U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB


               [X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                      FOR FISCAL YEAR ENDED: JUNE 30, 2004

                                       OR

             [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

     for  the  transition  period  from  _____  to  _____


                         Commission file number: 0-3071
                                                 ------

                              SiVault Systems, Inc.
                              ---------------------

                     (Exact name of small business issuer as
                            specified in its charter)

             Nevada                                       98-0209119
             ------                                       ----------
  (State or other jurisdiction                          (IRS Employer
of incorporation or organization)                     Identification No.)

                500 Fifth Avenue, Suite 1650, New York, NY 10110
                ------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                     Issuer's telephone number: 212-931-5760
                                              --------------

     Securities  registered  under  Section  12(b)  of  the  Act:

     None
     ----
                    (Title  of  each  class)


      Securities  registered  under  Section  12(g)  of  the  Act:

               Common  Stock,  par  value  $.001  per  share
               ---------------------------------------------
                    (Title  of  each  class)


<PAGE>

     Check  whether  the  issuer  (1)  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 [  ]   No [X]

     Check  if  disclosure  of  delinquent  filers  in  response  to Item 405 of
Regulation  S-B  is  not  contained  in  this  form,  and  no disclosure will be
contained,  to  the  best  of  registrant's  knowledge,  in  definitive proxy or
information statements incorporated by reference in Part III of this Form 10 KSB
or  any  amendment  to  this  form  10  KSB.  [  ]

     State  issuer's  revenues  for  its  most  recent  fiscal year: $ 7,131,437

     As  of September 22, 2004, there were 14,011,693 shares of the registrant's
common  stock  issued  and outstanding. Of these, approximately 7,400,000 shares
are  held  by  non-  affiliates of the registrant. As of September 22, 2004, the
market  value  of  common  stock  held  by  non-affiliates  was  approximately $
19,835,079,  based  on  the  closing  price  of  the  common stock on that date.

     Transitional  Small  Business  Disclosure  Format  (check  one):
Yes  [  ]  ;  No  [  X  ]


     DOCUMENTS  INCORPORATED  BY  REFERENCE

     Portions  of  the  registrant's  definitive  proxy  statement  to  be filed
pursuant  to  Regulation  14A in connection with solicitation of proxies for its
2004  Annual Meeting of Stockholders are incorporated by reference into Part III
of  this  Form  10-KSB.


<PAGE>

<TABLE>
<CAPTION>
                                TABLE OF CONTENTS


Item Number and Caption                                                  Page
---------------------------------------------------------------------    ---
<S>     <C>                                                              <C>

PART I

1.      Description of Business                                          1

2.      Description of Property                                          17

3.      Legal Proceedings                                                17

4.      Submission of Matters to a Vote of Security Holders              17

        PART II

5.      Market for Common Equity and Related Stockholder Matters         18

6.      Management's Discussion and Analysis or Plan of Operation        21

7.      Financial Statements                                             33

8.      Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure                                             33

8A.     Controls and Procedures                                          34

        8B. Other Information                                            34

        PART III

9.      Directors, Executive Officers, Promoters and Control Persons;
        Compliance with Section 16(a) of the Exchange Act                34

10.     Executive Compensation                                           34

11.     Security Ownership of Certain Beneficial Owners and Management
        and Related Stockholder Matters                                  34

12.     Certain Relationships and Related Transactions                   35

13.     Exhibits                                                         35

14.     Principal Accountant Fees and Services                           37

        Index to Consolidated Financial Statements                       38
</TABLE>


<PAGE>

SPECIAL  NOTE  REGARDING  FORWARD-LOOKING  STATEMENTS

This  report  contains  forward-looking statements within the meaning of Section
21E  of  the Securities Exchange Act of 1934. These statements can be identified
by  the  use  of  forward-looking  terminology such as "expects", "anticipates",
"intends",  "believes"  and  similar  language,  or  the  negatives thereof, and
discussions of our strategy, future revenues and future costs. You are cautioned
that  our  business  and  operations  are  subject  to  a  variety  of risks and
uncertainties  and,  consequently, our actual results may differ materially from
those  anticipated  or  projected by any forward-looking statements. Some of the
factors  that  might  cause  or  contribute  to  such  differences include those
discussed in Item 6. Management's Discussion and Analysis or Plan of Operation."


Unless  the  context  otherwise  requires,  all references in this report to (i)
"we",  "us"  or  the  "Company",  or  words  of similar import, refer to SiVault
Systems,  Inc.,  a  Nevada  corporation, together with its subsidiaries and (ii)
share  information reflect a 4:1 forward stock split effected in August 2000 and
a  1:20  reverse  stock  split  effected  in  June  2004.


<PAGE>

                                     PART I

ITEM  1.  DESCRIPTION  OF  BUSINESS.

RECENT  DEVELOPMENTS

     The  following  significant  events  have  occurred  since  June  30, 2004:

SiVault  Acquisition;  Name  Change

     In  July  2004,  we  completed  the  acquisition  of SiVault Analytics Inc.
("SiVault  Analytics"),  a  private  Delaware  corporation  that provides secure
storage  and  retrieval  of  signed  documents  and  biometric  signature-based
authentication  for processing of online transactions. Its services are designed
to  be  compliant  with  regulations  and standards in the retail and healthcare
industries  for authentication, authorization, transmission and storage of data.

     The  acquisition  was  completed  by  means of a share exchange in which we
issued  4,000,000  of  our shares of common stock to the stockholders of SiVault
Analytics in exchange for all of the outstanding stock of SiVault Analytics. Our
shares  were valued in the transaction at $2.50 per share, or $10,000,000 in the
aggregate.  Following  the  acquisition,  we  merged  SiVault Analytics into our
company  and  changed  the  name of our company to SiVault Systems, Inc. and our
stock  trading  symbol  to  SVTL.OB.

New  Management

     Following  the  SiVault  Analytics  acquisition,  certain  principals  and
management  of  SiVault  Analytics were elected as members of our management and
Board  of  Directors.  Emilian  Elefteratos  was  elected  President  and  Chief
Executive  Officer,  Igor  J. Schmidt was elected Chief Strategy Officer, Steven
Pollini was elected Vice President-Engineering and Operations and Alexander Gelf
was  elected  Vice  President-Analytics.  Effective  August  6,  2004,  Messrs.
Elefteratos  and  Schmidt  were  elected directors of our company. Following the
acquisition, Wayne Taylor, Interim Chief Financial Officer, and Chris Farnworth,
Vice  President,-  Corporate  Development, remained in their existing positions.

Private  Placement

     On  September 10, 2004, we completed a private placement in which we raised
gross  proceeds  of  approximately  $1.6  million.  We  sold  an  aggregate  of
1,071,631 shares  of  our  common  stock in the private placement at a per share
price  of  $1.50.  For  no  additional consideration, we issued to the investors
warrants  to  purchase  a like number of shares at $2.00 per share. The warrants
are  scheduled  to  expire  on  August  11,  2006.


                                        1
<PAGE>

OVERVIEW

     We  are  engaged  in  the  commercialization  of  technologies  designed to
implement  secure  electronic  storage  and  retrieval  of  signed documents and
biometric  signature-based  authentication for electronic transactions.  Each of
our  technologies,  several  of  which  have been licensed from others, has been
tested  and  proven  through  use  in  the  market. We intend to provide turnkey
solutions  combining  the  advantages  of these technologies to facilitate safe,
efficient  and  secure  electronic  transactions  and  data  access.

Through  our  wholly-owned subsidiary, Lightec Communications, Inc. ("Lightec"),
we  also  provide  design,  installation  and  technical  support  services  for
information  technology  systems.

For  the  year  ended  June  30,  2004,  we earned revenue of approximately $7.1
million  and  incurred  a  net  loss  of  approximately  $3.4 million (including
approximately $2.5  million in non-cash charges).  In the prior fiscal year, we
earned  revenue  of  approximately  $1.1  million  and  incurred  a  net loss of
approximately  $13.6  million (including approximately $11.2 million in non-cash
charges).  Substantially  all  of our historical revenue has been generated from
Lightec.

By  enabling  the  transition  to  electronic  transactions  from  traditional
paper-based transactions, we believe that our products and services will promote
reduced  costs,  quicker  response times, lower levels of mistakes and fraud and
the  facilitation  of  other  benefits not feasible for paper-based transactions
such  as instant transaction query capability, data mining for numerous business
and  research  purposes  and  more  efficient  data  storage.

STRATEGY

     Our  objective  is  to become a leading provider of technology solutions to
assist  in  the migration of paper transactions to electronic transactions. With
our recent management changes and expanded technology capabilities following the
acquisition  of SiVault Analytics, we have revised our business strategy to take
advantage  of  our  core  competencies.  Key  elements  of our strategy include:

     Focus  on Retail and Healthcare Markets. While our technology solutions are
appropriate  for  numerous  markets,  including  retail, healthcare, banking and
government, we believe the United States retail and healthcare markets represent
the  most  immediate  opportunities  for  our  company due to their size, market
inefficiencies  and regulatory changes requiring increased data availability and
higher  levels  of security.  As such, our initial target markets will be retail
and  healthcare.  For  retail,  we  will  offer  our branded product ReceiptCity
purchased  in  March 2004 from a subsidiary of Symbol Technologies.  ReceiptCity
is  a  software  solution designed to store electronic copies of signed customer
receipts  to  facilitate billing inquiries, lower the cost of dispute resolution
and  decrease  the  number  of  charge-backs  that  otherwise would occur due to
merchants'  inability  to  timely locate and present proof of transactions.  For
healthcare,  we  offer  an  electronic  prescription  service  utilizing
biometrically-authenticated  signatures, thereby reducing prescription fraud and
filling  errors  and  facilitating  compliance  with  new  standards relating to
medical  record  access.


                                        2
<PAGE>

     Transaction-Based  Revenue Model.  To minimize up-front costs to customers,
we  price  our services on a per transaction basis, depending on volume and type
of  transaction.  Subject  to  financing  availability,  we  may  also offer our
customers  leasing and financing options for necessary hardware and software, to
further  offset  implementation  costs.

     Expand Strategic Marketing Relationships.  We have entered into a number of
relationships  designed  to  leverage  our  marketing  capacity.  These  include
relationships with Hewlett Packard, Intelli-Check, Viaquo, Opus Software, Symbol
Technologies,  Hypercom,  MFXchange Holdings, Datawitness and Base Technologies.
Some  of  these  arrangements are licensing and marketing arrangements, and some
involve  offering  other  products and services bundled with our technology.  We
intend  to  continue  to expand our marketing relationships, particularly in the
retail  and  healthcare  sectors.

     Acquire  New  Technologies  and  Integrate  with Existing Technologies. Our
ability  to  offer turnkey solutions depends on our ability to offer a number of
technologies  and  applications  in  a  comprehensive service package. We devote
considerable resources to ensuring that our existing technologies are compatible
and  well  integrated  and  we  will  continue  to  seek  out  and integrate new
technologies  as  appropriate  to  support  our existing and planned product and
service  offerings.

     Leverage Our Lightec Business. Lightec provides a significant source of our
cash  funding  needs.  During the year ended June 30, 2004, substantially all of
our approximately $7.1 million in revenue was generated by Lightec. In addition,
we  believe that Lightec's system design and installation business and our other
technology  offerings  can  be  synergistic  in  terms  of  mutually  beneficial
marketing  opportunities.

     Protect  Our Intellectual Property. Protection of our intellectual property
is  important  to  generating maximum revenue from our products and services and
maximizing  the value of our business in general. To that end, we seek, whenever
practicable, to obtain patent and other intellectual property protection for our
technologies  and  we  seek to ensure that others from whom we license important
technologies  do  the  same.  We  currently  have  pending  five  United  States
provisional  patent  applications  relating to technologies owned by us. We also
own  and  are  considering applying for additional trademarks and/or copyrights.


                                        3
<PAGE>

OUR  CORE  TECHNOLOGIES

     Our  core  technologies  are  comprised  of  the  following:

-     Biometric  Signature  Authentication  Technology  -  software  designed to
record  and  analyze  biometric  parameters  relating  to a person's handwritten
signature.  Parameters  include  image,  speed,  stroke  sequence,  pen tilt and
acceleration.  Recorded  information  is  stored for each registered signer in a
dynamic  database  that  changes  over  time  to  reflect subtle changes in each
registered  signer's  signature.  Commercial  applications  of  this  technology
include  document  approval, verification of the identity of users participating
in  electronic  transactions  and  securing log-in access to computer systems or
protected  networks.  Key  components  of  this technology are licensed from two
independent  sources,  WonderNet,  Ltd.  and  Communications  Intelligence
Corporation.

-     Access  Control  Technology  -  a  distributed  access management software
solution  that  permits  only  authorized  users  to access (put in or take out)
protected  information  being  shared among groups of all sizes. The system uses
access credentials (permissions) that apply to each individual file (or field on
an  XML  form)  and  distributed  to  each  organizational member, and which are
automatically  refreshed  over  the  Internet.  This  access  control technology
enables  members  to securely encrypt files or XML fields for use by groups that
are  defined  by  access  credentials  issued  to  each  member  by  security
administrators. Only individuals with the correct access credentials may consume
(decrypt) or create (encrypt) the data. Individual members are assigned multiple
credentials  with  read  and/or write permissions according to their role in the
organization. Once encrypted by the creator-e.g., the central database sending a
report  to  an insurance company-the data remains protected by strong encryption
(typically  AES  encryption  )  and routed and/or stored to and from a number of
locations  before  the properly authorized person with the read credential opens
it  to access the data.  We license this technology on an exclusive basis in the
healthcare  field  from  Viaquo  Corporation.

-     Service  Oriented Architecture -  Our technology solutions employ a number
of  electronic  functionalities,  including  biometric  authentication, database
management,  transaction  processing,  financial settlement, data communication,
secure  data  access  and  storage,  data  mining  and  Internet-based  service
provision.  We  enable  these  functionalities  and related system components to
communicate  with  one  another through a service oriented architecture designed
for  fast  and  easy  integration  of functionalities, as well as scalability to
accommodate  growth  and  adaptation  to  changing  market  needs.  Our  system
components  include Sun database servers, Solaris database operating system, EMC
storage  area network, Hewlett Packard blade application and web servers, Oracle
database  management  software,  InterNap  primary production communication link
(network  provider)  and Fiorano enterprise service bus.  Our enterprise service
bus  is  a  key  component  of  our system architecture as it provides the basic
connectivity  backbone.  It  is  designed  to  interoperate  with  a  variety of
disparate  application  servers  simultaneously,  potentially  smoothing  over
technical  differences  and   also  providing  services  for  communication  and
integration.


                                        4
<PAGE>

-     ID-Check  Technology  Complementing our biometric signature authentication
technology,  ID-Check  technology  is  designed to determine the authenticity of
identification  cards.  The  technology  incorporates  software,  databases  and
hardware  that  instantly  read,  analyze  and  verify  encoded data in magnetic
stripes  and  barcodes on government issued identification cards to determine if
the  content  and  format  is  valid  (i.e.  that  the  card is authentic).  The
magnetic/barcode information is compared to a number of databases to ensure that
the  ID  card is not a fake and that that person actually exists and has a paper
trail  authenticating  his/her  existence.  We  anticipate offering the ID-Check
technology  as  a  means of authenticating individuals at the time they register
their  signatures  in  our system database.  Thereafter, subsequent transactions
would  be  authenticated  by  biometrically  comparing  the signature entered at
transaction  time  with  the signatures entered at registration time. We license
the  ID-Check  technology  from  Intelli-Check,  Inc.

     Our turnkey solutions may incorporate some or all of these technologies, as
well  as  other proprietary technologies that we may either license or otherwise
obtain  for  the  benefit  of  our  customers,  depending  on  the  needs of the
particular  application.

OUR  PRODUCTS  AND  SERVICES

     While  our  core  technologies  have  numerous  applications,  and  can  be
customized  to suit the needs of particular customers, we intend to focus on the
following  product  and  service  offerings:

ReceiptCity - is a branded software solution targeted to retail enterprises that
stores  electronic  copies of signed receipts of customers to facilitate billing
inquiries,  lower  the  cost  of  dispute  resolution and decrease the number of
charge-backs  that  otherwise  would occur due to merchants' inability to timely
locate and present proof of transactions.  This product can be combined with our
proprietary  data  analysis  technology  to  enable  merchants  to:

-    Create  targeted advertisements delivered directly to credit card terminals
     while  the  customer  is  waiting  for  credit  card  authorization.

-    Recognize  and  track  customers'  shopping  patterns

-    Track  efficiency  of  marketing  campaigns  and  promotions.


                                        5
<PAGE>

     To  support  ReceiptCity,  merchants  must  have  credit  and  debit  card
processing  capability,  point-of-sale  terminals capable of biometric signature
capture  and  Internet  connectivity.  We may enter into arrangements with third
party  providers  of  these facilities to offer them to our potential customers.

Expanded
Offerings  -     Other  products  and  services  we  are  offering to our target
markets  include:

-     Biometric  signature  registration
-     Biometric  signature  authentication  per  transaction
-     Database  security  protection  (access  control)
-     Digital  pen  and paper for forms input - We have entered into a marketing
arrangement  with  Hewlett  Packard  under  which  we are authorized to sell its
Digital  Pen  and  Paper  solution.  The  product consists of a digital pen that
contains  ink  and  a  small camera that captures pen strokes and puts them into
digital  form.  After  docking  the pen in its cradle, the data is automatically
integrated  into  the  enterprise  data  infrastructure.  It  is  targeted  to
businesses  with  processes  that  rely  heavily  on  filling  out  paper forms,
including  retail  and  healthcare  businesses.

e-Prescriptions  -     We  offer  an  electronic  prescription service utilizing
biometrically-authenticated  signatures, thereby reducing prescription fraud and
filling  errors  and  facilitating  compliance  with  new  standards relating to
medical  record  access.  The  service  will provide a systematic way to capture
signatures  of  medical doctors who prescribe medication, utilizing devices such
as  signature  pads,  pen  computers and person digital assistants (PDAs).  Once
authenticated,  a  secure  prescription with a unique number will be created and
centrally  stored.  A hard copy of the prescription can be given to the patient,
and/or  the  prescription  can  be  routed  in  electronic  form directly to the
dispensing  pharmacy.  To  the  extent  permitted by law, the system would store
prescription-related  data, and allow access by pharmacies, physicians and other
groups  involved  in  healthcare  delivery,  only  to  the  extent  authorized.

     In  Canada,  our  eMedRX  subsidiary  was the first company of which we are
aware  to develop a pilot e-prescribing product using a client-server model that
can biometrically authenticate physician signatures.  We completed a trial using
this  system  in  August 2004.  While we have entered into contracts with select
stores  in  drug  store  chains, our e-prescription solution requires additional
development  to  include more robust features including drug databases, decision
support  utilities,  integration/installation  into  current  products  and
certifications.

     Through our Lightec subsidiary, we offer design, installation and technical
support  for  information  technology  systems.  See "- Lightec Communications."


                                        6
<PAGE>

TECHNOLOGY  LICENSES

     Our  technology  platform is comprised of a number of technologies, several
of  which  we  license from others. Set forth below is a summary of the material
technology  license  agreements  to  which  we are a party.  Our rights to these
technologies  are dependent on our continued fulfillment of our responsibilities
under  these  agreements,  including our satisfaction of royalty and license fee
payment  obligations.

WonderNet

     Effective  August  15,  2003,  we entered into an agreement with WonderNet,
Ltd.,  an Israeli company, under which we license rights to WonderNet's Pen Flow
biometric signature authentication software, software development kit and secure
storage  and  data  communication  software.  Under  the  agreement,  which  is
perpetual  in  term,  we  were  granted  the  right  to develop applications and
products  based on the licensed technology and to use, market, sell, distribute,
sublicense  and  commercially  exploit  the licensed technology in the following
markets:  North  America,  Mexico,  Central  America,  Bermuda and the Caribbean
islands. Other territories on a case by case basis.  Under the agreement, we are
entitled  to  purchase  software  products  at  a  discount ranging from 50%-60%
depending on dollar volume, and we are entitled to purchase hardware products at
a  10%  discount.  We  agreed  to  pay  minimum  software  license fees totaling
$120,000  per  quarter,  in  consideration  for  which we were granted exclusive
sublicense  and  distribution rights in the territory. All payments by us are to
be  made  quarterly.  The  agreement  is  terminable upon breach by either party
following notice and opportunity to cure and by WonderNet upon certain events of
insolvency  with  respect  to  our  company.  Under  the agreement, we granted a
comparable  license,  but not the right to sublicense, to WonderNet with respect
to  improvements  to  the  licensed  technology  created by us, on an exclusive,
royalty-free  basis  outside  of  the  territory. The agreement replaces a prior
agreement  entered  into  in April 2002, under which we issued WonderNet 125,000
shares  of  our  common  stock..

Viaquo

     Effective  May  13,  2004,  we  entered into a strategic partnering and ASP
license  agreement  with  Viaquo  Corporation.  Under  the  agreement,  Viaquo
appointed  us  as  its  exclusive  application  service provider ("ASP") for the
licensed  software  in  the  health  care industry, typically pharmaceutical and
medical services and related transactions.  Under the agreement, we were granted
the right to host Viaquo's ViaSeal software and related technology on authorized
servers  for  access  by  authorized  end users. The ViaSeal software is used to
protect  transactions-based  data.  Our rights under the agreement are exclusive


                                        7
<PAGE>

within  the  healthcare  industry, and are non-exclusive outside of that market.
We  also  have  the  right  to sublicense the licensed software, but not for the
purpose  of  outsourcing  to  make  the software available to parties beyond the
sublicensed  party.  The  agreement has a term of three years from the effective
date,  subject  to  automatic renewal for one term of two years unless notice of
termination is given at least six months prior to the scheduled expiration.  The
agreement  is  terminable  under  a variety of circumstances including by either
party upon material breach by the other following notice and opportunity to cure
or  an  insolvency-related  event  of the other, and by Viaquo following payment
default by our company.  In consideration for our rights under the agreement, we
paid Viaquo $250,000 upon signing and agreed to pay an additional $50,000 within
six  months  thereafter.  We  also agreed to pay a royalty equal to 10% of gross
revenue  received  by  us from subscription fees and any other forms of business
related  to  the hosted ASP service.  We agreed to review the agreement annually
on  May  15  to  determine  compliance  and  level  of  royalties generated.  If
following  review  Viaquo  determines  that  sufficient  royalties are not being
generated, Viaquo may solicit other customers in our market, but must offer us a
one-month  right  of  first  refusal  prior  to  entering into a tranaction with
another  party.  If  and for so long as we generate sufficient revenue, Viaquo's
right  to solicit other customers will be suspended.  We have the right to brand
our  ASP  service  as  we  like,  provided  we  must label the licensed software
"secured  by  ViaSeal".

