UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q 

 

(Mark One)

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

 

For the quarterly period ended December 31, 2020

 

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

 

For the transition period from ___________ to ___________.

 

Commission file number 000-54853

 

SMARTMETRIC, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   05-0543557

(State or Other Jurisdiction of

Incorporation or Organization)

  (IRS Employer
Identification No.)

 

3960 Howard Hughes Parkway, Suite 500, Las Vegas, NV   89169
Address of Principal Executive Offices   Zip Code

 

(702) 990-3687
Registrant’s telephone number, including area code

 

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

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
N/A   N/A   N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☒

 

Indicate by check mark whether the registrant is large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☐  

  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
N/A   N/A   N/A

 

The number of shares outstanding of the registrant’s Common Stock, $0.001 par value per share, as of February 19, 2021 was 421,399,111 

  

 

 

 

 

 

SMARTMETRIC, INC.

 

TABLE OF CONTENTS

 

INDEX

 

PART I. FINANCIAL INFORMATION 1
Item 1. Financial Statements 1
  Condensed consolidated balance sheets as of December 31, 2020 (unaudited) and June 30,2020 1
  Condensed consolidated statements of operations for the three months and six months ended December 31, 2020 and 2019 (unaudited) 2
  Condensed consolidated statements of stockholders’ deficit for the six months ended December 31, 2020 and 2019 (unaudited) 3
  Condensed consolidated statements of cash flows for the six months ended December 31, 2020 and 2019 (unaudited) 5
  Notes to condensed consolidated financial statements (unaudited) 6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 15
Item 3. Quantitative and Qualitative Disclosures about Market Risk 24
Item 4. Controls and Procedures 24
     
PART II OTHER INFORMATION  
Item 1. Legal Proceedings 25
Item 1A. Risk Factors 25
Item 2. Unregistered sales of equity securities and use of proceeds 25
Item 3. Defaults Upon Senior Securities 26
Item 4. Mine Safety Disclosures 26
Item 5. Other Information 26
Item 6. Exhibits 26
  Signatures 27

 

    i  

 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

In this Quarterly Report on Form 10-Q, references to “SmartMetric, Inc.,” “SmartMetric,” “SMME,” “the Company,” “we” “us,” and “our” refer to SmartMetric, Inc. Also, any reference to “common shares,” or “common stock” refers to our $0.001 par value common stock. Also, any reference to “preferred stock” or “preferred shares” refers to our $0.001 par value Series B Convertible Preferred Stock and our $0.001 par value Series C Convertible Preferred Stock.

 

This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to our business development plans, timing strategies, expectations, anticipated expense levels, business prospects, business outlook, technology spending and various other matters (including contingent liabilities and obligations and changes in accounting policies, standards and interpretations). These statements express our current intentions, beliefs, expectations, strategies or predictions as well as historical information. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will,” “could,” “continue,” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this Quarterly Report. Additionally, statements concerning future matters are forward-looking statements.

 

Although forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. These statements are no guarantee of future performance and involve risks and uncertainties that are difficult to predict. Our future operating results are dependent upon many factors which are outside our control. You should not place undue reliance on forward-looking statements. Forward-looking statements may not be realized due to a variety of factors, including, without limitation, our ability to:

 

  manage our business given continuing operating losses and negative cash flows;
     
  obtain sufficient capital to fund our operations, development, and expansion plans;
     
  manage competitive factors and developments beyond our control;
     
  maintain and protect our intellectual property;
     
  obtain patents based on our current and/or future patent applications;
     
  obtain and maintain other rights to technology required or desirable to conduct or expand our business; and
     
  manage any other factors, if any, discussed in the “Risk Factors” section, and elsewhere in this Quarterly Report.

 

We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report, except as required by federal securities laws. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this Quarterly Report, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

 

    ii  

 

 

PART I. FINANCIAL INFORMATION

 

SMARTMETRIC, INC. AND SUBSIDIARY

Condensed Consolidated Balance Sheet

(Unaudited) 

 

    December 31,     June 30,  
    2020     2020  
    (Unaudited)        
Assets            
Current assets:                
Cash   $ 21,591     $ 71,377  
Deferred financing costs     35,000       35,000  
Prepaid expenses and other current assets     4,875       7,017  
                 
Total current assets     61,466       113,394  
                 
Total assets   $ 61,466     $ 113,394  
                 
Liabilities and Stockholders’ Deficit                
                 
Current liabilities:                
Accounts payable and accrued expenses   $ 966,776     $ 916,728  
Liability for stock to be issued     134,864       50,000  
Deferred Officer’s salary     744,115       759,948  
Related party interest payable     175,664       149,481  
Dividends payable     2,442       2,945  
Due to shareholders     41,343       41,343  
Covid19 SBA loan     20,832       20,832  
Convertible note payable, net of discount, June 30,2020     35,000       32,127  
Derivative liability     65,000       -  
Convertible interest payable     2,926       -  
Shareholder loan     4,286       -  
                 
