UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON , D.C. 20549

FORM 10-QSB
Amendment Number 1

x
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2007

o
Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ___ to ___

Commission file number: 000-31883

PROTON LABORATORIES, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)


Washington
91-2022700
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)


980 Atlantic Avenue, Suite 110
Alameda, CA 94501
( Address of principal executive offices)

(510) 865-6412
Issuer's telephone number

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

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

     On August 17, 2007, the registrant had outstanding 29,070,523 Common Stock, $0.0001 par value per share.

     Transitional Small Business Disclosure Format:   Yes o    No x
 
 
Introduction: This amendment number 1 provides new Part 1-Item 3—Controls and Procedures, new certifications for exhibits 31.1 and 31.2, and the current company address on the cover page.
 
 
 
 
 
C ON TENTS


   
PAGE NO.
     
     
PART I.
FINANCIAL INFORMATION
 
     
ITEM 1.
FINANCIAL STATEMENTS
 
     
   
     
   
     
 
Condensed Consolidated Statement of Stockholders' Deficit (unaudited)
 
     
   
     
   
     
I TEM 2.
 
     
ITEM 3.
 
     
PART II.
OTHER INFORMATION
 
     
ITEM 1.
 
     
ITEM 2.
 
     
ITEM 3.
 
     
ITEM  4.
 
     
ITEM 5.
 
     
ITEM 6.
 
     
   
     
Certifications
 
 

PART  I.     FINANCIAL  INFORMATION

ITEM  1.     FINANCIAL  STATEMENTS

PROTON LABORATORIES, INC.
TABLE OF CONTENTS


 
PAGE
   
Condensed Consolidated Balance Sheets - June 30, 2007 and December 31, 2006 (Unaudited)
F-1
   
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2007 and 2006 (Unaudited)
F-2
   
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2007 and 2006 (Unaudited)
F-3
   
Notes to Condensed Consolidated Financial Statements (Unaudited)
F-4


L AB ORATORIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


   
JUNE 30,
2007
   
DECEMBER 31,
2006
 
             
ASSETS
           
CURRENT ASSETS
           
Cash
  $ 1,710     $ 9,768  
Accounts receivable, less allowance for doubtful accounts of $24,586 and $30,419, respectively
    360       794  
Inventory
    100,764       143,865  
TOTAL CURRENT ASSETS
    102,834       154,427  
PROPERTY AND EQUIPMENT
               
Furniture and fixtures
    23,316       23,316  
Equipment and machinery
    242,330       238,776  
Leasehold improvements
    11,323       11,323  
Accumulated depreciation
    (90,566 )     (69,550 )
NET PROPERTY AND EQUIPMENT
    186,403       203,865  
DEPOSITS
    6,131       6,131  
TOTAL ASSETS
  $ 295,368     $ 364,423  
LIABILITIES AND STOCKHOLDERS' DEFICIT
               
CURRENT LIABILITIES
               
Accounts payable
  $ 154,892     $ 71,314  
Accrued expenses
    307,554       266,079  
Deferred revenue
    52,506       52,506  
Preferred dividends payable
    19,200       16,000  
TOTAL CURRENT LIABILITIES
    534,152       405,899  
STOCKHOLDER LOANS, NET OF CURRENT PORTION
    307,642       270,642  
TOTAL LIABILITIES
  $ 841,794     $ 676,541  
STOCKHOLDERS' DEFICIT
               
Series A convertible preferred stock, 400,000 shares authorized with a par value of $0.0001; 8,000 shares issued and outstanding;   liquidation preference of $80,000 and $0, respectively
    80,000       80,000  
Undesignated preferred stock, 19,600,000 shares authorized with a par value of $0.0001; no shares issued or outstanding
    -       -  
Common stock, 100,000,000 common shares authorized with a par value of $0.0001; 26,470,523 and 21,658,223 shares issued and outstanding, respectively
    2,649       2,168  
Additional paid in capital
    5,515,442       4,045,371  
Stock subscription receivable
    (20,000 )     (20,000 )
Accumulated deficit
    (6,124,517 )     (4,419,657 )
TOTAL STOCKHOLDERS' DEFICIT
    (546,426 )     (312,118 )
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
  $ 295,368     $ 364,423  
 
The accompanying notes are an integral part of these condensed consolidated financial statements.