Communications  Intelligence  Corporation

     Effective  May  13,  2004, we entered into an agreement with Communications
Intelligence  Corporation ("CIC") pursuant to which we were granted a worldwide,
non-exclusive  license  to  use  and  incorporate  CIC's  iSign  software and to
distribute  the  licensed software embedded in our software or as part of hosted
ASP  services  or  for  independent  installation  by  our customers pursuant to
authorized  end  user  license agreements.  In consideration for the license, we
agreed  to  pay  CIC  a  fee  equal  to  33.33% of all CIC-based transaction fee
proceeds.  For  each unit shipped by us in a reseller capacity, we agreed to pay
CIC  75%  of  its then published list price.  For CIC support as contemplated by
the  agreement, we agreed to pay an additional 10% of the license fees otherwise
payable.  The  term  of  the  agreement  is  three  years,  subject to automatic
one-year  renewals  if  not terminated at least one month prior to the scheduled
renewal  date.  In addition to standard termination provisions, the agreement is
terminable by CIC if we have not generated revenue to CIC within 180 days of the
effective  date  or  if,  in CIC's reasonable judgment, we do not make continual
reasonable  commercial  use  of  the  licensed  technology.

@POS.com

     Pursuant  to  an  agreement  dated  March  2,  2004,  we acquired assets of
@POS.com,  Inc.,  a subsidiary of Symbol Technologies, Inc., exclusively related
to  the  business of capturing sales receipt transaction data for the purpose of
providing  access to such data on an ASP basis.  Included in the acquired assets
are the ReceiptCity.com software, hardware, a variety of hosted services related
thereto  and trademarks for the names "Crossvue" and "MyReceipts".  The business


                                        8
<PAGE>

was  formerly  conducted by the seller's wholly-owned subsidiary, Crossvue, Inc.
We  also  acquired a non-exclusive worldwide, non-trasferable, non-sublicensable
license  under  the  seller's  patent  claims  necessary to operate the acquired
software  and  to  make, use, sell and have sold the hosted software.  Under the
agreement,  we granted @POS a non-exclusive, worldwide, perpetual, sublicensable
license  under  copyright  in  all acquired software developed by @POS, provided
that  for  two  years  from  closing  @POS agreed not to sublicense the licensed
software  as  a  substantially  complete  system for providing ASP functionality
similar  to  the  hosted  services.  In consideration for the acquired assts, we
agreed to pay the following consideration to @POS:  For the year ending December
31,  2005,  10% of net receipts accrued by us for that year, for the year ending
December  31, 2006, 8% of net receipts accrued by us for that year, and for each
year  thereafter,  6% of net receipts accrued by us for that year, provided that
the rate shall drop to 5% if and when patents under which the license is granted
are  no  longer  valid  or  enforceable.  The  agreement  has no set term and no
provision  for  termination  following  closing.

Intelli-Check

     On August 24,  2004  we  entered  into  a  software  license agreement with
Intelli-Check  Inc., a Delaware corporation, pursuant to which we were granted a
nonexclusive,  nontransferable  right to use the licensed software in connection
with  the sale, by us or distributors, of our signature verification technology.
In  consideration  for the license, we agreed to pay Intelli-Check a fee of $475
for  each  system that uses the licensed software, as well as additional amounts
pursuant  to  agreed  upon  pricing for hardware and other products and services
offered  by  Intelli-Check  as  well  as software updates.  The agreement has no
fixed  term  and  is cancelable by us for any reason upon 60 days' notice and by
Intelli-Check  only upon breach by us that remains uncured following two months'
notice.

Opus

     Effective  September  15, 2004 we entered into a master agreement with Opus
Software  Solutions  Pvt.  Ltd,  an  India  company, pursuant to which Opus will
provide  its  customized and certified Electra suite of software products at our
location  to facilitate point-of-sale and credit card transaction authorization,
processing,  record keeping, management and other related electronic transaction
functions. Under the agreement, we were granted a license to use the software at
our  location  on  a non-exclusive, non-transferable basis.  The agreement shall
remain  valid  until  terminated.  Opus  may  terminate the agreement after five
years  upon 90 days' prior notice.  We may terminate the agreement upon 90 days'
prior notice at any time.  In consideration for the license, which for the first
thirty  months  covers  3500  point-of-sale  devices  driven  by Electra-POS and
250,000  cards  issued  by  Electra-Card,  we agreed to pay for the first thirty
months  $620,000 in monthly installments and annual interest at the rate of 10%.
See  Note  20 of Notes to the Consolidated Financial Statements included in this
report for a more detailed description of the payment arrangement.  We will also
be  obligated  to  pay  annual  maintenance fee for the base software license of
$10,333  per  month.  Additional  maintenance fees will be charged on additional
customizations.  All maintenance fees are payable on a revenue share model under
which  a  percentage  of  our  monthly  profits  will  be  applied  to cover the
maintenance  fees.


                                        9
<PAGE>

MARKETING

     We  employ a channel-based sales strategy, with some direct selling efforts
to  targeted  large  prospects.  Our managed network infrastructure services are
priced on a transaction basis, determined by the volume and type of transaction.
Related  value-added  services  incur  additional  fees.  Alternatively,  large
enterprises  can  license  our  service  package(s)  and manage their own system
internally.

     We have entered into agreements with a number of third parties to assist us
in  our  marketing  efforts.  These  arrangements  are  designed to leverage our
presently  limited  sales  force  and  to target defined geographic and business
markets.  We  envision  that certain of our technology license arrangements will
also result in marketing opportunities with those companies.  Set forth below is
a  summary  of  some  of  our  existing  marketing  arrangements.

Hypercom

     Effective  May 13, 2004, we entered into an agreement with Hypercom U.S.A.,
Inc.  under  which  we  were  appointed a non-exclusive Hypercom reseller in the
United  States.  Under  the  agreement,  we  are authorized to purchase Hypercom
point  of  sale terminal products and peripherals and to resell them to end user
customers.  We agreed to use our best efforts to promote and market the products
throughout  the  United  States  and  to maintain an active and suitably trained
sales  force.  The term of the agreement is three years from the effective date,
subject to earlier termination upon three months' notice by either party for any
reason.  The  agreement  may also be terminated under a variety of circumstances
for  cause  and  without  notice.
Rycom  CCI

     Effective  September  22,  2004,  we  entered into a strategic alliance and
exclusive  management  agreement  with  Rycom  CCI  Inc.,  a  company located in
Ontario,  Canada  ("Rycom").  Under  the  agreement, Rycom was authorized as our
exclusive  Canadian  Strategic  Manager  to  develop and operate a fully managed
signature  verification  authentication  system  and  other  solutions using our
proprietary  technology  for  the  Canadian  market.  In  consideration  for the
agreement,  we  and  Rycom  agreed  to  share  all software license and software
maintenance  revenue  generated  under  the agreement on a 50-50 basis.  Rycom's
rights  under  the  agreement  are  exclusive  in  Canada.  The agreement has an
initial term of three years, subject to automatic two-year renewal at the end of
each  term.  The  agreement  can  be  terminated upon 90 days' prior notice upon
either  party's  breach.

COMPETITION

     In  the  retail  market,  we are aware of companies that offer technologies
that  store  pictures  of  electronic  signatures  entered through point of sale
terminals.  Some  of  these  companies enable the signature to be printed on the
transaction  receipt.


                                       10
<PAGE>

     In  the  prescription  management  market,  we  are  aware  of  a number of
companies  that  provide  electronic  prescription services, including A4 Health
Systems, Allscripts, SureScripts, Alteer, ChartLogic, eInformatics, E-Physician,
Health  Probe, I-Scribe, Medical Manager/WebMD, OnCall Data, Pocket Scripts, and
RxMadeSimple.

     There  are  several  companies  that  offer  electronic biometric signature
authentication  technology  there  are  numerous  electronic  authentication and
verification  technologies  such  as  pin,  password,  and  other  biometrics
technologies.

     A  number  of companies offer digital pen technology. For example, PenPower
Group,  and  Palm  Inc.  have  developed  or  are  developing complete pen-based
hardware  and  software  systems. Others, such as Microsoft Corporation, Silanis
Technology,  Inc.,  and  Advanced  Recognition Technology, Inc., have focused on
different  elements  of those systems, such as character recognition technology,
pen-based  operating  systems  and  environments,  and  pen-based  applications.

LIGHTEC  COMMUNICATIONS

     Lightec  was  established  in  1994. It provides telecommunications design,
installation and information technology services. Lightec's customer base, which
is primarily located in Northeastern United States, includes governmental units,
particularly  school  districts. We believe that Lightec's experience in bidding
for  government  contracts  and  its  relationships  with governmental units may
provide  marketing  opportunities  for  our  other  products  and  services.

     Lightec's projects involve design and installation of cable and fiber optic
networks.  Lightec's  clients  include  educational  institutions,  including
universities  and  local  school  systems,  governmental entities, hospitals and
corporations.

     Lightec's  target  market  includes  government, manufacturers, processors,
utilities,  banks,  schools,  universities,  research  complexes,  media
conglomerates,  securities  and commodities exchanges, law firms, consulting and
research  organizations  and  transportation  service  companies.

     Lightec  competes  on the basis of quality versus price. Lightec's services
are  largely  delivered through long-term subcontractors and temporary staff. In
the  information  technology  sector,  Lightec competes with large-scale project
firms  such  as  Verizon  and  SNET  rather  than maintenance shops or equipment
resellers.  In  the general installation business Lightec competes with 20 to 30
small  regional/local  premise-wiring  providers.  In  the  fiber optic splicing
market,  Lightec  competes  with  national and regional firms. Lightec views its
real  competition  as  the  turnkey  solution  providers  who  can  retain  the
value-added  service  contracts ensuring the longevity of the solution provided.

     Lightec relies on one customer for the majority of its revenues. Lightec is
under  contract  to  provide supplies and services to this customer for the next
two  years. If Lightec were to be unable to supply requisite products or provide
the needed services to the customer, or if the customer became unable to finance
the  continued  acquisition  of  these  supplies  and  services,  the  impact on
Lightec's  earnings  would  be  significant.


                                       11
<PAGE>

     For  the year ended June 30, 2004, Lightec relied on one principal supplier
that  accounted for 69% of its purchases, primarily telecommunications equipment
for  that  year.  While  we  believe  that  there are numerous suppliers of such
equipment, we believe that our arrangement with the existing supplier, including
credit terms, is favorable. If we were forced to switch suppliers, we may not be
able  to  obtain  comparable  terms.

HISTORY

     We were incorporated in the State of Nevada on March 12, 1999 as Great Bear
Resources,  Inc.  On May 25, 1999, we changed our name to Great Bear Investments
Inc.  On  August  11, 2000, we changed our name to Security Biometrics, Inc.  On
July  23,  2004,  we  changed  our  name  to  SiVault  Systems,  Inc.

     On  August  25,  2000,  we acquired all of the outstanding capital stock of
Biometrics  Security,  Inc.,  a  Nevada  company,  in  a share exchange with its
shareholders.  In connection with the acquisition, we issued 1,875,000 shares of
our  common  stock  to Gesture Recognition Technologies International Limited in
exchange  for the preferred shares of Biometrics Security, Inc. it owned, and we
issued  approximately  25,000  shares  of  our  common stock in exchange for the
outstanding  shares  of common stock of Biometrics Security, Inc.  On August 22,
2000,  Biometrics  Security,  Inc.  entered  into  an  option agreement with DSI
Datotech  to  acquire an exclusive license to that company's gesture recognition
technology  for  banking  and  financial transactions. The exercise price of the
option  was $8,000,000, of which we paid $320,000. On December 2, 2002, the name
of  Biometrics  Security,  Inc.  was  changed  to  eMedRX,  Inc.

     On  June  29, 2001, we acquired all of the outstanding membership interests
of  Netface  LLC,  a  Connecticut  limited liability company, in exchange for an
aggregate  of  1,000,000  shares  of our common stock. NetFace held an option to
acquire  an  exclusive  royalty-free  license  to exploit DSI Datotech's gesture
recognition  technology  for  video  games and Internet/television. The exercise
price  of  the option was $5,000,000, of which we have paid $200,000, plus a 20%
equity  interest  in  NetFace  LLC.  Netface  LLC  is  presently  inactive.

     We  have  elected  not  to  exercise our options to acquire licenses to DSI
Datotech's  gesture  recognition  technology  and  the  options  have  expired.
Consequently,  the  Company  expensed  $320,000  in  2001 and the balance of the
investment  of  $200,000  in  2002.

     On June 14, 2002, we acquired Lightec Communications, Inc. through a merger
with  a wholly-owned subsidiary formed by us. The merger consideration consisted
of  950,000  shares  of  our common stock and $4,000,000 in cash. 900,000 shares
were  issued  to  Maryanne  Richard  and  50,000 shares were issued to Dr. Nabil
El-Hag.  We  financed  the  cash portion of the merger consideration through the


                                       12
<PAGE>

issuance  and  sale  of 9% promissory notes in the aggregate principal amount of
$2,000,000  and  the  sale  of  common stock and warrants at $2.40 per share for
gross  proceeds of $850,000. The notes were issued in equal principal amounts to
Synergex  Group Partnership, whose managing partner is Gerard Munera, a director
of  our  company,  and  Maryanne Richard, the owner of Lightec.  We also entered
into an employment agreement with the manager of Lightec, Michael Richard, under
which  we agreed to pay Mr. Richard an annual salary of $150,000 and performance
related  bonuses  for  2002,  2003  and  2004.  The  employment  agreement  was
subsequently  terminated  pursuant  to  the  settlement  described  below.  In
connection  with  the  acquisition, we issued 200,000 shares of common stock and
accrued  $200,000  as  a finder's fees under a finder's fee agreement with Chris
Farnworth.  In  August  2004,  the  $200,000  liability  to  Chris Farnworth was
converted  to  144,718  shares  of  common  stock.

     On  June  4,  2004,  we  entered  into a Settlement Agreement with MaryAnne
Richard  and Michael Richard, pursuant to which we and Lightec, on the one hand,
and  MaryAnne  Richard  and Michael Richard, on the other hand, agreed to settle
all obligations and disputes between them. As part of the agreement, we arranged
for  the  payment  to  the Richards of $1,189,983 in cash (including an $850,000
payment  for  the  shares referred to below) and we issued to MaryAnne Richard a
warrant  to  purchase 400,000 shares of our common stock at $2.50 per share, and
the Richards (i) transferred 850,000 shares of our common stock to third parties
designated by our company for $850,000 in cash and (ii) surrendered a promissory
note  issued  by  us  in  the  principal sum of $1,000,000. On July 2, 2004, the
parties finalized the settlement and executed a mutual waiver and release of all
claims  of  any kind whatsoever that each may have had against the other, and on
that  date  the remaining balance of the settlement payment $339,983 was paid to
the  Richards.

     On  June  28,  2002  we  acquired  all of the outstanding stock of Datadesk
Technologies,  Inc., a Washington corporation ("Datadesk"), pursuant to a merger
with  a  newly  formed  subsidiary  of  our  company.  In  the merger, we issued
approximately  550,000  shares  of  our  common  stock  to  the  shareholders of
Datadesk, and borrowed $1,680,000, pursuant to a one-year convertible debenture,
$1,375,000 of the proceeds of which was used to pay Datadesk bank loans, certain
liabilities  and  closing  costs.  In  connection with and as a condition to the
acquisition,  we  entered  into  a  three-year  employment agreement with Robert
Solomon,  pursuant  to which we agreed to employ Mr. Solomon as chief technology
officer  at  an  annual  base  salary  of  $150,000 plus annual bonuses based on
Datadesk  sales.

     Datadesk  was  in  the  business  of  designing, manufacturing, and selling
desktop  solutions,  educational  computing  systems,  and handheld and wireless
devices.  On August 20, 2003, we transferred ownership of Datadesk to Pan Pacifc
Ltd.  in  consideration  for  assumption  of the net liabilities of Datadesk. In
connection  with  the  transfer,  Mr.  Solomon's employment with our company was
terminated.  We  recorded  net  income  (loss)  from  discontinued operations of
$266,021  and  $3,918,281 (including a writedown of goodwill of $3,405,645 ) for
the  years ending June 30, 2004 and 2003 to reflect the disposition of Datadesk.


                                       13
<PAGE>

     On  January 21, 2003, we established a new wholly-owned subsidiary, eMedRx,
Inc.,  a  British  Columbia corporation ("eMedRx Canada"). EMedRx Canada entered
into  an  exclusive  worldwide license agreement with our Company to develop and
market  our  electronic  prescription  system.  eMedRx Canada has issued certain
common stock to outside interests for approximately $50,000 thereby reducing our
ownership  of  eMedRx  Canada  to  below  100%.  We  currently  have  two United
States-based  subsidiaries  under  the  name  eMedRx,  Inc.  To  streamline  our
corporate  structure,  we  intend  to  consolidate the business of each of these
entities  within  SiVault  Systems,  Inc.  during  the  current  fiscal  year.

     On  February  18,  2004,  we  entered  into  a  stock purchase agreement to
purchase  all  of the outstanding shares of Datagility, Inc. ("Datagility"). The
transaction  was  consummated  in May 2004.  Datagility has developed a software
application, CyberTrooper, that is designed to fulfill the scanning requirements
of  the  United  States  Patriot  Act and Office of Foreign Assets Control.  The
purchase  price  for the Datagility shares was (i) $200,000 in cash, $100,000 of
which  was  paid  at closing and the balance of which is payable on December 31,
2004,  and (ii) 116,278 shares of our common stock, which was issued at closing.
Of the $100,000 payment scheduled to become due on December 31, 2004, $50,000 is
payable  to  Mr.  Herve Bertacchi, President of Lightec. Under the agreement, we
agreed to pay additional cash consideration of up to $200,000 if revenues earned
by us from CyberTrooper exceed certain targets by December 31, 2004 and June 30,
2005.

     On  July 9, 2004, we issued an aggregate of 4,000,0000 shares of our common
stock,  valued  at  $2.50  per  share, to the shareholders of SiVault Analytics,
Inc.,  a  Delaware  corporation, in exchange for all of the outstanding stock of
SiVault  Analytics,  Inc.  Thereafter,  on July 23, 2004, we merged that company
into  ours  and  simultaneously  changed  our  name  to  SiVault  Systems,  Inc.

HUMAN  RESOURCES

     As  of  September  30, 2004, we had 15 employees, 12 of whom were full-time
employees.


EXECUTIVE  OFFICERS

     Our  executive  officers  are  as  follows:


                                       14
<PAGE>

<TABLE>
<CAPTION>
NAME                   AGE                        POSITION
---------------------  ---  ----------------------------------------------------

<S>                    <C>  <C>
Emilian Elefteratos     44  Chief Executive Officer, President and Director
Wayne Taylor            52  Interim Chief Financial Officer and Director
Christopher Farnworth   54  Vice President - Corporate Development and Secretary
Igor J. Schmidt         38  Chief Strategy Officer and Director
Steven Pollini          49  Vice President-Engineering and Operations
Alexander Gelf          37  Vice President-Analytics
Herve Bertacchi         35  President of Lightec Communications, Inc.
Dr. David Dalton        55  Chairman of eMedRx, Inc. and Director
Jeff Maynard            52  President and CEO of eMedRx, Inc.
</TABLE>

     Emilian  Elefteratos  joined  our  company  as  Chief Executive Officer and
President following the acquisition of SiVault Analytics, Inc. in July 2004.  He
was  elected  a director in August 2004.  Mr. Elefteratos has 20 years of global
business  experience  in  a  variety  of management functions including finance,
sales  operations,  business  development,  professional  services  and  network
operations.  From  1982  to  1986  he  served  as  a  senior  manager of British
Telecommunications  PLC,  with  responsibility  for mergers and acquisitions. He
served  as  a  senior  manager  of  Cisco  Systems  from  1996  to  2002,  with
responsibility  for  sales  finance  and  worldwide joint ventures.  During 2002
until  he  joined  SiVault  Analytics,  Inc. in 2003, he served as a director of
sales  finance  for  Brocade  Communications.  Mr.  Elefteratos  joined  SiVault
Analytics,  Inc.  in  2003,  and  served  as  its  chief  operating  officer.

     Wayne  Taylor  is  a  founder of our company.  He served as Chief Financial
Officer from June 1999 to March 2002 and from March 2003 to August 2003, and has
served as interim Chief Financial Officer since June 2004 to present. Mr. Taylor
joined  our  Board  of  Directors  in September of 2003.  He is President of FGH
Insurance  Agencies Ltd. and has developed both creditor insurance and specialty
products for some of the largest international banks. Mr. Taylor was employed by
HSBC  Canada  from  1977  to 1986 and served in a senior management capacity for
that  institution.  As  the  international  database  representative  for  OKRA
Marketing  Corporation,  Mr. Taylor was responsible for selling software systems
to  major  financial  institutions.

     Chris  Farnworth  has served as Vice President-Corporate Development of our
company  since  April  2003  and as a consultant to us from September 2003 until
joining  our  company  as  an  officer.  From  1993  to  2002, he served as vice
president  of  Nostrad  Telecommunications,  Inc.  Mr.  Farnworth  has extensive
worldwide  Board  and operational experience with large and small multi national
companies  in  high  technology  focusing  upon  business development, strategic
planning  and  development  of  broadband  telecommunications  networks.  He was
managing  director  of  Coastal International Agencies and BIX Engineering, both
subsidiaries of a major multinational company based in Singapore with offices in
Hong  Kong,  Indonesia,  and  Malaysia.

     Igor  J. Schmidt joined our company as Chief Strategy Officer following our
acquisition  of  SiVault Analytics, Inc. in July 2004 and was elected a director
in  August 2004.  Prior thereto and since 1993, Mr. Schmidt had been employed by
SiVualt  Analytics,  Inc.  as  chief  strategy  officer.  From 2000 to 2003, Mr.
Schmidt  served  as vice president-business development for Performance Central.
In  1997,  he co-founded OneNetwork, where he served as chief technology officer
until  2000.  Prior  to that, in 1994 he co-founded iVenture Group and served as
chief  technology  officer  until  1997. From 1990 to 1994 he served as a senior
business  development  manager  of  Vacation  Channel  Corp.