Total current liabilities     2,193,248       1,973,404  
                 
Commitments and contingencies (See note 4)                
Series C mandatory redeemable convertible preferred stock, net of discount, authorized 1000,000 shares, 143,050 and 117,200 shares issued and outstanding, respectively     119,083       101,661  
                 
Stockholders’ deficit:                
Preferred stock, $.001 par value; 5,000,000 shares authorized, 610,000 and 610,000 shares issued and outstanding     610       610  
Common stock, $.001 par value; 600,000,000 shares authorized, 416,590,136 and 379,523,000 shares issued and outstanding , respectively     416,591       379,524  
Additional paid-in capital     25,786,662       25,429,259  
Accumulated deficit     (28,454,728 )     (27,771,064 )
                 
Total stockholders’ deficit     (2,250,865 )     (1,961,671 )
                 
Total liabilities and stockholders’ deficit   $ 61,466     $ 113,394  

  

The accompanying notes are an integral part of these condensed consolidated financial statements

 

    1  

 

 

SMARTMETRIC, INC. AND SUBSIDIARY

Condensed Consolidated Statements Of Operations

(Unaudited)

 

    Three Months     Three Months     Six Months     Six Months  
    Ended     Ended     Ended     Ended  
    December 31,     December 31,     December 31,     December 31,  
    2020     2019     2020     2019  
    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  
Revenues   $ -     $ -     $ -     $ -  
                                 
Expenses:                                
Officer’s salary     47,500       47,500       95,000       95,000  
Other general and administrative     109,683       149,719       234,279       282,578  
Research and development     21,733       25,594       43,939       46,706  
                                 
Total operating expenses     178,916       222,813       373,218       424,284  
                                 
Loss from operations before income taxes     (178,916 )     (222,813 )     (373,218 )     (424,284 )
Interest & Financing Expense     (52,637 )     (13,825 )     (81,306 )     (27,651 )
Gain (loss) on change in derivatives     (113,629 )     -       (112,565 )     -  
                                 
Net loss     (345,182 )     (236,638 )     (567,089 )     (451,935 )
Preferred stock dividends     (112,546 )     (4,238 )     (116,575 )     (15,963 )
Net loss available for common stockholders   $ (457,728 )   $ (240,876 )   $ (683,664 )   $ (467,898 )
                                 
Net loss per share, basic and diluted   $ (0.00 )   $ (0.00 )   $ (0.00 )   $ (0.00 )
                               
Weighted average number of common shares outstanding, basic and diluted     403,288,668       278,034,075       392,521,660       275,362,668  

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

2

 

 

SMARTMETRIC, INC. AND SUBSIDIARY

Consolidated Statements of Changes In Stockholders’ (Deficit)

(Unaudited)

 

          Preferred Series B                     Additional Paid     Accumulated          
      Stock     Common Stock     In Capital     Deficit     Total  
                                                         
Balance June 30, 2020     610,000     $ 610       379,523,000     $ 379,523     $ 25,429,261     $ (27,771,062 )   $ (1,961,671 )
                                                         
Shares issued of common stock and warrants for services     -       -       585,000       585       2,340       -       2,925  
                                                         
Shares converted Preferred C shares     -       -       5,447,260       5,447       31,921       -       37,368  
                                                         
Series C Preferred dividends     -       -       -       -       -       (4,029 )     (4,029 )
                                                         
Net loss for the period   -       -       -       -       -       (221,907 )     (221,907 )
                                                         
Balance September 30, 2020     610,000     $ 610       385,555,260     $ 385,555     $ 25,463,522     $ (27,996,998 )   $ (2,147,314 )
                                                         
Shares issued of common stock and warrants for cash     -       -       15,000,000       15,000       60,000       -       75,000  
                                                         
Shares converted Preferred C shares     -       -       16,034,876       16,035       54,965       -       71,000  
                                                         
Valuation of Preferred C and Derivative Liability                             208,177               208,177  
                                                         
Series C Preferred dividends     -       -       -       -       -       (112,547 )     (112,547 )
                                                         
Net loss for the period   -       -       -       -       -       (345,183 )     (345,183 )
                                                         
Balance December 31, 2020   610,000     $ 610     416,590,136     $ 416,590     $ 25,786,662     $ (28,454,728 )   $ (2,250,865 )

  

 The accompanying notes are an integral part of these condensed consolidated financial statements 

 

3

 

 

SMARTMETRIC, INC. AND SUBSIDIARY

Consolidated Statements of Changes In Stockholders’ (Deficit)

(Unaudited)

 

          Preferred Series B                     Additional Paid     Accumulated          
      Stock     Common Stock     In Capital     Deficit     Total  
                                                         
Balance June 30, 2019     610,000     $ 610       264,648,821     $ 264,649     $ 24,663,528     $ (26,933,461 )   $ (2,004,674 )
                                                         
Shares issued of common stock and warrants for cash     -       -       7,991,662       7,992       218,008       -       226,000  
                                                         
Shares converted from Preferred shares                     3,224,643       3,224       63,289               66,513  
                                                         
Preferred dividends                                             (11,725 )     (11,725 )
                                                         
Net loss available for common shareholders     -     -     -     -     -       (215,296 )     (215,296 )
                                                         
