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

                          FORM 10-KSB

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

                          (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, 2000

 [ ] Transition report pursuant to Section 13 or 15(d) of the
                          Securities
                     Exchange Act of 1934

       For the transition period from _______________ to
                       ________________


                      Commission File No.

                ELECTRONIC IDENTIFICATION, INC.
          -------------------------------------------
        (Name of Small Business Issuer in its Charter)

               NEVADA                            88-0440528
     -----------------------------------       ---------------
     (State or other jurisdiction of         (I.R.S. Employer
       incorporation or organization)          Identification
                                                  Number)

          #411 - 1200 WEST PENDER STREET
          VANCOUVER, BC, CANADA                     V6E 2S9
      ---------------------------------------   --------------
     (Address of principal executive offices)        (Zip
                                                     Code)

           Issuer's telephone number: (604) 684-8002

    Securities registered pursuant to Section 12(b) of the
                         Exchange Act:
                             None

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

                 $0.001 Par Value Common Stock
               ---------------------------------
                       (Title of Class)

Check whether the Issuer (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 Company 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 contained herein of delinquent
filers in
response to Item 405 of Regulation S-B, and will not be
contained, to the best of the Company's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]


The Issuer's revenues for its year ended December 31, 2000
were $0.

As of March 28, 2001, the aggregate market value of the shares
of the issuer's Common Stock held by non-affiliates was
approximately $0.2031 per share based upon the closing price
per share as reported on the Nasdaq Bulletin Board over-the-
counter Market.

There were 21,371,011 outstanding shares of the issuer's
Common Stock on March 28, 2001.

FORWARD-LOOKING STATEMENTS

Statements contained in this report which are not historical
in nature are forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include statements in "Item 1.
Business," "Item 5. Market for Common Equity and Related
Stockholder Matters," and "Item 6. Management's Discussion and
Analysis of Financial Condition and Results of Operations,"
which can be identified by the use of forward-looking
terminology such as "believes," "expects," "may," "should," or
"anticipates" or the negative thereof or other variations
thereon or comparable terminology, or by discussions of
strategy.

Such forward-looking statements involve certain risks and
uncertainties that could cause actual results to differ
materially from anticipated results. These risks and
uncertainties include regulatory constraints, changes in laws
or regulations governing the Company's products and
international trade, the ability of the Company to market
successfully its products in an increasingly competitive
worldwide market, changes in the Company's operating or
expansion strategy, failure to consummate or
successfully integrate proposed product developments, the
ability of the Company to manage growth, the general economy
of the United States and the specific global markets in which
the Company competes, the availability of financing from
internal and external sources and other factors as may be
identified from time to time in the Company's filings with the
Securities and Exchange Commission or in the Company's press
releases.

No assurance can be given that the future results covered by
the forward-looking statements will be achieved. The matters
identified in "Item 1. Business-Risk Factors" contain
cautionary statements identifying important factors with
respect to such forward-looking statements, including certain
risks and uncertainties, that could cause actual results to
vary materially from the future results covered in such
forward-looking statements. Other factors could also cause
actual results to vary materially from the future results
covered in such forward-looking statements.


                ELECTRONIC IDENTIFICATION, INC.

                          FORM 10-KSB
             FOR THE YEAR ENDED DECEMBER 31, 2000

ITEM 1  BUSINESS                                                     4
ITEM 2  PROPERTIES                                                  15
ITEM 3  LEGAL PROCEEDINGS                                           15
ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS         15
ITEM 5  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER            15
        MATTERS
ITEM 6  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL           16
        CONDITION AND RESULTS OF OPERATION
ITEM 7   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                18
ITEM 8  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON            18
ACCOUNTING AND FINANCIAL DISCLOSURE
ITEM 9   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND               18
CONTROL PERSONS
ITEM 10  EXECUTIVE COMPENSATION                                     18
ITEM 11  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND        18
MANAGEMENT
ITEM 12  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS             19
ITEM 13  EXHIBITS AND REPORTS ON FORM 8-K                           19




                            PART I

ITEM 1.  BUSINESS

COMPANY OVERVIEW

The Company was incorporated in Nevada and is a leading
developer and marketer of contactless smart ID card systems
("Smart Card(s)" or "Smart ID Card System(s)"). Generally the
size of a credit card, Smart Cards add the ability and
intelligence to store and process information with a computer
chip embedded inside the card. Smart Cards are used in a
number of corporate and government applications including (i)
access to restricted areas (replacing keys and paper
identification cards), (ii) public transportation fare
collection (replacing bus tokens, taxi cab charge cards,
airline or railway tickets), (iii) point of sale purchases.
Smart Card technology is also used in industrial applications
such as attaching a "Smart Tag" containing the Smart Card
technology to a manufactured product in order to track the
product from the assembly line through quality control,
warehousing, inventory control, distribution and warranty.

The Company's Smart Card systems utilize "contact" and
"contactless" as well as "batteryless" systems and therefore
do not require the use of a magnetic stripe or insertion into
a terminal as is required by contacted cards ("Contacted
Card(s)"), such as credit cards and ATM cards. Contacted Cards
in use today are typically limited to storing information as
opposed to "intelligent" Smart Cards, which have processing
capabilities similar to that of a personal computer. The
Company's Smart Card System involves direct wireless radio
frequency communications and magnetic induction between a chip
in the Smart Card and a terminal. Moreover, the Company's
contactless Smart Card Systems do not require insertion in a
terminal or the use of a keypad and therefore may be used by
all members of the population regardless of age or physical
ability and in both indoor and outdoor locations.

For consumers and providers of goods and services, the
Company's Smart Cards offer the convenience and accuracy of
high speed transaction processing without the requirement of
carrying cash, checks or credit cards, thereby reducing the
threat of theft, inventory shrinkage, and payment fraud
resulting from the handling of cash or the counterfeiting of
cash or credit cards. Goods and services providers do not risk
loss from (i) accepting cash or checks which may be
subsequently stolen from them after payment by consumers or
(ii) accepting credit cards which may have been stolen prior
to such payment. Consumer loss is limited because the Smart
Card is programmed to purchase only specific goods or
services. Thus, the Smart Card is not as attractive to a thief
when compared to stolen cash, checks or credit cards.

The Smart Card is designed to complement credit cards rather
than replace them in that Smart Card applications involve the
storage and handling of substantially more data than credit
cards and can therefore be used for other applications (rather
than just purchase and sale transactions), such as
identification of the user, loyalty programs and other
portable data functions.

The Company sells its Smart Card Systems through its own
direct sales force, a combination of joint ventures and
strategic alliances and selective licensing and
distributorship arrangements and agreements with independent
Agents in foreign countries.

SUBSEQUENT EVENTS

Subsequent to year end, 2,028,261 shares of common stock of
the Company were issued for settlement of expenses incurred by
the Company.

DESCRIPTION OF DEMONSTRATIONS

Since 1998, the Company has conducted numerous demonstrations
of its technology and may have the potential for
implementation on a larger scale. In some cases, these
demonstration phases often take 6-12 months or longer.
Examples of the Company's Smart Card demonstration projects
(two of which are discussed below as representative of the
Company's potential) include the following:

The Kingdom of Saudi Arabia - Dammam: Electronic Visa, Hajj
visa and identification cards, expatriate visa and
identification cards and access control and identification for
prisons.

The Kingdom of Saudi Arabia expressed interest in smart ID
cards for use in the following areas:
1.   Fraud proof identification of prisoners, detainees and
  staff in the prisons systems. The use of the company's smart
  cards will enable the prison authorities to monitor prisons
  within the facility, monitor their movements, record and track
  the movement of prisoners from one prison facility to another.
  There are a total of 92 prisons in the Kingdom of Saudi
  Arabia. The intent is to monitor the prisoners within each
  prison from a central headquarters location. All of the
  prisons will be integrated to a central monitoring location.
2.   The use of company's Identification and visa cards for
  Hajj (The annual Muslim pilgrimage). Hardware and software
  would be installed at all major embassies throughout the
  world. Pilgrims would get their visas issued on the smart card
  at the embassies and this smart card would double as a visa
  card at the same time. This card would enable the bearer to
  enter the country for the sole purpose of attending the Hajj.
  When the card is issued at the embassies, the fingerprint and
  photo of the bearer is embedded onto the chip in the card and
  recorded on the integrated database residing in the Saudi
  Arabia.  When the bearer lands in Saudi Arabia, the card is
  read through the use of a reader and the identity of the
  bearer can be verified by taking another fingerprint to find a
  match to the fingerprint on the card. If a match is found the
  bearer is waived through, thus speeding the process at
  immigration. The bearer holds the card for further
  verification at other points at the Hajj locations if needed
  or required. When exiting, the bearer of the card is required
  to hand over the card to record on the database the exit of
  the person.
3.   The Kingdom needs a tamper and fraud proof system of
  identification for the expatriates in the country.  The
  expatriates are brought in to work on employer sponsored visas
  that are valid for anywhere from 1-3 years and can be renewed
  annually or longer. Our Smart Cards can provide this tamper
  and fraud proof system, with the information residing on the
  database.

United Arab Emirates - Abu Dhabi: National and Expatriate
identification cards, electronic visa cards

The UAE issued a contract for consultancy on identification
cards for both its nationals and expatriates to Ernst & Young
in September, 2000. The UAE requires 2 identification cards,
one for the nationals and the other for the expatriates.  The
smart cards will be fraud proof and tamperproof. These cards
will be used to identify the person, have their identification
on the national database. The expatriates will probably have
an expiry date on their cards and the cards will specify what
benefits they are or are not entitled to as compared to the
nationals. There may also be a requirement for the smart cards
to serve as e-visas between the AGCC countries.

SMART CARD INDUSTRY OVERVIEW

Smart Card products, including the Company's Smart Card
(collectively referred to as "generic smart cards"), are
typically the size of a plastic credit/debit card containing
an integrated circuit chip ("chip") which can process and
store information. Today's generic smart cards typically have
the processing power of an early 1980's vintage personal
computer, minus a keyboard, display and power supply. Because
generic smart cards are really portable computers, they can be
programmed to perform virtually any function that can be
implemented by software in the available memory space. Generic
smart cards benefit directly from ongoing advances in
semiconductor technology making available continuously
increasing performance and features at declining cost.