                                       15
<PAGE>

     Dr.  David  Dalton has served as Chairman of eMedRX, Inc. and as a director
of  our  company since Febraury 2004. During the past five years, Dr. Dalton has
served  as  the chief executive of Pharmacy Services, Health Resources Inc., and
Univec  IncDr.  Dalton  has  spent his professional career in the pharmaceutical
industry  and  brings  over  30  years  of experience to the group. He served in
several  capacities  with  Rite  Aid  Corporation  from  1971 to 1989, including
Corporate  Vice  President.  Dr  Dalton  has  served  as  a board member on such
organizations  as  Blue  Shield  of  Pennsylvania,  United  Way, National Health
Association,  and  National  Association  of Chain Drug Stores and is one of the
original  members  and  Director  of  the  National Council of Prescription Drug
Programs.

     Steve  Pollini  joined  our  company  as  Vice  President-Engineering  and
Operations  following  our  acquisition of SiVault Analytics, Inc. in July 2004.
Prior  thereto  and  since  2003,  Mr.  Pollini  had  been  employed  by SiVualt
Analytics,  Inc.  as  vice  president  engineering  and  network operations. Mr.
Pollini  has  more  than 25 years of technical and management experience in both
startup  and  large corporate environments. In 2002 he co-founded Vivin Systems,
where  he  served as vice president-engineering until joining SiVault Analytics,
Inc.  He  served  as vice-president-engineering and network operations for Qiva,
Inc.  from  2000  to  2001. For about nine years prior thereto, Mr. Pollini held
senior technical leadership and managerial positions in UPS' R&D and Information
Systems  groups  as  well  as  within  General  DataComm's high-speed networking
multiplexer  division.

     Alexander Gelf joined our company as Vice President-Analytics following our
acquisition  of  SiVault  Analytics,  Inc. in July 2004. Prior thereto and since
2003, Mr. Gelf had been employed by SiVualt Analytics, Inc. as a vice president.
Mr.  Gelf  has  over  15  years  of  experience  in systems design and analysis,
software  architecting, project management and product development. Mr. Gelf was
employed  by  Sun  Microsystems,  Inc. from 1997 until 2003, including as senior
architect and project leader since 1999. From 1995 to 1997 he served as a member
of  the  technical  staff  of  SunSoft,  Inc.  He spent 10 years working for Sun
Microsystems  in  various  positions,  from software engineer to senior software
architect.  Mr.  Gelf holds several patents related to data processing. Mr. Gelf
was  a  founder  and  the  chief  executive  officer  of  DLI,  a Silicon Valley
consulting  company,  that  provided software consulting services to a number of
companies  including  Cisco  Systems,  3Com  and  Longs  Drugs.

     Herve  Bertacchi  has  served  as President of Lightec since August 2003 to
August 2003. From March 2003 to August 2003 Mr. Bertacchi served as president of
Datagility,  Inc. Mr. Bertacchi is a senior information security specialist with
more  than  10  years  of  experience in security risk assessment, vulnerability
assessment  and  security  architecture  design.  As security consultant for Cap
Gemini  E&Y  US  from  1994 to March 2003, Mr. Nertacchi was responsible for the
creation  of  CGE&Y's  security  practice  in  the  United  States.


                                       16
<PAGE>

     Jeffrey  Maynard  has  served as President of  eMedRx since September 2003.
Mr.  Maynard's experience spans over 25 years in pharmaceuticals and health care
in  the  United  States  and Canada. He has a broad base of experience in senior
management  and  officer  positions in health care companies like Horizon Health
Care,  major  pharmaceutical  companies such as Aventis and Astra Zeneca, and as
equity  partner  in a software development and actuarial consulting firm. In his
previous  role, Mr. Maynard was the President of JCLADS and Associates, a health
care consulting firm involved in launching companies, developing their strategic
business  plans  and  implementing  all  phases  of  business  operations.


ITEM  2.  DESCRIPTION  OF  PROPERTY

     We  occupy  approximately  3,500  square feet of space at 500 Fifth Avenue,
Suite  1650,  New  York,  New York, under a lease expiring March 2007, at a base
rent  of $9,486 per month. A little more than half of the space is sub-leased to
an  unrelated party pursuant to an arrangement under which the party pays 57% of
our  rent  and  costs.  In  San  Jose,  California,  we sublease office and data
facility space at 2665 North 1st Street, under a sublease expiring May 31, 2008.
The  first  six  months  of  the term are at a reduced square footage of 15,000.
Beginning  in  month seven the square footage increases to approximately 35,000.
The  facility  will  be  designed to provide our customers with data management,
data  center support, engineering services, settlement management, a maintenance
platform, call center support, data storage retrieval, and integration services.
The  base rent is approximately $ 15,750 for the first six months, increasing to
$36,636.60  on  March  24, 2005. Lightec rents the space required to support its
functions on a month-to-month basis. We believe that our existing facilities are
suitable  and  provide  adequate  capacity  for our presently foreseeable needs.

ITEM  3.  LEGAL  PROCEEDINGS

     Neither  we, nor any of our subsidiaries, are a party to any material legal
proceeding, nor, to our knowledge, is any material litigation threatened against
us  or  our  subsidiaries.

ITEM  4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

     At the Company's annual meeting of stockholders held on April 30, 2004, the
following  proposals  were  submitted  to  a  vote of stockholders and, with the
exception  of  Proposal  3,  approved:

    Proposal 1. Election of Directors (Michel Berty, David Angus, Allan Gibbins,
Gerard  Munera,  Wayne  Taylor,  Elaine  Bloom,  Ken  Taylor  and  David Dalton)


                                       17
<PAGE>

     A total of 3,916,667 votes were cast in favor of this proposal.  There were
no  votes withheld or cast against the proposal and there were no abstentions or
broker  non-votes.

   Proposal 2. To amend the Articles of Incorporation to effect a one-for-twenty
reverse  stock  split  of  the issued and outstanding shares of common stock and
correspondingly  to  decrease  the  share  capital  from  300,000,000  shares to
15,000,000 shares, and then to increase the share capital from 15,000,000 shares
to  50,000,000  shares.

     A total of 3,916,667 votes were cast in favor of this proposal.  There were
no  votes withheld or cast against the proposal and there were no abstentions or
broker  non-votes.

     Proposal  3.  To  amend  the  Articles  of  Incorporation  to authorize the
issuance  of  up  to  30,000,000  shares of preferred stock par value $0.001 per
share  (or  1,500,000  shares,  if  Proposal  No.  2  is  approved).

          A  total  of  1,604,917  votes  were  cast  in favor of this proposal.

2,311,750  votes  were  withheld  or cast against the proposal and there were no
abstentions  or  broker  non-votes.

     Proposal  4.  To  approve  our  2004  Long-Term  Performance  Plan.

     A total of 3,031,167 votes were cast in favor of this proposal.  There were
no  votes  withheld  or  cast  against  the  proposal  and  there  were  885,550
abstentions  or  broker  non-votes.

                                     PART II

ITEM  5.  MARKET  FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDER  MATTERS.

MARKET  INFORMATION.

     Our  common  stock  is  traded  in the over-the-counter market and has been
quoted  on  the  OTC Bulletin Board since June 12, 2001.  The trading symbol for
our  common stock is currently SVTL.OB. From September 1, 2000 to June 11, 2001,
our common stock was quoted in the Pink Sheets. The following table presents the
range  of  the  high and low bid quotations for our common stock as reported for
each quarter beginning July 1, 2002. Such quotations reflect inter-dealer prices
without  adjustments  for  retail  mark-up,  markdown or commissions, and do not
necessarily  represent  actual  transactions.


                                       18
<PAGE>

<TABLE>
<CAPTION>

Period                               High    Low
-----------------------------------  -----  -----
<S>                                  <C>    <C>
April 1, 2004 - June 30, 2004        $2.70  $0.80
January 1, 2004 - March 30, 2004     $3.00  $1.90
October 1, 2003 - December 31, 2003  $3.00  $2.10
July 1, 2003 - September 30, 2003    $3.40  $1.50
April 1, 2003 - June 30, 2003        $3.60  $2.00
January 1, 2003 - March 30, 2003     $2.80  $1.40
October 1, 2002 - December 31, 2002  $3.60  $2.80
July 1, 2002 - September 30, 2002    $2.00  $1.60
</TABLE>

HOLDERS

     As  of  September 22, 2004, our common stock was owned by approximately 300
holders  of  record.

DIVIDENDS

     We have never declared or paid any cash dividends. It is our present policy
to  retain  earnings  to finance the growth and development of the business and,
therefore,  we  do  not  anticipate  paying  dividends  on  common  stock in the
foreseeable  future.

RECENT  SALES  OF  UNREGISTERED  SECURITIES

     The  following  sets  forth  certain  information  regarding  sales  of our
securities  during the year ended June 30, 2004, which sales were not registered
under  the  Securities  Act of 1933. Unless otherwise indicated, no underwriters
were  involved  in  these  transactions.

1.     On  September 19, 2003 we sold to private investors 600,998 shares of our
common  stock  for  a  total  purchase  price  of $1,201,996.  For no additional
consideration,  the investors also received two-year warrants to purchase a like
number  of  shares  of  common  stock  at  an exercise price of $3.00 per share.

2.     On  November 20, 2003 we sold to private investors 137,875  shares of our
common  stock  for  a  total  purchase  price  of  $275,750 .  For no additional
consideration,  the investors also received two-year warrants to purchase a like
number  of  shares  of  common  stock  at  an exercise price of $3.00 per share.

3.     On  December  30, 2003 we sold to private investors 184,525 shares of our
common  stock  for  a  total  purchase  price  of  $369,050  For  no  additional
consideration,  the investors also received two-year warrants to purchase a like
number  of  shares  of  common  stock  at  an exercise price of $3.60 per share.

4.     On  September  21  2003 we issued 7,500 shares of our common stock and on
May 10, 2004 we issued 12,500 shares of common stock to Jim Williams pursuant to
a  consulting  agreement.


                                       19
<PAGE>

5.     On  December  23, 2003 we issued 7,500 shares of our common stock to John
Leggate  pursuant  to  a  consulting  agreement.

6.     On  May  15, 2004, we issued 58,139 shares of our common stock to each of
the  two  shareholders  of  Datagility,  Herve  Bertacchi  and  John  Bell,  in
consideration  for  the  acquisition  of  Datagility.

7.     On  May  10  2004,  we  issued 50,000 of our common stock to David Dalton
pursuant to his engagement as Chairman of eMedRx Inc. (USA) and 15,000 shares of
common  stock  to Jeff Maynard pursuant to his employment agreement as President
and  CEO  of  that  company.

8.     On  May  7,  2004,  we  issued  to  Maryanne Richard warrants to purchase
400,000  shares  of  common  stock at an exercise price of $2.50 per share.  The
warrants  are  scheduled  to expire on May 7, 2006.  The warrants were issued in
connection  with  a  settlement  of  outstanding  claims.

9.     On May 25, 2004, we issued to the Synergex Group LLC warrants to purchase
400,000  shares  of  common  stock at an exercise price of $2.50 per share.  The
warrants  are scheduled to expire on May 25 , 2006.  The warrants were issued in
consideration  for  extending  the  initial repayment date by three months of an
outstanding  note which had  an original principal balance of $1,000,000 held by
the  Synergex  Group  LLC.

10.     On  September  30, 2003, we issued to Edinburgh LLC warrants to purchase
672,000  shares  of  common  stock at an exercise price of $3.00 per share.  The
warrants  are  scheduled  to  expire  on  September 30, 2008.  The warrants were
issued  in consideration for extending to December 31, 2004 the maturity date of
an  outstanding  debenture which had an original principal balance of $1,680,000
held  by  Edinburgh  LLC.

11.     On  June  24,  2004  we  issued  485,484  shares  of our common stock to
Synergex  Group  LLC  in  consideration  of the settlement  of a note that had a
remaining  balance  of  $970,968.

12.     On  August  1,  2003,  we  issued 25,000 shares of common stock to Thien
Pham,  valued  at  $3.00  per  share,  for  an  electronic  prescription program
developed  by  Mr.  Pham  for  eMedRx  Canada.


     Each  of the foregoing sales was made in reliance on the exemption afforded
by  Section  4(2) of the Securities Act.  No advertising or general solicitation
was  employed  in  offering  the  securities,  the  securities were offered to a
limited  number  of  individuals  and  the  transfer  thereof  was appropriately
restricted by us, all purchasers were believed to be accredited or sophisticated
investors  capable of evaluating the merits and risks of the investment and each
purchaser  represented  that the securities were acquired for investment and not
with  a  view  to re-sale in contravention of the registration provisions of the
Securities  Act.


                                       20
<PAGE>

ITEM  6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF  OPERATIONS.

     When  used  in  this report, the words "anticipated", "estimate", "expect",
and  similar  expressions  are  intended to identify forward-looking statements.
Such  statements  are  subject  to  certain risks, uncertainties and assumptions
including the possibility that we will fail to generate planned revenues. Should
one  or  more  of these risks or uncertainties materialize, or should underlying
assumptions  prove  incorrect,  actual  results  may  vary materially from those
anticipated,  estimated  or  projected.

     The  following  discussion and analysis of financial conditions and results
of  operation  should  be  read  in  conjunction with our consolidated financial
statements  and notes thereto included elsewhere in this report.  It is intended
to  assist  the  reader  in understanding and evaluating our financial position.

Please  see  Note  21  to Notes to Consolidated Financial Statements regarding a
prior  period  adjustment  to  correct  an error that resulted in overaccrual of
$329,556  for  federal  income  taxes  in  the  year  ended  June  30,  2002.

CRITICAL  ACCOUNTING  POLICIES

     Management  discussion  addresses  our  consolidated  financial statements,
which  have  been  prepared  in  accordance with accounting principles generally
accepted  in  the United States of America. The preparation of theses statements
requires  management  to make estimates and assumptions that affect the reported
amounts  of  assets  and  liabilities,  the  disclosure of contingent assets and
liabilities  at  the  date  of  financial statements and the reported amounts of
revenue  and  expenses  during  the  reporting  period.  On  an on- going basis,
management  evaluates  its  estimates  and  judgment, including those related to
revenue  recognition,  goodwill,  bad  debts,  income  taxes,  and  contingent
liabilities.  Management  bases  its  estimates  and  judgments  on  historical
experience and on various other factors that are believed to be reasonable under
the  circumstances,  the results of which form the basis for making judgments as
to  the  carrying  value of assets and liabilities that are not readily apparent
from  other  sources.  Actual  results  may  differ  from  these estimates under
different  assumptions  and  conditions.

     The Securities and Exchange Commission ("SEC") defines "critical accounting
policies"  as  those  that  require  application of management's most difficult,
subjective or complex judgments, often as a result of the need to make estimates
about  the  effect  of  matters  that are inherently uncertain and may change in
subsequent  periods.

     The  following  discussion  of  critical accounting policies represents our
attempt  to report on those accounting policies which we believe are critical to
our  consolidated financial statements and other financial disclosure. It is not
intended  to  be  a  comprehensive  list  of  all  of our significant accounting
policies,  which  are  more  fully  described  in  Note  2  of  the Notes to the
Consolidated  Financial  Statements  included  in  this  report.


                                       21
<PAGE>

     We  have identified the following as critical accounting policies affecting
our  company:  Revenue  Recognition;  Income  Taxes;  and  Goodwill  and  Other
Long-Lived  Assets


Revenue  Recognition

     Our  revenue  recognition policies are significant because our revenue is a
key  component  of  our results of operations. Revenue recognition in connection
with  our  Lightec  business,  which  accounted  for  substantially  all  of our
approximately  $7.1  million  in  revenue  for  the  most recent fiscal year, is
particularly  subjective  as it has historically been generated from fixed-price
or  modified fixed-price contracts.  Recognition of revenue from these contracts
requires  the  estimation  of  the  cost, scope and duration of each engagement.
Revenue  and  the  related  costs  for  these  projects are recognized using the
percentage-of-completion  method  as  costs  (primarily labor and materials) are
incurred,  with  revisions to estimates reflected in the period in which changes
become  known.  If  we  do not accurately estimate the resources required or the
scope of work to be performed, or do not manage our projects properly within the
planned  periods  of  time  or satisfy our obligations under the contracts, then
future  revenue  and  margins  from  this  business  may  be  significantly  and
negatively  affected  or losses on existing contracts may need to be recognized.
Any  such  resulting  changes  in revenues and reductions in margins or contract
losses  could  be  material  to  our  results  of  operations.


Income  Taxes

     We  have  a  history of losses. These losses generated sizeable federal net
operating  loss  ("NOL") carryforwards as of June 30, 2004 of approximately $3.3
million.

     Generally accepted accounting principles require that we record a valuation
allowance  against  the  deferred  income  tax  asset  associated with these NOL
carryforwards and other deferred tax assets if it is "more likely than not" that
we  will  not  be able to utilize them to offset future income taxes. Due to our
history of unprofitable operations, we only recognize net deferred tax assets in
those subsidiaries in which we believe that it is "more likely than not" that we
will  be  able  to  utilize them to offset future income taxes in the future. We
currently provide for income taxes only to the extent that we expect to pay cash
taxes  on  current  income.  At  June 30, 2004 and 2003, net deferred tax assets
were  approximately  $1.2  million.

     It  is  possible,  however,  that  we  could be profitable in the future at
levels  which  cause management to conclude that it is more likely than not that
we will realize all or a portion of the NOL carryforwards and other deferred tax
assets.  The net operating loss carry forwards may be limited in accordance with
Section  382  of  the Internal Revenue Code of 1986,as amended, based on certain
changes  in  ownership  that  have  occurred, or could occur in the future. Upon
being  profitable,  we  would  immediately  record  the estimated net realizable
value  of the deferred tax assets at that time and would then provide for income
taxes  at  a  rate  equal  to  our  combined  federal and state effective rates.
Subsequent  revisions  to the estimated net realizable value of the deferred tax
assets  could  cause  our  provision for income taxes to vary significantly from
period  to  period.


                                       22
<PAGE>

Goodwill  And  Other  Long-Lived  Assets

      We  review  the  carrying  value  of  our  long-lived  assets held for use
whenever  circumstances  indicate  there  may  be  an impairment. For all assets
excluding  goodwill,  the  carrying  value  of  a long-lived asset is considered
impaired  if  the  sum  of the undiscounted cash flows is less than the carrying
value  of  the  asset.  If this occurs, an impairment charge is recorded for the
amount  by  which  the  carrying  value of the long-lived asset exceeds its fair
value.  The  fair  value is determined by applying a market-rate multiple to the
estimated  near-term  future  revenue  stream  expected  to  be  produced by the
segment.  We  have adopted SFAS No. 142, "Goodwill and Other Intangible Assets."
Under this accounting standard, we do not amortize our goodwill and are required
to  complete an annual impairment test. For the purpose of implementing SFAS No.
142,  we  have  designated  the fourth quarter as the period of the annual test.
For  the year ended June 30, 2003, we came to the conclusion that there had been
an  impairment  of  goodwill  relating  to  the  acquisition  of Lightec and the
acquisition  of  Datadesk,  and  accordingly  we  recognized  an expense for the
impairment  of  goodwill  of  approximately  $7.5  million  for Lightec and $3.4
million  for Datadesk.  The goodwill impairment for Datadesk was included in the
loss  from  discontinued  operations of $3.9 million. No impairment was found in
the  annual assessment for the year ended June 30, 2004. As of June 30, 2004, we
had  no  goodwill  or  other  identifiable  intangible  assets.

RESULTS  OF  OPERATIONS

Year  Ended  June  30,  2004  vs.  Year  Ended  June  30,  2003

     Our  revenues for the year ended June 30, 2004 were $7,131,437, an increase
of  $5,984,297  or  approximately  520%  over  the prior year. Our revenues were
substantially  all  generated  from  the  Lightec  subsidiary, in regards to the
Bridgeport  School  District  ("Bridgeport")  contract.

     The  cost  of  revenues  incurred  for  the  year  ended June 30, 2004 were
$3,649,302,  an increase of $2,983,164 over the prior year.  This was due to the
costs  associated  with  the  increase in revenues from the Bridgeport contract.

     The gross margins, as a percentage of sales, were 49% and 42% for the years
ended  June  30, 2004, and 2003, respectively. The increase in gross margins can
be  attributed  to the increased efficiencies in delivering product and services
to  Bridgeport.

     Our  selling,  general  and administrative expenses for the year ended June
30,  2004  were  $3,737,955,  an  increase  of $1,768,329 or approximately a 90%
increase  over  the  prior  year.  Licensing  fees  increased  by  approximately
$480,000  due  to  the minimum payments required by the licensing agreement with
WonderNet.  Payroll  and other related costs increased by approximately $400,000
in  fiscal  2004 due to an increase in officers and employees receiving salaries
in  that  year.  Professional fees increased by approximately $260,000 primarily
due  to  increased  legal  fees  regarding  corporate  matters  and SEC required
filings.  Consulting  fees  increased due to hiring more consultants for product
and corporate development. Travel costs increased primarily due to the corporate
office moving from Vancouver to New York in early 2004, and the promotion of our
biometric  security  products.


                                       23
<PAGE>

     Other expenses for the year ended June 30, 2004 were $3,292,220, a decrease
of $4,878,490, or approximately 60% from the prior comparable year.  In 2003, we
wrote-  off  the goodwill attributable to Lightec's acquisition in the amount of
$7,527,654,  and  we wrote-off our investment in WonderNet of $187,500. Interest
expense  increased  in  2004  by  $404,706  due  to the increase in average debt
outstanding  and  a  $150,000  penalty  (recorded  as  interest expense) paid to
Edinburgh  Investments  LLC as part of the August 29, 2003 settlement agreement.
In  2004,  we  incurred  charges  relating  to the issuance of stock warrants of
$2,496,000.

     For  the  year  ended  June  30,  2004,  we  had  income  from discontinued
operations  of  $176,193  which  was  comprised  of  :  $266,020  in income from
Datadesk  and a loss of $89,827 from Security Biometrics, Limited, both of which
companies  were  former  wholly-owned subsidiaries of our company. On August 20,
2003,  we  entered  into  a  Stock and Transfer Agreement with Pan Pacifica Ltd.
("Pan  Pacific")  to  transfer  all  of  the  outstanding  shares of Datadesk in
exchange  for  Pan  Pacifica  assuming  the  net  liabilities of Datadesk, which
resulted  in  a  gain  on settlement. We had adopted a formal plan to dispose of
Datadesk  during  the  year  ended June 30, 2003, in which we had a discontinued
loss  from  Datadesk  of  $3,918,281  (including  a  goodwill  write-down  of
$3,405,645).

