U.S. SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-QSB
 
 (X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE ACT OF 1934.
 
 For the 3 month period ended September 30, 2004.
 
 ( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT OF 1934.
 
 For the transition period from to
 
 Commission File No. 333-118801
 
 SMARTMETRIC, INC.
 (Name of Small Business Issuer in its Charter)
 
 Delaware
05-0543557(State of Incorporation)
(IRS Identification Number)
 67 Wall Street, 22 nd Floor
 New York, New York 10005
 (Address of Principal Executive Offices)
 
 Registrant's telephone number, including area code (212) 859-5007
 
 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.
 
 (1) Yes X   No    (2) Yes X   No
 State the number of shares outstanding of each of the Registrant's classes of common equity, as of the latest applicable date:
 
 58,660,257 - November 17, 2004
 
 
     SMARTMETRIC, INC.
 FORM 10-QSB
 September 30, 2004
 
 
 INDEX
 
 
 
 PART I. FINANCIAL INFORMATION
 
 PART I - FINANCIAL INFORMATION
PAGEItem 1 - FINANCIAL STATEMENTS (UNAUDITED)Consolidated Balance Sheets -September 30, 2004 and June 30, 2004Consolidated Statements of Operations -Three Months Ended September 30, 2004 and 2003Consolidated Statements of Cash Flows -Three Months Ended September 30, 2004 and 2003Notes to Financial Statements -Three Months Ended September 30, 2004 and 2003Item 2 - PLAN OF OPERATIONItem 3 -CONTROLS AND PROCEDURESPART II- OTHER INFORMATIONItem 1 - LEGAL PROCEEDINGSItem 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSItem 3 - DEFAULTS UPON SENIOR SECURITIESItem 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSItem 5 - OTHER INFORMATIONItem 6 - EXHIBITS AND REPORTS ON FORM 8-K      PART I. FINANCIAL INFORMATION
   Item 1. FINANCIAL STATEMENTS (UNAUDITED)
  **SMARTMETRIC, INC. AND SUBSIDIARY****(A Development Stage Company)****Consolidated Balance Sheets****September 30,**


**June 30,****2004**


**2004****Assets**



**(Unaudited)**Current assets:Cash


$
61,192

$
64,142Stock subscriptions receivable



602


35,602Total current assets



61,794


99,744Other assets:Patent costs



15,000


-Deferred offering costs



60,000


52,500Organization costs - net



390


420Total assets


$
137,184

$
152,664**Liabilities and Stockholders' Equity**Current liabilities:Accounts payable and accrued expenses


$
-

$
1,250Due to related party



54,350


51,850Total current liabilities



54,350


53,100Other liabilities



-


-Total liabilities



54,350


53,100Stockholders' equity :Preferred stock, $.01 par value; 5,000,000 sharesauthorized, 0 shares issued and outstanding


-


-Class A common stock, $.001 par value;50,000,000 shares authorized, 50,000,000 sharesissued and outstanding



50,000


50,000Common stock, $.001 par value; 45,000,000 sharesauthorized, 8,560,257 shares issued and outstanding


8,560


8,560Additional paid-in capital



77,042


77,042Deficit accumulated during the development stage


(52,768)


(36,038)Total stockholders' equity



82,834


99,564Total liabilities and stockholders' equity


$
137,184

$
152,664See notes to consolidated financial statements.  
       
  **SMARTMETRIC, INC. AND SUBSIDIARY****(A Development Stage Company)****Consolidated Statements of Operations****(Unaudited)******
******Cumulative During****Three Months**


**the Development Stage****Ended September 30,**


**(December 18, 2002 to****2004**


**2003**


**September 30, 2004**Revenues
$
-

$
-

$
-Expenses:General and administrative

9,010


30


15,713Research and development

7,720


-


37,055Total expenses

16,730


30


52,768Net loss
$
(16,730)

$
(30)

$
(52,768)Net loss per share, basic and diluted
$
(0.00)

$
(0.00)Weighted average number of commonshares outstanding, basic and diluted

58,560,257


-See notes to consolidated financial statements.  
      
