--------------------------------------------------------------------------------

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2005

                                       OR

            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                        Commission file number 000-12382

                          VERIDICOM INTERNATIONAL, INC.
        (Exact name of small business issuer as specified in its charter)

             Delaware                                   95-2577731
  (State or other jurisdiction of          (I.R.S. Employer Identification No.)
  incorporation or organization)

             3800-999 3rd Avenue                        98104-4023
             Seattle, Washington                        (Zip Code)
  (Address of principal executive offices)

                                 (206) 224-6206
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 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

There were 15,892,107 shares outstanding of registrant's Common Stock, par value
$.001 per share, as of May 19, 2005.

--------------------------------------------------------------------------------


                                      -1-
<PAGE>

--------------------------------------------------------------------------------
                          VERIDICOM INTERNATIONAL, INC.
                                FORM 10-QSB INDEX
--------------------------------------------------------------------------------

                                                                            PAGE
--------------------------------------------------------------------------------

PART I    FINANCIAL INFORMATION                                               3

Item 1    Financial Statements (Unaudited):                                   3

a.        Consolidated Balance Sheets as of March 31, 2005 and December
          31, 2004                                                            4

b.        Consolidated Statements of Operations and Other Comprehensive
          Income (Loss) for the three months ended March 31, 2005 and
          2004                                                                5

c.        Consolidated Statements of Cash Flows for the three months
          ended March 31, 2005 and 2004                                       6

d.        Notes to Unaudited Consolidated Financial Statements                7

Item 2    Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                          16

Item 3    Controls and Procedures                                            37

PART II   OTHER INFORMATION                                                  38

Item 1    Legal Proceedings                                                  38

Item 3    Unregistered Sales of Equity Securities and Use of Proceeds        38

Item 4    Defaults Upon Senior Securities                                    40

Item 5    Submission of Matters to a Vote of Security Holders                40

Item 6    Other Information                                                  40

Item 7    Exhibits                                                           40

SIGNATURES                                                                   41
--------------------------------------------------------------------------------


                                      -2-
<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1   FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
                 VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
                     (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
                          INDEX TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                                                                            PAGE

Consolidated Balance Sheets as of March 31, 2005 and December 31, 2004        4

Consolidated Statements of Operations and Other Comprehensive Income
(Loss) for the three months ended March 31, 2005 and 2004                     5

Consolidated Statements of Cash Flows for the three months ended
March 31, 2005 and 2004                                                       6

Notes to Unaudited Consolidated Financial Statements                          7
--------------------------------------------------------------------------------


                                      -3-
<PAGE>

                 VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
                     (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                     ASSETS
                                                             March 31          December 31
                                                               2005                2004
                                                           ------------        ------------
                                                            [UNAUDITED]
<S>                                                        <C>                 <C>
Current assets
    Cash                                                   $    403,948        $     53,866
    Accounts receivable                                          15,428              15,791
    Receivable, related party                                   115,262              32,794
    Subscriptions receivable                                         --             420,000
    Inventory                                                    70,660              72,793
    Other current assets                                         21,600              26,603
                                                           ------------        ------------
         Total current assets                                   626,898             621,847

Furniture & equipment, net                                      192,723             206,697
Patents                                                         200,000             200,000
Goodwill                                                      4,728,546           4,728,546
Deferred financing costs, net                                   387,347                  --
Other assets                                                      3,305               3,302
                                                           ------------        ------------
                                                           $  6,138,819        $  5,760,392
                                                           ============        ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
    Accounts payable                                       $  1,206,026        $  1,808,828
    Accrued expenses                                            771,262             785,889
    Due to related party                                        576,181             610,003
    Notes payable related party, current portion                     --             166,467
    Notes payable, current portion                              299,549             254,549
    Other current liabilities                                    40,374              37,799
                                                           ------------        ------------
         Total current liabilities                            2,823,392           3,663,535

    Long term debt                                              366,214             416,214
    Convertible notes payable, net of discount                  438,317                  --
                                                           ------------        ------------
                                                              3,627,923           4,079,749

Minority interest                                                23,569              18,698
Stockholders' equity
    Common stock, $.001 par value, 60,000,000
    authorized; 15,842,107 and 15,781,107 issued
    and outstanding                                              15,842              15,781
    Additional paid in capital                               15,743,263          13,591,671
    Accumulated other comprehensive (loss)                     (141,422)           (144,695)
    Accumulated (deficit)                                   (13,130,356)        (11,800,812)
                                                           ------------        ------------
    Stockholders' equity                                      2,487,327           1,661,945
                                                           ------------        ------------
                                                           $  6,138,819        $  5,760,392
                                                           ============        ============
</TABLE>

         SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


                                      -4-
<PAGE>

                 VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
                     (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
   CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                            Three months          Three months
                                                                Ended                 Ended
                                                           March 31, 2005        March 31, 2004
                                                           --------------        --------------
<S>                                                        <C>                   <C>
Revenues
    Net revenue                                            $       80,576        $      238,975
    Cost of goods sold                                             22,694               160,038
                                                           --------------        --------------
    Gross profit                                                   57,882                78,937

Expenses
    General & administrative expenses                             742,681               781,778
    Research & development                                        293,323                45,607
    Depreciation                                                   17,267                 7,625
                                                           --------------        --------------
    (Loss) from operations                                       (995,389)             (756,073)

Other income / (expense)
    Other expense                                                  (4,637)               (2,434)
    Interest expense                                             (476,321)              (10,697)
    Gain on forgiveness of debt                                   151,675                    --
                                                           --------------        --------------
    (Loss) before minority interest                            (1,324,672)             (769,204)

    Minority interest                                              (4,871)                4,320
                                                           --------------        --------------
    Net (loss)                                                 (1,329,543)             (764,884)

    Other comprehensive  (loss):
    Foreign currency translation                                    3,273                    --
                                                           --------------        --------------
    Total comprehensive  (loss)                            $   (1,326,270)       $     (764,884)

    (Loss) per share: Basic and fully diluted (loss)
       per common share                                    $        (0.09)       $        (0.07)

    Weighted average common shares
       outstanding basic and fully diluted                     15,594,363            11,819,186
</TABLE>

         SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


                                      -5-
<PAGE>

                 VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
                     (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
                       CONSOLIDATED STATEMENTS CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                            Three months           Three months
                                                                 Ended                 Ended
                                                            March 31, 2005        March 31, 2004
                                                            --------------        --------------
<S>                                                         <C>                   <C>
Cash flows from operating activities
Net (loss) before minority interest                         $   (1,324,672)       $     (769,204)

Adjustments to reconcile net (loss) to net cash used
in operating activities:
    Depreciation and amortization                                   17,267                 7,625
    Stock based compensation                                       179,295                35,910
    Gain on forgiveness and cancellations of debt                 (151,675)                   --
    Accretion of interest expense on convertible debt              449,385                    --
(Increase) / decrease in:
    Accounts receivable                                                364                15,868
    Related party receivables                                      (82,468)               45,397
    Inventory                                                        2,133                 6,310
    Prepaid expenses and other assets                                5,003               (29,391)
Increase / (decrease) in :
    Accounts payable                                              (451,132)                8,087
    Accrued expenses                                               (14,628)             (148,376)
    Due to related parties                                         (33,821)              (91,745)
    Other current liabilities                                        2,575                    --
                                                            --------------        --------------
Net cash (used in) operating activities                         (1,402,374)             (919,519)
                                                            --------------        --------------

Cash flows from investing activities
    Cash acquired through merger and acquisition                        --               164,791
    Purchase of property and equipment                              (3,293)               (9,359)
                                                            --------------        --------------
Net cash provided by (used in) investing activities                 (3,293)              155,432
                                                            --------------        --------------

Cash flows from financing activities
    Proceeds from convertible notes payable                      1,700,000                    --
    Payments on notes payable                                     (241,467)             (100,000)
    Deferred financing costs                                      (221,707)                   --
    Collection of subscription receivable                          420,000               129,821
    Payment of offering costs/commission                            (5,000)             (166,668)
    Proceeds from sale of common stock and options                 100,650             1,238,808
                                                            --------------        --------------
Net cash provided by financing activities                        1,752,476             1,101,961
                                                            --------------        --------------
Effect of exchange rate changes on cash                              3,273                (2,040)
                                                            --------------        --------------
Net increase in cash                                               350,082               335,834
Cash, beginning of period                                           53,866               126,367
                                                            --------------        --------------
Cash, end of period                                         $      403,948        $      462,201
                                                            ==============        ==============
Supplemental disclosures of cash flow information
Interest paid                                                       10,000                13,906
Income taxes paid                                                       --                    --
</TABLE>

         SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


                                      -6-
<PAGE>

                 VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
                     (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

The accompanying  unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of America for interim  financial  information and with the instructions to Form
10-QSB and Item 310 of Regulation S-B.  Accordingly,  they do not include all of
the  information  and  footnotes  required  by  generally  accepted   accounting
principles  for  complete  financial  statements.   The  accompanying  unaudited
consolidated  financial  statements reflect all adjustments that, in the opinion
of management, are considered necessary for a fair presentation of the financial
position,  results of operations,  and cash flows for the periods presented. The
results of  operations  for such periods are not  necessarily  indicative of the
results  expected  for  the  full  fiscal  year or for any  future  period.  The
accompanying  consolidated  financial  statements  should be read in conjunction
with the  audited  financial  statements  included in Form 10-KSB for the fiscal
year ended December 31, 2004.

The  historical  results for the three  months  ended March 31, 2005 include the
Company and all its  subsidiaries.  The historical  results for the three months
ended March 31, 2004 include Cavio Corporation ("Cavio") from the merger date of
February 20, 2004.

NOTE 2 - OPERATIONS

Going Concern

The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business.  The Company has incurred a net
loss of $1,329,543 and has a working capital  deficit,  which raises doubt about
its ability to continue as a going  concern.  The Company is currently  devoting
its efforts to raising additional capital.  The Company's ability to continue as
a going concern is dependent upon its ability to develop  additional  sources of
capital,  and  ultimately,   achieve  profitable  operations.  The  accompanying
financial  statements do not include any adjustments  that might result from the
outcome of these uncertainties.

Subsidiaries

The Company has five  subsidiaries:  Esstec,  Essential  Tec Pakistan  (Private)
Limited  ("Pakistan Ltd."),  Veridicom Inc., Cavio, and Veridicom  International
(Canada) Inc. ("Canada Inc.").

Esstec  is  a   professional   services   company  that  focuses  on  e-commerce
initiatives,  interactive  multimedia,  and  mobile  software  applications  for
clients  in   various   industries,   including   the   telecommunications   and
entertainment  industries.  During  2004,  Esstec  did not have any  significant
revenues or incur any significant expenses.

Pakistan  Ltd. was  incorporated  on April 19, 2000 to establish the business of
software  development for the  international  markets and to export software and
technology. Esstec owns approximately 63.4% of Pakistan Ltd.

Veridicom Inc. designs, manufactures and delivers hardware and software products
that enable strong  authentication  solutions  based on fingerprint  biometrics.
Veridicom  Inc.  markets a complete  fingerprint  biometrics  platform  on which
applications can be built.


                                      -7-
<PAGE>

Cavio  produces   technology   tools  designed  to  protect  users  from  fraud,
misrepresentation,   security   and  privacy   issues  by   allowing   users  to
biometrically  authenticate  themselves  to secure  control  access and  confirm
identity across a number of industries.

On January 21, 2004, Canada Inc. was formed to be the Canadian operating company
for the public company.

Consolidation

The consolidated  financial  statements  include the accounts of the Company and
our subsidiaries Esstec,  Pakistan Ltd.,  Veridicom,  Cavio, and Canada Inc. All
significant  intercompany  balances and  transactions  have been  eliminated  in
consolidation.

Name Change

The legal entity, Alpha Virtual, Inc. ("Alpha"),  retained its name until it was
changed to Veridicom International, Inc. in February 2004.

Minority Interest

Minority interest reflects the ownership of minority  shareholders in the equity
of Pakistan Ltd., a consolidated subsidiary less than wholly owned.

