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

                                   FORM 10-KSB
(Mark One)

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


    For the fiscal year ended December 31, 2000
                              -----------------


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


    For the transition period from _______________to ______________


    Commission file number 000-28301
                           ---------

                           ID TECHNOLOGIES CORPORATION
                          ----------------------------
                 (Name of Small Business Issuer in Its Charter)



          North Carolina                                      56-1866233
  -------------------------------                          ----------------
  (State or Other Jurisdiction of                          (I.R.S. Employer
   Incorporation or Organization)                         Identification No.)


920 Main Campus Drive / Suite 400
Raleigh, North Carolina                                         27606
---------------------------------                             ----------
(Address of Principal Executive Offices)                      (Zip Code)





                                 (919) 424-3722
                              --------------------
                (Issuer's Telephone Number, Including Area Code)



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

                                      None

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

                           Common Stock, no par value
                   ------------------------------------------
                                (Title of Class)



Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.


Yes  X    No





     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of Regulation S-B in this form, and no disclosure will be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB.


     The issuer's revenues for its most recent fiscal year:       $   2,844.00



     As of March 15, 2001, 9,935,991 shares of common stock were outstanding. As
of March 15, 2001, the aggregate  market value of shares of common stock held by
non-affiliates was approximately $1,887,838.





                                FORM 10-KSB INDEX

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS


PART I
       ITEM 1.   DESCRIPTION OF BUSINESS.
       ITEM 2.   DESCRIPTION OF PROPERTY.
       ITEM 3.   LEGAL PROCEEDINGS.
       ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

PART II
       ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
       ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS.
       ITEM 7.   FINANCIAL STATEMENTS.
       ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                 AND FINANCIAL DISCLOSURE.


PART III
       ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
                 CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
       ITEM 10.  EXECUTIVE COMPENSATION.
       ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
       ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
       ITEM 13.  EXHIBITS, LISTS AND REPORTS ON FORM 8-K.

SIGNATURES





CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS


     This  Form  10-KSB  contains  forward-looking  statements.  Any  statements
contained in this Form 10-KSB that are not  statements  of  historical  fact are
intended to be and are hereby  identified as  forward-looking  statements within
the  meaning  of the  Private  Securities  Litigation  Reform  Act of  1995.  ID
Technologies  Corporation,  a  North  Carolina  corporation  (the  "Company"  or
"IDTEK")  cautions  readers that forward  looking  statements  involve known and
unknown risks and uncertainties  which could cause actual results or outcomes to
differ  materially  from  those  expressed  in the  forward-looking  statements.
Forward-looking  statements  include  statements  concerning plans,  objectives,
goals,  strategies,  expectations,  future events or performance  and underlying
assumptions and other statements,  which are other than statements of historical
facts.


     Without  limiting the  foregoing,  words such as "may,"  "will,"  "expect,"
"believe,"  "anticipate,"  "estimate,"  "continue" or comparable terminology are
intended to  identify  forward-looking  statements.  These  statements  by their
nature  involve  substantial  risks and  uncertainties,  and actual  results may
differ  materially  depending  on a variety  of  factors,  many of which are not
within the Company's  control.  These factors  include,  but are not limited to,
economic  conditions  generally  and in the  industries in which the Company may
participate;   competition  within  the  Company's  chosen  industry,  including
competition from much larger competitors; technological advances; and failure by
the  Company  to  successfully  develop  business  relationships  and  strategic
alliances.  In addition to other factors and matters discussed elsewhere herein,
the  following are  important  factors  that, in the view of the Company,  could
cause  actual  results  to  differ   materially  from  those  discussed  in  the
forward-looking  statements:  ability of the Company to obtain  acceptable forms
and amounts of  financing to fund  current and future  operations,  research and
development and acquisitions;  competition;  the Company's operating losses; the
Company's ability to commercially  develop its proposed products;  the Company's
ability to attract, hire and retain employees and management personnel;  and the
Company's ability to regain control over the development and exploitation of its
technology.  The Company  disclaims  any intent or  obligation  to update  these
forward-looking  statements,  whether  as a result  of new  information,  future
events or otherwise.


PART I


ITEM 1. DESCRIPTION OF BUSINESS


     GENERAL


     The Company was  incorporated  on March 16, 1994,  under the name CardGuard
International,  Inc.  On July 23,  1998,  the  Company  changed  its  name  from
CardGuard  International,  Inc. to ID  Technologies  Corporation.  The Company's
corporate headquarters are located in Raleigh, North Carolina.  Since inception,
the  Company  has  had  no  significant  revenues  and  is  considered  to  be a
development stage company.


     The Company is primarily a licensing company and is in the business of: (i)
developing and marketing its patented self-authenticating fingerprint technology
for applications  where  authentication of the identity of the owner of the card
is important  (the  "Technology")  and (ii) selling  exclusive and  nonexclusive
licenses  to use the  Technology.  The  Company  does not  currently  design  or
manufacture  any finished goods or products,  which make use of the  Technology.
Consequently,  the Company intends to continue development of the Technology and
to promote its position as a licensor of the  Technology  to both  licensees and
manufacturers of finished goods and products.


     During the period from inception to December  1996, the Company  focused on
obtaining a patent for the  Technology.  In December 1996, the Company  received
the Notice of Allowance from the United States Patent Office for issuance of its
patent.


     In July 1997, the Company entered into a licensing  agreement (the "SafeNet
Agreement") with SafeNet,  formerly known as Information  Resource  Engineering,
Inc., a leading provider of computer  network  security and encryption  products
and services.  Pursuant to the SafeNet Agreement,  SafeNet provides research and
development assistance to the Company to develop the Technology.  The success of
the Company is no longer  dependent on the operations,  research and development
of SafeNet. See section heading - "LICENSING AND LICENSE AGREEMENTS."


     THE TECHNOLOGY


     The Technology  includes patented and trade secret  technologies  which are
designed  to  allow  authentication  and  re-authentication  of  biometric  skin
surfaces,  including  finger and  thumbprints.  The  Technology  is  designed to
identify   authorized   card,   document  and  other  item  users  by  means  of
self-authenticating   panels/substrates   which  register  and   re-authenticate
authorized  users without the assistance of databases or external devices of any
sort.  The  biometric  sensing  panel  component of the  Technology  will enable
instantaneous  fingerprint  identification.  The  sensing  panel is  designed to
utilize microchip-assisted and electrically-powered  sensing, storing, computing
transmitting/signaling  and  associated  technologies  which are  designed to be
housed in a credit card sized surface panel.


     As a result  of the  Technology's  design,  it will not be  dependent  upon
storing a user's  fingerprint in a central database,  but will store and confirm
fingerprints in a self-contained unit. All present verification systems known to
the Company utilize  databases to store user  fingerprint  information.  In such
systems,  valuable biometric signatures  (fingerprint,  eye scan, etc.) are kept
with hundreds of thousands of other such signatures in databases. This method of
storing  biometric  information  raises privacy  concerns because such databases
become,  in effect,  national  registries for  fingerprints  or other  biometric
signatures.  Moreover,  database  technology  has  long  been  characterized  by
problems such as data mismatches,  high costs,  unauthorized access to files and
unauthorized  access to the  database  itself.  Although the  Technology  is not
dependent upon databases or external devices,  it is possible for the Technology
to malfunction,  leaving the user without a working card or other identification
system.


     Certain methods,  processes and technologies  which comprise the Technology
are generally patent protected by US Patent No. 5623552.  The original US patent
has been augmented with other trade secret technologies acquired or developed by
SafeNet to cover many types of  identification  and security  cards,  as well as
other devices enabling applications, which make use of the Technology.


     The Technology has been developed into an eight chip-working prototype. The
three chip prototype is also complete and being tested.  The Company  intends to
have the single chip prototype completed and tested by late 2001 or early 2002.


     THE MARKET


     The market for cards employed for the storage of confidential  information,
the maintenance of stored value, debit and credit cards, and security access and
control cards  represents over one billion of the cards in use today  worldwide.
This market includes the private credit, medical/insurance,  airport and airline
security, hotel security, banking and telecommunications  industries. The advent
and acceptance of a worldwide  standard  operating system to both read and write
on stored value and information  cards has raised serious  concerns about how to
protect  unauthorized  access  to  such  information.  To the  knowledge  of the
Company, there are currently only commercial biometric processors, which rely on
special card readers,  expensive  specialized software and separate equipment in
order to capture  biometric  signatures  (such as fingerprints) on a card. While
almost all of the applications mentioned above have the potential to support the
use of a  self-authenticating  fingerprint  evaluator  device,  the Company will
focus on markets that have demonstrated early interest in the Technology.


     MARKETING PLANS


     The Company has commenced pre-marketing of the Technology to government and
industry.  The Company's  Technology  system  concept was  demonstrated  for the
public in May 1999 at Card  Tech/Secure  Tech 99, a leading card  technology and
security  tradeshow.  Internet and  conventional  marketing  have also generated
interest in the Technology  both  internationally  and  domestically,  which has
resulted in several further  demonstrations  of the Company's  Technology system
concept.  Over three  dozen  demonstrations  have been  given to many  potential
licensees,  including IBM, VISA  International,  MasterCard,  American  Express,
Lockheed-Martin,  General Electric, WhoVision, US Immigration and Naturalization
Services,  Citibank,  Bank of America,  Cabletron,  Bull and other companies and
governmental  agencies.  However,  there  can  be no  assurance  that  any  such
companies  or agencies  will become  licensees or users of the  Technology.  The
eight-chip  prototype was completed in the fall of 2000 and the Technology  will
be  marketed  to those  industries  that  demonstrate  the  potential  for early
exposure,  publicity,  profitability  and  diversification  into other licensing
areas.  To  achieve  this  goal,  the  Company  intends  to  pursue   licensing,
partnerships  and  strategic  alliances  with industry and  government  agencies
through both direct contact and the use of consulting services.  However,  there
can be no assurance that the Company will develop such relationships.


     COMPETITION


     At present,  identification and security verification  processes range from
simple  devices used to store personal  information  such as names and addresses
(non-biometric)  to highly  secretive  security systems which can verify complex
biometric data such as fingerprints,  voice prints,  facial  recognition and eye
characteristics   (biometric).   The  Company   expects  to  compete  with  both
non-biometric   and   biometric   technologies.   With   current   non-biometric
technologies,   the  user  must  typically  possess  a  key,  card,  or  bit  of
information, such as a personal identification number or password. These systems
are easily defeated by obtaining possession of the key, card, or password, or by
counterfeiting  the  key  or  the  card.  With  respect  to  existing  biometric
technology, some of the perceived disadvantages are as follows:


     o    Hand geometry devices are subject to physical changes in the user. The
          devices  are  also  typically  large  and,  therefore,   difficult  to
          integrate into many applications.


     o    Iris scanning has remained costly, subject to user motion and requires
          large databases.


     o    Signature  verification is subject to user physical  changes over time
          and is susceptible to forgery.


     o    Voice  analysis is subject to user physical  changes and can be forged
          through  the  use  of  devices   capable  of  recording  and  altering
          individual voices.


     Furthermore,  most  currently  available  biometric  identity  verification
systems share reliance upon database  technology,  which the Company believes is
problematic. Most valuable biometric signatures (fingerprints,  voiceprints, eye
scans,  etc.)  commonly  are stored  with  hundreds of  thousands  of other such
signatures  in  databases.  This method of storing  information  often  presents
multiple  problems,  including  data  mismatches,  the high cost of storage  and
retrieval and unauthorized access to both the files and the database itself. The
Company  believes that the Technology  system  addresses more problems than many
competing  products by  providing a means of  identifying  users at the point of
authentication  access without relying on information stored in a database.  The
information  stored on the card  incorporating the Technology is intended not to
function in any reader or scanner  without  the  authorized  user's  fingerprint
first being placed on and matched  with the data stored in the card itself.  The
user's  fingerprint  data never  leaves the card.  As a result,  no databases or
special readers will be required.  Moreover,  it is anticipated that all present
readers such as ATMs and point of purchase terminals will be compatible with the
Technology  system because the Company  currently plans to incorporate  magnetic
strip  simulators  into each card system that will activate only for  authorized
users and allow these  cards to operate  with  database,  or  "legacy,"  systems
worldwide.


     The Company considers companies such as Identix,  Identicator, NRI, Harris,
NEC,  Motorola,  Siemens,  and other  larger  and  smaller  companies  to be its
competition.  Almost all  present  competitors  use card  systems  that  require
special readers and software  applications  to store  digitized  information and
depend on power sources  independent  of the card device.  The Company  believes
that it will offer a  technological  advantage over the current  products of its
competitors because the Technology is expected to reduce costs and eliminate the
need for special  equipment  and software and will include a power source within
the card. However, there can be no assurance that competitors will not introduce
improved  products or that the  Company's  product will  function as the Company
anticipates. The Technology, however, will not replace all competitive biometric
systems  since  database   systems  will  be  of  continuing  value  in  certain
applications.  Indeed,  even as  retailers  and  other  end-users  of  credit or
identification   cards  accept  cards   utilizing   alternative   authentication
technology, they will continue to need specialized equipment and software.


     LICENSING AND LICENSE AGREEMENTS


     The  Company is  primarily  a  licensing  company.  The  Company's  initial
licensing  strategy  consisted  of  granting  licenses  in broad  fields of use.
Licenses have the following common  components:  a one-time standard license fee
payable  to  the  Company;  a  right  retained  by the  Company  to  select  the
manufacturer  of the product  for the  licensee;  and either an ongoing  royalty
payable  by  the  licensee  or  a  manufacturing  surcharge  paid  by  the  card
manufacturers.


     The Company  currently has ten licenses with the following five  licensees:
SafeNet, Global Biometrics, Inc. ("Global Biometrics"), who purchased the assets
of Protective  Technologies,  Inc.  ("Protek"),  Power^Up Marketing  Corporation
("Power^Up"),  BrentScott  Associates,  LLC  ("BrentScott"),  and the Bob Barker
Company ("Bob Barker").


