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


                                   FORM 10-KSB

[X] Annual Report Pursuant to Section 13 of 15(d) of the Securities Exchange Act
    of 1934

                   For the fiscal year ended December 31, 2001

                             GLOBAL SMARTCARDS INC.

                Nevada, USA                             86-0951473
            -----------------                        ----------------
      State of other jurisdiction of               (IRS Employer ID No.)
      incorporation or organization)

                             38820 North 25th Avenue
                             Phoenix, Arizona, 85027
                        ---------------------------------
                    (Address of principal executive offices)

                                 (480) 329-1336
                                -----------------
              (Registrant's telephone number, including area code)

Securities registered under Section 12(b) of the Act: None

Securities registered under
Section 12(g) of the Act:           Common Stock with $0.001 par value per share
                                    --------------------------------------------
                                                  (Title of Class)

Check  whether  the  registrant  (1) filed all  reports  required to be filed by
Section 13 or 15(d) of the Securities  Exchange Act of 1934 during the preceding
12 months (or for such shorter  period that the  registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [ 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 [ ]

The registrant's revenues for the most recent fiscal year was $Nil

The  aggregate  market  value  of the  common  stock of the  registrant  held by
non-affiliates of the registrant on March 25, 2002, based on the average closing
bid and asked price of the Common Stock as quoted on the OTC  Bulletin  Board on
such date, was approximately $Nil.

The number of shares of the  registrant's  Common Stock  outstanding as of March
25, 2002 was 4 million (4,000,000) shares.

Documents  incorporated  by  reference  are  contained  in Item 13 of this  Form
10-KSB.




<PAGE>



                             GLOBAL SMARTCARDS INC.
                          ANNUAL REPORT ON FORM 10-KSB

                                TABLE OF CONTENTS


     PART I....................................................................3

ITEM 1 - DESCRIPTION OF BUSINESS...............................................3
             SUMMARY...........................................................3

ITEM 2 - DESCRIPTION OF PROPERTY...............................................3

ITEM 3 - LEGAL PROCEEDINGS.....................................................4

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS....................4

ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS..............4
             DIVIDENDS.........................................................4
             STOCK OPTIONS AND SHARE PURCHASE WARRANTS.........................4
             SHARE ISSUANCES FROM INCEPTION TO MARCH 31, 2002..................4

ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.............5

ITEM 7 - FINANCIAL STATEMENTS..................................................6

ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
         ON ACCOUNTING AND FINANCIAL DISCLOSURE................................6

ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
         PERSONS COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.............6

ITEM 10 - EXECUTIVE COMPENSATION...............................................7
             OPTION GRANTS IN LAST FISCAL YEAR.................................7
             COMPENSATION OF DIRECTOR..........................................7
             EMPLOYMENT CONTRACTS..............................................7

ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND  MANAGEMENT......7
             STOCK OPTION PLAN.................................................8
             PENSION PLANS.....................................................8

ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................8

ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K.....................................8
             SIGNATURES........................................................8






                                      - 2 -

<PAGE>



                                     PART I

ITEM 1 - DESCRIPTION OF BUSINESS

SUMMARY

GLOBAL SMARTCARDS INC. (the "Company") was incorporated under the laws of Nevada
on  February  16, 1999 under the name Global  Smartcards  Inc.  The Company is a
development stage company with a principal business objective to sell and market
Smart Cards (plastic cards with embedded  microprocessors)  to hotels,  resorts,
cruise lines and casinos.  The original  Articles of the Company  authorized the
issuance  of  twenty-  five  million   (25,000,000)  common  shares.  There  are
twenty-five  million  (25,000,000) shares of Common Stock at par value of $0.001
per share and no Preferred  Stock. In connection with its formation,  a total of
two million  (2,000,000)  shares of its Common Stock were purchased by the three
founders of the Company on February 18, 1999, for cash.  Between February 23 and
February 28, 1999, the Company sold one million (1,000,000) shares of its Common
Stock in connection with a public offering at a price of $0.025 per share. On or
about  February 28, 1999, the Company  completed a public  offering of shares of
Common  Stock  of the  Company  pursuant  to  Regulation  "D,"  Rule  504 of the
Securities  Act of 1933,  as amended,  whereby it sold one  million  (1,000,000)
shares of the Common  Stock of the Company for  twenty-five  thousand  ($25,000)
dollars to approximately  twenty-five (25) unaffiliated  shareholders of record.
The Company filed an original Form D with the Securities and Exchange Commission
on or about  February 25,  1999.  On August 26,  1999,  the Company  completed a
subsequent  Public  Offering  that was offered  without  registration  under the
Securities  Act of 1933, as amended (The "Act"),  in reliance upon the exemption
from registration  afforded by Sections 4(2) and 3 (b) of the Securities Act and
Regulation "D"  promulgated  thereunder.  The Company sold to six (6) additional
unaffiliated  shareholders,  one million (1,000,000) shares of Common Stock at a
price of $0.05 per share for a total amount raised of fifty  thousand  ($50,000)
dollars. As of March 25, 2002 the Company had four million (4,000,000) shares of
its $0.001 par value common voting stock issued and  outstanding  which are held
by  approximately  thirty four (34)  shareholders,  including the three founding
shareholders, of record.