There are two basic types of generic smart cards, memory cards
and microprocessor cards, each of which can interface between
the generic smart card and a terminal on a contacted or
contactless basis. Memory cards are typically used to store
and retrieve information only and do not have the capability
of performing complex processing of information.
Microprocessor cards are true "smart" cards in that they
contain a central processing unit within a chip which can
perform a number of functions, including complex arithmetic
operations required for security. In excess of 90% of all
generic smart cards sold in 1995 were memory cards with
contacted interfaces requiring alignment and insertion of the
generic smart card into a terminal to complete an electrical
circuit with the metal contacts on the surface of the card.
While contacted generic smart cards have found broad use in
high volume, cost sensitive applications, such as pay phone
systems which use contacted generic smart cards, they are
expensive to maintain, less reliable and may be considered too
slow for applications such as transportation. To address the
perceived shortcomings of the contacted generic smart card, a
contactless generic smart card was first developed and
introduced in the early 1990's. According to the consulting
firm Frost & Sullivan, more than 676 million generic smart
cards were issued in 1996.

According to the U.S. Federal Reserve, 68% of the
approximately 360 billion financial transactions completed in
1995 were for transactions of less than $2.00 each. Electronic
commerce using electronic funds transfer, magnetic stripe
cards and generic smart cards accounted for less than ten
percent of all such transactions, but grew at an annual rate
of 17% versus 1% growth for transactions using cash, coin and
checks. The Company believes that the evolution of personal
computers, the Internet and generic smart cards represent
technologies that will contribute to the growth of electronic
commerce in the future. According to a report by Killen &
Associates, "Non-Banks Smart Card Strategies: New
Opportunities To Increase Sales and Profits," the generic
smart card market will triple to 30 billion transactions by
2005. Furthermore, according to a report by International Data
Corporation, as published by the Smart Card Forum, a multi-
industry group formed to explore the use of generic smart
cards in various applications, the growth in the number of
online buyers and the amount of an average transaction will
drive electronic commerce up from $2.6 billion in 1996 to more
than $220 billion in 2001.

According to market research performed by Dataquest, as
published by the Smart Card Forum, the generic smart card
market will grow to 3.4 billion units by 2001, a rate of 30%
each year. Dataquest has also determined that sales of generic
smart cards in Europe accounted for 90% of worldwide smart
card shipments in 1995, while the Americas accounted for only
2%. By the year 2001, the ratios are expected to change to
40%, 25% and 20% for Europe, Asia and the Americas,
respectively. Asia, Latin America and North America are areas
generally believed to be of greatest potential for generic
smart card growth in the next three years.

Costs play an important role in this emerging industry. Recent
reports in CARD TECHNOLOGY magazine (September 1997) indicate
that price competition is fierce. Frost & Sullivan reported
average selling prices of Contactless Smart Cards in mid-1996
at $5.50 per unit at high volume. During 1997, the largest
Contactless Smart Card competitors sold these cards at $2.50
per unit, if not lower or even below cost, affecting profit
margins on the products.

Generic smart card products and markets have only recently
begun to develop, are rapidly evolving and are characterized
by an increasing number of market entrants who have developed
or are developing a wide variety of products. As is typical in
a new and rapidly evolving industry, demand and market
acceptance for new products are subject to a high level of
uncertainty. There is no assurance that the Company's Smart
Cards will become widely accepted. If the market fails to
develop, develops more slowly than expected or becomes
saturated with competitors, or if the Company's Smart Cards do
not achieve market acceptance, the Company's business,
operating results and financial condition may be materially
adversely affected.

STRATEGY

The Company's mission is to achieve sustained leadership in
developing and delivering contactless and the new combi-card
(contact and contactless) Smart Card solutions for electronic
identification, access control, security and immigration,
while securing worldwide acceptance and usage of its
technology in Smart Card chips. The following discussions
represent the Company's business strategy.

PRODUCT DEVELOPMENT

The Company believes its compression technology provides
distinct advantages over known competing Smart Card Systems
including: (i) higher speed making possible real-time
processing; (ii) lower power consumption with no battery
requirements; and (iii) reliability with a virtually unlimited
card life. The Company continues to demonstrate its abilities
in the fields of radio frequency ("RF") analog and digital
circuit design. The Smart Cards developed by the Company
offers a level of security and flexibility in contactless
operation that could only previously be achieved in contacted
operation.

Key to the success of new generations of Smart Card Systems is
the Company's strength in both the front end and back end
protocol implementation. This core competency is important
because of the continuous evolution of Smart Card standards.
The Company's product development team strives to develop
Smart Card Systems which will not only comply with the
evolving standards, but will also continue to communicate with
existing legacy Systems.

The Company intends to continue to develop Smart Card Systems
Utilizing "Next Generation Architecture" The Next Generation
Architecture evolves into an Internet oriented interface that
will be browser and micro browser (WAP or wireless application
protocol) based.

This will allow the new system to operate in a much smaller
technology footprint moving toward the PDA or handheld size
with a wireless backbone.  The next generation will also
include the creation of a driver library to provide support
for several card / reader and biometric devices.  This will
assure compatibility with the political as well as technical
interests in the customer base.

The back end integration problems will also be solved in the
next generation architecture.  Customers are looking for a
single smart card to be able to interface with several back
end legacy service delivery systems.  These include passports,
driver licenses, healthcare, etc.  To achieve this capability
a layered e-business integration backbone will be created.
This will include support for:
  1.   A formal architecture and development methodology,
2.   A distributed application development environment,
3.   An integrated management and monitoring capability,
4.   Required transport technologies (messaging, IIOP, etc),
5.   Formatting,
6.   Routing,
7.   Transformation (including but not limited to XML),
8.   Application and legacy technology connectors (adapters),
9.   Business process design and automated tracking.

The company, in addition to its own development staff and in
addition to the core competencies of its strategic alliances,
is actively recruiting the leading independent experts in the
disciplines discussed above. However, there is no assurance
that these development efforts will result in commercially
viable products.

The Company incurred R&D expenses of $3,914 in 2000 and
$55,993 in 1999. The majority of the costs of R&D activities
were incurred in prior years. During the past two years the
Company has been trying to marry its technology with its
strategic partners to form a basis for the next generation
architecture. Therefore, the R&D expenses have been relatively
insignificant over the past two years.

MARKETING

The Company promotes and markets its Smart Card Systems on a
worldwide basis using a multi-faceted marketing and sales
strategy.

The Company's near term strategy is designed to address
primarily systems in the identification, access control and
security market segments.
The Company's Smart Card Systems are custom based systems
requiring software modification for varied users. The Company
believes that these Custom system applications offer the
greatest opportunity for its technology for the next several
years.

A key component of the Company's marketing strategy is to
leverage its  strategic alliances to develop new users and
increase market share in its targeted markets. To that end,
the Company has signed teaming agreements with Hewlett-Packard
Company and Bluestone Software Inc. and has alliance
agreements with Smart Card Integrators Inc. and CPI Card Group
Inc.

The Company also markets its Smart Card Systems technology
commercial organizations in the Middle East, which is the
Company's primary focus for its systems and technology. The
Company has established an Internet web site and electronic
mail capability.

The Company has not recorded any sales to date but is actively
pursuing opportunities in the United Arab Emirates and Saudi
Arabia and it hopes to secure a major contract in that area.

MANUFACTURING AND ASSEMBLY

Since inception, the Company has subcontracted substantially
all of its manufacturing operations. The Company will continue
to contract with third parties to manufacture the Company's
Smart Card products in order to avoid capital intensive
investments and to focus the Company's limited resources on
product applications and software development.

The Company will subcontract assembly of Smart Cards,
terminals and card lamination to multiple companies who
specialize in this kind of contract work. With increasing
production volumes, the Company intends to consolidate its
outside contract manufacturing in order to gain greater
economies of scale and to better control product quality.

COMPETITION

The market for Smart Card products is new, intensely
competitive, quickly evolving and subject to rapid
technological change. Competitors may develop superior
products or products of similar quality for sale at lower
prices. Moreover, there can be no assurance that the Company's
Smart Card will not be rendered obsolete by changing
technology or new industry standards. The Company expects
competition to persist and increase in the future. The
Company's current and potential competitors are primarily
subsidiaries of multinational companies with established
Contacted and Contactless Smart Card Products that have longer
operating histories, greater name recognition, larger customer
bases and significantly greater financial, technical and
marketing resources than the Company. This intense level of
competition could materially adversely affect the Company's
future business, operating results and financial condition.

Competitive factors in the industry include transaction speed,
the extent and flexibility of Smart Card memory, reliability,
transaction accuracy and cost, all of which are discussed
below. There can be no assurance that the Company will be able
to compete successfully against current or future competitors
or that competitive pressures faced by the Company will not
materially adversely affect its business, operating results
and financial condition. Many of the Company's competitors
have the financial resources necessary to enable them to
withstand substantial price and product competition, which are
expected to increase, and to implement extensive advertising
and promotional programs, both generally and in response to
efforts by other competitors to enter into existing markets or
introduce new products.

The industry is also characterized by frequent introductions
of new products. The Company's ability to compete successfully
will be largely dependent on its ability to anticipate and
respond to various competitive factors affecting the Smart
Card industry, including new products which may be introduced,
changes in customer preferences, demographic trends, pricing
strategies by competitors and consolidation in the industry
where smaller companies with leading edge technologies may be
acquired by larger multinational companies.

Contacted Cards represent the Company's primary competition in
electronic commerce applications. Contacted Card competitors
include such multinational firms as Gemplus, Schlumberger and
Group Bull. The Company believes that it is able to compete
favorably against Contacted Cards because the Company's
contactless Smart Cards (i) operate at higher speeds, (ii) do
not require the time and effort involved in inserting the
Smart Card in a terminal or removing the Smart Card from a
wallet or purse, (iii) use reliable solid state electronics
with no moving parts, exposed contact points or magnetic
stripes which can be erased by a magnetic field, and (iv) are
lower in cost over the product life.

The Company also competes against contactless Smart Cards
designed by Philips GmbH, Sony Corporation, Gemplus, Motorola
and Micron Communications, Inc., which use contactless
technologies similar to the Company's technology. The Company
believes that its Smart Cards Systems compete favorably
against these other contactless technologies because the
Company's contactless Smart Cards operate at higher speeds,
have higher endurance and the Company's proprietary
compression technology has the ability to compress and store a
lot of information including photo and fingerprint on the
Smart Card and do not require batteries for power.

PATENTS AND TRADE SECRETS

The Company relies on its own patents, trade secrets and
copyrights as well as the patents, trade secrets and
copyrights of its licensors to protect its Smart Card
technology and compression. Due to rapid changes in the
generic smart card industry, the Company believes that
development of trade secrets and unpatented proprietary
knowledge in connection with new products and technologies are
generally as important as patent and copyright protection in
establishing and maintaining a competitive advantage. To date,
the Company has been awarded one Canadian patent and will
pursue additional patents, both in the U.S. and in certain
foreign countries. There can be no assurance that any of the
Company's future patent applications will be granted, that any
current or future patent or patent application will provide
significant protection for the Company's products or
technology, be of commercial benefit to the Company, or that
the validity of such patents or patent applications will not
be challenged. Furthermore, there can be no assurance that any
patent underlying licensed technology will not be challenged.
Moreover, there can be no assurance that foreign patent, trade
secret or copyright laws will protect the Company's
technologies or that the Company will not be vulnerable to
competitors who attempt to copy or use the Company's Smart
Card products or processes.