     In July 1997,  pursuant  to the  SafeNet  Agreement,  the  Company  granted
SafeNet  a license  to the  Technology  for use in  SafeNet's  primary  business
fields,  including dedicated computer networks,  the Internet,  and treasury and
banking areas. In consideration  for this license (to which the Company ascribed
a value of over  $500,000) and an initial 13.7% equity  interest in the Company,
SafeNet  agreed to provide  (i)  development  of the  Company's  Technology  and
complimentary   technology,   (ii)   $300,000  in  cash  and  (iii)   additional
engineering,  design  and  sales  assistance.  Also,  SafeNet  agreed to pay the
Company a royalty equal to five percent (5%) of SafeNet's  future gross revenues
(subject to certain discounts,  shipping,  customs and insurance charges,  taxes
and  allowances  for  returns)  related  to the use of the  Company's  patent in
SafeNet's  fields  of  license  during  the  eighteen-year  term of the  SafeNet
Agreement.  In the  fourth  quarter of 2000,  SafeNet  granted a  sublicense  in
perpetuity for $1.9 million to Global Biometrics.  SafeNet retains its ownership
in the Company, now at 12%. Global Biometrics is a 100% owned holding company of
TecBanc.


     In April 1998,  the Company  granted three separate  exclusive  licenses to
three  different  licensees  in  the  medical/pharmacy,  telecommunications  and
private  card/credit  markets.  In March of 1999, the Company entered into a new
agreement (the "Protek  Agreement")  whereby these three exclusive licenses were
canceled and Protek was granted the following:


         (1)      For a 20 year period,  if the Company receives a manufacturing
                  surcharge  payment under any license agreement in the areas of
                  medical/pharmacy,  telecommunications and private card/credit,
                  the  Company  will pay  Protek a portion of the  license  fees
                  and/or the  manufacturing  surcharge and any other revenue the
                  Company actually receives from those licenses.


         (2)      For a period of seven  years,  Protek has the right to sell or
                  use itself (or with  allied  concerns)  nonexclusive  licenses
                  from the  Company for the  Technology  in areas not subject to
                  exclusive licenses granted by the Company. Protek will receive
                  a credit of up to  $2,625,000  to be  applied  to the  initial
                  license  fees  required  to be paid in  connection  with  such
                  agreements.


         (3)      For a period of 20 years, Protek has the nonexclusive right to
                  sell nonexclusive  license agreements in fields not covered by
                  an exclusive  license and shall receive a sales commission fee
                  and manufacturing surcharges.


         (4)      For the 20 year period, if the Company returns to the issuance
                  of exclusive  licenses in any of the original areas of license
                  covered  by the  cancelled  agreements,  Protek  will have the
                  right  to  acquire  an  exclusive  license  in such  field  of
                  license, subject to non-exclusive licenses previously granted.


     In October,  2000,  the Protek  Agreement was  terminated and replaced with
three new exclusive licenses in the three fields. In addition, two new exclusive
licenses in the fields of casino/lottery  gaming and mass transit were issued to
Protek.  Each new license  term is 20 years and carries a 7% royalty  payable to
IDTEK on all sales.  Protek also received  options to purchase  four  additional
exclusive  licenses  in  the  fields  of  building  access,   drivers  licenses,
passports/VISAs,  and military/citizenship  cards. These options expire June 30,
2001. All surcharges and sales  commissions  due to Protek under the old license
agreements were eliminated.


     In the  last  quarter  of  1998,  the  Company  entered  into an  exclusive
licensing  agreement  with  Revolution  Labs  Inc.  ("Revolution")  with  a term
expiring in January 2014 (the  "Revolution  Agreement").  Revolution  and Protek
entered into an agreement  that provides  whereby Protek  acquired  Revolution's
rights  under this  license for FAA  airports  and  employees.  The license also
includes an  agreement  for  on-going  royalty  payments to the Company of 6% of
Protek's  gross product sales.  The $500,000  license fee was paid as a debit to
the $2,625,000 credit. With the issuance of FAA license and the two new licenses
to  Protek  the  $2,625,000  credit  has been  paid in full  and is no  longer a
contingent liability of the Company.


     In the first  quarter of 2001,  Global  Biometrics  purchased the assets of
Protek,  including the licenses discussed above.  Global Biometrics can exercise
Protek's  options  to  purchase  the  four  additional  exclusive  licenses  for
$1,850,000 until June 30, 2001.


     In February 1999, the Company granted to Power^Up an exclusive license (the
"Power^Up  Agreement") to use the Technology in connection with  identification,
access and security  cards,  associated  systems and  equipment of whatever type
used in the hotel  security  industry,  including  hotel door  locking  devices,
in-room safes,  mini bars and all associated  security  systems  worldwide.  The
initial term of the license is twenty (20) years. The license was granted for an
initial  fee of $25,000,  and an  additional  fee of  $350,000  will be due upon
delivery and acceptance of a first working prototype.  The license also includes
an agreement  for on-going  royalty  payments to the Company of 6% of Power^Up's
gross product sales. The $350,000 fee has not been paid to date.


     In October 1999,  the Company  granted to  BrentScott an exclusive  license
(the   "BrentScott   Agreement")  to  use  the  Technology  in  connection  with
identification,  access and security cards,  associated systems and equipment of
whatever  type for all fields of use (except  fields of use  already  subject to
license) within the member States of the Gulf Cooperation  Counsel States in the
Middle East, consisting of the Kingdom of Saudi Arabia, Kuwait, Bahrain, U.A.E.,
Oman and Qatar.  The  initial  term of the license is three (3) years and may be
renewed  for  sequential  one (1) year  periods for a renewal fee of $10,000 per
year. The license was granted for an initial fee of $25,000, paid and payable as
follows:  $2,000 upon execution of the agreement and $23,000  payable within ten
(10)  days  after  BrentScott's  receipt  of  a  functioning/  demonstrable  and
stand-alone  operational  product.  Pursuant  to the terms of the  license,  the
Company  does not collect a royalty  from  BrentScott,  but  instead  collects a
surcharge from authorized  manufacturers  from whom BrentScott must purchase the
finished products.


     In August  2000,  the  Company  granted  to Bob  Barker  Company,  Inc.  an
exclusive  license  (the  "Bob  Barker  Agreement")  to use  the  Technology  in
connection with identification,  access, and security cards,  associated systems
and equipment of whatever type for all federal,  state,  county city and private
prisons in the United States including prison  applications for prison personnel
and inmates. The initial term of the license is 15 years. The agreement requires
Bob  Barker  Company  to pay the  Company a 10%  royalty  on sales of  detention
systems utilizing the Company's  Technology.  For more information regarding the
Bob Barker agreement, see Exhibit 10.9 attached hereto.


     RESEARCH AND DEVELOPMENT


     The Company has spent  considerable  management  time on the development of
the  Technology  over the last three  years;  however,  pursuant  to the SafeNet
Agreement,  SafeNet is responsible for research and development  with respect to
the  Technology.  SafeNet has expended over $700,000 in engineering  development
costs  from  July  1997 to  December  2000  on the  development  of the  current
prototype.  Pursuant to the SafeNet Agreement,  SafeNet is currently responsible
for  developing  the  Technology  for its  intended  uses.  The  Company  is not
prohibited from engaging in its own research and development. However, there can
be no assurances  that the Company will have the financial  resources or ability
to conduct such research and development.


     EMPLOYEES


     As of December 31, 2000,  the Company  engaged two full-time  employees and
six   independent   contractors.   The  full-time   employees  are  involved  in
administrative  and finance  matters,  and  independent  contractors  assist the
full-time  employees with  administrative  and finance matters and marketing the
technology.


     REPORTS TO SECURITY HOLDERS


     The Company  files annual and  quarterly  reports with the  Securities  and
Exchange Commission ("SEC"). The public may read and copy any materials filed by
the Company with the SEC at the SEC's Public Reference Room at 150 Fifth Street,
N.W., Washington, D.C. 20549. The public may obtain information on the operation
of the Public Reference Room by calling the SEC at  1-800-SEC-0330.  The Company
is an  electronic  filer and the SEC  maintains an Internet  site that  contains
reports and other  information  regarding  the  Company,  which may be viewed at
http://www.sec.gov.


     CERTAIN ADDITIONAL CONSIDERATIONS


     In  addition  to the other  information  presented  herein,  the  following
information  should be considered  carefully in  evaluating  the Company and its
business.


     The Company has yet to generate  any  significant  revenues or profits and,
for the years ended December 31, 2000 and 1999, the Company  incurred net losses
of $906,644 and $939,741,  respectively. The Company anticipates that net losses
will continue for the  foreseeable  future.  There can be no assurance  that the
Company will be able to generate significant revenues or operate successfully.


     Development Stage Company.  The Company is in its development stage and has
no  commercial  products.  Further,  the Company  will face the same  challenges
experienced by other development stage companies, including, but not limited to,
developing market acceptance for its proposed products.


     Technology. The Company owns the Technology,  subject to the licenses which
the Company has already granted (see LICENSING AND LICENSE  AGREEMENTS,  above).
Accordingly, the Company does not have complete rights to exploit the Technology
in all  markets.  The  success  of the  Company,  therefore,  will  depend  upon
collection of royalties,  fees and  manufacturing  surcharges from its licensees
and manufacturers of products containing the Technology, and its ability to sell
licenses in other  markets.  Furthermore,  to date,  the Company has depended on
SafeNet for research and development of the Technology.


     Limited Sales and Marketing;  Market  Acceptance.  The Company has recently
begun  developing its licensing,  marketing and  distribution  system.  However,
there can be no  assurance  that such  efforts  will be  successful  or that the
Company will be able to attract and retain qualified  individuals with marketing
and sales  expertise.  The  Company's  future  success will depend,  among other
factors,  upon the extent to which end users acquire,  adopt and continue to use
the Company's  products.  There can be no assurance that the Company's  products
will gain wide acceptance.


     Changes  in  Technology.   The  Company's  industry  is  subject  to  rapid
technological  change and intense  competition and the Company's  products could
become subject to technological obsolescence.  Even though the Company has filed
for another biometric patent, there can be no assurance that the Company will be
able to keep pace with the  changing  technology.  If the  Company is unable for
technological or other reasons to develop products on a timely basis in response
to technological  changes, or if the Company's products or product  enhancements
do not achieve market acceptance, the Company's business would be materially and
adversely affected.


     Need for Additional  Funds.  The Company expects that it will need to raise
substantial  additional capital to fund the ongoing development and expansion of
its business, including its research, development,  marketing and sales efforts,
and to attain  profitability.  There is no assurance that any  additional  funds
needed will be available to the Company on favorable terms, or at all.  Although
based on assumptions  that the Company  considers  reasonable,  there is also no
assurance  that the Company's  estimate of its  anticipated  liquidity  needs is
accurate or that new business  developments or other unforeseen  events will not
occur,  resulting in the need to raise  additional  funds.  In  addition,  it is
probable that raising additional funds will result in a substantial  dilution to
the Company's existing investors.


     Competition.   The  Company  is  engaged  in  a  rapidly   evolving  field.
Competition  from other  companies is intense and expected to increase.  Many of
the Company's  competitors have substantially  greater  resources,  research and
development  staffs,  sales and marketing  staffs,  and facilities than does the
Company. In addition,  other recently developed  technologies are, or may in the
future be, the basis of competitive products. There can be no assurance that the
Company's  competitors will not develop  technologies and products that are more
effective  than those being  developed  by the Company or that would  render the
Company's technology and products obsolete or noncompetitive.


     Dependence  on Key  Personnel.  The  Company's  operations  are  materially
dependent  upon the services of Mr. J. Phillips L.  Johnston,  the President and
CEO of the Company, and Mr. William F. Lane, the Chairman, Treasurer and founder
of the Company.  The loss of the services of either of these  individuals  could
have a material  adverse  effect on the Company.  There can be no assurance that
the Company will retain Mr. Johnston or Mr. Lane in its employ,  or that it will
successfully  attract and retain  additional or  replacement  personnel with the
requisite  experience and  capabilities  to enable the Company to profitably and
effectively evaluate, develop and market the Technology.


ITEM 2.  DESCRIPTION OF PROPERTY.


     The  Company's  principal  offices  are  located  on North  Carolina  State
University's  Centennial  Campus at 920 Main Campus Drive,  Suite 400,  Raleigh,
North Carolina 27606.  These offices contain  approximately  250 square feet and
are leased on a  month-to-month  basis.  The Company also maintains an office in
Wilson, North Carolina at 2506 West Nash Street, Suite C, Wilson, North Carolina
27896.  This  lease  is for  approximately  150  square  feet  and is  also on a
month-to-month basis. The Company's aggregate monthly rent obligation is $700.


ITEM 3.  LEGAL PROCEEDINGS.


     The  Company is not  involved  in any  material  pending  legal  proceeding
adverse to the Company.


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


     A special  meeting of the  shareholders  was held on October 23, 2000.  The
shareholders  elected five  directors,  approved the Company's  Incentive  Stock
Plan, and ratified the appointment of the Company's independent certified public
accountants.  No other  matters  were  submitted  to a vote of security  holders
during the fourth quarter of the fiscal year ended December 31, 2000.


     Specifically,  4,308,550 shares voted in favor,  6,000 shares voted against
and 1,000 shares  abstained on approval of the adoption of the  Incentive  Stock
Plan. With respect to the directors,  each director received  4,310,550 votes in
favor of the directors appointment, with only 6,000 shares withholding authority
for  the  election  of  directors.  With  respect  to  the  ratification  of the
appointment of the Company's independent certified public accountants, 4,315,550
shares voted in favor and 1,000 shares voted against.


PART II


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


     The Company's common stock is listed on the Over the Counter Bulletin Board
("OTCBB") under the symbol "IDTK." Although  quotations for the Company's common
stock  appear on the  OTCBB,  there is no  established  trading  market  for the
Company's common stock. For the past calendar year and from December 31, 1998 to
the present, transactions in the common stock can only be described as sporadic.
Consequently,   the  Company  believes  that  any  published  prices  cannot  be
attributed  to a liquid  and  active  trading  market  and,  therefore,  are not
indicative of any meaningful market value.


