                                                 |   |
|                                 |                            | Name: Gil Boosidan                                                               |   |
|                                 |                            | Title :  Chief Executive Officer and Director (Principal Executive Officer) |   |

|  Dated: May 13, 2011  | By:    | /s/ Ran Daniel                                      |   |
|---------------------------------|--------|-----------------------------------------------------|--------|
|                            |   | Name: Ran Daniel                               |   |
|                            |   | Title:  Chief Financial and Accounting Officer |   |

----