 **SMARTMETRIC, INC. AND SUBSIDIARY****(A Development Stage Company)****Consolidated Statements of Cash Flows****(Unaudited)****Cumulative During****Three Months**


**the Development Stage****Ended September 30,**


**(December 18, 2002 to****2004**


**2003**


**September 30, 2004)**Cash flows from operating activities:Net loss
$
(16,730)

$
(30)

$
(52,768)Changes in assets and liabilities:Organization costs

30


30


(390)Accounts payable and accrued expenses

(1,250)


-


-Net cash used for operating activities

(17,950)


-


(53,158)Cash flows from investing activities:Patent costs incurred

(15,000)


-


(15,000)Net cash used for investing activities

(15,000)


-


(15,000)Cash flows from financing activities:Loans from related party

2,500


-


54,350Stock subscriptions collected

35,000


-


135,000Deferred offering costs incurred

(7,500)


-


(60,000)Net cash provided by financing activities

30,000


-


129,350Net increase in cash

(2,950)


-


61,192Cash, beginning of period

64,142


-


-Cash, end of period
$
61,192

$
-

$
61,192Supplemental disclosures of cash flow information:Interest paid
$
-

$
-

$
-Income taxes paid
$
-

$
-

$
-See notes to consolidated financial statements.     **SMARTMETRIC, INC. AND SUBSIDIARY**
 **(A Development Stage Company)**
 **Notes to Consolidated Financial Statements**
 **For the Three Months Ended September 30, 2004 and 2003**
 **and For the Period December 18, 2002 (Date of Inception)**
 **to September 30, 2004**
 **(Unaudited)**
 
 
 NOTE 1 - INTERIM FINANCIAL STATEMENTS
 
 The unaudited financial statements as of September 30, 2004 and for the three months ended September 30, 2004 and 2003 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-QSB. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of September 30, 2004 and the results of operations and cash flows for the three month periods ended September 30, 2004 and 2003. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the three month period ended September 30, 2004 are not necessarily indicative of the results to be expected for any subsequent quarter of the entire year ending June 30, 2005. The balance sheet at June 30, 2004 has been derived from the audited financial statements at that date.
 
 Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commissions rules and regulations. These unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended June 30, 2004 as included in our report on Form 10-KSB.
 
 NOTE 2 - ORGANIZATION
 
 SmartMetric, Inc. (SmartMetric) was incorporated in the State of Nevada on December 18, 2002. SmartMetric is developing a credit card size plastic card embedded with an integrated circuit chip and biometric fingerprint sensor which provides identification of the user (the SmartMetric Smart Card) to market to government agencies, corporations, and organizations interested in identification cards.
 
 NOTE 3 - DUE TO RELATED PARTY
 
 Prior to opening the Companys bank account, the president of the Company paid organization costs of $600 on behalf of the Company. Subsequently, the president of the Company paid legal fees of $52,500 and audit fees of $1,250 on behalf of the Company. These loans do not bear interest and are due on demand.
 
 NOTE 4 - STOCKHOLDERS EQUITY
 
 In October 2003, the Company sold 50,000,000 shares of Class A common stock to the president of the Company at a price of $.001 per share, or $50,000 total. From October 2003 to June 30, 2004, the Company sold 8,560,257 shares of common stock (the Additional Shares) to the president of the Company at a price of $.01 per share, or $85,602 total. These Additional Shares were assigned by the president of the Company in varying amounts to approximately 600 shareholders for no consideration.
 
 The Class A common stock and the common stock have identical voting and other rights.
 
 NOTE 5 - PLANNED PUBLIC OFFERING
 
 The Company filed a Form SB-2 registration statement with the U.S. Securities and Exchange Commission in September 2004 in connection with a public offering (the Public Offering) of up to 4,000,000 shares of common stock at $1.50 per share or $6,000,000 total. The Company plans on offering the shares directly on a best efforts, all or none basis as to the first 500,000 shares and on a best efforts basis as to the remaining 3,500,000 shares. The shares are planned to be sold by SmartMetrics officers and directors in a self-underwritten offering (although the Company may decide to engage registered broker-dealers to assist in the sale) for a period of 90 days (which may be extended for an additional 90 days at the Companys option). The Public Offering plans that subscription proceeds will be placed in an escrow account until the minimum offering of $750,000 is achieved, after which proceeds shall be released directly to the Company; if the minimum offering is not sold by the end of the offering period, or extended offering period if so extended, the escrowed proceeds would be returned to investors. Also, certain selling shareholders plan on offering 11,560,257 shares for sale in this offering.
 
 NOTE 6 - COMMITMENTS
 
 Marketing agreement - On October 30, 2003, SmartMetric executed an agreement with Information Spectrum, Inc. (ISI). Pursuant to this agreement, ISI shall seek to market SmartMetrics Smart Card technology by actively seeking customers interested in purchasing credential cards which incorporate SmartMetrics patented Smart Card technology. Prior to ISI offering SmartMetric products by submitting a formal proposal, ISI and SmartMetric shall enter into a Teaming Agreement which will define each partys rights and obligations concerning that particular sales opportunity. Every proposal will require its own Teaming Agreement. Pursuant to this Agreement, ISI is the exclusive reseller of SmartMetric products to agencies of the United States government and the Government of Canada. In addition, ISI has the right of first refusal for other marketing, sales or re-sales opportunities for customers other than the United States or Canadian governments. The terms of this agreement is two years and may be extended upon mutual agreement of the parties.
 