EMPLOYEES

As of March 28, 2001 the Company has a total of ten
consultants. The Company believes its relations with its
consultants are satisfactory.

RISK FACTORS

INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS
AND THE OTHER INFORMATION CONTAINED IN THIS REPORT BEFORE
MAKING AN INVESTMENT DECISION WITH REGARD TO THE COMPANY'S
COMMON STOCK. INFORMATION CONTAINED IN THIS REPORT CONTAINS
"FORWARD-LOOKING STATEMENTS" WHICH CAN BE IDENTIFIED BY THE
USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "BELIEVES,"
"EXPECTS," "MAY," "SHOULD" OR "ANTICIPATES" OR THE NEGATIVE
THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY,
OR BY DISCUSSIONS OF STRATEGY. SEE, E.G., "ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS" AND "ITEM 1. BUSINESS." NO
ASSURANCE CAN BE GIVEN THAT THE FUTURE RESULTS COVERED BY THE
FORWARD-LOOKING STATEMENTS WILL BE ACHIEVED. THE FOLLOWING
MATTERS CONSTITUTE CAUTIONARY STATEMENTS IDENTIFYING IMPORTANT
FACTORS WITH RESPECT TO SUCH FORWARD-LOOKING STATEMENTS,
INCLUDING CERTAIN RISKS AND UNCERTAINTIES, THAT COULD CAUSE
ACTUAL RESULTS TO VARY MATERIALLY FROM THE FUTURE RESULTS
COVERED IN SUCH FORWARD-LOOKING STATEMENTS. OTHER FACTORS
COULD ALSO CAUSE ACTUAL RESULTS TO VARY MATERIALLY FROM THE
FUTURE RESULTS COVERED IN SUCH FORWARD-LOOKING STATEMENTS.

LIMITED OPERATING HISTORY AND LIMITED REVENUES; LOSSES AND
INDEPENDENT PUBLIC ACCOUNTANTS GOING CONCERN OPINION.

The Company began operations in May 1992 and has a limited
operating
history upon which potential investors may base an evaluation
of its performance. Since inception, the Company has focused
its efforts and resources on developing its technology and on
identifying products and applications for introduction into
the market. The Company has not generated revenues from its
operations and therefore the Company has historically incurred
significant operating losses and cash flow deficits. For the
year ended December 31, 2000, the Company had no revenues and
a net loss of $2,711,506. Moreover, at December 31, 2000, the
Company had a working capital deficiency of $400,745 and an
accumulated deficit of $13,706,166. The Report of Independent
Public Accountants covering the Company's December 31, 2000
financial statements, included elsewhere in this Report,
contains an explanatory paragraph about circumstances that
raise substantial doubt about the Company's ability to
continue as a going concern. The financial statements do not
include any adjustments as a result of this uncertainty. There
can be no assurance that the Company's operations will
generate sufficient revenues to fund its operations and to
allow it to become profitable. The likelihood of the Company's
success must be considered relative to the problems,
experiences, difficulties, complications and delays frequently
encountered in connection with the operation and development
of a new business and the competitive environment in which the
Company operates. See "Item 7. Financial Statements."

DEVELOPING MARKET; UNPROVEN MARKET FOR THE COMPANY'S SMART
CARD PRODUCTS.

Smart Card products and markets have only recently begun to
develop, are rapidly evolving and are characterized by an
increasing number of market entrants who have developed or are
developing a wide variety of products. As is typical in a new
and rapidly evolving industry, demand and market acceptance
for new products are subject to a high level of uncertainty.
There can be no assurance that the Smart Cards Systems
designed by the Company will become widely accepted. Because
the market for the Company's Smart Cards is new and evolving,
it is also difficult to predict with any assurance the future
growth rate, if any, and size of the market. If a market fails
to develop, develops more slowly than expected or becomes
saturated with competitors, or if the Company's Smart Cards do
not achieve market acceptance, the Company's business,
operating results and financial condition may be materially
adversely affected. See "Item 1. Business."

COMPETITION; FREQUENT PRODUCT INTRODUCTIONS.

The market for Smart Card products is new, intensely
competitive, quickly evolving and subject to rapid
technological change. Competitors may develop superior Smart
Card products or products of similar quality for sale at lower
prices. Moreover, there can be no assurance that the Company's
Smart Cards will not be rendered obsolete by changing
technology or new industry standards. The Company expects
competition to persist and increase in the future. The
Company's current and potential competitors are primarily
subsidiaries of multinational companies with established
Contacted Card and contactless Smart Card businesses which
have longer operating histories, greater name recognition,
larger customer bases and significantly greater financial,
technical and marketing resources than the Company. This
intense level of competition could materially adversely affect
the Company's future business, operating results and financial
condition.

Competitive factors in the industry include transaction speed,
the extent and flexibility of Smart Card memory, reliability,
transaction accuracy and cost. Current competitors include
such multinational firms as Gemplus, Schlumberger and Group
Bull, which primarily offer Contacted Cards, and Philips GmbH,
Motorola, Sony Corporation and Micron Communications, Inc.,
which offer primarily contactless Smart Cards.

There can be no assurance that the Company will be able to
compete successfully against current or future competitors or
that competitive pressures faced by the Company will not
materially adversely affect its business, operating results
and financial condition. Many of the Company's competitors
have the financial resources necessary to enable them to
withstand substantial price and product competition, which are
expected to increase, and to implement extensive advertising
and promotional programs, both generally and in response to
efforts by other competitors to enter into existing markets or
introduce new products. The industry is also characterized by
frequent introductions of new products. The Company's ability
to compete successfully will be largely dependent on its
ability to anticipate and respond to various competitive
factors affecting the industry, including new products which
may be introduced, changes in customer preferences,
demographic trends and pricing strategies by competitors,
which could adversely affect the Company's operating margins.

RISKS OF NEW PRODUCT DEVELOPMENT.

The Company may experience difficulties that could delay or
prevent the development, introduction and marketing of new
Smart Card products. The Company will be substantially
dependent in the near future upon Smart Card products that are
currently being developed. There can be no assurance that,
despite testing by the Company, errors will not be found in
the Company's Smart Card products, or, if errors are
discovered, corrected in a timely manner. If the Company is
unable to develop on a timely basis existing or new Smart Card
products or enhancements to existing products, or if its Smart
Card products do not achieve market acceptance, the Company's
business, operating results and financial condition may be
materially adversely affected.

RISKS ASSOCIATED WITH EXPANSION.

The Company will seek to develop and expand its Smart Card
products and increase its marketing operations. Expansion will
place substantial strains on the Company's management and its
operational, accounting and information resources and systems.
Successful management of growth will require the Company to
improve its financial controls, operating procedures and
information systems, and to hire, train, motivate and manage
its employees and consultants. The Company's failure to manage
growth effectively would have a material adverse effect on its
results of operations and its ability to execute its business
strategy.

OBSOLESCENCE AND TECHNOLOGICAL CHANGE.

The markets for Smart Card products are characterized by
rapidly changing technology and evolving industry standards
that result in product obsolescence and short product life
cycles.

Accordingly, the Company's success is dependent upon its
ability to anticipate technological changes in the industry
and to continually identify, develop and successfully market
new Smart Card products that satisfy evolving technologies,
customer preferences and industry requirements. There can be
no assurance that competitors will not market Smart Card
products which have perceived advantages over those of the
Company or which render the Company's Smart Card products
obsolete or less marketable.

IMPEDIMENTS TO MARKET ACCEPTANCE OF PRODUCTS.

As with other new products designed to replace existing
products or change product designs, potential customers may be
reluctant to integrate the Company's Smart Card products into
their systems unless the products are proven to be both
reliable and available at a competitive price in an assured
quantity. Even assuming product acceptance, the Company's
customers may be required to redesign their systems to
effectively use the Company's Smart Card products. The time
and costs necessary for such redesign could delay or prevent
market acceptance of the Company's Smart Card products. A lack
of, or delay in, market acceptance of one or more of the
Company's Smart Card products could adversely affect the
Company's operations.

DEPENDENCE ON MANUFACTURERS AND SUPPLIERS.

The Company's reliance upon outside manufacturers and
suppliers is expected to continue and involves several risks,
including limited control over the availability of components,
delivery schedules, pricing and product quality. The Company
may also experience delays, expenses and lost sales should it
be required to locate and qualify alternative suppliers.

RELIANCE UPON PATENTS AND TRADE SECRETS.

The Company relies on its patents, trade secrets and
copyrights to protect its Smart Card technology. Although the
Company intends to enforce its patents, trade secrets and
copyrights aggressively, there can be no assurance that such
protection will be available in any particular instance or
that the Company will have the financial resources necessary
to adequately enforce its rights. The unavailability of such
protection or the inability to enforce adequately such rights
could materially adversely affect the Company's business and
operating results. The Company operates in a competitive
environment in which it would not be unlikely for a third
party to claim that certain of the Company's present or future
Smart Card products or licensed technology may infringe the
patents or rights of such third parties. If any such
infringements exist or arise in the future, the Company may be
exposed to liability for damages and may be required to obtain
licenses relating to technology incorporated into the
Company's products. The Company's inability to obtain such
licenses on acceptable terms or the occurrence of related
litigation could materially adversely affect the Company's
operations.

NEED FOR ADDITIONAL FINANCING.

The Company anticipates, based on currently proposed plans and
assumptions relating to its operations, that its current cash
on hand plus projected cash flow from its Rights Offering will
be sufficient to satisfy its contemplated cash requirements
for at least 12 months following the date of this Report. In
the event that the Company's plans change, its assumptions
prove to be inaccurate or its cash flow prove to be
insufficient (due to unanticipated expenses, inadequate
revenues, difficulties, problems or otherwise), the Company
may be required to seek additional financing or curtail its
activities. Any issuance of equity securities would result in
dilution to the interests of the Company's stockholders and
any issuance of debt securities would subject the Company to
risks that interest rates may increase or cash flow may be
insufficient to repay such indebtedness. The Company has no
arrangements or understandings for additional financing and
there can be no assurance that additional financing will be
available to the Company if required.

DEPENDENCE UPON CUSTOM SYSTEM DEVELOPMENT PROJECTS.

The Company will rely upon custom system development projects
for a significant part of its revenues. The inability of the
Company to replace completed projects with new projects will
adversely affect the Company's operations.

DEPENDENCE UPON QUALIFIED PERSONNEL AND EXECUTIVE OFFICERS.