Mergers

On January 16, 2004,  we entered into an Agreement and Plan of Merger with Cavio
Corporation,  a privately  held  Washington  corporation  ("Cavio").  The merger
became  effective  on February 20, 2004  following a special  meeting of Cavio's
stockholders.  In accordance with the merger, on February 20, 2004,  through its
wholly owned subsidiary,  A/VII Acquisition  Corporation,  a Nevada corporation,
acquired Cavio in exchange for 5,119,140 shares of our common stock. We recorded
goodwill of $3,792,019 for this acquisition.

          Cash                                    $   164,791
          Receivables                                  14,043
          Stock subscription receivable               129,821
          Prepaid expenses                              4,874
          Fixed assets, net                           109,473
                                                  -----------
                                                      423,002
                                                  -----------
     Less liabilities assumed
          Accounts payable and accrued expenses      (694,009)
          Loans payable                               (28,693)
                                                  -----------
                                                     (722,702)
                                                  -----------
     Net liabilities                              $  (299,700)
                                                  ===========
     Net liabilities assumed                      $   299,700
     Stock issued for acquisition                     299,700
     Common stock issued into escrow                3,192,619
                                                  -----------
     Goodwill                                     $ 3,792,019
                                                  ===========


                                      -8-
<PAGE>

The following unaudited proforma condensed consolidating statement of operations
for  the  year  period  ended  December  31,  2004  gives  effect  to the  above
transaction as if it had occurred on January 1, 2004.

<TABLE>
<CAPTION>
                        Veridicom
                      International      Cavio Corporation
                    Inc. Consolidated     for the period
                       for the year      from November 01,
                          ended          2003 to February          Proforma           Proforma
                    December 31, 2004        19, 2004            Adjustments        Consolidated
                    -----------------    -----------------    -----------------   -----------------
<S>                 <C>                  <C>                  <C>                 <C>
Revenues            $         384,853    $              --    $              --   $         384,853
(Expenses)                 (4,196,622)            (481,715)                  --          (4,678,337)
Other                          91,508               (3,367)                  --              88,141
                    -----------------    -----------------    -----------------   -----------------
Net loss            $      (3,720,261)   $        (485,082)   $              --   $      (4,205,343)
                    =================    =================    =================   =================
</TABLE>

New Entity

On January 21, 2004 Veridicom  International (Canada) Inc. ("Canada") was formed
to be the Canadian operating company for the public company.

Reclassifications

For comparative purposes,  prior period's consolidated financial statements have
been reclassified to conform to report classifications of the current year.

Goodwill

Goodwill  was  recorded at its purchase  price and is not being  amortized.  the
Company  has  evaluated  its  goodwill  for  impairment  pursuant  to  SFAS  142
("Goodwill  and Other  Intangible  Assets")  and SFAS 144  ("Accounting  for the
Impairment  or Disposal of Long-Lived  Assets"),  and  determined  that the fair
value of the Company's goodwill is $4,728,546.

Valuation of the Company's Common Stock

Unless otherwise  disclosed,  all stock based  transactions  entered into by the
Company have been valued at the market value of our common stock on the date the
transaction was entered into or have been valued using the  Black-Scholes  Model
to estimate the fair market value.

Concentrations of Credit Risk

Financial instruments, which potentially expose the Company to concentrations of
credit risk, consist primarily of trade accounts receivable. Aggregate potential
credit losses have so far not exceeded management's expectations.


                                      -9-
<PAGE>

Advertising Expenses

We expense  advertising  costs as  incurred.  During the period  ended March 31,
2005, we did not have significant advertising costs.

Fair Value of Financial Instruments

The carrying  amounts of cash,  accounts  receivable,  notes payables,  accounts
payable,  and  accrued  expenses  approximate  fair  value  because of the short
maturity of these items.

Inventory

Inventory consists primarily of various sensors, combos and parallel port units.
Inventory is valued at lower of cost (first-in, first-out) or market.

Furniture and Equipment

Furniture  and  equipment are recorded at cost.  Depreciation  and  amortization
expense is provided on a straight-line basis using estimated useful lives of 3-7
years.  Depreciation  expense was $17,267 and $7,625 for the three  months ended
March 31, 2005 and 2004,  respectively.  Maintenance  and repairs are charged to
expense as incurred and  expenditures  for major  improvements  are capitalized.
When assets are retired or  otherwise  disposed  of, the  property  accounts are
relieved of costs and accumulated depreciation and any resulting gain or loss is
credited or charged to operations.

Patents

At the  acquisition  of  Veridicom  Inc.,  we evaluated  the unused  patents and
determined  the costs to secure the patents  outweighed  their  intended use and
were unable to find a party  interested in purchasing  the patents.  The patents
were  originally  recorded at cost and were being  amortized on a  straight-line
basis over 15 years. The Company has valued the patents at $200,000.

Cash and Cash Equivalents

For  purposes of  reporting  cash flows,  we  consider  all funds with  original
maturities of three months or less to be cash equivalents.

Income Taxes

We recognize  deferred tax assets and liabilities for the expected future income
tax consequences of events that have been recognized in the Company's  financial
statements.   Under  this  method,  deferred  tax  assets  and  liabilities  are
determined based on temporary differences between the financial carrying amounts
and the tax bases of assets and liabilities using enacted tax rates in effect in
the  periods  in which  the  temporary  differences  are  expected  to  reverse.
Valuation  allowances  are  established  when  necessary to reduce  deferred tax
assets to the amount expected to be realized.  Income tax expense represents the
tax payable for the current  period and the change during the period in deferred
tax assets and  liabilities.  The Company has a net operating loss carry forward
of approximately $3,800,000 expiring beginning in 2020.

Revenue Recognition

Sales of services are recorded  when  performed in  accordance  with  contracts.
Revenues from software sales are recorded in accordance  with SOP 97-2 `Software
Revenue  Recognition',  which  requires  that revenue  recognized  from software
arrangements be allocated to the various  elements of the  arrangement  based on
the relative  fair market  values of the  elements,  such as software  products,
upgrades,   enhancements,   post  contract  customer  support,  installation  or
training.  Revenue from product  services is  recognized  at the time service is
provided.


                                      -10-
<PAGE>

For fixed fee  contracts,  Esstec  recognizes  revenue  based on the  percentage
completed,  calculated as either the number of direct labor hours in the project
to date divided by the  estimated  total  direct labor hours,  or based upon the
completion of specific task benchmarks. It is Esstec's policy to record contract
losses in their  entirety in the period in which such  losses can be  estimated.
Any revenues  associated with  pre-payments  or pre-billings  are deferred until
revenue is earned. For non-fixed fee jobs, revenue is recognized as services are
performed and adjusted to realization value, if necessary.

Pakistan   Ltd.   Recognizes   revenue  at  the   point/time   the  software  is
delivered/exported.

Veridicom Inc. recognizes revenues at the point of shipment of products.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.

Comprehensive Loss

We  utilize  Statement  of  Financial  Accounting  Standards  ("SFAS")  No.  130
"Reporting  Comprehensive  Income."  This  statement  establishes  standards for
reporting  comprehensive  loss  and its  components  in a  financial  statement.
Comprehensive loss as defined includes all changes in equity (net assets) during
a  period  from  non-owner  sources.   Examples  of  items  to  be  included  in
comprehensive  loss, which are excluded from net loss,  include foreign currency
translation  adjustments and unrealized  gains and losses on  available-for-sale
securities.   Comprehensive  loss  presented  in  these  consolidated  financial
statements resulted from translations of foreign currency financial statements.

Software Development Costs

Software  development  costs were expensed as research and development  costs as
incurred until the software reached technological feasibility in accordance with
Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed" ("SFAS 86").

Earnings Per Common Share

We compute  earnings  (loss) per common share in  accordance  with  Statement of
Financial  Accounting Standards No. 128, Earnings Per Share (SFAS No. 128). This
statement  simplifies  the  standards  for  computing  earnings  per share (EPS)
previously  found in Accounting  Principles  Board Opinion No. 15,  Earnings Per
Share, and makes them more comparable to international  EPS standards.  SFAS No.
128 replaces the  presentation  of primary EPS with a presentation of basic EPS.
In addition,  the Statement  requires dual presentation of basic and diluted EPS
on the face of the  income  statement  for all  entities  with  complex  capital
structures and requires a reconciliation of the numerator and denominator of the
basic EPS  computation  to the  numerator  and  denominator  of the  diluted EPS
computation.


                                      -11-
<PAGE>

NOTE 3 - FOREIGN CURRENCY TRANSLATION

Pakistan Ltd. considers the Pakistan Rupee to be the functional  currency of its
operations.  Cavio  and  Canada  Inc.  consider  the  Canadian  Dollar to be the
functional  currency of their operations.  The reporting currency of the Company
is  the  U.S.  dollar;  accordingly,  all  amounts  included  in  the  financial
statements have been translated into U.S. dollars.

--------------------------------------------------------------------------------
                                            For the period        For the period
                                                Ending                 Ending
Exchange Rates                              March 31, 2005        March 31, 2004
--------------------------------------------------------------------------------
Rupee Average                                   .01683                .01745
Rupee Period end                                .01684                .01745
Canadian Dollar Average                         .81500                .76260
Canadian Dollar Period end                      .82672                .75884
--------------------------------------------------------------------------------

NOTE 4 - ACCOUNTS RECEIVABLE, RELATED PARTY

The Company inadvertently repaid a note that was previously converted to equity.
The $82,501 is fully recoverable.

NOTE 5 - FURNITURE AND EQUIPMENT

Furniture and equipment consists of the following:

--------------------------------------------------------------------------------
                                                       March 31,    December 31,
                                                         2005           2004
--------------------------------------------------------------------------------
Tooling equipment                                      $161,595       $161,595
Furniture & fixture                                      33,932         33,932
Office equipment                                         30,954         30,954
Computer hardware                                       281,225        278,185
Computer software                                       158,792        158,539
Vehicles                                                 19,818         19,818
                                                       --------       --------
                                                        686,316        683,023
Less accumulated depreciation and amortization          493,593        476,326
                                                       --------       --------
                                                       $192,723       $206,697
--------------------------------------------------------------------------------

NOTE 6 - NOTES PAYABLE, RELATED PARTIES

During the three  months  ending  March 31,  2005,  the  Company  reached a full
settlement with a lender. Under the settlement terms, the total interest payable
was to be limited to a maximum of $20,000.  The Company paid, in full,  $100,000
and all the accrued  interest  owed to the lender of $10,000.  The Company  also
issued 25,000 shares of the Company's  common stock to this lender as a loan fee
valued at  $106,250.  A director of the Company is an  associate of the lender's
parent company.


                                      -12-
<PAGE>

NOTE 7 - STOCK-BASED COMPENSATION

The Company accounts for stock based  compensation  under Statement of Financial
Accounting  Standards No. 123,  "Accounting for Stock-Based  Compensation" (SFAS
123). The standard  requires the Company to present the "fair value" method with
respect to stock-based compensation of consultants and other non-employees.

The  Company  did not  change  its method of  accounting  with  respect to stock
options;  the Company continues to account for these under the "intrinsic value"
method. The Company recognized $179,295 as stock based compensation to employees
and directors of the Company for the three months ended March 31, 2005.

NOTE 8 - COMMON STOCK

Common Stock Issued during the Period to March 31, 2005

During the period ending March 31, 2005 the Company sold 61,000 shares of common
stock for $100,650 less offering costs of $5,000.

Stock Option Plan

In April 2004 the Company  adopted the 2004 Stock Option,  Deferred  Stock,  and
Restricted Stock Plan (the Plan) effective June 25, 2004, which provides for the
granting  of  options  to  officers,  directors,  consultants,   employees,  and
advisors.  2,000,000  shares of common stock are reserved under the Plan for the
granting of options.  The Plan is in effect until June 25, 2014. The options are
exercisable  to purchase  stock for a period of up to ten years from the date of
grant.

On February 7, 2005, the Board of Directors of the Company approved the granting
of 1,025,000  shares to officers,  directors  and employees of the Company under
the 2004 Stock Option Plan.