     The following table sets forth for the respective  periods  indicated,  the
prices of the Company's common stock in the over-the-counter market, as reported
and summarized by the OTCBB. Such prices are based on inter-dealer bid and asked
prices,  without  markup,  markdown,  commissions  or  adjustments  and  may not
represent actual transactions.


Calendar Quarter Ended                High Bid ($)         Low Bid ($)
----------------------                ------------         -----------

March 31, 1999                            2.750                1.063
June 30, 1999                             3.500                1.188
September 30, 1999                        2.000                0.875
December 31, 1999                         0.750                0.531

March 31, 2000                            2.00                 0.531
June 30, 2000                             1.125                0.406
September 30, 2000                        0.938                0.344
December 30, 2000                         0.625                0.250

     The  Company's  common stock is subject to the  provisions of Section 15(g)
and Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"),  commonly referred to as the "penny stock" rule. Section 15(g) sets forth
certain  requirements  for  transactions  in penny  stocks and Rule  15g-9(d)(1)
incorporates  the  definition  of penny stock as that used in Rule 3a51-1 of the
Exchange Act.


     The Commission  generally  defines a penny stock to be any equity  security
that  has a  market  price  less  than  $5.00  per  share,  subject  to  certain
exceptions.  Rule 3a51-1 provides that any equity security is considered to be a
penny  stock  unless  that  security  is:  registered  and  traded on a national
securities exchange meeting specified criteria set by the Commission; authorized
for  quotation on The NASDAQ  Stock  Market;  issued by a registered  investment
company;  excluded from the definition on the basis of price (at least $5.00 per
share) or the issuer's net tangible  assets;  or exempted from the definition by
the Commission. If the Company's shares are deemed to be a penny stock, which at
this time they are,  trading in the shares will be subject to  additional  sales
practice  requirements on broker-dealers  who sell penny stocks to persons other
than  established  customers and accredited  investors,  generally  persons with
assets in excess of $1,000,000 or annual income exceeding $200,000,  or $300,000
together with their spouse.


     For transactions covered by these rules, broker-dealers must make a special
suitability  determination  for the  purchase of such  securities  and must have
received  the  purchaser's  written  consent  to the  transaction  prior  to the
purchase.  Additionally,  for any  transaction  involving a penny stock,  unless
exempt,  the rules require the delivery,  prior to the first  transaction,  of a
risk  disclosure  document  relating to the penny stock market.  A broker-dealer
also must disclose the  commissions  payable to both the  broker-dealer  and the
registered representative,  and current quotations for the securities.  Finally,
the monthly  statements must be sent disclosing recent price information for the
penny stocks held in the account and  information on the limited market in penny
stocks. Consequently,  these rules may restrict the ability of broker dealers to
trade and/or maintain a market in the Company's  common stock and may affect the
ability of shareholders to sell their shares.


     As of December 31, 2000,  there were 228 holders of record of the Company's
common stock.


     The Company has not declared or paid cash  dividends or made  distributions
in the past, and the Company does not anticipate that it will pay cash dividends
or make  distributions in the foreseeable  future. The Company currently intends
to retain and reinvest future earnings, if any, to finance its operations.


     During the fourth  quarter of 2000,  the  Company  raised an  aggregate  of
approximately  $425,000  in gross  proceeds  from  the  sale of debt and  equity
securities.  Specifically, on September 18, 2000, the Company issued a six-month
promissory  note in the principal  amount of $100,000 to Paul C.  Hilliard.  The
note bore interest at 9% per annum and was payable in full on March 18, 2001. In
settlement of the note, on October 30, 2000,  the Company paid Mr.  Hilliard the
accrued  interest  on the note and issued  Mr.  Hilliard  250,000  shares of the
Company's  common stock and a warrant to purchase 250,000 shares of common stock
at a purchase  price of $0.40 per share.  The warrant is exercisable at any time
until 5:00 p.m. on October 30, 2002.


     On September  28, 2000,  the Company  issued  375,000  shares of its common
stock to the Bob Barker  Company for gross  proceeds  of $210,938 in  connection
with its lease agreement with the Company.


     On  November  7, 2000  Centennial  Venture  Fund  exercised  its warrant to
purchase  150,000  shares of the  Company's  common  stock at $0.01  per  share,
netting the Company $1,500.


     In  November  and  December of 2000,  the  Company  sold a total of 282,901
shares of its common stock and warrants to purchase an additional 282,901 shares
at an exercise  price of $0.40 per share to eight existing  shareholders  of the
Company,  including Bill Lane, the Company's Chairman who purchased 5,401 shares
and a warrant for a like number of shares.  This offering  raised gross proceeds
for the Company of $110,784.


     The Company relied on the  securities  registration  exemption  provided by
Section 4(2) of the Securities  Act of 1933, as amended in connection  with each
of the above sales since all of the investors were, to the Company's  knowledge,
"accredited investors" who each had a preexisting business relationship with the
Company or its officers.


ITEM 6.  MANAGEMENT'S PLAN OF OPERATION.


     The  Company is  engaged  in the  development  of  biometric  technologies,
know-how, and products for licensing worldwide. The Company holds the patent for
a card,  panel,  or substrate  allowing  "on-board"  storage and  authentication
(identification) of fingerprints with a frontier biometric market size estimated
to be 1/10 trillion  dollars.  The  applications of this technology are many and
varied: from welfare cards to loyalty/medical records/personal information cards
to controlling firearms by one user.


     The development and production of this biometric breakthrough is managed by
the Company's  scientific partner SafeNet of Baltimore,  Maryland.  SafeNet is a
leading  provider of network and  internet  security  systems and  technologies.
SafeNet is a 12% Company  shareholder  and holds a Company license in the fields
of internet,  computer  network,  banking and treasury  fields  worldwide  which
SafeNet  sublicensed in perpetuity to Global Biometrics in the fourth quarter of
2000.


     A  prototype  card  has just  been  completed,  as well as a  comprehensive
manufacturing  plan to build a single-chip  production card at a cost below $20.
The  non-recurring  engineering  cost  (NRE)  will  be paid  by  SafeNet  to the
production  card  maker  for a  single-chip  card  at a  cost  of  approximately
$1,700,000.


     Presently,  the Company has initial licenses in place with SafeNet,  Global
Biometrics  (formerly  Protek),  Power^Up and BrentScott,  which are expected to
yield  $400,000  in  additional   license  fees  when  card  production  begins.
Production is expected to begin in late 2001.  The license to Bob Barker is paid
in full and will not yield any additional license fees.


     The  Company  believes  it has to be the  first-to-market  leader  with the
following competitive advantages:


     -    A biometric  fingerprint card with storage and a power source (lithium
          battery) on board.
     -    A  biometric  fingerprint  card not  requiring  an  independent  power
          source.
     -    A  biometric   fingerprint  card  safeguarding   personal  privacy  (a
          government or corporate-based database system is unnecessary).
     -    A biometric  fingerprint  card with 130 m.p.s of computing  power (the
          power of a Palm Pilot).

     The biometric  fingerprint  card is essentially a standalone  computer on a
card  protected by the Lane  foundation  patent:  United  States  Patent  Number
5,623,552 issued on April 22, 1997. Another biometric patent was filed in 2001.


     The Company has been a  developmental-stage  company with nominal  revenues
since  its  inception.  Losses  were  $1,684,313  in 1997,  $1,426,725  in 1998,
$939,741 in 1999, and $906,644 in 2000.


     As of March 15,  2001,  the Company has  $178,000 in cash.  Currently,  the
Company has an operating cost burn rate of $35,000 per month.


     With the  policy  of  contracting  out  development  and  concentrating  on
licensing of  intellectual  property,  the Company does not plan to purchase any
equipment or buy or rent plant(s) in the next year.


     RESULTS OF OPERATIONS


     The following  discussion  provides an analysis of the Company's results of
operations  and  liquidity  and  capital  resources.  This  should  be  read  in
conjunction with the financial  statements of the Company and notes thereto. The
operating  results of the years  presented  were not  significantly  affected by
inflation.


YEAR ENDED DECEMBER 31:                         2000                 1999
                                             -----------          -----------

Revenue                                      $   2,844            $   2,000
Operating Expenses:
  Research and Development                      72,600              269,441
  Selling, general and administrative          473,348              580,588
                                             -----------          -----------

Operating Losses                              (543,104)            (848,029)

Other Expenses                                (363,540)             (91,712)
                                             -----------          -----------

Net Loss                                      $(906,644)           $(939,741)
                                             -----------          -----------


     COMPARISON OF YEARS ENDED DECEMBER 31, 2000 AND 1999:


     License  revenue for both 2000 and 1999 were  nominal and not  significant.
License  fee  payments  were  predicated  primarily  on  a  $20  cost  biometric
fingerprint  production card. Royalty payments are predicated on the sale of the
cards to end users by licensees.


     The research and  development  expenses are a non-cash entry in both years,
which mirrors exactly  SafeNet's  research and development cash expenses for the
development  of  the  biometric   fingerprint  card.   SafeNet's   research  and
development cost for the card was $72,600 for 2000 and $269,441 for 1999.


     Selling,  general,  and administrative  expenses during 2000 were $473,348,
down 18% from the 1999  expenses of  $580,588  due to the  Company's  efforts to
reduce these costs.


     Other expense was $363,540 in 2000 versus  $91,712 in 1999. The majority of
the expense is non-cash debt discount  amortization  expense of $216,816 in 2000
and $66,704 in 1999. This is the  amortization of the value of stock options and
warrants associated with debt issuances. In addition,  $126,000 in non-cash debt
conversion  expense  was  recorded  to  reflect  the  value  of  the  beneficial
conversion  feature in a $100,000  convertible debt instrument  issued September
2000. Also included in other expense is interest of 12% on $185,000  convertible
debentures issued in mid-1999 and 8% interest on $300,000 convertible debentures
issued in September 1999.


     The  Company's  loss for 2000 was  $906,644,  down 4% from the 1999 loss of
$939,741 due primarily to the Company's $305,000  reduction in selling,  general
and  administrative  expenses  which was offset by the  increase in the non-cash
debt discount  interest expense and non-cash debt discount  conversion  expenses
discussed above.


     LIQUIDITY AND CAPITAL RESOURCES


     The Company  raised  $625,000 in debt and equity in 2000. A majority of the
money  raised  was  used to pay  off  the  $300,000  convertible  debenture  due
September 2000 and reduce payables and short-term debt. The Company has $178,000
in cash as of March 15,  2001.  The  Company's  current  cash  requirements  are
$35,000 per month excluding the approximately $40,000 in payables outstanding as
of March 15, 2001.  The Company will need to raise  capital of $180,000 to allow
the Company to operate for the calendar year 2001.


     The Company has no bank credit lines or any  likelihood  of  servicing  any
bank credit until profitable.


ITEM 7.  FINANCIAL STATEMENTS.


                          INDEX TO FINANCIAL STATEMENTS


                                                                        Page No.

Report of Independent Auditors. . . . . . . . . . . . . . . . . . . . . . F-1


Balance Sheets as of December 31, 2000 and 1999. . . . . . . . . . . . .  F-2


Statements of  Operations  for the years ended
  December  31, 2000 and 1999, and the period from March 16, 1994
  (date of inception) through December 31, 2000   . . . . . . . . . . . . F-3


Statements of Shareholder's Equity (Deficit) for
    the period from March 16, 1994 (date of inception)
    through December 31, 2000. . . . . . . . . . . . . . . . . . . . . . .F-4


Statements of Cash Flows for the years  ended
    December  31,  2000 and 1999, and the period from March 16, 1994
   (date of inception) through December 31, 2000 . . . . . . . . . . . .  F-5


Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . .  F-6








                         REPORT OF INDEPENDENT AUDITORS



Board of Directors and Shareholders
ID Technologies Corporation





We have audited the accompanying  balance sheets of ID Technologies  Corporation
(a development  stage company) as of December 31, 2000 and 1999, and the related
statements of operations, shareholders' equity (deficit) and cash flows for each
of the two  years  in the  period  ended  December  31,  2000.  These  financial
statements  are  the  responsibility  of  the  Corporation's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.  The  financial  statements  of ID  Technologies  for the period from
inception  (March 16,  1994)  through  December  31, 1998 were  audited by other
auditors whose report, dated August 26, 1999, included an explanatory  paragraph
regarding the Corporation's ability to continue as a going concern.


We conducted our audits in accordance with auditing standards generally accepted
in the United  States.  Those  standards  require  that we plan and  perform the
audits to obtain reasonable assurance about whether the financial statements are
free of material  misstatement.  An audit also includes assessing the accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits and the  reports of other  auditors  provide a  reasonable  basis for our
opinion.


In our  opinion,  based on our  audits  and the  report of other  auditors,  the
financial statements referred to above present fairly, in all material respects,
the financial  position of ID  Technologies  Corporation  (a  development  stage
company) at December 31, 2000 and 1999 and the results of its operations and its
cash flows for each of the two years in the period  ended  December  31, 2000 in
conformity with accounting principles generally accepted in the United States.


The  accompanying  financial  statements  have been  prepared  assuming that the
Corporation will continue as a going concern. As more fully described in Note 1,
the  Corporation  is  a  development  stage  company,   has  not  yet  generated
sustainable  revenues,  has suffered  recurring  losses from  operations,  has a
working capital deficit, and has a net capital deficiency that raise substantial
doubt about its ability to continue as a going  concern.  Management's  plans in
regard to these matters are also  described in Note 1. The financial  statements
do not  include  any  adjustments  that  may  result  from the  outcome  of this
uncertainty.