The Company's operations depend in part upon its ability to
retain and hire qualified personnel, of which there can be no
assurance. The Company's operations are also dependent upon
the continued services of Terry Kirby, its Chairman and Chief
Executive Officer, and certain other consultants. The loss of
services of the Company's executive officer or any of its
consultants, whether as a result of death, disability or
otherwise, could have a material adverse effect upon the
Company's operations. The Company does not have employment
agreements with its executive officers.

CONTROL BY PRINCIPAL STOCKHOLDERS; AUTHORIZATION AND ISSUANCE
OF PREFERRED STOCK; PREVENTION OF CHANGES IN CONTROL.

There is no one single shareholder who owns 10% or more of the
Company's Common Stock. The Company's Certificate of
Incorporation authorizes the issuance of up to 5,000,000
shares of Preferred Stock with such rights and preferences as
may be determined from time to time by the Board of Directors.
Accordingly, under the Certificate of Incorporation, the Board
of Directors may, without shareholder approval, issue
Preferred Stock with dividend, liquidation, conversion,
voting, redemption or other rights which could adversely
affect the voting power or other rights of the holders of the
Common Stock. The issuance of any shares of Preferred Stock
having rights superior to those of the Common Stock may result
in a decrease in the value or market price of the Common Stock
and could further be used by the Board of Directors as a
device to prevent a change in control of the Company. The
Company has not issued any of the Preferred Shares to date and
has no plans to issue Preferred Shares. The Company has no
other anti-takeover provisions in its Certificate of
Incorporation or Bylaws. Holders of the Preferred Stock may
have the right to receive dividends, certain preferences in
liquidation and conversion rights.

NO DIVIDENDS.

The Company has not paid any dividends on its Common Stock and
does not intend to pay dividends in the foreseeable future.

POSSIBLE VOLATILITY OF SECURITIES PRICES.

The market price of the Common Stock may be highly volatile.
Factors such as the Company's operating results or public
announcements by the Company or its competitors may have a
significant effect on the market price of the securities. In
addition, market prices for the securities of many small
capitalization companies have experienced wide fluctuations
due to variations in quarterly operating results, general
economic conditions and other factors beyond the Company's
control.

LIMITATIONS ON LIABILITY OF DIRECTORS.

The Company's Certificate of Incorporation substantially
limits the liability of the Company's directors to the Company
and its stockholders for breach of fiduciary or other duties
to the Company.

ITEM 2.  PROPERTIES

The Company's headquarters are located in a 5,700 square foot
rented facility that it shares with another company in
Vancouver, British Columbia. The current rent is included and
forms part of a monthly billing that includes accounting
services, secretarial services, and consulting services at a
base monthly amount of $15,275. The Company believes its
existing facility is adequate for its current needs and that
suitable additional or substitute space will be available as
needed on commercially reasonable terms.

ITEM 3.  LEGAL PROCEEDINGS

From time to time the Company is subject to litigation
incidental to its business. The Company is not presently a
party to any material litigation. Such claims, if successful,
could result in damage awards exceeding, perhaps
substantially, applicable insurance coverage.

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

There are no such matters to submit during the year 2000.


                            PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
     MATTERS

The Company's Common Stock is quoted on NASD Over-The-Counter
Bulletin Board under the symbol "EISQ"

The following table sets forth, for the periods indicated the
range of high and low sales prices per share of the Company's
Common Stock, as reported on NASD Over-The-Counter Bulletin
Board.

                               Low       High
Quarter End 2000
First Quarter (Ending        0.240      7.125
March 31, 2000)
Second Quarter (Ending       0.906      3.313
June 30, 2000)
Third Quarter (Ending        0.656      1.438
September 30, 2000)
Fourth Quarter (Ending       0.203      0.719
December 31, 2000)


Quarter End 1999
First Quarter (Ending              0.350            0.690
March 31, 1999)
Second Quarter (Ending             0.440            1.000
June 30, 1999)
Third Quarter (Ending              0.300            0.870
September 30, 1999)
Fourth Quarter (Ending             0.240            0.660
December 31, 1999)

As of March 28, 2001 the last reported sale price of the
Company's Common Stock was $0.2031 per share.

The Company has not declared or paid dividends on its Common
Stock since its formation, and the Company does not anticipate
paying dividends in the foreseeable future. Although the
Company does not currently have a credit facility, future
credit facilities, if any, are likely to prohibit the payment
of dividends. Declaration or payment of dividends, if any, in
the future, will be at the discretion of the Board of
Directors and will depend on the Company's then current
financial condition, results of operations, capital
requirements and other factors deemed relevant by the Board of
Directors.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
     CONDITION AND RESULTS OF OPERATIONS

The following table outlines certain selected financial data,
which should be read in conjunction with, and are qualified in
their entirety by, the financial statements and related notes
thereto.

STATEMENT OF OPERATIONS DATA
                           1998        1999         2000
Revenues                     $0          $0           $0

Loss from            (2,419,795  (1,792,872  (2,711,506)
operations                    )           )
Net loss             (3,082,864  (3,051,195  (2,711,506)
                              )           )
Net loss per share      $(0.67)     $(0.22)      $(0.15)
-
basic and diluted
Weighted average      4,635,715  13,951,357   18,404,389
shares outstanding
--------------------------------------------------------------
---------
BALANCE SHEET DATA AT DECEMBER 31,
                           1998        1999         2000
Cash                      4,615       8,071          874
Working capital       (685,730)   (625,236)    (400,745)
deficit
Total assets            176,108     135,077       57,233
Total liabilities     1,800,613     703,638      530,115
Stockholders'        (1,624,505   (568,561)    (472,882)
deficit                       )
--------------------------------------------------------------
----------

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER
31, 1999

REVENUES. Revenues were nil for both years. The Company has
conducted demonstrations of its technology that may have the
potential for implementation on a larger scale. In some cases,
these demonstration projects are "rolled out" for full scale
implementation, however the demonstration phase often takes 6-
12 months or longer.

RESEARCH AND DEVELOPMENT EXPENSES ("R&D"). R&D decreased to
$3,914 in 2000 from $55,993 in 1999. R&D efforts relating to
the Company's Smart Card Systems continued to expand from 1996
through 1998. Starting in 1999 and throughout 2000, the
Company concentrated its efforts primarily on forming
strategic alliances and partnerships, demonstrating its
technology and marketing its products. The costs of R&D are
now borne by the Company's partners.

GENERAL AND ADMINISTRATIVE EXPENSES ("G&A"). G&A decreased to
$753,339 from $922,097 in 1999. This decrease is primarily
attributable to lower expenses incurred for G&A consulting and
contract services, as the Company continues to work toward
reducing costs while working closely with its consultants.
There was a decrease in general office and rent costs during
the year due to a new services and rental agreement with the
company that provides Electronic Identification, Inc. with the
use of its office space.

SALES AND MARKETING EXPENSES. Sales and marketing expenses
increased to $685,468 in 2000 from $303,875 in 1999. This
increase is primarily due to the hiring of consultants to form
strategic alliances and partnerships, demonstrate the
Company's technology and market its products.

DEPRECIATION AND AMORTIZATION EXPENSE. The Company's primary
assets are its compression technology and the demonstration
and testing equipment that includes computers and equipment.

INTEREST ON LONG TERM DEBT. During 2000, the Company incurred
$1,252,042 in interest expense which includes 1,249,335 of
amortization of the effective premium equal to the intrinsic
value calculated based on the difference between the quoted
market price of the Company's common stock and the conversion
price on conversions of debt.

NET LOSS. As of December 31, 2000, the Company has
approximately $11,240,000 in non-capital losses that may be
deducted in the calculation of taxable income of future
periods until their expiry December 31, 2007.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary need for capital is for the sales and
marketing of its products.

CASH FLOW

The Company had cash and cash equivalents of $874 and $8,071
as of December 31, 2000 and 1999, respectively.

CAPITALIZATION

The Company's capitalization of $13,233,284 as of December 31,
2000 is comprised entirely of stockholders' equity.  The
Company has short-term debt of $405,115, long-term debt of
$125,000 and stockholders' deficit of $472,882.

The Company has generated substantial operating losses since
inception and has yet to generate revenues to fund its
operations. The Company has not yet completed a significant
number of substantial sales transactions covering the
application of its products and, as a result, an uncertainty
exists as to whether the Company will be able to successfully
market and sell its products to third parties at sufficient
prices and volumes to fund its operations. From 1996 to 2000,
the Company experienced significant cash flow deficits and
liquidity shortages and funded its operations primarily
through the issuance of its common stock for debt and related
party borrowings.

During 2001, the Company anticipates that operating revenues
will be achieved through a combination of product sales and
development contracts. In addition, the Company also
anticipates that it will maintain its current level of
operating expenses, including research and development
expenditures which are required for the Company to further
develop and market its products and achieve successful
operations. However, there is no assurance the Company will be
successful in developing and marketing its products or that
the Company's operations will generate sufficient revenues to
fund its operations and to allow it to become profitable.

Management of the Company intends to fund its 2001 operations
through a combination of product sales and possible offerings
of its common stock. There is no assurance that sufficient
product sales or sales of common stock will occur or that
additional proceeds will be received from such offerings. The
Company currently does not have an available source for short-
term borrowings.

These factors, among others, raise substantial doubt about the
ability of the Company to continue as a going concern. The
financial statements do not include any adjustments relating
to the recoverability of assets and carrying amounts of
liabilities that might be necessary should the Company be
unable to continue as a going concern.

The Company must also maintain certain requirements in order
to be listed on NASD Over-the-Counter Bulletin Board.

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Company's financial statements are included in this report
as Exhibit C.

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

The Registrant has not changed accountants since its formation
and Management has had no disagreements with the findings of
its accountants.

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
     PERSONS

Terry Kirby is and has been Chairman, CEO and Director of  the
Company  since  its  inception  and  was  a  director  of  the
predecessor  company, RFID Systems Corp.  From 1997  to  1998,
Mr.   Kirby   served  as  President  of  Crescendo   Corporate
Development,   Inc.,   a   company   involved   in   corporate
development, promotion and investor relations.  From  1996  to
1997,  he was Vice-President, Corporate Development of  Alpine
Exploration  Corporation, currently African  Minerals  on  the
CDNX,  a  company involved in precious metals  exploration  in
Western  Africa.  From 1994 to 1996, Mr. Kirby was responsible
for  all  aspects  of  Corporate  Development  for  Kensington
Resources  Ltd., a public company involved in a joint  venture
diamond  exploration program in Saskatchewan with Monopros,  a
DeBeers  company.   From 1993 to 1994, he was  Vice-President,
International  Sales  and Marketing of  Hot  In-Place  Asphalt
Recycling    Inc,    an   international   company    providing
rehabilitation  methods  to various government  agencies,  and
from 1989 to 1992 he was a principal of R.W. Blacktop Ltd.,  a
company  that provides environmentally and economically  sound
asphalt highway resurfacing solutions.  From 1986 to 1989, Mr.
Kirby  was Managing Partner of First Marketing Inc., a company
that  developed Kingman Island, an interactive theme  park  in
Washington, D.C. and Harbour Front, a redevelopment project on
Toronto's  waterfront.  From 1983 to 1986,  he  was  Director,
Corporate  Sponsorships of EXPO '86, the World  Exposition  in
Vancouver, BC Canada.