The stock options vest monthly over a sixty-month  period. The fair value of the
vested options of $71,565 was estimated using the  Black-Scholes  option pricing
model with an expected  life of five years,  a risk-free  interest rate of 2.43%
and an expected  volatility of 209%. The fair value of vested options during the
year has been expensed as stock based compensation.

On April 22, 2005,  the Board of Directors of the Company  approved the granting
of an additional 130,000 shares to employees of the Company under the 2004 Stock
Option Plan.

NOTE 9 - COMMITMENTS AND CONTINGENCIES

Employment Agreement

The Company  entered into an employment  agreement  with its President and Chief
Executive  Officer  effective  February 20, 2004 for one year  providing  for an
annual salary of $175,000,  ten-year stock option to purchase  150,000 shares of
the  Company's  common stock at $3.50,  and an annual bonus of $20,000 for every
$1.5  million in gross  consolidated  revenue of the Company for said year.  The
agreement is automatically renewable.

The stock options vest monthly over a twenty-four  month period. As at March 31,
2005, 55% of the options were vested.  The fair value of the  cumulative  vested
options of $469,705 was estimated using the  Black-Scholes  option pricing model
with an expected life of five years,  a risk-free  interest rate of 2.79% and an
expected  volatility of 293%.  The fair value of vested  options during the year
has been expensed as stock based compensation.


                                      -13-
<PAGE>

Litigation

Five former  employees of Veridicom,  Inc. have filed claims against the Company
with the Labor  Commissioner  in the State of California.  The former  employees
allege that the Company owes unpaid wages, salaries and vacation pay for various
periods  between July 2000 and November  2003  amounting to a total of $111,651.
The Company has accrued for this  liability in its  financial  statements  as at
March 31, 2005.

On March 21, 2005 one of the  claimants  signed a letter of agreement to convert
his claim of $ 61,054 into stock based on the closing  price of our common stock
on that day of $2.40 per  share,  or a total of  25,439  shares  for his  entire
claim.  However,  this  settlement is subject to obtaining  certain  waivers and
documents from the holders of our Callable Secured Convertible Notes.

In addition, the Company is a party to a number of other lawsuits arising in the
normal course of business. In the opinion of management, the resolution of these
matters will not have a material  adverse  effect on the  Company's  operations,
cash flows or financial position.

On March 28,  2003 the  Company and one of the  company's  stockholders  filed a
lawsuit in  Superior  Court  against a former CEO of the  Company.  The  lawsuit
alleges a breach of  fiduciary  duty,  negligence,  fraud and breach of contract
claiming the CEO did not devote his efforts to the Company's product development
and market  strategies  or  maximize  the profit of the  business.  An amount of
damages  has not been  determined  and the  outcome  of this  lawsuit  cannot be
determined at this time.

NOTE 10 - GAIN ON CANCELLATION/FORGIVENESS OF DEBT

In the period ended March 31,  2005,  the Company  recorded  $151,675 of gain on
forgiveness of debt after reaching settlement agreements with certain vendors to
cancel old accounts payable for reduced cash payments

The Company is  currently  investigating  the  possibility  of revising  certain
pre-merger accounts payable estimated at $270,000.

NOTE 12 - CONVERTIBLE NOTES PAYABLE AND LONG TERM DEBT

In March  2005,  the  Company  paid  $50,000 of its  unsecured  loan from Global
Ventures  Advisors,  a company  controlled by a former director of the Company's
subsidiary in Pakistan.  The loan bears  interest at 12% per annum and due on or
before June 30, 2006,  with an option to convert to common stock in the event of
default in repayment by the Company.

On February  25,  2005,  the Company  completed  the first of three  rounds of a
private  placement  whereby  the  Company  will  issue  up  to an  aggregate  of
$5,100,000 worth of 10% callable secured notes convertible into shares of common
stock of the Company and warrants to purchase up to an  aggregate of  10,200,000
shares of common  stock,  of the Company to certain  accredited  investors.  The
closing  of the first  round of the  Private  Placement  resulted  in  aggregate
proceeds to the Company of $1,700,000. Subsequent to March 31, 2005, the Company
completed  the second  round of the private  placement  resulting  in  aggregate
proceeds amounting to $1,700,000.  The third closing of $1,700,000 is contingent
upon triggering events set forth in the Securities Purchase Agreement. The Notes
have a term of 3 years and bear  interest  at 10% per  annum,  which is  payable
monthly;  provided,  however,  that the interest  rate shall reset at 0% for any
monthly  period in which the  Company's  stock price is greater than 125% of the
"Initial Market Price," which is defined as 100% of the volume weighted  average
of the Company's common stock for the five days immediately prior to closing, as
reported on the Over-the-Counter Bulletin Board. The principal payments begin in
May 2005.


                                      -14-
<PAGE>

The notes are convertible  into the Company's common stock at a conversion price
equal to $1.27,  which is seventy  percent (70%) of the initial  market price of
$1.81 as  defined in the  agreement  using the  Weighted  Volume  Average  Price
("WVAP");  provided however, that if an event of default shall have occurred and
be continuing,  the  conversion  price shall be equal to the lesser of (i) fifty
percent (50%) of the initial market price or (ii) the variable conversion price,
defined as the  applicable  percentage  multiplied by the average of the average
daily  prices for the  common  stock for the five (5) days prior to the date the
conversion notice is sent by the holder of the notes to the Company.

The Company also expensed the related beneficial  conversion feature of $402,269
as interest.

The fair value of the beneficial  conversion feature for these convertible notes
and warrants issued was estimated using the  Black-Scholes  option pricing model
with an expected life of five years,  a risk-free  interest rate of 2.43% and an
expected volatility of 187%. The fair value of the beneficial conversion feature
of $1,297,731  has been  capitalized as a discount on notes payable and is being
amortized as interest expense over the three-year term of the notes.

The  Warrants  are  exercisable  at any time for a period of five years from the
date of  issuance.  The Series A Warrants  have an  exercise  price of $3.00 per
share and the Series B Warrants have an exercise price of $5.00 per share.

As an inducement to participate in the Private  Placement,  the Company  granted
the Note Holders a security interest in all of its intellectual property.

The Company  incurred a total of $221,707 in legal  expenses and  commissions to
complete  the  first  round  of a  private  placement.  These  costs  are  being
capitalized and amortized over the three-year term of the note.

The Company also  recorded as deferred  finance  costs the fair value of 107,087
warrants issued as consideration for placement agent services provided by Joseph
Stevens & Company Inc.  ("JSC") in connection  with the Private  Placement.  The
fair value of these warrants was estimated at $176,707  using the  Black-Scholes
option pricing model with an expected life of five years,  a risk-free  interest
rate of 2.43% and an expected  volatility  of 187%.  The Company  also issued an
additional 100,000 warrants to JSC, which are restricted for one year.


                                      -15-
<PAGE>

NOTE 13 - OFFICE CLOSING

On April 15, 2004 the Company permanently closed the offices of Veridicom,  Inc.
in  Sunnyvale,  California  and is currently in the process of  integrating  and
consolidating  its  software and  hardware  product  divisions at its offices in
Vancouver,  British Columbia,  Canada.  The direct costs incurred by the company
to-date, with respect to the closure and relocation of the Sunnyvale operations,
amount to $31,575.

NOTE 14 - SUBSEQUENT EVENTS

On April 22, 2005,  the Board of Directors of the Company  approved the granting
of an additional 130,000 shares to employees of the Company under the 2004 Stock
Option Plan.

ITEM 2 MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND RESULTS
OF OPERATIONS

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

The  following  discussion  should  be read in  conjunction  with our  Financial
Statements, including the related notes thereto, and other financial information
included  herein.  The  information  in  this  Report  includes  forward-looking
statements.  In addition,  past operating results are not necessarily indicative
of the results to be expected for future periods.

OVERVIEW

We  were   incorporated  in  Delaware  on  September  9,  1987  under  the  name
Perceptronics,  Inc. From our inception  through fiscal 2000, we were engaged in
the design, development and manufacture of computer-based simulation systems for
training and decision support. These systems included both hardware and software
and are used to train  personnel in the use of various  military and  commercial
equipment.  Much of our simulator  business was in the foreign defense industry.
The  tightening  of defense  budgets  worldwide,  combined  with the  continuing
consolidation and competition in the defense industry,  negatively  impacted the
growth and profit  opportunities  for small companies such as ours. As a result,
in July 2000, we refocused our business. In connection with the refocus, we sold
the assets related to our computer based simulation system line of business to a
developer and manufacturer of specialized defense simulation  products.  We then
commenced   development   of  commercial   products  in  the  area  of  Internet
collaboration.

However, we lacked the funds necessary to exploit our developed  products.  As a
result,  in October  2002,  we entered  into a license  agreement  with our then
principal  stockholder,  Global Alpha Corporation  ("GAC") pursuant to which GAC
was granted an exclusive  license to our software and systems commonly  referred
to as the "IC3D Framework" (the "System"). The System encompassed  substantially
all of our software  including  software  developed to support multi-user online
collaborative  interactivity  in a broad  variety of  applications  employing  a
variety of virtual  media over a number of networks  including  the Internet and
intra-nets. Under the license agreement, GAC agreed to pay the Company a license
fee of 10% of the  revenue  generated  from the sale or use of the  System up to
$1.0 million, 9% up to $2.0 million, 8% up to $3.0 million and,  thereafter,  7%
of the revenue generated.


                                      -16-
<PAGE>

In  connection  with  the  license  agreement,  in  October  2002 we  terminated
substantially all of our employees, and except for our license agreement, ceased
all of our prior operating activities.  Our principal activities became directed
to reducing our  liabilities  and seeking  possible  acquisitions.  Management's
objective was to acquire an operating  company that has  experienced  management
and the potential for profitable growth in exchange for our securities.

On April 28, 2003,  we entered into an Agreement and Plan of Merger with EssTec,
Inc., a privately-held  Nevada  corporation  ("EssTec").  In accordance with the
merger,  on  May  8,  2003,  we,  through  our  wholly-owned  subsidiary,  Alpha
Acquisition Corporation,  a Nevada corporation,  acquired EssTec in exchange for
4,276,162  shares of our  Common  Stock.  The  transaction  contemplated  by the
agreement  was  intended  to be a  "tax-free"  reorganization  pursuant  to  the
provisions of Section 351 and 368(a)(1)(A) of the Internal Revenue Code of 1986,
as amended.

On May 8, 2003, in connection with the EssTec merger, we changed our fiscal year
end from March 31 to December 31.

On November  25,  2003,  we entered  into an  Agreement  and Plan of Merger with
Veridicom,  Inc., a  privately-held  California  corporation  ("Veridicom").  In
accordance with the merger,  on November 25, 2003, we, through our  wholly-owned
subsidiary,  A/V  Acquisition  Corporation,   a  Nevada  corporation,   acquired
Veridicom in exchange for 3,500,000 shares of our Common Stock; 3,250,000 shares
were issued to the  holders of  Veridicom  stock and 250,000  shares were issued
into escrow to cover  indemnification  obligations,  if any, of  Veridicom.  The
transaction  contemplated  by the  agreement  was  intended  to be a  "tax-free"
reorganization pursuant to the provisions of Section 351 and 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended.

On January 16, 2004,  we entered into an Agreement and Plan of Merger with Cavio
Corporation,  a privately-held  Washington corporation ("Cavio").  In accordance
with the merger, on February 20, 2004, we, through our wholly-owned  subsidiary,
A/VII  Corporation,  a  Nevada  corporation,  acquired  Cavio  in  exchange  for
5,119,140  shares of our  Common  Stock.  The  transaction  contemplated  by the
agreement  was  intended  to be a  "tax-free"  reorganization  pursuant  to  the
provisions of Section 351 and 368(a)(1)(A) of the Internal Revenue Code of 1986,
as amended.

Description of the Company Post-Merger

Following  the merger with Cavio,  we  appointed  the  following  officers,  key
employees and advisors:

         Paul Mann, President, Chief Executive Officer and Director
         Bashir Jaffer, Chief Financial Officer
         Terry Laferte, VP, Technical Operations
         Cameron Adams, VP, Strategic Development and Sales
         Hamid Baradaran, VP, Hardware Development and Manufacturing

We also realigned our business  strategy to leverage the core operations of each
of our subsidiaries.  The Company has five subsidiaries:  Esstec,  Essential Tec
Pakistan  (Private)  Limited  ("Pakistan  Ltd."),  Veridicom  Inc.,  Cavio,  and
Veridicom International (Canada) Inc. ("Canada Inc.").