                                                              ERNST & YOUNG LLP


Raleigh, North Carolina
March 5, 2001


                                                                             F-1
<PAGE>
<TABLE>
<CAPTION>



                           ID Technologies Corporation
                          (A Development Stage Company)

                                 Balance Sheets

                                                                           December 31,
                                                                   --------------------------
                                                                       2000          1999
                                                                   -----------    -----------
<S>                                                                <C>            <C>
ASSETS
Current assets:
Cash and cash equivalents ......................................   $    49,311    $    62,986
Notes receivable ...............................................          --            3,270
Prepaid expenses ...............................................         7,010            150
                                                                   -----------    -----------

Total current assets ...........................................        56,321         66,406

Equipment, net .................................................         1,252          1,884
Intangible assets, net .........................................        19,653         17,562
                                                                   -----------    -----------

Total assets ...................................................   $    77,226    $    85,852
                                                                   ===========    ===========

LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued liabilities .......................   $    84,053    $   122,260
Note payable to shareholder ....................................        22,840           --
Notes payable, current .........................................        60,618           --
Convertible debt, net of discount ..............................          --          129,000
                                                                   -----------    -----------

Total current liabilities ......................................       167,511        251,260

Long-term notes payable ........................................        35,374           --
Long-term convertible debt, net of discount of $19,550 .........       165,450        150,834
   And $34,166 at December 31, 2000 and 1999, respectively

Deferred revenue ...............................................       179,218         93,000

Commitments and contingencies (Note 14)

Shareholders' deficit:
Series A preferred stock, $.001 par value; 300,000 shares
  authorized;  no shares issued and outstanding at December 31,
  2000 and 1999 ................................................          --             --
Common stock, no par value, 50,000,000 shares authorized,
  9,684,305 and 8,277,583 shares issued and outstanding at
  December 31, 2000 and 1999, respectively .....................       282,953        282,953
Additional paid-in-capital .....................................     4,236,417      3,390,859
Deficit accumulated during the development state ...............    (4,989,697)    (4,083,054)
                                                                   -----------    -----------

Total shareholders' deficit ....................................      (470,327)      (409,242)
                                                                   -----------    -----------

Total liabilities and shareholders' deficit ....................   $    77,226    $    85,852
                                                                   ===========    ===========


                             See accompanying notes.


                                                                                          F-2
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                           ID Technologies Corporation
                          (A Development Stage Company)

                            Statements of Operations

                                                                         PERIOD FROM
                                                                          INCEPTION
                                                                      (MARCH 16, 1994)
                                                                          THROUGH
                                                                         DECEMBER 31,
                                               2000          1999           2000
                                           -----------    -----------    -----------
<S>                                        <C>            <C>            <C>
License revenue ........................   $     2,844    $     2,000    $    94,844
Operating expenses:
  Research and development .............        72,600        269,441        736,268
  Selling, general and administrative ..       473,348        580,588      3,893,520
                                           -----------    -----------    -----------

Loss from operations ...................      (543,104)      (848,029)    (4,534,944)
                                           -----------    -----------    -----------

Other income (expense):
  Interest income - contractual ........         1,063          1,000          3,220
  Gain on disposal of asset ............           353           --              353
  Forgiveness of debt ..................        28,717           --           28,717
  Amortization of debt discount on
    convertible debentures .............      (216,816)       (66,704)      (283,520)
  Interest expense .....................       (50,857)       (26,008)       (77,523)
  Debt Conversion Expense ..............      (126,000)          --         (126,000)
                                           -----------    -----------    -----------

Total other expense ....................      (363,540)       (91,712)      (454,753)
                                           -----------    -----------    -----------
Net loss ...............................   $  (906,644)   $  (939,741)   $(4,989,697)
                                           -----------    -----------    -----------

Basic and diluted per common stock .....   $      (.11)   $      (.11)

Weighted average number of common shares
  Outstanding ..........................     8,634,373      8,226,854
                                           ===========    ===========

                             See accompanying notes.

                                                                                   F-3
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                                ID Technologies Corporation
                                               (A Development Stage Company)

                                        Statements of Shareholders' Equity (Deficit)

                              Period from inception (March 16, 1994 through December 31, 2000)

                                                                                                  DEFICIT
                                                                                  ADDITIONAL     ACCUMULATED
                                                                                   PAID-IN         DURING
                                                      SHARES         AMOUNT        CAPITAL       DEVELOPMENT        TOTAL
                                                    ----------     ----------     ----------     ----------      ----------
<S>                                              <C>              <C>            <C>            <C>              <C>
Balance at March 16, 1994 .....................           --             --             --             --              --
Issuance of common shares for cash and
   noncash consideration ......................      1,595,200            366             33           --               399

Net loss ......................................           --             --             --             (123)           (123)
                                                    ----------     ----------     ----------     ----------      ----------

Balance at December 31, 1994 ..................      1,595,200            366             33           (123)            276
Issuance of common shares for cash and
   noncash consideration ......................        404,800           --              101           --               101

Net loss ......................................           --             --             --           (2,263)         (2,263)
                                                    ----------     ----------     ----------     ----------      ----------

Balance at December 31, 1995 ..................      2,000,000            366            134         (2,386)         (1,886)
Issuance of common shares for cash and
   noncash consideration ......................      6,000,000           --            1,500           --             1,500

Net loss ......................................           --             --             --          (29,889)        (26,889)
                                                    ----------     ----------     ----------     ----------      ----------

Balance at December 31, 1996 ..................      8,000,000            366          1,634        (32,275)        (30,275)
Issuance of common shares for cash net of
   issuance costs .............................        153,333        282,587           --             --           282,587
Capital contribution in form of research
   and development services ...................           --             --          201,405           --           201,405
Stock-based compensation ......................           --             --        1,333,600           --         1,333,600
Net loss ......................................           --             --             --       (1,684,313)     (1,684,313)
                                                    ----------     ----------     ----------     ----------      ----------

Balance at December 31, 1997 ..................      8,153,333        282,953      1,536,639     (1,716,588)        103,004
Issuance of common shares for noncash
   consideration ..............................         22,500           --           45,000           --            45,000
Capital contribution in form of research
   and development services ...................           --             --          192,319           --           192,319
Stock-based compensation ......................           --             --          933,425           --           933,425
Net loss ......................................           --             --             --       (1,426,725)     (1,426,725)
                                                    ----------     ----------     ----------     ----------      ----------

Balance at December 31, 1998 ..................      8,175,833        282,953      2,707,383     (3,143,313)       (152,977)
Issuance of warrants in connection with
   issuance of convertible debt ...............           --             --          271,870           --           271,870
Capital contribution in form of research
   and development services ...................           --             --          269,441           --           269,441
Issuance of common shares for noncash
   consideration ..............................        101,750           --          142,165           --           142,165
Net loss ......................................           --             --             --         (939,741)       (939,741)
                                                    ----------     ----------     ----------     ----------      ----------

Balance at December 31, 1999 ..................      8,277,583        282,953      3,390,859     (4,083,054)       (409,242)

Conversion of convertible debt to equity ......        250,000           --          100,000           --           100,000
Issuance of beneficial conversion features in
   connection with issuance of convertible debt           --             --           31,200           --            31,200
Debt conversion expense .......................           --             --          126,000           --           126,000
Capital contribution in form of research and
   development services .......................           --             --           72,600           --            72,600
Issuance of common shares for noncash
   consideration ..............................        211,759           --          116,148           --           116,148
Issuance of common shares for cash ............        944,963           --          399,610           --           399,610
Net loss ......................................           --             --             --         (906,644)       (906,644)
                                                    ----------     ----------     ----------     ----------      ----------

Balance at December 31, 2000 ..................      9,684,305        282,953      4,236,417     (4,989,697)       (470,327)


                                                  See accompanying notes.


                                                                                                                        F-4
</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                                    ID Technologies Corporation
                                   (A Development Stage Company)

                                      Statements of Cash Flows

                                                                                       PERIOD FROM
                                                                                        INCEPTION
                                                                                        (MARCH 16,
                                                                                      1994 THROUGH
                                                                                       DECEMBER 31,
                                                            2000           1999           2000)
                                                         ----------     ----------     ----------
<S>                                                        <C>            <C>          <C>
OPERATING ACTIVITIES
Net Loss ............................................      (906,644)      (939,741)    (4,989,697)
Adjustments to reconcile net loss to net cash used in
  operation activities:
  Depreciation ......................................           676            930          2,067
  Amortization ......................................         4,209          3,975         14,550
  Deferred revenue ..................................        86,218           --          179,218
  Gain on disposal of equipment .....................          (353)          --             (353)
  Stock-based compensation ..........................          --             --        2,267,025
  Non-cash marketing expenses .......................          --            4,165         49,165
  Non-cash research and development expenses ........        72,600        269,441        737,394
  Non-cash professional fees ........................       111,947        138,000        249,947
  Non-cash interest payments ........................         6,930           --            6,930
  Debt forgiveness of note payable ..................       (28,717)          --          (28,717)
  Non-cash debt conversion expense ..................       126,000           --          126,000
  Discount on convertible debenture .................       216,816         66,704        283,520
  Change in operating assets and liabilities:
    Notes receivable ................................         3,270         10,000           --
    Prepaid expenses ................................        (6,860)          --           (7,010)
    Accounts payable and accrued liabilities ........       (38,207)        60,648         84,053
                                                         ----------     ----------     ----------

Net cash used in operating activities ...............      (352,115)      (385,878)    (1,025,908)

INVESTING ACTIVITIES
Patent costs ........................................        (6,300)          --          (34,203)
Purchase of equipment ...............................          (705)        (1,640)        (3,980)
Disposal of equipment ...............................         1,014           --            1,014
                                                         ----------     ----------     ----------

Net cash used in investing activities ...............        (5,991)        (1,640)       (37,169)

FINANCING ACTIVITIES
Proceeds from issuance of note payable ..............       281,000         45,000        383,750
Payment of notes payable ............................       (62,166)       (87,750)      (164,917)
Proceeds from issuance of convertible debt ..........       100,000        565,000        665,000
Payment on convertible debt .........................      (300,000)       (80,000)      (380,000)
Proceeds from sale of common shares .................       325,597           --          325,597
Proceeds from issuance of common shares, net ........          --             --          282,958
                                                         ----------     ----------     ----------

Net cash provided by financing activities ...........       344,431        442,250      1,112,388

Increase (decrease) in cash and cash equivalents ....       (13,675)        54,732         49,311

Cash and cash equivalents, beginning of period ......        62,986          8,254           --
                                                         ----------     ----------     ----------

Cash and cash equivalents, end of period ............        49,311         62,986         49,311


                                      See accompanying notes.


                                                                                              F-5

</TABLE>

<PAGE>


1. NATURE OF BUSINESS


BACKGROUND


ID  Technologies  Corporation  (the  "Company") is a  development  stage company
incorporated  in North  Carolina  on March 16,  1994.  The Company was formed to
develop and commercialize certain technologies allowing for  self-authenticating
fingerprint   identification  and  transmission  and  signaling  devices  housed
together  in a  microelectronic  panel  suitable  for,  but not  limited to, the
confines of a credit card.


STATUS OF DEVELOPMENT


During the period from  inception  to  December  1996,  the  Company  focused on
obtaining a patent for its proposed  technology.  In December  1996, the Company
received  the Notice of  Allowance  from the  United  States  Patent  Office for
issuance of its patent.  Since  December  1996,  the Company has  outsourced its
research  and  development  efforts to SafeNet  (formerly  Information  Resource
Engineering,  Inc.) The Company,  in  conjunction  with  SafeNet,  a significant
shareholder  of the  Company,  has  developed a computer  assisted  version of a
prototype card.


The Company incurred a net loss of $906,644 for the year ended December 31, 2000
and had an  accumulated  deficit of $4,989,697 at December 31, 2000. The Company
has yet to generate  any  significant  revenues  and has no  assurance of future
revenues.  Even if  successful,  substantial  time may pass  before  significant
revenues might be realized.  As a development stage  enterprise,  the Company is
also  subject  to a number  of risks  including  obtaining  adequate  financing,
successfully  developing and marketing its technologies,  successfully defending
its rights under the patent,  and attracting and retaining key personnel.  These
factors  among others raise  substantial  doubt about the  Company's  ability to
continue  as a going  concern.  The  financial  statements  do not  include  any
adjustments  relating  to the  recoverability  and  classification  of assets or
liabilities  that might be necessary should the Company be unable to continue as
a going concern.


Management  plans to obtain the capital  necessary to execute its business  plan
through several  sources,  which include (1) the sale of additional  licenses of
the  Company's  fingerprint  identification  technology,  (2)  obtaining  equity
financing  and (3)  obtaining  debt  financing.  Management  expects  that these
efforts will result in the  introduction  of additional  capital to the Company.
There  is no  assurance  that  the  Company  will  be able  to  raise  or find a
sufficient  number of  purchasers  of its licenses to fund the future  operating
expenses of the Company and the inability to obtain such financing  would have a
material adverse effect on the Company.


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


USE OF ESTIMATES


The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial  statements and accompanying notes.
Actual results could differ from those estimates.


CASH AND CASH EQUIVALENTS


The Company considers highly liquid,  short-term  investments with a maturity of
three months or less when purchased to be cash equivalents.


EQUIPMENT


Equipment  is recorded at cost and is being  depreciated  on a double  declining
balance for assets placed in service prior to 1/1/00 and straight-line basis for
assets placed in service after 1/1/00.  The estimated useful life is five years.
Accumulated  depreciation  totaled  $1,714 and $1,392 at  December  31, 2000 and
1999, respectively.


INTANGIBLE ASSETS


In filing its patent,  the Company  incurred direct legal costs in the amount of
$27,903 which it  capitalized.  In 2000,  an  additional  $6,300 was incurred to
obtain and file an  international  patent,  which is expected to be finalized in
2001.  Patent  costs are being  amortized  on a  straight-line  basis over seven
years, the estimated  economic life of the patent.  Accumulated  amortization at
December 31, 2000 and 1999 was $14,550 and $10,341, respectively.