ITEM 10. EXECUTIVE COMPENSATION

The Company's sole officer and director receives no
compensation for his respective services rendered to the
Company.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

There  are  no persons known to the Company, as of  March  28,
2001 to be a beneficial owner of five percent (5%) or more  of
the  Company's  common stock, and none  of  the  directors  or
officers own any of the Company's common stock.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There are no relationships or related transactions to report.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

A)  Articles of Incorporation are incorporated by reference to
exhibit A of the Company's amended Form 10-KSB, filed on  June
20, 2000.

B)  By-Laws are incorporated by reference to exhibit A of the
Company's amended Form 10-KSB, filed on June 20, 2000.

C)  Financial Statements

          Report  of  Independent Auditors, KPMG,  LLP,  dated
            March 9, 2001.

          Balance  Sheet as at December 31, 2000 and  December
            31, 1999.

          Statement of Operations for each of the years in the
            three year period ended December 31, 2000 and  for
            the  period  from  inception on May  14,  1992  to
            December 31, 2000.

          Statement  of Stockholders' Equity for each  of  the
            years in the three year period ended December  31,
            2000 and for the period from inception on May  14,
            1992 to December 31, 2000.

          Statement of Cash Flows for each of the years in the
            three year period ended December 31, 2000 and  for
            the  period  from  inception on May  14,  1992  to
            December 31, 2000.

INDEPENDENT AUDITORS' REPORT
To the Stockholders and Director of
Electronic Identification, Inc.

We  have audited the accompanying balance sheets of Electronic
Identification,  Inc. (a development stage enterprise)  as  at
December  31,  2000  and  1999 and the related  statements  of
operations, stockholders' deficit and cash flows for  each  of
the years in the three year period ended December 31, 2000 and
for  the period from inception on May 14, 1992 to December 31,
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 the audit to obtain
reasonable  assurance  about 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, the financial statements referred  to  above
present  fairly,  in  all  material  respects,  the  financial
position of Electronic Identification, Inc. as at December 31,
2000  and 1999 and the results of its operations and its  cash
flows  for  each of  the years in the three year period  ended
December 31, 2000 and for the period from inception on May 14,
1992  to  December  31,  2000, in accordance  with  accounting
principles generally accepted in the United States of America.
The  accompanying  financial  statements  have  been  prepared
assuming  that  the Company will continue as a going  concern.
As  discussed  in  note  2  to the financial  statements,  the
Company has suffered recurring losses from operations and  has
a  net  capital deficiency that raises substantial doubt about
its  ability  to  continue as a going  concern.   Management's
plans in regard to these matters are also described in note 2.
These financial statements do not include any adjustments that
might result from the outcome of this uncertainty.


/s/ KPMG, LLP
Chartered Accountants
Vancouver, Canada
March 9, 2001
ELECTRONIC IDENTIFICATION, INC.
(A Development Stage Enterprise)

Balance Sheets
(Expressed in U.S. dollars)

December 31, 2000 and 1999

<TABLE>
<S>                                        <C>            <C>
                                           2000           1999

Assets

Current assets:
Cash                                             $  874        $  8,071
Accounts receivable                               3,496           4,280
Prepaid expenses and deposits                         -             351
Due from stockholder (note 9)                         -          65,700
                                             ----------      ----------
Total current assets                              4,370          78,402
Fixed assets (note 6)                            45,134          46,670
Patents (note 7)                                  7,729          10,005
                                             ----------      ----------
Total assets                                  $  57,233      $  135,077
                                             ==========      ==========
Liabilities and Stockholders' Deficit

Current liabilities:
Accounts payable and accrued liabilities     $  291,188      $  402,310
Due to director (note 8 (a))                     46,269          39,478
Due to stockholder (note 9)                      67,658         261,850
                                             ----------      ----------
Total current liabilities                       405,115         703,638
                                             ----------      ----------
Long-term debt                                  125,000               -
Total liabilities                               530,115         703,638

Stockholders' deficit:
Preferred stock:
Authorized:  5,000,000 stock,
 with $0.001 par value
Issued:  nil (1999 - nil)
Common stock (note 10):
Authorized:  70,000,000 stock,
 with $0.001 par value
Issued:  19,342,750 stock (1999 -                19,344          17,419
17,418,083)
Additional paid-in capital                   13,213,940      10,408,680
Deficit accumulated during the             (13,706,166)    (10,994,660)
development stage
                                           ------------    ------------
Total stockholders' deficit                   (472,882)       (568,561)
                                           ------------    ------------
Total liabilities and stockholders'           $  57,233      $  135,077
deficit
                                           ============    ============
</TABLE>

Future operations (note 2)
Contingencies (note 11)
Subsequent events (note 15)


See accompanying notes to financial statements

 ELECTRONIC IDENTIFICATION, INC.
(A Development Stage Enterprise)

Statements of Operations
(Expressed in U.S. dollars)

<TABLE>
<S>                      <C>          <C>            <C>            <C>
                                                                    Period from
                                                                    inception on
                                                                    May 14, 1992
                                                                    to
                                 Years ended December 31,           December 31,
                         2000         1999           1998           2000

Revenue:
Revenue                         $  -           $  -           $  -     $  254,996
Interest and other                 -            990          2,993          4,996
income
                                   -            990          2,993        259,992

Expenses:
General and                  753,339        922,097        888,857      4,275,498
administrative
(schedule)
Sales and marketing          685,468        303,875      1,006,689      3,067,384
(schedule)
Research and                   3,914         55,993        266,689      1,601,482
development (schedule)
Interest on long-term      1,252,042        493,586        216,026      2,277,654
debt (note 14)
Depreciation and              16,743         18,311         44,527        147,580
amortization
Write-off of leasehold             -              -              -         32,131
improvements (note 5)
                           2,711,506      1,793,862      2,422,788     11,401,729

Operating loss           (2,711,506)    (1,792,872)    (2,419,795)   (11,141,737)

Loss due to settlement
of debt by issuance of
common stock (note                 -    (1,258,323)      (663,068)    (1,921,391)
3(f))

Equity loss in and
write-down of
investment in
and advances to RFID
Datachip Technologies
Inc. (note 5)                      -              -            (1)      (358,835)

Write-off of advances              -              -              -      (284,203)

Net loss for the period $(2,711,506)   $(3,051,195)   $(3,082,864)  $(13,706,166)


Net loss per common
share information:
Basic and diluted          $  (0.15)      $  (0.22)      $  (0.67)



Weighted average number
of common shares used
in
computing net loss per
share, basic
and diluted (note         18,404,389     13,951,357      4,635,715
10(a))
</TABLE>

See accompanying notes to financial statements


 ELECTRONIC IDENTIFICATION, INC.
(A Development Stage Enterprise)

Statements of Stockholders' Deficit
(Expressed in U.S. dollars)

<TABLE>
<S>                                               <C>         <C>        <C>         <C>
                                                                                     Deficit
                                                                                     accumulated
                                                                         Additional  during the
                                                  Common stock (note     paid-in     development
                                                  10(a))
                                                  Shares      Amount     capital     stage

Balance, May 14, 1992 (inception)                          -        $  -        $  -        $  -

Loss for the period                                        -           -           -       (185)
Stock issued for cash                              3,111,111         700           -           -
Balance, December 31, 1992                         3,111,111         700           -       (185)

Loss for the period                                        -           -           -        (80)
Balance, December 31, 1993                         3,111,111         700           -       (265)

Loss for the period                                        -           -           -        (80)
Balance, December 31, 1994                         3,111,111         700           -       (345)

Loss for the period                                        -           -           -    (25,627)
Stock issued for cash                                444,445      15,300       4,700           -
Balance, December 31, 1995                         3,555,556      16,000       4,700    (25,972)

Loss for the period                                        -           -           - (1,312,673)
Stock returned to Company for cancellation         (2,275,55    (10,240)      10,240           -
                                                          6)
Stock issued for secured notes receivable            222,222       1,000     182,810           -
Stock issued for cash                                214,005         963     962,160           -
Balance, December 31, 1996                         1,716,227       7,723   1,159,910 (1,338,645)

Loss for the period                                        -           -           - (3,521,956)
Stock issued for cash                                222,222       1,000     999,000           -
Stock issued on settlement of convertible            639,027       2,875     497,124           -
debentures
Stock issued to settle expenses                       50,380         227      24,773           -
Intrinsic value of beneficial conversion of
liabilities
(note 14)                                                  -           -     316,000           -
Stock issue costs                                          -           -   (225,112)           -
Balance, December 31, 1997                         2,627,856      11,825   2,771,695 (4,860,601)

Loss for the period                                        -           -           - (3,082,864)
Stock issued on settlement of accounts payable       383,334       1,725     342,691           -
Stock issued for cash                              2,605,336      11,723     758,520           -
Stock issued on settlement of notes payable          298,033       1,341     151,249           -
Stock issued on settlement of convertible
debentures                                         1,944,590       8,751     678,880           -
Stock issued on settlement of legal claims           250,000       1,126     131,733           -
Stock issued on settlement of loan payable           355,555       1,600     114,902           -
Stock issued to settle expenses                    1,009,222       4,541     435,323           -
Intrinsic value of beneficial conversion of
liabilities
(note 14)                                                  -           -     175,653           -
Settlement of debt by issuance of common stock
(note 3(f))                                                -           -     663,068           -
Cancellation of redeemable common stock issued
to RFID Datachip Technologies Inc.                         -           -     226,670           -
Stock issue costs                                          -           -   (174,056)           -

Balance, December 31, 1998, carried forward        9,473,926      42,632   6,276,328 (7,943,465)
</TABLE>

 ELECTRONIC IDENTIFICATION, INC.
(A Development Stage Enterprise)

Statements of Stockholders' Deficit, Continued
(Expressed in U.S. dollars)

<TABLE>
<S>                                            <C>          <C>           <C>          <C>
                                                                                       Deficit
                                                                                       accumulated
                                                                          Additional   during the
                                               Common stock (note 10(a))  paid-in      development
                                               Shares       Amount        capital      stage

Balance, December 31, 1998, brought forward      9,473,926     $  42,632  $ 6,276,328  $ (7,943,465)

Net loss for the period                                  -             -            -    (3,051,195)
Stock issued on the settlement of
subscriptions
received for common stock                        3,440,000        15,480    1,044,520              -
Stock issued to settle expenses                  2,012,000         5,782      369,531              -
Stock issued on settlement of notes payable        500,000         2,250       97,750              -
Stock issued on settlement of convertible
debentures                                       1,992,157         3,392      398,640              -
Intrinsic value of beneficial conversion of
liabilities (note 14)                                    -             -      474,117              -
Settlement of debt by issuance of common stock
(note 3(f))                                              -             -    1,258,323              -
Authorized par value change resulting in an
increase in additional paid-in capital                   -      (52,117)       52,117              -
Stock issue costs                                        -             -     (48,474)              -
Compensatory benefit of stock options (note              -             -      485,828              -
10(d))

Balance, December 31, 1999                      17,418,083        17,419   10,408,680   (10,994,660)

Loss for the period                                      -             -            -    (2,711,506)

Stock issued to settle expenses                    908,000           908    1,130,892              -
Stock issued on the settlement of debt             966,667           967      425,033              -
Stock issued on recapitalization transaction
of
Girne Acquisition Corporation (note 4)             300,000           300            -              -
Stock cancelled                                  (250,000)         (250)            -              -
Intrinsic value of beneficial conversion of
liabilities (note 14)                                    -             -    1,249,335              -

Balance, December 31, 2000                      19,342,750     $  19,344  $13,213,940  $(13,706,166)        $              $
</TABLE>


See accompanying notes to financial statements.