Our core strategy is to build a comprehensive  authentication  suite of products
and services, with market-specific  applications that leverage the core identity
management  infrastructure.  We  believe  there  is a  significant  need  for an
auditable,  scalable  product  solution  capable of linking an  individual  to a
specific  electronic  event or transaction -- a strong  authentication  solution
that safeguards legitimate interests and adheres to emerging electronic commerce
legislation.  Our identity management solutions employ public key infrastructure
and a "virtual  token"  based  technology  to  control,  audit and  monitor  the
identification processes for electronic events and transactions.


                                      -17-
<PAGE>

We will focus on  transforming  the market for biometrics and growing the market
beyond traditional security applications. In particular, the strategy will be to
expand the traditional  security  offerings to include  security and convenience
value propositions for commercial or point-of-sale  transactions.  By developing
customizable   applications  as  well  as  authentication   technology,  we  are
endeavoring  that  our  brand  become  synonymous  with  secure,   authenticated
transactions.

We offer a solution that we believe not only addresses an organization's current
requirements for stronger and more scalable  authentication  and  authorization,
but  also  addresses  a  future  vision  for  security,  via  a  combination  of
centralized and distributed  identity  repositories  and  administration  tools.
Utilizing biometric technology,  we provide organizations with an authentication
solution that also provides  users with  increased  convenience  by reducing the
reliance on passwords.

The Company has a strong  management team with combined  experience in sales and
marketing,  vertical  market  knowledge,  technology  development,  and hardware
integrated circuit design. In addition, we are continuing our efforts to appoint
an  advisory  board  with  significant  expertise  in the  areas of  technology,
government, security and financial service to provide the Company with strategic
direction for products and services.

There  are  several   factors  that   management   believes   will  provide  new
opportunities  or present new  challenges  for us. We believe  that  regulatory,
technological, and cultural changes will create new opportunities. International
distribution  arrangements are currently in place,  while new channels are being
developed.

Since March 1, 2004,  the Company has undertaken a  comprehensive  review of all
pre-merger  operations.   This  on-going  review  has  included  all  facets  of
operations, including the supply chain, product development,  previous sales and
marketing agreements,  internal controls,  and reporting systems.  Based on this
review,  we have decided that a thorough  reorganization of all of the companies
is  warranted,  including  a  re-evaluation  of  the  supply  chain,  method  of
manufacture,  product  strategy and other  organizational  procedures.  Although
distracting in the  short-term,  we believe that this review is in the long-term
best   interests  of  the  Company  and  our   stockholders.   As  part  of  the
reorganization, we closed our Sunnyvale, California offices on April 15, 2004 in
favor of a more cost  effective and  efficient  development  environment  in the
Pacific Northwest.

We  officially   changed  our  name  from  Alpha  Virtual,   Inc.  to  Veridicom
International, Inc. on February 23, 2004.

Following  the name  change,  shares of our common  stock are  traded  under the
symbol "VRDI" on the OTC Bulletin Board (the "OTCBB").


                                      -18-
<PAGE>

CRITICAL ACCOUNTING POLICIES USED IN FINANCIAL STATEMENTS

Basis of presentation

We prepare our financial  statements in accordance  with  accounting  principles
generally  accepted in the United States.  The  preparation  of these  financial
statements requires management to make estimates and assumptions that affect the
reported  amounts of assets and  liabilities  and the  disclosure  of contingent
assets and liabilities at the date of the financial  statements and the reported
amounts of revenues  and  expenses  during the  reporting  period.  Management's
estimates and judgments  are based on  historical  experience  and various other
factors that are believed to be reasonable under the circumstances,  the results
of which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions.

Veridicom International,  Inc., ("we," "us," "our," or the "Company"),  formerly
known as Alpha Virtual, Inc. is a Delaware Corporation formerly headquartered in
California  that was formed on  September  9, 1987.  The name of the Company was
changed  to  Veridicom  International,   Inc.  in  February  2004.  The  Company
consolidated  its  corporate  offices in  Seattle,  Washington,  and  Vancouver,
British Columbia in April 2004.

Going Concern

The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business.  The Company has incurred a net
loss of $1,329,543 and has a working capital  deficit,  which raises doubt about
its ability to continue as a going  concern.  The Company is currently  devoting
its efforts to raising additional capital.  The Company's ability to continue as
a going concern is dependent upon its ability to develop  additional  sources of
capital,  and  ultimately,   achieve  profitable  operations.  The  accompanying
financial  statements do not include any adjustments  that might result from the
outcome of these uncertainties.

Consolidation

The consolidated  financial  statements  include the accounts of the Company and
its subsidiaries Esstec,  Pakistan Ltd.,  Veridicom,  Cavio, and Canada Inc. All
significant  intercompany  balances and  transactions  have been  eliminated  in
consolidation.

Name Change

The legal entity, Alpha Virtual, Inc. ("Alpha"),  retained its name until it was
changed to Veridicom International, Inc. in February 2004.

Minority Interest

Minority interest reflects the ownership of minority  shareholders in the equity
of Pakistan Ltd., a consolidated subsidiary less than wholly owned.


                                      -19-
<PAGE>

Mergers

On January 16, 2004,  we entered into an Agreement and Plan of Merger with Cavio
Corporation,  a privately  held  Washington  corporation  ("Cavio").  The merger
became  effective  on February 20, 2004  following a special  meeting of Cavio's
stockholders.  In accordance with the merger, on February 20, 2004,  through its
wholly owned subsidiary,  A/VII Acquisition  Corporation,  a Nevada corporation,
acquired Cavio in exchange for 5,119,140 shares of our common stock. We recorded
goodwill of $3,792,019 for this acquisition.


                                      -20-
<PAGE>

New Entity

On January 21, 2004 Veridicom  International (Canada) Inc. ("Canada") was formed
to be the Canadian operating company for the public company.

Reclassifications

For comparative purposes,  prior period's consolidated financial statements have
been reclassified to conform to report classifications of the current year.

Goodwill

Goodwill  was  recorded at its purchase  price and is not being  amortized.  The
Company  has  evaluated  its  goodwill  for  impairment  pursuant  to  SFAS  142
("Goodwill  and Other  Intangible  Assets")  and SFAS 144  ("Accounting  for the
Impairment  or Disposal of Long-Lived  Assets"),  and  determined  that the fair
value of the Company's goodwill is $4,728,546.

Valuation of the Company's Common Stock

Unless otherwise  disclosed,  all stock based  transactions  entered into by the
Company have been valued at the market value of our common stock on the date the
transaction was entered into or have been valued using the  Black-Scholes  Model
to estimate the fair market value.

Concentrations of Credit Risk

Financial instruments, which potentially expose the Company to concentrations of
credit risk, consist primarily of trade accounts receivable. Aggregate potential
credit losses have so far not exceeded management's expectations.

Advertising Expenses

We expense  advertising  costs as  incurred.  During the period  ended March 31,
2005, we did not have significant advertising costs.


                                      -21-
<PAGE>

Fair Value of Financial Instruments

The carrying  amounts of cash,  accounts  receivable,  current  portion of notes
payable,  accounts payable,  and accrued expenses approximate fair value because
of the short maturity of these items.

Inventory

Inventory consists primarily of various sensors, combos and parallel port units.
Inventory is valued at lower of cost (first-in, first-out) or market.

Furniture and Equipment

Furniture  and  equipment are recorded at cost.  Depreciation  and  amortization
expense is provided on a straight-line basis using estimated useful lives of 3-7
years.  Depreciation  expense was $17,267 and $7,625 for the three  months ended
March 31, 2005 and 2004,  respectively.  Maintenance  and repairs are charged to
expense as incurred and  expenditures  for major  improvements  are capitalized.
When assets are retired or  otherwise  disposed  of, the  property  accounts are
relieved of costs and accumulated depreciation and any resulting gain or loss is
credited or charged to operations.

Patents

At the  acquisition  of  Veridicom  Inc.,  we evaluated  the unused  patents and
determined  the costs to secure the patents  outweighed  their  intended use and
were unable to find a party  interested in purchasing  the patents.  The patents
were  originally  recorded at cost and were being  amortized on a  straight-line
basis over 15 years. The Company has valued the patents at $200,000.

Cash and Cash Equivalents

For  purposes of  reporting  cash flows,  we  consider  all funds with  original
maturities of three months or less to be cash equivalents.

Income Taxes

We recognize  deferred tax assets and liabilities for the expected future income
tax consequences of events that have been recognized in the Company's  financial
statements.   Under  this  method,  deferred  tax  assets  and  liabilities  are
determined based on temporary differences between the financial carrying amounts
and the tax bases of assets and liabilities using enacted tax rates in effect in
the  periods  in which  the  temporary  differences  are  expected  to  reverse.
Valuation  allowances  are  established  when  necessary to reduce  deferred tax
assets to the amount expected to be realized.  Income tax expense represents the
tax payable for the current  period and the change during the period in deferred
tax assets and  liabilities.  The Company has a net operating loss carry forward
of approximately $3,800,000 expiring beginning in 2020.

Revenue Recognition

Sales of services are recorded  when  performed in  accordance  with  contracts.
Revenues from software sales are recorded in accordance  with SOP 97-2 `Software
Revenue  Recognition',  which  requires  that revenue  recognized  from software
arrangements be allocated to the various  elements of the  arrangement  based on
the relative  fair market  values of the  elements,  such as software  products,
upgrades,   enhancements,   post  contract  customer  support,  installation  or
training.  Revenue from product  services is  recognized  at the time service is
provided.


                                      -22-
<PAGE>

For fixed fee  contracts,  Esstec  recognizes  revenue  based on the  percentage
completed,  calculated as either the number of direct labor hours in the project
to date divided by the  estimated  total  direct labor hours,  or based upon the
completion of specific task benchmarks. It is Esstec's policy to record contract
losses in their  entirety in the period in which such  losses can be  estimated.
Any revenues  associated with  pre-payments  or pre-billings  are deferred until
revenue is earned. For non-fixed fee jobs, revenue is recognized as services are
performed and adjusted to realization value, if necessary.

Pakistan   Ltd.   recognizes   revenue  at  the   point/time   the  software  is
delivered/exported.

Veridicom Inc. recognizes revenues at the point of shipment of products.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.

Comprehensive Loss

We  utilize  Statement  of  Financial  Accounting  Standards  ("SFAS")  No.  130
"Reporting  Comprehensive  Income."  This  statement  establishes  standards for
reporting  comprehensive  loss  and its  components  in a  financial  statement.
Comprehensive loss as defined includes all changes in equity (net assets) during
a  period  from  non-owner  sources.   Examples  of  items  to  be  included  in
comprehensive  loss, which are excluded from net loss,  include foreign currency
translation  adjustments and unrealized  gains and losses on  available-for-sale
securities.   Comprehensive  loss  presented  in  these  consolidated  financial
statements resulted from translations of foreign currency financial statements.

Foreign Currency Translation

Pakistan Ltd. considers the Pakistan Rupee to be the functional  currency of its
operations.  Cavio  and  Canada  Inc.  consider  the  Canadian  Dollar to be the
functional  currency of their operations.  The reporting currency of the Company
is  the  U.S.  dollar;  accordingly,  all  amounts  included  in  the  financial
statements have been translated into U.S. dollars.

--------------------------------------------------------------------------------
                                            For the period        For the period
                                               Ending                  Ending
Exchange Rates                              March 31, 2005        March 31, 2004
--------------------------------------------------------------------------------
Rupee Average                                   .01683                .01745
Rupee Period end                                .01684                .01745
Canadian Dollar Average                         .81500                .76260
Canadian Dollar Period end                      .82672                .75884
--------------------------------------------------------------------------------

Software Development Costs

Software  development  costs were expensed as research and development  costs as
incurred until the software reached technological feasibility in accordance with
Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed" ("SFAS 86").


