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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-QSB
(Mark One)
[ X ] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended: June 30, 2004
[ ] Transition report under section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period
from____________________ to ______________________.
Commission File No: 000-30717
e-SMART TECHNOLOGIES, INC.
(Name of small business in its charter)
Nevada 88-0409261
(State or other jurisdiction of incorporation) (IRS Employer Id. No.)
7225 Bermuda Road, Suite C, Las Vegas, Nevada 89119
(Address of Principal Office including Zip Code)
Issuer's telephone Number: (702) 447- 5210
Check whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the 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 [ ]
State the number of shares outstanding of each of the issuer's classes
of common equity as of the latest practicable date:
Common Stock, par value $.001 per share, 173,042,610 shares at June 30, 2004.
Transitional Small Business Disclosure Format (Check one):Yes [ ] No [X]
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e-SMART TECHNOLOGIES, INC.
FORM 10-QSB QUARTERLY PERIOD ENDED JUNE 30, 2004
INDEX
Page
PART I FINANCIAL INFORMATION 2
Item 1. Financial Statements 2
Condensed Consolidated Balance Sheets at
June 30, 2004 and December 31, 2003 3
Condensed Consolidated Statements of Operations
for the Six Months and Three Months Ended
June 30, 2004 and 2003 4
Condensed Consolidated Statement of Shareholders'
Impairment for the Period January 1, 2003
through June 30, 2004 5
Condensed Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 2004 and 2003 6
Notes to the Condensed Consolidated Financial
Statements 7
Item 2. Management's Discussion and Analysis 9
Item 3. Controls and Procedures 12
PART II OTHER INFORMATION 12
Item 1. Legal Proceedings 12
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 14
EXHIBITS 15
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The unaudited condensed consolidated balance sheet of the Registrant at
June 30, 2004, the audited balance sheet at December 31, 2003, and the
unaudited condensed consolidated statements of operations, shareholders'
impairment, and cash flows for the three and six month periods ended
June 30, 2004 and June 30, 2003 follow. The unaudited condensed
consolidated financial statements reflect all adjustments that are, in
the opinion of management, necessary to a fair statement of the results
for the interim periods presented.
2
e-SMART TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
2004 2003
------------ ------------
ASSETS
Current assets -
Cash $ 8,005 $ 14,096
Due from Associated Business Group, Inc. -- 31,334
Prepaid expenses 59,635 --
------------ ------------
Total current assets 67,640 45,430
Super Smart Card tm Technology 109,006 109,310
System Development 136,000 --
Leasehold Improvements and Equipment 91,134 --
Due from Biosensor LLC 154,500 --
Deposit - e-Smart Korea -- 151,000
------------ ------------
Total assets $ 558,280 $ 305,740
============ ============
LIABILITIES AND SHARESHOLDES' IMPAIRMENT
Current liabilities -
Accounts payable $ 433,041 $ 397,081
Accrued expenses 157,594 38,853
Notes payable 80,000 80,000
Due to Associated Business Group, Inc. 12,427 --
------------ ------------
Total current liabilities 683,062 515,934
------------ ------------
6% Note Payable to Intermarket
Ventures, Inc. 300,000 --
------------ ------------
Shareholders' Impairment -
Common Stock, par value $.001 per share,
300,000,000 authorized, 173,042,610 and
170,707,012 issued and outstanding,
respectively 173,042 170,707
Additional paid in capital 60,767,183 59,497,446
Accumulated deficit (61,365,007) (59,878,347)
------------ ------------
Total shareholders' impairment (424,782) (210,194)
------------ ------------
Total liabilities and shareholders'
impairment $ 558,280 $ 305,740
============ ============
See notes to condensed consolidated financial statements.