ITEM 2 - DESCRIPTION OF PROPERTY

The Company is developmental stage company, which plans to market Smart Cards to
hotels,  resorts, cruise lines and casinos using Smart Cards (plastic cards with
embedded  microprocessors).  Management  of the Company  believes  that they can
deliver  a more  cost-effective  turn-key  program  with  the  ability  to share
consumer  information  and profiles  between  clients and build a  comprehensive
database  for resale.  The Company  hopes to provide  solutions  for the growing
demand in  application of computers in the wallet or what have been termed Smart
Cards, and the  implementation  of loyalty programs based on the technology (See
"Business  of the  Company").  The  Company  plans to  provide  consumer  credit
tracking and loyalty  programs for specialized  market niches focused toward the
resort and cruise markets through the use of Smart Cards. The Global Smart Cards
are designed to eliminate  growing  transaction  charges by creating an internal
credit  system for each client while adding  photo  identification  for security
verification.  The Company  plans to  contract  with  Gemplus a major  worldwide
provider of Smart Card solutions,  for use of their technology platform. At this
time,  no contract has been made  between the Company and  Gemplus.  Gemplus has
developed a flexible,  configurable  technology  engine which offers merchants a
method to retain  customers  as compared to  traditional  stand alone paper card
alternatives.  Any potential  revenue which the Company might  generate would be
derived from sales by the Company to hotels,  casinos, cruise lines and resorts,
which generally achieve full occupancy levels and consistent sold out turnover.

Management  believes  that placing this  technology  into foreign  resorts would
enhance the Company's revenues as wholesaler volume discounts for hardware would
then be made available to these customers from

                                      - 3 -

<PAGE>



the  Company.  The  Company  hopes to also  achieve  revenues  from  maintenance
contracts and supply of new cards.


ITEM 3 - LEGAL PROCEEDINGS

There are no material  legal  proceedings to which the Company is a party nor to
the best of the  knowledge of  management,  are any material  legal  proceedings
contemplated.


ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

No matters were  submitted to a vote by  shareholders  of the Company during the
fourth quarter of the fiscal year ended December 31, 2001.


                                     PART II

ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

There is no public market for the common shares of Global.

DIVIDENDS

Global  has not  paid  any  cash  dividends  on its  common  stock  and does not
anticipate paying any cash dividends in the foreseeable future. Global currently
intends to retain future earnings, if any, to fund the development and growth of
its business.  Any future  determination  to pay cash  dividends  will be at the
discretion  of the  board of  directors  and  will be  dependent  upon  Global's
financial  condition,   operating  results,  capital  requirements,   applicable
contractual  restrictions  and other  factors  as the board of  directors  deems
relevant.

STOCK OPTIONS AND SHARE PURCHASE WARRANTS

There are no outstanding  stock options or share  purchase  warrants to purchase
securities of the Company.

