U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   Form 10-KSB

(Mark One)

[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

For the fiscal year ended December 31, 1999

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

For the transition period from _______________ to ________________

Commission file no. 000-29201

                                   ELVA, INC.
                  --------------------------------------------
               (Name of small business registrant in its charter)

          Florida                                              65-0790761
-------------------------------                             -------------------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                               Identification No.)

222 Lakeview Avenue, Suite 415
West Palm Beach, Florida                                         33401
- -------------------------------------                        ----------
(Address of principal executive offices)                       (Zip Code)

Registrant's telephone number (561) 659-6530

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

                                                  Name of each exchange on
      Title of each class                           which registered

         None
-----------------------------                     -------------------------

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

                         Common Stock, $.0001 par value
                       -----------------------------------
                                (Title of class)
 Copies of Communications Sent to:

                                    Donald F. Mintmire, Esq.
                                    Mintmire & Associates
                                    265 Sunrise Avenue, Suite 204
                                    Palm Beach, FL 33480
                                    Tel: (561) 832-5696
                                    Fax: (561) 659-5371


<PAGE>



     Check whether the registrant (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  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

     State registrant's revenues for its most recent fiscal year. $448,696.00

     Of the  21,500,000  shares of voting  stock of the  registrant  issued  and
outstanding   as  of  December   31,   1999,   6,897,200   shares  are  held  by
non-affiliates.  Because of the absence of an established trading market for the
voting stock,  the registrant is unable to calculate the aggregate  market value
of the voting  stock held by  non-affiliates  as of a specified  date within the
past 60 days.


                                        2

<PAGE>



PART I

Item 1.  Description of Business

(a) Development

         ELVA,  Inc.  (the  "Company"  or  "ELVA")  was  organized  as a Florida
corporation  on August 15,  1997.  The  original  purpose of the  Company was to
develop and apply new and profitable  applications of computer technology in the
general  marketplace.  Introduction to a French company's unique  application of
such technology  resulted in the entry into a Voluntary Share Exchange Agreement
between the Company and the shareholders of the French company ELVA, S.A.("ELVA,
SA").  Recognizing that ELVA, SA had invaluable technology and computer software
designing assets,  the Company's  management  renamed the Company ELVA, INC. See
Part I, Item 1. "Description of the Business - (b) Business of Registrant".  The
United States Company's  executive offices are presently located at 222 Lakeview
Avenue,  Suite 415, West Palm Beach,  Florida 33401 and its telephone  number is
(561)  659-6530.  It also has offices  located at 4540 Campus Drive,  Suite 108,
Newport Beach, CA 92660 and its telephone number is (949) 863-0670.  Its offices
outside the United States are located at 74,av Edouard Vaillant, 92100 Boulogne,
France  and its  telephone  number is  33-(0)1-41-31-66-77  and at 89 Neil Road,
0888849 Singapore and its telephone number is (65) 326-07-88.

         In April 1997,  the Company  issued  9,000,000  shares of Common Stock,
$0.0001 par value per share as founders shares to its sole officer and director.
For such issuance, the Company relied upon Section 4(2) of the Securities Act of
1933,  as  amended  (the  "Act")  and  Rule  506 of  Regulations  D  promulgated
thereunder ("Rule 506") and Section 517.061(11) of the Florida Code. See Part I,
Item 7. "Certain Relationships and Related  Transactions";  and Part II, Item 4.
"Recent Sales of Unregistered Securities."

         In October  1997,  the Company  sold  557,376  shares of common  stock,
$.0001 par value per share (the  "Common")  for cash in the amount of $5,573.76,
pursuant to Section 3(b) of the  Securities Act of 1933, as amended (the "Act"),
and Rule 504 of  Regulation D promulgated  thereunder  ("Rule  504")and  Section
517.061(11)  of the  Florida  Code.  These  offerings  were made in the State of
Florida. See Part II, Item 4. "Recent Sales of Unregistered Securities."

         In November 1997,  the Company sold  1,200,000  shares of common stock,
$.0001  par value per  share  (the  "Common  Stock")  for cash in the  amount of
$12,000.00,  to fourteen (14) Georgia  residents,  twelve (12) Florida residents
and three (3) French  nationals,  pursuant to Section 3(b) of the Securities Act
of 1933,  as amended  (the  "Act"),  and Rule 504 of  Regulation  D  promulgated
thereunder  ("Rule  504"),  Section  10-5-9(13)  of the Georgia Code and Section
517.061(11) of the Florida Code. See Part I, Item 7. "Certain  Relationships and
Related  Transactions";  and  Part II,  Item 4.  "Recent  Sales of  Unregistered
Securities."

         In June 1998,  the Company sold  9,000,000  shares of its common stock,
$.0001 par value per share (the "Common"),  to one(1)  purchaser for cash in the
amount of  $32,500.00.  This offering was conducted  pursuant to Section 4(2) of
the Securities Act of 1933, as amended (the "Act") and Rule 506 of Regulations D
promulgated thereunder ("Rule 506") and Section 517.061(11) of the Florida Code.
See Part I, Item 7. "Certain Relationships and Related  Transactions";  and Part
II, Item 4. "Recent Sales of Unregistered Securities."


                                        3

<PAGE>



         In September  1998, the Company sold 2,700,000  shares of common stock,
$.0001 par value per share (the "Common"), for cash in the amount of $54,000.00,
pursuant to Section 3(b) of the  Securities Act of 1933, as amended (the "Act"),
and Rule 504 of Regulation D promulgated  thereunder  ("Rule 504").  See Part I,
Item 7. "Certain Relationships and Related  Transactions";  and Part II, Item 4.
"Recent Sales of Unregistered Securities.

         On December  18th,  1998,  the Company  entered into a Letter of Intent
whereby the Company agreed to acquire the issued and outstanding shares of ELVA,
SA in a share exchange  agreement with its shareholders.  The terms of the share
exchange  agreement by the Company  required that 14,160,000 Rule 144 restricted
shares of the Company be issued to the  shareholders of ELVA, SA in exchange for
all but 10 of the 26, 336 shares  (representing  99.6% of the outstanding stock)
of ELVA,  SA  stock  which  is  required  by  French  law to be owned by  French
citizens.  In  addition,  on  December  21,  1998,  at the  closing of the above
acquisition  and pursuant to the  Company's  Letter of Intent with ELVA,  SA the
Company by agreement  canceled  9,000,000 shares of common stock formerly issued
to the Company's sole director, President,  Secretary and Treasurer. The Company
also by  agreement  canceled  the 557,376  shares of common  stock (the  "Common
Stock") it sold to three (3)  individuals  for cash in the amount of  $5,573.76.
Lastly,  in  accordance  with the terms of the  Company's  Letter of Intent,  it
repurchased for $32,500.00 in cash the previously  purchased 9,000,000 shares of
Rule 144 Common Stock which shares the Company subsequently  canceled.  See Part
II, Item 4.  "Recent  Sales of  Unregistered  Securities".  See Part IV. Item 1.
"Index to Exhibits, Material Agreements"; Part I, Item 7. "Certain Relationships
and Related  Transactions"  and Part II, Item 4. "Recent  Sales of  Unregistered
Securities".

         In  conjunction  with the  acquisition  by the Company of  ELVA,SA,  it
assumed  responsibility for repayment of a loan to a third party, Meadlight TMO,
a French company. A condition of the above acquisition  entailed the issuance of
3,440,000  shares of the  Company's  shares of common stock in  settlement  of a
$204,550 loan made to ELVA,SA. In March, May and September 1999, ELVA, SA, now a
subsidiary of the Company,  received additional  traunches of this loan from the
now related party in the total amount of approximately $500,000 US dollars. This
additional  loan is payable in full on January 1, 2002 and the  Company  can, at
its option. prepay all or part of this amount without  penalty.(See:  Part F/S -
Note 5 - Notes to Consolidated Financial Statements -F-9)

         Upon  completion  of the  share  exchange  agreement  ELVA,  SA and its
shareholders  hold  17,200,000  shares of the  Company's  21,500,000  issued and
outstanding  shares of common  stock.  The Company  also amended its Articles of
Incorporation  changing its name to ELVA, INC.  effective  immediately  upon the
closing of the agreement.  A new Board of Directors was appointed,  new officers
were  named for the board  and the  resignation  of the  Company's  former  sole
officer and director was accepted with regret.

         There are no  preliminary  agreements  or  understandings  between  the
Company and its officers and  directors or  affiliates  or lending  institutions
with respect to any loan agreements or arrangements.

         The Company intends to offer  additional  securities  under Rule 506 of
Regulation  D under  the Act  ("Rule  506) to fund its  short  and  medium  term
expansion plans.  (See Part I, Item 1. Description of Business - (b) Business of
Registrant").

         See (b) "Business of Registrant" immediately below for a description of
the Company's proposed business.

         (b)      Business of Registrant.

                                        4

<PAGE>



General

         One  of  the  main   objectives  of  ELVA  is  to  participate  in  the
globalization  of e-commerce,  through  providing  secure online  purchasing and
customer  loyalty  incentives  between  individuals and businesses.  The latter,
whether  they are banks or  retailers,  telecommunication  operators or internet
service  providers,  issue  cards in order to allow for  payment  and to promote
customer  loyalty.  ELVA  foresees a consumer  that can order goods and services
both over the telephone and over the internet anytime and anywhere, with maximum
security,  with the same card and more often, with ones preferred  retailers and
service  suppliers.  This system,  based on VocaliD(R)  smart card  issuing,  is
described as the Company's " butterfly  scheme " through which customer  loyalty
is promoted,  cross selling and  co-marketing  occurs  naturally  producing more
reliability and profitability.

         VocaliD(R) is a new  technology  that marries the security of the smart
card technology with  telecommunications  simple and basic feature:  sound.  Any
country can use the Company's  VocaliD(R) smart card since a simple telephone is
enough to make it work. From this point forward,  the Company's VocaliD(R) smart
card will no longer require smart card readers.

         The Company's main goal has always been to conceive, develop and market
an online  authentication  smart card technology.  After three years of research
and development,  including the setting of industrial  processes,  the Company's
VocaliD(R)  is  ready to  enter  its  first  mass  production  cycle in the year
2000["Y2K"].

         The Company  believes  that its  technology  may become a standard  for
mobile online authentication devices usable by the general public for electronic
secured exchanges including e- commerce. This belief has been bolstered recently
when the Company's  VocaliD(R)  card was  recognized  and awarded the " best new
technology  of  the  year  "  during  the "  Cartes  98 "  exhibition  which  is
acknowledged  by the  industry  as the  most  important  smart  card  exhibition
worldwide.

         The  Company's  VocaliD(R)  smart  card  technology  has  designed  and
implemented  a memory  card  product in  accordance  with a  proprietary  online
authentication protocol. The Company's smart card, VocaliD(R),  can be used from
an  ordinary  telephone,  a  magnetic  stripe  reader,  a chip card  reader or a
personal   computer.   The  basic   function  of  VocaliD(R)  is  secure  online
authentication.  Its  proprietary  design offers  unique  solutions for ensuring
secure electronic  transactions  using the Company's smart card technology.  The
Company's   research   efforts  have  enabled  it  to  develop   secure   online
authentication  solutions  centered  on smart  card  technology.  The  Company's
proprietary  technology enables electronic  commerce together with point-of-sale
transactions,  telephonic  transactions payment and customer loyalty incentives.
The product's registered trade name is VocaliD(R).

         The  Company  believes  it is  positioned  in the  market  for  further
development of the audio sequenced smart card.  Near-term  marketing efforts are
focused on further  solidifying  market  position and using such position as the
foundation  for expansion  into  additional  markets such as the health card and
transportation card markets.

         In addition to the  development  of the  VocaliD(R)  technology  and in
order to provide  traditional  smart card  applications  for some  clients,  the
Company has developed  customized software and integrated  appropriate  hardware
technologies.   The  Company  believes  that  its  ASIC  Design  engineers  have
sufficient  expertise  in  hardware  technology  and VHDL and  Verilog  modeling
computer programming languages necessary for such development efforts.



                                        5

<PAGE>


VocaliD(R), the online Smart Card

         A VocaliD(R) smart card is a credit card-sized plastic card in which an
integrated  circuit,  containing a memory chip is embedded.  The  authentication
data on the  card  can be read  via the  emission  of a  secure  audio  sequence
generated  by vibration of the card.  The use of  VocaliD(R)  smart card is very
simple:  pressing  the module with the thumb  activates  the card that emits the
signal  through the  telephone set or the computer  microphone.  Once the remote
server receives the signal,  it deciphers the information,  with the application
of ELVA's deciphering software.  Once the card is authenticated,  the server may
ask the card  holder to  authenticate  himself  by  entering  his PIN.  Then the
service is open. The above sequence is not reusable for the  cryptographic  part
of the information is random and synchronizes only with the server.

         With  a  card  reader,  be  it a  magnetic  stripe  or a  chip  reader,
VocaliD(R)  is  used  as  a  traditional  card.  Telephone  sets  and  computers
microphone are the natural  readers of VocaliD(R)  smart card. The main function
of the  card is the  universal  and  secure  online  authentication;  as for the
applications,  like customer  loyalty  tracking,  payment systems or whatsoever,
they are  exclusively  processed by the remote server,  whether it's an internet
service or an interactive voice response system.  The whole information  related
to the card owner is stored in the server data base. Therefore, it is useless to
store  anything  more than the secure  authentication  function  inside the card
itself. The traditional smart card, based on an off line model, is not used like
this.

         ELVA's online vision is the following: the secure authentication key is
VocaliD(R) smart card, the card itself is not  multifunction ; it is just highly
secure, online and multi reading without requiring specific readers.  Therefore,
VocaliD(R)   technology   turns  existing   online  systems  into  secure  multi
application  systems.  The Company  believes its solution  will truly be readily
available and cost effective from Y2K,  everywhere in the world,  provided there
are  telephones.  In addition to this global  positioning,  ELVA's  partners and
managers  believe that the VocaliD(R)  model meets many of the modern one to one
market data mining requirements in terms of customer loyalty, security and cross
selling within a multi platform environment.