                                                                             F-6


INCOME TAXES


The Company  accounts for income taxes using the liability method which requires
the  recognition  of  deferred  tax  assets  or  liabilities  for the  temporary
differences  between  financial  reporting and tax basis of the Company's assets
and  liabilities  and tax  carryforwards.  A valuation  allowance is recorded to
reduce net deferred tax assets to an amount  which  management  believes is more
likely than not to be realized.


LOSS PER SHARE


Basic net loss per share has been  calculated in  accordance  with SFAS No. 128,
"Earnings  Per Share".  Basis net loss per share is  calculated  by dividing net
loss available to common  stockholders by the weighted  average shares of common
stock outstanding during the period.


Had the Company been in a net income position,  diluted earnings per share would
have been presented and would have included  potential  common shares related to
outstanding options and warrants.  The diluted earnings per share computation is
not included, as all potential common shares are antidilutive.


STOCK-BASED COMPENSATION


The Company accounts for stock-based  compensation in accordance with Accounting
Principles Board Opinion No. 25,  Accounting for Stock Issued to Employees ("APB
25"). No compensation is recorded for stock options or other stock-based  awards
to employees  that are granted with an exercise price equal to or above the fair
value per share of the Company's  common stock on the grant date.  The pro forma
affect of recording  stock-based  compensation  at the  estimated  fair value of
awards on the grant date,  as  prescribed  by Statement of Financial  Accounting
Standards No. 123,  Accounting  for  Stock-Based  Compensation  ("FAS 123"),  is
disclosed in Note 9.


ADVERTISING COSTS


The  Company  expenses  advertising  costs as  incurred.  The  Company  incurred
advertising expense of $0 and $102,400 for the years ended December 31, 2000 and
1999, respectively.


REVENUE RECOGNITION


The Company  recognizes  revenue from the licensing of its technology as well as
from the  associated  royalties.  Licensing  revenue is recognized  based on the
specific  terms of each  agreement.  Royalty  revenue  is  recognized  as earned
pursuant to the applicable royalty agreement.


IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS


In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards No. 133, Accounting for Derivative  Instruments
and  Hedging  Activities  ("FAS  133").  FAS 133  establishes  a new  model  for
accounting  for  derivatives  and  hedging  activities  and  supercedes  several
existing standards.  FAS 133, as amended by FAS 137, is effective for all fiscal
quarters of fiscal years  beginning  after June 15, 2000.  The Company  plans to
adopt the new standards  effective  January 1, 2001.  Management does not expect
that the  adoption  of FAS 133 will  have a  material  impact  on the  Company's
financial statements.


3. SIGNIFICANT CUSTOMERS AND CONCENTRATION OF CREDIT RISK


In 2000 and 1999,  two  customers  accounted  for all of the  Company's  license
revenue. The Company had no outstanding accounts receivable from either customer
at December 31, 2000 and 1999.


4. DEFERRED REVENUE


In 1998,  the  Company  entered  into three  exclusive  license  agreements  and
received an  aggregate  of $75,000 in license  fees upon the  execution of these
agreements.  In  accordance  with  the  terms  of the  three  exclusive  license
agreements, which include additional obligations on the part of the Company, the
$75,000 was  recorded as deferred  revenue at December  31,  1998.  On March 30,
1999, the Company entered into a nonexclusive  license agreement with Protective
Technologies,  Inc. (see Note 13). In conjunction  with this new agreement,  the
three  exclusive  license  agreements  were  terminated,  and Protek assumed the
$75,000 license fee deposit. In 2000, the non-exclusive  license agreements were
terminated  and  replaced  with three  exclusive  licenses  plus two  additional
licenses.  The  obligations  in the original  agreements are still in effect and
have not been met by the Company;  therefore, the revenue remains deferred as of
December 31, 2000.

                                                                             F-7


In 1998, the Company  received  $18,000 from potential  licensees as deposits on
options to acquire  certain  license  rights.  These  amounts are  reflected  as
deferred  revenue  in the  accompanying  balance  sheets  until such time as the
Company  enters  into  binding  agreements  with the  potential  licensees,  and
completes  development  of the  licensed  technology  and  delivers  such to the
licensees.


In August 2000, the Company granted Bob Barker  Company,  Inc. ("Bob Barker") an
exclusive  license to use the technology in connection  with detention  facility
systems  in the United  States.  Bob  Barker  paid  $300,000  and  received  the
exclusive  license plus 375,000 shares of Company  common stock.  The stock sale
was valued at $210,938  and the license was valued at $89,062.  The license sale
was recorded as deferred revenue and is being amortized on a straight-line basis
over  13.5  years,  which is the  remaining  life of the  original  patent.  The
deferred revenue remaining was $86,218 at December 31, 2000.


5. CONVERTIBLE DEBENTURES AND WARRANTS


In 1996,  the  Company  issued  warrants  to a law firm in  exchange  for  legal
services, which entitled the holders to acquire 80,000 shares of common stock at
a price of $5 per share.  The  warrants  immediately  vested and expire in 2001.
Management  believed  the fair value of these  warrants on the date of the grant
was nominal, and as such, no legal expense was recognized. In 1997, an amendment
lowered the exercise price of these warrants to $3.33 per share of common stock.
Legal expense of $133,600 was recognized due to the repricing of these warrants.
Subsequent  to the  amendment,  the warrants were canceled and new warrants were
issued which  entitled the holders to acquire  20,000  shares of common stock at
$3.33 per share.


In April 1999, the Company issued $185,000 of unsecured, subordinated debentures
that  mature  April  2002 at 12% annual  interest.  The  Company  may redeem the
debentures  at any  time,  provided  that it gives at least  thirty  days  prior
written  notice to the  debenture  holders,  during which  period the  debenture
holders  may elect  instead  to convert  the  outstanding  principal  amount and
accrued and unpaid interest into the Company's  common stock at $2.00 per share,
including  accrued  interest,  which is subject to  adjustments  for  changes in
capital stock,  including dividends.  In the event of an acquisition,  merger or
new public  offering,  the  debentures  will be  converted  at the option of the
Company at $2.50 per share or greater.  If notice of redemption has not occurred
by the maturity  date,  the  debentures may be converted at any time between the
Company's  notice of  maturity  (which  will occur at least 30 days but not more
than 60  days  before  the  maturity  date)  and the  business  day  immediately
proceeding  the  maturity  date.  The  debentures  carry  a three  year  option,
exercisable immediately,  to buy 37,000 shares of the Company's common stock, or
one option for every $5.00 of principal  held, at an exercise price of $2.75 per
share.  The estimated  value of these options,  $43,870,  has been recorded as a
debt discount and additional paid-in capital.  The debt discount is amortized to
debt discount expense over the term of the debentures at $3,654 per quarter.


In  September  1999,  the  Company  issued  $300,000  of  unsecured  convertible
debentures to an institutional investor that matured September 2000 at 8% annual
interest.  The debenture was repaid with $26,600 in accrued  interest in October
2000.

                                                                             F-8


In connection with the issuance of the $300,000  debentures,  the Company issued
various detachable warrants to purchase shares of the Company's common stock, as
follows:

<TABLE>
<CAPTION>


TITLE OF         NUMBER                PURCHASE PRICE                    VESTING
WARRANT         OF SHARES             PER WARRANT SHARE                  PERIOD

<S>              <C>               <C>                                <C>
WC-1             450,000           0.30 to $5.00 (increasing            1-10 years
                                   sliding scale over 10 years)
WC-2             150,000           $ 0.01                               Immediately
WC-3             200,000           $ 0.50                               Immediately
WC-4         Variable, up to       Fair market value (based on most     Exercisable only if certain
            $500,000 worth of      recent financing by institutional    events occur, including a
               common stock        investors or, if none within prior   merger, sale of assets, change
                                   12 months, as determined by          of ownership, or qualified
                                   third-party valuation expert)        public offering of the Company

</TABLE>

The warrants expire  September 24, 2009. Each warrant is subject to full-ratchet
anti-dilution protection.  Furthermore, the holder may exercise each warrant and
receive   shares  of  common  stock  without  the  payment  of  any   additional
consideration  to the Company based on the value of the warrant as determined in
accordance  with the formula set forth in each warrant.  The Company has granted
the holder certain demand and piggy-back  registration rights to register shares
of the Company's common stock received upon conversion of the debentures or upon
exercise of the warrants.  The estimated value of these warrants,  $228,000, has
been recorded as a non-cash  debt discount with an offset to additional  paid-in
capital and was amortized over the one year term of the debt.


On November 7, 2000, the holder  exercised  warrants to purchase  150,000 shares
for $0.01 each.


On September  18, 2000,  an  individual  loaned the Company  $100,000  through a
six-month  promissory note with interest  accruing at 9%. During the term of the
note,  the  individual  had the right to convert  the  $100,000  principal  into
200,000  shares of the Company's  common stock at $.50 per share.  The Company's
stock price was $.656 on the date of the agreement.  As a result of the discount
allowed on the conversion of the stock, the Company recorded  non-cash  interest
expense of $31,200 with an offset to additional paid-in-capital.  On October 30,
2000, the individual  surrendered the six-month  promissory note in exchange for
250,000  shares of the  Company's  common  stock with a market price of $.47 per
share,  and warrants to purchase an additional  250,000  shares of the Company's
common  stock at $.40 per share.  The warrants  expire on October 30, 2002.  The
fair market value of the  inducement  to convert the debt to equity was $126,000
and recorded as a non-cash debt conversion  expense with an offset to additional
paid-in-capital.


In 2000,  the  Company  sold  282,901  shares of common  stock for  $113,160  to
existing  shareholders.  The  shareholders  also  received two year  warrants to
purchase an additional 282,901 shares at $0.40 per share.


6. NOTES PAYABLE


In June 2000, the Company  borrowed $50,000 for 48 months at an interest rate of
14%. The Company makes payments of approximately $800 per month in principal and
interest.  At December 31, 2000, the outstanding balance of the note was $45,992
of which $10,618 was classified as notes payable, current.


On October 24, 2000, the Company  borrowed $50,000 from a local bank for 90 days
while  raising  equity.  The note carried an interest rate of 12% and was repaid
with interest of $1,317 on January 11, 2001.


7. RELATED PARTY TRANSACTIONS


In  September  1999,  the Company  contracted a former board member to conduct a
marketing study for  compensation of $5,000.  A payable of $2,300 is outstanding
at  December  31,  2000 and is  included  in the  accounts  payable  and accrued
liabilities in the 2000 financial statements.


The Company  borrowed up to $45,000 from a  shareholder  at various times during
1999, and repaid the entire amount during 1999, including interest which accrued
between 7.5% and 12%.  During 2000, two  shareholders  made loans to the Company
for $15,000 and $35,000 which were repaid with  interest at 11-12%.  An interest
free loan of $31,000 was made by a shareholder  in October 2000 of which $22,840
is still outstanding as of December 31, 2000.

                                                                             F-9


The Company received  consulting  services during 2000 and 1999 in the amount of
$10,500  and  $17,450,  respectively,  from an entity  owned by  certain  of the
Company's significant shareholders.


The Company's  Chairman of the Board  purchased  additional  5,401 shares of the
Company's common stock in December of 2000 at $.40 per share, which was the fair
market value.


8. SHAREHOLDERS' EQUITY (DEFICIT)


On September 24, 1999, the Company  entered into a  Shareholders  Agreement with
certain  officers  and  shareholders  ("investors")  of the Company  whereby the
Company has rights of first refusal to purchase  shares  offered for sale by the
investors at a price specified by the investor. If the Company does not purchase
the  offered  shares  within  five days of receipt of  written  notice  from the
investor,  the remaining  investors have rights of first refusal to purchase the
offered  shares,  on a pro rata basis  determined  by such party's  proportional
interest  of all  outstanding  shares  of the  Company's  common  and  Series  A
Preferred Stock, at the specified price for an additional seven days.


COMMON STOCK


Holders of the Company's common stock are entitled to one vote per share on each
matter  submitted  to a vote at any  meeting of  shareholders.  Shares of common
stock do not  carry  cumulative  voting  rights  and,  therefore,  holders  of a
majority  of the  outstanding  shares of common  stock will be able to elect the
entire board of directors and, if they do so, minority shareholders would not be
able to elect any  members  of the board of  directors.  However,  holders  of a
majority  of the  Company's  common  stock  have  executed  an  Investor  Rights
Agreement  together with the holder of the Company's  $300,000  debentures ("the
debenture  holder") that provides that such shareholders shall vote their shares
in such a manner so that the Company's  board of directors  will be comprised of
five (5) directors and that a designee of the debenture  holder shall be elected
as a director so long as the debenture holder owns 50,000 shares of common stock
or the  Company's  Series A Preferred  Stock.  All of the shares of common stock
currently issued and outstanding are fully paid and non-assessable.  The holders
of common stock are entitled to such  dividends as may be declared  from time to
time by the board of directors from funds available therefor (provided, however,
that no dividends  may be paid on the common stock unless  equivalent  dividends
are  then  declared  and  paid  on the  Series  A  Preferred  Stock),  and  upon
liquidation  they are  entitled  to receive  pro rata all assets of the  Company
available for distribution to such holders (subject to the rights of the holders
of the Series A Preferred Stock).


PREFERRED STOCK


The Company's Articles of Incorporation, as amended, provide for the issuance of
Series A Preferred Stock;  however, no shares of such stock are currently issued
and  outstanding.  Shares of the Series A Preferred Stock are  convertible  into
shares of common stock by the holders  thereof at any time. Such shares are also
automatically  convertible  upon the Company's  initial  public  offering of its
common stock.  The  conversion  rate is set forth in the  Company's  Articles of
Incorporation,   as  amended,   and  provides  for  full-ratchet   anti-dilution
protection.  The  holders of Series A  Preferred  Stock are  entitled to receive
dividends  out of the  assets  of the  Company  legally  available  therefor  as
declared  from time to time by the board of  directors.  Holders of the Series A
Preferred  Stock  are  entitled  to  receive,  prior  and in  preference  to any
distribution  to holders of common stock,  an amount equal to $2.00 per share in
the event of any liquidation,  dissolution or winding up of the Company. Holders
of shares of Series A Preferred  Stock are entitled to the number of votes equal
to the  number of  shares of common  stock  into  which  such  share of Series A
Preferred  Stock could be  converted  and shall have the same voting  rights and
powers as the  common  stock.  The  Series A  Preferred  Stock  also  enjoys the
benefits of redemption rights and preemptive (or first participation) rights, as
more fully described in the Company's Articles of Incorporation, as amended. The
Investors Rights Agreement  restricts the ability of the Company to merge,  sell
all or  substantially  all of the assets of the  Company or take  certain  other
actions  unless holders of fifty percent (50%) or more of the Series A Preferred
Stock consent to the taking of such actions.