                                      -23-
<PAGE>

Earnings Per Common Share

We compute  earnings  (loss) per common share in  accordance  with  Statement of
Financial  Accounting Standards No. 128, Earnings Per Share (SFAS No. 128). This
statement  simplifies  the  standards  for  computing  earnings  per share (EPS)
previously  found in Accounting  Principles  Board Opinion No. 15,  Earnings Per
Share, and makes them more comparable to international  EPS standards.  SFAS No.
128 replaces the  presentation  of primary EPS with a presentation of basic EPS.
In addition,  the Statement  requires dual presentation of basic and diluted EPS
on the face of the  income  statement  for all  entities  with  complex  capital
structures and requires a reconciliation of the numerator and denominator of the
basic EPS  computation  to the  numerator  and  denominator  of the  diluted EPS
computation.

Results of Operations - Three Months Ended March 31, 2005 and 2004

The  following  table sets forth certain  statement of  operations  data for the
three months ended March 31, 2005 and 2004:

                 VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
                     (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
   CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
                                   (Unaudited)

                                                Three months      Three months
                                                    Ended             Ended
                                               March 31, 2005    March 31, 2004
                                               --------------    --------------
Revenues
    Net revenue                                $       80,576    $      238,975
    Cost of goods sold                                 22,694           160,038
                                               --------------    --------------
    Gross profit                                       57,882            78,937

Expenses
    General & administrative expenses                 742,681           781,778
    Research & development                            293,323            45,607
    Depreciation                                       17,267             7,625
                                               --------------    --------------
    (Loss) from operations                           (995,389)         (756,073)

Other income / (expense)
    Other expense                                      (4,637)           (2,434)
    Interest expense                                 (476,321)          (10,697)
    Gain on forgiveness of debt                       151,675                --
                                               --------------    --------------
    (Loss) before minority interest                (1,324,672)         (769,204)

    Minority interest                                  (4,871)            4,320
                                               --------------    --------------
    Net (loss)                                     (1,329,543)         (764,884)

    Other comprehensive  (loss):
    Foreign currency translation                        3,273                --
                                               --------------    --------------
    Total comprehensive  (loss)                $   (1,326,270)   $     (764,884)

    (Loss) per share:
       Basic and fully diluted (loss)
       per common share                        $        (0.09)   $        (0.07)

    Weighted average common shares
       outstanding basic and fully diluted         15,594,363        11,819,186

         SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


                                      -24-
<PAGE>

Net Revenue

Net revenue for the three  months  ended March 31, 2005 of $80,576  decreased by
$158,399  compared to net revenue of $238,975  for the same period in 2004.  The
decrease is due to a specific order of finger print sensor chips for $170,000 in
the three months ended March 31, 2004.  All other  revenues for the  comparative
periods  are in respect of sales of  capacitive  fingerprint  sensors,  computer
peripherals and software  related to the use of our  fingerprint  authentication
technology.

Cost of Goods Sold

Cost of goods sold is mainly for product components purchased from suppliers and
the cost of finished products from existing inventory. These amounted to $22,694
for the three  months  ended  March 31, 2005  compared to $160,038  for the same
period in 2004.

Gross Profit

The gross  profit for the three months ended March 31, 2005 of $57,882 was 71.8%
of net sales  compared to gross  profit of $78,937  which was 33.0% of net sales
for the same period in 2004.  The variance in the gross profit  margin is due to
the  change in  product  sales mix  during  the  comparable  periods,  including
$170,000  of sales in the three  months  ended  March 31,  2004 for  fingerprint
sensor chips which carry a lower gross profit margin.

General and Administrative Expenses

General  and  administrative   expenses,  which  include  non-cash  compensation
expenses of, $179,295 amounted to $742,681 for the three months ending March 31,
2005  compared to $781,778 for the same period in 2004,  being a net decrease of
$39,097. The significant variances are as follows:

      o     Salaries  increased  to $280,000 in the three months ended March 31,
            2005 compared to $142,006 for the same period in 2004 as a result of
            the hiring of new software  development,  hardware  development  and
            administrative staff.

      o     Commissions  and fees  related  to new  equity  and debt  financings
            increased  to  $16,000  in the three  months  ended  March 31,  2005
            compared to $8,802 for the same period in 2004.

      o     Stock based  compensation  amounted to $179,295 for the three months
            ended  March 31,  2005  compared  to $35,910  for the same period in
            2004. Stock based  compensation for the three months ended March 31,
            2004 are in respect of one month  vested  options for the CEO of the
            Company  as  part  of  his   employment   agreement.   Stock   based
            compensation  for the  three  months  ended  March  31,  2005 are in
            respect of two months vested  options for employees and directors of
            the Company in accordance  with the 2004 Stock Option Plan which was
            approved in early April 2004 and three months vested options for the
            CEO of the Company as part of his employment agreement.

      o     Insurance  amounted to $32,000 for the three  months ended March 31,
            2005.  There were no insurance costs incurred for the same period in
            2004.


                                      -25-
<PAGE>

      o     A decrease in consulting expenses from $305,634 for the three months
            ended March 31, 2004 to $63,000 for the three months ended March 31,
            2005.  After the merger of  Sunnyvale,  the Company  hired full time
            employees   for   services   which  were   previously   provided  by
            consultants. This reduced consulting expenses.

      o     A decrease in travel  expenses  from  $48,664  for the three  months
            ended March 31, 2004 to $31,861 for the three months ended March 31,
            2005.  Most of the travels  for the current  year will be made after
            the first quarter and it is expected  that travel  expenses for 2005
            fiscal  will be higher  than those of 2004 as a result of  increased
            marketing and sales activities.

Research and Development

Research and development  expenditure for the three months ending March 31, 2005
was $293,323, compared to $45,607 for the same period in 2004. Such expenditures
are related to salaries  paid to research  and  development  staff and  on-going
product, hardware and software enhancements.

Interest Expense

Interest  expense  for the three  months  ending  March 31,  2005  amounting  to
$476,321 was for  amortization  of notes discount and accrued  interest on notes
payable,  compared to  interest  expense of $10,697 for the same period in 2004.
The  increase in interest  expense in the three  months  ended March 31, 2005 is
mainly in respect of the  amortization  of the notes discount on the convertible
notes issued in 2005.

Liquidity and Capital Resources

On  February  25,  2005,  we  completed  the first of three  rounds of a private
placement  whereby we will issue up to an aggregate of  $5,100,000  worth of 10%
callable secured notes  convertible into shares of common stock, and warrants to
purchase up to an aggregate of 10,200,000  shares of our common stock to certain
accredited  investors.  The first of three equal  installments of $1,700,000 was
received in March 2005.

Subsequent  to March 31,  2005,  the Company  completed  the second round of the
private placement  resulting in aggregate proceeds amounting to $1,700,000.  The
third closing of $1,700,000 is contingent  upon  triggering  events set forth in
the Securities Purchase Agreement.

We intend to complete the third round of our private placement financing to fund
our current and future operations. If successful in completing this financing or
if we need to seek additional or alternative  sources of finance,  we may not be
able  to do so on  terms  that  are not  excessively  dilutive  to our  existing
stockholders  or less  costly than  existing  sources of  financing.  Failure to
secure  additional  financing in a timely  manner and on favorable  terms if and
when needed in the future could have a material  adverse effect on our financial
performance,  balance  sheet and stock  price and require us to  implement  cost
reduction initiatives and curtail operations.

We  anticipate  that if we are able to  complete  the third round of our private
placement  financing  and if we are able to generate  funds from  operations  by
fulfillment of orders and product deliveries in the third and fourth quarters of
this year, we will have sufficient funds to meet our operating  requirements for
the remainder of this year.


                                      -26-
<PAGE>

Off-Balance Sheet Arrangements

None

Dividends and Distributions

We have not paid any cash  dividends  to date.  We intend to retain  our  future
earnings, if any, and we do not anticipate paying cash dividends on either class
of our stock in the foreseeable future.

RISK FACTORS

Risks related to our financial results

Our stock price is volatile and could decline in the future.

The price of our  common  stock has been  volatile  in the past and will  likely
continue to fluctuate in the future.  The stock market in general and the market
for shares of technology  stocks in  particular  has  experienced  extreme stock
price fluctuations. In some cases, these fluctuations have been unrelated to the
operating  performance  of  the  affected  companies.   Many  companies  in  the
technology  and related  industries,  including  us, have  experienced  dramatic
volatility in the market prices of their common stock.

We have an accumulated deficit, are not currently profitable and expect to incur
significant expenses in the future as we implement our new business model, which
may reduce our profitability.

We have  incurred  a  cumulative  net loss  since  inception  and are  currently
experiencing  negative cash flow.  We expect to continue to experience  negative
cash flow and operating losses for the foreseeable future as we continue to make
significant  expenditures for acquisitions,  sales and marketing,  international
expansion,  infrastructure development and general and administrative functions,
in light of our new  business  model.  As a  result,  we will  need to  generate
significant revenues to achieve profitability.  If our revenues grow more slowly
than we anticipate,  or if our operating  expenses exceed  expectations,  we may
experience reduced profitability.

Our  auditors  have  indicated  uncertainty  concerning  our ability to continue
operations as a going concern.

Our auditors have indicated uncertainty  concerning our ability to continue as a
going  concern as of the most recent  audited  financial  statements.  We cannot
assure you that our ability to obtain additional  customers or financing sources
will be  impaired  as a result of this  qualification.  Additionally,  we cannot
assure you that our proposed projects and services,  if fully developed,  can be
successfully  marketed  or that we will ever  achieve  significant  revenues  or
profitable margins and therefore remain a going concern.

We will be required to raise additional capital to fund our operations.

We recently completed the second of three rounds of a private placement to raise
an aggregate of $5,100,000.  The first of three equal installments of $1,700,000
was received in  February,  2005,  the second was received in May,  2005 and the
third closing of $1,700,000 is contingent  upon  triggering  events set forth in
the Securities Purchase  Agreement.  If we cannot complete the third installment
of this placement and cannot raise needed funds on acceptable terms, we will not
be  able  to  develop  or  enhance  our  products,   take  advantage  of  future
opportunities or respond to competitive pressures or unanticipated requirements.
To the extent we raise  additional  capital by issuing  equity  securities,  our
stockholders  may  experience   substantial  dilution.   Also,  any  new  equity
securities may have greater rights,  preferences or privileges than our existing
common  stock.  A material  shortage of capital  will require us to take drastic
steps such as reducing our level of operations,  disposing of selected assets or
seeking an acquisition partner. If cash is insufficient,  we will not be able to
continue operations.


                                      -27-
<PAGE>

We will be  required  to amend our  previous  periodic  reports  filed  with the
Securities and Exchange Commission.

We have failed to timely  respond to comments  generated by the  Securities  and
Exchange  Commission on several of our  previously  filed periodic  reports.  In
addition, our previous auditors resigned largely as a result of periodic reports
being filed prior to their review.  Although we are  currently  working with our
new auditors to address  these  concerns,  we will be required to amend  certain
previously filed periodic reports and there can be no assurance that we will not
be required to restate previously filed financial  statements,  or be subject to
regulatory  action  by the  Securities  and  Exchange  Commission.  Any of these
actions would have a material  adverse  effect on us and the price of our common
stock.

If we fail to maintain effective internal controls over financial reporting, the
price of our Common Stock may be adversely affected.

Our  internal  controls  over  financial   reporting  may  have  weaknesses  and
conditions  that  need to be  addressed,  the  disclosure  of which  may have an
adverse  impact on the price of our common  stock.  We are required to establish
and maintain appropriate internal controls over financial reporting.  Failure to
establish  those  controls,  or any failure of those controls once  established,
could adversely impact our public disclosures regarding our business,  financial
condition or operating  results.  In addition,  management's  assessment  of our
internal  controls  over  financial   reporting  may  identify   weaknesses  and
conditions  that need to be addressed in our internal  controls  over  financial
reporting or other matters that may raise concerns for investors.  Any actual or
perceived  weaknesses and  conditions  that need to be addressed in our internal
controls over financial reporting,  disclosure of management's assessment of our
internal  controls  over  financial   reporting  or  disclosure  of  our  public
accounting  firm's  attestation to or report on  management's  assessment of our
internal  controls over  financial  reporting may have an adverse  impact on the
price of our common stock.

