Bill Gates, founder of Microsoft, recently was quoted in PC Week saying “Biometrics technologies – those that use human characteristics such as fingerprint, voice or face recognition – will be the most important IT innovations of the next several years.” “Passwords,” Gates said “will soon be a thing of the past, replaced by biometric and smart-card technology.”

We at e-Smart couldn’t agree more with Mr. Gates’ assessment of the future of biometrics and smart cards and have known that the move in this direction was the natural transition on a number of levels and applications, including the safety and security of nations, ourselves, our families, our financial transactions, business and personal information, our computers and our privacy. During our travels around the world it has become abundantly clear that every nation is searching for effective, efficient, safe and secure alternatives to current technologies. It has been our pleasure to speak about and demonstrate the enormous advantages of our advanced biometric technologies, including our Super Smart Card™ and Super Smart Passport™ and I am happy to have an opportunity to share the company’s progress with you.

First, though, earlier in the year, I announced that due to the speed in which the number of contracts and agreements were being signed that my monthly communications would end and I would be providing quarterly updates. I have heard from many of you inquiring about the status of the April newsletter. I am happy to report that the decision to hold the April Chairman’s newsletter was made in order to provide our shareholders with the most up-to-date information about the company’s progress in Asia and specifically our projects unfolding in China and Singapore. While it is the company’s intent to stick to a schedule on the newsletters, special circumstances may arise where we choose to hold them and, conversely, we may put out special unannounced newsletters when there is important information we believe the shareholders should know.

The good news we received in China is such a case of information that we believed should be part of the newsletter. As you know, we announced in March of 2004 that we signed a “Cooperation Agreement” with China’s Ministry of Information Industry (“MII”) owned corporation, Guoxin Wel TeleCom, to establish a joint venture in Beijing, China. While in China to address two important conferences on the future of biometric technology in China, we were pleased that the Chinese Government approved and issued a license for our new joint venture company, Guoxin-e-Smart Beijing Technology Co. Ltd. Guoxin stands for Ministry of Information Industry. Guoxin, with the Ministry of Information Industry, is a powerful partner in China and is charged with approving and setting standards for technologies, equipment, etc,. for China. Guoxin has worked hard in the past year to prioritize and line up important projects in China ready for implementation, which, now that our Joint Venture has been approved by the government and the license for our Joint Venture Company has been issued, we are ready to begin. We plan to move forward with our China partners immediately to market our advanced technologies to the giant burgeoning market in China.

Another exciting news item, as most of you are aware from the press release, is our recently signed “Teaming Agreement” with SES Systems, Pte Ltd., a wholly owned subsidiary of Singapore Technologies Electronics Limited (ST Electronics), one of the Temasek Holdings companies which falls under the umbrella of the Singapore Government. Temasek manages an estimated $90 billion in holdings and its portfolio includes holdings in Singapore, Asia and around the world . In Asia, SES is a leader in systems integration with a focus on Homeland Security systems, defense applications and enterprise solutions. The Agreement calls for e-Smart and SES to identify and cooperate on projects on an international basis. Already we are in discussions for projects in Singapore and a number of other countries, which we will jointly visit in the next few weeks to assess the projects we look forward to implementing with our SES partners.

As a follow up to “old” business, because of the recent events that have occurred in Kyrgyzstan, a number of the company’s shareholders have inquired about the status of the “Framework Agreement” we signed last April. As you may recall, it is our goal to provide the platform for the e-government, ID and bank payment card for Kyrgyzstan. While there are changes in the government, it is our belief that our technology is needed now more than. The company has been told that the new government will honor all agreements made by the previous administration, and we hope this will be the case. I will keep you updated on the status of this project as information becomes available.

During the last few months I have been invited to speak at a number of conferences around the world where I’ve had the opportunity to highlight the unique capabilities of our Super Smart Card™, Super Smart Passport™ and BVS2™ operating system. Specifically, I was honored to have been a featured speaker at both the 7th Smart Cards + Smart Label, China & Users’ Conference (the premier Smart Card Conference in China) and also the China ePassport Forum. The ePassport Forum was a particularly significant event as we were presenting and demonstrating with our partners, Guoxin Wel TeleCom, the versatility of our Super Smart Card™ being used as a hybrid razor-thin passport. The conference afforded us the opportunity to officially debut our new China joint venture company, Guoxin-e-Smart, to government agencies and banks in China and those from other countries of Asia and around the world. CCTV and Beijing TV filmed both the speeches and our US/China/Korea team in the e-Smart exhibit booth. Our e-Smart Korea Team with our Mybi partners from Korea participated at the conference with our China partners and our partners from Daewoo International and Samsung attended, along with local Korean government dignitaries.

The same great team joined e-Smart in Singapore for the 10th Annual Card Asia Exhibition and Conference and also the Biometric World Annual Conference and Exhibition to display and demonstrate our advanced technologies at the e-Smart exhibit booth. Many of the world’s largest international companies participated in the two conferences and exhibitions, including Axalto, Infineon, Philips, IBM Global Services, Visa and Master Card International, among others. I was honored to address the 10th annual Card Asia Conference and Exhibition on ‘Financial Fraud Prevention and ID Management – How the Super Smart Card can Eliminate Identity Theft and Reduce Payment Fraud in the Banking World’ and I also addressed the Biometric World Annual Conference on ‘Integrating Biometrics with Smart Cards.’ I was also pleased and honored to be a member of a panel discussion addressing the “Best Practice Plan for Tomorrow’s Retail Bank – Can new technologies help to increase payment and transactions efficiency and reduce fraud?” The panel was moderated by David Belchick, Project Manager, E-authentication, US Department of the Interior, Office of the Chief Information Officer, and other attendees included Francis Hsu, Senior Vice President/Regional Head of Cards, United Overseas Bank, Singapore, Edwin Bautista, Executive Vice President, Retail Banking Head, Union Bank of the Philippines, Chongho Yoon, General Manager, e-Business, Kookmin Bank, Korea, David Hendrix, Executive Vice President, Retail Banking, Kasikornbank, Thailand.

As one can well imagine the invitations the company receives asking me speak at these prestigious biometric and smart card conferences and forums around the world provide e-Smart unprecedented visibility and access to private industry and government representatives, many of which will decide the standards that will be used in biometric smart cards in the future and, understandably, this important visibility is a great boost to the company.

From the exposure and demonstration of our technology for industry experts in attendance at each of these conferences, we are made ever more aware that e-Smart’s reputation continues to grow as a leader in on-card matching biometric smart card technology. In addition, because we with our partners have signed and are continuing to sign agreements to be the provider of smart card systems and technologies to countries that encompass nearly a third of the world’s population, this appears to be of great help in “branding” e-Smart’s name and products in these countries.

The e-Smart marketing team, including our wonderful partners in Asia, are doing a tremendous job marketing our extraordinary technology to the world and I believe that we will look back on this year as one of our most successful.

We are covering many countries around the world with our most important partners, who we greatly value, Daewoo International, Samsung SDS, MYbi, and now SES and our Indonesian partners Primrose Intl. and our China Partners, Guoxin. These partners have the expertise and capacity to market and carry out the simultaneous rollout and systems integration and implementation necessary on a national and a worldwide basis. This expertise enables us, together, to capture the market share in countries and the world, to establish nationwide Biometric Verification ID and Payment networks quickly and connect them into a global Biometric Verification ID and Payment network that will protect countries, their citizens around the globe and create a safer more secure world for us all. That is our vision. That is our goal.