     Our net loss for the year ended June 30, 2004 was $3,406,660 as compared to
a loss of $13,577,615 for the prior fiscal year, or a decrease of $10,170,955 or
approximately  75%. The decrease was  primarily attributable to: (i) a reduction
in  losses  from  operations  of  approximately $1,232,000, (ii) a write-down of
goodwill  and  investment  of approximately $7,715,000 in the prior fiscal year,
and  (iii)  a  decrease  in  losses  from discontinued operations of $4,094,000,
offset  by  an  increase for the year ended June 30, 2004 in interest expense of
$404,000  and  charges  relating  to  the  issuance  of warrants of $2,496,000.

LIQUIDITY  AND  CAPITAL  RESOURCES

     For  the fiscal year ended June 30, 2004, our operating activities did
not  generate  positive  cash flow. We financed our operations primarily through
the  placement of our common stock and cash flows from Lightec. We had a working
capital  deficit of approximately $4.3 million at June 30, 2004 as compared with
$6.5  million  at June 30, 2003. Cash increased by approximately $100,000 during
the  year  ended  June  30,  2004.

     Net  cash  used  in operating activities was $150,000 during the year ended
June  30,  2004,  as  compared to $899,000 for the year ended June 30, 2003. Net
cash  used in operations for fiscal 2004 resulted primarily from our net loss of
$3.6  million  and  an increase in the accounts receivable of $754,000 offset in
part  by  the  increase  in  accounts  payable  and  certain  non-cash expenses.
Investing  activities  utilized  $496,000 of cash during the year ended June 30,
2004,  as compared to $218,000 for the year ended June 30, 2003. This was due to
the  purchase  of  property and equipment, and the advances made to discontinued
subsidiaries.

     Financing  activities  provided $757,000 of cash during the year ended June
30,  2004  as  compared  to $637,000 for fiscal 2003. Net cash provided resulted
primarily from the issuance of common stock and warrants offset by repayments on
the  convertible  debenture  and  notes.


                                       24
<PAGE>

     We  settled  in  excess of approximately $2,150,000 in debt in June and the
beginning  of  July 2004. Pursuant to an agreement entered into in June 2004, we
settled  all  outstanding  claims  by  and  obligations to Mary Anne and Michael
Richard.  Under the settlement, we arranged for third parties unrelated to us to
purchase  850,000  shares  of common stock owned by Mary Ann Richard for a total
price  of $850,000 in cash and an additional cash payment to Mary Ann Richard of
$339,983,  and  Ms.  Richard surrendered to us a note with a remaining principal
and  interest  balance of $1,189,983. The shares were purchased in June 2004 and
the  $339,983  balance of the settlement was paid on July 2, 2004, whereupon the
parties exchanged mutual releases. Pursuant to an agreement entered into on June
24,  2004,  Synergex  Group  LLC  surrendered  to  us a note issued by us with a
remaining  balance  due  of  $970,968 in consideration for the issuance by us to
Synergex  Group LLC of 485,484 of our shares of common stock valued at $2.00 per
share.

     During the first quarter of fiscal 2005, we raised approximately $2,000,000
in  equity  capital  and  have  settled  amounts  owing to management and others
amounting  to  approximately $700,000 for equity.  In addition, we have begun to
pay  down  accounts  payable  to  our  supplier  for  Lightec, which amounted to
approximately  $1,250,000  at  June  30,  2004.

     We will require additional equity and/or debt financing for fiscal 2005  to
fund  our  operations  and satisfy our debt service obligations.  We  anticipate
significant  cash  flows  from our Lightec subsidiary for fiscal 2005.  While we
have  been exploring financing options and have received preliminary indications
of  interest,  we  have  not entered into definitive arrangements.  Our auditors
have  expressed  in  their  audit  report  a  qualification as to our ability to
continue  as  a  going  concern.  See  Note 3 of Notes to Consolidated Financial
Statements  regarding  our  plans  to  address  this  concern.


                                       25
<PAGE>
QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  AND  FACTORS THAT MAY AFFECT FUTURE
RESULTS

Interest  Rate  Risk.  The  Company  has an investment portfolio of fixed income
securities  that  are classified as cash equivalents. These securities, like all
fixed  income  instruments,  are  subject to interest rate risk and will fall in
value  if the market interest rates increase. The Company attempts to limit this
exposure  by  investing  primarily in short-term securities. The Company did not
enter  into  any  short-term security investments during the twelve months ended
June  30,  2004.

FACTORS  THAT  MAY  AFFECT  FUTURE  RESULTS

     We  may  from  time  to  time  make written or oral statements that contain
forward-looking  information.  However, our actual results may differ materially
from  our  expectations,  statements  or  projections.  The  following risks and
uncertainties  could  cause  actual  results  to  differ  from our expectations,
statements  or  projections.

Risks  related  to  our  business

We  have a limited history of operations, which makes it difficult to anticipate
our  future  performance.

We have a limited operating history and limited historical financial information
upon  which to base your evaluation of our performance, particularly in light of
our  recent  change in business strategy. Our Lightec business, which is largely
independent of our new technology solution offerings, has historically generated
substantially  all  of our revenue. We have not generated any meaningful revenue
from  our new business strategy and our historical performance is not indicative
of  future  performance.

Our  business  model  is  unproven  and  may  not  succeed.

We  recently  changed  and  continue  to refine our business model and strategy.
Although  we have some customers for the turnkey solutions that form the core of
our  new  business  strategy,  we  have  not yet validated our business model or
strategy  in  the  market.  The  success  of  our business model and strategy is
dependent  on  a  number  of  factors  including:

-    our  ability  develop  and deliver our technology solutions within budgeted
     costs;
-    our  ability  to  enter  into  and  implement  successful  channel  partner
     arrangements
-    acceptance  in  the  market  of  our  technology  solutions
-    our  ability  to  price  our  technology  solutions  at  competitive  rates


                                       26
<PAGE>

Our  prospects  must  be  considered  in  light  of  the  risks,  expenses  and
difficulties  frequently  encountered  by  companies  starting  a  new business,
particularly  companies  in rapidly evolving markets such as the markets for our
technology  solutions.

We  have  incurred  and  expect  to continue to incur significant losses and may
never  achieve  profitability.

We  incurred a net loss of $3,406,660 during the fiscal year ended June 30, 2004
and  $13,577,615  during  the  prior  fiscal  year.  At June 30, 2004, we had an
accumulated  deficit of $18,212,058. Our auditors have issued a qualification in
their  report  on  our  financial  statements  for the year ended June 30, 2004,
reflecting  their  concern  about our ability to continue as a going concern for
the  current  fiscal  year.  We  expect  to  make  significant  expenditures  in
connection  with  the  implementation  of  our  new business strategy, including
expenditures  relating to sales and marketing activities, technology development
and  integration,  potential  acquisitions  and  administrative  resources. As a
result,  we  expect our losses to continue for the foreseeable future and we may
never  achieve  profitability.

We  need  and  may  not  be  able  to  obtain  additional  financing.

As  of  June  30,  2004,  we  had  a working capital deficiency of approximately
$4,340,000.  Despite  raising  approximately  $2,000,000 in equity from June 30,
2004  through  October 12, 2004, we need to raise additional capital in order to
continue  to  fund  our plan of operations. We have no sources of financing from
which  we  can  draw  immediately.  We cannot assure investors that we will have
adequate  capital  resources  to  fund planned operations or that any additional
funds  will  be  available  to our company when needed, or if available, will be
available  on favorable terms or in amounts required. If we are unable to obtain
adequate  capital  resources  to  fund  operations, we may be required to delay,
scale  back  or  eliminate  some  or all of our existing and planned operations.

We  are  dependent  on  a  limited  number  of  customers.

Substantially all of our historical revenue has been attributable to our Lightec
business.  During the year ended June 30, 2004, substantially all of our revenue
was attributable to a contract with the Bridgeport School District funded by the
Federal  eRate  program.  While  additional  amounts have been budgeted for this
project for the 2004-2005 school year, we have not yet received Federal approval
under the eRate program.  We have also been awarded contracts with the New Haven
School  Board  for  a  total of $500,000.  Our plan of operation is dependent on
successfully  fulfilling  the Bridgeport and New Haven contracts. Should we fail
for  any  reason to perform the balance of the contracts, or if Federal approval
is  not  granted  or  Bridgeport  or  New  Haven  defaults on payments under the
contract, we may not have sufficient funding to continue the Lightec business as
planned  and  our  other  activities  will  be  substantially  harmed.


                                       27
<PAGE>

Our  Lightec  assets may be foreclosed to satisfy certain debt obligations under
which  we  are  in  default.

We  have  granted  a first priority lien in the assets and revenue of Lightec to
secure  repayment  of  a debenture in the principal amount of $1,358,569 at June
30,  2004.  On  August  29,  2003, the holder of the debenture obtained a court
order  requiring us, among other things, to make scheduled payments of principal
and interest on the debenture and to allocate to the debenture holder 15% of all
proceeds  received under Lightec's contract with the City of Bridgeport Board of
Education  until  the debenture is fully repaid.  As of the date hereof, we have
not fully complied with the 15% allocation requirement of the court order and on
or  about  March  2004  we were so notified by the debenture holder.  Should the
debenture  holder choose to enforce its rights as a secured party, the assets of
Lightec  could  be  sold  in  a foreclosure action and a portion of the proceeds
thereof  could  be  applied  to satisfy our obligations to the debenture holder.
The  existence of this security interest, as well as the lack of compliance with
the  court  order,  could  adversely  impact  our liquidity and may make it more
difficult  for  us  to  obtain  additional  debt  or equity financing from other
sources.

Our  refocused  business  strategy  exposes  us to long sales and implementation
cycles  for  our  products.

Our  target customers in the electronic transaction authentication, data storage
and  retrieval  and  access  control  markets include large retailers, financial
institutions  and  government agencies, which typically require longer sales and
implementation  cycles than smaller, independent customers. We expect the longer
sales  and implementation cycles for these larger companies to continue to delay
our  ability  to realize meaningful revenue from these prospective customers. In
addition,  budgetary  constraints  and  economic  slowdowns may also continue to
delay  purchasing  decisions  by  these prospective customers. These initiatives
have  costs  associated with them, and we cannot assure you that they ultimately
will  prove  successful  or  result  in  meaningful  revenue.

In  addition,  the  loss  or  significant  reduction in government spending by
government  entities  could  materially  limit  our ability to obtain government
contracts.  These  limitations  could also have a material adverse effect on our
business,  financial  condition  and results of operations. In addition, we will
need  to  develop  additional  strategic  relationships  with  large  government
contractors  in  order  to  successfully  compete  for government contracts. Our
inability  to  develop  these  strategic  relationships may limit our ability to
implement  our  business  strategy.

Our  products  and  technologies  may  not  achieve  market  acceptance.

The markets for our products and technology are relatively new. Because of the
emerging  nature  of  these  markets  we  are  unable  to predict whether we can
sufficiently  commercialize  our  products  and technology and obtain and retain
significant  market  acceptance. Demand and market acceptance for our electronic
document  authentication, data storage and retrieval and access control products
and  services  is  evolving  and  uncertain. Our products and technology involve


                                       28
<PAGE>

changes  to  traditional  ways  of  doing business and related processes, which,
despite  its  efficiencies  and  potential  cost  savings, will likely encounter
resistance  to  implementation.  Our  business may suffer if the market develops
more  slowly  than  anticipated  and  does  not  sustain  market  acceptance.

We  face  competition  in  the  markets  for  our  products  and  services.

We  face  competition in each of our markets. Our competitors are generally more
established, benefit from greater market recognition and have greater financial,
development  and  marketing resources than we have. As such, our competitors may
develop  products or technologies that are more effective, easier to use or less
expensive  than  ours. This could make our products and technologies obsolete or
non-competitive.

We  may  not  be successful in keeping pace with the rapid technological changes
that  characterize  our  industry.

The  technology  incorporated  in  our  technology solutions is characterized by
rapid  changes.  Moreover,  the emergence of new technologies can rapidly render
existing  products  obsolete and unmarketable. Our ability to anticipate changes
in  technology and industry standards and successfully develop and introduce new
and enhanced products which can gain market acceptance on a timely basis will be
a critical factor in our ability to grow and to remain competitive. In addition,
we  may diversify our business by developing new products and applications based
on  our  core  technologies.  There  can  be no assurance that we will timely or
successfully  complete  the  development  of  new  or  enhanced  products  or
applications or successfully manage transitions from one release to the next, or
that  our  future  products  or  applications  will  achieve  market acceptance.

If  we are unable to adequately protect our intellectual property, third parties
may  be  able to use our technology, which could adversely affect our ability to
compete  in  the  market  as  well  as  our  financial  condition and results of
operations.

We  seek  to  rely  on  a  combination of patents, copyrights, trademarks, trade
secrets  and  contractual  provisions  to  protect our proprietary rights in our
products and technologies. These protections may not adequately protect us for a
number of reasons. First, our competitors may independently develop technologies
that  are substantially equivalent or superior to ours. Second, the laws of some
of  the  countries  in  which  our products may be licensed do not protect those
products  and our intellectual property rights to the same extent as do the laws
of  the  United  States. Third, because of the rapid evolution of technology and
uncertainties  in  intellectual  property  law  in  the  United  States  and
internationally,  our  current  and  future  products  and technologies could be
subject  to  infringement claims by others. Fourth, a substantial portion of our
technology  and  know-how  are  trade  secrets  and are not protected by patent,
trademark or copyright laws. We require our employees and contractors to execute
written  agreements  that  seek  to protect our proprietary information. We also
have  a  policy  of  requiring  prospective  business  partners  to  enter  into


                                       29
<PAGE>

non-disclosure  agreements before any of our proprietary information is revealed
to  them.  However, measures taken by us to protect our technology, products and
other  proprietary  rights  may  not  be enforceable; to the extent they involve
contractual  restrictions, and otherwise might not adequately protect us against
improper  use.

We  may  be  required  to take legal action to protect or defend our proprietary
rights.  Litigation  or third-party claims of intellectual property infringement
could  require  us  to spend substantial time and money and adversely affect our
ability  to  develop  and  commercialize  products. If we are required to defend
against  lawsuits  brought  by  third  parties,  or  if  we  sue  to protect our
proprietary  rights, we may be required to pay substantial litigation costs, and
our  management  and  technical  personnel's  attention  may  be  diverted  from
operating  our  business. If the results of any litigation are adverse to us, we
may  be  required  to  expend  significant  resources  to develop non-infringing
technology  or  obtain  licenses from third parties. If we are not successful in
those efforts or if we are required to pay any substantial litigation costs, our
business  would  be  materially  and  adversely  affected.

Failure  to manage our operations if they expand could impair our future growth.

  If  we  are able to expand our operations, particularly through sales to large
retailers,  financial  institutions  and  government  agencies,  as  well  as
implementation  of  our  e-prescription  solution,  the  expansion  will  place
significant  strain  on  our  management, financial controls, operating systems,
personnel  and  other  resources. Our ability to manage future growth, should it
occur, will depend to a large extent upon several factors, including our ability
to  do  the  following:

  -  build  and  train  our  sales  force;

  -  establish  and  maintain  relationships  with  channel  partners;

  -  develop  customer  support  systems;

  -  develop  expanded  internal  management  and  financial  controls  adequate
     to  keep  pace  with  growth  in  personnel  and  sales;  and

  -  manage  the  use  of  third-party  manufacturers  and  suppliers.

If  we  are able to grow our business but do not manage our growth successfully,
we  may experience increased operating expenses, loss of customers, distributors
or  suppliers  and  declining  or  slowed  growth  of  revenues.

We are subject to risks associated with product failure and technological flaws.

  Our  technology  solutions  incorporate complex software and hardware products
that  require  extensive  development and testing to ensure that they operate as
intended.  These  solutions  may contain undetected errors or result in failures
when  first  introduced  or  when  new  versions  are released. Despite vigorous


                                       30
<PAGE>

product  testing  efforts  and testing by current and potential customers, it is
possible  that  errors  will  be  found  in  a  new product or enhancement after
commencement  of  commercial  shipments.  The  occurrence  of product defects or
errors  could  result  in  adverse  publicity,  delay  in  product introduction,
diversion  of  resources  to  remedy  defects,  loss,  of  or  a delay in market
acceptance,  claims  by  customers  against  us,  or  could  cause  us  to incur
additional  costs,  all  of  which  could  adversely  affect  our  business.

Our  business  is  dependent on our ability to attract and retain management and
other  key  personnel

We  depend to a significant degree on the skills, experience and efforts of our
executive officers and other key management, technical, finance, sales and other
personnel.  Our  failure  to attract, integrate, motivate and retain existing or
additional  personnel  could  disrupt  or  otherwise  harm  our  operations  and
financial  results.  While  we  have  employment agreements with a number of our
executives,  many  of  these  agreements  do  not  have  fixed terms.  We do not
presently carry key man life insurance policies covering any employees. The loss
of  services  of certain of our key employees, an inability to attract or retain
qualified  personnel  in  the  future,  or delays in hiring additional personnel
could  delay  the  development  of  our  business  and  could  hurt our existing
business.

We  may  not  be  able  to  successfully  manage  and  assimilate  acquisitions,
investments and strategic alliances, which would adversely affect our results of
operations.

We  recently  acquired SiVault Analytics, Inc., and may, in the future, acquire,
make investments in, or enter into strategic alliances with companies which have
technologies,  customer  bases,  channel  relationships  and  other  value-added
services  or  assets  in our current markets or in areas into which we intend to
expand  our  business.

Any  acquisitions,  investments, strategic alliances, or related efforts will be
accompanied  by  risks  such  as  the:

-    Difficulty  of  identifying  appropriate  acquisition  candidates;
-    Difficulty  of  assimilating  operations  of  respective  entities;
-    Potential  disruption  of  our  ongoing  business;
-    Potential  liability  for  unknown  debts;
-    Loss  of  key  management  and  operating  personnel;
-    Difficulties  managing joint ventures especially those in which we may hold
     less  than  a  majority  interest;
-    Inability  of  management  to  integrate  businesses  and  capitalize  on
     opportunities  presented  by acquisitions, investments, strategic alliances
     or  related  efforts;
-    Failure  to  successfully  incorporate  licensed or acquired technology and
     rights  into  our  services;
-    Inability to maintain uniform standards, controls, procedures and policies;
     and
-    Impairment  of  relationships  with  employees and customers as a result of
     changes  in  management.


                                       31
<PAGE>

If  we  are  not able to successfully overcome these risks or any other problems
encountered  with such acquisitions, investments, strategic alliances or related
efforts, the benefits of such transaction may not be realized and we could incur
significant  costs  and  suffer  reductions in revenue form existing operations.

Our  net  operating  loss  carry-forwards  may  be  limited.

Our  net operating loss carry forwards may be limited in accordance with Section
382  of  the Internal Revenue Code of 1986, as amended, based on certain changes
in  ownership  that  have  occurred, or could in the future occur. Net operating
loss carry forwards are utilized to offset future taxable income for federal and
state  income  tax  purposes.

Risks  related  to  ID-Check(TM)  technology

Our  licensed  ID-Check software relies on reference data provided by government
and  quasi-government  agencies.  If  these  governmental  and  quasi-government
agencies  were  to  stop  sharing  data  with  our  licensor, the utility of the
id-check  software  would  be diminished in those jurisdictions and our business
would  be  damaged.

Our licensor of the ID-Check software relies on the cooperation of US state and
Canadian  provincial  governmental  agencies  to  cooperate with the licensor by
providing  sample  identification  cards  so  that  the  licensor may modify the
ID-Check  system  terminal  and  other software products to read and analyze the
encoded  information found on such jurisdiction's identification cards. The data
is  generally  encoded  in  a  format that conforms to guidelines established by
certain organizations responsible for implementing industry standards. We cannot
assure  you that each of these jurisdictions will continue to cooperate with our
licensor.  In  the event that one or more of these jurisdictions do not continue
to  provide  this  reference  data,  the utility of the ID-Check software may be
diminished  in  those  jurisdictions.

Future  government  regulation  restricting  the  capture  of  information
electronically  stored  on  identification  cards  could  adversely  affect  our
business.

Our  licensed  ID-Check  software  and  other proprietary software products are
designed  to  read and capture information from identification cards. In certain
states,  such  as  New  Hampshire,  North  Carolina and Texas, our customers are
legally  restricted  from  using  this information for their own use without the
card-holders' consent. Because issues of personal privacy continue to be a major
topic  of  public  policy  debate,  it is possible that in the future additional
customers in these and other jurisdictions may be restricted from capturing this
information.  Therefore,  the  implementation  of  unfavorable  regulations  or
unfavorable  interpretations  of  existing  regulations  by courts or regulatory
bodies  could  require  us  to  incur  significant  compliance  costs, cause the
development  of  the  affected  markets  to  become  impractical  and  otherwise
adversely  affect  our  business.


                                       32
<PAGE>

Risks  Related  to  Our  Securities

Our  stock  may  be  affected  by  limited  trading  volume  and  may  fluctuate
significantly  in  price.

Our  common stock is traded on the NASD OTC Bulletin Board. Trading in our stock
has been limited and there can be no assurance that an active trading market for
our  stock  will  develop.  As  a  result,  this  could  adversely  affect  our
shareholders'  ability  to  sell  our  common  stock  in  short time periods, or
possibly at all. Thinly traded shares can be more volatile than shares traded in
an active public market. The average daily trading volume of our common stock in
August 2004 was 3,900 shares. The high and low bid price of our common stock for
the  last  two years has ranged from $0.80 and $4.50 per share. Our common stock
has  experienced,  and  is likely to experience in the future, significant price
and  volume  fluctuations,  which could adversely affect the market price of our
common  stock  without  regard  to  our  operating  performance.

Our  common  stock  is  deemed  to  be  a  "Penny  Stock" which may make it more
difficult  for  investors  to sell their shares due to suitability requirements.

Our common stock is deemed to be a "penny stock" as that term is defined in Rule
3a51-1  promulgated  under the Securities Exchange Act of 1934. Penny stocks are
stock:

-    With  a  price  of  less  than  $5.00  per  share;
-    That  are  not  traded  on  a  "recognized"  national  exchange;
-    Whose  prices  are  not quoted on the NASDAQ automated quotation system; or
-    Of  issuers  with  net  tangible  assets  of less than $2.0 million (if the
     issuer  has  been in continuous operation for at least three years) or $5.0
     million  (if  issuer  has  been in continuous operation for less than three
     years),  or  with  average  revenues of less than $6.0 million for the last
     three  years.