During the period  from  inception  to December  31,  1996,  the Company  issued
6,537,800 shares of common stock for noncash consideration,  primarily comprised
of services,  to certain of its shareholders.  Management has estimated the fair
value of these shares based on the initial per share cash  contribution  to form
the Company, as there were no events which would indicate a change in this value
prior to the  Company  receiving  a Notice of  Allowance  for the  patent on its
identification  technology in December  1996.  Compensation  expense  recognized
related to these stock issuances totaled $1,634.

                                                                            F-10


In conjunction with the SafeNet license  agreement,  in 1997, the Company issued
121,000  shares  of  common  stock  for  cash  consideration  of  $140,000,   or
approximately  $1.16 per share.  As additional  non-monetary  consideration  for
these shares,  SafeNet will perform certain research and development expenses on
behalf of the Company for which the Company will not be billed (see Note 10).


In 1999,  the Company  issued  101,750  shares of common  stock in exchange  for
professional  fees and marketing  services.  Professional  fees and  advertising
expense related to these issuances totaled $138,000 and $4,165, respectively.


In 2000,  the Company  issued  211,759  shares of common  stock in exchange  for
professional fees and interest payments.  Professional fees and interest expense
related to these issuances totaled $111,947 and $4,200, respectively.


The following number of potentially  convertible  shares of common stock related
to convertible debentures, warrants, and stock options are as follows:


                                                              DECEMBER 31
                                                           2000         1999
                                                        ----------   ---------
For conversion of convertible debentures . . . . . .             -      92,000
Outstanding warrants . . . . . . . . . . . . . . . .     1,239,901     857,000
Outstanding stock options. . . . . . . . . . . . . .       886,000     766,000
Possible future issuance under stock option plan . .       497,148     617,148

Total shares potentially convertible . . . . . . . .     2,623,049   2,332,148
                                                         =========   =========


9. STOCK OPTION PLAN


During 1997,  the  Company's  Board of Directors  approved the granting of stock
options to certain employees and non-employee  members of the Board of Directors
as  compensation  for  their  services  as  members  of the  Company's  Board of
Directors. Prior to 1997, the Company had not previously issued stock options to
its employees or its directors.


In October 1999, the Company's Board of Directors approved the 1999 Stock Option
Plan (the  "Plan").  Under the Plan,  options to  purchase  1,383,148  shares of
common stock may be granted to employees,  directors,  and eligible individuals,
as  determined  by the  Compensation  Committee.  The Plan is intended to create
additional   performance   incentives   for  directors,   officers,   employees,
consultants  and advisors of the Company.  The  incentive  stock  options may be
granted at an exercise  price not less than the fair market value on the date of
grant and shall vest over a period of two years.


The  following  table  summarizes  stock  option  activity  for the years  ended
December 31, 1997, 1998, 1999 and 2000:

                                                                            F-11


<TABLE>
<CAPTION>


                                                                  WEIGHTED
                                                                  AVERAGE            WEIGHTED         EXERCISE
                                                 NUMBER OF        EXERCISE           AVERAGE           PRICE
                                                  OPTIONS          PRICE            FAIR VALUE         RANGE
                                                 ---------        --------          ----------      --------------
<S>                                             <C>                <C>              <C>              <C>
Outstanding as of December 31, 1996 . . . .             -              -                 -                  -
Granted . . . . . . . . . . . . . . . . . .       300,000            $1.00             $5.00             $1.00
Forfeited . . . . . . . . . . . . . . . . .             -              -                 -                 -
Expired . . . . . . . . . . . . . . . . . .             -              -                 -                 -
Outstanding as of December 31, 1997 . . . .       300,000            $1.00             $5.00             $1.00

Granted . . . . . . . . . . . . . . . . . .       216,000            $1.00             $5.00             $1.00
Forfeited . . . . . . . . . . . . . . . . .             -              -                 -                 -
Expired . . . . . . . . . . . . . . . . . .             -              -                 -                 -
Outstanding as of December 31, 1998 . . . .       516,000            $1.00             $5.00             $1.00

Granted . . . . . . . . . . . . . . . . . .       300,000            $ .50             $ .37          $.32 - 1.38
Forfeited . . . . . . . . . . . . . . . . .        50,000              -                 -                 -
Expired . . . . . . . . . . . . . . . . . .             -            $1.00             $5.00             $1.00
Outstanding as of December 31, 1999 . . . .       766,000            $ .80             $3.19          $.32 - 1.38
                                                  -------           ------
Granted . . . . . . . . . . . . . . . . . .       170,000            $ .40             $ .45             $ .40
Forfeited . . . . . . . . . . . . . . . . .        50,000            $1.00             $1.00             $1.00
Expired . . . . . . . . . . . . . . . . . .            -
Outstanding as of December 31, 2000  . . . .      886,000              .69              2.78         $.32 - 1.38
                                                  =======           ======           =======         ===========

Exercisable as of December 31, 2000 . . . .       655,000
                                                  =======
</TABLE>

The  weighted-average  remaining  contractual life of options  outstanding as of
December 31, 2000 is five years.


All of the stock options granted during 1998 were immediately vested at the date
of grant.  Total expense  recognized in 1998 for option grants totaled $933,425.
Stock  options  granted  in 2000 and 1999 vest over  three  years and two years,
respectively.  No expense  was  recognized  during  2000 and 1999,  as all stock
options  granted  exercisable at the fair market value on the date of grant.  In
accordance with the provisions of FAS 123, the Company accounted for stock-based
compensation  through the Black-Scholes option pricing model. If the Company had
elected  to  recognize  compensation  cost based on the fair value of options at
grant date as prescribed by FAS 123, the Company's net loss would be as follows:


                                              2000            1999
                                            --------        --------
Net loss reported. . . . . . . . .          $906,644        $939,741
Net loss pro forma . . . . . . . .          $970,103        $950,230

Net loss per share reported. . . .          $   (.11)       $   (.11)
Net loss per share pro forma . . .          $   (.11)       $   (.12)


To determine  the impact of FAS 123, the fair value of these option  grants were
estimated  on the date of grant using the  Black-Scholes  method  based upon the
following assumptions:


                                             2000         1999

Risk-free interest rate. . . . . . .         5.9%         5.8%
Expected years until exercise. . . .           4            2
Expected stock volatility. . . . . .         203%         157%
Dividend yield . . . . . . . . . . .           0%           0%


10. SAFENET AGREEMENT


On July 30,  1997,  the  Company and  SafeNet,  formerly  Information  Resources
Engineering,  entered  into a patent  license  agreement  (the  "Patent  License
Agreement"),  whereby,  in  exchange  for  consideration  of $10,000 in cash and
SafeNet's  commitment to conduct  research and  development  programs to develop
prototypes  of  products  utilizing  the  Company's  fingerprint  identification
technology,  SafeNet  was  granted  a  license  to use  the  Company's  patented
technology in the markets defined in the Patent License Agreement.  In addition,
the Company is entitled to receive  royalties of 5% of the net selling price, as
defined in the Patent License  Agreement,  of all products sold by SafeNet which
use the Company's fingerprint identification technology.

                                                                            F-12


In the event that the Company,  with SafeNet's consent,  sells licenses to other
parties in SafeNet's markets, the Company will be required to pay SafeNet 50% of
the gross royalty income it receives from these licenses.


Under the Patent  License  Agreement,  the  Company  was  granted  the rights to
license  the  technology  developed  by SafeNet in markets in which  SafeNet was
granted a license.  The Company is not  required to pay SafeNet any royalty from
such licenses.


As part of the Patent License Agreement, the Company agreed to sell or cause its
existing  shareholders  to sell to  SafeNet  1,120,660  shares of the  Company's
common stock,  which  represented  13.7% of the outstanding  common stock of the
Company on a fully  diluted basis on the  effective  date of the Patent  License
Agreement,  for total  consideration  of $290,000 or $.26 per share. The Company
issued 121,000 shares of common stock to SafeNet for cash consideration of $1.16
per share or $140,000 (see Note 8) and the Company's existing  shareholders sold
to SafeNet 999,660 shares for total consideration of $150,000.


If  SafeNet  has  not  commercially  developed  the  licensed  technology  to  a
reasonable level by July 30, 2001, the Company shall have the right to terminate
the Patent License Agreement for a payment of $10,000.  If the Company elects to
terminate  the Patent  License  Agreement,  SafeNet  can  require the Company to
repurchase  all or part of the 1,120,660  shares of the  Company's  common stock
purchased by SafeNet pursuant to the Patent License Agreement at a price of $.26
per share.


In the fourth quarter of 2000, SafeNet  sublicensed the Patent License Agreement
to Global Biometrics for $1.9 million.  SafeNet retains its 11%- stock ownership
in the Company.


As discussed above,  SafeNet is performing research and development  services on
behalf of the Company for which the Company is not required to reimburse SafeNet
for the costs  incurred  in such  research  and  development  effort.  The costs
incurred  by SafeNet on the  Company's  behalf are  recorded  by the  Company as
research  and  development  expenses  and as a  capital  contribution  which  is
reflected as an increase in additional  paid-in  capital because the performance
of these  services  represents  a part of the  purchase  price of the  shares of
common stock sold to SafeNet by the Company  (see Note 8).  SafeNet has incurred
$736,268 in costs in developing  the licensed  technology  through  December 31,
2000, which is reflected in the accompanying financial statements.


11. INCOME TAXES


Under Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes,  a  deferred  tax asset is  established  for the  complete  amount of tax
benefits  available in future  periods from the assumed  realization  of tax net
operating loss carryforwards (NOL) and tax credits. In addition,  a deferred tax
asset or liability  is  established  for the complete  amount of tax benefits or
liabilities  from the  assumed  effect of  temporary  differences.  A  valuation
allowance is  established to adjust the deferred  assets to their  estimated net
realizable value.


Significant  components of the Company's  deferred tax assets and liabilities at
December 31, 2000 and 1999 are as follows:


                                                         2000            1999
                                                     ------------   ------------
NOL carryforwards ................................       602,877    $   595,695
Deferred tax assets related to temporary
     differences as follows
     Deferred revenue ............................        63,313         30,070
     Stock-based compensation ....................       821,721        821,720
     Amortization ................................         2,709          1,820
     Tax credits .................................          --           11,385
                                                     ------------   ------------
Total deferred tax assets ........................     1,490,649      1,460,695
                                                     ------------   ------------
Valuation allowance ..............................    (1,490,649)    (1,460,695)
                                                     ------------   ------------
Net deferred tax assets ..........................          --             --

Deferred tax liabilities related to temporary
     differences:  ...............................          --             --
Net deferred taxes ...............................   $      --      $      --
                                                     ===========    ===========


As  of  December  31,  2000  and  1999,  the  Company  had  net  operating  loss
carryforwards  for tax purposes of approximately  and $1,564,000,  respectively.
Such  carryforwards will begin to expire in 2015. The utilization of the federal
net operating loss  carryforwards  may be subject to limitation  under the rules
regarding a change in stock  ownership as  determined  by the  Internal  Revenue
Code.  No  benefit  for the  losses  has  been  recognized  in the  accompanying
financial  statements,  due to uncertainty of the Company's  ability to generate
taxable income in the future.

                                                                            F-13


12. SELLING, GENERAL AND ADMINISTRATIVE EXPENSE


Following is an analysis of selling general and administrative expenses incurred
by the Company for the years ended December 31, 2000 and 1999


                                             2000       1999
                                         ---------    --------
Commission expense ....................  $ 24,250     $  7,375
Marketing expense .....................      --        102,400
Salaries ..............................   182,415       69,953
Professional fees .....................    58,176      316,505
Insurance .............................    37,786       21,617
Other .................................    70,721       62,738
                                         ---------    --------
                                         $473,348     $580,588


13. LICENSING AGREEMENTS


In April 1998, the Company  granted three separate  exclusive  licenses to three
different  licensees  in the  medical/pharmacy,  telecommunications  and private
card/credit  markets. In March of 1999, the Company entered into a new agreement
(the "Protek  Agreement")  whereby these three exclusive licenses were canceled,
and in which  Protek will act as a marketing  agent and will sell the  Company's
licenses to third parties. Upon the execution of the agreement,  Protek received
a credit totaling  $2,625,000 for future purchases of the Company's  licenses In
addition,  for a 20 year period  beginning  on the date of the  execution of the
agreement, Protek is entitled to (1) a sales commission fee ranging between five
and ten percent of the initial license fees and manufacturing surcharges and (2)
a license  fee  percentage  ranging  between  fifteen  and fifty  percent of all
license fees,  manufacturing  surcharges and other revenues the Company receives
through Protek's licensing agreement,  less all sales commissions paid to Protek
and to unaffiliated third parties, during the entire 20-year period.


In May,  2000,  the Company  announced  an  agreement  in  principal to purchase
Protek.  In conjunction with the acquisition,  the Company received a good faith
deposit of $100,000.  The  transaction  did not  commence  and was  cancelled in
August 2000. The Company returned the deposit to Protek in the form of a 120 day
promissory  note for $25,987 and 137,000  shares of the  Company's  common stock
valued at $74,013.  The  promissory  note had an interest  rate of prime plus it
with  principal  and  interest due  December  31,2000.  The note and all accrued
interest  was  forgiven  on December  31,2000 and  recorded as a credit to other
income in the amounts of $25,987 of principal and $2,730 of accrued interest.