         The VocaliD(R)'s natural environment is characterized by six trends and
three VocaliD(R) features:

Six trends

     1.   Online exchanges explosion (call centers, IVR, hot lines, internet)
     2.   Globalization of card concepts in daily life
     3.   Tremendous  endeavors  of smart  card  manufacturers  to market  their
          products worldwide
     4.   Evolution of stakes and  techniques in marketing,  bringing about more
          and more customer loyalty programs
     5.   Increase in one to one strategies  with customers and  product/service
          providers
     6.   Development of multi service options and co branding

Three VocaliD(R) features

     1.   Online multi access
     2.   Multi application
     3.   Security



                                        6

<PAGE>



THE SMART CARD INDUSTRY

         Smart  cards  were first  developed  in the late  1960's in France.  At
present  smart  card  technology  is  established  and used in Europe  and Asia.
According  to Ovum Ltd.,  the market for smart card units will reach 2.7 billion
by 2003. The largest markets will be in the prepayment applications, followed by
access control,  and electronic cash  applications.  According to a recent study
from  Dataquest,  the overall market for memory and  microprocessor-based  cards
will grow from 544 million  units in 1995 to 3.4 billion  units by 2001. Of that
figure,  microprocessor-based  smart cards,  which accounted for only 84 million
units  in 1995  will  grow  to 1.2  billion  units  in  2001.(Source:  Microsoft
Corporation:       HTTP://WWW.MICROSOFT.COM/WINDOWSCE/SMARTCARD/BACKGROUND.ASP.)
According to research firm, SJB Research,  the smart card market is growing at a
rate close to 50% a year, with three to four billion cards expected to be issued
in 2000. (Source: Smart Card Central: HTTP://WWW.SMARTCARD  RESEARCH.COM/REPORTS
/SJB.HTML.)  Furthermore,  Killen &  Associates,  Inc.,  also a  research  firm,
projects  that the smart  card  market  will grow from a world wide total of 250
million transactions in 1996 to 25 billion in 2005. (Source:  Killen Associates,
Inc., quoted in the SMART CARD FORUM, HTTP://WWW.SMARTCRD.COM/INFO/MORE/FACTOID.
HTM.) The smart card market in North  America  totaled 13 million  cards in 1996
and is expected to grow to 273 million by 2001 and the projection for 2005 is an
estimated  543 million  cards in North  America.  (Source:  Schlumberger  Public
Relations Department,  "Schlumberger  Electronic  transactions," quoted in SMART
CARD FORUM, HTTP://WWW.SMARTCRD.CWOM/ INFO/MORE/FACTOID.HTM.)

         At first mainly installed in pay telephones,  smart cards are now being
used for mobile phones, customer loyalty tracking, payment, transportation,  car
parking,  arcade games and vending  machines.  Any coin operated  machine can be
converted to a smart card format.  Other  applications  include automated teller
machines,  point-of-sale terminals, personal computers, electronic ticketing and
automatic  fare   collection.   Theoretically,   smart  cards  can  be  utilized
everywhere;  however,  one of the main problems of  traditional  off  line-based
smart card systems is the need for specific  readers,  which are  expensive  and
restrictive.

PAYMENT  VEHICLE CARDS -- The most familiar of these cards are the  stored-value
payment  vehicles,  commonly known as electronic purse or wallet cards,  credit,
debit and automated  teller machine cards,  all of which are disposable or value
reloadable.  Some library  applications  use the same structure  using tokens or
units instead of a monetary value.

ACCESS  AND  SECURITY  KEY CARDS -- These  cards  are used to store  and  access
identification  and  authentication   information,   including   biometrics  and
encryption  technology,  such as digital  certificates,  for control of physical
access, online access and for facilitating secured commerce on intranets and the
Internet.

INFORMATION  MANAGEMENT CARDS -- These cards enable the storage and manipulation
of data of all kinds, including emergency information,  medical history, account
management  information,  expense  tracking and various loyalty  programs.  Such
cards may be used to track and  cross-reference  consumer  purchasing  habits to
provide  marketing  information to retailers,  distributors and manufacturers of
various products and services.

         The  manufacturing  cost of a  traditional  smart card varies from less
than $1 to  approximately  $10 depending on the amount of  information  the card
holds and the  complexity of the microchip or its operating  system.  Similarly,
the cost of a reader  device  can vary  from  $50 to  $2,000,  depending  on the
complexity and functionality of the terminal.

                                        7

<PAGE>



VocaliD(R) is the fourth step in plastic card technology.

         Company  analysis of the foregoing data indicates that VocaliD(R) smart
card    technology    represents   the   next   step   in   the   evolution   of
credit/debit/loyalty  instruments and related products and services.  VocaliD(R)
Smart card systems differ from other payment  mechanisms in their ability to set
up secure online  authentication models without requiring specific card readers.
Moreover, the philosophy of the system is the following:  "let the remote server
carry out the processing  part".  This means that the card supplies the mobility
and a part of the  security of the system  while the server  supplies  the other
part of the latter and 100% of the applications.  The  sophisticated  encryption
algorithms and other security  mechanisms  that the chip employs  provide secure
information protection.

         Each smart card has an  integrated  circuit  embedded,  which  gives it
power to perform many  different  functions.  With a smart card,  consumers will
have  the  capability  to  make  secure  purchases,   pay  for  phone  calls  or
transportation  as  well as  make  credit  and  debit  purchases.  Historically,
magnetic  stripe cards,  which  represent  the first  technological  step,  were
followed by chip cards, that works in contact with the reader. A new interesting
recent  family of chip  cards is  contactless  smart  cards  which are the third
technological   step.   Those  are  slowly  emerging  in  specific  fields  like
transportation where the card does not need to be in contact with the reader.

         There are two main  differences  between magnetic stripe cards and chip
cards: The first type are not very secure (criminals duplicate  information from
the magnetic  stripe of a credit or debit card and use such clones for their own
benefit)  and work "on line".  The second type are really  secure but works "off
line".  What they have in common is that they both require specific card readers
; therefore, they cannot be used anytime nor anywhere (at home for example).

         The next step in plastic card evolution is " acoustic" technology.  The
latter  is a chip  card  technology  that  works  "online",  offers a chip  card
security and can be used with or without specific readers (since it works with a
simple  telephone or a computer  microphone).  These are the features  that make
VocaliD(R) the universal  online  authentication  smart card. These features are
patented by ELVA.  VocaliD(R)  is the first and still the only acoustic ISO chip
card in the world.

         That is the solution for reliable, fast and convenient security for any
transaction  anytime and  anywhere.  The Company  believes  that  VocaliD(R)  is
already a standard in several  aspects:  it utilizes the ISO 7816 standard;  its
manufacturing is based on existing smart card processes and available equipment;
and its  marketing  medium is already  widely  used and  accepted by the general
public as well as user friendly.

         As  a  result  of  the  Company's  advanced  authentication   protocol,
VocaliD(R) enables higher value online services over the internet,  by telephone
and in real life stores.

         The Company believes widespread  acceptance and use of VocaliD(R) smart
card  technology  will occur  following the transition from magnetic stripe only
infrastructure  to one that includes both  magnetic  stripe and audio  sequenced
smart cards which do not require new  readers.  This may be the most  acceptable
means to meet, on a worldwide scale, the eventual and unavoidable convergence of
traditional purchase in stores and electronic remote services.

         The Company believes its technology will open up new opportunities with
regard  to the way  people  interact  with  financial  institutions,  healthcare
providers,   retailers   and  others  by  enabling  an  individual  to  exchange
information and payment through the smart card VocaliD(R) microchip technology.

                                        8

<PAGE>



Most  information  based  industries  are candidates  for  VocaliD(R)smart  card
conversion and utilization.

         The Company  believes it is well  positioned  to take  advantage of the
developing  VocaliD(R) smart card technology and utilization based upon a number
of  factors.  These  factors  include:(i)  our  engineering  know-how,  patents,
software tools and technical support,  (ii) our knowledge and under- standing of
the  technology  and  the  market,   (iii)  our   successful   development   and
implementation of our product,  (iv) our commitment to quality and innovation in
our product line,  and (v) our ability to create  applications  quickly in for a
rapidly changing industry.

         COMPETITIVE ADVANTAGES

         The Company believes its exclusive  acoustic  interface to be unique in
terms of its ability to be universal read. When traditional smart card, based on
off line secured  functions require specific card readers,  VocaliD(R)  requires
none.  Its  economic  advantage  is that the  Company  does not have to  install
expensive card readers everywhere.

         Other acoustic authentication devices exist, but none of them are smart
cards ; since  they are not ISO format  devices,  they are more  expensive  than
VocaliD(R) (whose manufacturing is based on the smart card process with standard
industrial equipment). Moreover, other acoustic authentication devices cannot be
used  in  magnetic  stripe  or chip  readers,  which  means  that  they  are not
universal.  The Company  believes that its VocaliD(R)  allows for the merging of
e-commerce  with the real  world in terms of secure  authentication  and  global
marketing  while being cost effective,  widely  available and usable at the same
time.

         The Company's  VocaliD(R)  product  utilizes  object-oriented  computer
software programming applications. This methodology allows Company engineers and
programmers to create sets of reusable  programming language blocks, or building
blocks,  that may be  combined to form a complex  system.  Our  software  design
developmental  efforts have produced a library of reusable  individual  software
language blocks for a variety of personal computer and smart card devices. Using
this extensive  collection of  programming  language  blocks or building  blocks
provides:(i) a simpler system design which reduces system  maintenance costs, as
well as allowing for the reusability of these programming language blocks across
a more divers range of smart card and  VocaliD(R)  smart card systems,  (ii) the
ability to respond  rapidly to customers that have a specialized  range of smart
card and  VocaliD(R)  smart card  needs;  and (iii) the  ability  to  seamlessly
integrate   our    proprietary    software   with   many   operating    systems,
office-management and point-of-sale systems.

         The Company  continues to have a  significant  commitment to innovation
and quality in the  development  of  products.  A stringent  set of standards is
adhered to by the Company.  These standards include (i) compatibility with other
operating  systems:  our engineers design our software products to be compatible
with all major  operating  SYSTEMS for the  various  system  architectures.  The
Company  believes  that  the  compatibility  of our  products  is key to  market
acceptance   and  will  provide  a  distinct   advantage;   (ii)  market  driven
enhancements and product offerings:  our product design and architecture provide
flexibility  and  adaptability to emerging  technologies;  and (iii) support for
industry standards:  our engineers follow strict adherence to industry standards
as  promulgated  by the  International  Standards  Organization.  We also follow
different  operating  SYSTEMS  standards  and  recommended  configurations  when
developing our products for those operating SYSTEMS.




                                        9

<PAGE>


Offline Disadvantages vs. Online Advantages

         Traditional  smart  cards are " off line ". This  means that their chip
carries out several functions in addition to the authentication  one. Therefore,
the  information is located at two different  places:  in the card and in a data
base which means, most of the time that data desynchronization occurs.

         Another  problem is that if we need to change the application or to add
new ones, new cards must be issued since the previous ones are unable to upgrade
(like a computer could for instance). This means new developments and of course,
additional costs.

         Moreover,  in an  offline  smart  card the  chip  never  works  without
specific  readers ; without it they cannot be processed,  read or scanned.  Chip
readers are expensive  and will probably  never be found at every place they are
needed. In addition,  the security level is not the same at each use: in a store
equipped with a reader,  the chip will be used, but at home,  over the internet,
the card holder  will have to enter  numbers  and codes  unless his  computer is
fitted with a reader.

         VocaliD(R)  is "  online  ".  This  means  that  the  chip  shares  the
authentication  function  with a remote server that carries out all card related
applications. The information and applications, stored only in a database inside
a remote server,  are updated in real time, at each use. New applications  never
require  the  issuing  of new cards  since  they are  located  in the server and
upgraded at the same place (not in the card).

         Moreover,  with VocaliD(R),  the online secure authentication  function
can be processed on line without requiring a chip reader, thanks to its acoustic
interface. Therefore, VocaliD(R) can enter any country immediately (not only the
ones  equipped with smart card readers) and ensure a smart card security at each
use.

         How can an off line  smart card  offer a  customer  loyalty  program in
addition to phone  applications,  home banking services and theatre  reservation
with the same level of security and from  everywhere  the holder stands ? With a
very big chip and a card  reissuing-based  model at each new function issue. The
Company's  VocaliD(R)  system can  provide the above with the same chip card all
the time,  used from any telephone or multimedia  computer,  or even with a card
reader (provided it is used online). The VocaliD(R) card never has to be changed
(as long as the embedded  battery  supplies  enough  power to make it work:  2/3
years)

         North  America is the online  part of the world and has no  significant
number of smart card readers.  The Company  believes  North America is ready for
the VocaliD(R) system.

BUSINESS STRATEGY

         During the fiscal year ended  December  31, 1999 and 1998,  the Company
had revenues of $ 448,696 and $ 297,153 respectively.  Our VocaliD(R) smart card
technology  shall focus on e- commerce  environments  including home banking and
telecommunication  services.  This technology is capable of being customized for
other  markets.  The  Company is  encouraged  by the  results  of these  initial
programs,  and the Company believes that such programs will lead to the national
introduction and installation of such products.

         The Company's objective is to develop VocaliD(R) until the card reaches
international  leadership and becomes a leading provider of smart card solutions
across a wide range of applications.




                                       10

<PAGE>


Our strategy is mainly the following:

     To focus on product  development in order to widely open the technology and
     ensure its evolution.  That means that ELVA will reinforce its  engineering
     know-how,  patents,  software tools and technical support and innovation in
     the area of VocaliD(R)  smart card. This includes the industrial  processes
     related to quality, productivity and profitability.

     To ensure the  availability of the  VocaliD(R)smart  card cards to meet the
     market demand and the  conducting of pilot tests in all areas.  The Company
     will not wait for partners or licensees to assist in developing  the market
     ELVA intends to introduce its  VocaliD(R)  technology  through an operating
     cooperation with its historical and current partners around the world. ELVA
     will, within a few months following introduction, become more involved with
     the VocaliD(R)  manufacturing  matters and maintain a license policy toward
     the smart card industry worldwide.

     To continue  development  of marketing,  sales efforts and expertise in the
     area of  VocaliD(R)  smart  cards to  maintain  demand  and to  offer  this
     expertise  to future  partners  such as smart  card  manufacturers,  system
     integrators, value added resellers.

         The  Company's   market  focus  will  be  on   VocaliD(R)   smart  card
applications in consumer  situations that require card usage on a weekly or more
frequent basis or on an event basis.

         Although we expect to market  smart card SYSTEMS  directly  through our
management  and  employees,  we intend to obtain the  assistance of a network of
prescribers to enhance rapid growth.  These  additional  unrelated third parties
will enable the Company to more rapidly market the VocaliD(R) smart card system.
In  addition,  the  Company  will  seek  licensing  arrangements  and  strategic
marketing alliances or other arrangements with SYSTEMS integrators,  value-added
resellers and other smart card vendors and manufacturers. Fulfillment of product
orders and  installations  will be managed  directly by both our staff and these
partners and licensees.