Broker/dealers  dealing  in  penny  stocks  are  required  to  provide potential
investors  with  a  document  disclosing  the  risks  of penny stocks. Moreover,
broker/dealers  are required to determine whether an investment in a penny stock
is  a  suitable  investment  for  a prospective investor. These requirements may
reduce  the  potential  market  for  our  common stock by reducing the number of
potential  investors.  This  may  make it more difficult for our shareholders to
sell  shares  to third parties or to otherwise dispose of them. This could cause
our  share  price  to  decline.

ITEM  7.  FINANCIAL  STATEMENTS

     The  financial  statements  and  supplementary  data are included beginning
immediately  following the signature page to this report. See Item 13 for a list
of  the  financial  statements  and  financial  statement  schedules  included.

ITEM  8.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING AND
FINANCIAL  DISCLOSURE

     None.


                                       33
<PAGE>

ITEM  8A.  CONTROLS  AND  PROCEDURES.

     Our  principal  executive officer and principal financial officer evaluated
the  effectiveness  of  the  Company's  disclosure  controls  and procedures (as
defined  in  Rules  13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934,  as  amended) as of the end of the period covered by this report. Based on
this  evaluation,  the  Company's  principal  executive  officer  and  principal
financial  officer have concluded that the Company's controls and procedures are
effective  in providing reasonable assurance that the information required to be
disclosed  in  this report has been recorded, processed, summarized and reported
as of the end of the period covered by this report. During the period covered by
this  report,  there  have  not  been  any  significant  changes in our internal
controls  or, to our knowledge, in other factors that could significantly affect
our  internal  controls.

ITEM  8B.  OTHER  INFORMATION.

     All information required to be disclosed in a report on Form 8-K during the
fourth  quarter  of  the  fiscal  year ended June 30, 2004 has been so reported.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH  SECTION  16(A)  OF  THE  EXCHANGE  ACT.

     The information called for by this item is incorporated herein by reference
to  our  definitive Proxy Statement to be filed by us pursuant to Regulation 14A
within  120  days  after  the  close  of  the  2004  fiscal  year.


ITEM  10.  EXECUTIVE  COMPENSATION.

     The information called for by this item is incorporated herein by reference
to  our  definitive Proxy Statement to be filed by us pursuant to Regulation 14A
within  120  days  after  the  close  of  the  2004  fiscal  year.

ITEM  11.  SECURITY  OWNERSHIP  OF  CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED  STOCKHOLDER  MATTERS.

     The information called for by this item is incorporated herein by reference
to  our  definitive Proxy Statement to be filed by us pursuant to Regulation 14A
within  120  days  after  the  close  of  the  2004  fiscal  year.


                                       34
<PAGE>

ITEM  12.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS.

     The information called for by this item is incorporated herein by reference
to  our  definitive Proxy Statement to be filed by us pursuant to Regulation 14A
within  120  days  after  the  close  of  the  2004  fiscal  year.

ITEM  13.  EXHIBITS.

     The  following  exhibits  are  included  as  part  of  this  report:
<TABLE>
<CAPTION>
Exhibit
Number     Title  of  Document
------     -------------------
<S>        <C>
2.1        Stock Purchase Agreement dated July 9, 2004 among the registrant and all
           shareholders  of  SiVault  Analytics,  Inc.  (Incorporated  by  reference to the
           registrant's  report  on  Form  8-K  filed  on  July  20,  2004)

3.1        Amended  and  Restated  By-Laws  of  the  registrant.  (Incorporated  by
           reference  to  Exhibit 3.1 to the registrant's report on Form 10-Q filed on June
           4,  2004)

10.1       2004 Incentive Stock Plan of the registrant. (Incorporated by reference
           to  the  Registrant's  Proxy  Statement on Schedule 14A filed on April 19, 2004)

10.2       Settlement  Agreement dated June 4, 2004 among the registrant, MaryAnne
           Richard,  Michael  Richard  and  Lightec  Communications  Corp. (Incorporated by
           reference  to  the  registrant's  report  on  Form  8-K  filed  on June 8, 2004)

10.3       Warrant  in  favor  of  MaryAnne  Richard  to  purchase  400,000 shares
           expiring  May  6,  2006 (Incorporated by reference to the registrant's report on
           Form  8-K  filed  on  June  8,  2004)

10.4       Settlement  Agreement  dated  June  23, 2004 between the registrant and
           Synergex  Group, LLC (Incorporated by reference to the Statement on Schedule 13D
           filed  by  Synergex  Group  LLC  and  Gerard  Munera  on  July  1,  2004)

10.5       Sublease  dated  September  24,  2004 between the registrant and Euclid Network
           Solutions  for  San  Jose  facility.

10.6       Exclusive  Distribution  and  Partnership Rights Agreement dated August 15,  2003
           between  the  registrant  and  WonderNet,  Ltd.

10.7       Strategic  Partnering and ASP License Agreement effective as of May 13,
           2004  between  SiVault  Analytics,  Inc.  and  Viaquo  Corporation.

10.8       ISV  and  Reseller  License  Agreement  effective  May 13, 2004 between SiVault
           Analytics,  Inc.  and  Communications  Intelligence  Corporation.

10.9       Reseller  Agreement  effective  May  13, 2004 between Hypercom U.S.A., Inc.  and
           SiVault  Analytics,  Inc.
</TABLE>


                                       35
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number     Title  of  Document
------     -------------------
<S>        <C>
10.10      Agreement  dated March 2, 2004 for Purchase and Sale of Assets between
           SiVault  Analytics,  Inc.  and  @POS.com,  Inc.

10.11      Master  Agreement  effective  September 15, 2004 between Opus Software
           Solutions  Pvt.  Ltd  and  the  registrant.

10.12      Software  License  and  Strategic  Alliance  Agreement  effective
           September  2004  between  Intelli-Check,  Inc.  and  the  registrant.

10.13      Strategic  Alliance  and  Exclusive  Management  Agreement  effective
           September  22,  2004  between  Rycom  CCI  Inc.  and  the  registrant.

21.1       List  of  Subsidiaries  of  the  registrant.

23.1       Consent  of  Miller  Ellin  &  Company,  LLP., Certified  Public  Accountants.

23.2       Consent  of  Amisano  Hanson,  Chartered Accountants.

31.1       Rule  13(a)-14(a)/15(d)-14(a) Certification of Principal Executive
           Officer.

31.2       Rule  13(a)-14(a)/15(d)-14(a) Certification of Principal Financial
           Officer.

32.1       Section  1350  Certification  of  Chief  Executive  Officer.

32.2       Section  1350  Certification  of  Chief  Financial  Officer.
</TABLE>


                                       36
<PAGE>

ITEM  14.  PRINCIPAL  ACCONTANT  FEES  AND  SERVICES.

     The information called for by this item is incorporated herein by reference
to  our  definitive Proxy Statement to be filed by us pursuant to Regulation 14A
within  120  days  after  the  close  of  the  2004  fiscal  year.

                                   SIGNATURES

     Pursuant  to  the  requirements  of  Section  13 or 15(d) of the Securities
Exchange  Act of 1934, as amended, the registrant has duly caused this report to
be  signed  on  it  behalf  by  the  undersigned,  thereunto  duly  authorized.

                               SiVault  Systems,  Inc.

                               By:  /s/  Emilian  Elefteratos
                                    ------------------------------
                                    Emilian Elefteratos, Chief Executive Officer
                                    Dated:  October  12,  2004


     In  accordance  with the Exchange Act, this report has been signed below by
the  following  persons on behalf of the registrant and in the capacities and on
the  dates  indicated.

<TABLE>
<CAPTION>



Name                                                        Capacity                     Date
---------------------------------------------  ----------------------------------  ----------------
<S>                                            <C>                                 <C>
                                               Chief Executive Officer, President
                                               and Director (principal executive
/s/ Emilian Elefteratos                        officer)                            October 12, 2004
---------------------------------------------  ----------------------------------  ----------------
Emilian Elefteratos

                                               Interim Chief Financial Officer
                                               (principal financial and
/s/ Wayne Taylor                               accounting officer) and Director    October 12, 2004
---------------------------------------------  ----------------------------------  ----------------
Wayne Taylor

                                               Chief Strategy Officer and
/s/ Igor Schmidt                               Director                            October 12 , 2004
---------------------------------------------  ----------------------------------  ----------------
Igor Schmidt

/s/ Elaine Bloom                               Director                            October 12, 2004
---------------------------------------------  ----------------------------------  ----------------
Elaine Bloom

/s/ Gerard Munera                              Chairman of the Board of Directors  October 12, 2004
---------------------------------------------  ----------------------------------  ----------------
Gerard Munera

/s/ Allan Gibbins                              Director                            October 12, 2004
---------------------------------------------  ----------------------------------  ----------------
Alan Gibbins

/s/ Stuart Platt                               Director                            October 12, 2004
---------------------------------------------  ----------------------------------  ----------------
Stuart Platt

/s/ David Dalton                               Director                            October 12, 2004
---------------------------------------------  ----------------------------------  ----------------
David Dalton

                                               Director
---------------------------------------------  ----------------------------------  ----------------
Ken Taylor

</TABLE>


                                       37
<PAGE>

<TABLE>
<CAPTION>
                SIVAULT SYSTEMS, INC. AND SUBSIDIARIES
                 (FORMERLY SECURITY BIOMETRICS, INC.)
                   CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED JUNE 30, 2004 AND 2003


                               CONTENTS


                                                               PAGE
                                                              -------
<S>                                                           <C>
INDEPENDENT AUDITORS' REPORT                                    F-1

INDEPENDENT AUDITORS' REPORT                                    F-2

CONSOLIDATED BALANCE SHEETS                                     F-3

CONSOLIDATED STATEMENT OF OPERATIONS                            F-4

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)    F-5

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)          F-6

CONSOLIDATED STATEMENT OF CASH FLOWS                          F-7-F-8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                   F-9-F-33
</TABLE>


                                       38
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To  the  Stockholders,
SiVault  Systems,  Inc.  (formerly
  Security  Biometrics,  Inc.)  and  Subsidiaries

We  have audited the accompanying consolidated balance sheet of SiVault Systems,
Inc.  (formerly  Security Biometrics, Inc.) and Subsidiaries as of June 30, 2004
and  the  related  consolidated  statements  of  operations,  stockholders'
deficiency  and  cash  flows  for  the  year  ended  June  30,  2004.  These
consolidated  financial  statements  are  the  responsibility  of  the Company's
management.  Our  responsibility  is  to  express  an  opinion  on  these
consolidated  financial  statements  based  on  our  audit.

We  conducted  our  audit  in  accordance  with auditing standards of the Public
Company  Accounting  Oversight  Board (United States).  Those  standards require
that  we plan and perform  an  audit  to  obtain  reasonable  assurance  whether
the  consolidated  financial  statements  are  free  of  material  misstatement.
An  audit includes examining  on  a  test basis, evidence supporting the amounts
and disclosures in the  financial  statements.  An audit also includes assessing
the  accounting  principles  used  and  significant  estimates  made  by
management,  as  well  as  evaluating  the  overall  financial  statement
presentation.  We  believe  that  our audit  provides  a  reasonable  basis  for
our  opinion.

In  our  opinion,  these  consolidated  financial  statements  referred to above
present  fairly,  in  all  material  respects, the financial position of SiVault
Systems,  Inc.  (formerly Security Biometrics, Inc.) and Subsidiaries as of June
30,  2004 and the results of their operations  and their cash flows for the year
ended  June  30,  2004,  in  conformity  with  accounting  principles  generally
accepted  in  the  United  States  of  America.

The  accompanying  consolidated financial statements referred to above have been
prepared assuming the Company will continue as a going concern.  As discussed in
Note  2  to  the  consolidated  financial  statements,  conditions  exist  which
raise  substantial  doubt  about  the  Company's  ability to continue as a going
concern  unless  it  is  able  to  generate  sufficient  cash  flows to meet its
obligations  and  sustain  its operations.  Management's  plan  in  this  regard
to  these matters  are  described  in  Note  3.  The financial statements do not
include  any  adjustments  that  might  result  from  the  outcome  of  this
uncertainty.


New York, New York                                /s/ Miller Ellin and Company
October 1, 2004                                   Certified Public Accountants


                                      F-1
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To  the  Stockholders,
Security  Biometrics,  Inc.  and  Subsidiaries

We  have  audited  the  accompanying  consolidated  balance  sheet  of  Security
Biometrics,  Inc.  and  Subsidiaries  as  of  June  30,  2003  and  the  related
consolidated  statements  of operations, stockholders' deficiency and cash flows
for  the  year ended June 30, 2003.  These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an  opinion  on  these  consolidated  financial  statements  based on our audit.

We  conducted our audit in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  an  audit  to  obtain  reasonable  assurance  whether  the consolidated
financial  statements  are  free  of  material  misstatement.  An audit includes
examining  on  a  test basis, evidence supporting the amounts and disclosures in
the  financial  statements.  An  audit  also  includes  assessing the accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating  the  overall  financial  statement presentation. We believe that our
audit  provides  a  reasonable  basis  for  our  opinion.

In  our  opinion,  these  consolidated  financial  statements  referred to above
present  fairly,  in  all  material respects, the financial position of Security
Biometrics,  Inc.  and Subsidiaries as of June 30, 2003 and the results of their
operations  and their cash flows for the year ended June 30, 2003, in conformity
with  accounting  principles generally accepted in the United States of America.

The  accompanying  consolidated financial statements referred to above have been
prepared assuming the Company will continue as a going concern.  As discussed in
Note  1  to  the  financial statements, conditions exist which raise substantial
doubt  about  the  Company's ability to continue as a going concern unless it is
able  to  generate sufficient cash flows to meet its obligations and sustain its
operations.  Management's  plan  in  this  regard  to  these  matters  are  also
described  in  Note  1.  The financial statements do not include any adjustments
that  might  result  from  the  outcome  of  this  uncertainty.


Vancouver,  Canada                                  /s/ Amisano  Hanson
November 6, 2003                                    Certified Public Accountants


                                      F-2
<PAGE>

<TABLE>
<CAPTION>

                           SIVAULT  SYSTEMS,  INC.  AND  SUBSIDIARIES
                              (FORMERLY SECURITY BIOMETRICS, INC.)

                                  CONSOLIDATED BALANCE SHEETS

                                                                             JUNE 30,
                                                                   ----------------------------
                                                                       2004           2003
                                                                   -------------  -------------
<S>                                                                <C>            <C>
CURRENT ASSETS
   Cash                                                            $    112,880   $      4,092
   Accounts receivable                                                  848,617         94,634
   Inventory                                                              3,884              -
   Prepaid expenses and other current assets                             58,788         19,064
   Current assets of discontinued operations                                  -        137,270
                                                                   -------------  -------------
             Total current assets                                     1,024,169        255,060

PROPERTY AND EQUIPMENT, net of accumulated depreciation                 636,994         65,018

SECURITY DEPOSITS                                                        56,916              -
LONG-TERM ASSETS OF DISCONTINUED OPERATIONS                                   -         23,783
                                                                   -------------  -------------

                                                                   $  1,718,079   $    343,861
                                                                   =============  =============

CURRENT LIABILITIES
   Accounts payable and accrued liabilities - non-related parties  $  2,558,883   $    686,762
   Accounts payable and accrued liabilities - related parties           789,410      1,540,704
   Billings in excess of costs and estimated earnings on
      uncompleted contracts                                              90,018              -
   Convertible debenture payable                                      1,358,569      1,780,000
   Notes payable - related parties                                      339,983      2,000,000
   Capital lease obligations                                              3,329          5,230
   Corporate income taxes payable                                       129,920         94,986
   Current liabilities of discontinued operations                        93,913        719,955
                                                                   -------------  -------------
             Total current liabilities                                5,364,025      6,827,637

DEFERRED RENT EXPENSE                                                    16,954              -
                                                                   -------------  -------------

NOTE PAYABLE - NET OF CURRENT PORTION                                         -            872
                                                                   -------------  -------------

MINORITY INTEREST IN EQUITY OF CONSOLIDATED SUBSIDIARY                        -            193

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY
  Common stock
      Authorized - 50,000,000 shares $0.001 par value
      Issued and outstanding - 7,924,664 and 6,214,813 at
           June 30, 2004 and 2003, respectively                           7,924          6,215
  Additional paid-in capital                                         14,548,456      8,319,589
  Accumulated other comprehensive loss                                   (7,222)        (5,247)
  Accumulated deficit                                               (18,212,058)   (14,805,398)
                                                                   -------------  -------------
        TOTAL STOCKHOLDERS' DEFICIENCY                               (3,662,900)    (6,484,841)
                                                                   -------------  -------------

                                                                   $  1,718,079   $    343,861
                                                                   =============  =============
</TABLE>

The  accompanying  notes  are  an  integral part of these consolidated financial
statements.


                                      F-3
<PAGE>

<TABLE>
<CAPTION>

                      SIVAULT SYSTEMS, INC. AND SUBSIDIARIES
                       (FORMERLY SECURITY BIOMETRICS, INC.)

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                         YEARS ENDED JUNE 30,
                                                      ---------------------------
                                                          2004          2003
                                                      ------------  -------------
<S>                                                   <C>           <C>
REVENUES:
   Contract revenues earned                           $ 7,110,034   $  1,147,140
   Other revenues                                          21,403              -
                                                      ------------  -------------
      Total revenues                                    7,131,437      1,147,140
                                                      ------------  -------------

OPERATING EXPENSES:
   Costs of revenue earned                              3,649,302        666,138
   Selling, general and administrative                  3,737,955      1,969,626
                                                      ------------  -------------
                                                        7,387,257      2,635,764

LOSS FROM OPERATIONS                                     (255,820)    (1,488,624)
                                                      ------------  -------------

OTHER EXPENSES:
   Interest expense                                       796,220        391,514
   Charge relating to issuance of stock warrants        2,496,000              -
   Write-down of capital assets                                 -         64,042
   Write-down of investment                                     -        187,500
   Write-down of goodwill                                       -      7,527,654
                                                      ------------  -------------
                                                        3,292,220      8,170,710

LOSS BEFORE PROVISION FOR
    INCOME TAXES                                       (3,548,040)    (9,659,334)

PROVISION FOR INCOME TAXES                                 34,934              -
                                                      ------------  -------------

LOSS FROM CONTINUING OPERATIONS
   BEFORE MINORITY INTEREST IN LOSS
   OF SUBSIDIARY                                       (3,582,974)    (9,659,334)

Minority interest in loss of subsidiary                       121              -
                                                      ------------  -------------

LOSS FROM CONTINUING OPERATIONS                        (3,582,853)    (9,659,334)

INCOME (LOSS) FROM DISCONTINUED
   OPERATIONS                                             176,193     (3,918,281)
                                                      ------------  -------------

NET LOSS                                              $(3,406,660)  $(13,577,615)
                                                      ============  =============
BASIC AND DILUTED LOSS PER COMMON SHARE
   Continuing operations                              $     (0.51)  $      (1.60)
                                                      ============  =============
   Discontinued operations                            $      0.02   $      (0.65)
                                                      ============  =============
   Net loss                                           $     (0.49)  $      (2.25)
                                                      ============  =============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING    6,971,497      6,037,476
                                                      ============  =============
</TABLE>

The  accompanying  notes  are  an  integral part of these consolidated financial
statements.


                                      F-4
<PAGE>

<TABLE>
<CAPTION>

                                         SIVAULT  SYSTEMS,  INC.  AND  SUBSIDIARIES
                                            (FORMERLY SECURITY BIOMETRICS, INC.)
                                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                                              YEARS ENDED JUNE 30, 2004 AND 2003


                                                                                                                 Total
                                            Common  Stock       Additional                       Other        Stockholders'
                                        ---------------------    Paid In      Accumulated    Comprehensive       Equity
                                         Shares      Amount      Capital        Deficit          Loss         (Deficiency)
                                        ---------  ----------  ------------  -------------  ---------------  ---------------
<S>                                     <C>        <C>         <C>           <C>            <C>              <C>
Balance, June 30, 2002 - as originally
reported                                5,880,063  $    5,880  $ 7,458,366   $ (1,557,339)  $       (6,989)  $    5,899,918

Prior period adjustment                         -           -            -        329,556                -          329,556
                                        ---------  ----------  ------------  -------------  ---------------  ---------------

Balance, June 30, 2002 - as restated    5,880,063       5,880    7,458,366     (1,227,783)          (6,989)       6,229,474

Issuance of common stock for:
  Cash                                    281,781         282      615,419              -                -          615,701
  Services                                 52,969          53      104,497              -                -          104,550
  Compensation                                  -           -       85,500              -                -           85,500

Issuance of common stock by subsidiary          -           -       55,807              -                -           55,807

Other comprehensive loss                        -           -            -              -            1,742            1,742

Net loss                                        -           -            -    (13,577,615)               -      (13,577,615)
                                        ---------  ----------  ------------  -------------  ---------------  ---------------

Balance, June 30, 2003 - as restated    6,214,813       6,215    8,319,589    (14,805,398)          (5,247)      (6,484,841)

Issuance of common stock for:
  Cash                                    935,588         935    1,426,080              -                -        1,427,015
  Services                                 92,500          93      193,907              -                -          194,000
  Software                                141,279         141      374,859              -                -          375,000

Issuance of shares to settle debt         540,484         540    1,070,428              -                -        1,070,968

Issuance of common stock by subsidiary          -           -       27,593              -                -           27,593

Issuance of stock warrants to:
  Extend convertible debenture                  -   2,016,000            -              -                -        2,016,000
  Extend note                                   -     480,000            -              -                -          480,000
  Settle debt                                   -     640,000            -              -                -          640,000

Other comprehensive loss                        -           -            -              -           (1,975)          (1,975)

Net loss                                        -           -   (3,406,660)             -                -       (3,406,660)
                                        ---------  ----------  ------------  -------------  ---------------  ---------------

Balance, June 30, 2004                  7,924,664  $    7,924  $14,548,456   $(18,212,058)  $       (7,222)  $   (3,662,900)
                                        =========  ==========  ============  =============  ===============  ===============
</TABLE>

The  accompanying  notes  are  an  integral part of these consolidated financial
statements.


                                      F-5
<PAGE>

<TABLE>
<CAPTION>

                         SIVAULT SYSTEMS, INC.
                 (FORMERLY SECURITY BIOMETRICS, INC.)
        CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
           ----------------------------------------------


                                            YEARS  ENDED  JUNE  30,
                                            -----------------------
                                              2004          2003
                                          ------------  -------------
<S>                                       <C>           <C>
Net loss for the year                     $(3,406,660)  $(13,577,615)

Other comprehensive income (loss)
Foreign currency translation adjustment        (1,975)         1,742
                                          ------------  -------------

Net comprehensive loss                    $(3,408,635)  $(13,575,873)
                                          ============  =============
</TABLE>

The  accompanying  notes  are  an  integral part of these consolidated financial
statements.