In August 2000,  the Company  granted to Bob Barker an exclusive  license to use
the  technology  in connection  with  detention  facility  systems in the United
States. Bob Barker paid $300,000 and received the exclusive license plus 375,000
shares of Company  common  stock.  The stock sale was valued at $210,938 and the
license was valued at $89,062. The license sale was recorded as deferred revenue
and is being  amortized  on a straight  line basis over 13.5 years  which is the
remaining life of the original patent.  The agreement requires Bob Barker to pay
the  Company a 10%  royalty  on all sales of  detention  systems  utilizing  the
Company's technology.


In October 2000,  the Protek  Agreement was  terminated  and replaced with three
identical  exclusive  licenses plus two new exclusive  licenses in the fields of
casino,  lottery gaming and mass transit.  Each new license term is 20 years and
carries a 7% royalty  payment to the Company on all sales.  Protek also received
options to purchase four additional exclusive licenses in the fields of building
access, drivers licenses, passports/VISAs, and military/citizenship cards. These
options expire June 30, 2001. All surcharges and sales commissions due to Protek
under the old agreements were eliminated.


In the last quarter of 1998,  the Company  entered  into an exclusive  licensing
agreement  with  Revolution  Labs  Inc.("Revolution")  with a term  expiring  in
January 2014 (the "Revolution Agreement"). Revolution and Protek entered into an
agreement that provides whereby Protek acquired  Revolution's  rights under this
license for FAA airports and  employees.  The license also includes an agreement
for on-going  royalty  payments to the Company of 6% of Protek's  gross  product
sales.  The $500,000  license fee was paid as a debit to the $2,625,000  credit.
With the  issuance  of FAA  license  and the two new  licenses  to  Protek,  the
$2,625,000 credit has been paid in full and is no longer a contingent  liability
of the Company.

                                                                            F-14


14. COMMITMENTS AND CONTINGENCIES


The  Company  leases its  office  facility  under an  operating  lease  which is
renewable on an annual basis. Rental expense for this lease in 2000 and 1999 was
approximately $6,283 and $7,146, respectively.


The  Company  is  subject to various  legal  matters in the  ordinary  course of
business. In the opinion of management, the ultimate outcome of any such matters
will not have a material adverse effect on the financial  condition,  results of
operations or cash flows of the Company.


15. DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS


The following disclosures of estimated fair values were determined by management
using available  market  information and  appropriate  valuation  methodologies.
Considerable  judgment  is  necessary  to  interpret  market  data  and  develop
estimated  fair  value.  Accordingly,  the  estimates  presented  herein are not
necessarily  indicative  of the amounts  that the Company  should  realize  upon
disposition  of  the  financial   instruments.   The  use  of  different  market
assumptions  and/or  estimation  methodologies may have a material effect on the
estimated  fair value.  The  carrying  amounts and  estimated  fair value of the
Company's financial instruments at December 31, 2000, were as follows:


                                                  FAIR
                                CARRYING AMOUNT   VALUE
                                ---------------  --------
Cash and cash equivalents . . .     $ 49,311     $ 49,311
Long-term convertible debt  . .      165,450      126,464


The fair values for the  Company's  short and  long-term  convertible  debt were
estimated using discounted cash flow analysis,  based on the Company's estimated
incremental  borrowing rate the Company would have likely  incurred in the event
of securing the debt without warrants.


16. SUBSEQUENT EVENTS


In the first quarter of 2001, Global Biometrics  purchased the assets of Protek,
including the exclusive licenses for casino, lottery gaming and mass transit and
the options to purchase four additional  exclusive licenses.  The exercise price
for the four options is $1,850,000 and the options expire June 30, 2001.


In February 2001,  SafeNet paid the Company $4,000 royalties on $80,000 in sales
made to a British  government  agency  that uses the  Company's  technology.  In
addition,  the Company  earned  $52,000 in license  transfer fee income from the
transfer of licenses from SafeNet and Protek to Global  Biometrics.  The Company
also received a $200,000 advance for royalties on 2001 sales.


Since December 31, 2000, the Company has sold 257,555 shares of common stock for
$103,022. The CEO and Chairman of the Board invested $28,022 of the total.


In January 2001,  the $50,000 short term note payable to a local bank was repaid
with interest.



                                                                            F-15


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


     The Company reported on a Form 8-K filed February 11, 2000, that it changed
independent public accounting firms for the fiscal year ended December 31, 1999.
No  disagreements  existed or now exist  between the former  accountant  and the
Company.


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


     The  following  is a list  of the  names  and  ages  of all  directors  and
executive officers of the Company:


                                                                  DIRECTOR OR
NAME                         AGE       POSITION                   OFFICER SINCE
----                        ----       --------                   --------------
William F. Lane              68        Chairman and Treasurer      March 1994

J. Phillips L. Johnston      61        CEO, President              June 1997
                                           and Director

Harold H. Reddick, Jr.       45        Director                    December 1997

Robert E. Huffman            45        Director                    October 2000

Mark Seifert                 44        Secretary                   October 2000


     There is one open board seat as of December 31, 2000.


     Mr. Lane  served as  Chairman,  President,  Treasurer  and Chief  Executive
Officer of the Company from March 1994 to September 1999. He currently serves as
Chairman of the Board and  Treasurer and his term of office as a Director is set
to expire in October 2001.  He is the  Company's  founder and has been active in
various  industries for over  thirty-five  years. Mr. Lane has been president of
three  different  trade  associations  and served the State of North Carolina as
Assistant  Secretary of Commerce for three years and as a Deputy Commissioner of
Motor Vehicles for two years.  Mr. Lane was the founder of four companies  which
he later sold to public  companies.  Mr.  Lane is a graduate  of North  Carolina
State  University.  He is also a graduate of The National  Association  of Small
Business  Investment  Companies  Management School and the Governor's  Executive
Management Program.


     Mr.  Johnston has served the Company as a Director  since June 1997 and now
also serves as the Company's President and CEO. His term of office as a Director
is set to expire in October  2001.  Mr.  Johnston  was  formerly  the  Chairman,
President  and CEO of Pilot  Therapeutics,  Inc.  from October 1998 to September
1999, Digital Recorders, Inc. (NASDAQ-TBWS) for nine years until April 30, 1998.
He was the CEO of Norman  Perry,  Chantry  Lamp  Company,  Erwin-Lambeth,  Inc.,
DataPix,  Inc., and Currier Piano  Company.  He was the  administrator  of North
Carolina Credit Unions. Mr. Johnston is a co-founder and founding  Chairman,  of
the  Board  of  the  North  Carolina  Electronics  and  Information   Technology
Association.  In 1997, Mr.  Johnston was named the Emerging  Entrepreneur of the
Year by the Council for Entrepreneurial Development. Mr. Johnston has a Bachelor
degree in Economics from Duke  University and a Doctor of  Jurisprudence  degree
from the University of North Carolina Chapel Hill Law School.  Additionally,  he
attended New York  University  Business School and the John F. Kennedy School of
Government at Harvard University.


     Mr.  Reddick has served the Company as its Secretary  from December 1997 to
October 2000 and is currently a director.  Since 1992, Mr. Reddick has served as
an independent financial advisor, marketing consultant and management advisor to
early-stage  companies.  He  currently  serves  on the  Board  of  Directors  of
RemoteLight.com  and  Unibuzz  Communities.  Mr.  Reddick  attended  Wake Forest
University and graduated from North Carolina State University.


     Mr. Huffman  currently serves as a director with a term expiring in October
2001.  He is a private  investor and  consultant  to  companies  involved in the
development of security technologies for  computer/telecommunications  networks.
He served as vice president of business development for SecureLogic Corporation.
He was a founder of  WheelGroup  Corporation  which was sold to Cisco Systems in
1998.  In 1982 he was a  special  agent  with the Air Force  Office  of  Special
Investigations where he ran fraud and counterintelligence investigations. As the
Special Assistant for Counterintelligence  Computer Affairs in Washington, D.C.,
he  developed  the first  computer  counter  intelligence  program  implementing
programs  to  counter  real-time  attacks on  government  computer  and  network
systems. Mr. Huffman left the Air Force in 1992 and started Trident Data Systems
where he developed the first Mission Target Analysis  Program to support the Air
Force  information  Warfare  Center.  Mr.  Huffman has degrees in Economics  and
Computer  Science  from  the  University  of  North  Carolina  Chapel  Hill  and
Charlotte.


         Mr. Seifert has served the Company as Secretary since October 2000 with
his term expiring in October 2001. He is a practicing  attorney  specializing in
positioning  legislation.  He  graduated  from Duke and  received a doctorate in
jurist prudence from Boston College.


SIGNIFICANT EMPLOYEES OR CONTRACTORS


     Katherine A. Chandler is an  independent  contractor  and s been engaged to
provide  controller  services  to the  Company.  Ms.  Chandler  formed  Chandler
Consulting, Inc. ("CCI") in 1997. CCI provides temporary controller services and
performs all types of finance related projects for small businesses.  During the
period from 1992 to 1997, Ms.  Chandler  served as Finance  Director for Qualex,
Inc., a photofinishing company with $1 billion in revenues and 12,000 employees.
Prior to Qualex, Ms. Chandler was a senior accountant at Ernst & Young, LLP. Ms.
Chandler  received  her  Bachelor  of  Science  degree  in  accounting  from the
University of North Carolina at Chapel Hill.


     Edward M. Collins is an independent  contractor engaged as the assistant to
the  President.  Mr.  Collins  received  his  Bachelor  of Arts  degree from the
University  of North  Carolina at  Charlotte  in 1992 and received his Master of
Business  Administration  from Wake Forest  University in May 2000.  Mr. Collins
served as an intern  in the  Information  Technology  Special  Projects  Unit at
Carolina  Power & Light  during the Summer of 1999 and was a Senior  Application
Consultant  at Marsh  Software  Systems  from  1995 to 1998  and an  Application
Consultant for Marsh from 1992 to 1995.


     Bill  Daubenmier  is the Chief  Information  Officer of the  Company and is
responsible for both the Internet and Intranet.


SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE


     To the Company's  knowledge,  Robert E. Huffman, a director of the Company,
and Mark Seifert,  the Company's  Secretary,  have not yet filed their  required
Form 3s.


ITEM 10. EXECUTIVE COMPENSATION.


     The  following  table sets forth certain  information  regarding the annual
compensation  for each of the last three years for the Company's Chief Executive
officer during 2000 (the "named executive officer").  No other executive officer
of the Company  earned more than  $100,000 in salary and bonus during the fiscal
year ended December 31, 2000:


                           SUMMARY COMPENSATION TABLE


                               ANNUAL COMPENSATION
                               -------------------

                                               Year                 Salary
Name and                                                             ($)
Principal Position
                                               2000               $150,000
J. Phillips L. Johnston. . .                   1999               $ 37,500
President and CEO *. . . .                     1998               $      0


         * Mr.  Johnston is the current  President  and CEO of the Company.  The
effective  date of his  appointment to such positions was September 1, 1999. Mr.
Johnston is currently serving as an officer of the Company pursuant to a written
employment agreement. Under this employment agreement, Mr. Johnston receives the
following  compensation:  (a) annual  salary of  $150,000,  subject to  possible
increases once the Company has raised  additional  capital;  (b) incentive stock
options to purchase  250,000  shares of the  Company's  common stock at a strike
price of $.312 per share,  to vest  annually - over three years,  subject to the
terms and  conditions  of the  Company's  1999  Incentive  Stock Option Plan (as
described below); (c) eligibility for additional stock options, salary increases
and bonuses based on the attainment of mutually  agreed upon annual  milestones;
(d)  participation in employee benefit plans made available from time to time to
the Company's  executive  officers;  and (e) the  arrangement is deemed to be at
will so that either  party may  terminate  the  arrangement  at any time for any
reason.


STOCK OPTION PLAN


     The Company's  Board of Directors and  shareholders  approved the Company's
1999 Stock  Option Plan (the "Plan") in October  1999.  Prior to adoption of the
Plan, the Company issued options  (non-qualified)  to purchase 516,000 shares of
the  Company's  common  stock to  officers,  directors  and  consultants  of the
Company. The purchase price for shares pursuant to such non-qualified options is
$1.00 per share.


     The  purpose  of the  Plan is to  enable  the  Company  to offer to its key
employees,  officers,  directors,  consultants and sales  representatives  whose
past,  present and/or  potential  contributions to the Company have been, are or
will be  important to the success of the Company,  an  opportunity  to acquire a
proprietary interest in the Company. The total number of shares of the Company's
common stock reserved and available for distribution under the Plan is 1,383,148
shares. These shares will underlie the options issued by the Company pursuant to
the Plan.  The option  holders  will not be  protected  against  dilution if the
Company should issue  additional  shares in the future.  Neither the options nor
the shares underlying the options have preemptive rights.


     The Company  has granted  certain  Directors  of the Company  non-qualified
options to purchase 170,000 shares of the Company's common stock during the last
fiscal year.  Each of the options have an exercise  price of $0.40 per share and
expire in  October  of 2005.  No options  were  granted  to the named  executive
officer in the year 2000.


     The following table reflects aggregate option exercises in the year 2000 by
the named executive  officer and fiscal year-end option values for options owned
by the named executive officer as of December 31, 2000.


               AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
                              FY-END OPTION VALUES


                               Number of
                               Securities              Value
                               Underlying           Unexercised
                              Unexercised          In-The-Money
                             Options At FY-       Options At FY-
                                End (#)               End ($)
                              Exercisable/         Exercisable/
Name                         Unexercisable         Unexercisable
----                         -------------         -------------
J. Phillips L. .                216,667/              $13,333
  Johnston - CEO                 83,333               $ 6.668



ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.