3
e-SMART TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
[Unaudited]
Six Months Ended Three Months Ended
June 30 June 30
------------------------- -------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Net Revenue $ -- $ -- $ -- $ --
Cost of revenue -- -- -- --
Gross profit -- -- -- --
Operating expenses:
Research and development 214,210 280,200 153,682 230,200
General and administrative 1,268,950 518,226 534,371 444,723
Interest 3,000 14,998 1,500 7,499
------------ ------------ ------------ ------------
Total operating expenses 1,486,160 813,424 689,553 682,422
------------ ------------ ------------ ------------
Loss before taxes (1,486,160) (813,424) (689,553) (682,422)
Provision for taxes 500 250 250 --
------------ ------------ ------------ ------------
Net Loss $(1,486,660) $ (813,674) $ (689,803) $ (682,422)
============ ============ ============ ============
Net loss per common share -
basic and fully-diluted $ (0.01) $ (0.00) $ (0.00) $ (0.00)
============ ============ ============ ============
Weighted average common shares
shares outstanding 172,124,990 160,550,084 172,855,610 162,409,292
============ ============ ============ ============
See notes to condensed consolidated financial statements.
4
e-SMART TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF
SHAREHOLDERS' IMPAIRMENT
[Unaudited]
Common Stock Additional
---------------------- Paid-in Accumulated
Shares Amount Capital Deficit Total
----------- --------- -------------- ------------- -------------
Balance, January 1, 2003 153,771,993 $ 153,772 $ 22,714,779 $(23,106,740) $ (238,189)
Shares issued for cash 16,497,519 16,498 2,531,854 -- 2,548,352
Shares issued for services 437,500 437 80,813 -- 81,250
Options issued for services -- -- 34,170,000 -- 34,170,000
Net loss -- -- -- (36,771,607) (36,771,607)
----------- --------- -------------- ------------- -------------
Balance, December 31, 2003 170,707,012 $ 170,707 $ 59,497,446 $(59,878,347) $ (210,194)
----------- --------- -------------- ------------- -------------
Balance January 1, 2004 170,707,012 $ 170,707 $ 59,497,446 $(59,878,347) $ (210,194)
Shares issued for cash 2,335,598 2,335 1,269,737 -- 1,272,072
Net loss -- -- -- (1,486,660) (1,486,660)
----------- --------- -------------- ------------- -------------
Balance, June 30, 2004 173,042,610 $ 73,042 $ 60,767,183 $(61,365,007) $ (424,782)
----------- --------- -------------- ------------- -------------
See notes to condensed consolidated financial statements.
5
e-SMART TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
[Unaudited]
Six Months Ended
June 30,
-----------------------------
2004 2003
------------ ------------
Cash flows of operating activities -
Net loss $(1,486,660) $ (813,674)
Adjustments to reconcile net loss to
net cash used by operations:
Depreciation and amortization 726 980
Decrease (increase) in assets -
Due from Associated Business
Group, Inc. 31,334 --
Prepaid expenses (59,635) 4,483
Increase (decrease) in liabilities -
Accounts payable 35,960 53,122
Accrued expenses 118,741 (432)
Due to Associated Business
Group, Inc. 12,427 --
------------ ------------
Net cash used by operating
activities (1,347,107) (755,521)
------------ ------------
Cash flows of investing activities -
System development (136,000) --
Leasehold and improvements (91,556) (58,750)
Advances to Biosensor LLC (154,500) --
Recoupment of e-Smart Korea deposit 151,000 --
------------ ------------
Net cash used by investing
activities (231,056) (58,750)
------------ ------------
Cash flows of financing activities -
Proceeds from sale of common shares 1,272,072 848,803
Proceeds from loans -- 11,429
Borrowings from Intermarket
Ventures, Inc. 300,000 --
------------ ------------
Net cash provided by financing
activities 1,572,072 860,232
------------ ------------
Net (decrease) increase in cash (6,091) 45,961
Cash at beginning of period 14,096 202
------------ ------------
Cash at end of period $ 8,005 $ 46,163
============ ============
See notes to condensed consolidated financial statements.
6
e-SMART TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements, which
include the accounts of the Registrant and (since commencement of its
operations on January 1, 2004) those of its wholly-owned subsidiary,
e-Smart Korea, Inc., have been prepared in accordance with generally
accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the six
month and three month periods ended June 30, 2004 and 2003, are not
necessarily indicative of the results that may be expected for the
respective years ended December 31, 2004 and 2003.