                                      F-6
<PAGE>

<TABLE>
<CAPTION>
                     SIVAULT  SYSTEMS,  INC.  AND  SUBSIDIARIES
                         (FORMERLY SECURITY BIOMETRICS, INC.)

                         CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                               YEARS ENDED JUNE 30,
                                                            --------------------------
                                                                2004          2003
                                                            ------------  ------------
<S>                                                         <C>           <C>
  CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss from continuing operations                     $(3,582,853)  $(9,659,334)
    Adjustments to reconcile net income to net cash
      provided by operating activities:
    Depreciation of property and equipment                       10,026        55,072
    Deferred rent expense                                        16,954             -
    Gain on settlement of debt                                  (55,156)            -
    Compensation charge                                               -        85,500
    Issuance of stock for consulting services                   194,000       104,550
    Issuance of stock to extend note and
      convertible debenture                                   2,496,000             -
    Write-down of capital assets                                      -        64,042
    Write-down of investment                                          -       187,500
    Write-down of goodwill                                            -     7,527,654
    Minority interest in equity of consolidated subsidiary         (193)            -
    Changes in assets and liabilities:
      Accounts receivable                                      (753,983)      (64,797)
      Inventory                                                  (3,884)            -
      Prepaid expenses and other current assets                 (39,724)      169,163
      Deposits                                                  (56,916)        4,374
      Accounts payable and accrued expenses                   1,500,439     1,169,011
      Costs and estimated earnings in excess of billings
       on uncompleted contracts                                  90,018      (541,245)
      Corporation income taxes payable                           34,934             -
                                                            ------------  ------------

  NET CASH USED BY OPERATING ACTIVITIES                        (150,338)     (898,510)
                                                            ------------  ------------

  CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property and equipment                         (207,002)       (9,268)
    Proceeds on disposal of property and equipment                    -        38,000
    Advances to discontinued subsidiaries                      (288,796)     (246,414)
                                                            ------------  ------------

  NET CASH USED IN INVESTING ACTIVITIES                        (495,798)     (217,682)
                                                            ------------  ------------

  CASH FLOWS FROM FINANCING ACTIVITIES:
    Net proceeds from issuance of common stock                1,427,015       615,702
    Proceeds from issuance of common stock by subsidiary         27,593        56,000
    Repayments on capital lease obligations                      (2,773)       (5,539)
    Repayments on equipment notes payable                             -       (28,918)
    Repayments on convertible debenture                        (321,431)            -
    Repayments on notes payable - related parties              (373,505)            -
                                                            ------------  ------------

  NET CASH PROVIDED BY FINANCING ACTIVITIES                     756,899       637,245
                                                            ------------  ------------

  EFFECT OF FOREIGN EXCHANGE RATE
    CHANGES ON CASH                                              (1,975)        1,742
                                                            ------------  ------------

  NET INCREASE (DECREASE) IN CASH FROM
    CONTINUING OPERATIONS                                       108,788      (477,205)

  DECREASE IN CASH FROM DISCONTINUED
    OPERATIONS                                                        -        (1,978)
                                                            ------------  ------------

  INCREASE (DECREASE) IN CASH DURING THE YEAR                   108,788      (479,183)

  CASH, AT BEGINNING OF PERIOD                                    4,092       483,275
                                                            ------------  ------------

  CASH, AT END OF PERIOD                                    $   112,880   $     4,092
                                                            ============  ============
</TABLE>

The  accompanying  notes  are  an  integral part of these consolidated financial
statements.


                                      F-7
<PAGE>

<TABLE>
<CAPTION>

                     SIVAULT  SYSTEMS,  INC.  AND  SUBSIDIARIES
                       (FORMERLY SECURITY BIOMETRICS, INC.)

                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    (CONTINUED)

                                                              YEARS ENDED JUNE 30,
                                                              --------------------
                                                                 2004       2003
                                                              ----------  --------
<S>                                                           <C>         <C>
  SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

  CASH PAID DURING THE YEAR FOR:
    Interest                                                  $  795,258  $212,877
                                                              ==========  ========
    Income taxes                                              $        -  $      -
                                                              ==========  ========

  NON-CASH INVESTING AND FINANCING ACTIVITIES
    Issuance of common stock for:
      Services                                                $  194,000  $104,550
                                                              ==========  ========
      Software                                                $  375,000  $      -
                                                              ==========  ========
      Settlement of convertible debenture                     $  100,000  $      -
                                                              ==========  ========
      Settlement of note payable - related party              $  970,968  $      -
                                                              ==========  ========

    Issuance of stock warrants to:
      Extend convertible debenture                            $2,016,000  $      -
                                                              ==========  ========
      Extend note payable - related party                     $  480,000  $      -
                                                              ==========  ========
      Settle note payable - related party                     $  640,000  $      -
                                                              ==========  ========


    Conversion of accounts payable and accrued liabilities -
      related parties to notes payable - related parties      $  325,000  $      -
                                                              ==========  ========

</TABLE>

The  accompanying  notes  are  an  integral part of these consolidated financial
statements.


                                      F-8
<PAGE>

                     SIVAULT SYSTEMS, INC. AND SUBSIDIARIES
                      (FORMERLY SECURITY BIOMETRICS, INC.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2004 AND 2003
                             ----------------------



NOTE  1  -  ORGANIZATION  AND  NATURE  OF  BUSINESS

Nature  of  Business

Security Biometrics, Inc. pursuant to the acquisition of SiVault Analytics, Inc.
in  July  2004  changed  its  name  to  SiVault  Systems,  Inc.  ("SiVault").

SiVault  (together  with  its  consolidated  subsidiaries,  unless  the  context
otherwise  requires,  "the  Company")  is  a Nevada corporation incorporated  on
March  12,  1999.  SiVault  and  its  subsidiaries  are  engaged  in  the
commercialization  of  technologies  designed  to  implement  secure  electronic
storage  and  retrieval  of  signed  documents  and  biometric  signature-based
authentification  for electronic transactions technologies which the Company has
developed,  acquired  or  licensed  from  others.  Lightec  Communications Corp.
("Lightec"),  a  wholly-owned  subsidiary  of  SiVault,  is  a  provider  of
telecommunications  design,  installation  and technical support for information
technology  systems.

Organization

On August 25, 2000, the Company acquired all of the issued and outstanding stock
of  Biometrics  Security,  Ltd.  ("BSI") in exchange for 1,912,884 shares of its
common  stock.  (1,875,000  of  these  shares  were  owned  by  a  trust  whose
beneficiaries  were  the  children  of  an  officer  of  the  Company).  This
transaction  has  the  effect  of  what  is  commonly  referred to as a "reverse
acquisition"  in  that  the  Company  is the legal acquirer; however, BSI is the
accounting  acquirer. In connection with the legal form of this transaction, BSI
became  a wholly-owned subsidiary  of the Company.  For accounting purposes, the
acquisition  is  treated  as  a  recapitalization  of  BSI  rather  than  a
business  combination.  BSI  was  subsequently  renamed  eMedRx,  Inc.  ("eMedRx
Nevada")  (a  Nevada  corporation)  on  December  2, 2002, which is still in the
development  stage  as  of  June  30,  2004.

Lightec  Communications  Corp.
-------------------------------

On  March 14, 2002, the Company acquired 100% of the outstanding common stock of
Lightec.  Lightec  is  a  New  York  corporation  incorporated  on July 2, 1996.

eMedRx,  Inc.  (Canada)
-------------------

On  January  21,  2003,  the  Company  incorporated  a  new  subsidiary, eMedRx,
Inc.  ("eMedRx  Canada")  under  the  Company  Act  of  the Province  of British
Columbia,  Canada.  eMedRx  Canada  entered  into an exclusive license agreement
with  the  Company  to  develop  and  market  its  electronic  medical
prescription  system around the world.  EMedRx Canada had no revenues, expenses,
nor net income/loss during  the  period  from  January  21,  2003  to  June  30,
2003.  During  the  year  ended  June  30,  2004, eMedRx Canada was still in the
development  stage.


                                      F-9
<PAGE>

NOTE  1     ORGANIZATION  AND  NATURE  OF  BUSINESS  -  (cont'd)

eMedRx,  Inc.  ("eMedRx,  USA")
-----------------------------

On October 1, 2003, the Company established a new subsidiary to sell, market and
implement  the  eMedRx  product  and  PenFlow application in the U.S. healthcare
delivery  market.  In return for the rights to the product, the Company received
consideration  of  49%  of  the  stock  of the new subsidiary, eMedRx, USA.  The
chairman  of  eMedRx,  USA  is  also  a  director  of  the Company.  The Company
granted to the chairman  of  eMedRx,  USA, 50,000 shares of the Company's common
stock  as  compensation  for  his  services.  eMedRx,  USA has not generated any
revenues to date,  and its losses have been funded by the Company as of June 30,
2004.  Accordingly,  eMedRx,  USA  is  considered  a  variable  interest  entity
and  has  been  consolidated  in the Company's  financial  statements as of June
30,  2004.

Datadesk  Technologies,  Inc.
------------------------------

On  June  28, 2002, the Company acquired 100% of the outstanding common stock of
Datadesk  Technologies, Inc. ("Datadesk").  Datadesk is a  state  of  Washington
corporation  incorporated  on  May  20,  1997.  Datadesk  designed  and produced
(through  subcontractors)  advanced  digital  input devices and appliances.  The
Company  discontinued  its  operations  as  of  August  20,  2003 (see Note 19).

Netface,  LLC.
---------------

On  June  29,  2001,  the  Company  acquired  all  of the outstanding membership
interest  of  Netface,  LLC  ("Netface").  Netface  is  a  Connecticut  limited
liability  corporation. Netface held an option to acquire on exclusive worldwide
perpetual,  royalty-free  license  to exploit the Gesture Recognition Technology
developed  by  DSI  Datotech Systems, Inc. (hereinafter referred to as Datotech)
for  video  games  and  internet/television.  In  the  year  ended June 30,2002,
Netface,  LLC  abandoned  its  Datotech  option  and  is  now  inactive.

Security  Biometrics  Ltd.
------------------------------

On November 13, 2003, the Company established a subsidiary in the United Kingdom
to  sell and market the Company's products in Europe.  This subsidiary, Security
Biometrics  Limited  ("SBL"),  was  incorporated as a private limited company in
England  and Wales with 100,000 shares of authorized capital stock.  The Company
was  issued  60,000  shares  of SBL and  a  minority  interest holder was issued
10,000  shares.  On  May  24,  2004, the Board of Directors approved the sale of
this  subsidiary  to  its  minority  interest holder for consideration of one US
dollar.  The  liabilities  will  be  assumed  by  the  minority interest holder,
pursuant  to  a resolution  of  the  Board  of  Directors and an acknowledgement
by  the  minority  stockholder.  The  expenses  of  SBL  have  been  reported as
discontinued  operations  in  the accompanying financial statements for the year
ended  June  30,  2004.


                                      F-10
<PAGE>

NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

BASIS  OF  PRESENTATION
---------------------

The  Consolidated  Financial Statements reflect the operations of the Biometrics
and  Lightec  operations as continuing operations. The results of operations and
cash  flows  of  Datadesk  Technologies,  Inc.  and Security Biometrics Ltd. are
reflected  as  discontinued  operations in accordance with Accounting Principles
Board  "(APB")  Opinion 30, "Reporting the Results of Operations - Reporting the
Effects  of  Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently  Occurring  Events  and  Transactions.

GOING  CONCERN
-------------

The  consolidated  financial  statements have been prepared assuming the Company
will  continue  to  operate  as  a  going  concern  which  contemplates  the
realization of assets and  the settlement of liabilities in the normal course of
business.  The  Company  has  experienced  significant  operating  losses  since
inception.  In  addition, as at June 30, 2004, the Company has a working capital
deficit  amounting  to  approximately  $4.3  million.  Management  has adopted a
reorganization  plan  which  the  Company  believes  will  address  its  current
financial  condition  (see  Note  3).

The  accompanying  consolidated  financial  statements  do  not  include  any
adjustments  relating  to  the  recoverability  and classification of assets and
liabilities  that might be necessary should the Company be unable to continue as
a  going  concern.

PRINCIPLES  OF  CONSOLIDATION
-----------------------------

The  consolidated  financial statements include the accounts of SiVault Systems,
Inc.  and  the  following  subsidiaries:

Lightec  Communications  Corp.
eMedRX,  Inc.  (Nevada)
eMedRX,  Inc  (Delaware)
eMedRx  Inc.  (Canada)
Datadesk  Technologies,  Inc.  (discontinued  on  August  20,  2003)
NetFace,  LLC  (Inactive)
Security  Biometrics  Limited  (effective  November  13,  2003  and discontinued
  on  May  24,  2004)

The  company  has  consolidated  all  entities  under  its  control.

All  significant  inter-company  accounts and transactions have been eliminated.


                                      F-11
<PAGE>

NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  -  (cont'd)

VARIABLE  INTEREST  ENTITIES
-----------------------------

In  January  2003, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation  No.  46,  "Consolidation  of  Variable  Interest  Entities,  an
Interpretation  of  ARB  No.  51"  which  was  replaced  in December 2003 by the
issuance  of  FIN  46R  ("FIN  46R").  FIN 46R explains how to identify variable
interest  entities  ("VIEs")  and how a company should assess its interests in a
variable  interest entity to decide whether to consolidate that entity.  FIN 46R
requires  existing  unconsolidated variable interest entities to be consolidated
by their primary beneficiaries if the entities do not effectively disperse risks
among parties involved.  The provisions of FIN 46R must be applied to VIEs as of
June  30  2004.  The  Company  is  considered the primary beneficiary of eMedRX,
USA,  and  accordingly, has consolidated the assets, liabilities and the results
of  operations  of  eMedRX,  USA,  as  of  and for the year ended June 30, 2004.

CONCENTRATIONS  OF  CREDIT  RISK
-----------------------------

The  Company  derived  substantially all of its revenues for year ended June 30,
2004  from  one  customer.

The  Company  maintains  cash balances in banks, which, at times, may exceed the
limits  of  the  Federal  Deposit  Insurance  Corp.

ACCOUNTING  ESTIMATES
----------------------

Management  uses  estimates  and assumptions in preparing consolidated financial
statements  in  accordance  with generally accepted accounting principles in the
United  States.  Those  estimates and assumptions affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities, and
the  reported  revenues  and  expenses.  Actual  results  could  vary  from  the
estimates  that  were  used.  Significant  estimates  made by management include
revenue  recognition, and the fair values of property and equipment and warrants
issued,  allowances  on receivables, and the valuation allowance on deferred tax
assets.

REVENUE  RECOGNITION
---------------------

The  Company  recognizes  product  revenue  when  persuasive  evidence  of  an
arrangement exists, delivery has occurred, the fee is fixed or determinable, and
collectibility is reasonably assured.  In instances where the customer specifies
final  acceptance of the product, system, or solution, revenue is deferred until
all  acceptance  criteria  have been met.  Service revenue is generally deferred
and, in most cases, recognized ratably over the period during which the services
are  to  be performed, which is typically approximately one year.  Cash payments
received  in  advance  of  product  or  service revenue are recorded as deferred
revenue.

When  a  sale involves multiple elements, such as sales of products that include
services,  the  entire  fee from the arrangement is allocated to each respective
element based on its relative fair value and recognized when revenue recognition
criteria  for  each element are met.  Fair value for each element is established
based  on  the  sales  price  charged  when the same element is sold separately.


                                      F-12
<PAGE>

NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  -  (cont'd)

Lightec  recognizes revenues from fixed-price and modified fixed-price contracts
on  the  percentage-of-completion  method,  measured  by  the  percentage  of
costs  incurred  to date to estimated total cost for each contract.  This method
is  used  because  management  considers  total  cost  to  be the best available
measure of progress  on  the  contracts.  Because  of  inherent uncertainties in
estimating  costs,  it  is  at least reasonably possible that the estimates used
will  change  within  the  near  term.

Revenue from time-and-materials contracts is recognized currently as the work is
performed.

Contract  costs  include  all direct material and labor costs and those indirect
costs  related to contract performance, such as indirect labor, supplies, tools,
repairs,  and  depreciation.  Selling,  general  and  administrative  costs  are
charged  to expense as incurred.  Provisions for estimated losses on uncompleted
contracts  are  made in the period in which such losses are determined.  Changes
in  job  performance,  job conditions, and estimated profitability may result in
revisions  to  costs and income, which are recognized in the period in which the
revisions are determined.  Changes in estimated job profitability resulting from
job  performance,  job  conditions,  contract  penalty  provision, claims change
orders and settlements, are accounted for as changes in estimates in the current
period.

The  asset,  "Costs  and estimated earnings in excess of billings on uncompleted
contracts",  represents  revenues  recognized  in excess of amounts billed.  The
liability,  "Billings  in  excess of costs and estimated earnings on uncompleted
contracts",  represents  billings  in  excess  of  revenues  recognized.

Revenue  from  claims  is recognized when realization is probable and the amount
can  be reliably estimated.  When realization is probable, but the amount cannot
be  reliably  estimated,  revenue is recognized to the extent of costs incurred.

ACCOUNTS  RECEIVABLE
---------------------

Management  performs  ongoing  credit evaluations of its customers and estimated
that  an  allowance was not necessary at June 30, 2004 and 2003.  Such estimates
may  change  in  the  future.  Accounts  receivable represent amounts due from a
contract  entered  into  by  Lightec.

Accounts  would  be  written off if significantly past due and management deemed
them  to be uncollectible after exhaustive efforts to collect them.  However, no
write-offs  have  been  necessary.

INVENTORY
----------

The  Company's  inventory  is  stated  at  the  lower of cost (determined on the
first-in,  first-out  method)  or  market.

SOFTWARE  DEVELOPMENT  COSTS
----------------------------

The Company accounts for software development costs in accordance with Statement
of  Financial Accounting Standards No. 86, "Accounting for the Costs of Computer
Software  to  be  Sold,  Leased,  or  Otherwise  Marketed."


                                      F-13
<PAGE>

NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  -  (cont'd)

PROPERTY  AND  EQUIPMENT
------------------------

Property  and equipment are stated at cost.  Major renewals and improvements are
charged to the asset accounts while replacements, maintenance and repairs, which
do  not  improve or extend the lives of the respective assets, are expensed.  At
the  time property and equipment are retired or otherwise disposed of, the asset
and  related  accumulated  depreciation  accounts are relieved of the applicable
amounts.  Gains  or  losses from retirements or sales are credited or charged to
income.

The  Company  depreciates  its  property  and  equipment for financial reporting
purposes using the straight-line method based upon the following useful lives of
the  assets:

     Furniture  and  fixtures        7-10  Years
     Machinery  and  equipment          5  Years
     Computer  equipment                5  Years
     Software                           3  Years

PATENTS  AND  TRADEMARKES
-----------------------

Costs incurred for the application of patents and trademarks are capitalized and
amortized  on  the  straight-line method, based on their estimated useful lives,
commencing  upon approval of the patent and trademarks.  These costs are charged
to  expense  if the patent or trademark is unsuccessful.  As of the date of this
report,  no  patents  have  yet  been  approved.

INCOME  TAXES
--------------

The  Company adopted SFAS No. 109, "Accounting for Income Taxes," which requires
the  use  of the liability method of accounting for income taxes.  The liability
method  measures  deferred  income  taxes by applying enacted statutory rates in
effect  at  the  balance  sheet date to the differences between the tax bases of
assets  and  liabilities and their reported amounts in the financial statements.
The resulting deferred tax assets or liabilities are adjusted to reflect changes
in  tax  laws  as  they  occur.

LOSS  PER  COMMON  SHARE
---------------------

Net  loss  per  common  share is calculated by dividing net loss by the weighted
average number of shares outstanding during each period presented.  Common stock
equivalents,  consisting  of, warrants and convertible debentures, have not been
included, as their effect would be antidilutive for the two years ended June 30,
2004  and  2003, the following potentially dilutive securities were not included
in  the  computation  of  diluted  loss  per  share:

                                         2004                     2003
                               ------------------------  -----------------------
                                               EXERCISE                 EXERCISE
                                  SHARES        PRICE       SHARES       PRICE
                               ------------  ----------  -----------  ----------
     Warrants                    2,944,440   $     2.75     599,205   $     2.43
     Convertible  debenture        226,428   $     6.00     295,152   $     6.03


                                      F-14
<PAGE>

NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  -  (cont'd)
         ------------------------------------------

The  following table sets forth the numerator and denominator in the computation
of  basic  and  diluted  per  share  information:

<TABLE>
<CAPTION>
                                                            2004              2003
                                                   --------------------  -------------
<S>                                                <C>                   <C>
Numerator for basic and diluted loss per share:
  Loss from continuing operations                  $        (3,582,853)  $(9,659,334)
                                                   --------------------  -------------

  Income (loss) from discontinued operations       $           176,193   $(3,918,281)
                                                   --------------------  -------------

Denominator for basic and diluted loss per share:
  Weighted-average shares outstanding                        6,971,497     6,037,476
                                                   ====================  =============
</TABLE>

LONG-LIVED  ASSETS
------------------

SFAS  No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets,"
requires  that  long-lived  assets be reviewed for impairment whenever events or
changes  in  circumstances  indicate  that  the  carrying amount of the asset in
question  may  not  be  recoverable.  For  the  years  ended  June  30, 2004 and
2003,  SFAS  No.  144 did not have a material effect on the Company's results of
operations,  cash  flows  or  financial  condition.

DISCLOSURES  ABOUT  FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS
-------------------------------------------------------

The  Company  estimates  that  the fair value of all financial instruments as of
June  30,  2004  and 2003,  as  defined in SFAS No. 107, "Disclosures about Fair
Value of Financial  Instruments,"  does not differ materially from the aggregate
carrying  values  of  its  financial  instruments  recorded  in the accompanying
balance  sheet.  The  estimated  fair  value  amounts  have  been  determined by
the  Company  using  available  market  information  and  appropriate  valuation
methodologies.  Considerable  judgment  is  required  in  interpreting  market
data to develop the estimates  of  fair  value,  and  accordingly, the estimates
are not necessarily indicative  of  the  amounts  that the Company could realize
in  a  current  market  exchange.