 ELECTRONIC IDENTIFICATION, INC.
(A Development Stage Enterprise)

Statements of Cash Flows
(Expressed in U.S. dollars)

 <TABLE>
 <S>                                           <C>           <C>          <C>            <C>
                                                                                         Period from
                                                                                         inception on
                                                                                         May 14, 1992 to
                                                       Years ended December 31,          December 31,
                                               2000          1999         1998           2000

 Cash flows from operating activities:
 Loss for the period                           $(2,711,506)   $(3,051,195   $(3,082,864)  $(13,706,166)
                                                                        )
 Items not involving cash:
 Depreciation and amortization                       16,743        18,311         44,527        147,580
 Loss due to settlement of debt by issuance
 of common stock (note 3(f))                              -     1,258,323        663,068      1,921,391
 Equity loss in and write-down of investment
 in and advances to RFID Datachip
 Technologies Inc. (note 5)                               -             -              1        358,835
 Write-off of leasehold improvements                      -             -              -         32,131
 Write-off of advances                                    -             -              -        284,203
 Write-down of fixed assets                               -             -         35,252         35,252
 Loss on disposal of fixed assets                         -             -         10,771         10,771
 Acquisition of in-process research and
 development                                              -             -              -        340,108
 Expenses settled with the issuance of
 notes payable                                            -             -              -        154,131
 Expenses settled with the issuance of stock      1,131,800       375,313        439,864      1,971,976
 Stock issued on recapitalization transaction
 of Girne Acquisition Corporation (note 4)              300             -              -            300
 Stock cancelled                                      (250)                        (250)
 Intrinsic value of beneficial conversion of
 liabilities into common stock (note 14)          1,249,335       474,117        175,653      2,215,105
 Compensatory benefit of stock options
 (note 9(d))                                              -       485,828              -        485,828
 Changes in non-cash operating working
 capital:
 Accounts receivable                                    783        45,648       (34,979)        (3,497)
 Prepaid expenses and deposits                          351          (11)         14,436              -
 Restricted cash                                          -        47,394          3,522              -
 Accounts payable and accrued liabilities         (111,121)      (65,752)        324,375        614,813
 Due to director (note 8 (a))                         6,791        39,478              -         46,269
 Due to stockholder (note 9)                      (128,492)        22,444      (108,333)         67,659
 Accounts payable to be settled with
 common stock                                             -             -              -        291,006
 Net cash used in operating activities            (545,266)     (350,102)    (1,514,707)    (4,732,555)

 Cash flows from investing activities:
 Bank overdraft                                           -             -       (15,968)              -
 Purchase of fixed assets                          (11,760)             -       (12,709)      (262,861)
 Acquisition of patent                              (1,171)             -       (13,410)       (14,581)
 Advances to RFID Datachip Technologies Inc.
 (note 5)                                                 -             -              -      (132,165)
 Other advances                                           -             -              -      (440,501)
 Net cash used in investing activities             (12,931)             -       (42,087)      (850,108)

 Cash flows from financing activities:
 Subscriptions received for common stock                  -             -        564,260      1,060,000
 Net proceeds on issuance of common stock                 -             -        596,188      2,354,899
 Net proceeds on issuance of convertible            426,000       353,558        400,961      1,938,780
 debentures
 Issuance of loan payable                           125,000             -              -        229,858
 Net cash provided by financing activities          551,000       353,558      1,561,409      5,583,537

 Increase (decrease) in cash                        (7,197)         3,456          4,615            874

 Cash, beginning of period                            8,071         4,615              -              -

 Cash, end of period                                 $  874      $  8,071       $  4,615         $  874
 </TABLE>

 ELECTRONIC IDENTIFICATION, INC.
(A Development Stage Enterprise)

Statements of Cash Flows (continued)
(Expressed in U.S. dollars)

 <TABLE>
 <S>                                           <C>           <C>          <C>            <C>
                                                                                         Period from
                                                                                         inception on
                                                                                         May 14, 1992 to
                                                       Years ended December 31,          December 31,
                                               2000          1999         1998           2000

 Supplemental non-cash investing and
 financing activities:
 Stock issued on the settlement of
 subscriptions
 received for common stock                             $  -             $           $  -   $  1,060,000
                                                                1,060,000
 Stock issued on settlement of accounts                   -             -        344,416        344,416
 payable
 Stock issued on settlement of notes payable              -       100,000        152,590        252,570
 Stock issued on settlement of convertible
 debentures                                         426,000       402,032        687,631      2,015,663
 Stock issued on settlement of legal claims               -             -        132,858        132,858
 Stock issued on settlement of loan payable               -             -        116,502        116,502
 Common stock issued on settlement of             1,131,800       375,313        439,864      1,971,976
 expenses
 Stock issued on recapitalization transaction
 of Girne Acquisition Corporation (note 4)              300             -              -            300
 Stock cancelled                                      (250)             -              -          (250)
 Cancellation of redeemable common stock                  -             -        226,670        226,670
 Intrinsic value of beneficial conversion of
 liabilities into common stock (note 14)          1,249,335       474,117        175,653      2,215,105
 Loss due to settlement of debt by
 issuance of common stock (note 3(f))                     -     1,258,323        663,068      1,921,391
 Issuance of common stock in exchange for
 secured notes                                            -             -              -        183,810
 Issuance of redeemable common stock                      -             -              -        226,670
 Authorized par value change resulting in an
 increase in additional paid in capital                   -        52,117              -         52,117



 Supplemental cash flow information:
 Cash paid for taxes                                   $  -          $  -           $  -           $  -
 Cash paid for interest                               2,707        28,921         27,382         59,010
 </TABLE>

See accompanying notes to financial statements.

 ELECTRONIC IDENTIFICATION, INC.
(A Development Stage Enterprise)

Notes to Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000, 1999 and 1998


1.   General:
  On   April  23,  1999  Electronic  Identification,  Inc.(the
  "Company"  or "El2") signed an Agreement and Plan of  Merger
  with  RFID Systems Corp. ("RFID"). This merger was completed
  on May 3, 1999.
  On   March   1,  2000,  the  Company  acquired,  through   a
  reorganization  agreement,  Girne  Acquisition   Corporation
  ("Girne").  Girne  is a corporation organized  and  existing
  under  the  laws of the State of Delaware.   At  that  date,
  Girne was an inactive shell company (note 4).

2.   Future operations:
  These  financial statements have been prepared on the  going
  concern basis under which an entity is considered to be able
  to  realize on its assets and satisfy its liabilities in the
  ordinary  course  of  business.   During  the  period  since
  inception  on  May  14,  1992,  the  Company  has   incurred
  operating  losses aggregating $13,706,166.  At December  31,
  2000,  the  Company  has  a working  capital  deficiency  of
  $400,745 and a stockholders' deficit of $472,882.
  The  Company's ability to meet its obligations as they  come
  due   is   primarily  dependent  upon  securing   additional
  financing, whether from operations or otherwise.  Management
  continues   to  pursue  additional  sources  of   financing;
  however,  there  can  be  no  guarantee  that  the  required
  additional financing will be obtained.  Failure to  identify
  and obtain such financing may limit the Company's ability to
  satisfy its obligations as they come due which may, in turn,
  impair the Company's ability to continue as a going concern.
  This  could  negatively  impact the  recoverability  of  the
  carrying value of assets.
  These  financial  statements do not include any  adjustments
  relating  to  the recoverability of assets and  amounts  and
  classification of liabilities that might be necessary should
  the  Company  be unable to continue as a going concern.   If
  the Company is unable to continue as a going concern, assets
  and  liabilities could require restatement on a  liquidation
  basis,  which would differ materially from the going concern
  basis.

3.   Significant accounting policies:
  (a)    Basis of presentation:
     These  financial  statements are prepared  in  accordance
     with  generally  accepted accounting  principles  in  the
     United States of America.
     The Company has not produced significant revenues and  is
     a  Development  Stage  Company as  defined  by  Financial
     Accounting Standard ("FAS") No. 7.

 ELECTRONIC IDENTIFICATION, INC.
(A Development Stage Enterprise)

Notes to Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000, 1999 and 1998


3.   Significant accounting policies (continued):
  (b)    Foreign currency translation:
     The  Company's functional and reporting currency  is  the
     United  States  dollar.   Transactions  undertaken  in  a
     currency   other  than  the  United  States  dollar   are
     remeasured  into  United  States dollars  using  exchange
     rates  at  the date of the transaction.  Monetary  assets
     and  liabilities  denominated in foreign  currencies  are
     remeasured  at  each balance sheet date at  the  exchange
     rate  prevailing  at the balance sheet date.   Gains  and
     losses  arising on remeasurement or settlement of foreign
     currency   denominated  transactions  or   balances   are
     included   in  the  determination  of  income.    Foreign
     currency   transactions  are  primarily   undertaken   in
     Canadian  dollars.   The  Company  does  not  enter  into
     derivative  instruments to offset the impact  of  foreign
     currency fluctuations.
  (c)    Use of estimates:
     The  preparation  of financial statements  in  accordance
     with  generally  accepted accounting principles  requires
     management  to make estimates which affect  the  reported
     amounts  of assets and liabilities and the disclosure  of
     contingent  assets and liabilities at the  balance  sheet
     dates,  and the recognition of revenues and expenses  for
     the reporting periods.  Areas where significant estimates
     have  been applied include the assessment of the ultimate
     liability  arising  out  of legal contingencies  and  the
     recoverability of capital and intangible assets.   Actual
     results could differ from these estimates.
  (d)  Fixed assets:
     Fixed   assets  are  carried  at  cost  less  accumulated
     amortization.   Amortization is  calculated  annually  as
     follows:

<TABLE>
<S>                                <C>                <C>
Assets                             Basis              Rate

Furniture and equipment            Straight-line      20%
Computers and technology           Declining-balance  30%
equipment
</TABLE>

     The Company reviews and assesses the underlying value  of
     fixed  assets  as  the  situation dictates  to  determine
     whether  a  provision for impairment should be  recorded.
     Such  determination  is  made by comparing  the  carrying
     value   of   fixed  assets  to  the  future   cash   flow
     (undiscounted) expected to result.  When these cash flows
     are   less   than  the  carrying  value,  impairment   is
     calculated by reference to the fair value of the specific
     assets.