The unaudited condensed consolidated financial statements should be read
in conjunction with the audited financial statements and related
footnotes included in the Registrant's Annual Report on Form 10-KSB for
the two fiscal years ended December 31, 2003, supplemented by the notes
included herein. Such Annual Report on Form 10-KSB was the first to be
filed by the Registrant since present management assumed control of the
Registrant in October 2000. Prior thereto, the Registrant's last
audited financial statements were filed with the Registrant's Form 10-SB
on May 30, 2000.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Note 2 - Related Party Transactions
Common Ownership
Approximately 74% of the Registrant's outstanding common shares are
owned by IVI Smart Technologies, Inc., a Delaware corporation (the
"Licensor"), that is the sole owner of all of the Super Smart Card TM
technology licensed to the Registrant in November 2000, August 2001, and
September 2001, for a 20-year term for commercialization throughout China,
the remainder of Asia exclusive of China, and the United States of
America, respectively. Mary A. Grace, the Registrant's President and
Chief Executive Officer, is a director, executive officer and principal
stockholder of the Licensor. Tamio Saito, the Registrant's Chief
Technology Officer, is also an executive officer and principal
stockholder of the Licensor. As such, the Licensor is in a position to
materially influence the direction of the Registrant, its efforts in
raising the additional capital critical to its
7
success, and the strategies employed in commercialization of the
licensed technology, assuming the Registrant's business plan is
ultimately successful.
Research and Development Services Agreement
Pursuant to a Research and Development Services Agreement dated January
1, 2001, and reduced to writing on May 29, 2003 (the "BBT Agreement"),
the Registrant engaged Big Bang Technologies, Inc., a California
corporation controlled by and under common control of Tamio Saito, a
co-inventor of the Super Smart Card TM technology ("BBT"), as the
Registrant's research and development co-coordinator, administrator and
personnel provider. BBT was also engaged to provide the Registrant with
state of the art software development, testing, laboratory and other
services related to the Registrant's smart card technology, and the
services of Tamio Saito as the Registrant's Chief Technology Officer.
The term of the BBT Agreement, which provides for mutual confidentiality
and non-compete protection, is one year, and is thereafter automatically
renewed for successive one year terms unless sooner terminated in
accordance with its provisions. In consideration for BBT's services,
the Registrant agreed to promptly pay monthly invoices submitted by BBT.
Pursuant to an amendment to the BBT Agreement dated April 19, 2004 and
effective as of January 1, 2004, and as hereinafter described in Item 5,
the Registrant: (i) subleased an aggregate of 1,200 square feet of space
plus common areas and the use of a conference room for $3,000 per month;
(ii) hired four former research employees of BBT; (iii) agreed to pay BBT
an aggregate of $22,000 per month to provide the services of Tamio Saito
and other BBT employees to the Registrant in conjunction with software
development, testing, laboratory and other services related to the
Registrant's smart card technology; and (iv) agreed to reimburse BBT for
expenses incurred on the Registrant's behalf.
Advisory and Administrative Service Agreement
Pursuant to an Advisory and Administrative Services Agreement effective
January 1, 2001, and dated May 29, 2003 (the "ABG Agreement"), the
Registrant engaged Associated Business Group, Inc., a Nevada corporation
controlled by the father of Wayne Drizin, a co-inventor of our Super
Smart Card TM technology and the BVS2 TM platform ("ABG"), to administer
the receipt of investor's funds, to pay expenses and to perform other
necessary and related administrative services including utilizing its
best efforts to cover temporary shortfalls in the Registrant's cash
receipts. The Registrant agreed to pay ABG a fee of $10,000 per month
subject to ABG's right to convert the same into restricted shares of the
Registrant's common stock at a conversion price equal to 75% of the mean
between the closing bid and asked prices for the Registrant's common
stock on the day before the date ABG elects to convert. The term of the
ABG Agreement, which provides for mutual confidentiality and non-compete
protection, is one year, and is thereafter automatically renewed for
successive one year terms unless sooner terminated in accordance with
its provisions.
