76

             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, 1999

  [ ] 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, B.C., 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:

                   $.01 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, 1999 were
$0.0

As of May 01, 2000, the aggregate market value of the shares of
the issuer's Common Stock held by non-affiliates was
approximately $1.875 per share based upon the closing price per
share as reported on the Nasdaq Bulletin Board over-the-counter
Market.

There were 18,085,596 outstanding shares of the issuer's Common
Stock on May 01, 2000.

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, 1999

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
MATTERS.................15
ITEM  6.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL
CONDITION  AND RESULTS OF OPERATION.16


ITEM     7.       FINANCIAL    STATEMENTS    AND    SUPPLEMENTARY
DATA............................18
ITEM  8.   CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON
ACCOUNTING AND FINANCIAL DISCLOSURE.18
ITEM  9.    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND  CONTROL
PERSONS.................18
ITEM                        10.                         EXECUTIVE
COMPENSATION.......................................19
ITEM  11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL  OWNERS  AND
MANAGEMENT................19
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 Cards are both "contactless" and
""batteryless" 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 be used 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, 366,667 shares of common stock of the
Company were issued on settlement of $276,000 of amounts due to a
stockholder.

On March 1, 2000, the Company acquired Girne Acquisition Corp.
("Girne"), a corporation organized and existing under the laws of
the State of Delaware through a reorganization agreement. Under
the terms of the agreement, each issued and outstanding share of
common stock of Girne was exchanged pro rata for an aggregate of
1,000 shares of voting common stock of the Company $0.001 par
value per share. The Company issued 300,000 shares of common
stock for the acquisition of Girne, consisting of 150,000 common
shares at a deemed value of $2.9375 per share and converting
$150,000 of cash payable to the shareholders of Girne at a deemed
value $1.00 per share into 150,000 shares of common stock.
Pursuant to the reorganization agreement, the Company is the
surviving corporation and will continue under its present name as
a corporation in the State of Nevada.

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 if needed can be verified by taking
another fingerprint to find a match to the fingerprint on the
card. If the match is found and , 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 any where from 1-3 years and can be renewed
annually or longer. Our Smart cards can provide this tamper and
fraud proof smart cards that identifies the person and the
information resides on the database.

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

The UAE has issued Tender documents for consultancy for
Identification cards for both its nationals and expatriates. The
UAE requires 2 identification cards one for the nationals and the
other for the expatriates.  The company's 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
will probably specify what benefits they are or are not entitled
to as compared to the nationals. There may also be a requirement
for the company's 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 which 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 which 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 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 $55,993 in 1999 and $266,689
in 1998. Generally, the costs of R&D activities are borne by the
Company.

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 and has alliance agreements with
SCI 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 May 01, 2000, the Company has a total of seven 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, 1999, the Company had no revenues a net loss of
$3,051,195. Moreover, at December 31, 1999, the Company had
working capital of $8,071 and had an accumulated deficit of
$10,994,660. The Report of Independent Public Accountants
covering the Company's December 31, 1999 financial statements,
included elsewhere in this Report, contains an explanatory
paragraph about the Company's ability to continue as a going
concern. 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 which 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
with 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 any of the Company's executive officer or consultant,
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
$15,830. 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 last quarter of
1999.


                             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.

<TABLE>
<S>                          <C>         <C>
                                     Low       High
Quarter End
1999
First Quarter                        .46        .50
(Ending March 31, 1999)
Second Quarter                       .50      .5469
Third Quarter                      .2969      .4375
Fourth Quarter                     .3125      .3594
</TABLE>

As of May 01, 2000, the last reported sale price of the Company's
Common Stock was $1.875 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 sets forth 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
<TABLE>
<S>                      <C>         <C>         <C>
                               1997        1998         1999
Revenues                    $54,996          $0  $0

Loss from operations     (3,250,429  (2,149,795   (1,792,872
                                  )           )            )
Net loss                 (3,521,956  (3,082,864   (3,051,195
                                  )           )            )
Net loss per share -        $(1.81)      $(.67)       $(.22)
Basic and Diluted
Weighted average shares   1,951,000   4,635,712   13,951,357
outstanding
</TABLE>
-----------------------------------------------------------------
------
BALANCE SHEET DATA AT DECEMBER 31,
<TABLE>
<S>                      <C>         <C>         <C>
                               1997         1998        1999
Cash                              0        4,615 8,071
Working Capital             735,594      685,730     625,236
(deficit)
Total assets                218,904      176,108     135,077
Total liabilities         2,295,985    1,800,613     703,638
Stockholders' deficit     2,077,081    1,624,505     568,561
</TABLE>
-----------------------------------------------------------------
-------

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31,
1998

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 by 79%
to $55,993 in 1999 from $266,689 in 1998. R&D efforts relating to
the Company's Smart Card Systems continued to expand from 1996
through 1998. During 1999, the Company concentrated its efforts
primarily in demonstrating its technology and signing strategic
alliances. The reduction in R&D costs were as a result of letting
go of one technical consultant.

GENERAL AND ADMINISTRATIVE EXPENSES ("G&A"). G&A increased 3.8%
to $922,097 for 1999 from $888,857 for 1998. This increase is
primarily attributable to expenses incurred for consulting and
contract services increased approximately $364,040, as the
Company replaced employees with consultants. Legal and
professional fees decreased approximately $25,377 as the Company
amicably settled a lot of the claims against it.  There was a
decrease of $107,275 in rent, office expenses, telephone and
travel and accommodation as the Company closed down its San Jose,
California offices. There was also a gain of $36,744 in foreign
exchange transactions between US and Canadian currency
transactions.

SALES AND MARKETING EXPENSES. Sales and marketing expenses
decreased 69.8% to $303,875 in 1999 from $1,006,689 in 1998. This
decrease is due to the reduction in investor relations programs.
The Company also discontinued with its sales and marketing
program for SACS (Secure Access Control System) a Firewall
protection software. As a result, the Company reduced its costs
for consulting, entertainment and promotion, and telephone by
$358,057.  The closure of the San Jose, California office further
reduced rent and salaries by $201,445.

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

INTEREST ON LONG TERM DEBT. During 1999, the Company incurred
$493,586 in interest which is made up by 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. The Company as of December 31, 1999, has approximately
$8,500,000 in non-capital losses which may be deducted in the
calculation of taxable income of future periods until their
expiry to December 31, 2006.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary need for capital has been to finance
expansion of research and development of new Smart Card products,
sales and marketing of its products and operations.

CASH FLOW

The Company had cash and cash equivalents of $8,071 and $4,615 as
of December 31, 1999 and 1998, respectively.

CAPITALIZATION

The Company's capitalization of $10,426,099 as of December 31,
1999 is comprised entirely of stockholders' equity, $703,638 of
short-term debt and $(568,561) in stockholders' deficit.

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. During 1996 and 1998, 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 2000, 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 2000 operations
through a combination of product sales and possible offerings of
its common stock. There is no assurance that 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.

Year 2000

The Company utilizes software and related technologies throughout
its business and relies on many suppliers of services and
materials that are in compliant with year 2000 issue.

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 was responsible
for all aspects of Corporate Development for Kensington Resources
Ltd.,   a  public  company  involved  in  joint  venture  diamond
exploration  program  in Saskatchewan with  Monopros,  a  DeBeers
company.   From  1993  to  1994, Mr.  Kirby  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 May 1, 2000,  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 nor related transactions to report.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     3.1  Articles of Incorporation
3.2  Bylaws