 ELECTRONIC IDENTIFICATION, INC.
(A Development Stage Enterprise)

Notes to Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000, 1999 and 1998


3.   Significant accounting policies (continued):
  (e)  Patents:
     Patents  are  recorded at cost and  amortized  using  the
     straight-line method over a period of five years.
  (f)  Common stock issuances:
     During  the year, common stock of the Company was  issued
     for  settlement  of indebtedness.  The  Company  did  not
     incur a loss (1999 - $1,258,323; 1998 - $663,068) on this
     settlement  resulting  from any differences  between  the
     market  value  of common stock issued at  the  settlement
     date and the carrying value of the debt.
     Stock issue costs are accounted for as a reduction in the
     proceeds from the issuance of common stock.
  (g)    Research and development costs:
     Research and development costs are expensed as incurred.
  (h)  Stock-based compensation:
     The  Company  has  elected to apply the  intrinsic  value
     principles of Accounting Principles Board Opinion No. 25,
     "Accounting  for Stock Issued to Employees"  ("APB  25"),
     and  related interpretations in accounting for its  stock
     options  on  options granted to employees and  directors.
     Under  APB  25, compensation expense is only recorded  to
     the  extent  that  the exercise price is  less  than  the
     market  value of the underlying stock on the  measurement
     date  which  is  usually the date of grant.   Stock-based
     compensation   for   employees  is   recognized   on   an
     accelerated  basis  over  the  vesting  period   of   the
     individual  options.   Stock  options  granted  to   non-
     employees   are  accounted  for  under   SFAS   No.   123
     "Accounting   for  Stock-Based  Compensation"   and   are
     recognized at the fair value of the options as determined
     by  an  option pricing model as the related services  are
     provided  and the options earned.  Fair value information
     with   respect  to  options  granted  to  employees   and
     directors is disclosed in accordance with SFAS  123  (see
     note 10(d)).
  (i)  Comprehensive loss:
     The  Company has adopted FAS 130, "Comprehensive Income",
     which  requires  disclosure of  comprehensive  income  or
     loss.   The  Company's net loss is equal to comprehensive
     loss for all periods.

 ELECTRONIC IDENTIFICATION, INC.
(A Development Stage Enterprise)

Notes to Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000, 1999 and 1998


3.   Significant accounting policies (continued):
  (j)    Income taxes:
     Income  taxes  are  accounted for  under  the  asset  and
     liability  method.  Deferred tax assets  and  liabilities
     are   recognized   for   the  future   tax   consequences
     attributable   to  differences  between   the   financial
     statement   carrying  amounts  of  existing  assets   and
     liabilities and their respective tax bases and  operating
     loss  and tax credit carry forwards.  Deferred tax assets
     and  liabilities  are measured using  enacted  tax  rates
     expected to apply to taxable income in the years in which
     those  temporary differences are expected to be recovered
     or  settled.   The  effect  on deferred  tax  assets  and
     liabilities  of  a change in tax rates is  recognized  in
     income  in  the period that includes the enactment  date.
     To the extent that the realization of deferred tax assets
     is not considered to be more likely than not, a valuation
     allowance is provided.
  (k)  Net loss per common share:
     Loss per common share is calculated based on the weighted
     average  number  of  common  shares  outstanding,   which
     excludes  subscribed but unissued shares.  The number  of
     shares used for loss per share purposes gives retroactive
     effect  to  the reverse stock split on May 4, 1998  (note
     10(a)).
     As  the  effect of outstanding warrants is anti-dilutive,
     diluted  loss per share does not differ from  basic  loss
     per share.

4.   Reorganization and recapitalization transactions:
  (a)  Girne reorganization:
     On  March  1,  2000,  the  Company  acquired,  through  a
     reorganization agreement, Girne, a corporation  organized
     and existing under the laws of the State of Delaware.  At
     that  date,  Grine was an inactive shell company.   Under
     the terms and conditions of the reorganization agreement,
     each  issued  and  outstanding share of common  stock  of
     Grine  was exchanged pro rata for an aggregate  of  1,000
     shares  of  voting common stock of the Company at  $0.001
     par  value  per  share.  As a result, the Company  issued
     300,000  shares  of common stock for the  acquisition  of
     Girne.   Immediately  after the transaction,  the  former
     shareholders  of  the  Company  controlled  the  combined
     entity.   For  accounting purposes, this transaction  has
     been accounted for as an issuance of common shares by the
     Company  for the net monetary assets of Girne which  were
     nominal.
     Pursuant to the reorganization agreement, the Company was
     the  surviving  corporation and was continued  under  its
     present name as a corporation in the State of Nevada.

 ELECTRONIC IDENTIFICATION, INC.
(A Development Stage Enterprise)

Notes to Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000, 1999 and 1998


4.   Reorganization (continued):
  (b)  RFID recapitalization:
     In  1997,  EI2  merged with RFID.  El2 was a  corporation
     organized  and existing under the laws of  the  State  of
     Nevada.  At that date, El2 was an inactive shell company.
     RFID  was  a  developmental  stage  enterprise  and   was
     developing  automatic identification and data  collection
     systems    utilizing   radio   frequency   identification
     technology.  El2 is continuing in this line of business.
     El2  had 1,000 shares of common stock outstanding.  Under
     the  terms  and conditions of the Agreement, each  issued
     and  outstanding  share  of  common  stock  of  RFID  was
     converted into one share of common stock of the  Company.
     Immediately   after   the   transaction,    the    former
     shareholders of RFID controlled the combined entity.
     This   transaction   has  been   accounted   for   as   a
     recapitalization  of RFID, effectively  as  if  RFID  had
     issued  common shares to acquire the net monetary  assets
     of  El2.  The net monetary assets acquired by El2 were as
     follows:


      Total assets                               $ 176,108
      Total liabilities                          1,800,613


  Under    recapitalization   accounting,   these    financial
  statements  reflect  the assets, liabilities,  revenues  and
  expenses of RFID from its inception on May 14, 1992 combined
  with those of El2 from the date the merger was completed.

5.   Investment in and advances to RFID Datachip Technologies
Inc. ("Datachip"):
  During  1996, the Company acquired 49.9% of the  issued  and
  outstanding  common  stock of Datachip, an  unrelated  party
  prior  to  the  transaction, by way  of  a  stock  exchange.
  Datachip  received  50,371 redeemable common  stock  of  the
  Company  valued at $4.50 per stock (as adjusted for  reverse
  stock  split  (note 10(a)).  During fiscal 1997,  management
  determined that a permanent impairment in the value  of  its
  investment  had occurred and as a result, the investment  in
  Datachip was written down to a nominal value.  During fiscal
  1998,  pursuant to a legal settlement, the Company  returned
  all  common stock of Datachip for consideration equal to the
  return  and  cancellation  of the  redeemable  common  stock
  previously issued, and wrote-off the balance of the carrying
  value of its investment in Datachip.



 ELECTRONIC IDENTIFICATION, INC.
(A Development Stage Enterprise)

Notes to Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000, 1999 and 1998


6.   Fixed assets:

<TABLE>
<S>                            <C>          <C>          <C>
                                            Accumulated   Net book
December 31, 2000                 Cost      amortization    value

Furniture and equipment           $ 18,062       $ 7,341   $ 10,721
Computers and technology            82,363        47,950     34,413
equipment				   $ 100,425      $ 55,291   $ 45,134

</TABLE>


<TABLE>
<S>                            <C>          <C>           <C>
                                            Accumulated   Net book
December 31, 1999              Cost         amortization   value

Furniture and equipment           $ 18,062       $ 4,308   $ 13,754
Computers and technology            70,603        37,687     32,916
equipment

                                  $ 88,665      $ 41,995   $ 46,670
</TABLE>

7.   Patents:

   <TABLE>
   <S>                            <C>          <C>
                                  Years ended December 31,
                                  2000          1999

   Cost                               $ 15,927     $ 14,756
   Accumulated amortization              8,198        4,751

                                       $ 7,729     $ 10,005
   </TABLE>
8.   Related party transactions:
  (a)    Due to director:
     The amount due to the director represents a loan provided
     as  well as expenses paid on behalf of the Company by the
     director.   The  loan is non-interest bearing,  unsecured
     and has no specific terms of repayment.
  (b)    Transactions with director and officer:
     During  the year, the Company was charged a total of  nil
     (1999  -  nil;  1998  -  $602,721)  for  management   and
     consulting  services by the director and officer  of  the
     Company.   In 1998, the Company settled $238,548  of  the
     $602,721 by issuing 641,667 shares of common stock of the
     Company.


 ELECTRONIC IDENTIFICATION, INC.
(A Development Stage Enterprise)

Notes to Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000, 1999 and 1998


9.   Due to (due from) stockholder:
  The   amount  due  to  (due  from)  a  minority  stockholder
  represents services and loans provided to the Company.   The
  amounts  are paid off periodically throughout the year.  The
  loans  are  non-interest  bearing,  unsecured  and  have  no
  specific terms of repayment.

10.  Common stock:
  (a)    Reverse stock split:
     On  May 4, 1998, the Company resolved to consolidate  the
     number  of  preferred and common stock outstanding  by  a
     ratio of 4.5 old for one new common stock.  The effect of
     this  reverse  stock split has been applied retroactively
     to these financial statements.
  (b)  Stock purchase warrants:
     Activity  during the year ended December 31, 2000  is  as
     follows:

<TABLE>
<S>            <C>           <C>       <C>     <C>       <C>        <C>
               Outstanding                                          Outstanding
               Exercise      December                    Expired/   December,
Expiry date    price         1999      Granted  Exercised cancelled   2000

June 20, 2002        $2.93      4,444       -          -        -      4,444
</TABLE>

     Activity  during the year ended December 31, 1999  is  as
     follows:

<TABLE>
<S>             <C>          <C>       <C>     <C>        <C>        <C>
                Outstanding                                          Outstanding
                Exercise     December,                     Expired/  December,
Expiry date     price        1999      Granted  Exercised  cancelled  2000

June 20, 2002      $2.93       4,444         -         -          -       4,444
</TABLE>

  (c)  Non-cash consideration:
     Shares  issued for non-cash consideration are  valued  at
     their market price at the date of agreement for issuance.
  (d)  Stock options:
     The  Company has reserved 3,200,000 common stock pursuant
     to a stock option plan.  Options to purchase common stock
     of  the  Company may be granted by the Board of Directors
     and vest immediately.


