Dear Shareholders,

I know that you have been eager to obtain updated information about the company’s activities. I am pleased to report that due to an enormous amount of hard work and dedication our progress is substantial.

A number of important agreements have been signed, strategic partnerships made, and a new production, engineering lab facility has been opened. Our engineering staff has been expanded under the leadership of our CTO Tamio Saito, who also serves as the Company’s Senior Executive Vice President. New corporate divisions are being created for which experienced senior management positions are being recruited, all of which we believe will be help the Company achieve its goal of becoming the leader in its field.

We are currently working to finalize the long-term financing necessary to realize our goal of establishing a global ID and payment transaction network and we are working to roll out and implement our newest technology in Korea by end of this year and in the first part of the New Year. We also are working to expedite the manufacturing, installation and implementation of our contracts in Korea, while our great team of engineers, lead by our CTO Tamio Saito, continues inventing, developing and patenting new, more advanced, cutting edge technologies.

At the same time, we are currently taking the steps necessary to move from the Pink Sheets to the Bulletin Board and then prepare the Company to list on the NASDAQ.

And, as you also are aware, the United States Patent Office has granted e-Smart the patent for its “Secure Biometric Verification of Identity” #7,278,025 relating to the Super Smart Card™ with an “on-board sensor” and “on-board processor.” This is an important development and milestone for e-Smart, as the Company now has the highest level of protection from infringement and misappropriation of this unique technology. Much credit is due to our talented and dedicated team of engineers, who have never wavered from their commitment to creating this advanced, cutting edge technology. As many of you are aware from the company profiles listed on the website, Tamio Saito, our Chief Technical Officer, invented the first IC (Smart) card more than 30 years ago, and patented the first smart card with a biometric years before others in 1983. With the support of our loyal shareholders, he and his team of engineers has and continues to move the biometric card technology generations ahead today.

We can now implement the Company’s contracts and manufacturing of our state of the art technologies with patent protection and, more importantly, begin to generate the revenue we believe to be commensurate with the safety and security the Company’s advanced technology offers.

In this regard, in order to rapidly deploy our system worldwide, it was necessary to expand our research and development operations and to open a new Production & Engineering Center and Research and Development lab in South Korea, with an increased engineering staff. The new center will enable the Company to have an Asia-based Manufacturing, Delivery and Quality Control Division, along with a Network Division staffed by a team of network and processing engineers on-site. Our network engineers will be setting up the infrastructure and overseeing and implementing the Company’s ID and transaction network in Korea and later around the world.

Along with the new divisions in South Korea, the Company also intends to make significant changes in its U.S. operations, creating specialized divisions to better utilize the Company’s resources, necessary to meet the demands of a very busy worldwide manufacturing, delivery and implementation process. To tackle this ambitious schedule we are in the process of creating four new divisions: Executive Management Division, Network Division, Research and Development Division and a Manufacturing, Delivery and Quality Control Division, for which we are currently searching to recruit top management candidates. Announcements will be made and posted on the website when these executive positions are filled.

We are scheduling a shareholders meeting before the end of the year in order to inform you of all that has and is taking place with the Company. Shareholders will be notified of the date as soon as it is finalized. Because of the holidays, knowing it would be difficult for everyone to attend, the meeting will be telephonic so that shareholders who wish can participate. I look forward to presenting much to you at this meeting as we close out the year. For 2008 we are planning a shareholders meeting in April or May, at Mt. Vernon, the home of our first president, and I look forward to meeting all who make up our wonderful e-Smart Family.

It is an exciting time for all of us at e-Smart who are working to bring this extraordinary technology to the world and I know that all of you take pride in being part of what we believe will be a world-changing technology. This is a competitive business, where smaller companies are often unable to compete with the corporate giants. But thanks to you, our shareholders, we believe we will exceed our own expectations. Thank you for your continued belief and support. Our foremost goal is to produce financial rewards for you all and to realize our vision - to create a safer and more secure world, and as a result, hopefully a more peaceful world for all.