P RO TON LABORATORIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


   
FOR THE THREE MONTHS ENDED
   
FOR THE SIX MONTHS ENDED
 
   
JUNE 30,
   
JUNE 30,
 
   
2007
   
2006
   
2007
   
2006
 
                         
SALES
  $ 27,298     $ 33,639     $ 79,039     $ 84,561  
                                 
COST OF GOODS SOLD
    18,455       26,187       48,255       70,479  
                                 
GROSS PROFIT
    8,843       7,452       30,784       14,082  
OPERATING EXPENSES
                               
Selling, general and administrative expenses (including equity-based expenses of $0, $0, $0 and $40,526, respectively)
    163,701       124,011       251,239       252,041  
Product development costs (including equity-based expenses of $0, $0, $1,470,551 and $0, respectively)
    -       -       1,470,551       -  
                                 
LOSS FROM OPERATIONS
    (154,858 )     (116,559 )     (1,691,006 )     (237,959 )
                                 
OTHER INCOME AND (EXPENSE)
                               
Interest income
    59       175       112       200  
Interest expense
    (5,382 )     (15,044 )     (10,766 )     (32,781 )
NET OTHER EXPENSE
    (5,323 )     (14,869 )     (10,654 )     (32,581 )
                                 
NET LOSS
    (160,181 )     (131,428 )     (1,701,660 )     (270,540 )
                                 
PREFERRED STOCK DIVIDEND
    (1,600 )     (1,600 )     (3,200 )     (3,200 )
                                 
LOSS APPLICABLE TO COMMON SHAREHOLDERS
  $ (161,781 )   $ (136,228 )   $ (1,704,860 )   $ (273,740 )
                                 
BASIC AND DILUTED LOSS PER COMMON SHARE
  $ (0.01 )   $ (0.01 )   $ (0.07 )   $ (0.02 )
                                 
BASIC AND DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING
    26,470,523       15,483,316       24,616,797       14,914,666  
 
The accompanying notes are an integral part of these condensed consolidated financial statements.


P RO TON LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


FOR THE SIX MONTHS ENDED JUNE 30,
 
2007
   
2006
 
             
             
CASH FLOWS FROM OPERATING ACTIVITIES
           
Net loss
  $ (1,701,660 )   $ (270,540 )
Adjustments to reconcile net loss to cash used in operating activities:
               
Depreciation
    21,016       15,603  
Common stock issued for services
    1,470,551       40,526  
Changes in operating assets and liabilities
               
Accounts receivable
    434       6,906  
Inventory
    43,102       (3,688 )
Accounts payable
    83,578       (33,151 )
Accrued expenses
    41,475       64,271  
                 
NET CASH FROM OPERATING ACTIVITIES
    (41,504 )     (180,073 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES
               
Purchases of property and equipment
    (3,554 )     -  
                 
NET CASH FROM INVESTING ACTIVITIES
    (3,554 )     -  
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
Proceeds from issuance of common stock, net
    -       401,959  
Proceeds from stockholder loans
    37,000       73,852  
Payment on note payable
    -       (267,852 )
                 
NET CASH FROM FINANCING ACTIVITIES
    37,000       207,959  
                 
NET INCREASE (DECREASE) IN CASH
    (8,058 )     27,886  
                 
CASH AT BEGINNING OF PERIOD
    9,768       1,384  
                 
CASH AT END OF PERIOD
  $ 1,710     $ 29,270  
                 
NON-CASH INVESTING AND FINANCING ACTIVITIES:
               
Stock issued for accrued legal services
  $ -     $ 40,526  
Accrual of preferred stock dividends
  $ 3,200     $ 3,200  
 
The accompanying notes are an integral part of these condensed consolidated financial statements.


P RO TON LABORATORIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


NOTE 1 - BASIS OF PRESENTATION AND NATURE OF OPERATIONS

BASIS  OF PRESENTATION - The condensed consolidated financial statements include the  accounts  of  Proton  Laboratories,  Inc.,  and its wholly owned subsidiary ("Proton"  or  the  "Company").  All  significant  intercompany transactions and balances  have  been  eliminated  in  consolidation.