 Patent license agreement - Effective August 1, 2004, SmartMetric executed a license agreement with Applied Cryptology, Inc. (ACI), a corporation controlled by SmartMetrics president and the owner of certain technology for which there are patents pending in the United States and Australia. Pursuant to the license agreement, SmartMetric has the right to make use of this technology for the purpose of developing software and systems to be used by SmartMetric to provide any or all of the following: 1) secure transactions over the Internet from home and office computers; 2) an automatic method for connecting to remote computers; 3) a method of developing targeted advertising to home and/or office computers; 4) identity verification and access control as provided for in the patent. Pursuant to this license agreement, ACI will receive 2% of all revenues generated by SmartMetric on products which utilize this patented technology. The license fee will be paid on a quarterly basis based on revenues received during the quarter. The license fee shall be due within 45 days of the end of each quarter. In the event no revenues are generated through the use of any of the licensed patents during a given quarter, no money shall be owed ACI for such quarter. ACI may rescind the license agreement and reclaim all rights and interest in the patents if certain events, such as SmartMetrics filing for bankruptcy protection or reorganization, occur. This license agreement will remain in effect for the lives of the patents. SmartMetric may utilize the patent-pending technological applications anywhere in the world without limitation.
 
 Employment agreement - Effective July 1, 2004, SmartMetric executed an employment agreement with its president. Pursuant to this one-year employment agreement, the president shall receive an annual salary of $170,000. This salary will commence upon the Company achieving gross revenues of $1,000,000. Until that time, SmartMetric may pay the president as salary up to 25% of any offering proceeds received by the Company, which amount shall not exceed $170,000. The president is also eligible for an annual bonus based on certain performance criteria to be determined by a Compensation Committee of the board of directors at a later date. His employment may be terminated for cause at any time. According to the employment agreement, any inventions, ideas, disclosures and improvements made or conceived by him during his employment, including adoptions and improvements to existing patents, shall be his property.
 
 Rental agreement - The Company currently uses office space provided by its president at no cost to the Company. It is anticipated that the Company will start paying rent for this space following the successful completion of the Public Offering.
 
 NOTE 7 - SUBSEQUENT EVENT
 
 In October 2004, the Company sold a total of 100,000 shares of common stock to 15 investors at a price of $1.50 per share, or $150,000 total.
 
 
 
    Item 2. PLAN OF OPERATION
 
 OVERVIEW
 
 Incorporated in 2002, SmartMetric and its founder and CEO, Colin Hendrick, have been engaged in research and development of a biometric security solution which would authenticate the identity of a person in a self-contained credit card-sized device. SmartMetrics biometric card has been designed to use an on-board finger print sensor which is imbedded in the card along with an integrated circuit chip which will provide one gigabyte of memory capacity. SmartMetric has not yet completed a prototype of its Smartcard and has not yet begun to manufacture Smartcards utilizing its licensed technology. To date, SmartMetric has had no sales revenues.
 
 Over the next 12 months, SmartMetric intends to complete the prototype of its Smartcard and commence marketing in an attempt to generate sales. We will use the proceeds of this offering to complete the prototype and commence marketing. We believe that proceeds from the Maximum Offering will be sufficient to cover these costs, as well as working capital, for at least 12 months. However, in the event we raise less than the Maximum Offering, we will have to raise additional funds during the next 12 months.
 
 A key part of our business plan is to complete the prototype of the Smartcard within the next 12 months. Additional research and development may be necessary if the prototype does not work as planned, or if after it is complete, we believe it could be improved upon.
 
 We expect to outsource manufacturing of our Smartcards once the prototype is complete and we have sales orders. Because we will outsource the manufacturing, we will not be purchasing any plants or significant equipment.
 
 Once we have begun to generate sales, we intend to hire additional employees. However, until that time, we may only hire a few employees to market the SmartMetric Smartcard.
 
 COMPLETION OF PROTOTYPE
 
 We have hired a company to design and manufacture a model of our Smartcard utilizing our licensed technology and according to our proposed plans for the Smartcard. That engineering firm has been working on the design and they have built the prototype, they will need to test it to determine if the electronic components work. Any defects will be reworked until all the engineering works to the satisfaction of SmartMetric. The finished product will be the prototype or model for our Smartcards, which will be manufactured upon receipt of customer orders. We expect this prototype to be complete in the first quarter of 2005.
 
