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 December 31, 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:





Common Stock- 8,674,214 - February 15, 2005


Class A Common Stock - 50,000,000 - February 15, 2005




















SMARTMETRIC, INC.


FORM 10-QSB


December 31, 2004








INDEX











PART I. FINANCIAL INFORMATION





PART I - FINANCIAL INFORMATION
PAGEItem 1 - FINANCIAL STATEMENTS (UNAUDITED)Consolidated Balance Sheets -December 31, 2004 and June 30, 2004Consolidated Statements of Operations -Three Months Ended December 31, 2004 and 2003Consolidated Statements of Cash Flows -Three Months Ended December 31, 2004 and 2003Notes to Financial Statements -Three Months Ended December 31, 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****December 31,**


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


**2004****Assets**

**(Unaudited)**Current assets:Cash
$
32,190

$
64,142Stock subscriptions receivable

-


35,602Prepaid expenses

1,400


-Total current assets

33,590


99,744Other assets:Patent costs

15,000


-Deferred offering costs

80,000


52,500Organization costs - net

360


420Total assets
$
128,950

$
152,664**Liabilities and Stockholders' Equity**Current liabilities:Accounts payable and accrued expenses
$
3,000

$
1,250Due to related party

29,427


51,850Total current liabilities

32,427


53,100Other liabilities

-


-Total liabilities

32,427


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, issued and outstanding 8,628,464,8,560,257 and 0 shares, respectively

8,628


8,560Additional paid-in capital

135,233


77,042Deficit accumulated during the development stage

(97,338)


(36,038)Total stockholders' equity

96,523


99,564Total liabilities and stockholders' equity
$
128,950

$
152,664See notes to consolidated financial statements.

**SMARTMETRIC, INC. AND SUBSIDIARY****(A Development Stage Company)****Consolidated Statements of Operations****(Unaudited)****Cumulative****During the****Development****Stage****Six Months**


**Three Months**
**(December 18, 2002****Ended December 31,**


**Ended December 31,**
**to December 31,****2004**


**2003**


**2004**


**2003**


**2004)**Revenues
$
-

$
-

$
-

$
-

$
-Expenses:General and administrative

20,890


1,061


11,880


1,031


27,593Research and development

40,410


-


32,690


-


69,745Total expenses

61,300


1,061


44,570


1,031


97,338Net loss
$
(61,300)

$
(1,061)

$
(44,570)

$
(1,031)

$
(97,338)Net loss per share,basic and diluted
$
(0.00)

$
(0.00)

$
(0.00)

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

58,594,361


25,000,000


58,560,257


50,000,000See notes to consolidated financial statements.


**SMARTMETRIC, INC. AND SUBSIDIARY****(A Development Stage Company)****Consolidated Statements of Cash Flows****(Unaudited)****Cumulative****During the****Development****Stage****Six Months**

**(December 18, 2002****Ended December 31,**


**to December 31,****2004**


**2003**


**2004)**Cash flows from operating activities:Net loss
$
(61,300)

$
(1,061)

$
(97,338)Changes in assets and liabilities:Prepaid expenses

(1,400)


-


(1,400)Organization costs

60


60


(360)Accounts payableand accrued expenses

1,750


-


3,000Net cash used foroperating activities

(60,890)


(1,001)


(96,098)Cash flows from investing activities:Patent costs incurred

(15,000)


-


(15,000)Net cash used forinvesting activities

(15,000)


-


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

2,577


-


54,427Repayment of loans fromrelated party

(25,000)


-


(25,000)Stock subscriptions collected, net

93,861


100,000


193,861Deferred offering costs incurred

(27,500)


-


(80,000)Net cash providedby financing activities

43,938


100,000


143,288Net increase (decrease) in cash

(31,952)


98,999


32,190Cash, beginning of period

64,142


-


-Cash, end of period
$
32,190

$
98,999

$
32,190Supplemental disclosuresof cash flow information:Interest paid
$
-

$
-

$
-Income taxes paid
$
-

$
-

$
-See notes to consolidated financial statements.


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 second 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 and November 2004, SmartMetrick sold 68,207 shares of SmartMetric common stock at $1.50 per share to 9 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: February 15, 2005

By: /s/ Colin HendrickColin Hendrick, President