STOCK-BASED  COMPENSATION
-------------------------

The  Company  accounts  for  stock-based  compensation  in  accordance  with the
provision of SFAS NO. 148, ""Accounting for Stock-Based Compensatin - Transition
and  Disclosure - an amendment of SFAS No. 123."  This statement amends SFAS No.
123,  "Accounting  for Stock-Based Compensation," to provide alternative methods
of  transition  for  a  voluntary  change  to  the  fair  value  based method of
accounting  for  stock-based employee compensation.  In addition, this Statement
amends  the  disclosure  requirements  of  SFAS  No.  123  to  require prominent
disclosures  in both annual and interim financial statements about the method of
accounting  for  stock-based  employee compensation and the effect of the method
used  on  reported  results.  The Company has adopted the provisions of SFAS No.
148  prospectively  from July 1, 2003.  Prior to 2003, the Company accounted for
stock-based  employee  compensation  under  the  recognition  and  measurement
provisions  of Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued  to  Employees,"  and  related  Interpretations.  Warrants  issued  to
consultants  and  others  are  expensed  in accordance with  SFAS  No.  123,  as
amended  by  SFAS  No.  148.


                                      F-15
<PAGE>

NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  -  (cont'd)
         ------------------------------------------

STOCK  ISSUED  BY  SUBSIDIARY
------------------------------

The issuance of stock by a subsidiary to third parties reduces the proportionate
ownership  interest  in  the  investee.  The  subsidiary's  plan  is to continue
raising funds through private placements and, as a result, the additional equity
raised  has  been  included  in  additional  paid-in  capital.

COMPREHENSIVE  INCOME
----------------------

The  Company  follows  the  provisions of SFAS No. 130, "Reporting Comprehensive
Income,"  which  establishes rules for the reporting of comprehensive income and
its  components.  Comprehensive  income  is  comprised  of  foreign  currency
translation  adjustments.

FOREIGN  CURRENCY  TRANSLATION
-------------------------------

The  financial  statements  of  the Company are measured using the United States
dollar as the functional and reporting currency.  Assets, liabilities and equity
accounts  of  the  Company are translated from foreign currency to United States
currency  at  exchange  rates  as  of  the  balance  sheet  date  or  historical
acquisition date, depending on the nature of the account.  Revenues and expenses
are  translated  at  average  rates  of exchange in effect during the year.  The
resulting  cumulative  translation  adjustments have been recorded as a separate
component  of  stockholders'  equity  (deficiency).

RECLASSIFICATION
-----------------

Certain  2003  amounts have been reclassified to conform with the 2004 financial
statement  presentation.

SHIPPING  AND  HANDLING  COSTS
----------------------------

The  Company's policy is to classify shipping and handling costs as part of cost
of  goods  sold  in  the  statement  of  operations.

NEW  ACCOUNTING  POLICIES
-----------------------

In  2003  and  2004,  the  FASB  issued  the  following  statements:

SFAS  No.  146       -     Accounting  for  costs  associated  with  exit  or
                           disposal
                           activities
SFAS  No.  147       -     Acquisitions  of  Certain  Financial  Institution
SFAS  No.  148       -     Accounting  of  Stock-based Compensation - Transition
                           and
                           Disclosure,  an  amendment  of  FASB  statement  No.
                           123
SFAS  No.  149       -     Amendment  of  Statement  No.  133  on  Derivitive
                           Instruments  and  Hedging  Activities
SFAS  No.  150       -     Accounting  for  Certain  Financial  Instruments
                           with
                           Characteristic's  of  Both  Liabilities  and  Equity.
FASB  Interpretation  -    Guarantor's  Accounting and Disclose Requirement for
  ("FIN")  No.  45         Guarantees

SFAS  No.s  146-150  and  FIN45  did  not  have  a  material  impact  on  the
Company's  financial  position  and  results  of  operations.


                                      F-16
<PAGE>

NOTE  3  -  MANAGEMENT'S  LIQUIDITY  PLANS
         -----------------------------

As  shown  in  the  accompanying  financial  statements,  the  Company has shown
recurring  losses from operations, negative cash flows from operations and as of
June  30,  2004  had  a  working  capital deficit of approximately $4.3 million.
These factors raise substantial doubt about the Company's ability to continue as
a  going  concern.  Management's  plan  includes  the  following:

1.   Raised  approximately  $2  million  from  July 1 through September 30, 2004
     through  the  issuance  of  its  common  stock.
2.   Subsequent  to  June 30, 2004, related party debt of approximately $600,000
     was  settled  through  issuance  of  common  stock.
3.   Acquired  SiVault  Analytics,  Inc.  on July 9, 2004 which had entered into
     several  strategic  alliances  and  licensing agreements.
4.   Entered  into strategic alliances and licensing agreements which management
     believes  will  increase  revenues.
5.   Increased  Lightec's  contracts  to approximately $9.6 million for the year
     ended  June  30,  2005.

In  addition,  management's  business  plan  is  to  seek  to acquire additional
companies,  enter into more strategic alliances and to increase its sales force.
The  Company  expects  that it will need to raise additional capital to meet its
business plan.  The Company expects to seek to obtain additional funding through
issuance  of  stock  and/or  lending  from  financial  institutions.

However,  continuation  of the business thereafter is dependent on the Company's
ability  to  achieve  profitable operations and sufficient cash flow to meet its
current  obligations.  Management believes that with settlements of certain debt
and  with  the  expected  increase  in  revenues  on  the  Lightec and Biometric
contracts,  that the Company will continue as an ongoing entity at least through
the  end  of  fiscal  year  2005.


NOTE  4  -  ACQUISITION  OF  DATAGILITY
            ---------------------------

On  February  18,  2004,  the Company entered into a Stock Purchase Agreement to
purchase  all  of  the  outstanding  shares  of  Datagility Inc. ("Datagility").
Datagility  has  developed  a software application, CyberTrooper, which fulfills
the  scanning  requirements  of the USA Patriot Act and Office of Foreign Assets
Control  (OFAC).

The fair value of the assets acquired at the date of acquisition are as follows:

     Property  and  equipment     $     500,000
                                  -------------

     Total  assets  acquired            500,000
     Total  liabilities                       -
                                  -------------

     Net  assets  acquired        $     500,000
                                  =============


                                      F-17
<PAGE>

NOTE  4  -  ACQUISITION  OF  DATAGILITY  -  (cont'd)
            ---------------------------

Total  consideration:

     Cash                         $     200,000*
     Common stock - 116,279 shares      300,000
                                  -------------
                                  $     500,000
                                  =============

*  $100,000  in  cash  is  payable by December 31, 2004, including $50,000 to an
officer  of  the  Company.

As  of  the  date of this report no revenues and expenses have been generated by
Datagility.


NOTE  5  -  PROPERTY  AND  EQUIPMENT
           ----------------------

Property  and  equipment  at  June  30,  consists  of  the  following:

<TABLE>
<CAPTION>
                                                     2004        2003
                                                  ----------  ---------
<S>                                               <C>         <C>
  Furniture and fixtures                          $   64,198  $ 64,198
  Computer equipment                                  24,601    16,027
  Computer software                                  573,477         -
                                                  ----------  ---------
                                                     662,276    80,225
  Less: accumulated depreciation                     (25,282)  (15,207)
                                                  ----------  ---------

                                                  $  636,994  $ 65,018
                                                  ==========  =========
</TABLE>

Depreciation  charged  to  operations for the years ended June 30, 2004 and 2003
amounted  to  $10,026 and $55,072, respectively.  There has been no amortization
of  computer software costs because it has not been fully implemented as of June
30,  2004.


NOTE  6  -  Goodwill
            --------

The  Company adopted the provisions of FASB 142 for the accounting for goodwill.
According  to  the FASB requirements, goodwill is capitalized and not amortized.
Each  year,  management is required to review goodwill to determine if there has
been  an  impairment  loss  to  recognize  on  the  carrying  value of goodwill.
Management  believes  that there has been an impairment of goodwill for the year
ended  June  30,  2003, and has accordingly written-down the balance of goodwill
relating  to  the  acquisition  of  Lightec  in the amount of $7,527,654 and the
goodwill  relating  to  the  acquisition  of  Datadesk  in  the  amount  of
$3,405,345  (see  Note  19,  discontinued  operations).


                                      F-18
<PAGE>

NOTE  7  -     Estimated  Earnings  On  Uncompleted  Contracts
              -----------------------------------------------


<TABLE>
<CAPTION>
                                                     2004       2003
                                                  ----------  ---------
<S>                                               <C>         <C>
  Costs incurred on uncompleted contracts         $3,637,670  $   -
  Estimated earnings to date                       3,471,459      -
                                                  ----------  ---------
                                                   7,109,129      -
  Less:  Billings to date                          7,199,147      -
                                                  ----------  ---------

  Billings  in  excess  of  costs and
    estimated earnings  on uncompleted
    contracts                                     $   90,018  $   -
                                                  ==========  =========
</TABLE>

NOTE  8  -  Notes  Payable
           --------------
<TABLE>
<CAPTION>
                                                                                     2004        2003
                                                                                   ----------  ----------
<S>                                                                                <C>         <C>

MARYANNE  RICHARD

On  June  13, 2002, the Company issued a note payable to MaryAnne Richard in the
amount  of  $1,000,000 as part of the consideration for the purchase of Lightec.
The  note  was  secured  by  deposit  accounts,  investment property, letters of
credit,  rights  to  payments evidenced by chattel paper, rights to payments for
money or funds advanced or sold and all proceeds of any and all of the above. On
November  6,  2002,  the  Company  agreed  to  grant a warrant to Ms. Richard to
purchase  400,000 shares of common stock at a price of $2.50 for a period of two
years,  in  order  to  extend  the  initial  repayment  terms of the note. These
warrants  were  cancelled  in  the  June  2004  settlement  Agreement.

Pursuant  to  an agreement dated October 29, 2003, the Company agreed to set the
principal  of  the note at $1,105,000 ("new principal"). Interest accrued on the
new  principal  at  the rate of 9% per annum commencing on the date of the first
receipt of funds generated from the Lightec contract with the City of Bridgeport
Board  of  Education. 9% of the receipts from the Bridgeport School contract was
applied  against  the  new  principal  and  accrued  interest.
</TABLE>


                                      F-19
<PAGE>

NOTE  8  -  Notes  Payable  -  (cont'd)
           --------------

<TABLE>
<CAPTION>
                                                                                     2004        2003
                                                                                   ----------  ----------
<S>                                                                                <C>         <C>

On  June  4, 2004, the Company entered into a settlement Agreement with MaryAnne
and  Michael  Richard  (together, the "Richards") whereby the Richards agreed to
settle  all  obligations  and disputes with the Company. The Company agreed to a
payment  to  the Richards of $1,189,983 (new principal and accrued interest) and
the May 7, 2004 issuance of a warrant for 400,000 shares of the Company's common
stock  at $2.50 per share. The Richards agreed to (i) a June 7, 2004 transfer of
850,000  shares  (valued  at  $850,000)  of  the  Company's  common  stock  to a
third-party designees of the Company and (ii) settlement of the promissory note.
On  July  2,  2004,  the  parties finalized the settlement and executed a mutual
waiver  and  release  of  all  claims  against  each other. On July 2, 2004, the
remaining  balance of $339,983 was paid to the Richards.                           $  339,983  $1,000,000

SYNERGEX  GROUP  LLC

On  June 11, 2002, Synergex Group LLC ("Synergex") loaned the Company $1,000,000
to  facilitate  the  acquisition  of  Lightec. The note bears interest at 9% and
originally  matured  on  December  31,  2002.  A director and stockholder of the
Company  also  is  the  managing  director  and  member  of  Synergex.

Pursuant  to  an agreement dated September 12, 2003, the Company was required to
pay  the  following:

i)  The principal plus all interest accrued in the outstanding principal balance
at  the  rate  of  9%  per  annum  from the date of receipt of the first payment
related  to  the  Lightec's  Bridgeport  School  contract  until  paid  in full;

ii)  7.4%  of  all  money  received on account of the Bridgeport School contract
until  paid  in  full.

The  note  was  secured  by certain Lightec assets. On May 25, 2004, the Company
agreed to grant a warrant to Synergex to purchase 400,000 shares of common stock
at  a  price  of $2.50 for a period of two years, in order to extend the initial
repayment  terms  of  the  note  by  three  months.

On June 24, 2004, the Company entered into a settlement agreement with Synergex.
Under the terms of the settlement, Synergex was issued 485,484 shares (48,548 of
these  shares  were  directed  to  legal counsel) of common stock of the Company
valued  at  $2.00  per  share,  in  exchange  for  surrender
of the note with the  remaining balance due of $970,968.                           $      -    $1,000,000
                                                                                   ----------  ----------
                                                                                   $  339,983  $2,000,000
                                                                                   ----------  ----------
</TABLE>

Interest  on  these  notes  amounted  to  $188,877  and  $180,000
for  2004  and  2003,  respectively.


                                      F-20
<PAGE>

NOTE  9  -  CONVERTIBLE  DEBENTURE  PAYABLES

<TABLE>
<CAPTION>
                                                                                     2004        2003
                                                                                   ----------  ----------
<S>                                                                                <C>         <C>
EDINBURGH  INVESTMENTS  LLC

On  June  30,  2002,  the  Company  issued  a convertible debenture to Edinburgh
Investments  LLC  ("Edinburgh").  The  debenture was secured by a first priority
interest  in  the  revenues and assets of Lightec and originally matured on June
30,  2003.  Accrued  interest  at  10%  was payable quarterly. Edinburgh has the
option  to convert the debenture into the Company's common stock at a conversion
price  of  $6.00  per  share,  subject  to  anti-dilution  adjustments.

On  August 29, 2003, Edinburgh obtained a court order for settlement against the
Company  requiring  the  Company  to  pay  the  following:

i) $50,000 on each of October 31, 2003, November 28, 2003 and December 31, 2003,
($150,000  paid  as  penalty  has  been  included  in  interest  expense);

ii)  principal plus all interest accrued on the outstanding principal balance at
the  rate  of  18%  per  annum from June 28, 2002. All outstanding principal and
accrued  interest  shall  be  paid to Edinburgh no later than December 31, 2004;

iii)  accrued  interest  at  the  rate  of 18% from September 1, 2003 payable on
January  5,  2004,  April  5,  2004,  July  5,  2004  and  October  5,  2004;

iv)  15%  of  all funds received from Lightec's Bridgeport School contract until
the  principal  and  interest  is  fully  paid;

Under  the  court order, the Company was also required to deliver to Edinburgh a
five-year  warrant  to  purchase  672,000  shares of common stock at an exercise
price  of  $3.00  per  share.  On September 30, 2003, this warrant was issued as
consideration  for  extending  the  maturity  date  to  December  31,  2004.

As  of  June 30, 2004, the Company has not paid 15% of all the receipts from the
Bridgeport  School  Contract.  The Company was notified by Edinburgh that it was
not  in  technical  compliance  with  the  terms  of  the  settlement.             $1,358,569  $1,680,000
</TABLE>


                                      F-21
<PAGE>

NOTE  9  -  CONVERTIBLE  DEBENTURE  PAYABLES  -  (cont'd)
           -----------------------------

<TABLE>
<CAPTION>
                                                                                     2004        2003
                                                                                   ----------  ----------
<S>                                                                                <C>         <C>
LIBRICO  PROPERTIES,  LTD.

On  November  8,  2001,  the  Company  issued a convertible debenture to Librico
Properties,  Ltd.  ("Librico")  for  a  minimum  of  $100,000  to  a  maximum of
$1,000,000.  The  debenture  was  unsecured, bore interest at 12% and was due to
mature  on  November  2,  2011.  On  September  12,  2003, Librico converted its
convertible  debenture  into  55,000  common  shares of the Company and received
another  55,000  warrants  to purchase an additional 55,000 common shares of the
Company  at  $3.00  Canadian  for  two  years  from  September  12,  2003.         $     -     $  100,000
                                                                                   ----------  ----------
                                                                                   $1,358,569  $1,780,000
                                                                                   ==========  ==========
</TABLE>

Interest  on  these  debentures totaled $507,651 and $237,874 for the years 2004
and  2003,  respectively.

NOTE  10  -    401(K)  PLAN
              ------------

On  February  1,  2002,  Lightec  (prior  to  the  acquisition  of  the Company)
adopted  a 401(K) retirement savings plan for its employees.  Contributions  are
determined  by  the  Board  of  Directors,  and  the  Company  did  not make any
contributions  to  the  plan  for  the  years  ended  June  30,  2004  and 2003.


NOTE   11  -   INCOME  TAXES
              -------------

The  income  tax  expense for the years ended June 30, 2004 and 2003 was $34,934
and  $-0-,  respectively.  The  income  tax expense for June 30, 2004 represents
current  state  and  local  income  taxes.

The  Company's  effective tax rate differs from the statutory Federal income tax
rate  of  34%, primarily due to the impact of recording a valuation allowance to
offset  the  potential  future  tax  benefit  resulting  from net operating loss
carry-forwards  for  all  years  presented.

As  of  June  30,  2004 and 2003, the net deferred tax assets were approximately
$1,122,000,  resulting  primarily  from  net  operating loss carry-forwards.  In
accordance  with  SFAS  No.  109,  the  Company  has  provided  a full valuation
allowance  against its net deferred tax assets as of June 30, 2004 and 2003, due
to  the  uncertainty  as  to  their future realization.  The valuation allowance
against the net deferred tax assets remained the same during the year ended June
30,  2004 and increased by approximately $687,000 during the year ended June 30,
2003.

As  of June 30, 2004, the Company has net operating loss carry forwards totaling
approximately  $3,300,000  available to offset future taxable income for federal
income  tax  purposes.  The  net operating loss carry-forwards expire in varying
amounts  through  2024  and may be limited in accordance with Section 382 of the
Internal Revenue Code of 1986, as amended, based on certain changes in ownership
that  have  occurred,  or  could  in  the  future  occur.


                                      F-22
<PAGE>

NOTE  12  -  COMMITMENTS  AND  CONTINGENCIES
           -----------------------------

LEASES
------

On  January  23,  2004,  the  Company entered into a sublease for its new office
space  in  New  York  City.  On  June  22,  2004,  the  Company  entered  into a
sub-sublease  for  part  of  this  office  space.  The sublease and sub-sublease
expires  on  December  30,  2007.  Future annual  minimum  lease payments  as of
June  30,  2004  are  as  follows:

<TABLE>
<CAPTION>
                           MINIMUM ANNUAL            MINIMUM ANNUAL
YEAR ENDING JUNE 30,       RENTAL EXPENSE             RENTAL INCOME
--------------------   -----------------------   ----------------------
<S>                    <C>                       <C>
2005                   $       113,832           $        65,040
2006                           113,832                    65,040
2007                           113,832                    65,040
2008                            56,916                    32,520
                       -----------------------   ----------------------
                       $       398,412           $       227,640
                       =======================   ======================
</TABLE>

Lightec  rents  its  Connecticut  facilities  on  a  month-to-month  basis.

Rent  expense  for  the  years  ended  June  30,  2004 and 2003 was $136,466 and
$53,744,  respectively.

WONDERNET,  LTD.  AGREEMENT
-------------------------

On  April  20,  2002,  the  Company  entered  into an exclusive distribution and
partnership  agreement  with  WonderNet, Ltd. ("WonderNet") a Company located in
Israel, whereby the Company  received  the  distribution  rights for WonderNet's
Penflow  Proprietary Biometric signature authentication software engine.  During
the  year ended June 30, 2003, the Company wrote-down its investment of $187,500
to  its  net  realizable  value  of  $-0-  and wrote-off the balance of the paid
purchases in the amount of $68,219.  This amount is included in selling, general
and  administrative  expenses  for  the  year  ended  June  30,  2003.

On  August  15,  2003,  the  Company entered into new exclusive distribution and
partnership  agreement  with WonderNet whereby the Company was granted the right
to  develop  products  based on WonderNet's technology and to use, market, sell,
distribute and exploit the technology in North America, Central America, Bermuda
and  the  Caribbean  Islands.  The  Company  is  required  to  pay  Wondernet  a
minimum  of  $120,000 per quarter and to pay a 12% royalty on gross sales of the
product.  $480,000  in  licensing  fees was included in the selling, general and
administrative  expenses  for  the  year ended June 30, 2004.  As of the date of
this  report,  the  Company  is  intending  to  end their exclusive distribution
agreement,  thereby  ending  the  Company's  minimum $120,000 quarterly payment.

EMPLOYMENT  AND  CONSULTING  AGREEMENTS
------------------------------------

At June 30, 2004, the Company had employment and consulting agreements with five
key  executives  of the Company.  The agreements provide for minimum payments of
approximately  $627,000  and  performance bonuses to certain of the individuals.
These  agreements  have  no  fixed  date  of  expiration.


                                      F-23
<PAGE>

NOTE  12  -  COMMITMENTS  AND  CONTINGENCIES  -  (cont'd)
           -----------------------------

ACQUISITION  OF  DATAGILITY
----------------------------

In  accordance  with  the  Stock Purchase Agreement entered into on February 18,
2004,  the Company is required to pay $100,000 in cash as fixed consideration to
the  former  stockholders  of  Datagility before December 31, 2004 (see Note 4).
In  addition,  the  Company  may  owe  the  former  stockholders  of  Datagility
(including  one  officer  of  the  Company)  the  following  additional  cash
consideration  if,  on  or  before  the  following  dates,  revenues received in
connection  with  Datagility's  CyberTrooper  software  application  exceed  the
following  amounts:


     CYBERTROOPER        ACHIEVEMENT         CONTINGENT  ADDITIONAL
       REVENUES             DATES              CASH  CONSIDERATION
    -------------    -------------------     ----------------------
      $  500,000       December  31,  2004             $  100,000
         750,000           June  30,  2005                100,000

CONVERTIBLE  DEBENTURE  PAYABLE
------------------------------

The  Company  is  currently not in technical compliance of its obligations under
a  convertible  debenture  held  by  Edinburgh  Investments  LLC,  as  further
discussed  in Note 9.  This obligation is reflected in current liabilities as of
June  30,  2004.

PIVOT  GROUP
-----------

The  Company  and  a  subsidiary  received a summary judgment against them dated
September  12,  2003 for $93,912 for an unpaid account.  Management is currently
in negotiations to settle this claim.  This amount  has  been  provided  for  in
the  current  liabilities  of  discontinued  operations.


NOTE  13  -  STOCKHOLDERS'  EQUITY  (DEFICIENCY)
            ---------------------------------

REVERSE  STOCK  SPLIT
----------------------

On  April 30, 2004, the Company's stockholders approved a one-for-twenty reverse
stock split which was effected in June 2004.  All references in the accompanying
consolidated  financial statements and notes thereto relating to common stock an
additional  paid-in  capital  and  warrants  per  share and share data have been
retroactively  adjusted  to  reflect  the  one-for-twenty  reverse  stock split.

