UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTERLY REPORT FOR SMALL BUSINESS ISSUERS SUBJECT TO THE 1934
ACT REPORTING REQUIREMENTS
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000 Commission File No.
000-27365
18
ELECTRONIC IDENTIFICATION, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0440528
(State of organization) (I.R.S. Employer Identification No.)
1200 West Pender St., Suite 411, Vancouver, BC, Canada V6E 2S9
(Address of principal executive offices)
Registrant's telephone number, including area code (604) 684-8002
Check whether the issuer (1) filed all reports required to be
file by Section 13 or 15(d) of the Exchange Act during the past
12 months and (2) has been subject to such filing requirements
for the past 90 days. Yes X
There were 18,085,596 outstanding shares of the issuer's Common
Stock on May 01, 2000.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The financial statements and supplemental data are attached as
Exhibit A.
ITEM 2. MANAGEMENT'S PLAN OF OPERATION
NOTE REGARDING PROJECTIONS AND FORWARD LOOKING STATEMENTS
This statement includes projections of future results and
"forward-looking statements" as that term is defined in Section
27A of the Securities Act of 1933 as amended (the "Securities
Act"), and Section 21E of the Securities Exchange Act of 1934 as
amended (the "Exchange Act"). All statements that are included in
this Registration Statement, other than statements of historical
fact, are forward-looking statements. Although Management
believes that the expectations reflected in these forward-looking
statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. Important factors
that could cause actual results to differ materially from the
expectations are disclosed in this Statement, including, without
limitation, those expectations reflected in forward-looking
statements contained in this Statement.
PLAN OF OPERATION
The Company was incorporated in Nevada and is a leading developer
and marketer of contactless smart ID card systems ("Smart
Card(s)" or "Smart ID Card System(s)"). Generally the size of a
credit card, Smart Cards add the ability and intelligence to
store and process information with a computer chip embedded
inside the card. Smart Cards are used in a number of corporate
and government applications including (i) access to restricted
areas (replacing keys and paper identification cards), (ii)
public transportation fare collection (replacing bus tokens, taxi
cab charge cards, airline or railway tickets), (iii) point of
sale purchases. Smart Card technology is also used in industrial
applications such as attaching a "Smart Tag" containing the Smart
Card technology to a manufactured product in order to track the
product from the assembly line through quality control,
warehousing, inventory control, distribution and warranty.
The Company's Smart Cards are both "contactless" and
"batteryless" and therefore do not require the use of a magnetic
stripe or insertion into a terminal as is required by contacted
cards ("Contacted Card(s)"), such as credit cards and ATM cards.
Contacted Cards in use today are typically limited to storing
information as opposed to "intelligent" Smart Cards, which have
processing capabilities similar to that of a personal computer.
The Company's Smart Card System involves direct wireless radio
frequency communications and magnetic induction between a chip in
the Smart Card and a terminal. Moreover, the Company's
contactless Smart Card Systems do not require insertion in a
terminal or the use of a keypad and therefore may be used by all
members of the population regardless of age or physical ability
and in both indoor and outdoor locations.
For consumers and providers of goods and services, the Company's
Smart Cards offer the convenience and accuracy of high speed
transaction processing without the requirement of carrying cash,
checks or credit cards, thereby reducing the threat of theft,
inventory shrinkage, and payment fraud resulting from the
handling of cash or the counterfeiting of cash or credit cards.
Goods and services providers do not risk loss from (i) accepting
cash or checks which may be subsequently stolen from them after
payment by consumers or (ii) accepting credit cards which may
have been stolen prior to such payment. Consumer loss is limited
because the Smart Card is programmed to be used to purchase only
specific goods or services. Thus, the Smart Card is not as
attractive to a thief when compared to stolen cash, checks or
credit cards.
The Smart Card is designed to complement credit cards rather than
replace them in that Smart Card applications involve the storage
and handling of substantially more data than credit cards and can
therefore be used for other applications (rather than just
purchase and sale transactions) such as identification of the
user, loyalty programs and other portable data functions.
The Company sells its Smart Card Systems through its own direct
sales force, a combination of joint ventures and strategic
alliances and selective licensing and distributorship
arrangements and agreements with independent Agents in foreign
countries.