8
On April 19, 2004, the Registrant and ABG amended the ABG Agreement, as
hereinafter described in Part II, Item 5. In lieu of the original ABG
Agreement, the Registrant entered into a one year administrative services
consulting agreement with ABG wherein ABG agreed to supervise the
Registrant's Nevada office and perform other necessary and related
administrative services in consideration of a monthly fee of $1,500,
plus any expenses incurred on the Registrant's behalf. The new agreement,
which contains confidentiality and non-compete protection, is terminable
by either party on six months prior written notice.
Note 3 - Going Concern
The Registrant's condensed consolidated financial statements have been
presented on the basis that it is a going concern, which contemplates
the realization of assets and the satisfaction of liabilities in the
normal course of business.
As shown in the accompanying financial statements, the Registrant had
negative working capital at June 30, 2004, of $615,422. In addition,
the Registrant has incurred an accumulated deficit of $(61,365,007)
through June 30, 2004. The Registrant is dependent upon the efforts of
its management to raise proceeds from continued debt or equity placements
to sustain the research and development and ultimate commercialization
of their respective interests in the Super Smart Card TM technology. The
Registrant's ability to continue to receive new investment proceeds is
uncertain. The condensed consolidated financial statements do not
include any adjustments that might be necessary if the Registrant is
unable to continue as a going concern.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion contains forward-looking statements regarding
the Registrant, its business, prospects and results of operations that
are subject to certain risks and uncertainties posed by many factors and
events that could cause the Registrant's actual business, prospects and
results of operations to differ materially from those that may be
anticipated by such forward-looking statements. Factors that may affect
such forward-looking statements include the Registrant's ability to
successfully exploit its licensed technology, develop new markets for
its licensed technology; the impact of competition on the Registrant's
proposed operations, changes in law or regulatory requirements that
adversely affect or preclude customers from using the Registrant's
licensed technology, delays in the Registrant's introduction of new
products or services, and failure by the Registrant to keep pace with
emerging technologies.
When used in this discussion, words such as "believes," "anticipates,"
"expects," "intends," and similar expressions are intended to identify
forward-looking statements, but are not the exclusive means of
identifying forward-looking statements. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak
only as of the date of this report. The Registrant undertakes no
obligation to revise any forward-looking statements in order to reflect
events or circumstances that may subsequently arise. Readers are urged
to carefully review and consider the various
9
disclosures made by the Registrant in this report and other reports filed
with the Securities and Exchange Commission ("SEC") that attempt to
advise interested parties of the risks and factors that may affect the
Registrant's business.
Six Months Ended June 30, 2004 and June 30, 2003
Revenues - Since obtaining the license to the Super Smart Card TM
technology in November 2000, the Registrant has been engaged in research
and development efforts to enhance and broaden the technology's
applications and in exploring its licensed markets for optimal
commercialization. Despite the fact that the Registrant has commenced
preparation for manufacture and delivery of its products to customers
within its licensed territory, the Registrant is still deemed to be in
the development stage for accounting purposes as it has not experienced
revenues in either of the six month periods ended June 30, 2004 ("6M04")
or June 30, 2003 ("6M03").
Cost of Revenues - Consistent with the Registrant still being in its
development stage, it did not experience cost of revenues in either 6M04
or 6M03.
Operating Expenses - Operating expenses rose to $1,486,160 for 6M04
compared to $813,424 for 6M03; an increase of $672,736 or 83%. The
principal factors underlying this increase were as follows: 1) increased
marketing expenses during 6M04 compared to 6M03 consistent with the
Registrant's efforts to get closer to generating revenues, 2) an
increase in general and administrative expenses during 6M04 consistent
with the Registrant beginning to create the infrastructure it will
require to oversee its affairs, and 3) an increase in research and
development expenses in 6M04 in line with the Registrant's technology
becoming closer to commercialization.
Loss Before Taxes and Income Taxes - As a result of the foregoing, loss
before taxes for 6M04 was $(1,486,160) compared to $(813,424) for 6M03
upon which the Registrant's provision for taxes in both periods was
solely attributable to minimum state franchise taxes payable.