 PRODUCTION OF SMARCARDS
 
 Once we have a working prototype of our Smartcard, we will seek to obtain orders for it. However, because SmartMetric does not own or rent a manufacturing facility, we will have to contract with a manufacturing facility to produce our Smartcards. We will begin to search for one or more manufacturing facilities once we have obtained the completed Smartcard prototype. When searching for a manufacturing facility, we will take into consideration such factors as pricing, timing, location and quality of product. We may contract with one or more facilities to produce our Smartcards. A portion of the proceeds from this offering will be applied toward the production of Smartcard.
 
 SmartMetric believes its current sources of credit and liquidity, including funds raised in its private placement are insufficient to commerce operations, and that, in the event we raise less than the maximum offering, we may have to raise additional capital within the next eighteen months. SmartMetric believes the Maximum Offering proceeds will be sufficient to proceed with its plan of operations for the next eighteen months. We estimate that we will need approximately $4,000,000 to proceed with our plan of operation for the next 12 months. A key element of SmartMetric's growth strategy is raising adequate funding to begin to outsource the manufacture of its biometric card. We believe that $500,000 will suffice to begin outsourcing the manufacturing of our Smartcard. The amount of funds required will depend on the size of the orders we receive.  Currently, SmartMetric has no material commitments for capital expenditures.
 
 SmartMetric does not believe its business is seasonal in any way.
 
 On October 30, 2003, we entered into an agreement with Information Spectrum, Inc. Pursuant to this agreement, ISI will seek to market our Smartcards. Once ISI begins such marketing efforts and is able to find companies and/or government agencies to purchase our Smartcards, we will contract with a manufacturer to produce the required number of Smartcards. While we have located several manufacturing facilities, we have not entered into agreements with any of them. There is no guarantee that ISI will locate companies or agencies that are interested in purchasing our Smartcards, or that we will be able to negotiate a manufacturing agreement on terms acceptable to SmartMetric.
 
 Item 3. CONTROLS AND PROCEDURES
 
 An evaluation has been carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and the operation of our "disclosure controls and procedures" (as such term is defined in Rules 13a-15(e) under the Securities Exchange Act of 1934). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures are reasonably designed and effective to ensure that (i) information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and (ii) such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
 
 
 
 PART II. OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
 
 None
 
 Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
 Between November 2003 and June 30, 2004, SmartMetric sold 8,560,257 shares to Colin Hendrick, President, Chief Executive Officer and Chief Financial Officer of SmartMetric at $.01 per share for a total of $85,602.57. Mr. Hendrick completed payment of these shares in July 2004. This sale was made pursuant to Section 4(2) of the Securities Act of 1933. There was no general solicitation or advertising, and Mr. Hendrick did not purchase the shares with intent to resell them. In August 2004, Mr. Hendrick transferred 8,560,257 shares to approximately 600 friends, acquaintances and associates for no consideration.
 
 In October 2004, SmartMetrick sold 100,000 shares of SmartMetric common stock at $1.60 per share to approximately 15 people. These shares are restricted from transfer. SmartMetric relied on Section 4(2) of Securities Act when selling such securities. SmartMetric did not engage in general solicitation or advertising, and the purchasers did not purchase the common stock with the intent to resell it.
 
 Item 3. DEFAULTS UPON SENIOR SECURITIES
 
 None
 
 Item 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
 None
 
 Item 5. OTHER INFORMATION
 
 None
 
 Item 6. EXHIBITS
 
 The following exhibits are attached to this Form 10-QSB and made a part hereof.
 
 Exhibit No.
Description3(i)
Articles of Incorporation(1)3(ii)
Bylaws(1)10
Contract with Information Spectrum, Inc.(1)31.1
Certification of HOMIs Chief Exective Officer and Chief Financial Officer pursuant to Rule13a- 14(a) of the Securities Exchange Act of 193432.1
Certification of HOMIs Chief Exective Officer and Chief Financial Officer required by Rule 13a-14(b) under the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 the United States Code (18 U.S.C. 1350) 
 
 (1)  Incorporated by reference from SmartMetrics Registration Statement filed on Form SB-2 filed with the Securities and Exchange Commission on September 3, 2004.
 
     SIGNATURE
 
 In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
  
  SMARTMETRIC, INC.Dated: November 19, 2004

By: /s/ Colin HendrickColin Hendrick, President