Since 1998, the Company has conducted numerous demonstrations of
its technology and may have the potential for implementation on a
larger scale. In some cases, these demonstration phase often
takes 6-12 months or longer. Examples of the Company's Smart Card
demonstration projects (two of which are discussed below as
representative of the Company's potential) include the following:
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action by
or against the Company has been threatened.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On February 29, 2000, the Company issued 300,000 shares of its
common stock to Girne Acquisition Corp. pursuant to the terms of
the reorganization agreement, consisting of 150,000 common shares
at a deemed value of $2.9375 per share and converting $150,000 of
cash payable to the shareholders of Girne at a deemed value of
$1.00 per share into 150,000 shares of common stock.
On February 29, 2000, the Company issued 366,667 shares of its
Common Stock as settlement of $276,000 of amounts due to a
stockholder, St. George Capital Corp.
EXHIBITS AND REPORTS ON FORM 8-K
A) Financial Statements
Unaudited financial statements as of March 31, 2000 and for the
three-month period then ended:
ELECTRONIC IDENTIFICATION, INC.
(Formerly RFID Systerms Corp.)
(A Development Stage Company)
Balance Sheet
(Expressed in U.S. Dollars)
As At March 31, 2000 and December 31, 1999
<TABLE>
<S> <C> <C> <C>
Mar. 31, Dec. 31,
2000 1999
Assets
Current Assets
Cash 5,176 8,071
Accounts Receivable 9,193 4,280
Prepaid Expenses and Deposits 354 351
Due from Stockholder (note 6(a)) 0 65,700
Total Current Assets 14,722 78,402
Other Assets
Fixed Assets (note 4) 34,477 46,670
Patents (note 5) 11,390 10,005
Acquisition of Girne Acquisition Corp. (note 7) 586,824 0
Total Other Assets 632,691 56,675
Total Assets 647,413 135,077
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable and Accrued Liabilities 332,612 402,310
Due to Stockholders, Directors and Officers (note 111,118 301,328
6(a))
Total Current Liabilities 443,731 703,638
Stockholders' Equity (Deficit)
Common Stock (note 8) 17,770 17,419
Paid-In Capital 11,363,819 10,408,680
Current Earnings (Loss) (71,926) (3,051,195
)
Retained Earnings (Loss) (11,105,981 (7,943,465
) )
Total Stockholders' Equity (Deficit) 203,682 (568,561)
Future operations (note 2)
Contingencies (note 9)
Year 2000 issue (note12)
Subsequent events (note 13)
Total Liablities and Stockholders' Equity 647,413 135,077
</TABLE>
Unaudited - See accompanying notes to financial statements
ELECTRONIC IDENTIFICATION, INC.
(Formerly RFID Systems Corp.)
(A Development Stage Company)
Statement of Income (Loss)
(Expressed in U.S. Dollars)
For the Period January 1 to March 31, 2000 and for the Year Ended
December 31, 1999
<TABLE>
<S> <C> <C> <C>
Period Year Ended
Ended
Mar. 31, Dec. 31,
2000 1999
Revenue
Revenue 0 0
Interest and Other Income 0 990
Total Revenue 0 990
Expenses
General and Administration
Administration Fees 4,742 22,215
Bank Charges and Interest 98 1,348
Consulting and Contract Services 31,838 731,799
Foreign Exchange Loss 1,585 (36,744)
Legal and Professional 6,933 150,909
Office 3,411 23,647
Rent 2,568 10,098
Stock Administration 794 13,495
Telephone 2,111 2,772
Travel and Accommodation 1,655 2,558
Total General and Administration 55,734 922,097
Marketing and Sales
Consulting and Contract Services 11,982 123,561
Entertainment and Promotion 4,512 19,190
Investor Relations 3,423 99,618
Office 0 4,080
Salaries and Benefits 0 2,287
Telephone and Internet 0 2,772
Travel and Accommodation 0 52,367
Total Marketing and Sales 19,917 303,875
Research and Development
Consulting and Contract Services (3,832) 53,013
Supplies 107 0
Travel and Accommodation 0 2,980
Total Research and Development (3,725) 55,993
Depreciation and Amortization 0 18,311
Interest on Long-Term Debt 0 493,586
Loss before the undernoted (71,926) (1,792,872
)
Loss due to settlement of debt by issuance of 0 (1,258,323
common stock )
Loss for the period (71,926) (3,051,195
)
</TABLE>
Unaudited - See accompanying notes to financial statements
ELECTRONIC IDENTIFICATION, INC.