ELVA's customers

         Semiconductor  manufacturers  like  ATMEL are  ELVA's  clients  for the
design of secure components.  The Company's  VocaliD(R)'s  customers are, on one
hand, smart card manufacturers  which should become ELVA's licensees and, on the
other hand,  VocaliD(R) card issuers,  companies that we call " end users " such
as internet service  providers,  telecommunication  operators,  banks (who offer
home banking  services) and retailers,  ready to use  VocaliD(R)  technology for
their global loyalty schemes (online and in stores).
Marketing

         In most industry  sectors,  a company who wants to improve its customer
relationships  needs to merge its  marketing  tools like the web site,  the call
center and other  phone  applications  or even  online  private  access  issues.
Moreover,  in the retail sector,  these  electronic tools must be married to the
real world stores by the same  authentication  and loyalty  device.  The Company
believes  that  VocaliD(R)  is the  solution,  due to its secure  multi  reading
features provided with exactly the same security level.

         The Company  believes that if it is able to attain  recognition  as the
industry standard in such large markets as e-commerce,  home banking,  and value
added  telecommunication  services,  VocaliD(R)  volumes  may reach  hundreds of
millions  of cards  within  the next four  years.  The  leverage  related  to an
industrial  partners'  commitment to VocaliD(R)  technology will be important in


                                       11

<PAGE>


order for the Company to meet this possible market demand.  However, there is no
assurance that the Company will be able to attain industry standard recognition.

         The Company  however  has chosen to offer  VocaliD(R)  through  license
contracts   worldwide.   New  market  entries  and  strong   relationships  will
strategically create the company's technology exposure to any geographic region.
Such a licensing  and  partnership  policy is being  establish at present by the
Company with smart card manufacturers,  system integrators and several different
vendors.


         Marketing  campaigns targeting end users are scheduled to begin in Y2K.
Moreover,  a partnership  program aimed at cooperation  with system  integrators
will soon be issued.  ELVA's  marketing  structure,  strategy  and actions  were
established  in Europe  during 1999 and are now being  extended to North America
and Asia.

         Pilot tests in cooperation with end users in the  telecommunication and
internet  sectors are in the planning  stages.  The first  version of the online
smart  card as an  industrial  product  is  anticipated  to be tested by several
market leaders before the end of the second quarter [Q2] of 2000.

CURRENT AND FUTURE MARKETS FOR VocaliD(R)

         The  Company  believes  the  following  industries  are best suited for
VocaliD(R)  smart card  technology and have commenced  research and  development
efforts aimed at meeting perceived needs of such industries.

         To date our marketing efforts have been limited to the following market
segments:

     o    telecommunications among which rechargeable value added calling cards
     o    e-commerce applications
     o    home banking.

         The Company  believes the following  industries will be best suited for
VocaliD(R) smart card technology in the future:

         Retail Industry

         The Company  believes that the  Retailing  Industry can be embraced and
enhanced by VocaliD(R)  smart card  technology.  The retail  sector  encompasses
everything from locally owned stores to national  department  stores.  Retailers
have been made acutely  aware of the value of their  contact with the  consumer.
The key to repeat business is to accurately identify, and then satisfy, customer
needs.  Smart cards are capable of enabling retailers to track customer behavior
and  base  marketing  decisions  mined  from  this  valuable  information.  This
technology can also reduce the risk of fraud,  improve inventory  management and
offer the customer  convenience and better service.  With  VocaliD(R),  affinity
programs can be highly improved by the  combination of e-commerce,  exchanges by
phone and traditional purchasing within a unique secure environment.

         Health Care Industry

          The Company believes that the healthcare  industry,  with its millions
of participants, voluminous, individualized information and payment requirements
can  benefit  significantly  from  smart  card  technology.  Smart  cards can be


                                       12

<PAGE>



designed  to  provide  patient   identification,   medical  record  storage  and
retrieval, as well as electronic benefit transfers, determination of eligibility
and drug interaction information.  In an emergency situation, a quick assessment
of vital  information  such as allergies,  prescriptions  and  immunizations  is
critical for effective healthcare delivery.  Additionally,  patient cards can be
used to improve and streamline  administrative and billing procedures as well as
insurance reimbursement.

         Every  insurance   company,   HMO,  PPO,  hospital   association,   and
independent  provider  association  which serves the United  States  health care
market can benefit from the use of a smart card system.  Only  authentication of
the  patient  and  thus  of  its  medical  files  allow  an  efficient   medical
intervention.  VocaliD(R) is the only ISO smart card enabling a universal secure
authentication  of the patient anywhere  anytime,  be it by telephone,  over the
internet,  at home,  on the  street  or at the  hospital,  in the card  holder's
country or abroad.

         The Company  believes  its  advantage in this market will be based upon
its  position as the first to provide a universal  smart card reading mode which
can communicate  with existing online systems.  The opportunity to reduce health
care costs,  improve the quality of health care  services,  and  facilitate  the
payments  process  through  a more  user  friendly  medium  makes  the  use of a
VocaliD(R) smart card system very attractive and viable.

         Events Market

         There are  approximately  10,000  festivals  in the United  States each
year. [Source: Festivals.com LLC, available from HTTP://WWW.FESTIVALS.COM. ] The
scope of these of these  festivals  ranges from air shows,  art,  food and music
festivals, to state fairs and sporting events. One of our significant advantages
in the  festival-fair  market is that the  product  can be sold  profitably  and
implemented with minimum cost and development effort.  Given the large number of
festivals  that occur each year,  the  opportunity  for steady and reliable cash
flows form the sale of this product could be considerable.

         Main VocaliD(R)  applications are identified in the  telecommunication,
internet and online / traditional combined retail sectors:

     o    VocaliD(R) can be a rechargeable secure calling card aimed at offering
          the online access to value added services from any telephone set,
     o    an internet authentication card,
     o    a loyalty card,
     o    and of course a combination  of the above features in home banking and
          retail sectors for instance.

         VocaliD(R) is an ISO card with an acoustic interface. This means that a
company may,  from now on, issue a single card in order to entitle its customers
to have secure private access to all its services (IVR  information,  hot lines,
customer  loyalty program,  miscellaneous  database uses,  transactions  both in
stores and on the web site...).

         VocaliD(R)  technology is also a solution for citizen applications such
as universal  health cards,  provided the information is stored and updated in a
remote  server and  accessible  on line (and not  within the card's  chip with a
specific reader).  It can also entitle access,  reservation and payment for city
services such as theatre, festivals etc...


                                       13

<PAGE>



         LICENSE AGREEMENTS AND INTELLECTUAL  PROPERTY RIGHTS

         We regard our  technology  as  proprietary  and  license  our  products
(hardware and software)  generally under written license agreements  executed by
licensees.

         We have  registered  several patents and some patent  applications  are
pending.

         Patents : ELVA  holds 2 French  patents  and has 1 patent  application
                   (duration : from the date of registration, 20 years):

          # 97 08939 on  1997,  July  15th for a  method  an  system  for  voice
          transmission of a binary data sequence from a piezoelectric transducer

     Foreign patent applications pending: PCT/FR 98/01422 (7/03/98)

          # 97  013902  on  1997,  November  5th for a method  to emit  acoustic
          signals from a smart card, and card to implement this method

     Foreign patent applications pending: PCT/FR98/0235 (11/04/98)

          French patent  application # 99 09074 on 1999, July 13th for a<< smart
          card to emit acoustic signals

         ELVA has the exclusive rights to use 2 French patents  (duration : upon
the date of expiration of the patents) :

          # 95 15735 on 1995, December 29th for a portab device for access to at
          least one service provided by a server

     Foreign patent applications pending: European patent #96944092 0 (12/27/96)

          96 01872 on 1996,  february 15th for a method for enabling a server to
          authorize access to a service from portable devices having  electronic
          microcircuits, E.G devices of the smart card type>>

         Foreign patent applications pending:

                  Canada : #2,246,301                (08/12/98)
                  Europe : #97905199 2               (02/13/97)
                  USA : #09/125,222                  (02/13/97)
                  Japan : #529050/97                 (08/13/98)

         The Company also relies on a combination  of  copyright,  trademark and
trade secret laws to protect our products.  We require  employee and third-party
non-disclosure   and   confidentiality   agreements   as  well.   Despite  these
precautions,  it may be  possible  for  unauthorized  parties  to  copy  certain
portions of our products or reverse  engineer or obtain and use information that
we regard as proprietary.

         Because the software  development  industry is  characterized  by rapid
technological change, we believe that factors, such as (i) the technological and


                                       14

<PAGE>



creative skills of our personnel, (ii) new product developments,  (iii) frequent
product   enhancements,   (iv)  name  recognition,   and  (v)  reliable  product
maintenance  are  important  to   establishing   and  maintaining  a  technology
leadership position and improve the various legal protections  available for our
technology.


         RISK FACTORS

         Before  making an  investment  decision,  prospective  investors in the
Company's  Common  Stock should  carefully  consider,  along with other  matters
referred to herein,  the  following  risk factors  inherent in and affecting the
business of the Company.

         1.  Dependence on Management:  The  possible  success of the Company is
expected to be largely dependent on the continued  services of the main managers
of the Company,  whether they are  shareholders or not.  Virtually all decisions
concerning  the  customers  and  users,  advertisers,  and  potential  strategic
partners  to begin to  contact,  the type of  services  to  promote  and  direct
marketing  material to disseminate,  and the establishment of a customer profile
database  by the  Company  will  be  made  or  significantly  influenced  by the
management  team. Mr. Colnot,  Mr. Misko and Mr. Parienti are expected to devote
such time and  effort to the  business  and  affairs  of the  Company  as may be
necessary to perform his  responsibilities  as an executive officer of ELVA. The
loss of the services of the current  managers would adversely affect the conduct
of the Company's business and its prospects for the future. ELVA, INC. presently
holds  no  significant  key-man  life  insurance  on the  life  of,  and  has no
employment  contract  or other  agreement  with  Mr.  Colnot,  Mr.  Misko or Mr.
Parienti.

         2. We have a short history of operations..  We have a limited operating
history  upon  which  you can base  your  evaluation  of our  prospects  and the
potential value of our common stock. Our operating  activities have been focused
on the  development of the smart card technology and products.  Accordingly,  we
have  incurred  substantial  operating  losses.  Our prospects and the potential
value of our common stock must be considered  risky. We face the  uncertainties,
expenses, delays and difficulties associated with establishing a new business in
the  rapidly  evolving  smart card  industry,  plus the risks of  shifting  from
development  to  commercialization  and marketing of our smart card products and
technologies.

         3. Minimal  Customer Base. While ELVA intends to engage in the business
of providing of VocaliD(R) Smart Card Systems and Services the Company currently
has few users and one customer, ATMEL CORPORATION of Colorado Springs, Colorado.
Further,  the very limited funding  currently  available to the Company will not
permit it to  commence  business  operations  in the  industry  except on a very
limited scale.  There can be no assurance that the debt and/or equity financing,
which is expected to be required by the Company in order for ELVA to continue in
business after the expiration of the next twelve (12) months, will be available.
The Company has no users or  customers  presently  and there can be no assurance
that  it  will be  successful  in  obtaining  such  in its  initial  prospective
marketing  area  encompassing  the U.S.  ELVA does not expect to have long- term
contracts with any customers;  thus,  management believes that the Company must,
in  order to  survive,  ultimately  obtain  the  loyalty  of a large  volume  of
customers. The Company could be expected to experience substantial difficulty in
attracting the high volume of customers in the  prospective  target market which
would enable ELVA to achieve commercial viability. The Company will be dependent
upon Mr.  Colnot,  who has  approximately  10 (ten) years of  experience  in the
industry,  Mr. Misko who has  approximately  10 (ten) years of  experience as an
officer for several  companies in the computer  industry,  Mr.  Parienti who has
approximately  10 (ten) years of experience in marketing and  communications  in

                                       15

<PAGE>



several technological  sectors such as  telecommunications  (See Part I, Item 1.
"Description of Business," (b) "Business of Registrant - Business Strategy;  and
- Sales and Marketing.")

         4. High Risks and Unforeseen  Costs  Associated  with ELVA's Entry into
the  VocaliD(R)  Smart  Card  Systems  and  Services  Industry.  There can be no
assurance  that the costs for the  establishment  of a customer  base or for the
obtaining of a substantial  volume of services  directly with  consumers by ELVA
will not be  significantly  greater than those estimated by Company  management.
Therefore, the Company may expend significant unanticipated funds or significant
funds may be expended  by ELVA  without  development  of a  commercially  viable
business.  There can be no assurance  that cost  overruns will not occur or that
such cost overruns will not adversely  affect the Company.  (See Part I, Item 1.
"Description of Business," (b) "Business of Registrant", and "Seasonality.")

         5.  Ability  to Grow.  The  Company  expects to grow  through  internal
growth.  The Company plans to expand its business from its current  location and
by entry into other markets.  There can be no assurance that the Company will be
able to create a market  presence,  or if such market  presence  is created,  to
profitably expand its market presence or successfully  enter other markets.  The
ability of the Company to grow will depend on a number of factors, including the
availability  of working  capital to support such growth,  existing and emerging
competition and the Company's  ability to maintain  sufficient profit margins in
the face of an increasingly  competitive industry.  The Company must also manage
costs in a changing regulatory environment, adapt its infrastructure and systems
to accommodate growth and recruit and train qualified personnel.

         6. No Dividends.  While payments of dividends on the Common Stock rests
with the  discretion of the Board of Directors,  there can be no assurance  that
dividends  can or will ever be paid.  Payment of dividends is  contingent  upon,
among other things,  future earnings, if any, and the financial condition of the
Company,  capital  requirements,  general business  conditions and other factors
which cannot now be predicted.  It is highly unlikely that cash dividends on the
Common Stock will be paid by the Company in the foreseeable future.

         7. No Cumulative  Voting. The election of directors and other questions
will be decided by a majority vote. Since cumulative voting is not permitted and
one-third  of the  Company's  outstanding  Common  Stock  constitute  a  quorum,
investors  who purchase  shares of the  Company's  Common Stock may not have the
power to elect even a single  director and, as a practical  matter,  the current
management will continue to effectively control the Company.

         8. Control by Present  Shareholders.  The present  shareholders  of the
Company's  Common Stock will, by virtue of their  percentage share ownership and
the lack of cumulative  voting,  be able to elect the entire Board of Directors,
establish the Company's policies and generally direct its affairs.  Accordingly,
persons  investing in the Company's Common Stock will have no significant  voice
in Company  management,  and cannot be assured of ever having  representation on
the Board of  Directors.  (See Part I, Item 4.  "Security  Ownership  of Certain
Beneficial Owners and Managers.")