Risks related to our business

We face intense  competition from other biometric security solution providers as
well as identification and security systems providers.

A significant  number of established and startup companies have developed or are
developing  hardware  for  fingerprint   biometric  security  applications  that
currently  compete  or will  compete  directly  with  those  products  designed,
developed and sold by us. Other  companies  have developed or are developing and
marketing  biometric  security  applications for the recognition of fingerprints
that currently compete or will compete with those products  designed,  developed
and sold by us. Some of these  companies  have  developed or are  developing and
marketing  semiconductor  or optically  based direct contact  fingerprint  image
capture devices.  Other companies have developed or are developing and marketing
other methods of biometric  identification  such as retinal blood vessel or iris
pattern, facial structure, or voice recognition.


                                      -28-
<PAGE>

If one or more of these technologies or approaches were widely adopted, it would
significantly  reduce the potential  market for our products.  Our products also
compete with  non-biometric  technologies  such as certificate  authorities  and
traditional keys, cards,  surveillance  systems and passwords.  Many competitors
offering  products  that are  competitive  with our products  and services  have
significantly  more cash and resources than us. The biometric security market is
a rapidly  evolving  and  intensely  competitive  market,  and we  believe  that
additional  competitors  may enter the market and become  significant  long-term
competitors.

We  expect  competition  to  increase  and  intensify  in the  near  term in the
biometrics markets.  Companies competing with us may introduce products that are
competitively priced, have increased performance or functionality or incorporate
technological advances not yet developed or implemented by us.

Some present and potential competitors have financial,  marketing, research, and
manufacturing resources substantially greater than we have.

In order to compete effectively in this environment, we must continually develop
and market new and  enhanced  products at  competitive  prices and must have the
resources   available  to  invest  in  significant   research  and   development
activities.  The  failure to do so could have a material  adverse  effect on its
business operations, financial results and stock price.

We will need to raise additional equity or debt financing in the future.

We will  need to  raise  financing  in the  future  to fund our  operations.  If
successful in raising additional financing, we may not be able to do so on terms
that are not  excessively  dilutive to our existing  stockholders or less costly
than existing sources of financing.  Failure to secure additional financing in a
timely manner and on favorable terms if and when needed in the future could have
a material adverse effect on our financial performance,  balance sheet and stock
price and  require  us to  implement  cost  reduction  initiatives  and  curtail
operations.

Our business will not grow unless the market for our security  solutions expands
both domestically and internationally.

A large  portion of our revenues is derived  from the sale of security  products
and services.  We cannot  accurately  predict the future growth rate, if any, or
the ultimate  size of the  biometric  technology  market.  The  expansion of the
market for our products and services depends on a number of factors, including:

      o     the cost,  performance  and reliability of its products and services
            and the products and services of our competitors;

      o     customers'   perception   of  the  benefit  of  biometric   security
            solutions;

      o     public  perceptions of the  intrusiveness of these solutions and the
            manner in which firms are using the biometric information collected;

      o     public   perceptions   regarding  the   confidentiality  of  private
            information;

      o     customers' satisfaction with our products and services; and

      o     marketing  efforts  and  publicity   regarding  these  products  and
            services.

Certain groups have publicly objected to the use of biometric  products for some
applications  on civil  liberties  grounds and  legislation has been proposed to
regulate the use of biometric security products.  From time to time, fingerprint
recognition  and  other   biometrics   technologies   have  been  the  focus  of
organizations  and individuals  seeking to curtail or eliminate the use of these
technologies  on the  grounds  that these  technologies  may be used to diminish
personal  privacy  rights.  In  the  event  that  such  initiatives   result  in
restrictive legislation,  the market for fingerprint recognition products may be
adversely  affected.  Even if biometric markets develop as we hope, our products
and services  may not gain wide market  acceptance.  Even if biometric  security
solutions  gain wide  market  acceptance,  our  products  and  services  may not
adequately address the market requirements.


                                      -29-
<PAGE>

The  biometrics  industry is  characterized  by rapid  technological  change and
evolving industry standards, which could render our existing products obsolete.

Our future  success  will depend  upon our  ability to develop  and  introduce a
variety of new products and services and  enhancements to these new products and
services  in  order to  address  the  changing  and  sophisticated  needs of the
marketplace.  Frequently,  technical  development  programs  in  the  biometrics
industry require  assessments to be made of the future  directions of technology
and technology market generally, which are inherently difficult to predict.

Delays in introducing new products,  services and  enhancements,  the failure to
choose correctly among technical alternatives or the failure to offer innovative
products  and  services  at  competitive  prices may cause  customers  to forego
purchases of our products and services and purchase those of our competitors.

The  development  of new or  enhanced  products  and  services  is a complex and
uncertain  process that requires the accurate  anticipation of technological and
market trends. We may experience development,  marketing and other technological
difficulties  that may delay or limit our  ability to  respond to  technological
changes,  evolving  industry  standards,  competitive  developments  or customer
requirements. You should also be aware that:

      o     Our  technology  may  become  obsolete  upon  the   introduction  of
            alternative technologies;

      o     We may incur substantial costs if we need to modify our products and
            services to respond to these alternative technologies;

      o     We may not have  sufficient  resources  to develop  or  acquire  new
            technologies  or to introduce  new  products or services  capable of
            competing with future technologies;

      o     We may be  unable to  acquire  the  rights  to use the  intellectual
            property necessary to implement new technology; and

      o     When  introducing  new or enhanced  products or services,  we may be
            unable to effectively  manage the transition from older products and
            services.

Continued  participation  by us in the market for  biometric  products  that are
linked to forensic  quality  databases  under the  jurisdiction  of governmental
agencies may require the  investment  of resources in upgrading our products and
technology  in order for us to  compete  and to meet  regulatory  and  statutory
standards.  We may  not  have  adequate  resources  available  to us or may  not
adequately  keep  pace with  appropriate  requirements  in order to  effectively
compete in the marketplace.

Defects in our products and services could diminish  demand for our products and
services, which may harm our business.

Because our  products  and  services  are  complex,  they may contain  errors or
defects that are not found until after they are used by our customers. Errors or
defects that  subsequently  arise could  seriously  harm our  reputation and its
ability to generate sales to new or existing customers.

Our products and  services  are used in systems  with other  vendors'  products.
These  products  and  services  can be  adequately  tested  only  when  they are
successfully  integrated with these systems. Errors may be found in new products
or releases  after  shipment  and our  products  and services may not operate as
expected. Errors or defects in our products and services could result in:

      o     loss of revenues and increased service and warranty costs;

      o     delay in market acceptance;

      o     loss of salaries; and

      o     injury to our reputation.


                                      -30-
<PAGE>

We may be subject to loss in market share and market  acceptance  as a result of
manufacturing errors, delays or shortages.

Performance failure in our products or certain of our services may cause loss of
market share, delay in or loss of market acceptance, additional warranty expense
or product recall, or other contractual  liabilities.  The complexity of certain
of the  fingerprint  recognition  systems makes the  manufacturing  and assembly
process of such products,  especially in volume,  complex. This may in turn lead
to delays or  shortages in the  availability  of certain  products,  or, in some
cases, the unavailability of certain products. The negative effects of any delay
or failure could be  exacerbated  if the delay or failure  occurs in products or
services  that  provide  personal  security,  secure  sensitive  computer  data,
authorize significant financial  transactions or perform other functions where a
security breach could have significant consequences.

If a product or service  launch is delayed or is the subject of an  availability
shortage  because of problems  with our ability to  manufacture  or assemble the
product or service  successfully  on a timely basis,  or if a product or service
otherwise fails to meet performance  criteria, we may lose revenue opportunities
entirely  and/or  experience  delays in revenue  recognition  associated  with a
product or service in addition to incurring higher operating expenses during the
period  required  to  correct  the  defects.   We  may  be  subject  to  repair,
replacement,  reimbursement  and liability claims for products that fail to work
or to meet applicable performance criteria.

There is a risk that for  unforeseen  reasons  we may be  required  to repair or
replace a  substantial  number of products in use or to reimburse  customers for
products that fail to work or meet strict  performance  criteria.  We attempt to
limit  remedies for product or service  failure to the repair or  replacement of
malfunctioning  or  noncompliant  products  or  services,  and also  attempts to
exclude or minimize exposure to product and related  liabilities by including in
our standard agreements  warranty  disclaimers and disclaimers for consequential
and related damages as well as limitations on our aggregate liability. From time
to time,  in certain  complex  sale or licensing  transactions,  each entity may
negotiate liability provisions that vary from such standard forms.

Our existing and proposed  international business exposes us to additional risks
that may  result in future  additional  costs or limit the  market  for  product
sales.

Products  and services  provided to our  international  customers  account for a
significant  part of our  revenues.  In addition,  key component of our business
plan is to expand our reach in our foreign markets.  Conducting business outside
of the United States subjects us to additional risks, including:

      o     changes in regulatory requirements;

      o     reduced protection of intellectual property rights;

      o     evolving privacy laws;

      o     tariffs and other trade barriers;

      o     difficulties in staffing and managing foreign operations;

      o     problems in collecting accounts receivable; and

      o     difficulties in authenticating customer information.

We will face risks  inherent  to new  ventures in each new market that we enter,
including  a lack  of  acceptance  of our  business  model.  We may  also  incur
substantial  costs  related  to  entering  into new  markets,  which  may not be
recoverable if we are  unsuccessful  in these markets.  Failure to recover these
costs and expenses may materially  adversely impact our cash flow and ability to
meet our  regular  operating  expenses,  which may,  in turn harm our ability to
serve our customers and our competitive position to obtain new customers.


                                      -31-
<PAGE>

In  addition,  a portion  of our  technology  base is in  Pakistan.  We could be
adversely affected by any major hostilities involving Pakistan,  which result in
the  interruption  or  curtailment  of trade  between  Pakistan  and its trading
partners.  For  example,  if the United  States or any of its  trading  partners
reinstitutes  the recently lifted trade  sanctions,  it may adversely impact our
ability to continue our Pakistani operations.

If we fail to attract and retain employees,  our growth could be limited and our
costs could increase,  which may adversely  affect our results of operations and
financial position.

Our future success depends in large part upon our ability to attract,  train and
retain  highly  skilled  executive-level  management  and creative and technical
personnel.  The  competition  in the  technology  industry for such personnel is
intense,  and we  cannot  be sure  that we will  be  successful  in  attracting,
training and  retaining  such  personnel.  Some of our  employees  and executive
officers have joined our company recently,  and all employees are subject to "at
will" employment.  High turnover resulting in additional  training expense would
decrease its profitability.  We cannot guarantee that we will be able to replace
any of our management personnel in the event their services become unavailable.

Our failure to maintain the proprietary  nature of our technology,  intellectual
property and manufacturing processes could have a material adverse effect on our
business,  operating  results  and  financial  condition  and on our  ability to
compete effectively.

We principally rely upon patent, trademark, copyright, trade secret and contract
law to establish and protect our proprietary rights. There is a risk that claims
allowed on any  patents or  trademarks  that we hold may not be broad  enough to
protect  our  technology.   In  addition,  our  patents  or  trademarks  may  be
challenged,  invalidated or circumvented  and management  cannot be certain that
the rights  granted  thereunder  will  provide us with  competitive  advantages.
Moreover,  any current or future issued or licensed patents,  or trademarks,  or
currently  existing or future developed trade secrets or know-how may not afford
sufficient   protection  against   competitors  with  similar   technologies  or
processes, and the possibility exists that certain of our already issued patents
or trademarks may infringe upon third party patents or trademarks or be designed
around by others.

In addition,  there is a risk that others may independently  develop proprietary
technologies and processes,  which are the same as, substantially  equivalent or
superior to those  possessed by us or become  available in the market at a lower
price.

There is a risk that we have infringed or in the future will infringe patents or
trademarks owned by owners,  that we will need to acquire licenses under patents
or trademarks belonging to others for technology potentially useful or necessary
to us and that licenses will not be available on acceptable terms, if at all.