(Formerly RFID Systems Corp.)
(A Development Stage Company)
Statement of Cash Flows
(Expressed in U.S. Dollars)
For the Period January 1 to March 31, 2000 and for the Year Ended
December 31, 1999
<TABLE>
<S> <C> <C> <C>
Period Ended Year Ended
Mar. 31, 2000 Dec. 31, 1999
Cash flows from operating activities:
Loss for the period (71,926) (3,051,195
)
Items not involving cash:
Depreciation and amortization 0 18,311
Loss due to settlement of debt by issuance 0 1,258,323
of common stock
Write-down of fixed assets 12,193 0
Expenses and debt settled with the 844,171 375,313
issuance of stock
Intrinsic value of beneficial conversion 0 474,117
of liabilities into c/s
Compensatory benefit of stock options 0 485,828
Changes in non-cash operating working
capital:
Accounts receivable (4,913) 45,648
Prepaid expenses and deposits (3) (11)
Restricted cash 0 47,394
Accounts payable and accrued liabilities (69,698) (65,752)
Due to stockholders, directors and (124,510) 61,922
officers
Net cash provided by (used in) operating 585,314 (350,102)
activities
Cash flows from financing activities:
Net proceeds on issuance of convertible 0 353,558
debentures
Net cash provided by financing activities 0 353,558
Cash flows from investing activities:
Acquisition of patents (1,385) 0
Acquistion of Girne Acquisition Corp. (586,824) 0
Net cash used in investing activities (588,209) 0
Increase (decrease) in cash (2,895) 3,456
Cash, beginning of period 8,071 4,615
Cash, end of period 5,176 8,071
</TABLE>
Unaudited - See accompanying notes to financial statements
ELECTRONIC IDENTIFICATION, INC.
(Formerly RFID Systems Corp.)
(A Development Stage Enterprise)
Notes to Financial Statements, page 1
(Expressed in U.S. Dollars)
Period ended March 31, 2000
1. General:
On April 23, 1999, Electronic Identification, Inc. (the
"Company" or "El2") signed an Agreement and Plan of Merger with
RFID Systems Corp. ("RFID"). This merger was completed on May 3,
1999.
EI2 is a corporation organized and existing under the laws of
the State of Nevada. At that date, El2 was an inactive shell
company. RFID was a development stage enterprise and was
developing automatic identification and data collection systems
utilizing radio frequency identification technology. EI2 is
continuing in this line of business.
EI2 had 1,000 shares of common stock outstanding. Under the
terms and conditions of the Agreement, each issued and
outstanding share of common stock of RFID was converted into one
common stock of the Company.
This transaction has been accounted for as a recapitalization of
RFID, effectively as if RFID had issued common shares to acquire
the net monetary assets of EI2. The net monetary assets acquired
by EI2 were as follows:
<TABLE>
<S> <C>
Total assets $ 176,108
Total $1,800,613
liabilities
</TABLE>
Under recapitalization accounting, these financial statements
reflect the assets, liabilities, revenues and expenses of RFID
from its inception on May 14, 1992 combined with those of EI2
from the date the merger was completed.
Pursuant to this Agreement, and subject to regulatory approval,
each stockholder of RFID who sent in their stock certificates for
transfer into certificates representing shares of the Company
prior to May 31, 1999, will receive a right to purchase, for
every ten shares owned and tendered, an additional share of
common stock at 75% of the market price of the Company stock as
of the date of exercise. The rights will be exercisable for
thirty days after filing of the registration statement with the
Securities Exchange Commission. Rights outstanding at March 31,
2000 are 1,169,295.
2. Future operations:
These financial statements have been prepared on the going
concern basis under which an entity is considered to be able to
realize on its assets and satisfy its liabilities in the ordinary
course of business. During the period since inception on May 14,
1992, the Company has incurred losses aggregating $11,177,907. At
March 31, 2000, the Company has a working capital deficiency of
$429,009 and a stockholders' equity balance of $203,682.
The Company's ability to meet its obligations as they come due is
primarily dependent upon securing additional financing, whether
from operations or otherwise. Management continues to pursue
additional sources of financing; however, there can be no
guarantee that the required additional financing will be
obtained. Failure to identify and obtain such financing may limit
the Company's ability to satisfy its obligations as they come due
which may, in turn, impair the Company's ability to continue as a
going concern. This could negatively impact the recoverability of
the carrying value of assets.