In April 2004, the Company changed its name from BentleyCapitalCorp.com, Inc. to Proton  Laboratories,  Inc.  The Company's subsidiary also changed its name from Proton  Laboratories,  Inc.  to  Water  Science,  Inc.

CONDENSED   FINANCIAL   STATEMENTS   -   The   accompanying   unaudited   condensed consolidated   financial   statements are condensed and, therefore, do not include all disclosures normally required by accounting principles generally accepted in the   United   States   of America.   These statements should be read in conjunction with   the   Company's   annual   financial   statements   included   in   the Company's December   31,   2006   Annual Report on Form 10-KSB.   In particular, the Company's significant   accounting   principles were presented as Note 1 to the consolidated financial   statements   in   that   report.   In   the   opinion   of   management,   all adjustments   necessary   for   a   fair   presentation   have   been   included   in the accompanying   condensed   consolidated   financial   statements and consist of only normal   recurring   adjustments.   The   results   of   operations   presented   in the accompanying   condensed   consolidated   financial   statements   for the six months ended   June   30,   2007 are not necessarily indicative of the results that may be expected   for   the   full   year   ending   December   31,   2007.

NATURE   OF   OPERATIONS   -   The   Company's   operations   are   located   in Alameda, California.   The   core   business   of   the   Company   consists   of   the   sales and marketing   of   the   Company's   industrial, environmental and residential systems throughout   the   United States of America which alter the properties of water to produce   functional   water. The Company acts as an exclusive importer and master distributor   of   these   products to various companies. Additionally, the Company formulates intellectual properties under licensing agreements, supplies consumer products,   consults   on projects utilizing functional water, facilitates between manufacturer   and   industry   and acts as educators on the benefits of functional water.
 
USE   OF   ESTIMATES     - The preparation of financial statements in conformity with accounting   principles   generally   accepted   in   the   United   States   of America requires   management   to make estimates and assumptions that affect the reported amounts   of   assets   and   liabilities,   disclosure   of   contingent   assets   and liabilities   and   the   reported   amounts   of   revenues   and   expenses during the reporting   period.   Actual   results   could   differ   from   those   estimates.
 
BASIC  AND  DILUTED  LOSS  PER  COMMON  SHARE  -  Basic loss per common share is calculated  by dividing net loss by the weighted-average number of common shares outstanding. Diluted loss per common share is calculated by dividing net loss by the  weighted-average number of Series A convertible preferred shares and common shares  outstanding  to give effect to potentially issuable common shares except during  loss  periods  when those potentially issuable shares are anti-dilutive. Potential  common shares from convertible preferred stock have not been included as  they  are  anti-dilutive.


PROTON LABORATORIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


NOTE  2  -  BUSINESS  CONDITION

The   accompanying   consolidated   financial   statements   have   been   prepared   in conformity with accounting principles generally accepted in the United States of America,   which   contemplate continuation of the Company as a going concern. The company   has incurred losses applicable to common shareholders of $1,704,860 for the   six months ended June 30, 2007. For June 30, 2007 and December 31, 2006 the Company   had   working   capital   deficits of $431,318 and $251,472, respectively. Loans   and   equity   funding   were   required   to   fund   operations.

The   Company   is   working   towards raising additional public funds to expand its marketing   and revenues.   The Company has spent considerable time in contracting with   several   major   overseas   corporations   for the co-development of enhanced antioxidant   beverages for distribution into the overseas markets.   In addition, the   Company   is   working   with   its   Canadian   business   associates to identify institutional   businesses to market various disinfection applications based upon functional   water,   pending   government   approval.

On   February   20, 2007, the Board of Directors of Proton Laboratories, Inc. (the "Company")   ratified   an   exclusive   Marketing, Distribution and Sales Agreement ("Marketing   Agreement")   and   a   Manufacturing   and   Packaging   Agreement ("Manufacturing   Agreement"),   each   made   with   Aqua   Thirst,   Inc. Through the enactment   of   these   agreements,   the   Company has been able to acquire what is views   as   key   components   necessary   to   strengthen its infrastructure for the manufacturing,   marketing   and   sales   of   its   products   and   applications.