SHARE ISSUANCES FROM INCEPTION TO MARCH 25, 2002

A total of two million  (2,000,000)  shares of the  Company's  common stock were
purchased by the three  founders of the Company on February 18, 1999,  for cash.
Between  February  23 and  February  28,  1999,  the  Company  sold one  million
(1,000,000)  shares of the  Common  Stock of the  Company in  connection  with a
public  offering at a price of $0.025 per share.  On or about February 28, 1999,
the Company  completed a public  offering of shares of common stock  pursuant to
Regulation D, Rule 504 of the  Securities  Act of 1933,  as amended,  whereby it
sold one  million  (1,000,000)  shares of the Common  Stock of the  Company  for
twenty-five  thousand  ($25,000)  dollars  to  approximately   twenty-five  (25)
unaffiliated  shareholders of record.  The Company filed an original Form D with
the Securities and Exchange  Commission on or about February 25, 1999. On August
26, 1999, the Company  completed a subsequent  Public  Offering that was offered
without  registration  under the Securities Act of 1933, as amended (the "Act"),
in reliance upon the exemption from registration afforded by sections 4(2) and 3
(b) of the Securities Act and Regulation D promulgated  thereunder.  The Company
sold to six (6) additional  unaffiliated  shareholders,  one million (1,000,000)
shares of Common  Stock at a price of $.05 per share for a total amount of fifty
thousand  ($50,000)  dollars.  As of March 25, 2002,  the Company had  4,000,000
million  shares  of  its  $0.001  par  value  common  voting  stock  issued  and
outstanding.

                                      - 4 -

<PAGE>




ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Management  discussion  and  analysis  of  financial  condition  and  results of
operations  for the period from  inception  (February  16, 1999) to December 31,
2001.

OPERATIONS

Year Ended December 31, 2001 compared to Year Ended December 31, 2000

During the year ended  December  31,  2001,  the  Company  incurred  $19,649 for
general and administrative expenses, an increase of $15,502 from $4,147 reported
for the 2000 year. Expenses incurred in 2001 comprised of $6,300 for audit fees,
$955 for legal expenses,  $1,612 accounting fees, $7,600 consulting fees paid to
the President of the Company and $3,182 for office and miscellaneous expenses.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2001,  the Company had a working  capital  deficiency of $1,131.
The Company has no  operating  revenue and has, to date,  raised  funds from the
sale of its equity.  During the year ended  December 31, 2001,  the President of
the Company repaid the $15,000 which was previously advanced by the Company.

If the Company cannot generate sufficient revenues or raise money in the next 12
months, it is most likely the Company will not be able to stay in business.  The
Company is a  developmental  stage company.  The Company does not anticipate any
revenues until it can identify and sell customers its products.

The Company expects that it will continue to experience  negative operating cash
flow for the  foreseeable  future as a result of  administration  and  operating
costs. The Company does not have significant cash or other material assets,  nor
does it have an established source of revenues sufficient to cover its operating
costs and to allow it to continue as a going concern. It is, however, the intent
of the  Company  to seek to raise  additional  capital  via a private  placement
offering  pursuant to Regulation "D" Rule 505 or 506 or a private placement once
the Company is trading on OTC-BB. If the Company needs to raise additional funds
in order to fund  expansion,  develop  new or  enhanced  services  or  products,
respond to competitive pressures or acquire complementary  products,  businesses
or  technologies,  any additional funds raised through the issuance of equity or
convertible debt securities, the percentage ownership of the stockholders of the
Company will be reduced,  stockholders  may experience  additional  dilution and
such  securities may have rights,  preferences or privileges  senior to those of
the Company's  Common Stock. The Company does not currently have any contractual
restrictions  on its ability to incur debt and,  accordingly,  the Company could
incur  significant  amounts of indebtedness to finance its operations.  Any such
indebtedness   could  contain  covenants  which  would  restrict  the  Company's
operations.  There  can  be no  assurance  that  additional  financing  will  be
available on terms  favorable to the Company,  or at all. If adequate  funds are
not available or are not available on acceptable  terms,  the Company may not be
able  to  continue  in  business,  or to a  lessor  extent  not be  able to take
advantage of acquisition opportunities,  develop or enhance services or products
or respond to competitive  pressures.  The Company does not have any preliminary
agreements or understandings  between the company and its  stockholders/officers
and directors with respect to loans or financing to operate the company.

Management  believes that the Company's future growth and success will depend on
its ability to find customers for its Smart Card products.  The Company  expects
to  continually  evaluate its potential  products to determine  what  additional
products or enhancements are required by the  marketplace.  The Company does not
plan to develop products internally,  but find suppliers who would be willing to
sell, market or license their products through the Company.  This can help avoid
the time and expense involved in developing actual products. The Company has yet
to incur any research and development costs and the only research and

                                      - 5 -

<PAGE>



development  the  Company  plans to  incur is in  respect  to  finding  suitable
products which offer the Company potential for revenues and profits.

The Company  currently does not expect to purchase or sell any of its equipment,
since it owns no equipment.  Any computer  equipment to be utilized is equipment
owned by the Officers of the Company.