Net Loss - Consistent with the foregoing analysis, the Registrant
reported a net loss of $(1,486,660) or $(0.01) per share for 6M04,
compared to a net loss of $(813,674) or $(0.00) per share for 6M03,
based upon weighted average shares outstanding of 172,124,990 and
160,550,084, respectively.
Three Months Ended June 30, 2004 and June 30, 2003
Revenues - Since obtaining the license to the Super Smart Card TM
technology in November 2000, the Registrant has been engaged in research
and development efforts to enhance and broaden the technology's
applications and in exploring its licensed markets for optimal
commercialization. Despite the fact that the Registrant has commenced
preparation for manufacture and delivery of its products to customers
within its licensed territory, the Registrant is still deemed to be in
the development stage for accounting purposes as it has not experienced
revenues in either of the three month periods ended March 31, 2004
("2Q04") or March 31, 2003 ("2Q03").
10
Cost of Revenues - Consistent with the Registrant still being in its
development stage, it did not experience cost of revenues in either 3Q04
or 3Q03.
Operating Expenses - Operating expenses rose to $689,553 for 2Q04
compared to $682,422 for 2Q03; an increase of $7,131 or 1%. The
principal factors underlying this increase were as follows: 1) increased
marketing expenses during 2Q04 compared to 2Q03 consistent with the
Registrant's efforts to get closer to generating revenues, 2) an
increase in general and administrative expenses during 2Q04 consistent
with the Registrant beginning to create the infrastructure it will
require to oversee its affairs, and 3) an increase in research and
development expenses in 2Q04 in line with the Registrant's technology
becoming closer to commercialization.
Loss Before Taxes and Income Taxes - As a result of the foregoing, loss
before taxes for 2Q04 was $(689,553) compared to $(682,422) for 2Q03
upon which the Registrant's provision for taxes in both periods was
solely attributable to minimum state franchise taxes payable.
Net Loss - Consistent with the foregoing analysis, the Registrant
reported a net loss of $(689,803) or $(0.00) per share for 2Q04,
compared to a net loss of $(682,422) or $(0.00) per share for 2Q03,
based upon weighted average shares outstanding of 172,855,610 and
162,409,292, respectively.
Liquidity and Capital Resources - The Registrant has limited working
capital and is dependent upon its efforts in raising proceeds derived
from private securities offerings for funds for the continuation of its
proposed smart card business. Currently, the Registrant does not have
any existing credit facilities or similar bank borrowing arrangements.
The Registrant will need to obtain additional financing in order to
carry out its entire business plan. There can be no assurance that any
additional financing will be available to the Registrant on acceptable
terms, if at all. If the Registrant raises additional funds by issuing
additional equity securities, further dilution to existing equity
holders will result. If adequate additional funds are not available,
the Registrant may be required to curtail significantly its long term
business objectives and the Registrant still may not be able to
transition out of the development stage, notwithstanding that the BVS2 TM
systems and Super Smart Card TM and other smart card system technologies
are ready for commercialization.
At June 30, 2004, the Registrant had current assets of $67,640 (including
cash of $8,005), current liabilities of $683,062, and an accumulated
deficit of $61,365,007. The Registrant periodically evaluates its
liquidity requirements, capital needs and availability of capital
resources in view of its plans for commercialization of its technology,
and other operating cash needs. In the opinion of Registrant's
management, the Registrant is entirely dependent upon a material
infusion of capital from the sale of securities to its accredited
investors during the next several months in order to sustain its current
developmental efforts, commence commercial operations, and ultimately
transition out of the development stage.
11
ITEM 3. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
During the quarter ended June 30, 2004, the Registrant continued to
implement controls and procedures designed to ensure that information
required to be disclosed in the reports that the Registrant files or
submits under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the SEC. Based
upon their evaluation of the controls and procedures implemented within
90 days of the filing date of this Quarterly Report, the Chief Executive
and Chief Financial Officer of the Registrant concluded that the
Registrant's disclosure controls and procedures have been improved
substantially during the past three months. Such officer also concluded
that the Registrant's controls and procedures will likely equal or
exceed those required of the Registrant within one or two more operating
quarters.