 ELECTRONIC IDENTIFICATION, INC.
(A Development Stage Enterprise)

Notes to Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000, 1999 and 1998


10.  Common stock (continued):
  (d)  Stock options (continued):
     Stock option activity during the year ended December  31,
     2000 is as follows:

<TABLE>
<S>       <C>        <C>       <C>         <C>     <C>        <C>         <C>
          Weighted
          Average    Weighted  Outstanding                                Outstanding
Expiry    exercise   average   December,                       Expired/   December,
date      price      fair      1999        Granted  Exercised  cancelled   2000
                     value

February
24, 2002  $0.45      $0.25     3,125,000       -         -          -       3,125,000
</TABLE>

     Stock option activity during the year ended December  31,
     1999 is as follows:

<TABLE>
<S>       <C>       <C>       <C>         <C>       <C>        <C>         <C>
          Weighted
          Average   Weighted  Outstanding                                  Outstanding
Expiry    exercise  average   December,                        Expired/    December,
date      price     fair      1999        Granted   Exercised  cancelled   2000
                    value

February
24, 2002  $0.45     $0.25            -   3,125,000         -        -       3,125,000
</TABLE>

     There  was no stock option activity during the year ended
     December  31, 1998.  As options granted in 1999  have  an
     exercise price equal to the market price at the  date  of
     grant,  there  was no compensation expense  recorded  for
     employees and directors in 1999.
     The weighted average fair value of options was calculated
     using the Black-Scholes option pricing formula.
     Had the compensation benefit been determined based on the
     fair  value  at the grant dates of the stock options  and
     charged  to  earnings  consistent  with  the  measurement
     provision of FAS 123, the impact would be as follows:

<TABLE>
<S>                  <C>           <C>          <C>           <C>
                                                              Period from
                                                              inception on
                                                              May 14, 1992
                                                              to
                             Years ended December 31,         December 31,
                     2000          1999         1998          2000

Loss for the
period,
as reported          $(2,572,361)  $(3,051,195)  $(3,082,864)  $ (13,567,021)

Estimated fair
value
of option grants
to employees                    -    (292,743)              -       (292,743)

Pro forma loss       $(2,572,361) $(3,343,938)   $(3,082,864)  $ (13,859,764)


Loss per share           $ (0.14)     $ (0.24)       $ (0.67)
</TABLE>


 ELECTRONIC IDENTIFICATION, INC.
(A Development Stage Enterprise)

Notes to Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000, 1999 and 1998


10.  Common stock (continued):
  (d)  Stock options (continued):
     The  fair  value  of the stock option  grants  have  been
     estimated  using  the Black-Scholes Option-Pricing  model
     with  the  following assumptions:  dividend yield  -  0%;
     risk-free interest rate- 5.875%, expected option life - 3
     years, expected volatility - 80%.
  (e)  Rights:
     Pursuant  to the Agreement and Plan of merger signed  and
     completed  on May 3, 1999, each stockholder of  RFID  who
     sent  in  their  stock  certificates  for  transfer  into
     certificates representing stock of the Company  prior  to
     May  31, 1999 will receive a right to purchase, for every
     ten  stocks  owned and tendered, an additional  share  of
     common  stock at 75% of the market price of  the  Company
     stock  as  of the date of exercise.  The rights  will  be
     exercisable   for  thirty  days  after  filing   of   the
     registration  statement  with  the  Securities   Exchange
     Commission. Rights outstanding at December 31,  2000  are
     1,205,149 (1999 - 1,169,295).

11.  Contingencies:
  The  Company has determined that it is not possible at  this
  time  to  predict  the final outcome of the following  legal
  contingencies.  The Company has accrued its best estimate of
  potential  damages  that may be awarded  pursuant  to  these
  legal contingencies.  Any adjustment to that amount will  be
  recorded in the period determinable.
  (a)  Chemoco NV ("Chemoco"):
     During  1997,  the  Company contracted  with  Chemoco  to
     provide    services   to   the   Company.    As   advance
     consideration of the services to be provided by  Chemoco,
     individuals  related  to the Company transferred  155,556
     common  stock  of  the Company to  Chemoco.   It  is  the
     Company's  belief  that  Chemoco  did  not  fulfill   its
     obligations  for  the services to be provided  and  as  a
     result,  the  transfer of common stock  from  individuals
     related  to  the  Company to Chemoco  was  canceled.   On
     September  15, 1999, Chemoco commenced an action  against
     the  Company and a former officer of the Company claiming
     for the delivery of 700,000 shares of the Company, or  in
     the  alternative, damages for the Company not  delivering
     the said shares to the Plaintiff.  Since the commencement
     of  the action and the filing of the Statement of Defense
     in  November 1999, the solicitors for the Plaintiff  have
     filed a Notice of Intention to withdraw as solicitors  in
     this  matter.  The outcome of this claim is unknown.   It
     is management's belief that any claim that may arise from
     this situation is without merit.


 ELECTRONIC IDENTIFICATION, INC.
(A Development Stage Enterprise)

Notes to Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000, 1999 and 1998


11.  Contingencies (continued):
  (b)  Former director claim:
     On  June  29,  1999,  a former director  of  the  Company
     commenced  an action against the Company claiming,  inter
     alia,  for a declaration that he was entitled to  100,000
     warrants  of the Company exercisable at $0.375 per  share
     and a further declaration that he was entitled to 600,000
     warrants exercisable at $0.25 per share which were issued
     and  subsequently  cancelled.  The  claim  also  includes
     damages  for breach of contract and interest with  costs.
     The Company has filed a defense denying any claims of the
     former director in and to the warrants alleged.  To date,
     no further activity has been commenced and the outcome is
     unknown.

12.  Income taxes:
  The  Company  has  non-capital  losses  carried  forward  of
  approximately  $11,240,000 which  may  be  deducted  in  the
  calculation of taxable income of future periods until  their
  expiry to December 31, 2007.
  Due to the uncertainty as to the utilization of deferred tax
  assets, a valuation allowance has been made to the extent of
  deferred tax assets at the year end.

   <TABLE>
   <S>                           <C>            <C>
                                   Years ended December 31,
                                 2000           1999

   Deferred tax assets:
   Losses carried forward          $ 4,700,000   $ 3,500,000
   Evaluation allowance at 100%    (4,700,000)    (3,500,000)

   Net deferred tax asset                  $ -           $ -
   </TABLE>

13.  Fair value of financial instruments:
  At  December  31, 1999, the Company's financial  instruments
  include  cash,  accounts receivable, due from  stockholders,
  accounts   payable   and   accrued   liabilities,   due   to
  stockholders, director and officer.  Due to their short-term
  to  maturity or ability for prompt liquidation, the carrying
  values  of  cash, accounts receivable, accounts payable  and
  accrued liabilities approximates their fair value.  The fair
  value  of  due  to  (due from) stockholders,  directors  and
  officers  cannot  be determined due to their  related  party
  nature  (note  7(a)).  Due to the nature of the relationship
  between the Company and the related parties and the lack  of
  a  ready market for such indebtedness, it is not possible to
  estimate the current fair value of this indebtedness.
  The   Company   has  not  entered  into  off-balance   sheet
  derivative instruments.
14.  Interest on long-term debt:
  Interest  on  long-term  debt includes  $1,249,335  (1999  -
  $474,117;  1998 - $175,653) of amortization of the effective
  premium equal to the intrinsic value calculated based on the
  difference   between  the  quoted  market  price   and   the
  conversion price on conversions of debt.

15.  Subsequent events:
  Subsequent to year-end, the Company issued 2,028,261  shares
  of common stock on the settlement of expenses.  Of the total
  stock  issued,  1,475,000 common shares were for  consulting
  services  and the remaining 553,261 common shares  were  for
  legal services.


 ELECTRONIC IDENTIFICATION, INC.
(A Development Stage Enterprise)

Schedules of General and Administrative, Sales and Marketing,
 and Research and Development Expenses
(Expressed in U.S. dollars)

<TABLE>
<S>                          <C>          <C>        <C>         <C>
                                                                 Period from
                                                                 inception on
                                                                 May 14, 1992 to
                                  Years ended December 31,       December 31,
                             2000         1999       1998        2000

General and administrative:
Administrative fees             $ 16,631    $ 22,215    $ 24,237       $ 63,083
Bad debts                              -           -           -         75,778
Bank charges and interest            198       1,348       1,949         45,486
Consulting and contract          498,235     731,799     367,759      1,617,794
services
Legal and professional           184,860     150,909     176,286        949,960
Office                            13,675      23,647      66,604        148,805
Rent                              10,099      10,098      52,758        133,579
Salaries and benefits                  -           -      72,975        766,458
Stock administration               5,317      13,495      11,829         32,254
Telephone                          3,207       2,772       9,518         54,580
Travel and accommodation          15,610       2,558      17,470        295,943
Foreign exchange (gain)            5,507    (36,744)      87,472         91,778
loss

                               $ 753,339   $ 922,097   $ 888,857    $ 4,275,498


Sales and marketing:
Advertising                          $ -         $ -         $ -       $ 16,749
Consulting and contract          637,375     123,561     402,477      1,616,797
services
Entertainment and promotion       14,522      19,190      84,575        154,710
Investor relations                 3,367      99,618     245,107        385,079
Office                               281       4,080      15,685         78,263
Rent                                   -           -      94,230        137,318
Salaries and benefits                  -       2,287     109,502        291,342
Telephone and Internet             3,207       2,772      16,528         22,507
Travel and accommodation          26,716      52,367      38,585        364,619

                               $ 685,468   $ 303,875  $1,006,689    $ 3,067,384


Research and development:
Acquired in-process
research and
development                          $ -         $ -         $ -      $ 340,108
Consulting and contract            2,291      53,013     142,505        197,809
services
Office                               231           -       7,437        101,373
Salaries and benefits                  -           -      94,883        727,739
Supplies                             798           -       6,004        183,615
Travel and accommodation             594       2,980      15,860         50,838

                                 $ 3,914    $ 55,993   $ 266,689    $ 1,601,482
</TABLE>


D)   Reports on Form 8-K

None







                          SIGNATURES

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



                           Electronic Identification, Inc.



                           By: /s/ Terry Kirby
                              Terry Kirby, President



                           Date: April 12, 2001