ITEM 7 - FINANCIAL STATEMENTS

                             GLOBAL SMARTCARDS INC.
     FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000 AND
         PERIOD FROM FEBRUARY 16, 1999 (INCEPTION) TO DECEMBER 31, 2001
                                Table of Contents

                                                                        Page No.

Independent Auditor's Report dated February 28, 2002 ........................F-2
Financial Statements:
     Balance Sheets as at December 31, 2001 and 2000.........................F-3
     Statements of Operations for the Years Ended
        December 31, 2001 and 2000 and Cumulative Period
        from February 16, 1999 (Inception) to December 31, 2001..............F-4
     Statement of Changes in Stockholders' Equity for the
        Period from February 16, 1999 (Inception) to December 31, 2001.......F-5
     Statements of Cash Flows for the Years Ended
        December 31, 2001 and 2000 and Cumulative
        Period from February 16, 1999 (Inception) to December 31, 2001.......F-6
     Notes to Financial Statements for the
        Years Ended December 31, 2001 and 2000...............................F-7


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

None.

                                    PART III

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


Name                             Age         Position
----                             ---         --------

Georgios Polyhronopoulos          42         President, Chief Executive Officer,
                                                 Secretary and Director




                                      - 6 -

<PAGE>



ITEM 10 - EXECUTIVE COMPENSATION

The  following  table sets  forth  certain  compensation  paid or accrued by the
Company to Mr. Georgios Polyhronopoulos,  the Company's current President, Chief
Executive Officer and Secretary, during the fiscal years ended December 31, 2000
and 2001.


<TABLE>
<CAPTION>
                                                                        Long Term Compensation
                                                               ----------------------------------------
                                     Annual Compensation                   Awards               Payouts
                                  -------------------------    -------------------------------  -------
                                                                                    Restricted
                                                                Other   Securities  Shares or               All
                                                               Annual      Under    Restricted             Other
                                   Year                        Compen-    Options     Share       LTIP    Compen-
Name and Principal Position       Ending    Salary    Bonus    sation     Granted     Units     Payouts    sation
---------------------------       ------    ------    -----    ------   ----------  ----------  -------   -------

<S>                             <C>      <C>        <C>       <C>        <C>        <C>        <C>       <C>

Georgios Polyhronopoulos           2001     $7,600     Nil       Nil        Nil        Nil        Nil       Nil
                                   2000      Nil       Nil       Nil        Nil        Nil        Nil       Nil

</TABLE>

OPTION GRANTS IN LAST FISCAL YEAR

No options were granted in fiscal 2001.

COMPENSATION OF DIRECTORS

None of the Directors receive Director's fees.

EMPLOYMENT CONTRACTS

The Company does not currently have any employment agreements in effect.


ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

On March 25,  2002,  the  Company  accepted  the  resignations  of Mr.  Larry L.
Richardson, as Secretary,  Chief Technology Officer and Director of the Company,
and Mr. Stephen Antol as Director of the Company.

As of March 25,  2002,  Mr.  Georgios  Polyhronopoulos,  as  President,  CEO and
Director of the Company, remained the sole officer and director of the Company.

The following table sets forth, as of March 25, 2002 information with respect to
the  beneficial  ownership  by each person who is known to the Company to be the
beneficial  owner of more  than 5% of the  Company's  common  shares  and of Mr.
Polyhronopoulos.  All persons named below have sole voting and investment  power
over their shares except as otherwise  noted.  the Company's common stock is the
only class of voting securities outstanding.

Name, Municipality of            Common Shares Beneficially       Percentage of
Residence and Office Held       Owned Directly or Indirectly      Common Shares
-------------------------       ----------------------------      -------------

George Polyhronopoulos                     1,500,000                   37.5%
Phoenix, Arizona
President, CEO, Director


                                      - 7 -

<PAGE>



STOCK OPTION PLAN

The Company does not have a stock option plan.

PENSION PLANS

The Company does not have a defined  benefit  pension plan that provides  annual
benefits to any Executive Officers.


ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.


ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K

No  reports  were  filed on Form 8-K  during  the  fourth  quarter of the period
covered by this Form 10-KSB.


EXHIBIT                                              DESCRIPTION

None


SIGNATURES

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

                                      GLOBAL SMARTCARDS INC.

                                      Per:
                                              /s/ George Polyhronopoulos
                                              ----------------------------------
                                              George Polyhronopoulos
                                              President, CEO and Director

                                              Dated: March 25, 2002

In accordance  with the  Securities  Exchange Act of 1934,  this report has been
signed below by the  following  persons on behalf of the  Registrant  and in the
capacities indicated.