         9.   Potential Anti-Takeover and Other Effects of Issuance of Preferred
Stock May Be Detrimental to Common  Shareholders.  Potential  Anti-Takeover  and
Other  Effects of  Issuance  of  Preferred  Stock May Be  Detrimental  to Common
Shareholders.  The Company is  authorized  to issue up to  10,000,000  shares of
preferred  stock.  $.0001 par value per share  (hereinafter  referred  to as the
"Preferred  Stock");  none of which  shares has been  issued.  The  issuance  of
Preferred Stock does not require  approval by the  shareholders of the Company's


                                       16

<PAGE>



Common Stock. The Board of Directors,  in its sole discretion,  has the power to
issue  shares of  Preferred  Stock in one or more  series and to  establish  the
dividend  rates  and  preferences,   liquidation  preferences,   voting  rights,
redemption and conversion terms and conditions and any other relative rights and
preferences with respect to any series of Preferred Stock.  Holders of Preferred
Stock  may  have  the  right  to  receive  dividends,   certain  preferences  in
liquidation and conversion and other rights; any of which rights and preferences
may operate to the detriment of the  shareholders of the Company's Common Stock.
Further, the issuance of any shares of Preferred Stock having rights superior to
those of the  Company's  Common  Stock may result in a decrease  in the value of
market price of the Common Stock  provided a market  exists,  and  additionally,
could be used by the Board of Directors as an anti-takeover measure or device to
prevent a change in control of the Company.

         10. No Secondary Trading  Exemption.  In the event a market develops in
the Company's shares,  of which there can be no assurance,  secondary trading in
the Common  Stock will not be  possible in each state until the shares of Common
Stock are qualified for sale under the applicable  securities  laws of the state
or the Company verifies that an exemption, such as listing in certain recognized
securities  manuals,  is available for secondary trading in the state. There can
be no assurance that the Company will be successful in registering or qualifying
the Common Stock for secondary  trading,  or availing itself of an exemption for
secondary  trading in the Common  Stock,  in any state.  If the Company fails to
register or qualify,  or obtain or verify an exemption for the secondary trading
of, the Common Stock in any particular  state,  the shares of Common Stock could
not be offered or sold to, or  purchased  by, a resident of that  state.  In the
event that a significant  number of states refuse to permit secondary trading in
the Company's  Common  Stock,  a public market for the Common Stock will fail to
develop and the shares could be deprived of any value.

         11. Possible Adverse Effect of Penny Stock  Regulations on Liquidity of
Common  Stock in any  Secondary  Market.  In the event a market  develops in the
Company's  shares,  of which  there  can be no  assurance,  then if a  secondary
trading market  develops in the shares of Common Stock of the Company,  of which
there can be no  assurance,  the Common  Stock is  expected  to come  within the
meaning of the term "penny  stock" under 17 CAR  240.3a51-1  because such shares
are issued by a small company; are low-priced (under five dollars);  and are not
traded on NASDAQ or on a national  stock  exchange.  The Securities and Exchange
Commission has  established  risk  disclosure  requirements  for  broker-dealers
participating in penny stock  transactions as part of a system of disclosure and
regulatory  oversight for the  operation of the penny stock  market.  Rule 15g-9
under the Securities Exchange Act of 1934, as amended, obligates a broker-dealer
to satisfy special sales practice requirements,  including a requirement that it
make an individualized  written  suitability  determination of the purchaser and
receive the purchaser's written consent prior to the transaction.  Further,  the
Securities  Enforcement  Remedies  and Penny Stock  Reform Act of 1990 require a
broker-  dealer,  prior  to a  transaction  in  a  penny  stock,  to  deliver  a
standardized  risk disclosure  instrument that provides  information about penny
stocks and the risks in the penny stock market. Additionally,  the customer must
be provided by the  broker-dealer  with current bid and offer quotations for the
penny stock,  the compensation of the  broker-dealer  and the salesperson in the
transaction  and monthly  account  statements  showing the market  value of each
penny stock held in the customer's account.  For so long as the Company's Common
Stock is considered penny stock, the penny stock  regulations can be expected to
have an adverse  effect on the  liquidity of the Common  Stock in the  secondary
market, if any, which develops.

         12. We have had limited revenues,  incurred significant losses and have
an  accumulated  deficit.  During the twelve months ended December 31, 1999, and
the year  ended  December  31,  1998,  we had total  revenues  of  $448,696  and
$297,153,  respectively. We have generated limited revenues to date. Substantial
increases in our revenues is dependent upon market acceptance of our smart card

                                       17

<PAGE>



products  and  systems.  We  incurred  significant  losses in each period of our
operating  history  resulting in an accumulated  deficit at December 31, 1999 of
$1,156,318. We will continue to have a high level of operating expenses. We will
be  required  to  make  significant  expenditures  in  further  development  and
marketing of our smart card  products and systems.  Consequently,  we anticipate
continuing to incur significant and increasing losses within the next two years,
if  ever,  that we are able to  generate  sufficient  revenues  to  support  our
development and marketing  activities.  We cannot assure you that our smart card
products  and systems  will gain market  acceptance,  or that we will be able to
successfully  implement our business strategy,  generate  meaningful revenues or
achieve  profitable  operations.  If we do not  achieve  or  sustain  profitable
operations,  we could  be  required  to  reduce  significantly  or  suspend  our
operations, including research and development activities, seek a merger partner
or  sell  additional  securities  on  terms  that  are  highly  dilutive  to the
purchasers of our common stock pursuant to the offering.

         13.  Although  we can  count  on  significant  revenues  from  previous
development  of chips and on design  contracts  with ours clients for the future
development of chips, from which we expect royalties,  our VocaliD(R) smart card
products  and  technology  are  expected  to  provide  most of our  sales in the
foreseeable future. Our operating results will therefore depend on continued and
increased market  acceptance of our smart card products and technology,  and our
ability  to  modify  our  products  and  technology  to meet  the  needs  of our
customers.  Any reduction in demand for, or increasing  competition with respect
to,  these  products  will  have a  material  adverse  effect  on our  financial
condition and results of operations.

         14. We are dependent on our executive  officers and key personnel.  Our
success to date has been  largely  dependent  upon the skills and efforts of the
current  executive  officers and other key employees.  We do not have employment
agreements  between  ELVA,  INC.  and  our  executive  officers  and  other  key
employees.  The loss of services of any of our  executive  officers or other key
personnel could have an adverse effect on our operations.

         15.  There are many  uncertainties  related to our business  plan.  The
successful  implementation  of our business plan will be largely  dependent upon
market acceptance of our smart card technology.  This will depend in part on our
ability to market or continue  to market  successfully  our smart card  systems.
This marketing  will involve  persuading  potential  customers or clients of the
perceived   benefits  of  our  products  and   services,   and  to  develop  and
commercialize  further  applications  of our smart card  technology.  Successful
marketing  of the online  smart card  technology  will  depend on,  among  other
things,  (i) our  ability  to  enter  into  marketing  and  licensing  or  other
arrangements  on a  timely  basis  and on  favorable  terms;  (ii)  establishing
satisfactory  arrangements with sales representatives and marketing consultants;
(iii) hiring and retaining skilled  management as well as financial,  technical,
marketing and other personnel;  (iv) managing successfully our growth (including
monitoring  operations,  controlling  costs and maintaining  effective  quality,
inventory and service  controls);  and (v) obtaining adequate financing when and
as needed.

         We  have  limited  experience  in  developing  new  products  based  on
innovative  technology.  There is limited information  available  concerning the
performance of our technologies or market acceptance of our products. We provide
no assurance  that we will be  successful in  implementing  our business plan or
that unanticipated expenses or problems or technical difficulties will not occur
which would result in material  implementation  delays, or that the Company will
have  sufficient  capacity to satisfy any  increased  demand for our  VocaliD(R)
smart card products and technologies  resulting from the  implementation  of our
plan of operation.

         16.    Need for additional Capital Resources.  Our capital requirements
have been and will continue to be significant.  Our future capital  requirements
will depend on many factors.  These factors include (i) the extent and timing of


                                       18

<PAGE>



acceptance of our products,  (ii) the progress of our research and  development,
(iii)  the cost of  increasing  our  sales and  marketing  activities,  (iv) our
operating results and, (v) the status of competing products.

         Also,  further  development  of our  smart  card  products  to meet the
requirements and specifications of a particular customer may require significant
investment in research and  development.  This investment may be much in advance
of the actual installation and commencement of revenues from such installation.

         Although  our  capital  requirements cannot be accurately predicted, we
may require  additional  financing within the next few months in order to ensure
the setting of our strategy and the Company's growth. If and when needed, we may
not be able to obtain additional financing or if available such financing may be
on terms not  satisfactory or advantageous to ou  shareholders,  including those
purchasing  our common stock in the  offering.  Our  inability to obtain  needed
financing  could have a material  adverse  effect on our financial  condition or
results of operations.  We could be required to reduce  significantly or suspend
our operations,  including  research and development  activities,  seek a merger
partner or sell additional  securities on terms that are highly dillutive to the
purchasers of our common stock pursuant to the offering.

         17. VocaliD(R) sales are lengthy, and fluctuations may occur in results
of operations. The purchase of a VocaliD(R) smart card system generally involves
a significant  commitment of capital with attendant delays frequently associated
with  large  capital  expenditures  and  implementation   procedures  within  an
organization.  Accordingly,  our  product  sales cycle  varies by  customer  and
industry, and may extend for periods of 12 months or more, depending upon, among
other things,  the time required by the customer to:(i) complete a pilot test of
the VocaliD(R) smart card system,  (ii) make a determination  regarding purchase
of  the  system,   (iii)  negotiate   payment  terms,   and  (iv)  complete  the
installation.

         The sales cycle  associated  with the purchase of our VocaliD(R)  smart
card system is typically  lengthy and subject to a number of significant  risks.
These risks include (i) the customers' or clients'  budgetary  constrains,  (ii)
internal  acceptance  reviews,  (iii)  competition,  (iv)  hardware and software
vendors'  inability  promptly to provide  quality  products  and  services,  (v)
technological factors, and (vi) market acceptance.

         We have limited or no control of these risks.  Because we determine our
expenditure  levels in  advance of each  quarter,  our  ability to reduce  costs
quickly in response to an unforeseen  revenue  shortfall is limited.  Therefore,
operating results would be adversely  affected if projected revenues for a given
quarter are not achieved.  Due to the  foregoing  and because of the  relatively
fixed nature of certain of our costs our quarterly  operating results are likely
to vary significantly in the future, period-to-period comparisons of our results
of operations may not necessarily be meaningful,  in any event, such comparisons
may not be  indicative  of future  performance.  It is also  likely that in some
future quarter our operating  results will be below the  expectations  of public
market  analysts and  investors,  which,  in turn,  could have a severe  adverse
effect on the price of our common stock.

         18. We obtain the hardware  components utilized in conjunction with our
smart card technology from manufacturers and suppliers. The chip and the battery
aimed at being embedded in VocaliD(R)  smart card are currently  supplied by two
manufacturers. We believe that in the future, these components will be generally
available from several  suppliers.  Also,  although a component may be available
from more than one supplier, we could incur delays in switching suppliers, which
could have a material  adverse  effect on our sales and  results of  operations.
Accordingly,  the inability or  unwillingness  of a vendor to continue to supply


                                       19

<PAGE>



components  to us,  whether  because of labor  unrest,  natural  disaster or the
vendor's production constraints or desire to favor other customers, could have a
material adverse effect on our results of operations.

         19. The Company may not be able to successfully  manage our growth.  In
the event we  experience  substantial  growth,  such growth will  challenge  our
management and operating resources,  require the hiring of more technical, sales
and  marketing,  support and  administrative  personnel,  and  customer  service
capabilities,  and directly cause the Company to expand  management  information
systems.

         In addition, there can be no assurance that the Company will be able to
attract and retain the necessary  personnel to accomplish our growth  strategies
and/or not  experience  constraints  that will  adversely  affect our ability to
satisfy customer demand in a timely fashion and/or to satisfactorily support our
customers.  If the Company is unable to manage growth effectively,  business and
results of operations could be materially and adversely affected.

         20.  Competition  for qualified  employees is intense.  Our success and
growth  will  continue  to depend in large part on our  ability  to attract  and
retain talented and qualified  employees,  including  highly skilled  management
personnel.  Competition  in the  recruiting  of  highly-qualified  personnel  is
intense.  We may  experience  difficulty  in  recruiting  talented and qualified
employees,  particularly  for further  development of out smart card technology.
Our inability to recruit  additional  qualified  personnel could have a material
adverse effect on our business,  financial  condition and results of operations.
We provide no  assurance  that we will be able to attract,  motivate  and retain
personnel  with the  skills and  experience  needed to  successfully  manage our
business and operations.

         21.  Uncertainties  exist  regarding Y2K  preparedness.  There has been
significant  awareness  raised  regarding the  potential  disruption to business
operations  worldwide  resulting  from the  inability of current  technology  to
process the change in the year 1999 to 2000. We have not  currently  experienced
any  significant   adverse  effects  or  material   unbudgeted  costs  resulting
therefrom. Nevertheless, we cannot provide any assurance in this regard, and any
such  significant  costs or effect could  materially  and  adversely  affect our
operations and financial condition.

         22.  Competition  within the Smart Card Industry is intense.  The smart
card industry in the United States is an emerging  business  characterized by an
increasing and substantial number of new market entrants.  These market entrants
have introduced or are developing an array of new products and services relating
to electronic transactions and information processing. Each of these entrants is
positioning  its products and services as the preferred  method of  effectuating
highly  individualized,   easy-to-use  electronic  transaction  and  information
processing.

         This market is therefore  characterized  by intense  competition.  More
specifically,   we  compete  with  numerous  well-established  companies.  These
companies include  International  Business Machines,  Inc., ICL, 3GI, CyberMark,
Touch Technology International, Inc., Sun MicroSystems, Inc., Technology @ Work,
Bull, Card Europe, Gemplus,  Innovatron,  Philips Electronics,  Aladdin Systems,
Pathways Group, Inc., MONDEX,  MasterCard,  Microsoft,  Motorola,  Schlumberger,
Siemens,  DigiCash,  Leapfrog, Inc., and Visa, which design,  manufacture and/or
market smart card systems.  We believe that our smart card  products  compete on
the basis of enhanced security, flexibility, salability,  cost-effectiveness and
quality.  Although, our smart card systems incorporate new concepts, they may be
unsuccessfully marketed even if they are superior to those of our competitors.