The   Company's   ability   to   continue   as   a going concern is dependent upon its ability   to   generate   sufficient cash flows to meet its obligations on a timely basis,   to   obtain   additional   financing   as may be required, and ultimately to attain   profitable   operations.   However,   there is no assurance that profitable operations   or   sufficient   cash   flows   will   occur   in   the   future.

NOTE  3  -  RELATED  PARTY  TRANSACTIONS

Stockholder  loans  as  of  June  30,  2007 and December 31, 2006 consist of the following:

   
2007
   
2006
 
             
Note payable to CEO and majority shareholder; principal and interest due December 2009; interest is accrued at 7% per annum; unsecured.
  $ 287,642     $ 270,642  
                 
Note payable to shareholder; principal and interest due December 2009; interest is accrued at 7% per annum; unsecured.
    20,000       -  
                 
TOTAL STOCKHOLDER LOAN
    307,642       270,642  
                 
Less: Current Portion
    -       -  
                 
TOTAL STOCKHOLDER LOAN - LONG TERM
  $ 307,642     $ 270,642  

During the six months ended June 30, 2007, two shareholders advanced the Company $37,000.  The  Company  did not make any payments on notes during the six months ended  June  30,  2007.

At June 30, 2007, the Company had accrued interest relating to shareholder loans of $62,321.


PROTON LABORATORIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

During  the  six  months  ended  June  30,  2007, the Company accrued $30,000 as salaries payable to the company's CEO, resulting in $225,091 of salaries payable at  June  30,  2007.

NOTE  4  -  COMMON  STOCK

During  January  through  June  30,  2007 the Company issued 4,812,300 shares of common  stock  for  various services and agreements. The value of the shares was $1,470,551  based  on  market prices ranging from $0.30 to $0.37 per share which was  the  market  price of the Company's common stock on the dates of issuances.

NOTE  5  -  COMMITMENTS

PRODUCTION  AGREEMENT - In June 2005, the Company entered into an agreement with Mitachi, a Japanese electronics component manufacturer, to aid in the production of  enhanced  drinking  water  generators.  Pursuant  to this agreement, Mitachi agreed  to  pay  the  Company  25,000,000  Yen  for engineering design, molding, tooling and preparation costs, and the exclusive product distribution rights for China,  Taiwan, and Japan.  As of June 30, 2007, Mitachi had paid 6,000,000 Yen, or  $52,506,  for the above mentioned distribution rights.  Since the project is not  yet  completed  and  no  units have been sold, this amount is classified as deferred  revenue.

EQUITY  LINE  -  In  June  2007, the Company terminated an equity line of credit agreement  with  a  private  investment  fund.  No funds were drawn down on this equity  line,  and  no  shares  of  stock  were  sold  to  the  investment fund.

NOTE  6  -  SUBSEQUENT  EVENTS

On July 1, 2007, the Company entered into a lease agreement to pay monthly lease payments of $3,852 until June 30, 2008 and $3,966 from July 1, 2009 through June 30,  2009.

Future  minimum  lease payments under operating lease obligations as of June 30, 2007  were  as  follows:
 
Year Ending December 31,

2007
  $ 23,109  
2008
    46,903  
2009
    23,794  
Total
  $ 93,806  

During  July 2007, the Company entered into an agreement with Legacy Media, LLC in connection with the agreement Legacy Media, LLC has been granted 2.6 million shares of the Company's restricted common stock to provide investor relations  services.  Legacy  Media, LLC has also been issued a convertible note  by  the Company in the amount of $250,000 repayable at 8% interest by January  2007. If payment is not received by the due date Legacy Media, LLC has  the option to convert this note into restricted voting common stock of the  Company,  at  the  lesser  of  (i) 50% of the lowest closing bid price during  15 days prior to conversion or (ii) 100% of the average of the five lowest  closing  bid  prices  for 30 Trading Days immediately following any reverse  split in the stock price. All of Legacy Media, LLC's shares may be registered  in  an  SB-2  filing  at  its  request.