                                      Signature:

                                              /s/ George Polyhronopoulos
                                              ----------------------------------
                                              George Polyhronopoulos
                                              President, CEO and Director

                                              Dated:  March 25, 2002


                                      - 8 -

<PAGE>




                             GLOBAL SMARTCARDS INC.
                          (A development stage company)

                              FINANCIAL STATEMENTS
                               FOR THE YEARS ENDED
                         DECEMBER 31, 2001 AND 2000 AND
                    PERIOD FROM FEBRUARY 16, 1999 (INCEPTION)
                              TO DECEMBER 31, 2001

                           (Expressed in U.S. dollars)








                                       F-1


<PAGE>



ELLIS FOSTER
CHARTERED ACCOUNTANTS

1650 West 1st Avenue
Vancouver, BC  Canada   V6J 1G1
Telephone:  (604) 734-1112  Facsimile: (604) 714-5916
E-Mail: generaldelivery@ellisfoster.com
Website:  www.ellisfoster.com

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





REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Stockholders

GLOBAL SMARTCARDS INC.
(A development stage company)

We have audited the balance sheets of Global  Smartcards Inc. ("the Company") (a
development  stage  company)  as at  December  31,  2001 and 2000,  the  related
statement  of  stockholders'  equity  for the  period  from  February  16,  1999
(inception) to December 31, 2001 and the statements of operations and cash flows
from  February  16, 1999  (inception)  to December  31, 2001 and the years ended
December 31, 2001 and 2000. These financial statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform an audit to obtain reasonable assurance whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the 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,  these  financial  statements  present  fairly,  in all material
respects, the financial position of the Company as at December 31, 2001 and 2000
and the  results  of its  operations  and its cash  flows  for the  period  from
February 16, 1999  (inception) to December 31, 2001 and the years ended December
31, 2001 and 2000 in conformity with generally accepted accounting principles in
the United States of America.



Vancouver, Canada                          /s/ MOORE STEPHENS ELLIS FOSTER LTD.
February 28, 2002                          Chartered Accountants





                                       F-2

<PAGE>



                             GLOBAL SMARTCARDS INC.
                          (A development stage company)
                                 BALANCE SHEETS
                           (Expressed in U.S. dollars)


<TABLE>
<CAPTION>

                                                                  December 31,     December 31,
                                                                     2001             2000
                                                                       $                $

                                   A S S E T S
<S>                                                              <C>              <C>

CURRENT ASSETS
     Cash and cash equivalents                                        2,514            5,018
     Advances to the President                                            -           15,000
                                                                  ---------         --------
TOTAL ASSETS                                                          2,514           20,018
                                                                  =========         ========




     L I A B I L I T I E S   &   S T O C K H O L D E R S '    E Q U I T Y

CURRENT LIABILITIES
     Accounts payable                                                 3,645            1,500
                                                                  ---------         --------
TOTAL LIABILITIES                                                     3,645            1,500
                                                                  ---------         --------

STOCKHOLDERS' EQUITY
     Common stock, $0.001 par value;
        Authorized - 25,000,000 shares
        Issued and outstanding - 4,000,000 shares                     4,000            4,000
     Additional paid-in capital                                      73,000           73,000
     (Deficit) accumulated during the development stage             (78,131)         (58,482)
                                                                  ---------         --------
                                                                     (1,131)          18,518
                                                                  ---------         --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                            2,514           20,018
                                                                  =========         ========

</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       F-3



<PAGE>



                             GLOBAL SMARTCARDS INC.
                          (A development stage company)
                            STATEMENTS OF OPERATIONS
                           (Expressed in U.S. dollars)


<TABLE>
<CAPTION>
                                                           Cumulative from
                                                             February 16,
                                                           1999 (inception)     Year Ended        Year Ended
                                                            to December 31,    December 31,      December 31,
                                                                 2001              2001              2000
                                                                   $                $                 $
<S>                                                            <C>             <C>               <C>

OPERATING EXPENSES
     General and administrative                                    78,131          19,649            4,147
                                                              -----------      -----------       ---------
NET (LOSS) FOR THE PERIOD                                         (78,131)        (19,649)          (4,147)
                                                              ===========      ===========       =========