                                       20

<PAGE>



         Certain competitors may be developing technologies or products which we
are  unaware.  These  products  may be  functionally  similar or superior to our
products.  Most of our  competitors  possess  substantially  greater  financial,
marketing, personnel and other resources than us. They may also have established
reputations relating to the design, development,  marketing and service of smart
card systems.

         As the market for smart card systems grows,  new competitors are likely
to  emerge.  Increased  competition  is likely  to  result in price  reductions,
reduced gross margins and loss of market  share,  any of which could  materially
adversely  affect  our  business  and  results  of  operations.  There can be no
assurance  that we will be able to compete  successfully,  competitors  will not
develop  technologies  or  products  that  render our  systems  obsolete or less
marketable,  or that we will be able to success-  fully  enhance our products or
develop new products when necessary.

         23.  Market  acceptance  to  VocaliD(R)  Smart Card  Technology  is not
certain.  The smart card industry in the United States is an emerging  business.
The use of smart  cards in many other  countries  is much more  progressed.  The
success of VocaliD(R)  smart card industry  domestically  depends,  in a certain
part, on the ability of ELVA, to convince governmental  authorities,  commercial
enterprises  and other  potential  system  sponsors or users to adopt this smart
card system. The VocaliD(R) smart card system would improve and enhance magnetic
stripe  card  system  and  replace  existing  or  alternative  systems  such  as
paper-based   systems,   and  would  change  the  way  certain  transaction  and
information processing tasks are accomplished.

         Due to the large capital and  infrastructure  investment  made by debit
and credit card issuers and significantly lower costs associated with the use of
basic  magnetic  stripe  cards,  there  is no  assurance  that  our  smart  card
technology  will  prove to be  economically  viable for a  sufficient  number of
sponsors and users. In such event,  many potential  system sponsors or users may
be reluctant to convert to VocaliD(R) smart card technology.  Accordingly, there
can be no assurance  that there will be  significant  market  opportunities  for
VocaliD(R) in the United States or that the acceptance of VocaliD(R)  card-based
systems in other  countries  will be sustained.  As such,  demand for and market
acceptance of our smart card systems are subject to a high level of uncertainty.

         Also,  because the  software  products  incorporated  in our smart card
products and systems are complex,  our software  products may contain  errors or
failures when  installed,  updated or enhanced.  There can be no assurance that,
despite  testing,  errors will not be found in our products  after the delivery,
resulting in loss of or delay in market acceptance.

         24. The Company has limited  VocaliD(R)  marketing  experience.  We may
rely on unrelated third parties to assist in marketing our smart card technology
and  applications.  However,  we  anticipate  that  companies  with  smart  card
marketing  experience  are very limited.  Following  the offering,  we will have
limited  financial,   personnel  and  other  resources  to  undertake  extensive
worldwide marketing activities.  Potential system sponsors or users of our smart
card systems must be persuaded that the costs of adopting and implementing smart
card systems are  justified by the benefits to be derived  therefrom.  Achieving
market acceptance of our products and systems will require  significant  efforts
and  expenditures to create  awareness,  demand and interest by potential system
sponsors and users,  and others  regarding the  perceived  benefits of our smart
card  technologies.  There  is no  assurance  that we  will be able to meet  our
current objectives,  succeed in positioning our cards and systems as a preferred
method of delivering  electronic  transaction  and  information  processing,  or
achieve significant market acceptance of our products.


                                       21

<PAGE>



         25.  VocaliD(R)  Smart Card  Technology  is subject to swift change and
obsolescence.  The  computer  application  software  market is  subject to rapid
technological  change,   frequent  new  product   introductions,   and  evolving
technologies  and  industry  standards  that may render  existing  products  and
services  obsolete.  We can not  provide any  assurance  that our  products  and
systems  will not  suffer  such  obsolescence.  Furthermore,  our  research  and
development  efforts are subject to all of the risks inherent in the development
of new products and technology,  including  unanticipated  delays,  expenses and
difficulties.  There  is  no  assurance  that  our  products  and  systems  will
satisfactorily  perform  the  functions  for which they are  designed,  that our
products and systems will meet applicable  price or performance  objectives,  or
that  unanticipated  technical or that other problems will not occur which would
result in increased costs or material delays in development.

         Because of the rapid pace of  technological  change in the  application
software  industry,  any developed market position in the smart card industry or
other markets that we may enter could be eroded rapidly by product advancements.
Our software  applications rely primarily on internally developed software tools
and  applications.  If alternative  software  development tools and applications
were to be redesigned and generally accepted in the marketplace,  we could be at
a competitive  disadvantage  relative to companies  employing  such  alternative
developmental  tools and  applications.  Our VocaliD(R)  smart card products and
systems  must keep pace with  technological  developments,  conform to  evolving
technologies and standards, and address increasingly sophisticated client needs.

         Such   developments   may  require   substantial   additional   capital
investments  by us in product  development  and testing.  We can not provide any
assurance that we will have sufficient  resources to make the necessary research
and development  investments.  Also,  there can be no assurance that we will not
experience  difficulties that could delay or prevent the successful development,
introduction  and  marketing  of new  products,  the new  products  and  product
enhancements  will meet the  requirements  of the marketplace and achieve market
acceptance,  or that our  current or future  products  will  conform to industry
requirements.

         26. Intellectual Property Right Infringement.  Our success in the smart
card industry is largely dependent upon our smart card technology.  Our products
and systems are licensed to customers  and sponsors.  These  license  agreements
contain provisions protecting against the unauthorized use, copying and transfer
of the licensed  program.  We also rely on a combination  of patents,  know how,
trade secret,  copyright and trademark  laws, and  non-disclosure  agreements to
protect our  proprietary  rights in our  products  and  technology.  There is no
assurance  that  such  measures  are  sufficient  to  protect  our   proprietary
technology.   There  is  also  no  assurance  that  our  competitors   will  not
independently develop technologies that are substantially equivalent or superior
to our technologies.

         We believe  that our  services  and  products  do not  infringe  on the
intellectual property rights of others and are not aware of any asserted claims.
However,  there is no assurance that a person will not assert a claim against us
for violating such person's technology property rights. It is also possible that
any such assertion may require us to enter into royalty arrangements,  resulting
in possible extensive and costly  litigation,  or possibly even prohibit us from
marketing our products.  Furthermore,  the intellectual property issues relating
to our products in general have not been  addressed by judicial  authorities  in
many instances. Such adverse actions or decisions made by such authorities could
create  uncertainty,  and our  business,  financial  condition  and  results  of
operations could be materially and adversely affected.





                                       22

<PAGE>


         Item 2. Description of Property:

         The United  States  corporate  headquarters  of ELVA are located at 222
Lakeview  Avenue,  Suite 415, West Palm Beach,  Florida 33401.  This facility is
available to the Company,  for the sole purpose of  satisfying  state of Florida
corporation requirements.  In United States, ELVA is also located at 4540 Campus
Drive Suite 108,  Newport Beach,  California  92660, and its telephone number is
949-863-  0670.  Its  offices  outside  the United  States are  located at 74,av
Edouard  Vaillant,   92100  Boulogne,   France,  and  its  telephone  number  is
33-(0)1-41-31-66-77.  The  Company  also has an office at 89 Neil Road,  0888849
Singapore, and its telephone number is (65) 326-07-88


         Item 3. Legal Proceedings.

         From time to time, we may be involved in litigation  relating to claims
arising out of our  operations in the normal course of business.  The Company is
not currently a party to any legal proceedings.

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

              No matter was  submitted  during the fourth  quarter of the fiscal
year ended December 31, 1999,  covered by this report to a vote of the Company's
shareholders, through the solicitation of proxies or otherwise.


         PART II

         Item 5. Market Price of and Dividends on the Registrant's Common Equity
                 and Other Shareholder Matters.

<TABLE>
<S>                                <C>            <C>
Market Information
2000                               HIGH           LOW
-------                            ---            ---

March 31, 2000                     4 1/8          4 1/8


1999                               HIGH           LOW
-------                            ----           ---

December 31, 1999                  4 1/8          3 7/8
September 30, 1999                 N/A            N/A
June 30, 1999                      N/A            N/A
March 31, 1999                     N/A            N/A


1998                               HIGH           LOW
------                             ----           ----

December 31, 1998                  N/A            N/A
September 30, 1998                 N/A            N/A
June 30, 1998                      N/A            N/A
March 31, 1998                     N/A            N/A


1997                               HIGH           LOW
-----                              ----           ----

December 31, 1997                  N/A            N/A
Inception to September 30, 1997    N/A            N/A
</TABLE>


                                       23

<PAGE>



Shareholders

     The  approximate  number of holders of record of common  equity is 45 as of
December 31, 1999.

Dividends

     The Company has never  declared  or paid any cash  dividends  on its common
stock and does not intend to declare any dividends in the foreseeable future.


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

               Management's Discussion and Analysis or Plan of Operation

         12 Month Plan of Operations

     The Company's  plan of operations for the next twelve (12) months is for it
to further  refine its marketing and sales  strategy (See Part I, Item 1) and to
develop a web site for its  primary  VocaliD(R)  Smart Card System  product.  An
average  initial  funding of $ 400,000  has been  committed  for such work.  The
Company  plans to  continually  refine its strategy for  capitalizing  on recent
trends  within  the  Smart  Card  industry  and to  exploit  such  trends to its
advantage.  The Company  plans to develop new and varied  VocaliD(R)  Smart Card
systems,  concepts and ventures in addition to its current VocaliD(R) Smart Card
development plans.

     The Company plans believes it can capitalize on the general  Internet trend
of increasing  consumer usage and increasing  levels of e-commerce  transactions
through  providing the market the  Company's  VocaliD(R)  Smart Card,  which the
Company  believes will increase levels of person-to-  person  communication  and
which may directly increase levels of advertising and Web site linkage revenues.
The  Company   believes  that  it  is  well   positioned  to  profit  from  such
opportunities.

     The Company's  business  strategy is to develop its  VocaliD(R)  Smart Card
system to provide  consumers with versatile high quality,  easy to use, personal
and secure communications.  The Company believes the ease of use and versatility
of its online Smart Card system will differentiate itself among the array of off
line smart card options. The Company believes that this differentiation strategy
will allow it to carve out a profitable market niche. In addition to the primary
revenue  stream  derived  from fees earned  through  the usage of the  Company's
VocaliD(R)  Smart Card, the Company believes that its market niche will allow it
to  successfully  gain consumer  "hits" to its VocaliD(R)  Smart Card system Web
site; such "hits" are the major factor in determining  advertising  revenue over
the Internet  (through banner ad sales) and will allow the Company to realize an
additional  revenue  stream  through  charging  advertising  fees for  banner ad
placements.  Therefore,  while the Company plans to generate its primary revenue
by charging fees for the use of its  VocaliD(R)  Smart Card system,  it may also
generate  significant  revenue by attracting interest ("hits") to its VocaliD(R)
Smart Card Web site.

     The Company plans to seek out strategic alliances,  joint venture partners,
and business partners with other high-technology firms in which shared resources
of  such  could  provide  enhanced  shareholder  value.  The  Company  plans  to
continually scan the environment for such partnering  opportunities.  Particular
attention will be paid to the possibilities of developing international

                                       24

<PAGE>



corporate  strategic  alliances,  partnering  with  successful  U.S.  technology
start-ups, and finding merger and acquisition candidates or counter-parties with
firms operating in the U.S. and/or abroad.

         Results of Operations - Fiscal Years: 1998 & 1999

         Financial Condition, Capital Resources and Liquidity

         At December 31, 1999, the Company had assets on a consolidated  audited
basis  totaling  $635,964 and  liabilities  of $ 1,015,256.  Since the Company's
inception, it has received $ 50,000 in cash contributed as consideration for the
issuance of shares of Common Stock and ELVA, SA has received $442,000 in cash as
consideration for the issuance of shares of Common Stock.

         The Company's  revenues of approximately  $297,153 and $448,696 for the
years ended December 31, 1998 and 1999 are from one source,  ATMEL  CORPORATION.
The Company  substantially  completed its research and development during fiscal
1997,  with a minimum amount of refinement of research and  development in early
fiscal 1998. In 1999, the employees  changed to marketing its completed  product
and General and  Administrative  expenses increased due to the shift in focus by
the Company from research and  development to marketing its product to potential
new customers.

         The Company  experienced  a net loss of $231,045  and  $723,712 for the
years  ended  December  31,  1998  and  1999,  respectively.   The  increase  of
approximately $498,000 in General and Administrative  accounted for the increase
in the  Company's  loss.  This  occurred due to the  Company's  transition  from
research and development to marketing.

         The   Company's   principal   source  of  liquidity  has  consisted  of
conditional government subsidies and the sale of common stock for cash.

         The Company's  working capital is presently minimal and there can be no
assurance that the Company's  financial  condition will improve.  The Company is
expected  to  continue  to have  minimal  working  capital or a working  capital
deficit as a result of current  liabilities.  In April 1997,  the Company issued
9,000,000  founders  shares of the Company's  Common Stock to its sole executive
officer and  director  for the fair value of services  rendered on behalf of the
Company.  These 9,000,000  founders shares were returned to the Company upon the
resignation  of its sole  executive  officer and director and were  subsequently
reissued to his successor.  During October and November 1997, the Company issued
and sold an aggregate of 1,756,  376 shares of Common Stock to Florida,  Georgia
and European residents for cash consideration  totaling $17,574.  No underwriter
was employed in connection with the offering and sale of the shares. The Company
claimed the exemption from registration in connection with each of the offerings
provided  under Section 3(b) of the Act and Rule 504 of Regulation D promulgated
thereunder. In June, 1998, the Company issued and sold an aggregate of 9,000,000
shares  of  Common  Stock  to one  individual  for cash  consideration  totaling
$32,000. No underwriter was employed in connection with the offering and sale of
the shares.  The Company  claimed the exemption from  registration in connection
with each of the offerings  provided  under Section 3(b) of the Act and Rule 504
of Regulation D promulgated thereunder.  In September,  1998, the Company issued
and sold an aggregate of 2,700,000 shares of Common Stock to European  residents
for  cash  consideration  totaling  $54,000.  No  underwriter  was  employed  in
connection  with the  offering and sale of the shares.  The Company  claimed the
exemption from  registration in connection  with each of the offerings  provided
under  Section  3(b)  of the  Act  and  Rule  504 of  Regulation  D  promulgated
thereunder.  In conjunction with the Company's acquisition of ELVA, SA, a French
corporation,  it issued  3,440,000  shares to a third party in  settlement  of a


                                       25

<PAGE>



$204,550  loan the third  party had made to ELVA,  SA.  Even  though  management
believes,  without assurance,  that it will obtain sufficient capital with which
to implement its business plan on a limited  scale,  the Company is not expected
to continue  in  operation  without an  infusion of capital.  In order to obtain
additional equity  financing,  management may be required to dilute the interest
of  existing  shareholders  or  forego  a  substantial  interest  of its  future
revenues,  if any. (See Part I, Item 1.  "Description of Business";  See Part I,
Item 4. "Security  Ownership of Certain Beneficial Owners and Managers" and Part
I, Item 7. "Certain Relationships and Related Transactions.")