     The following table sets forth certain information regarding the beneficial
ownership of the shares of the  Company's  common stock as of March 15, 2001, by
(i) each person who is known to the Company to be the  beneficial  owner of more
than five percent  (5%) of the issued and  outstanding  shares of the  Company's
common stock,  (ii) each director of the Company  individually,  (iii) the Named
Executive, and (iv) all directors and executive officers as a group:

<TABLE>
<CAPTION>

NAME AND ADDRESS                       AMOUNT AND NATURE OF SHARES    PERCENT OF CLASS
OF BENEFICIAL OWNER                      BENEFICIALLY OWNED (1)         OUTSTANDING
-------------------                      ----------------------         -----------

<S>                                          <C>                        <C>
William F. Lane (2)(3)                          2,526,661                  25.18%
2506 W. Nash Street
Suite C
Wilson, NC 27896

J. Phillips L. Johnston (3)(4)                    363,500                   3.10%
Venture Bldg. II
NCSU Centennial Campus
920 Main Campus Drive
Suite 400
Raleigh, NC 27606

Ira A. Hunt, Jr.                                  502,500                   5.01%
7102 Capitol View Drive
McLean, VA 22101

Harold H. Reddick, Jr. (3)                         75,000                   *
1216 Hunting Ridge Rd.
Raleigh, NC 27615

Robert E. Huffman                                  50,000                   *
13750 San Pedro, Suite 230
San Antonio, TX 78232

Mark Seifert                                       15,000                   *
107 St. Bridges Court
Cary, NC 27511

Kaye B. Amick                                     797,439                   7.95%
1809 Faison Road
Durham, NC 27896

Information Resource Engineering, Inc.          1,120,660                  11.17%
8029 Corporate Drive
Baltimore, MD 21236

All Directors and Executive
Officers as a Group (5 persons)(1)              5,450,760                  54.31%
---------------------
* less than 1%

     (1)  Includes  shares as to which  such  persons  have the right to acquire
          beneficial  ownership  upon exercise of options which are  exercisable
          within sixty (60) days  hereof,  as follows:  Mr. Lane - 100,000;  Mr.
          Hunt - 250,000; Mr. Johnston - 133,000; and Mr. Wakil - 90,000.

     (2)  Mr. Lane owns his shares as a joint  tenant with his wife,  Barbara D.
          Lane.

     (3)  Director of the Company

     (4)  Named Executive Officer of the Company.

</TABLE>



ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.


     Director Hunt loaned the Company $5,460 in the Summer of 1999 and repaid in
full in July 1999.


     In September  1999,  former  Director Joe S. Wakil received $5,000 from the
Company to conduct a  marketing  study for the  Company.  A payable of $2,300 is
outstanding at December 31, 1999 and December 31, 2000.


     The Company  borrowed up to $45,000  from a  shareholder  at various  times
during 1999, and repaid the entire amount during 1999,  including interest which
accrued  between 7.5% and 12%. During 2000, two  shareholders  made loans to the
Company for $15,000 and $35,000  which were repaid with  interest at 11-12%.  An
interest free loan of $31,000 was made by a shareholder in October 2000 of which
$22,840 is still outstanding as of December 31, 2000.


     The Company received management assistance services during 1999 and 1998 in
the amount of $17,450 and $68,500, respectively,  from TelAmeriCard Corporation,
an entity owned by certain of the Company's significant shareholders.


     Chief Executive  Officer J. Phillips L. Johnston  guaranteed a $50,000 bank
loan which was repaid in October 2000 with 10% interest.


ITEM 13. EXHIBITS, LISTS AND REPORTS ON FORM 8-K.


     (A) EXHIBITS.


 Exhibit                                                              Sequential
   No.                    Description                                  Page No.
--------                  -----------                                 ---------
    3                     Articles  of  Incorporation,   together
                          with all amendments  thereto,  filed as
                          Exhibit 2.01 to the  Registrant's  Form
                          10-SB  filed as of November  30,  1999,
                          filed   with   the   SEC,    which   is
                          incorporated  herein  by  reference  to
                          such Form 10-SB.


   3.1                    Bylaws,  filed as  Exhibit  2.02 to the
                          Registrant's  Form  10-SB  filed  as of
                          November 30, 1999,  filed with the SEC,
                          which   is   incorporated   herein   by
                          reference to such Form 10-SB.

    4                     Form of Debenture Purchase Agreement by
                          and among the Company and purchasers of
                          the    Company's    12%     Convertible
                          Subordinated Debentures due 2002, filed
                          as  Exhibit  3.01  to the  Registrant's
                          Form  10-SB  filed as of  November  30,
                          1999,  filed  with  the  SEC,  which is
                          incorporated  herein  by  reference  to
                          such Form 10-SB.

   4.1                    Form  of 12%  Convertible  Subordinated
                          Debenture  Due 2002,  filed as  Exhibit
                          3.02  to the  Registrant's  Form  10-SB
                          filed as of November  30,  1999,  filed
                          with  the SEC,  which  is  incorporated
                          herein by reference to such Form 10-SB.

   4.2                    Registration Rights Agreement, dated as
                          of  December  31,  1997,   between  the
                          Company  and  Hutchison  & Mason  PLLC,
                          filed   as   Exhibit    3.04   to   the
                          Registrant's  Form  10-SB  filed  as of
                          November 30, 1999,  filed with the SEC,
                          which   is   incorporated   herein   by
                          reference to such Form 10-SB.

   4.3                    Stock Purchase  Agreement,  dated as of
                          August  1,  1997,   by  and  among  the
                          Company,  Li-Pei Wu and William F. Lane
                          (as   agent   for   certain   sellers),
                          together   with   Addendum   to   Stock
                          Purchase   Agreement   of   even   date
                          therewith, filed as Exhibit 3.04 to the
                          Registrant's  Form  10-SB  filed  as of
                          November 30, 1999,  filed with the SEC,
                          which   is   incorporated   herein   by
                          reference to such Form 10-SB.

   4.4                    Convertible  Debenture,  dated September
                          24, 1999, made by the  Company  in favor
                          of   Centennial    Venture     Partners,
                          LLC,  filed   as  Exhibit  3.05  to  the
                          Registrant's  Form  10-SB  filed  as  of
                          November 30,  1999,  filed with the SEC,
                          which   is   incorporated    herein   by
                          reference to such Form 10-SB ("CVP").

   4.5                    Common Stock Purchase  Warrant,  dated,
                          September 24, 1999, made by the Company
                          in favor of CVP (450,000 shares), filed
                          as  Exhibit  3.06  to the  Registrant's
                          Form  10-SB  filed as of  November  30,
                          1999,  filed  with  the  SEC,  which is
                          incorporated  herein  by  reference  to
                          such Form 10-SB.

   4.6                    Common Stock  Purchase  Warrant,  dated
                          September 24, 1999, made by the Company
                          in favor of CVP (150,000 shares), filed
                          as  Exhibit  3.07  to the  Registrant's
                          Form  10-SB  filed as of  November  30,
                          1999,  filed  with  the  SEC,  which is
                          incorporated  herein  by  reference  to
                          such Form 10-SB.

   4.7                    Common Stock  Purchase  Warrant,  dated
                          September 24, 1999, made by the Company
                          in favor of CVP (200,000 shares), filed
                          as  Exhibit  3.08  to the  Registrant's
                          Form  10-SB  filed as of  November  30,
                          1999,  filed  with  the  SEC,  which is
                          incorporated  herein  by  reference  to
                          such Form 10-SB.

   4.8                    Common Stock  Purchase  Warrant,  dated
                          September 24, 1999, made by the Company
                          in favor of CVP (up to $500,000), filed
                          as  Exhibit  3.09  to the  Registrant's
                          Form  10-SE  filed as of  November  30,
                          1999,  filed  with  the  SEC,  which is
                          incorporated  herein  by  reference  to
                          such Form 10-SB.

   4.9                    Investor Rights Agreement,  dated as of
                          September  24,  1999,  by and among the
                          Company  and  certain  holders  of  its
                          capital stock, filed as Exhibit 3.10 to
                          the Registrant's Form 10-SB filed as of
                          November 30, 1999,  filed with the SEC,
                          which   is   incorporated   herein   by
                          reference to such Form 10-SB.

  4.10                    Shareholders Agreement, dated September
                          24, 1999,  by and among the Company and
                          certain   shareholders  and  investors,
                          filed   as   Exhibit    3.11   to   the
                          Registrant's  Form  10-SB  filed  as of
                          November 30, 1999,  filed with the SEC,
                          which   is   incorporated   herein   by
                          reference to such Form 10-SB.

  4.11                    Form of Warrant to Purchase Common Stock
                          issued  by   the  Company   to   various
                          investors in 2000.

   10                     License  Agreement,  dated  October  1,
                          1999,    between    the   Company   and
                          BrentScott  Associates,  LLC,  filed as
                          Exhibit 6.01 to the  Registrant's  Form
                          10-SB  filed as of November  30,  1999,
                          filed   with   the   SEC,    which   is
                          incorporated  herein  by  reference  to
                          such Form 10-SB.

  10.1                    Patent  License  Agreement,  dated July
                          30,  1997,   between  the  Company  and
                          Information Resource Engineering, Inc.,
                          filed   as   Exhibit    6.02   to   the
                          Registrant's  Form  10-SB  filed  as of
                          November 30, 1999,  filed with the SEC,
                          which   is   incorporated   herein   by
                          reference to such Form 10-SB.

  10.2                    License  Agreement,  dated  October 31,
                          1999,    between    the   Company   and
                          Revolution  Labs, Inc.  ("Revolution"),
                          together with the  agreement  among the
                          Company,   Revolution   and  Protective
                          Technologies, Inc. ("Protek") regarding
                          the  potential  purchase  by  Protek of
                          Revolution's  fields of license,  filed
                          as  Exhibit  6.03  to the  Registrant's
                          Form  10-SB  filed as of  November  30,
                          1999,  filed  with  the  SEC,  which is
                          incorporated  herein  by  reference  to
                          such Form 10-SB.

  10.3                    Agreement, dated  March  30, 1999, among
                          Safe Guard  Corporation,  Protek, Secure
                          Card International,  Inc., International
                          Biometrics   Incorporated,   Tele-Guard,
                          Inc. and the Company, filed  as  Exhibit
                          6.04  to  the  Registrant's  Form  10-SE
                          filed  as  of  November  30, 1999, filed
                          with  the  SEC,  which  is  incorporated
                          herein by reference to such Form 10-SB.

  10.4                    License  Agreement  dated  February  2,
                          1999  between the Company and  Power^Up
                          Marketing Corporation, filed as Exhibit
                          6.05  to  the  Registrant's  Form,10-SB
                          filed as of November  30,  1999,  filed
                          with  the SEC,  which  is  incorporated
                          herein by reference to such Form 10-SB.

  10.5                    Debenture  Purchase  Agreement,   dated
                          September 24, 1999, between the Company
                          and   certain   purchasers,   filed  as
                          Exhibit 6.06 to the  Registrant's  Form
                          10-SB  filed as of November  30,  1999,
                          filed   with   the   SEC,    which   is
                          incorporated  herein  by  reference  to
                          such Form 10-SB.

  10.6                    1999 Stock Option Plan, filed as Exhibit
                          6.07  to  the  Registrant's  Form  10-SB
                          filed as of November  30,   1999,  filed
                          with  the  SEC,  which  is  incorporated
                          herein  by reference to such Form 10-SB.

  10.7                    Form   of   Incentive    Stock   Option
                          Agreement, filed as Exhibit 6.08 to the
                          Registrant's  Form  10-SB  filed  as of
                          November 30, 1999,  filed with the SEC,
                          which   is   incorporated   herein   by
                          reference to such Form 10-SB.

  10.8                    Employment Agreement between the Company
                          and  CEO/President  Mr. J.  Phillips  L.
                          Johnston, dated   November 9, 1999 filed
                          as Exhibit 10.8 to the Registrant's Form
                          10-KSB for the  year ended December  31,
                          1999 which  is  incorporated  herein  by
                          reference to such Form 10-KSB.

  10.9                    License    Agreement  with   Bob  Barker
                          Company, Inc. filed as Exhibit 10 to the
                          Registrant's Form 10-QSB for the quarter
                          ended  September  30,  2000,  which  is
                          incorporated herein by reference to such
                          Form 10-QSB.

  10.10                   License  Agreement  between  the Company
                          and Protective  Technology,  Inc.  dated
                          October 24, 2000.

  10.11                   Amended and Restated License Agreement
                          dated February, 2001 between the Company
                          and Protective Technologies, Inc.

  10.12                   Amended and Restated License Agreement
                          dated February, 2001 between the Company
                          and Protective Technologies, Inc

  10.13                   Amended and  Restated  License Agreement
                          dated February, 2001 between the Company
                          and Protective Technologies, Inc

  10.14                   Amended and Restated License Agreement
                          dated February, 2001 between the Company
                          and Protective Technologies, Inc

  10.15                   Amended and  Restated  License Agreement
                          dated February, 2001 between the Company
                          and Protective Technologies, Inc

  10.16                   Amended and Restated License Agreement
                          dated February, 2001 between the Company
                          and Protective   Technologies, Inc

     (B) REPORTS ON FORM 8-K.


     None.


                                   SIGNATURES


In accordance  with Section 13 or 15(d) of the Exchange Act, the  registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.


                                               ID TECHNOLOGIES, INC.


                                          BY /S/ J. Phillips L. Johnston
                                   --------------------------------------------
DATE: March 30, 2001                J. Phillips L. Johnston, President and CEO


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


SIGNATURE                                CAPACITY                                                DATE
---------                                --------                                                ----
<S>                                     <C>                                                   <C>

/S/ J. Phillips L. Johnston
------------------------------
J. Phillips L. Johnston                  President and Director
                                         (Principal Executive Officer)                           March 30, 2001

/S/ William F. Lane
------------------------------
William F. Lane                          Chairman, Director and Treasurer                        March 30, 2001
                                         (Principal Financial and Accounting Officer)

/S/ Harold H. Reddick, Jr.
------------------------------
Harold H. Reddick                        Director                                                March 30, 2001


------------------------------
Robert E. Huffman                        Director                                                March 30, 2001


</TABLE>