NET (LOSS) PER COMMON SHARE - BASIC AND DILUTED                    (0.005)         (0.001)
                                                              ===========      ==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
     - BASIC AND DILUTED                                        4,000,000       4,000,000
                                                              ===========      ==========


</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       F-4




<PAGE>


                             GLOBAL SMARTCARDS INC.
                          (A development stage company)
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                FOR THE PERIOD FROM FEBRUARY 16, 1999 (INCEPTION)
                              TO DECEMBER 31, 2001
                           (Expressed in U.S. dollars)


<TABLE>
<CAPTION>
                                                                                     (Deficit)
                                           Common Stock                             Accumulated
                                   -----------------------------     Additional      During the        Total
                                                                      Paid-In       Developmental    Stockholder
                                      Shares           Amount         Capital          Stage           Equity
                                   ------------     ------------   ------------     -------------    -----------
                                                         $               $                $               $
<S>                               <C>                <C>            <C>              <C>             <C>

Inception, February, 1999
Issued for cash                      2,000,000          2,000               -                 -           2,000
February, 1999
Issued from public offering          1,000,000          1,000          24,000                 -          25,000
August, 1999
Issued from public offering          1,000,000          1,000          49,000                 -          50,000
Net (loss) for the period                    -              -               -           (54,335)        (54,335)
                                  ------------     ----------     -----------       -----------      ----------
Balance, December 31, 1999           4,000,000          4,000          73,000           (54,335)         22,665
Net (loss) for the year                      -              -               -            (4,147)         (4,147)
                                  ------------     ----------     -----------       -----------      ----------
Balance, December 31, 2000           4,000,000          4,000          73,000           (58,482)         18,518
Net (loss) for the year                      -              -               -           (19,649)        (19,649)
                                  ------------     ----------     -----------       -----------      ----------
Balance, December 31, 2001           4,000,000          4,000          73,000           (78,131)         (1,131)
                                  ============     ==========     ===========       ===========      ==========

</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       F-5




<PAGE>

                             GLOBAL SMARTCARDS INC.
                          (A development stage company)
                            STATEMENTS OF CASH FLOWS
                           (Expressed in U.S. dollars)


<TABLE>
<CAPTION>

                                                               Cumulative from
                                                                February 16,
                                                              1999 (inception)     Year Ended      Year Ended
                                                               to December 31,    December 31,    December 31,
                                                                    2001              2001            2000
                                                                      $                $               $
<S>                                                             <C>              <C>              <C>

CASH FLOWS FROM OPERATING ACTIVITIES
     Net (loss) for the period                                     (78,131)         (19,649)         (4,147)
     Adjustments to reconcile net (loss) to
        net cash (used) by operating activities
     Changes in assets and liabilities
        Increase (decrease) in accounts payable                      3,645            2,145           1,000
        Repayment from the President                                     -           15,000               -
                                                                ----------       ----------      ----------
     Net cash (used) by operating activities                       (74,486)          (2,504)         (3,147)
                                                                ----------       ----------      ----------
CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from sale of common shares                            77,000                -               -
                                                                ----------       ----------      ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                 2,514           (2,504)         (3,147)

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                          -            5,018           8,165
                                                                ----------       ----------      ----------
CASH AND CASH EQUIVALENTS - END OF PERIOD                            2,514            2,514           5,018
                                                                ==========       ==========      ==========

</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       F-6



<PAGE>


                             GLOBAL SMARTCARDS INC.
                         (A development stage company )
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
                           (Expressed in U.S. dollars)


1.   NATURE OF BUSINESS AND CONTINUANCE OF OPERATIONS

     The Company was organized on February 16, 1999, under the laws of the State
     of Nevada,  U.S.A. as Global  Smartcards Inc. The Company  currently has no
     operations  and  in  accordance  with  Statement  of  Financial  Accounting
     Standards ("SFAS") 7, it is considered a development company.

     The Company's  financial  statements are prepared using generally  accepted
     accounting principles applicable to a going concern, which contemplates the
     realization  of assets and  liquidation of liabilities in the normal course
     of business.  However,  the Company does not have significant cash or other
     material  assets,  nor  does it  have  an  established  source  of  revenue
     sufficient  to cover its  operating  costs and to allow it to continue as a
     going  concern.  It is the intent of the  Company to seek a merger  with an
     existing operating company.