         Net Losses

          For the  twelve  months (12) ended  December 31, 1999  and  1998,  the
Company   reported  a  net  loss  from   operations  of  $723,712  and  $231,045
respectively.(See: PART F/S - Statement of Loss - F-4.)

         The ability of the Company to continue as a going  concern is dependent
upon its ability to obtain  clients who will  utilize the  Company's  VocaliD(R)
product and whether the Company can attract an adequate  number of clients.  The
Company  believes  that in order to be able to expand its initial  operations in
terms of sales and marketing,  it must rent new offices in USA and abroad,  hire
staff and acquire  through  purchase or lease  computer and office  equipment to
maintain accurate  financial  accounting and client data.  Further,  the Company
believes  that the type of  equipment  necessary  for the  operation  is readily
accessible at  competitive  rates.  The Company is already  registered  with the
Secretary  of  State  of  California  to do  business  and is  anticipating  the
penetration of the North American market from its California office.

         To implement  such plan,  also during this initial  phase,  the Company
intends to initiate a self- directed  private  placement under Rule 506 in order
to raise the funds required by its  development  among which the financial means
related to new staff, equipment and offices. Those needs are currently estimated
by the  management  staff.  The Company  expects to accomplish  its fund raising
objective before June 1, 2000. No underwriters  have been contacted and no known
investors have been  contacted  with respect to such fund raising.  In the event
such placement is successful,  the Company believes that it will have sufficient
operating  capital to meet the initial expansion goals and operating costs for a
period of one (1) year.

         Employees

         Next year, ELVA intends to hire new persons in North America,  Asia and
Europe in order to widen its marketing  worldwide and to ensure the evolution of
the technology.

         At December 31, 1999, at ELVA had a total of 13  employees,  of which 4
were employed in sales and marketing, 6 were employed in product development,  1
was employed in professional  services and customer support, one was employed in
internal operations  support,  and 2 was employed in administration and finance.
Our future performance depends in significant part upon the continued service of
our key  technical  and  management  personnel,  and our  continuing  ability to
attract and retain highly qualified and motivated  personnel in all areas of our
operations.  Competition for such personnel is intense.  We provide no assurance
that  we can  retain  key  managerial  and  technical  employees  or that we can
attract,  assimilate or retain other highly  qualified  personnel in the future.
Our employees are not  represented by a labor union. We have not experienced any
work stoppages and consider our employee relations to be good.


                                       26

<PAGE>



         The Company will attempt to maintain  diversity within its customer and
advertising base in order to decrease its exposure to downturns or volatility in
any particular market segment. As part of this selection  strategy,  the Company
intends to offer its services to those  consumers and strategic  partners  which
have  a  reputation  for  reputable  dealings  and,  eliminating  customers  and
advertisers that it believes  present a higher credit risk. Where feasible,  the
Company will evaluate  beforehand each customer,  supplier,  partner,  strategic
partner, and advertiser for their creditworthiness.

         Research and Development Plans

         For the  next  twelve  months  there is a plan  for  funding  extensive
research and development efforts if, in fact, the Company is successful with its
planned 506 Private  Offering.  The Company's  goal is to enhance the technology
features  in  terms of  personalization  and  security.  The  Company's  planned
research  and  development  is also  expected to evaluate  the  migration of the
technology to other  platforms  and  utilizations.  For that  purpose,  the chip
capabilities and the software  environment will both be enlarged and improved in
order to supply a more efficient  access to the technology for each end user and
for any application.  Other investments related to the manufacturing process are
scheduled,  too.  Therefore,  the Company  foresees  significant  changes in the
number of employees.


         Impact of the Year 2000 Issue

         The Year 2000 Issue is the result of potential  problems  with computer
systems or any equipment  with computer  chips that use dates where the date has
been stored as just two digits (e.g. 98 for 1998). On January 1, 2000, any clock
or date recording  mechanism  including date sensitive  software which uses only
two digits to represent  the year,  may  recognize the date using 00 as the year
1900  rather  than the year  2000.  This  could  result in a system  failure  or
miscalculations causing disruption of operations,  including among other things,
a temporary  inability  to process  transactions,  send  invoices,  or engage in
similar activities.

         The Company determined that the Year 2000 impact is not material to the
Company  and that it will not  impact  its  business,  operations  or  financial
condition  since all of the  internal  software  utilized by the Company has the
capability of being upgraded to support Year 2000 versions.  The Company did not
experience  any  material  impact  to  its  business,  operations  or  financial
condition as a result of the change over to the year 2000.  The Company also did
not experience any material impact to its business as a result of experiences of
other companies on which the Company's systems may rely.

         The Company  believes that it has  disclosed  all required  information
relative to Year 2000 issues relating to its business and  operations.  However,
there can be no  assurance  that the  systems  of other  companies  on which the
Company's systems rely also will be timely converted or that any such failure to
convert by another  company  would not have an adverse  affect on the  Company's
systems.

         Forward-Looking Statements

         This Form  10-KSB  includes  "forward-looking  statements"  within  the
meaning of Section 27A of the  Securities  Act of 1933, as amended,  and Section
21E of the Securities  Exchange Act of 1934, as amended.  All statements,  other
than statements of historical facts, included or incorporated by reference in

                                       27

<PAGE>



this Form 10-KSB which  address  activities,  events or  developments  which the
Company expects or anticipates  will or may occur in the future,  including such
things as future capital expenditures (including the amount and nature thereof),
demand for the  Company's  products and  services,  expansion  and growth of the
Company's  business and operations,  and other such matters are  forward-looking
statements.  These statements are based on certain assumptions and analyses made
by the  Company in light of its  experience  and its  perception  of  historical
trends,  current  conditions and expected  future  developments as well as other
factors it believes  are  appropriate  in the  circumstances.  However,  whether
actual results or developments will conform with the Company's  expectations and
predictions is subject to a number of risks and uncertainties,  general economic
market and business  conditions;  the business  opportunities  (or lack thereof)
that  may be  presented  to and  pursued  by the  Company;  changes  in  laws or
regulation;  and other  factors,  most of which are  beyond  the  control of the
Company.  Consequently,  all of the forward-looking statements made in this Form
10-KSB  are  qualified  by  these  cautionary  statements  and  there  can be no
assurance  that the actual  results or  developments  anticipated by the Company
will be realized  or, even if  substantially  realized,  that they will have the
expected consequence to or effects on the Company or its business or operations.
The  Company   assumes  no  obligations  to  update  any  such   forward-looking
statements.


         Item 7. Financial Statements.

              The  Financial  Statements of ELVA,  Inc.,  and Notes to Financial
Statements  together  with the  Independent  Auditor's  Report  of  Durland  and
Company,  CPA's,  P.A.,  required by this Item 7 commence on page F-1 hereof and
are  incorporated  herein by this reference.  The Financial  Statements filed as
part of this Annual  Report on Form 10-KSB are listed in the Index to  Financial
Statements below:




                          INDEX TO FINANCIAL STATEMENTS


Independent Auditor's Report. . . . . . . . . . . . . . . . . . . . . . . .. F-2

Consolidated Balance Sheets..................................................F-3

Consolidated Statements of Operations and Comprehensive Income (Loss)........F-4

Consolidated Statements of Stockholders' Equity (Deficiency).................F-5

Consolidated Statements of Cash Flows........................................F-6

Notes to Consolidated Financial Statements...................................F-7








                                       28


<PAGE>



                          INDEPENDENT AUDITORS' REPORT



The Board of Directors and Stockholders
Elva, Inc.
West Palm Beach, Florida

         We have audited the accompanying  consolidated  balance sheets of Elva,
Inc.,  (the  "Company")  as of  December  31,  1999  and  1998  and the  related
consolidated   statements  of  operations  and   comprehensive   income  (loss),
stockholders'  equity  (deficiency)  and cash flows for the years ended December
31,  1999  and  1998.   These   consolidated   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects,  the financial position of the Company
as of December 31, 1999 and 1998 and the results of their  operations  and their
cash flows for the years ended  December 31, 1999 and 1998, in  conformity  with
generally accepted accounting principles.

         The accompanying  consolidated  financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
4 to the  consolidated  financial  statements,  the Company has  experienced net
losses since inception.  The Company's  financial position and operating results
raise  substantial  doubt  about its  ability to  continue  as a going  concern.
Management's  plans with regard to these  matters are also  described in Note 4.
The consolidated  financial statements do not include any adjustments that might
result from the outcome of this uncertainty.



/s/ Durland & Company
Durland & Company, CPAs, P.A.

Palm Beach, Florida
March 13, 2000




                                       F-2

<PAGE>



<TABLE>
<CAPTION>
                                                         Elva, Inc.
                                                 Consolidated Balance Sheets
                                                        December 31,


                                                             1999          1998
                                                       ------------- -------------
                           ASSETS
<S>                                                    <C>           <C>
CURRENT ASSETS
  Cash and equivalents                                 $      97,476 $     293,604
  Accounts receivable                                         55,958        60,398
  VAT tax receivable                                          42,251       133,087
                                                       ------------- -------------
          Total current assets                               195,685       487,089
                                                       ------------- -------------

PROPERTY AND EQUIPMENT
  Computers and equipment                                     72,036        26,168

        Less accumulated depreciation                        (28,843)      (15,736)
                                                       ------------- -------------

          Net property and equipment                          43,193        10,432
                                                       ------------- -------------

OTHER ASSETS
  Deposits and other assets                                   16,134        10,976
  Income tax credit receivable                               111,791             0
  Patent                                                     313,092       349,099

        Less accumulated amortization                        (43,931)      (33,065)
                                                       ------------- -------------

          Net other assets                                   397,086       327,010
                                                       ------------- -------------
Total Assets                                           $     635,964 $     824,531
                                                       ============= =============

     LIABILITIES AND STOCKHOLDERS' EQUITY ( DEFICIENCY)
CURRENT LIABILITIES
   Accounts payable                                    $      46,006 $      40,370
   Accrued Expenses
       Trade                                                  34,919        72,090
       Payroll taxes                                         126,644        36,497
   Current portion of long-term debt                           2,450         3,557
   Advances from shareholder                                       0        11,563
   Conditional government subsidy                             95,365       100,246
                                                       ------------- -------------

          Total current liabilities                          305,384       264,323
                                                       ------------- -------------

LONG-TERM DEBT
   Conditional government subsidy                            190,729       200,246
   Other long-term debt                                        9,802        14,230
   Long-term debt - related party                            509,341             0
                                                       ------------- -------------

          Total long-term debt                               709,872       214,476
                                                       ------------- -------------
Total Liabilities                                          1,015,256       478,799
                                                       ------------- -------------
Minority interest in consolidated subsidiary                       0           136
                                                       ------------- -------------

STOCKHOLDERS' EQUITY (DEFICIENCY)
Preferred stock, $0.0001 par value, authorized
 10,000,000 shares; none issued and outstanding                    0             0
Common stock, $0.0001 par value, authorized
 50,000,000 shares; 21,500,000 issued and
      outstanding shares                                       2,150         2,150
  Additional paid-in capital                                 828,401       828,401
  Accumulated comprehensive income(loss)                     (53,525)      (52,349)
  Deficit                                                 (1,156,318)     (432,606)
                                                       ------------- -------------

          Total stockholders' equity (deficiency)           (379,292)      345,596
                                                       ------------- -------------
Total Liabilities and Stockholders' Equity (Deficiency)$     635,964 $     824,531
                                                       ============= =============
</TABLE>


    The accompanying notes are an integral part of the financial statements


                                       F-3



<PAGE>



<TABLE>
<CAPTION>
                                   Elva, Inc.
      Consolidated Statements of Operations and Comprehensive Income (Loss)
                             Year Ended December 31,


                                                                 1999              1998
                                                          ---------------    ---------------
<S>                                                       <C>                <C>
REVENUES                                                  $       448,696    $       297,153
                                                          ---------------    ---------------

OPERATING EXPENSES
    Salaries                                                      536,834            206,541
    Advertising                                                    63,228             32,723
    Royalty expense - related parties                              24,363                  0
    Depreciation and amortization                                  33,564             22,499
    General and administrative                                    732,901
                                                                                     234,873
    Research and development                                            0             33,819
                                                          ---------------    ---------------

          Total operating expenses                              1,390,890            530,455
                                                          ---------------    ---------------

 Operating Loss                                                  (942,194)          (233,302)
                                                          ---------------    ---------------

OTHER INCOME (EXPENSE):
    Other income                                                        0              6,587
    Interest income                                                   459              1,643
    Interest expense                                              (14,586)              (233)
    Foreign currency transaction gain (loss)                       11,534             (5,604)
                                                          ---------------    ---------------

          Total other income (expense)                             (2,593)             2,393
                                                          ---------------    ---------------

Net loss before tax credit and minority interest                 (944,787)          (230,909)


    Foreign income tax credit                                     220,939                  0
    Minority interest in consolidated subsidiary                      136               (136)
income (loss)
                                                          ---------------    ---------------

Net loss                                                         (723,712)          (231,045)

Other comprehensive income (loss):
    Foreign currency translation gain (loss)                       (1,039)            (2,521)
                                                          ---------------    ---------------
Comprehensive loss                                        $      (724,751)   $      (233,566)
                                                          ===============    ===============
Net loss per common share                                 $         (0.03)   $         (0.01)
                                                          ===============    ===============

Weighted average number of common shares outstanding           21,500,000         21,500,000
                                                          ===============    ===============
</TABLE>




     The accompanying notes are an integral part of the financial statements


                                       F-4

<PAGE>



<TABLE>
<CAPTION>
                                   Elva, Inc.
          Consolidated Statements of Stockholders' Equity (Deficiency)


