News From the Chairman: Vol. 2, Issue 1: February 2005

With the holidays over and another year passed, we’re pleased to have not only an opportunity to review all that the company has achieved in 2004, but also take a look ahead to the next 365 days and how we intend to use those 8,760 hours on your behalf. We are as optimistic about the coming year as we were at the beginning of 2004, and given the enormous success the company has experienced in the last twelve months, I believe e-Smart is well on its way to becoming a household name and the world leader in biometric Smart Cards.

We began 2004 with great expectations and the dedicated e-Smart team, with what can only be described as a dizzying schedule, far exceeded our goals. Throughout the world, government and private industry leaders recognize e-Smart’s extraordinary Biometric Verification Security System™ (“BVS2™”) featuring e-Smart’s “Super Smart Card™” as the most advanced secure and privacy protected Smart Card and system available and have chosen it above others offered by some of the world’s largest IT companies as the solution to the growing number of national security and financial security concerns. Furthermore, e-Smart’s Super Smart Passport™ is quickly becoming the security solution to protecting against terrorists, insurgents and criminals crossing borders. The proof of this success is found in the following list of the many major announcements, partnerships and agreements the company finalized in 2004 (more detailed information may be found at other locations on this website.

*MARCH – e-Smart, through its wholly owned subsidiary e-Smart Korea, entered into a “Mutual Cooperation Agreement” with Daewoo International Corporation, a leading global corporation specializing in international trade; infrastructure, resource and project development; and information technology solutions. e-Smart with Daewoo have finalized and are finalizing agreements for government ID & payment/bank cards & passports and are marketing e-Smart’s advanced technology in over 20 countries around the world.

*MARCH – e-Smart, through its wholly owned subsidiary e-Smart Korea, entered into a “Master Teaming Agreement” with Samsung SDS Co., Ltd., a leading global IT solutions provider in Korea (six projects have been identified – see below for details of projects signed).

*APRIL – e-Smart and its affiliate, Homeland Defense, Inc., announced what they believe to be the world’s first market-ready “e-Passport” or Super Smart Passport™ that authenticates its holder’s identity via its own on-board fingerprint sensor and on-board biometric matching system both powered wirelessly without the need for any physical connection for power. (A wireless passport that will allow verification of car/motorcycle/vehicle passengers identity while traveling 40+ miles per hour, at a distance of 30+ meters from security checkpoints at borders, high security installations and government buildings, etc).

*APRIL – e-Smart demonstrated the latest version of the Super Smart Card™ and introduced and demonstrated the revolutionary new Super Smart Passport™ to industry leaders at the CardTech-SecureTech Trade Show in Washington, D.C.

*MAY – e-Smart through its wholly owned subsidiary e-Smart Korea entered into a “Framework Agreement” with the Republic of Kyrgyzstan for the provision and operation of the country’s e-Government and National ID Card and bank payment card initiatives using e-Smart’s Super Smart Card™ and Biometric Verification Security System™ platform.

*MAY – e-Smart enters into a “Cooperation Agreement” with China’s Ministry of Information Industry owned subsidiary to establish a Sino-foreign cooperative joint venture in Beijing, China for the purpose of operating a value-added network or networks that allow for the nationwide roaming and operation of e-Smart’s biometrically powered multi-application, secure national ID & payment smart cards.

*JUNE – e-Smart, through its wholly owned subsidiary e-Smart Korea and Samsung SDS, in association with Korean Company, Kobile Co., Ltd., entered into a “Student Management Card Project.” The project will provide secure ID and payment cards for middle school, high school and university students in Korea. Samsung projects the Cooperation Agreement to have a total revenue potential during its first six years (through 2011) of in excess of the equivalent of US$617,000,000.

*SEPTEMBER – e-Smart, with its partner Daewoo International Corporation entered into an agreement with the Republic of Uzbekistan for the development and introduction of e-Smart’s Super Smart Card™ and Biometric Verification Security System™ platform for the government ID and bank payment card, with the goal of eliminating ID and payment fraud, black market and counterfeited currency and money laundering, and further provide physical and financial security and stimulate economic growth.

*NOVEMBER – e-Smart entered into a Cooperation Agreement and an Agreement to Form Joint Venture with PT Primrose Gantari Indonesia, whose principals were involved in the management of the Indonesia Bank Restructuring Agency (IBRA), the Indonesian government agency, which most recently restructured the Indonesian banks and government controlled property and assets. e-Smart will work with Primrose to provide e-Smart’s biometric systems for payment processing services in banking institutions and other corporate and government entities in Indonesia.

*DECEMBER – e-Smart, through its wholly owned subsidiary e-Smart Korea, its partner Samsung SDS and Mybi Co., Ltd., the largest public transportation system and e-Currency infrastructure provider in Korea, entered into an agreement to distribute a multi-application e-Currency biometric smartcard. The new card will integrate Mybi’s e-Currency product into e-Smart’s Super Smart Card ™ to be used as a digital city (ID) card, payment in mass transportation, banking transactions and for other multiple and diverse financial transactions.
The above, when brought to fruition, will represent the largest number of advanced biometric cards and passports in use in the world.

At the same time, although it may appear that the U.S. has yet to embrace the extraordinary benefits of our revolutionary technology, the e-Smart marketing team continues in discussions with agencies of the federal government and it is our intent to do everything possible in the coming months to bring our advanced biometric system to the attention of the appropriate policy makers in Washington. We remain confidant that those charged with protecting the safety and security of America will acknowledge and take advantage of what so many other nations have come to believe is the superiority of the e-Smart Super Smart Card™ and Super Smart Passport™.

And, in an effort to inform the public about how our Super Smart Card™ and Super Smart Passport™ will satisfy their safety and security concerns without an invasion of privacy, I have been a guest on several national radio shows, including The Gordon Liddy Show, The Power Hour and The George Putnam Show. Selected portions of each of these shows can be found elsewhere on the company’s website. And, as my schedule allows, I am eager to have the opportunity, through radio and other media outlets, to get the word out about our revolutionary biometric technology.

As you can see, it has been an extraordinarily successful year and it is our sincere hope that you, our shareholders, are pleased with the results. But we believe this is just the tip of the iceberg and that in 2005 the company will enjoy even greater successes. We consider it a great blessing that there have been no major terrorist attacks, but the world still is hostage to those who would do harm. It is our resolve to continue our efforts to bring our technology to the world, which will provide the kind of safety and security that is so desperately needed to protect against both terrorist and criminals who perpetrate both physical and economic terrorism upon governments, financial institutions and individuals which threatens the security and economy of our country and other countries around the world. It is with great enthusiasm that we move into the coming year, and with sincere gratitude that e-Smart has been chosen as the citadel of safety and security in so many countries around the world.

May God Bless You, all of our shareholders, our company, our country and the world with peace and prosperity in the New Year!