I TE M  2.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATION

FORWARD-LOOKING  STATEMENT

Certain   statements   contained   herein,   including,   without   limitation, statements containing the words, "believes," "anticipates," "expects," and other words   of   similar   meaning,   constitute "forward-looking statements" within the meaning   of   Section   27A of the Securities Act of 1933, as amended, and Section 21E   of   the   Securities   Exchange Act of 1934, as amended. Such forward-looking statements   involve   known   and   unknown   risks, uncertainties and other factors which   may   cause   our   actual   results,   performance   or   achievements,   to   be materially   different   from   any   future   results,   performance, or achievements expressed   or   implied   by   such   forward-looking   statements.   Given   these uncertainties,   readers   are   cautioned   not   to   place   undue   reliance on such forward-looking   statements.   In   addition   to   the   forward-looking   statements contained   herein,   the following forward-looking factors could cause our future results   to   differ   materially   our   forward-looking   statements:   competition, funding,   government   compliance   and   market   acceptance   of   our   products.
 
INTRODUCTION
The   following discussion and analysis of our financial condition and results of operations   should   be read in conjunction with our audited financial statements and   the   accompanying   notes thereto for the year ended December 31, 2006 which appear   in   our Form 10-KSB for the year then ended, and our unaudited financial statements for the three and six months ended June 30, 2007 and the accompanying notes   thereto   and   the other financial information appearing elsewhere herein.

The   accompanying   consolidated   financial   statements   have   been   prepared   in conformity   with   accounting   principles   generally   accepted   in the USA, which contemplates   our   continuation   as   a   going   concern.   We have incurred losses applicable   to   common   shareholders of $1,704,860 for the six months ended June 30, 2007. We had working capital deficit of $431,318 at June 30, 2007. Loans and equity   funding   were   required   to   fund   operations.   We   had   a   stockholder deficit   of   $546,426   at June 30,2007 and a stockholders deficit of $312,118 at December   31,   2006.
 

Our  independent  auditors  made  a  going concern qualification in their report dated  April  13,  2007,  which  raises  substantial  doubt about our ability to continue  as  a  going  concern.  The  financial  statements  do not include any adjustments  relating to the recoverability and classification of recorded asset amounts  or  amounts  and  classification of liabilities that might be necessary should  the  Company be unable to continue in existence. Our ability to continue as  a  going  concern  is dependent upon our ability to generate sufficient cash flows  to meet our obligations on a timely basis, to obtain additional financing as  may  be  required,  and ultimately to attain profitable operations. However, there  is  no assurance that profitable operations or sufficient cash flows will occur  in the future. We have our primary office located in Alameda, California. During  2006 we created a presence in Quincy, Washington and Portland, Oregon by aligning  ourselves  with  office  spaces  that were made available to us. These offices  are  used  primarily  for  marketing  and  sales  generation.

Our business consists of the development, marketing and sales of the industrial, environmental, and residential systems through the United States which alter the properties  of  water  to produce functional water. During 2006, we continued to import  and  resell systems manufactured by various Japanese companies; however, during  the  same  time  period  the  company started design, engineering, parts sourcing  and  assembly  identification  for  developing  its  own brand labeled products.  In  Management's  view,  the  company  has  successfully  designed, engineered  and  developed  five commercial systems and one residential unit. We need  to  raise  more funds to bring our residential counter top unit to market, and  there  is  no assurance that such funds can be raised. The Company believes the food safety commercial unit will be ready for market introduction during the third  quarter  of  2007,following  certification by an independent underwriters laboratory.  We  are  prioritizing  the  marketing  and distribution of our food safety  commercial  unit which can also have applications in the medical, dental and  sports  facility  industries.

We formulate intellectual properties under licensing agreements; supply consumer products; consult on projects utilizing functional water; facilitate usage, uses and  users  of  functional  water  between manufacturer and industry; and act as educators  on the benefits of functional water. Our business has been focused on marketing  functional  water  equipment  and  systems.  Alkaline-concentrated functional  water  may  have  health-beneficial  properties  and may be used for drinking  and cooking purposes. Acidic-concentrated functional water may be used as  a  topical,  astringent  medium.

In February, 2007, the Company entered into an exclusive Marketing, Distribution and   Sales   Agreement   and   a   Manufacturing   and   Packaging Agreement with Aqua Thirst,   Inc.   These   agreements   effectively provide that the Company will have access   to   Aquathirst's   product   distribution   channels   in   domestic   and international   markets.   These   distribution   channels   will   cover residential, cosmetic,   medical,   agricultural,   food   processing and consumer product areas.
 