ELECTRONIC IDENTIFICATION, INC.
(Formerly RFID Systems Corp.)
(A Development Stage Enterprise)
Notes to Financial Statements, page 2
(Expressed in U.S. Dollars)
Period ended March 31, 2000
2. Future operations (continued):
These financial statements do not include any adjustments
relating to the recoverability of assets and amounts and
classification of liabilities that might be necessary should the
Company be unable to continue as a going concern. If the Company
is unable to continue as a going concern, assets and liabilities
would require restatement on a liquidation basis, which would
differ materially from the going concern basis
3. Significant accounting policies:
Basis of presentation:
These financial statements are prepared in accordance with
generally accepted accounting principles in the United States.
The Company has not produced significant revenues and is a
Development Stage Company as defined by Financial Accounting
Standard No. ("FAS") 7.
(b) Foreign currency translation:
The Company's functional and reporting currency is the United
States dollar. Transactions Undertaken in a currency other than
the United States dollar are remeasured into United States
dollars using exchange rates at the date of the transaction.
Monetary assets and Liabilities denominated in foreign currencies
are remeasured at each balance sheet date at the exchange rate
prevailing at the balance sheet date. Gains and losses arising on
remeasurement or settlement of foreign currency denominated
transactions or balances are included in the determination of
income. Foreign currency transactions are primarily undertaken in
Canadian dollars. The Company does not enter into derivative
instruments to offset the impact of foreign currency
fluctuations.
(c) Use of estimates:
The preparation of financial statements in accordance with
generally accepted accounting Principles requires management to
make estimates which affect the reported amounts of Assets and
liabilities and the disclosure of contingent assets and
liabilities at the balance Sheet dates, and the recognition of
revenues and expenses for the reporting periods. Areas where
significant estimates have been applied include the assessment of
the ultimate liability arising out of legal contingencies and the
recoverability of capital and intangible assets. Actual results
could differ from these estimates.
(d) Fixed assets:
Fixed assets are carried at cost less accumulated depreciation.
Depreciation is calculated annually as follows:
<TABLE>
<S> <C> <C>
Assets Basis Rate
Furniture and equipment Straight- 20%
line
Computers and technology Declining- 30%
equipment balance
</TABLE>
ELECTRONIC IDENTIFICATION, INC.
(Formerly RFID Systems Corp.)
(A Development Stage Enterprise)
Notes to Financial Statements, page 3
(Expressed in U.S. Dollars)
Period ended March 31, 2000
3. Significant accounting policies (continued):
(d) Fixed assets (continued):
The Company reviews and assesses the underlying value of fixed
assets as the situation dictates to determine whether a provision
for impairment should be recorded. Such determination is made by
comparing the carrying value of fixed assets to the future cash
flow (undiscounted) expected to result. When these cash flows are
less than the carrying value, impairment is calculated by
reference to the fair value of the specific assets.
(e) Patents:
Patents are recorded at cost and amortized using the straight-
line method over a period of five years.
(f) Common stock issuances:
During fiscal 1999, common stock of the Company was issued in
settlement of the indebtedness. A loss of $1,258,323 (1998 -
$663,068) occurred on this settlement equal to the difference
between the market value of common stock issued and the carrying
value of the debt. Stock issue costs are accounted for as a
reduction in the proceeds from the issuance of common stock.
(g) Research and development costs:
Research and development costs are expensed as incurred.
(h) Stock-based compensation:
The Company has elected to apply the intrinsic value principles
of Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25"), and related
interpretations in accounting for its stock options on options
granted to employees and directors. Under APB 25, compensation
expense is only recorded to the extent that the exercise price is
less than the market value of the underlying stock on the date of
grant. For stock options granted to non-employees, the fair value
of the options at their date of grant will be recognized. Values
assigned to options will be charged against income over their
vesting period. Fair value information with respect to options
granted to employees and directors is disclosed in accordance
with FAS 123, "Accounting for Stock-Based Compensation".
(i) Comprehensive loss:
The Company has adopted FAS 130, "Comprehensive Income", which
requires disclosure of comprehensive income or loss. The
Company's net loss is equal to comprehensive loss for all
periods.
(j) Income taxes:
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and
tax credit carry forwards. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled.
ELECTRONIC IDENTIFICATION, INC.
(Formerly RFID Systems Corp.)