We may have to litigate to enforce our patents or trademarks or to determine the
scope and validity of other parties'  proprietary  rights.  Litigation  could be
very  costly  and  divert  management's  attention.  An  adverse  outcome in any
litigation may have a severe negative effect on our financial  results and stock
price.  To determine the priority of  inventions,  we may have to participate in
interference  proceedings  declared by the United  States  Patent and  Trademark
Office or  oppositions  in foreign  patent and  trademark  offices,  which could
result in  substantial  cost to us and  limitations on the scope or validity our
patents or trademarks.

We also rely on trade secrets and proprietary know-how, which we seek to protect
by confidentiality agreements with our employees, consultants, service providers
and third parties.  There is a risk that these  agreements may be breached,  and
that the remedies  available to us may not be adequate.  In addition,  our trade
secrets  and  proprietary   know-how  may  otherwise   become  known  to  or  be
independently discovered by others.


                                      -32-
<PAGE>

Failure to  increase  our brand  awareness  could  limit our  ability to compete
effectively.

If the  marketplace  does  not  associate  us  with  high-quality  products  and
services, we may be unable to keep our existing customers, attract new customers
or  successfully  introduce  new products and  services.  Competitive  and other
pressures may require us to increase our marketing expenses to promote our brand
name, and the benefits associated with brand creation may not outweigh the risks
and costs associated with  establishing our brand name. Our failure to develop a
strong  brand  name  or  the  incurrence  of  excessive  costs  associated  with
establishing our brand name may harm our business.

We have a lengthy sales and  implementation  cycle,  which increases the cost of
completing sales and renders completion of sales less predictable.

If we are unable to license our  products  and  services to new  customers  on a
timely  basis or if our  existing and  proposed  customers  and their  end-users
suffer delays in the  implementation  and adoption of its services,  our revenue
may be limited and business and  prospects  may be harmed.  Our  customers  must
evaluate our  technology  and  integrate  our  products  and  services  into the
products and services they provide. In addition, our customers may need to adopt
a comprehensive  sales,  marketing and training  program in order to effectively
implement  some  of its  products.  For  these  and  other  reasons,  the  cycle
associated  with  establishing  licenses  and  implementing  our products can be
lengthy.

Our success  depends on our ability to grow and develop our direct and  indirect
distribution  channels and the inability to do so could adversely  affect future
operating results.

Our  failure to grow and  develop our direct  sales  channel or to increase  the
number of our  indirect  distribution  channels  could have a  material  adverse
effect on its  business,  operating  results and  financial  condition.  We must
continue to develop  relationships  with existing  channel  partners or they may
choose to devote greater resources to supporting the products of competitors.

We may be  adversely  impacted  by the  events of and  actions  in  response  to
September  11,  2001.  A  recurrence  of  terrorist  attacks may have a material
adverse impact on our business plan, operations and financial condition.

We may be adversely affected by the events of September 11, 2001, and the war in
Iraq. At this time,  the long term effects of these events,  or other similar or
related events that may occur in the future,  on the  biometrics  industry or on
worldwide economic conditions. We cannot assure you that our business plan, will
not be  adversely  impacted  by future  terrorist  attacks or  actions  taken in
response to those attacks.

Risks relating to our current financing arrangement

There are a large number of shares  underlying our callable secured  convertible
notes,  and warrants that may be available for future sale and the sale of these
shares may depress the market price of our common stock.


                                      -33-
<PAGE>

As of  May 19,  2005,  we had  15,892,107  shares of  common  stock  issued  and
outstanding and callable secured  convertible notes outstanding or an obligation
to issue  callable  secured  convertible  notes  that may be  converted  into an
estimated  8,050,513  shares of  common  stock at  current  market  prices,  and
outstanding  warrants or an obligation to issue warrants to purchase  10,200,000
shares  of common  stock.  In  addition,  the  number of shares of common  stock
issuable upon conversion of the outstanding  callable secured  convertible notes
may increase if there is an event of default.  All of the shares,  including all
of the shares  issuable  upon  conversion  of the notes and upon exercise of our
warrants,  may be sold  without  restriction.  The  sale  of  these  shares  may
adversely affect the market price of our common stock.

If there is an event of default,  the continuously  adjustable  conversion price
feature of our callable secured convertible notes become applicable, which could
have a depressive effect on the price of our common stock.

Upon an event of default the callable secured  convertible notes are convertible
into shares of our common  stock at a 50%  discount to the trading  price of the
common stock prior to the conversion.  The significant  downward pressure on the
price of the common stock as the selling stockholder converts and sells material
amounts of common  stock  could have an adverse  effect on our stock  price.  In
addition,  not only the sale of shares  issued  upon  conversion  or exercise of
notes, warrants and options, but also the mere perception that these sales could
occur, may adversely affect the market price of the common stock.

The issuance of shares upon conversion of the callable secured convertible notes
and  exercise  of  outstanding  warrants  may cause  immediate  and  substantial
dilution to our existing stockholders.

The issuance of shares upon conversion of the callable secured convertible notes
and exercise of warrants may result in substantial  dilution to the interests of
other  stockholders  since the selling  stockholders may ultimately  convert and
sell the full amount issuable on conversion.  Although the selling  stockholders
may not convert their callable secured  convertible  notes and/or exercise their
warrants if such  conversion or exercise would cause them to own more than 4.99%
of our outstanding  common stock,  this restriction does not prevent the selling
stockholders  from converting  and/or exercising some of their holdings and then
converting  the rest of their  holdings.  In this way, the selling  stockholders
could sell more than this limit while never holding more than this limit.  There
is no upper limit on the number of shares that may be issued which will have the
effect of further diluting the proportionate equity interest and voting power of
holders of our common stock, including investors in this offering.

If we are  required  for any reason to repay our  outstanding  callable  secured
convertible  notes,  we would be required to deplete  our  working  capital,  if
available,  or raise additional funds. Our failure to repay the callable secured
convertible  notes, if required,  could result in legal action against us, which
could require the sale of substantial assets.

On February 25, 2005, we entered into a Security  Purchase  Agreement  involving
the sale of an  aggregate of  $5,100,000  principal  amount of callable  secured
convertible  notes and stock purchase  warrants to buy 10,200,000  shares of our
common stock. The callable secured  convertible notes are due and payable,  with
10% interest,  three years from the date of issuance,  unless  sooner  converted
into shares of our common stock.  Although we currently have $1,700,000 callable
secured  convertible  notes  outstanding,  the investor is obligated to purchase
additional  callable  secured  convertible  notes  in the  aggregate  amount  of
$3,400,000.  In addition,  any event of default such as our failure to repay the
principal or interest when due, our failure to issue shares of common stock upon
conversion by the holder, our failure to timely file a registration statement or
have such registration  statement  declared  effective,  breach of any covenant,
representation  or  warranty in the  Securities  Purchase  Agreement  or related
convertible  note,  the  assignment  or  appointment  of a receiver to control a
substantial  part of our property or business,  the filing of a money  judgment,
writ or similar process against us in excess of $100,000,  the commencement of a
bankruptcy, insolvency,  reorganization or liquidation proceeding against us and
the  delisting  of our common  stock could  require the early  repayment  of the
callable secured convertible notes,  including a default interest rate of 15% on
the  outstanding  principal  balance  of the notes if the  default  is not cured
within the  specified  grace period.  We anticipate  that the full amount of the
callable secured  convertible  notes will be converted into shares of our common
stock, in accordance with the terms of the callable secured  convertible  notes.
If we are required to repay the callable secured  convertible notes, we would be
required to use our limited  working capital and raise  additional  funds. If we
were unable to repay the notes when  required,  the note holders could  commence
legal  action  against us and  foreclose  on all of our  assets to  recover  the
amounts due. Any such action would require us to curtail or cease operations.


                                      -34-
<PAGE>

Risks related to our recent filing of a registration statement

There is no assurance  of an  established  public  trading  market,  which would
adversely  affect  the  ability  of  investors  in our  company  to  sell  their
securities in the public markets.

Although our common stock trades on the  Over-the-Counter  Bulleting  Board (the
"OTCBB"),  a regular  trading  market for the securities may not be sustained in
the future.  The NASD has enacted  recent  changes that limit  quotations on the
OTCBB to  securities of issuers that are current in their reports filed with the
Securities  and  Exchange  Commission.  The  effect on the  OTCBB of these  rule
changes and other proposed  changes cannot be determined at this time. The OTCBB
is an inter-dealer,  Over-The-Counter  market that provides  significantly  less
liquidity  than  the  NASD's  automated  quotation  system  (the  "NASDAQ  Stock
Market").  Quotes  for  stocks  included  on the  OTCBB  are not  listed  in the
financial  sections  of  newspapers  as are those for The Nasdaq  Stock  Market.
Therefore,  prices for securities traded solely on the OTCBB may be difficult to
obtain and holders of common stock may be unable to resell their  securities  at
or near their  original  offering  price or at any price.  Market prices for our
common stock will be influenced by a number of factors, including:

      o     the issuance of new equity securities;

      o     changes in interest rates;

      o     competitive developments,  including announcements by competitors of
            new  products or services or  significant  contracts,  acquisitions,
            strategic partnerships, joint ventures or capital commitments;

      o     variations in quarterly operating results;

      o     change in financial estimates by securities analysts;

      o     the depth and liquidity of the market for our common stock;

      o     investor perceptions of our company and the technologies  industries
            generally; and

      o     general economic and other national conditions.

The limited prior public market and trading  market may cause  volatility in the
market price of our common stock.

Our common stock is currently  traded on a limited  basis on the OTCBB under the
symbol  "VRDI." The  quotation  of our common stock on the OTCBB does not assure
that a meaningful, consistent and liquid trading market currently exists, and in
recent years such market has experienced  extreme price and volume  fluctuations
that have particularly affected the market prices of many smaller companies like
us. Our common stock is thus subject to volatility.  In the absence of an active
trading market:


                                      -35-
<PAGE>

      o     investors may have difficulty buying and selling or obtaining market
            quotations;

      o     market visibility for our common stock may be limited; and

      o     a lack of  visibility  for our  common  stock may have a  depressive
            effect on the market for our common stock.

Our common stock could be considered a "penny stock."

Our common stock could be  considered  to be a "penny  stock" if it meets one or
more of the definitions in Rules 15g-2 through 15g-6  promulgated  under Section
15(g) of the Securities Exchange Act of 1934, as amended.  These include but are
not limited to the  following:  (i) the stock  trades at a price less than $5.00
per share; (ii) it is NOT traded on a "recognized"  national exchange;  (iii) it
is NOT quoted on The Nasdaq Stock  Market,  or even if so, has a price less than
$5.00 per share;  or (iv) is issued by a company with net  tangible  assets less
than $2.0 million,  if in business more than a continuous  three years,  or with
average  revenues  of less than  $6.0  million  for the past  three  years.  The
principal  result  or  effect  of  being  designated  a  "penny  stock"  is that
securities  broker-dealers cannot recommend the stock but must trade in it on an
unsolicited basis.

Broker-dealer requirements may affect trading and liquidity.

Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2
promulgated thereunder by the SEC require broker-dealers dealing in penny stocks
to provide  potential  investors  with a document  disclosing the risks of penny
stocks and to obtain a manually signed and dated written receipt of the document
before effecting any transaction in a penny stock for the investor's account.

Potential  investors  in our  common  stock are  urged to  obtain  and read such
disclosure  carefully before  purchasing any shares that are deemed to be "penny
stock." Moreover,  Rule 15g-9 requires broker-dealers in penny stocks to approve
the account of any investor for  transactions  in such stocks before selling any
penny stock to that investor.  This procedure  requires the broker-dealer to (i)
obtain from the investor information  concerning his or her financial situation,
investment  experience and investment  objectives;  (ii)  reasonably  determine,
based on that  information,  that  transactions in penny stocks are suitable for
the investor and that the investor has sufficient knowledge and experience as to
be reasonably capable of evaluating the risks of penny stock transactions; (iii)
provide the investor with a written  statement  setting forth the basis on which
the  broker-dealer  made the  determination  in (ii) above;  and (iv)  receive a
signed and dated copy of such  statement from the investor,  confirming  that it
accurately reflects the investor's  financial situation,  investment  experience
and investment  objectives.  Compliance with these requirements may make it more
difficult  for  holders  of our  common  stock to resell  their  shares to third
parties or to otherwise dispose of them in the market or otherwise.