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles.


The  preparation of these financial statements requires us to make estimates and judgments  that  affect the reported amounts of assets, liabilities, revenue and expenses,  and  related  disclosure  of contingent assets and liabilities. On an ongoing  basis,  we  evaluate our estimates. We base our estimates on historical experience  and  on various other assumptions that are believed to be reasonable under  the circumstances. These estimates and assumptions provide a basis for us to  make  judgments about the carrying values of assets and liabilities that are not  readily  apparent  from  other  sources. Our actual results may differ from these estimates under different assumptions or conditions, and these differences may  be  material.

We  recognize  revenue  when  all  four  of  the following criteria are met: (i) persuasive  evidence  that  an arrangement exists; (ii) delivery of the products and/or  services  has  occurred;  (iii)  the  selling  price  is  both fixed and determinable  and;  (iv)  collectibility  is  reasonably  probable.

Our  revenues  are  derived  from  sales  of  our  industrial, environmental and residential  systems,  which alter the properties of water to produce functional water.  We  believe  that  this  critical  accounting  policy  affects  our more significant  judgments and estimates used in the preparation of our consolidated financial  statements.

Our fiscal year end is December 31.

At  June  30,  2007,  we  had  accrued interest relating to shareholder loans of $62,321  and  outstanding principal due to shareholder loans of $307,642. During the six months ended June 30, 2007 we accrued $30,000 as salaries payable to our CEO,  resulting  in  $225,091  of  salaries  payable  at  June  30,  2007.

RESULTS OF OPERATIONS-Six Months ended June 30, 2007 and 2006.

We  had  revenue  of  $79,039 for the six months ended June 30, 2007 compared to revenue  of  $84,561  for  the six months ended June 30, 2006. During the period that  the  company is developing its new line of products, the revenue base will remain  fairly  consistent.

We  incurred a net loss of $1,701,660 for the six months ended June 30, 2007 and a  net  loss  of  $270,540  for  the six months ended June 30, 2006. This was an increase  in  net  loss attributable to in-kind consultant compensation expenses incurred  in  the  sourcing of manufacturing, marketing and sales infrastructure necessary  for  the  company.

Cash  used by operating activities was $41,504 for the six months ended June 30, 2007  compared  to  cash  used  by  operating activities of $180,073 for the six months  ended  June  30,  2006.

We  had  total  assets  at  June  30,  2007 of $295,368, compared to $364,423 at December 31, 2006. During the period that the company is developing its new line of  products,  the  total  asset  base  will  remain  fairly  consistent.

LIQUIDITY  At  June  30,  2007,  we  had  cash  on hand of $1,710. Our growth is dependent  on  our  attaining  profit  from  our  operations  and our raising of additional capital either through the sale of stock or borrowing funds. There is no  assurance  that we will be able to raise any equity financing or sell any of our  products  to  generate  a  profit.

 
At  June  30,  2007,  we  owed  stockholder loans of $307,642. In March 2007, we entered  into  an  equity line of credit with a private investor. As of June 30, 2007  we  terminated  this  equity  line  without  draw  down.

FUTURE CAPITAL REQUIREMENTS
Our  growth is dependent on attaining profit from our operations, or our raising additional  capital  either  through the sale of stock or borrowing. There is no assurance  that we will be able to raise any equity financing or sell any of our products  at  a  profit.
 
Our future capital requirements will depend upon many factors, including:
- The cost to acquire equipment that we then would resell.
- The cost of sales and marketing.
- The rate at which we expand our operations.
- The results of our consulting business.
- The  response  of  competitors.

I te m  3.  Controls  and  Procedures

a)    Evaluation of disclosure controls and procedures.

Based on their evaluation of our disclosure controls and procedures (as defined in Rule 13a-15e under the Securities Exchange Act of 1934), our principal executive officer and principal financial officer have concluded that as of the end of the period covered by this quarterly report on Form 10-QSB such disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, because of certain adjustments required by our auditors in the area of equity.
 