                                                                                     Accumulated                    Total
                                               Number       Common     Additional   Comprehensive                   Stockholders'
                                                 of          Stock      Paid-in         Income                      Equity
                                               Shares                   Capital         (Loss)          Deficit     (Deficiency)
                                            ------------  ----------- ------------ ---------------- --------------- -------------
<S>                                         <C>           <C>         <C>          <C>              <C>             <C>
BEGINNING BALANCE,
December 31, 1997                                 26,336  $   511,317 $     49,236 $        (49,828)$      (201,561)$     309,164

Year ended December 31, 1998:

   12/98 - Reverse merger                     18,033,664     (509,511)     574,959                0               0       (65,448)
   12/98 - Stock issued to settle debt         3,440,000          344      204,206                0               0       204,550
   Other comprehensive income (loss)                   0            0            0           (2,521)              0        (2,521)
   Net loss                                            0            0            0                0        (231,045)     (231,045)
                                            ------------  ----------- ------------ ---------------- --------------- -------------

BALANCE, December 31, 1998                    21,500,000        2,150      828,401          (52,349)       (432,606)      345,596

Year ended December 31, 1999:

   Other comprehensive income (loss)                   0            0            0           (1,175)              0        (1,175)
   Net loss                                            0            0            0                0        (723,712)     (723,712)
                                            ------------  ----------- ------------ ---------------- --------------- -------------

BALANCE, December 31, 1999                    21,500,000  $2,150      $828,401     $(53,524)        $(1,156,318)    $    (379,291)
                                            ============  =========== ============ ================ =============== =============
</TABLE>









     The accompanying notes are an integral part of the financial statements


                                       F-5

<PAGE>


<TABLE>
<CAPTION>
                                   Elva, Inc.
                      Consolidated Statements of Cash Flows
                             Year Ended December 31,


                                                                                     1999                  1998
                                                                                  --------------    --------------
<S>                                                                               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                          $     (723,712)   $     (231,045)
Adjustments to reconcile net loss to net cash used by operating activities:
     Minority interest in consolidated subsidiary income                                    (136)              136
     Depreciation                                                                         13,107             5,332
     Amortization                                                                         10,866            17,166
Changes in operating assets and liabilities:
     (Increase) decrease in accounts receivable                                            4,440           (22,288)
     (Increase) decrease in VAT receivable                                                90,836          (125,671)
     (Increase) decrease in deposits and other assets                                     (5,158)           (4,030)
     (Increase) decrease in income tax credit receivable                                (111,791)                0
     Increase (decrease) in accounts payable                                               5,636            38,802
     Increase (decrease) accrued expense - trade                                         (37,171)           55,140
     Increase (decrease) payroll taxes                                                    90,147            14,981
     (Increase) decrease foreign currency translation gain (loss)                         (6,057)            8,059
                                                                                  --------------    --------------

Net cash  provided (used) by operating activities                                       (668,993)         (243,418)
                                                                                  --------------    --------------

CASH FLOW FROM INVESTING ACTIVITIES:
     (Purchase) maturity investments                                                           0            90,724
     Purchase of property and equipment                                                  (45,868)          (11,850)
     (Increase expenditure) decrease application patent                                   36,007           (55,988)
                                                                                  --------------    --------------

Net cash provided (used) by investing activities                                          (9,861)           22,886
                                                                                  --------------    --------------

CASH FLOW FROM FINANCING ACTIVITIES:
     Shareholder advances                                                                      0            11,443
     Shareholder advance repayments                                                      (11,563)                0
     Receipt of conditional government subsidy                                            (9,517)          170,682
     Proceeds of  long term debt - related party                                         509,341             1,087
     Debt payments                                                                        (5,535)                0
     Issuance of common stock for cash                                                         0           272,650
                                                                                  --------------    --------------

Net cash provided by financing activities                                                482,726           455,862
                                                                                  --------------    --------------

Net increase (decrease) in cash and equivalents                                         (196,128)          235,330

CASH and equivalents, beginning of period                                                293,604            58,274
                                                                                  --------------    --------------

CASH and equivalents, end of period                                               $       97,476    $      293,604
                                                                                  ==============    ==============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Non-Cash Financing Activities:
  Common stock issued to settle long-term debt                                    $            0    $      204,550
                                                                                  ==============    ==============
</TABLE>





     The accompanying notes are an integral part of the financial statements


                                       F-6

<PAGE>



                                   Elva, Inc.
                   Notes to Consolidated Financial Statements


(1) Summary of Significant Accounting Principles
      TheCompany  Elva,   Inc.,  (the   "Company"),   is  a  Florida   chartered
         corporation  which  conducts  business  from its  offices  in West Palm
         Beach, Florida, Los Angeles,  California,  Paris, France and Singapore.
         The Company was  incorporated  on August 15, 1997 as Computer  Research
         Technologies,  Inc., and changed its name to Elva,  Inc. on January 25,
         1999. Prior to the acquisition of ELVA, SA, the Company was principally
         seeking  financing  to allow it to begin its  planned  operations.  The
         Company is principally  involved in the smart card technology  industry
         through its French  subsidiary,  ELVA, SA. The following  summarize the
         more significant accounting and reporting policies and practices of the
         Company:

         a) Use of estimates In preparing the consolidated financial statements,
         management is required to make  estimates and  assumptions  that affect
         the reported  amounts of assets and  liabilities  as of the date of the
         statements  of financial  condition,  and revenues and expenses for the
         year then ended.  Actual  results may differ  significantly  from those
         estimates.

         b)  Significant   acquisition  In  December  1998,  Elva,  Inc.  issued
         14,160,000  shares of common  stock to  acquire  substantially  all the
         issued and outstanding shares of the common stock of ELVA, SA, a French
         corporation,  in  a  reverse  merger,  which  was  accounted  for  as a
         reorganization  of ELVA, SA. There remains a four-tenths of one percent
         minority  interest  in ELVA,  SA,  which  is owned by two of the  major
         stockholders  of Elva,  Inc.  as a  result  of this  acquisition.  This
         minority interest is required under French corporate law.

         c) Principles of consolidation   The  consolidated financial statements
         include  the  accounts  of Elva, Inc., and its wholly owned subsidiary.
         Inter-company balances and transactions have been eliminated.

         d) Net loss per common share Basic net loss per weighted average common
         share is  computed  by dividing  the net loss by the  weighted  average
         number of common shares outstanding during the period.

         e) Property and  equipment  All property and  equipment are recorded at
         cost and  depreciated  over their  estimated  useful  lives,  using the
         straight-line  method.  Upon sale or retirement,  the costs and related
         accumulated depreciation are eliminated from their respective accounts,
         and  the  resulting  gain  or  loss  is  included  in  the  results  of
         operations.  Repairs and maintenance  charges which do not increase the
         useful  lives of the assets  are  charged to  operations  as  incurred.
         Depreciation  expense  was  $13,107  and  $5,332  for the  years  ended
         December 31, 1999 and 1998, respectively.

         f) Cash and  equivalents  The  company  considers  investments  with an
         initial maturity of three months or less as cash equivalents.

         g) Patents The Company acquired two French patents,  Nos.  95-15735 and
         96-01872,  from the founders of ELVA, SA. The Company is amortizing the
         cost of these patents over the remaining  life of the patents.  Patents
         in France  have a 20 year life.  Amortization  expense  was $10,866 and
         $17,166 for the years ended December 31, 1999 and 1998, respectively.

         h) Revenue  recognition  The Company's  sole source of revenue has been
         from licensing its patented  technology.  The Company  records  revenue
         when earned  under its  licensing  agreement.  The  Company  intends to
         license its  technology to others as well,  rather than to  manufacture
         the  VOCALID  cards for sale.  The  Company  believes  that it would be
         prohibitively  expensive  for it to  establish  its  own  manufacturing
         facilities  and to do so would  distract it from its efforts at getting
         its technology accepted as the world standard.



                                       F-7

<PAGE>



                                   Elva, Inc.
                   Notes to Consolidated Financial Statements

(1) Summary of Significant Accounting Principles, continued
         i) Foreign  currency  transaction  and  translation  gains(losses)  The
         principal operating entity of the Company is its subsidiary,  ELVA, SA,
         which is located in France. The functional  currency of ELVA, SA is the
         French Franc,  (FF). ELVA, SA has only one customer which is located in
         the US. ELVA,  SA bills this  customer in FF and is paid in US Dollars,
         (USD).  ELVA,  SA  records  a  transaction  gain or loss at the time of
         receipt of payment  consisting of the difference  between the amount of
         FF billed and the amount of FF the USD payment is converted  into. On a
         consolidated basis the Company's reporting currency is the US Dollar.

         j) Research & development Research &  development expenses are expensed
         in the period incurred.

         k) Software  development costs The software developed by the Company is
         used exclusively by licensors of the Company's technology. As such, the
         Company is not selling the software.  Costs  incurred in developing the
         software have been expensed in the period in which incurred.

         l) VAT tax  receivable  In  France,  as in many  other  countries,  the
         government  charges a Value Added Tax, (VAT), that is similar in nature
         to sales tax in the US.  There are three  major  differences.  First is
         that VAT is charged at each point of sale.  Second is that there are no
         exemptions  from the collection of VAT.  Finally,  each company files a
         VAT  return  with the  government  monthly  reflecting  the  gross  VAT
         collected  and VAT paid.  If the VAT paid is  greater  than the  amount
         collected,   the  Company   receives  a  refund  from  the   government
         approximately five months later.

(2)      Stockholders'  Equity The Company has authorized  50,000,000  shares of
         $0.0001 par value  common  stock and  10,000,000  shares of $0.0001 par
         value preferred stock. Rights and privileges of the preferred stock are
         to be  determined  by the Board of  Directors  prior to  issuance.  The
         Company has  21,500,000,  shares of common stock issued and outstanding
         at December 31, 1998 and September 30, 1999.

         In September 1997, the Company issued  9,000,000  shares to its founder
         for services  rendered to the Company valued at $9,000.  In April 1998,
         the Company  completed a Regulation D Rule 504  Placement for 1,757,376
         shares  in  exchange  for  $17,574  cash.  In April  1998,  a  majority
         shareholder donated 9,000,000 shares of common stock to the Company. In
         June 1998, 9,000,000 shares were issued for $32,500 in cash. During the
         third quarter of 1998,  the Company issued  2,700,000  shares of common
         stock for $54,000 in cash.  In  December  1998,  9,557,376  shares were
         donated to the Company. In December 1998, the Company issued 14,160,000
         shares for 26,326 of the 26,336 shares issued and  outstanding of ELVA,
         SA,  a French  corporation.  Additionally,  in  conjunction  with  this
         acquisition,  the Company issued  3,440,000  shares to a third party in
         settlement of a $204,550 loan the third party had made to ELVA,  SA. As
         the  common  stock  of the  Company  was  not  listed  at the  date  of
         acquisition, the fair value of the stock issued to settle this debt was
         not  determinable  and  the  Company  elected  to use the  loan  amount
         outstanding to value this transaction.

(3)      Income Taxes Deferred income taxes  (benefits) are provided for certain
         income and expenses which are  recognized in different  periods for tax
         and financial  reporting  purposes.  The Company had net operating loss
         carry-forwards  for income tax  purposes of  approximately  $1,156,000,
         which expire  $68,000 on December  31,  2011,  $132,000 on December 31,
         2117, $232,000 on December 31, 2118 and $724,000 on December 31, 2119.

         The amount recorded as a deferred tax asset,  cumulative as of December
         31,  1999  and  1999,   is   approximately   $462,000   and   $173,000,
         respectively,  which  represents the amount of tax benefits of the loss
         carry-forwards.  The Company has established a valuation  allowance for
         this deferred tax asset of $462,000 and $173,000, as the Company has no
         history of profitable operations.



                                       F-8

<PAGE>



                                   Elva, Inc.
                   Notes to Consolidated Financial Statements


(3) Income Taxes, continued The significant components net deferred tax asset as
of December 31, 1999, are:


Net operating losses          $          462,000
Valuation allowance                     (462,000)
                              ------------------
Net deferred tax asset        $                0
                              ==================

         The  Company's   subsidiary,   ELVA,   SA,  applied  for  research  and
         development income tax credits with the French government for the years
         ended December 31, 1999,  1998 and 1997. The credits are applied for on
         the Company's annual income tax return in mid-1998,  1999 and 2000. The
         amounts applied for were approximately $94,800, $15,300 and $94,400 for
         1999, 1998 and 1997, respectively. In the 4th quarter of 1999, ELVA, SA
         was  notified  by  the  French   government  of  the  approval  of  the
         application for 1997, and that payment by the government would occur in
         late 2000. The Company assigned this receivable to its bank in exchange
         for cash in the amount of  approximately  $94,400.  It is now  expected
         that the  government  will approve the 1998 and 1999 credits.  They are
         expected to be paid $15,300 in 2001 and $94,800 in 2002.  These credits
         reduce the income tax benefit of its net operating loss  carry-forwards
         for the French subsidiary on a one for one basis.

(4)      Going  Concern  As shown  in the  accompanying  consolidated  financial
         statements,  the Company  incurred  net losses  totaling  $724,000  and
         $231,000 for the years ended December 31, 1999 and 1998, and reflects a
         stockholders'  deficiency of approximately  $379,000 as of December 31,
         1999. These conditions raise substantial doubt as to the ability of the
         Company to continue as a going  concern.  The ability of the Company to
         continue as a going  concern is  dependent  upon  increasing  sales and
         obtaining additional capital and financing.  The Company has retained a
         registered  broker/dealer  to raise additional funds for the Company in
         an amount up to $5,000,000. The financial statements do not include any
         adjustments  that  might be  necessary  if the  Company  is  unable  to
         continue as a going concern.

(5) Related Party Transactions
         (a) Patents The Company acquired two French patents,  Nos. 95-15735 and
         96-01872,  from the  founders of ELVA,  SA for 21,069  shares of common
         stock of ELVA, SA valued at $320,700,  based on their  historical cost,
         and  approximately  $3,333  per month,  for the life of the  patents as
         royalty  payments,  beginning in March 1997. These ELVA, SA shares were
         part of the original issue shares of ELVA, SA, and  accordingly  had no
         fair  market  value at that time.  After  approximately  8 months,  the
         principals  realized  that the  Company  did not have the cash  flow to
         continue  to make the  payments  to them and  continue  to develop  the
         marketing  efforts and suspended the payments.  In February  1999,  the
         Company and the founders  entered into a new agreement which called for
         total  additional  payment of approximately  $116,700,  with an initial
         payment  of   approximately   $25,000,   and   quarterly   payments  of
         approximately  $11,500,   beginning  on  February  1,  2000.  This  new
         agreement also encompassed the international  patent  application filed
         with the World Organization of Intellectual  Property,  principally for
         the US, Canada,  Europe and Japan.  It also  encompasses  the trademark
         "VOCALID," No. 96-605347, registered at INPI in January 11, 1996.