Changes in Internal Controls
The Registrant made no significant changes in its internal controls or
in other factors that could significantly affect these controls
subsequent to the date of the evaluation of those controls by the Chief
Executive and Chief Financial Officer.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Administrative Proceeding
On December 12, 2003, the SEC commenced an Administrative Proceeding
against the Registrant seeking, inter alia, to interrupt public trading
in the Registrant's securities (the "Proceeding"). Pending a decision
by the Administrative Law Judge, the Registrant agreed to utilize its
best efforts to prepare and file its Annual Report on Form 10-KSB for
the two fiscal years ending December 31, 2003, on or before March 30,
2004.
However, and on March 4, 2004, Lillian A. McEwan, Administrative Law
Judge, published an Initial Decision in the Proceeding. In her Initial
Decision, the Administrative Law Judge found that the Registrant failed
to make the required filings, as alleged, and therefore violated
Exchange Act Section 13(a) and Rules 13a-1 and 13a-13. In assessing
sanctions, the Administrative Law Judge found that the Registrant's
violations were not only recurrent but also egregious, lasting over
three years and continuing to the present. The Administrative Law Judge
found that, although the Registrant represents that it intends to bring
itself into full compliance with the periodic reporting requirements no
later than March 31, 2004, this endeavor seems doomed. Because the
Administrative Law Judge was convinced that the Registrant could not
readily remedy its periodic reporting violations, the Administrative Law
Judge ruled that the Registrant's registration should be
12
revoked. On March 30, 2004, the Registrant filed a Form 10-KSB covering
fiscal years ending on December 31, 2002 and 2003.
On March 23, 2004, and within the 21 day period provided in the Initial
Decision, the Registrant filed a petition with the SEC for review of the
Administrative Law Judge's decision. The Registrant's petition was
granted on March 26, 2004. On March 30, 2004, the Division of Enforcement
asked that the Administrative Law Judge's decision be summarily affirmed
pursuant to Rule of Practice 411(e). The Division also moved for leave,
under Commission Rule of Practice 410(d), to file a brief in opposition
to the Registrant's petition for review.
On July 16, 2004, the SEC published an order wherein the Division of
Enforcement's motions for summary affirmance and for leave to file a
brief in opposition to the Registrant's petition for review were denied.
ITEM 5. OTHER INFORMATION
Agreement with Samsung SDS Co., Ltd. and Kobile, Inc.
On June 28, 2004, and pursuant to the Registrant's previously executed
Master Teaming Agreement between Samsung SDS Co., Ltd., a Korean
corporation ("Samsung"), the Registrant's wholly owned subsidiary,
e-Smart Korea, Inc. entered into a written Cooperation Agreement with
Kobile Co., Ltd., a Korean marketing company ("Kobile") and Samsung (the
"Agreement"). Pursuant to the Agreement, the parties agreed to implement
a joint project wherein the Registrant's proprietary Biometric
Verification Security SystemTM operating platform and its advanced Super
Smart CardsTM will be provided to participating schools, educational
institutions and their related facilities located in the Republic of
Korea (the "Institutions"). The Registrant is responsible for providing
the proprietary software, quantities of Super Smart CardsTM, hardware,
and all necessary operating services to the Institutions together with
the arrangement of all necessary capital. Kobile is responsible for
supplying irrevocable and unconditional contracts with each Institution
as well as agreements with merchants and suppliers. Samsung shall act
as the system integrator and maintenance provider for the project.
The Agreement provides for intellectual property and confidentiality
protection.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits:
10(p)- Cooperation Agreement dated June 18, 2004.
31.1 - Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2003
32.2 - Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2003
Reports on Form 8-K: None.
13
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
e-Smart Technologies, Inc.
By: /s/ Mary A. Grace
-------------------------------------
Chief Executive Officer, and Director
By: /s/ Mary A. Grace
-------------------------------------
Chief Financial Officer
Dated: August 16, 2004
14