In connection with its review of the Company's consolidated financial statements for the quarter ended September 30, 2007, Hansen, Barnett & Maxwell ("HB&M"), the Company's registered public accounting firm, advised the Audit Committee and management of internal control matters with respect to certain financial reporting controls that they considered to be a material weakness, which is described below. A material weakness is a control deficiency, or a combination of control deficiencies, that results in there being more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. The material weakness identified at September 30, 2007 was as follows:

A material weakness existed in our control environment relating to inadequate staffing of our technical accounting function, including a lack of sufficient personnel with skills, training and familiarity with certain complex technical accounting pronouncements that have or may affect our financial statements and disclosures.

In response to the observations made by HB&M, we are in the process of implementing enhancements to our internal controls, accounting staff and procedures, which we believe address the matters raised by HB&M, including the retaining of additional outside consultants and employees who will have the skills, training and familiarity with certain complex technical accounting pronouncements appropriate to preparing our financial statements and disclosures.
 
We are in the process of improving our internal controls in an effort to remediate these deficiencies. Our Chief Financial Officer has implemented revisions and instituted certain checks and balances to our accounting system. Additionally, he has addressed tighter controls over all aspects of financial revenue and expense recognition, as well as improving supervision and training of our accounting staff. We are continuing our efforts to enhance, improve and strengthen our control processes and procedures. Our management and directors will continue to work with our auditors and other outside advisors to ensure that our controls and procedures are adequate and effective.

(b)   Changes in internal control over financial reporting.

During the quarter under report, our Chief Financial Officer has implemented revisions and instituted certain checks and balances to our accounting system. Additionally, he continues to address tighter controls over all aspects of financial revenue and expense recognition, as well as improving supervision and training of our accounting staff.

The evaluation of our disclosure controls included a review of whether there were any significant deficiencies in the design or operation of such controls and procedures, material weaknesses in such controls and procedures, any corrective actions taken with regard to such deficiencies and weaknesses and any fraud involving management or other employees with a significant role in such controls and procedures.


P AR T  II  -OTHER  INFORMATION

I TE M  1.   LEGAL  PROCEEDINGS

None.

I TE M  2.  CHANGES  IN  SECURITIES.

No securities were issued for the quarter ended June 30,2007.

Subsequent to June 30, 2007,during July 2007, the Company entered into an agreement with Legacy Media, LLC in connection with the agreement Legacy Media, LLC has been granted 2.6 million shares of the Company's restricted common stock to provide investor relations services. Legacy Media, LLC has also been issued a convertible note by the Company in the amount of $250,000 repayable at 8% interest by January 2008. If payment is not received by the due date Legacy Media, LLC has the option to convert this note into restricted voting common stock of the Company, at the lesser of (i) 50% of the lowest closing bid price during 15 days prior to conversion or (ii) 100% of the average of the five lowest closing bid prices for 30 Trading Days immediately following any reverse split in the common stock. All of Legacy Media, LLC's shares may be registered in an SB-2 filing at its request.

These securities were issued in private transactions, in reliance on the exemption available under Section 4(2) of the 1933 Act.

I TE M 3. DEFAULTS UPON SENIOR SECURITIES

NONE.

I TE M 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the quarter ended June, 30, 2007.

Pursuant   to   Section   RCW   23B.07.040   (b) of the Revised Code of Washington, a majority   of   the   shareholders   of   Proton   Laboratories,   Inc   .acting   by   a Shareholder   Consent   in   Lieu   of   Annual Meeting have appointed a new Board of Directors   as follows: Edward Alexander, Don Gallego, Gregory Darragh, Jed A. Astin, Ga ry Taylor and Steven Perry. Mr. Miceal Ledwith   has stepped down from the Board following   good   service.   The   majority   shareholders   also   consented   to   the amendment   of   the   articles   of   incorporation   to increase the number of Board Members   to   nine.   They   have   also consented to the appointment of Dr. Kochiki Hanoaka   to   the Board as soon as the amendment has been properly filed with the state   of   Washington.

The effective date of the consent is June 6, 2007. Majority shareholder consents were received as of July 27, 2007. The total number of shareholder votes in favor of the consent was 16,279,308. Proton's total outstanding number of shares on the effective date of the consent was 29,185,673. A 14-C Statement will be filed with the Commission promptly.
 