2.   SIGNIFICANT ACCOUNTING POLICIES

     (a)  Accounting Estimates

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

     (b)  Cash Equivalents

          Cash equivalents  comprise of certain highly liquid instruments with a
          maturity of three  months or less when  purchased.  As of December 31,
          2001 and December 31, 2000, there were no cash equivalents.

     (c)  Concentration of Credit Risk

          The  Company  places its cash and cash  equivalents  with high  credit
          quality financial institutions.  As of December 31, 2001 and 2000, the
          Company has no funds placed in a bank beyond insured limits.



                                       F-7

<PAGE>


                             GLOBAL SMARTCARDS INC.
                         (A development stage company )
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
                           (Expressed in U.S. dollars)


2.   SIGNIFICANT ACCOUNTING POLICIES (continued)

     (d)  Foreign Currency Transactions

          The Company maintains its accounting records in U.S. dollars.

          At the transaction date, each asset, liability, revenue and expense is
          translated into U.S. dollars by the use of the exchange rate in effect
          at that date. At the period end,  monetary  assets and liabilities are
          translated  into U.S.  dollars by using the exchange rate in effect at
          that  date.  The  resulting  foreign  exchange  gains and  losses  are
          included in operations.

     (e)  Fair Value of Financial Instruments

          The carrying value of certain  on-balance-sheet  financial instruments
          approximated  their fair value.  These financial  instruments  include
          cash,  and  amount  advanced  to the  President.  Fair  value of these
          financial instruments  approximates its carrying values since they are
          short term in nature. Management is of the opinion that the Company is
          not exposed to significant interest,  credit or currency risks arising
          from these financial instruments.

     (f)  Income Taxes

          The Company has adopted SFAS 109, "Accounting for Income Taxes", which
          requires the Company to recognize  deferred tax liabilities and assets
          for the  expected  future tax  consequences  of events  that have been
          recognized in the Company's financial  statements or tax returns using
          the liability method. Under this method,  deferred tax liabilities and
          assets are determined based on the temporary  differences  between the
          financial  statement  and tax bases of assets  and  liabilities  using
          enacted tax rates in effect in the years in which the  differences are
          expected to reverse.

     (g)  Loss Per Share

          Net loss per share is provided in accordance with SFAS 128,  "Earnings
          Per  Share".  Basic  loss per share is  computed  by  dividing  losses
          available to common  stockholders  by the weighted  average  number of
          common shares  outstanding  during the period.  Diluted loss per share
          reflects per share amounts that would have resulted if dilative common
          stock  equivalents  had been converted to common stock. As of December
          31,  2001  and  2000,  the  Company  has  no  dilutive   common  stock
          equivalents such as stock options.



                                       F-8

<PAGE>


                             GLOBAL SMARTCARDS INC.
                         (A development stage company )
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
                           (Expressed in U.S. dollars)


2.   SIGNIFICANT ACCOUNTING POLICIES (continued)

     (h)  Accounting on Cost of Start-up Activities

          In April 1998, the American  Institute of Certified Public Accountants
          issued Statement of Position 98-5,  Reporting on the Costs of Start-up
          Activities,  ("SOP 98-5")  which  provides  guidance on the  financial
          reporting of start-up costs and organization  costs. It requires costs
          of  start-up  activities  and  organization  costs to be  expensed  as
          incurred.  SOP 98-5 is  effective  for fiscal  years  beginning  after
          December 15, 1998 with  initial  adoption  reported as the  cumulative
          effect of a change in accounting principle.  Adoption of this standard
          has no material effect on the financial statements.

     (i)  New Technical Pronouncements

          In June 2001, the Financial Accounting Standards Board ("FASB") issued
          SFAS 141  "Business  Combinations"  and SFAS 142  "Goodwill  and Other
          Intangible  Assets".  SFAS  141  requires  all  business  combinations
          initiated  after June 30, 2001 to be accounted  for under the purchase
          method.   For  all  business   combinations  for  which  the  date  of
          acquisition is after June 30, 2001, SFAS 141 also establishes specific
          criteria for the  recognization of intangible  assets  separately from
          goodwill and requires  unallocated negative goodwill to be written off
          immediately  as  an  extraordinary   gain  rather  than  deferred  and
          amortized.  SFAS 142 changes the  accounting  for  goodwill  and other
          intangible assets after an acquisition.  The most significant  changes
          made  by  SFAS  142  are:  i)  goodwill  and  intangible  assets  with
          indefinite  lives  will no  longer  be  amortized;  ii)  goodwill  and
          intangible  assets with indefinite lives must be tested for impairment
          at least  annually;  and iii) the  amortization  period for intangible
          assets with finite lives will no longer be limited to forty years. The
          Company does not believe that the  adoption of these  statements  will
          have  a  material  effect  on  its  financial  position,   results  of
          operations, or cash flows.