(A Development Stage Enterprise)
Notes to Financial Statements, page 4
(Expressed in U.S. Dollars)
Period ended March 31, 2000
3. Significant accounting policies (continued):
(j) Income taxes (continued):
The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the
enactment date. To the extent that the realization of deferred
tax assets is not considered to be more likely than not, a
valuation allowance is provided.
(k) Loss per common share:
Loss per common share is calculated based on the weighted average
number of common shares outstanding, which excludes subscribed
but unissued shares. The number of shares used for loss per share
purposes gives retroactive effect to the reverse stock split on
May 4, 1998.
4. Fixed assets:
<TABLE>
<S> <C> <C> <C>
Accumulate Net book
d
March 31, 2000 Cost amortizatio value
n
Furniture and equipment $13,728 $ 4,234 $ 9,494
Computers and technology 63,423 38,440 24,983
equipment
$77,151 $42,674 $34,477
</TABLE>
5. Patents:
<TABLE>
<S> <C> <C> <C>
Accumulated Net book
March 31, 2000 Cost amortization value
Patents $15,168 $4,228 $10,940
</TABLE>
6. Related party transactions:
Due to (due from) stockholders, directors and officers:
Amounts due to (due from) stockholders, directors and officers
represent amounts owed to, or receivable from, the stockholders,
directors and officers or companies controlled by the
stockholders, directors or officers. These amounts generally
arose from invoices or expenses paid on behalf of the Company by
the stockholders, directors and officers, and a loan provided by
a stockholder. The amounts are non-interest bearing, unsecured
and have no specific terms of repayment.
Transactions with directors and officers:
During this period, the Company was charged a total of $nil for
management and consulting services by the directors and officers
of the Company.
ELECTRONIC IDENTIFICATION, INC.
(Formerly RFID Systems Corp.)
(A Development Stage Enterprise)
Notes to Financial Statements, page 5
(Expressed in U.S. Dollars)
Period ended March 31, 2000
7. Girne Acquisition Corp.:
On March 1, 2000, the Company acquired, through a
reorganization agreement, Girne Acquisition Corp. ("Girne"), a
corporation organized and existing under the laws of the State
of Delaware. At that date, Girne was an inactive shell
company. Under the terms and conditions of the reorganization
agreement, each issued and outstanding share of common stock
of Girne was exchanged pro rata for an aggregate of 1,000
shares of voting common stock of the Company at $0.001 par
value per share. The Company issued 300,000 shares of common
stock for the acquisition of Girne, consisting of 150,000
common shares at a deemed value of $2.9375 per share and
converting $150,000 of cash payable to the shareholders of
Girne at a deemed value of $1.00 per share into 150,000 shares
of common stock. For accounting purposes, this transaction
will be accounted for as a re-capitalization, as if the
Company had issued common shares for the net monetary assets
of Girne.
Pursuant to the reorganization agreement, the Company is the
surviving corporation and will continue under its present name
as a corporation in the State of Nevada.
8. Common stock:
(a) Reverse stock split:
On May 4, 1998, the Company resolved to consolidate the
number of preferred and common stock outstanding by a ratio of
4.5 old for one new common stock. The effect of this reverse
stock split has been applied retroactively to these financial
statements.
(b) Stock purchase warrants:
Stock purchase warrant activity during the period ended March
31, 2000 is as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Exercis Outstanding Expired Outstanding
e /
Expiry price Dec. 31, Granted Exercised canceled March 31,
date 1999 2000
June 20, $2.93 4,444 - - - 4,444
2002
</TABLE>
(c) Non-cash consideration:
Shares issued for non-cash consideration are valued at their
market price at the date of agreement for issuance.
(d) Stock options:
The Company has reserved 3,200,000 common stock pursuant to a
stock option plan. Options to purchase common stock of the
Company may be granted by the Board of Directors and vest
immediately.
Stock option activity during the period ended March 31,
2000 is as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Weighted
Average Weighted
Exercise average Outstanding Outstanding
Expired/
Expiry price fair Dec. 31, Grante Exercise cancelle March 31,
date value 1999 d d d 2000
Feb. 24, $0.45 $0.25 3,125,000 - - - 3,125,000
2002
</TABLE>
ELECTRONIC IDENTIFICATION, INC.
(Formerly RFID Systems Corp.)