I TE M  5.  OTHER  INFORMATION

N/A

I TE M  6.  EXHIBITS  AND  REPORTS  ON  FORM  8-K

Exhibit 31.1  Certification

Exhibit 31.2  Certification

Exhibit 32.1  Certification

Exhibit 32.2  Certification


S IG NATURES

     In  accordance  with  the  requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


 
PROTON LABORATORIES, INC.
   
Date:  January 4, 2008
By:  /s/ Edward Alexander
   
 
EDWARD ALEXANDER
 
Chief Executive Officer, President,
 
Principal Accounting officer and
 
Chief Financial Officer

 
 
Exhibit 31.1
 
I, Edward Alexander that:
 
 
I have reviewed this Form 10-QSB Amendment Number 1 of Proton Laboratories, Inc.;
 
 
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
 
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
 
 
The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:
 
 
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
 
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
 
 
Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
 
 
The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):
 
 
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
 
 
Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

January 4, 2008
By:  /s/ Edward Alexander
 
EDWARD ALEXANDER
 
Chief Executive Officer and President
 
 
Exhibit 31.2
 
I, Edward Alexander that:
 
 
1.
I have reviewed this Form 10-QSB Amendment Number 1 of Proton Laboratories, Inc.;
 
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
 
 
4.
The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:
 
 
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
 
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
 
 
c.
Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
d.
Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
 
 
5.
The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):
 
 
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
 
 
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

January 4, 2008
By:  /s/ Edward Alexander
 
EDWARD ALEXANDER
 
Principal Accounting officer and
 
Chief Financial Officer
 
 
EXHIBIT 32.1

CERTIFICATION PURSUANT TO SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE as adopted pursuant to SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     I,  Edward  Alexander,  the chief executive officer and chief financial officer of  Proton  Laboratories,  Inc.  , certify that (i) the Quarterly Report on Form 10-QSB Amendment Number 1 for the quarter ended March 31, 2007, as filed by the Company with the Securities  and  Exchange Commission, to which this Certification is an Exhibit, fully complies with the requirements of Section 13(a) of the Securities Exchange Act  of  1934, as amended; and (ii) the information contained in the Form 10-QSB financial  statements  fairly  presents, in all material respects, the financial condition  and  results  of  operations  of  Proton  Laboratories,  Inc.

January 4, 2008
By:  /s/ Edward Alexander
 
EDWARD ALEXANDER
 
Chief Executive Officer and President


This  certification  accompanies  this  Report  pursuant  to  Section 906 of the Sarbanes-Oxley  Act  of  2002  and  shall not be deemed filed by the Company for purposes  of  Section  18  of  the  Securities Exchange Act of 1934, as amended.

A  signed  original  of  this written statement required by Section 906 has been provided  to  Proton  Laboratories,  Inc.  and  will  be  retained  by  Proton Laboratories,  Inc.  and  furnished to the Securities and Exchange Commission or its  staff  upon  request.
 
 
EXHIBIT 32.2


CERTIFICATION PURSUANT TO SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE as adopted pursuant to SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


     I,  Edward  Alexander,  the chief executive officer and chief financial officer of  Proton  Laboratories,  Inc.  , certify that (i) the Quarterly Report on Form 10-QSB Amendment Number 1 for the quarter ended March 31, 2007, as filed by the Company with the Securities  and  Exchange Commission, to which this Certification is an Exhibit, fully complies with the requirements of Section 13(a) of the Securities Exchange Act  of  1934, as amended; and (ii) the information contained in the Form 10-QSB financial  statements  fairly  presents, in all material respects, the financial condition  and  results  of  operations  of  Proton  Laboratories,  Inc.


January 4, 2008
By:  /s/ Edward Alexander
 
EDWARD ALEXANDER
 
Principal Accounting officer and Chief Financial Officer
 

This  certification  accompanies  this  Report  pursuant  to  Section 906 of the Sarbanes-Oxley  Act  of  2002  and  shall not be deemed filed by the Company for purposes  of  Section  18  of  the  Securities Exchange Act of 1934, as amended.

A  signed  original  of  this written statement required by Section 906 has been provided  to  Proton  Laboratories,  Inc.  and  will  be  retained  by  Proton Laboratories,  Inc.  and  furnished to the Securities and Exchange Commission or its  staff  upon  request.