INCREASE  IN  AUTHORIZED  SHARES
---------------------------------

On  April  30,  2004,  the  Company's  stockholders  approved an increase in the
authorized  number  of  common shares to 50 million from 15 million which became
effective  on  the  date  of  the  reverse  stock  split.


                                      F-24
<PAGE>

NOTE  14  -  STOCK-BASED  WARRANTS
            ----------------------

At  June  30,  2004  the  Company  had  the  following  warrants  outstanding:

<TABLE>
<CAPTION>

              EXERCISE
WARRANTS      PRICE        EXPIRATION
OUTSTANDING   PER SHARE    DATE
------------  -----------  ------------------
<S>           <C>          <C>
   90,500(A)       3.00    February 17, 2005
    1,000(A)       3.00    February 27, 2005
    3,375(A)       3.00    March 20, 2005
   55,000          3.00    September 12, 2005
  600,998          3.00    September 18, 2005
  137,875          3.00    November 19, 2005
  184,525          3.60    December 22, 2005
  400,000          2.50    May 7, 2006
  400,000          2.50    May 25, 2006
  100,000          2.00    August 22, 2006
  354,167(B)       2.00    September 13, 2006
  672,000          3.00    September 29, 2008
------------
2,999,440
============
</TABLE>

(A)     The  Company extended warrants that were to expire on February and March
2004  by  a  term  of  one  year.

(B)     The Company repriced warrants expiring on June 14, 2005 with an exercise
price  of  $7.00  per  share.  The exercise price of the repriced warrants dated
September  13, 2004 are as follows: if exercised within 30 days $2.00 per share,
within  one  year  $4.00  per  share,  and  within  2  years  $6.00  per  share.

During the year ended June 30, 2004, the Company settled $100,000 of convertible
debentures  (see  Note  9)  by  issuing 55,000 shares and issued 55,000 warrants
entitling  the  holder  thereof  the right to purchase one common share for each
warrant  held  at  $3.00  per  share  for  a  period  of  two  years.

During  the  year  ended  June  30, 2004, the Company issued 672,000 warrants to
Edinburgh  to extend the maturity date of the convertible debentures to December
31,  2004.  Each  warrant  entitles  the holder thereof the right to acquire one
common  share at $3.00 per share for a period of five years commencing September
30,  2003  (see  Note 9).  The fair value of each warrant issued to Edinburgh is
estimated  on  the  date  of  grant  using the  Black-Scholes  binomial  pricing
model  with  the  following  assumptions:

     Expected  life            5  years
     Interest  rate            5%
     Volatility              199%
     Dividend  yield           -

During  the  year  ended  June  30, 2004, the Company issued 400,000 warrants to
Synergex  to extend the maturity date of the Synergex note by three months (Note
9).  Each  warrant  entitles  the holder thereof the right to acquire one common
share  at  $2.50  per  share  for  a  period  of  two  years.


                                      F-25
<PAGE>

NOTE  14  -  STOCK-BASED  WARRANTS  -  (cont'd)
            ---------------------

During  the  year  ended  June  30, 2004, the Company issued 400,000 warrants to
MaryAnne  Richard  as  part  of the settlement agreement (Note 8).  Each warrant
entitles  the  holder thereof the right to acquire one common share at $2.50 per
share  for  a  period  of  two  years.  The fair value of each warrant issued to
Synergex  and Richard was estimated on the date of grant using the Black-Scholes
binomial  pricing  model  with  the  following  assumptions:

     Expected  life          2  years
     Interest  rate          5%
     Volatility            199%
     Dividend  yield         -


NOTE  15  -  INCENTIVE  STOCK  PLAN
          -----------------------

In  2002,  the Company's Board of Directors adopted an Incentive Stock Plan, the
effectiveness  of which was contingent upon the Plan's approval by the Company's
stockholders  at  the 2002 Annual Meeting.  The 2002 Annual Meeting was not held
and  approval  of  the  Plan  was neither sought nor obtained.  Accordingly, the
grants  made  pursuant  to  that  Plan  are  void.

On  April 30, 2004, the Company's stockholders approved the Security Biometrics,
Inc. 2004 Incentive Stock Plan (the "2004 Plan") which provides for the issuance
of  up  to  2,250,000 shares.  The 2004 Plan permits the grant of stock options,
stock  awards and restricted stock purchase awards.  Stock options granted under
the  2004  Plan  may  be  options intended to qualify as incentive stock options
("ISOs")  under  Section  422 of the Internal Revenue Code or nonqualified stock
options  ("NSOs"),  which  are options that are not intended to qualify as ISOs.
Stock options granted to a person who owns more than 10% of the Company's voting
power  shall  have  exercise prices of at least 110% of fair market value of the
Company's  stock on the date of the grant.  Stock options granted to others will
have  exercise  prices  of  not  less  than 100% of the fair market value of the
Company's  stock on the date of grant if they are ISOs, and not less than 85% of
the  fair  market  value of the Company's stock on the date of grant if they are
NSOs.  Stock  options  granted  under  the 2004 Plan will have terms of not more
than  10  years.


NOTE  16  -   BUSINESS  SEGMENTS
             ------------------

SFAS  No.  131,  "Disclosure  about  Segments  of  an  Enterprise  and  Related
Information",  requires  companies  to  provide  certain information about their
operating  segments.  The  Company  has  three  reportable  segments:  SiVault
Systems,  Inc.,  Lightec, and eMedRx at June 30, 2004 and SiVault Systems, Inc.,
Lightec  and  DataDesk  at  June  30,  2003.


                                      F-26
<PAGE>

NOTE  16  -   BUSINESS  SEGMENTS  -  (cont'd)
             ------------------

The  summarized  financial  information,  concerning  the  Company's  reportable
segments  for  the  year  ended  June  30,  2004,  as  follows:

<TABLE>
<CAPTION>
                                                SiVault
                                                Systems     Lightec     Emedrx      Total
                                               ----------  ----------  ---------  ---------
<S>                                            <C>           <C>         <C>         <C>
Net sales to external companies                $    19,573   $7,110,034  $   1,830   $ 7,131,437
Operating earnings (loss)                       (4,324,661)   1,190,802   (414,181)   (3,548,040)
Total assets                                       685,324      950,515     82,240     1,719,079
Depreciation and amortization                        9,566          460          -        10,026
Capital expenditures                               505,683            -     75,000       580,683
Interest expense                                   789,305        6,915          -       796,220
Provision for income taxes                               -       34,934          -        34,934
Charge related to issuance
  of stock warrants                              2,496,000            -          -     2,496,000
</TABLE>

The  summarized  financial  information,  concerning  the  Company's  reportable
segments  for  the  year  ended  June  30,  2003,  as  follows:

<TABLE>
<CAPTION>
                                                           Total before      Datadesk
                                   SiVault                 Discontinued   (Discontinued
                                   Systems     Lightec     Operations      Operations)
                                  ----------  ----------  --------------  --------------
<S>                               <C>         <C>         <C>             <C>
Net sales to external customers   $      -    $1,147,140   $ 1,147,140      $  231,301
Operating loss                    (8,512,220) (1,147,114)   (9,659,334)       (512,636)
Total assets                          82,432     100,376       182,808         161,053
Depreciation and amortization          8,399      46,673        55,072          10,568
Capital expenditures                   7,176       2,092         9,268           4,165
Interest expense                     391,514           -       391,514               -
Provision for income taxes                 -           -             -               -
Charge related to issuance
  Of stock warrants                       -           -             -               -
</TABLE>

NOTE  17  -    ECONOMIC  DEPENDENCY
             -------------------

The  sales  and  purchases listed below are for the year ended June 30, 2004 and
2003  for  Lightec  only:

<TABLE>
<CAPTION>
                                                               2004        2003
                                                            ----------  ----------
<S>                                                        <C>         <C>
Sales
------
Sales to major customers were as follows:
     Customer A. . . . . . . . . . . .. . . . . . . . . . . .   100%       47%
     Customer B. . . . . . . . . . . .. . . . . . . . . . . .     -        28%

Purchases
---------
Purchases from major suppliers and subcontractors were as follows:
     Supplier or subcontractor A . . .. . . . . . . . . . . .    69%       14%
</TABLE>


                                      F-27
<PAGE>

NOTE  17  -    ECONOMIC  DEPENDENCY  -  (cont'd)
             -------------------

Customer  A  is  a local municipality in Connecticut.  90% of these revenues are
collected  from  a  United  States  governmental agency.  The Company is able to
purchase  materials  from  other  suppliers  besides  Supplier  A.


NOTE  18  -     RELATED  PARTY  TRANSACTIONS
               --------------------------

During the year ended June 30, 2004 and 2003, the Company incurred the following
expenses  charged  by  directors,  relatives  of  directors,  former  directors,
officers  and  private  companies  with  common  directors  with  the  Company.

                                                         2004        2003
                                                      ----------  ----------

Consulting fees. . . . . . . . . . . . . . .           $ 158,400  $  277,350
Directors fees . . . . . . . . . . . . . . .                   -       1,965
Interest . . . . . . . . . . . . . . . . . .             244,789     180,000
Accounting fees. . . . . . . . . . . . . . .                   -      62,500

Included  in  additional paid-in capital are finder's fees totalling $16,430 and
$14,850  paid  to  a former director of the Company for the years ended June 30,
2004  and  2003,  respectively.

Included  in  accounts  payable and accrued expenses-related parties at June 30,
2004  and 2003, respectively, is $24,226 and $76,539 owing to former officers of
the  Company  with  respect  to  advances.  At  June 30, 2004, an officer of the
Company was due a payment of $50,000 in regards to the acquisition of Datagility
(see  Note  4).  At  June  30, 2003, included in accrued liabilities is interest
payable of $188,875 due to a relative of a former director and to a company with
a  common  director.

Accounts  payable  and  accrued  expenses-related  parties  at  June  30,  2004
represents  amounts owing to directors, former directors, officers and companies
with  a  former  common officer with respect to unpaid wages, advances, fees and
expenses.  On  July  28, 2004, the Company issued 375,335 shares to two officers
of  the Company and two other related parties in exchange for reduction of their
payable balances by $600,568, (the total balance due to the four individuals was
$715,006  and $800,759 as of June 30, 2004 and 2003, respectively).  Amounts due
to  related  entities are unsecured, non-interest bearing with no specific terms
for  repayment  with  the  exception  of  the  aforementioned.


NOTE  19  -     DISCONTINUED  OPERATIONS
              -----------------------

During  the  year  ended  June  30,  2004, the Company entered into a Stock  and
Note Transfer Agreement (the "Transfer Agreement") with Pan Pacifica Ltd.  ("Pan
Pacifica"),  effective as of August 20, 2003, to transfer all of the outstanding
shares  of  Datadesk,  a wholly-owned subsidiary of the Company, in exchange for
Pan Pacifica assuming the net liabilities of Datadesk.  The  Transfer  Agreement
was  entered  into  simultaneously  with  a  settlement  agreement  between  the
Company  and  its  former  officer.  In  connection  with  the  settlement,  the
Company  transferred  available  funds  in  the  amount  of  $151,020  to  Pan
Pacifica.  For the year ended June 30, 2004, the Company realized a net gain  on
the  disposal  of  Datadesk  of  $288,160  which was recognized at the  date  of
disposition.  During  the year ended June 30, 2003, the Company adopted a formal
plan  to  dispose  of  Datadesk.


                                      F-28
<PAGE>

NOTE  19  -     DISCONTINUED  OPERATIONS  -  (cont'd)
              -----------------------

On May 24, 2004, the Company agreed to sell its ownership in Security Biometrics
Limited  ("SBL")  to  the  minority  stockholder  of  SBL  for  a  total
consideration  of  one  dollar  plus  the  assumption  by this individual of the
liabilities  of  this  United  Kingdom  subsidiary.

The  consolidated financial statements include the following amounts related  to
the  discontinued  operations  of  Datadesk  and  SBL:

<TABLE>
<CAPTION>
                                                               2004        2003
                                                            ----------  ----------
<S>                                                         <C>         <C>
Inventories. . . . . . . . . . . . . . . . . .               $       -   $ 137,270
                                                             ---------   ---------

Current assets of discontinued operations. . .               $       -   $ 137,270
                                                             =========   =========

Capital assets . . . . . . . . . . . . . . . .               $       -   $  22,283
Other. . . . . . . . . . . . . . . . . . . . .                       -       1,500
                                                             ---------   ---------

Long-term assets of discontinued operations. .               $       -   $  23,783
                                                             =========   =========

Bank indebtedness. . . . . . . . . . . . . . .               $       -   $   1,207
Accounts payable . . . . . . . . . . . . . . .                  93,912     718,748
                                                             ---------   ---------

Current liabilities of discontinued operations               $  93,912   $ 719,955
                                                             =========   =========
</TABLE>

Capital  assets  related  to  discontinued  operations at  June 30, 2003 consist
of  the  following:

                                        Accumulated        Net
                             Cost       Amortization  Carrying Value
                         -------------  ------------  --------------

Computer equipment. . .  $      39,320  $    27,984     $   11,336
Furniture and equipment         26,131       15,184         10,497
Vehicles. . . . . . . .         27,393       27,393              -
                         -------------  ------------    ----------

                         $      92,844  $    70,561     $   22,283
                         =============  ============    ==========


                                      F-29
<PAGE>

NOTE  19  -     DISCONTINUED  OPERATIONS  -  (cont'd)
              -----------------------

Income  (loss)  from  discontinued  operations  is  as  follows:

                                        2004            2003
                                    ------------   -------------
Revenue . . . . . . . . . . . . .    $   6,431      $   231,301
Direct expenses . . . . . . . . .            -           99,357
                                     ---------      -----------
Gross profit. . . . . . . . . . .        6,431          131,944
                                     ---------      -----------

Expenses
Administrative and general. . . .      118,398          634,012
Amortization of capital assets. .            -           10,568
                                     ---------      -----------

                                       118,398          644,580
                                     ---------      -----------

Loss before other income (expenses)   (111,967)        (512,636)
Other income (expenses):
Write-down of goodwill. . . . . .            -       (3,405,645)
Gain on disposition                    288,160                -
                                     ---------      -----------

Income (loss) from discontinued
operations                           $ 176,193      $(3,918,281)
                                     =========      ===========

Cash  flows  from  discontinued  operations  are  as  follows:

<TABLE>
<CAPTION>
                                                             2004         2003
                                                          -----------  -----------
<S>                                                       <C>          <C>
Cash Flows from Operating Activities:
Net income (loss) for the year .. . . . . . . . . . . . . $   176,193  $(3,918,281)
Items not involving cash:
Gain on disposition of subsidiary                            (288,160)           -
Amortization of capital assets. . . . . . . . . . . . . .           -       10,568
Write-off of marketable securities. . . . . . . . . . . .           -        1,150
Write-down of goodwill. . . . . . . . . . . . . . . . . .           -    3,405,645
Changes in non-cash working capital balances consist  of:
Accounts receivable . . . . . . . . . . . . . . . . . . .      (2,910)      89,905
Inventories . . . . . . . . . . . . . . . . . . . . . . .       2,375      (71,787)
Accounts payable and accrued liabilities. . . . . . . . .    (182,198)     237,366
                                                          -----------  -----------
Net Cash Used In Operating Activities                        (294,700)    (245,434)
                                                          -----------  -----------
Cash Flows from Investing Activities:
Purchase of capital assets                                          -       (4,165)
                                                          -----------  -----------
Net Cash Used In Investing Activities                               -       (4,165)
                                                          -----------  -----------
</TABLE>


                                      F-30
<PAGE>
NOTE  19  -     DISCONTINUED  OPERATIONS  -  (cont'd)
              -----------------------
<TABLE>
<CAPTION>
                                                             2004         2003
                                                          -----------  -----------
<S>                                                       <C>          <C>
Cash Flows from Financing Activities:
Bank indebtedness . . . . . . . . . . . . . . . . . . . .       5,904        1,207
Advances from parent company. . . . . . . . . . . . . . .     288,796      246,414
                                                          -----------  -----------
Net Cash Provided By Financing Activities                     294,700      247,621

Net decrease in cash from discontinued
operations during the year. . . . . . . . . . . . .                 -       (1,978)

Cash, beginning of the year . . . . . . . . . . . . . . .           -        1,978
                                                          -----------  -----------
Cash, end of the year . . . . . . . . . . . . . . . . . . $         -  $         -
                                                          ===========  ===========
</TABLE>

NOTE  20  -   SUBSEQUENT  EVENTS
            -----------------

Note  Payable  -  Related  Party

On  July  2,  2004,  the Company issued a $150,000 unsecured note to Synergex, a
related  party  (see Note 9).  The principal and any accrued and unpaid interest
on  this  note  is payable on demand by Synergex at any time on or after July 2,
2005. Interest on the note is equal to the LIBOR Rate plus one percent per annum
and  is  payable  on  a quarterly basis commencing October 1, 2004. The proceeds
from  this  note  were  utilized  to  payoff  the  Richard  note  (see  Note 9).

ACQUISITION  OF  SIVAULT  ANALYTICS,  INC.
--------------------------------------

On  July  9,  2004,  the  Company  acquired  SiVault  Analytics, Inc., ("SiVault
Analytics"),  which  is  in  the  business of providing products and services to
implement  secure  storage and retrieval of signed documents and signature-based
authentication  for  processing  on-line  transactions.  The  acquisition  was
completed  by  the  Company's  purchase of all the 10,000,000 outstanding common
shares  of  SiVault Analytics (consideration valued at $ 10 million) in exchange
for  4  million  of  the Company's newly issued common stock valued at $2.50 per
share.  SiVault  Analytics was incorporated in the State of Delaware on June 16,
2003  under  the  name  of  "PERFORMANCE  CENTRAL, INC." and changed its name to
SiVault  Analytics,  Inc.  on  November  5,  2003.


                                      F-31
<PAGE>

NOTE  20  -   SUBSEQUENT  EVENTS  -  (cont'd)
            -----------------

The fair value of net assets acquired from SiVault Analytics on the July 9, 2004
acquisition  date  is  as  follows:

<TABLE>
<CAPTION>
<S>                                       <C>
Assets:
    Cash                                  $     5,622
    Property and equipment                     51,855
    Deposits                                      450
    Excess cost over net assets acquired   10,544,559
                                          ------------
                                          $10,602,446
                                          ============
  Liabilities:
    Accrued expenses                      $   487,446
    Shareholders' advance                     115,000
                                          ------------
                                          $   602,446
                                          ============
  Net assets acquired                     $10,000,000
                                          ============
</TABLE>

Three  key  executives  of  SiVault  Analytics  have employment agreements as of
January  1, 2004.  Future minimum base salary of three executives is as follows:

<TABLE>
<CAPTION>
                                   Minimum Annual
            Year Ending June 30,       Salary
            ---------------------  --------------
<S>         <C>                    <C>
                       2005        $     574,111
                       2006              574,111
                       2007              574,111
                       2008              574,111
                       2009              287,056
                                   --------------
                                        2,583,500
                                   ===============
</TABLE>

In  addition,  the three executives are entitled to a bonus each quarter for 15%
of  their yearly salary, based upon the performance and approval by the Board of
Directors.  Per  the  July  9,  2004  acquisition  agreement,  the  employment
agreements  may  be modified.  As of the date of this report, there have been no
modifications  to  these  agreements.

SiVault  Analytics,  prior  to  being  acquired  entered  into several strategic
alliances  and  licensing  agreements  during  2004.

EQUITY  TRANSACTIONS
-----------------------------

On  August 6, 2004, 350,000 common shares of the Company at $1.60 per share were
issued  to  the  Directors  of  the  Company  for  renumeration of directors for
services  to  be  rendered  for  the  year ended June 30, 2005.  An officer also
received  15,000  common shares at $1.60 per share upon signing of his August 3,
2004  employment  agreement.  These  stock awards were pursuant to the Company's
2004  Incentive  Stock  Plan.

On  September  10,  2004,  the Company completed the private placement of common
shares  and  warrants  begun  on June 12, 2004 in which the Company raised gross
proceeds  of  approximately  $1.35  million  subsequent  to  June  30,  2004. On
September  13,  2004, the Company initiated a new private placement of 1 million
shares  of  common stock at $1.50 per share and the proceeds from this placement
through  September  30,  2004  was  approximately  $700,000.


                                      F-32
<PAGE>

NOTE  20  -   SUBSEQUENT  EVENTS  -  (cont'd)
            -----------------

LEASE  COMMITMENT
----------------

On  September 24, 2004, the Company entered into a sublease agreement for rental
space  in  San  Jose,  California  with a base rent of approximately $15,750 per
month  for  the  first  six  months increasing to $36,637 per month on March 24,
2005.  The  sublease  agreement  expires  May  31,  2008.

LICENSING  AGREEMENT
-------------------

On  September  15,  2004,  the  Company  entered  into a licensing and strategic
alliance  with  a  software solutions company to deploy an integrated system for
securing  biometric authentication, validation, verification, records access and
point-of-sale  payment,  serving  the healthcare, retail, financial services and
government  markets.

The software license is for 3500 point of sale devices driven by Electra-POS and
250,000  cards  issued  by Electra-Card for a thirty month period.  The software
license fees as defined in the license agreement call for $620,000 to be paid in
monthly  installments  with  a  10%  annual  interest rate per annum as follows:

1.     Initial payment of $100,000: $50,000 paid upon initiation of the contract
and  an  additional $50,000 is due on the commencement date, two weeks after the
contract  initiation.
2.     The  Company  and  software  solution  company  agreed  to  negotiate the
financing  of  $40,000  in  third  party  software.
3.     The  remaining  thirty monthly payments of $16,833 each start ninety days
from  the  commencement  date.

In  addition,  the  software  solutions  company will be charging the Company an
annual  maintenance  fee  for  the  base  software license of $10,333 per month.
Additional  maintenance  fees will be charged based on additional customizations
and  a  revenue  sharing  program.


NOTE  21  -   PRIOR  PERIOD  ADJUSTMENT
            -----------------------
A  prior  period adjustment was recorded to correct an error in the recording of
federal  income taxes for the year ended June 30, 2002.  As originally reported,
a federal income tax liability of $329,556 was provided for Lightec as if it was
filing  as  a  separate  tax entity.  Lightec was filed as part of the Company's
June  30,  2002  consolidated  tax  return,  which  showed a loss, therefore, no
federal  tax  accrual  was  necessary.  Both  the  accumulated  deficit  and the
liability  for  income  taxes  at  July  1,  2002 were reduced by $329,556.  The
corrected  basic and diluted loss per share for the year ended June 30, 2002 was
$(0.11)  per  share  (reflecting  the  2004 one-for-twenty reverse stock split).


                                      F-33
<PAGE>