         (b) Long-term debt In 1998,  ELVA, SA received  approximately  $204,500
         from a third party as a loan. In December  1998, as part of the reverse
         merger,   Elva,  Inc.  issued  3,440,000  shares  of  common  stock  in
         settlement  of this  debt.  In  March,  May and  September  1999,  ELVA
         received additional  traunches of this loan from the now related party,
         in the total amount of approximately  $500,000. This loan is payable in
         full on January 1, 2002. The Company can, at its option,  prepay all or
         part of this amount without penalty.  The loan agreement does not carry
         a stated interest rate,  although it references  accrued interest.  The
         Company  is  accruing  interest  at a rate  of  10%,  until  it can get
         documentation from the lender as to the correct rate. The



                                       F-9

<PAGE>



                                   Elva, Inc.
                   Notes to Consolidated Financial Statements


(5) Related Party Transactions (Continued)
         b)  Long-term  debt   (continued)   Company  also  received  a  $16,000
         conditional  loan from an  unrelated  company,  under which the Company
         would not be liable for  repayment  if the  Company  hired at least one
         former  technical  employee of the other  company.  The Company has not
         done so and is  repaying  this loan at a rate of $3,000  per year.  The
         repayment schedule is per the original agreement.

(6)      Commitments  The Company is committed under two operating  leases,  one
         for its  office  space  and the  other  for an  automobile.  Under  the
         automobile lease the Company is obligated to pay  approximately  $4,000
         in 2000. The Company is obligated  under the lease for its office space
         for payments of $33,000 and $16,600 in 2000 and 2001, respectively. The
         Company  can, at its  option,  elect to extend this lease for up to two
         additional  three-year periods.  The Company leases its office space in
         Los Angeles and Singapore on a month-to-month basis. The Company's rent
         expense  was  approximately  $62,250  and  $25,000  for the years ended
         December 31, 1999 and 1998 respectively.

(7)      Concentration of customers The Company's sole source of revenue to date
         has been one customer, a US based company. Accordingly, its revenue and
         related accounts receivable at all periods presented are all related to
         this single  source.  The Company is endeavoring to expand its customer
         base.

(8)      Conditional  government  subsidies  The  Company has  received  several
         government grants which are conditional as to repayment. The grants are
         to be applied as  reductions of salaries and  employment  taxes paid to
         new employees.  They are intended by the government to induce increases
         in employment,  as France has experienced  high  unemployment  over the
         last few years. To date the Company has been increasing  employment and
         applying accumulated grants as offsets to salary expense and at present
         is not yet obligated to repay any of these grants. The Company does not
         expect to have to repay  any of the grant  amounts.  These  grants,  if
         required to be repaid, do not require the payment of interest. The term
         for adding the  required  employees  under these grants is three years.
         The  Company  has  amortized  approximately  $15,500 and $35,000 of the
         grants against  salary  expense for the years ending  December 31, 1999
         and 1998, respectively.





                                      F-10

<PAGE>



Item  8.  Changes  In and  Disagreements  with  Accountants  on  Accounting  and
          Financial Disclosure.

     Because the Company has been generally inactive since its inception, it has
not had independent  accountants until the retention of Durland & Company, CPAs,
P.A., 340 Royal Palm Way, 3rd Floor, Palm Beach,  Florida 33480.  There has been
no change in the Company's  independent  accountant during the period commencing
with the Company's  retention of The Durland & Company,  CPAs, P.A.  through the
date hereof.

PART III

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

Executive Officers and Directors

The following table sets forth certain  information  with respect to each of our
executive  officers and  directors.  Our directors are generally  elected at the
annual shareholders' meeting and hold office until the next annual shareholders'
meeting or until their successors are elected and qualified.  Executive officers
are elected by our board of directors  and serve at its  discretion.  Our bylaws
authorize the board of directors to be constituted of not less than one and such
number as our board of directors may  determine by  resolution or election.  Our
board of directors currently consists of four members.

NAME                AGE          POSITION
-------------     ------         -----------------
Cedric Colnot      36            President and Chairman of the Board
Patrick Misko      38            Vice President
Serge  Parienti    36            Vice president and Treasurer

There are no family  relationships  between or among the executive  officers and
directors of the Company.

Compliance with Section 16(a) of the Securities Exchange Act of 1934:

Section 16(a) of the Securities  Exchange Act of 1934, as amended,  requires the
Company's  executive officers and directors and persons who own more than 10% of
a  registered  class  of the  Company's  equity  securities,  to file  with  the
Securities and Exchange Commission (hereinafter referred to as the "Commission")
initial statements of beneficial ownership,  reports of changes in ownership and
annual  reports  concerning  their  ownership,  of Common Stock and other equity
securities of the Company on Forms 3, 4 and 5, respectively. Executive officers,
directors  and  greater  than  10%   shareholders  are  required  by  Commission
regulations to furnish the Company with copies of all Section 16(a) reports they
file.  To the  Company's  knowledge,  Mr.  Colnot,  Mr. Misko and  Meadlight TMO
comprise all of the Company's executive officers, directors and greater than 10%
beneficial  owners of its common  Stock,  and have  complied  with Section 16(a)
filing  requirements  applicable to them during the Company's  fiscal year ended
December 31, 1999.

                                       29

<PAGE>



Business Experience

Officers and Directors

The following is a brief description of the business background of our executive
officers, and directors:

Cedric Colnot,: President and Chairman of the board of ELVA, INC. and ELVA, SA

Graduate of the EFREI high school and of a microelectronics  University,  he has
spent  4  years  working  for   INNOVATRON  as  a  specialist  in  security  and
microelectronics  projects.  He also registered 4 patents for this company. Then
he joined  NEWTEK,  a  semiconductors  distributor  as  international  suppliers
manager.  His previous  function was Director of Research and Development in the
smart  card  field.   Experienced   in  the  areas  of  smart  cards  and  vocal
identification,  he has  achieved  a  merge  of  these  technologies  to  design
VocaliD(R).

Patrick Misko: Vice-President of ELVA, INC. And CEO of ELVA, SA

Graduate of  Accounting  and  Economy  Universities,  he managed a voice  server
company  for 3  years.  Then he  joined  Olivetti  as key  account  manager  for
computing and vocal products. His previous function was Director of sales in the
computer  industry and in IVR  (interactive  vocal response) field. He knows the
market  of  vocal  identification  card as well as its  major  players,  such as
manufacturers, integrators and VAR's.

Serge  Parienti:  Vice-President  and  Treasurer  of ELVA,  INC.  And  Marketing
Director of ELVA, SA

Graduate of a bio industry  high school,  he made a special  study of industrial
marketing  and  communication.  He has spent 8 years as a consultant  in several
sectors  among  which:  strategic  advisor  for  the  "Academie  des  Sciences",
marketing  and   communication   advisor  in   telecommunications   (France  and
Switzerland),   high  technology,   pharmaceutics   (France  and  Israel),   and
biotechnology sector. Just before joining ELVA, he was outstandingly involved in
internet  related to  projects.  He is also  manager of  MEADLIGHT  TMO, a major
ELVA's shareholder.

Zakaria En-Nana: Sales director of ELVA, SA

Zakaria NANA has served as Director Sales & Licensing  Policy since August 1999.
Prior to joining  ELVA,  Zakaria  NANA worked at Leading  Smart Card  Technology
Providers: Innovatron Data Systems belonging to the Smart Card Inventor's Group,
where Zakaria was in charge of the "Franchising & Licensing" activities. Through
an  Acquisition,  Zakaria NANA joined the  Ingenico  Group (Word Leader in Smart
Card based Payment  Systems)  Through a Merger,  Zakaria NANA took in charge the
Smart  Card  Business  Development  of Bull Corp  (World  Leader  in Smart  Card
Technology)  within its  international  network : Asia  Africa  Easten  Europe .
Zakaria NANA started his career as a Sales  Engineer in IBM since 1989. Mr. NANA
holds a Master  Degree in  Business  Administration  from Reims  University  and
received an Executive Program  Certificate from INSEAD. He is also the Principal
Accounting Officer of the Company.


                                       30

<PAGE>



        All directors hold office until the next annual meeting of the Company's
shareholders and until their successors have been elected and qualify.  Officers
serve at the pleasure of the Board of Director.  Mr. Adams,  Ms. Garrett and Ms.
Travis  will  devote  such time and effort to the  business  and  affairs of the
Company as may be  necessary  to perform  their  responsibilities  as  executive
officers and/or directors of the Company.

         Aside from the above officers and directors, there are no other persons
whose activities will be material to the operations of the Company at this time.
Mr. Adams is the sole  "promoter"  of the Company as such term is defined  under
the Act.

Item 10. Executive Compensation.

         At such time as ELVA  commences  operations,  it is  expected  that the
Board of Directors  will approve the payment of salaries in a reasonable  amount
to its officer for his services.  At such time,  the Board of Directors  may, in
its discretion,  approve the payment of additional cash or non-cash compensation
for services to the Company.

The Company does not provide officers with pension,  stock appreciation  rights,
long-term  incentive or other plans but has the intention of  implementing  such
plans in the future.

Compensation of Directors

         The Company has no standard arrangements for compensating the directors
of the Company for their attendance at meetings of the Board of Directors.

Item 11. Security Ownership of Certain Beneficial Owners and Management.

              The  following  table sets forth  information  as of December  31,
1999,  regarding the ownership of the Company's Common Stock by each shareholder
known by the  Company to be the  beneficial  owner of more than five per cent of
its outstanding shares of Common Stock, each director and all executive officers
and  directors  as  a  group.  Except  as  otherwise  indicated,   each  of  the
shareholders  has sole voting and investment power with respect to the shares of
Common Stock beneficially owned.


                                       31

<PAGE>



     Security Ownership of Certain Beneficial Owners

                  The following  shareholding  information relates to any person
or group who is known to be the  beneficial  owner of more than five  percent of
any class of the registrant's voting securities:

----------------------------------------------------------------------------
Title      Name and Address              Amount and Nature          Percent of
of Class   of Beneficial Owner           of Beneficial Owner        Class
----------------------------------------------------------------------------
Common     Cedric Colnot(1)              5,601,543                 26.05%
           17 rue Jean-Jacques Rousseau
           94200 Ivry sur Seine
----------------------------------------------------------------------------
Common     Patrick Misko(1)              5,040,393                 23.44%
           538 avenue de l'Hautil
           78955 Carrieres sous Poissy
----------------------------------------------------------------------------
Common     Alain Duffas(1)               1,126,600                  5.24%
           18 rue Auguste Demmler
           92340 Bourg La Reine
----------------------------------------------------------------------------
Common     Meadlight TMO(1)              3,440,000                 16.00%
           23/25, avenue Mac Mahon
           75017 Paris
----------------------------------------------------------------------------
All Executive Officers, Directors       10,641,936                 49.49%

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

(1)  Based upon  21,500,000  shares of the  Company's  Common  Stock  issued and
     outstanding as of December 31, 1999.



Item 12. Certain Relationships and Related Transactions.

         At the  current  time,  the  Company  has no  provision  to  issue  any
additional securities to management, promoters or their respective affiliates or
associates.  At such time as the Board of  Directors  adopts an  employee  stock
option or pension  plan,  any  issuance  would be in  accordance  with the terms
thereof and proper  approval.  Although  the Company has a very large  amount of
authorized  but unissued  Common Stock and  Preferred  Stock which may be issued
without further  shareholder  approval or notice, the Company intends to reserve
such  stock  for the Rule 506  offerings  contemplated  to  implement  continued
expansion,  for acquisitions and for properly approved employee  compensation at
such time as such plan is adopted. (See Part I, Item 1. "Description of Business
- (b) Business of Registrant.")

         In  conjunction  with  the  acquisition  by  the Company of ELVA,SA, it
assumed  responsibility for repayment of a loan to a third party, Meadlight TMO,
a French company. A condition of the above acquisition  entailed the issuance of
3,440,000  shares of the  Company's  shares of common stock in  settlement  of a
$204,550 loan made to ELVA,SA. In March, May and September 1999, ELVA, SA, now a

                                       32

<PAGE>



subsidiary of the Company,  received additional  traunches of this loan from the
now related party in the total amount of approximately $500,000 US dollars. This
additional  loan is payable in full on January 1, 2002 and the  Company  can, at
its option. prepay all or part of this amount without  penalty.(See:  Part F/S -
Note 5 - Notes to Consolidated Financial Statements -F-8)


Item 13. Exhibits and Reports on Form 8-K.

     (a) The exhibits  required to be filed  herewith by Item 601 of  Regulation
S-B, as described in the following index of exhibits, are incorporated herein by
reference, as follows:


Exhibit No.             Description
-------------------------------------------------------------------------------

Item 1.     Index to Exhibits
---------   -----------------------
3(i).1      Articles of Incorporation of ELVA, INC. f/k/a/ Computer Research
            Technology, Inc., effective August 15, 1997 (1)

3(i).1      Amended Articles of Incorporation of ELVA, INC. f/k/a/ Computer
            Research Technology, Inc., filed January 29, 1999. (1)

3(ii).1     Bylaws of ELVA, INC. f/k/a/ Computer Research Technology, Inc (1)

10.1        Letter of Intent dated December 19, 1998 between Computer Research
            Technologies, Inc. and ELVA,SA. (1)

27.1*       Financial Data Schedule
--------------
*    filed herewith

(1)  Incorporated  herein by  reference  to the  Registration  Statement on Form
     10-SB  Amendment  1 of ELVA , Inc.,  filed  with the  U.S.  Securities  and
     Exchange Commission.

(b)  No Reports on Form 8-K were filed during the fiscal year ended December 31,
     1999, covered by this Annual Report on Form 10-KSB.


                                       33

<PAGE>





                                   SIGNATURES
                               -------------------

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


                                       ELVA, INC.
                                       (Registrant)

Date: 14th  April, 2000                 /s/ Cedric Colnot
                                        ---------------------
                                        Cedric Colnot, President

     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.

Date:                          Signature              Title
------                         ------------           -----

 14 April, 2000       By:   /s/ Cedric Colnot
                      --------------------------
                       Cedric Colnot                  President & Director


 14 April, 2000       By: /s/ Patrick Misko
                      --------------------------
                        Patrick Misko                 Vice-President & Director



                                       34