          In August 2001,  the FASB also approved for issuance SFAS 143,  "Asset
          Retirement  Obligations." SFAS 143 establishes accounting requirements
          for retirement obligations associated with tangible long-lived assets,
          including:  (i) the timing of the liability recognition;  (ii) initial
          measurement of the liability;  (iii)  allocation of assets  retirement
          cost to expense; (iv) subsequent measurement of the liability; and (v)
          financial  statement  disclosure.  SFAS  143  requires  that an  asset
          retirement  cost  should  be  capitalized  as part of the  cost of the
          related long-lived asset and subsequently allocated to expense using a
          systematic  and  rational  method.  The  adoption  of SFAS  143 is not
          expected  to  have  a  material  effect  on  the  Company's  financial
          position, results of operations, or cash flows.



                                       F-9

<PAGE>


                             GLOBAL SMARTCARDS INC.
                         (A development stage company )
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
                           (Expressed in U.S. dollars)


2.   SIGNIFICANT ACCOUNTING POLICIES (continued)

          In October 2001, the FASB also approved SFAS 144,  "Accounting for the
          Impairment or Disposal of Long-Lived  Assets".  SFAS 144 replaces SFAS
          121,  "Accounting  for the  Impairment  of  Long-Lived  Assets and for
          Long-Lived  Assets to Be Disposed  Of". The new  accounting  model for
          long-lived  assets to be disposed of by sale applies to all long-lived
          assets, including discontinued operations, and replaces the provisions
          of APB 30, "Reporting Results of Operations - Reporting the Effects of
          Disposal of a Segment of a Business",  for the disposal of segments of
          a  business.  SFAS 144  requires  that  those  long-  lived  assets be
          measured  at the lower of  carrying  amount or fair value less cost to
          sell,  whether  reported in continuing  operations or in  discontinued
          operations.  Therefore,  discontinued  operations  will no  longer  be
          measured at net  realizable  value or include  amounts  for  operating
          losses  that  have  not yet  occurred.  SFAS  144  also  broadens  the
          reporting of  discontinued  operations to include all components of an
          entity and that will be eliminated from the ongoing  operations of the
          entity  in a  disposal  transaction.  The  provisions  of SFAS 144 are
          effective for financial  statements  issued for fiscal years beginning
          after   December   15,  2001  and,   generally,   are  to  be  applied
          prospectively.  The  adoption  of SFAS 144 is not  expected  to have a
          material  effect  on the  Company's  financial  position,  results  of
          operations, or cash flows.


3.   INCOME TAXES

     (a)  The Company has  estimated net losses for tax purposes to December 31,
          2001, totalling  approximately  $75,600,  which may be applied against
          future taxable income until 2015. Accordingly, there is no tax expense
          charged to operations  for the years ended December 31, 2001 and 2000.
          The Company  evaluates  its  valuation  allowance  requirements  on an
          annual basis based on projected future operations.  When circumstances
          change and this causes a change in  management's  judgement  about the
          realizability of deferred tax assets,  the impact of the change on the
          valuation allowance is generally reflected in current income/loss.

     (b)  The  tax  effects  of  temporary  differences  that  give  rise to the
          Company's deferred tax asset (liability) are as follows:


                                                2001                2000
                                                  $                  $

          Tax loss carryforwards                25,700             19,900
          Valuation allowance                  (25,700)           (19,900)
                                            ----------          ---------
                                                     -                  -
                                            ==========          =========




                                      F-10

<PAGE>


                             GLOBAL SMARTCARDS INC.
                         (A development stage company )
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
                           (Expressed in U.S. dollars)

4.   RELATED PARTY TRANSACTIONS

     During the year ended December 31, 2001:

        i)   the Company  paid  $7,600 professional fees to the President of the
             Company; and

       ii)   the  President  of the  Company  repaid  $15,000  which   had  been
             advanced by the Company during 1999.


5.   COMPREHENSIVE INCOME

     There are no  adjustments  necessary  to the net (loss) as presented in the
     accompanying  statements of operations  to derive  comprehensive  income in
     accordance with SFAS 130, "Reporting Comprehensive Income".



                                      F-11

<PAGE>