(A Development Stage Enterprise)
Notes to Financial Statements, page 6
(Expressed in U.S. Dollars)
Period ended March 31, 2000
9. Contingencies:
The Company has determined that it is not possible, at this time,
to predict the final outcome of the following legal
contingencies. The Company has accrued its best estimate of
potential damages that may be awarded pursuant to these legal
contingencies. Any adjustment to that amount will be recorded in
the period determinable.
Chemoco NV ("Chemoco"):
During 1997, the Company contracted with Chemoco to provide
services to the Company. As advance consideration of the services
to be provided by Chemoco, individuals related to the Company
transferred 155,556 common stock of the Company to Chemoco. It is
the Company's belief that Chemoco did not fulfill its obligations
for the services to be provided and as a result, the transfer of
common stock from individuals related to the Company to Chemoco
was canceled. On September 15, 1999, Chemoco commenced an action
against the Company and a former officer of the Company claiming
for the delivery of 700,000 shares of the Company, or in the
alternative, damages for the Company not delivering the said
shares to the Plaintiff. Since the commencement of the action and
the filing of the Statement of Defense in November 1999, the
solicitors for the Plaintiff have filed a Notice of Intention to
withdraw as solicitors in this matter. The outcome of this claim
is unknown. It is management's belief that any claim that may
arise from this situation is without merit.
(b) Former director claim:
On June 29, 1999, a former director of the Company commenced an
action against the Company claiming, inter alia, for a
declaration that he was entitled to 100,000 warrants of the
Company exercisable at $0.375 per share and a further declaration
that he was entitled to 600,000 warrants exercisable at $0.25 per
share. The warrant agreement was originally issued to the
Director to protect him against any potential claims. When the
director left the Company, the Board of Directors canceled the
warrant agreement for this director and all other directors. The
claim also includes damages for breach of contract and interest
with costs. The Company has filed a defense denying any claims of
the former director in and to the warrants alleged. To date, no
further activity has been commenced and the outcome is unknown.
(c) Other cancelled agreements:
In 1996, the Company cancelled agreements with two third parties.
To date, no litigation has been commenced or threatened regarding
these cancelled agreements. It is the opinion of management that
the termination of these agreements was warranted and, in the
event of litigation, would be deemed to be warranted. Further, it
is management's belief that any claim that may arise from these
situations are without merit.
ELECTRONIC IDENTIFICATION, INC.
(Formerly RFID Systems Corp.)
(A Development Stage Enterprise)
Notes to Financial Statements, page 7
(Expressed in U.S. Dollars)
Period ended March 31, 2000
10. Income taxes:
The Company has non-capital losses carried forward of
approximately $8,500,000 which may be deducted in the calculation
of taxable income of future periods until their expiry to
December 31, 2006.
11. Fair value of financial instruments:
At March 31, 2000, the Company's financial instruments include
cash, accounts receivable, accounts payable and accrued
liabilities, and due to stockholders, directors and officers. Due
to their short-term to maturity or ability for prompt
liquidation, the carrying values of cash, accounts receivable,
accounts payable and accrued liabilities approximates their fair
value. The fair value of due to stockholders, directors and
officers cannot be determined due to their related party nature
(note 6(a)). Due to the nature of the relationship between the
Company and the related parties and the lack of a ready market
for such indebtedness, it is not possible to estimate the current
fair value of this indebtedness.
The Company has not entered into off-balance sheet derivative
instruments.
12. Year 2000 Issue:
The Year 2000 Issue arises because many computerized systems use
two digits rather than four to identify a year. Date-sensitive
systems may recognize the year 2000 as 1900 or some other date,
resulting in errors when information using year 2000 dates is
processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something
other than a date. Although the change in date has occurred, it
is not possible to conclude that all aspects of the Year 2000
Issue that may affect the entity, including those related to
customers, suppliers, or other third parties, have been fully
resolved.
13. Subsequent events:
Subsequent to the end of the reporting period, there are no
subsequent events to report.
B)
Exhibit 3.1 Articles of Incorporation
C) Exhibit 3.2 By-Laws
D) Reports on Form 8-K
On March 7, 2000, the Company filed a Form 8-K announcing that
it had acquired Girne Acquisition Corp. and would retain the
reporting status of the acquired entity. On May 8, 2000, the
Company filed an Amended Form 8-K to include the financials
regarding the above-referenced acquisition.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this
registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Electronic Identification, Inc.
By: /s/ Terry Kirby
Terry Kirby, President
Date: June 20, 2000