Shares  eligible  for future sale may  adversely  affect the market price of our
common stock, as the future sale of a substantial amount of our restricted stock
in the public marketplace could reduce the price of our common stock.

From time to time,  certain of our  stockholders  may be eligible to sell all or
some of their shares of common stock by means of ordinary brokerage transactions
in the open market  pursuant to Rule 144,  promulgated  under the Securities Act
("Rule 144"), subject to certain limitations.  In general, pursuant to Rule 144,
a stockholder (or stockholders  whose shares are aggregated) who has satisfied a
one-year  holding  period  may,  under  certain  circumstances,  sell within any
three-month  period a number of securities  which does not exceed the greater of
1% of the then outstanding  shares of common stock or the average weekly trading
volume of the class during the four calendar weeks prior to such sale.  Rule 144
also permits, under certain circumstances,  the sale of securities,  without any
limitations,  by a  non-affiliate  of our company that has  satisfied a two-year
holding period. In addition, we completed the first of three rounds of a private
placement  in February  2005,  whereby we granted the  investors  in the private
placement certain registration rights with respect to the shares of common stock
underlying  their  securities.  Any substantial sale of common stock pursuant to
Rule 144 or pursuant to any resale  prospectus may have an adverse effect on the
market price of our securities.


                                      -36-
<PAGE>

Certain provisions of our Certificate of Incorporation and Delaware law may make
it more difficult for a third party to effect a change-in-control.

Our Certificate of  Incorporation  authorizes the Board of Directors to issue up
to 2,000,000 shares of preferred stock. The preferred stock may be issued in one
or more series,  the terms of which may be determined at the time of issuance by
the Board of Directors without further action by the  stockholders.  These terms
may include voting rights  including the right to vote as a series on particular
matters,  preferences  as  to  dividends  and  liquidation,  conversion  rights,
redemption  rights and sinking fund  provisions.  The issuance of any  preferred
stock could  diminish the rights of holders of our common  stock,  and therefore
could  reduce the value of such  common  stock.  In  addition,  specific  rights
granted to future  holders of  preferred  stock  could be used to  restrict  our
ability to merge  with,  or sell  assets to, a third  party.  The ability of the
Board of Directors to issue preferred stock could make it more difficult, delay,
discourage,   prevent   or  make  it  more   costly  to   acquire  or  effect  a
change-in-control.

In  addition,  we are  also  subject  to  Section  203 of the  Delaware  General
Corporation  Law that,  subject  to  certain  exceptions,  prohibits  a Delaware
corporation  from  engaging  in any  business  combination  with any  interested
stockholder  for a period of three years following the date that the stockholder
became an interested stockholder. The preceding provisions of our Certificate of
Incorporation,  as well as Section 203 of the Delaware General  Corporation Law,
could  discourage   potential   acquisition   proposals,   delay  or  prevent  a
change-in-control  and prevent  changes in our  management,  even if such things
would be in the best interests of our stockholders.

ITEM 3. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

a) Evaluation of Disclosure  Controls and Procedures.  As of March 31, 2005, the
Company's  management  carried out an evaluation,  under the  supervision of the
Company's  Chief  Executive  Officer  and the Chief  Financial  Officer,  of the
effectiveness  of the design and operation of the Company's system of disclosure
controls  and  procedures  pursuant to the  Securities  and  Exchange Act , Rule
13a-15(d) and 15d-15(d) under the Exchange Act. Based upon that evaluation,  the
Chief Executive Officer and Chief Financial Officer concluded that the Company's
disclosure  controls  and  procedures  were  effective,  as of the date of their
evaluation,  for the purposes of recording,  processing,  summarizing and timely
reporting material  information required to be disclosed in reports filed by the
Company under the Securities Exchange Act of 1934.

b) Changes in internal controls. There were no changes in the Company's internal
controls over financial  reporting,  that occurred  during the period covered by
this  report  that  have  materially  affected,  or  are  reasonably  likely  to
materially effect, the Company's internal control over financial reporting.


                                      -37-
<PAGE>

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Five former  employees of Veridicom,  Inc. have filed claims against the Company
with the Labor  Commissioner  in the State of California.  The former  employees
allege that the Company owes unpaid wages, salaries and vacation pay for various
periods  between July 2000 and November  2003  amounting to a total of $111,651.
The Company has accrued for this  liability in its  financial  statements.

On March 21, 2005 one of the  claimants  signed a letter of agreement to convert
his claim of $ 61,054 into stock based on the closing  price of our common stock
on that day of $2.40 per  share,  or a total of  25,439  shares  for his  entire
claim.  However,  this  settlement is subject to obtaining  certain  waivers and
documents from the holders of our Callable Secured Convertible Notes.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During  the  period  ended  March 31,  2005,  we  issued  the  following  equity
securities:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
             Name                    Title of Securities         Date of Sale      Amount of Securities      Consideration
                                                                                           Sold
-------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>                          <C>                 <C>                     <C>
AJW Offshore,                    Callable Secured             February, 2005      Principal of $450,000   $450,000 cash
Ltd.                             Convertible Notes and                            and 900,000 shares
                                 Common Stock Purchase
                                 Warrants
-------------------------------------------------------------------------------------------------------------------------------
AJW Qualified Partners, LLC      Callable Secured             February, 2005      Principal of $390,000   $390,000 cash
                                 Convertible Notes and                            and 780,000 shares
                                 Common Stock Purchase
                                 Warrants
-------------------------------------------------------------------------------------------------------------------------------
AJW Partners, LLC                Callable Secured             February, 2005      Principal of $140,000   $140,000 cash
                                 Convertible Notes and                            and 280,000 shares
                                 Common Stock Purchase
                                 Warrants
-------------------------------------------------------------------------------------------------------------------------------
New Millennium Capital           Callable Secured             February, 2005      Principal of $20,000    $20,000 cash
Partners II, LLC                 Convertible Notes and                            and 40,000 shares
                                 Common Stock Purchase
                                 Warrants
-------------------------------------------------------------------------------------------------------------------------------
Alpha Capital                    Callable Secured             February, 2005      Principal of $200,000   $200,000 cash
                                 Convertible Notes and                            and 400,000 shares
                                 Common Stock Purchase
                                 Warrants
-------------------------------------------------------------------------------------------------------------------------------
Enable Growth Partners,          Callable Secured             February, 2005      Principal of $100,000   $100,000 cash
L.P.                             Convertible Notes and                            and 200,000 shares
                                 Common Stock Purchase
                                 Warrants
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>



                                      -38-
<PAGE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>                          <C>                 <C>                     <C>
Whalehaven Capital Fund Limited  Callable Secured             February, 2005      Principal of $200,000   $200,000 cash
                                 Convertible Notes and                            and 400,000 shares
                                 Common Stock Purchase
                                 Warrants
-------------------------------------------------------------------------------------------------------------------------------
Meadowbrook Opportunity Fund     Callable Secured             February, 2005      Principal of $120,000   $120,000 cash
LLC                              Convertible Notes and                            and 240,000 shares
                                 Common Stock Purchase
                                 Warrants
-------------------------------------------------------------------------------------------------------------------------------
TCMP3 Partners                   Callable Secured             February, 2005      Principal of $80,000    $80,000 cash
                                 Convertible Notes and                            and 160,000 shares
                                 Common Stock Purchase
                                 Warrants
-------------------------------------------------------------------------------------------------------------------------------
Philip Benanti                   Common Stock Purchase        February, 2005      38,829 shares           For services
                                 Warrants                                                                 provided to the
                                                                                                          Registrant
-------------------------------------------------------------------------------------------------------------------------------
GunnAllen Financial              Common Stock Purchase        February, 2005      16,567                  For services
                                 Warrants                                         shares                  provided to the
                                                                                                          Registrant
-------------------------------------------------------------------------------------------------------------------------------
Joseph Stevens & Co., Inc.       Common Stock Purchase        February, 2005      77,657                  For services
                                 Warrants                                         shares                  provided to the
                                                                                                          Registrant
-------------------------------------------------------------------------------------------------------------------------------
Michele Markowitz                Common Stock Purchase        February, 2005      10,400                  For services
                                 Warrants                                         shares                  provided to the
                                                                                                          Registrant
-------------------------------------------------------------------------------------------------------------------------------
Fabio Migliaccio                 Common Stock Purchase        February, 2005      4,005                   For services
                                 Warrants                                         shares                  provided to the
                                                                                                          Registrant
-------------------------------------------------------------------------------------------------------------------------------
Patricia Sorbara                 Common Stock Purchase        February, 2005      10,400                  For services
                                 Warrants                                         shares                  provided to the
                                                                                                          Registrant
-------------------------------------------------------------------------------------------------------------------------------
Anthony St. Clair                Common Stock Purchase        February, 2005      38,829                  For services
                                 Warrants                                         shares                  provided to the
                                                                                                          Registrant
-------------------------------------------------------------------------------------------------------------------------------
Anthony Varbero                  Common Stock Purchase        February, 2005      10,400                  For services
                                 Warrants                                         shares                  provided to the
                                                                                                          Registrant
-------------------------------------------------------------------------------------------------------------------------------
Sichenzia Ross Friedman          Common Stock                 April, 2005         50,000 shares           For legal services
Ference LLP                                                                                               provided to the
                                                                                                          Registrant
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                      -39-
<PAGE>

All of the above offerings and sales were deemed to be exempt under Section 4(2)
of  the  Securities  Act  of  1933,  as  amended.   No  advertising  or  general
solicitation  was employed in offering the  securities.  The offerings and sales
were made to a limited number of persons, all of whom were accredited investors,
business  associates  of our company or executive  officers of our company,  and
transfer was restricted by our company in accordance  with the  requirements  of
the   Securities   Act  of  1933.   In  addition  to   representations   by  the
above-referenced  persons,  we have made independent  determinations that all of
the  above-referenced  persons were accredited or sophisticated  investors,  and
that they were  capable of analyzing  the merits and risks of their  investment,
and  that  they   understood  the  speculative   nature  of  their   investment.
Furthermore,  all of the  above-referenced  persons were provided with access to
our Securities and Exchange Commission filings.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

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

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

31.1  Certification  of Chief Executive  Officer  pursuant to Item 601(b)(31) of
      Regulation S-B, as adopted  pursuant to Section 302 of the  Sarbanes-Oxley
      Act of 2002.

31.2  Certification  of Chief Financial  Officer  pursuant to Item 601(b)(31) of
      Regulation S-B, as adopted  pursuant to Section 302 of the  Sarbanes-Oxley
      Act of 2002.

32.1  Certification  of Chief Executive  Officer  pursuant to 18 U.S.C.  Section
      1350 as adopted  pursuant  to  Section  906 of the  Sarbanes-Oxley  Act of
      2002.*

32.2  Certification  of Chief Financial  Officer  pursuant to 18 U.S.C.  Section
      1350 as adopted  pursuant  to  Section  906 of the  Sarbanes-Oxley  Act of
      2002.*

*     This exhibit shall not be deemed "filed" for purposes of section 18 of the
      Securities Exchange Act of 1934 or otherwise subject to the liabilities of
      that  section,  no shall it be deemed  incorporated  by  reference  in any
      filing under the Securities Act of 1933 or the Securities  Exchange Act of
      1934,  whether  before or after the date  hereof and  irrespective  of any
      general incorporation language in any filings.


                                      -40-
<PAGE>

                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized

    VERIDICOM INTERNATIONAL, INC.

    Date: May 19, 2005


                                     /s/ Paul Mann
                                     -------------------------------------------
                                     Paul Mann
                                     President and Chief Executive Officer
                                     (Duly Authorized Officer and
                                     Principal Executive Officer)


                                     /s/ Bashir Jaffer
                                     -------------------------------------------
                                     Bashir Jaffer
                                     Chief Financial Officer
                                     (Duly Authorized Officer and
                                     Principal Financial and Accounting Officer)


                                      -41-