Balance September 30, 2019     610,000     $ 610       275,865,126     $ 275,865     $ 24,944,825     $ (27,160,482 )   $ (1,939,182 )
                                                         
Shares issued of common stock and warrants for cash     -       -       3,730,000       3,730       77,720       -       81,450  
                                                         
Shares converted from Preferred shares                     2,370,696       2,371       28,538               30,909  
                                                         
Preferred dividends                                             (4,238 )     (4,238 )
                                                         
Net loss available for common shareholders     -       -       -       -       -       (236,638 )     (236,638 )
                                                         
Balance December 31, 2019     -     $ -       281,965,822     $ 281,966     $ 25,051,083     $ (27,401,358 )   $ (2,067,699 )

 

4

 

 

SMARTMETRIC, INC. AND SUBSIDIARY

Condensed Consolidated Statements Of Cash Flows

(Unaudited) 

 

    Six Months     Six Months  
    Ended     Ended  
    December 31,     December 31,  
  2020     2019  
    (Unaudited)     (Unaudited)  
CASH FLOWS FROM OPERATING ACTIVITIES            
Net loss   $ (567,089 )   $ (451,935 )
               
Adjustments to reconcile net loss to net cash used in operating activities:                
Common stock issued and issuable for services     2,926       -  
Non cash financing expense     49,322       -  
Gain (loss) on fair value of derivative liability     112,565       -  
Amortization of debt discount     2,873       -  
                 
Changes in assets and liabilities                
Increase (Decrease) in prepaid expenses and other current assets     2,142       (6,567 )
Increase in accounts payable and accrued expenses     50,048       7,258  
(Decrease) in deferred officer salary     (15,833 )     -  
Increase in Due to shareholder     -       41,342  
Increase in Convertible interest payable     2,926       -  
Increase in accrued interest payable     26,183       27,650  
                 
Net cash used in operating activities     (333,937 )     (382,252 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES                
Loans from related parties     4,286       6,060  
Proceeds from sale of common stock     159,865       349,504  
Proceeds from sale of Series C Preferred stock     120,000       70,000  
Net cash provided by financing activities     284,151       425,564  
               
NET INCREASE (DECREASE) IN CASH     (49,786 )     43,312  
                 
CASH BEGINNING OF PERIOD     71,377       10,161  
END OF PERIOD     21,591       53,473  
                 
Non-cash investing and financing activity                
Conversion of 119,000 and 104,000 Preferred C shares into 21,482,136 and 5,595,339 shares of common stock, respectively   $ 109,000     $ 93,906  
15,000,000 and 11,721,62 shares were issued from stock liability, respectively   $ 75,000     $

307,450

 
                 
CASH PAID DURING THE PERIOD FOR:   $ -     $ -  
Income taxes   $ -     $ -  

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

5

 

 

SMARTMETRIC INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

NOTE 1 ORGANIZATION AND BASIS OF PRESENTATION

 

SmartMetric, Inc. (the “Company” or “SmartMetric”) was incorporated in the State of Nevada on December 18, 2002. SmartMetric’s main product is a fingerprint sensor-activated card with a finger sensor onboard the card and a built-in rechargeable battery for portable biometric identification. This card may be referred to as a biometric card or the SmartMetric Biometric Datacard. SmartMetric has completed development of its card along with pre-mass manufacturing cards but has not yet begun to mass manufacture the biometric fingerprint activated cards.

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management of the Company, the accompanying unaudited financial statements contain all the adjustments (which are of a normal recurring nature) necessary for a fair presentation. Operating results for the six months ended December 31, 2020 are not necessarily indicative of the results that may be expected for the year ending June 30, 2021. For further information, refer to the financial statements and the footnotes thereto contained in the Company’s Annual Report on Form 10-K for the year ended June 30, 2020, as filed with the Securities and Exchange Commission on October 20, 2020. The consolidated balance sheet as of June 30, 2020, has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by US GAAP for complete financial statements.

 

Going Concern

 

As shown in the accompanying condensed consolidated financial statements the Company has sustained recurring losses of $683,664 for the six months ended December 31, 2020 and has an accumulated deficit of $28,454,728 at December 31, 2020.

 

These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date of this filing. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The COVID-19 has had an impact on SmartMetric’s final card production. While the delays are due to supply line disruption, the Company is confident that these delays will be short-lived based on advice from our manufacturing partners, manufacturing alternatives and alternative supply lines that are being put into place by the Company.

 

 Management believes that the Company’s capital requirements will depend on many factors. These factors include product marketing and distribution. The management plans include equity sales and borrowing in order to fund the operations. The Company plans to continue its relationship with Geneva Roth Remark in order to raise capital through means other than private placement stock sales.

 

There are no assurances that the Company will be able to achieve the level of revenues adequate to generate sufficient cash flow from operations to support the Company’s working capital requirements. To the extent that funds generated are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available, the Company may not continue its operations.

 

On March 5, 2020, the Company entered into an agreement with GHS Investments, LLC whereas the investor agrees to invest up to four million dollar ($4,000,000) over the 36 months immediately subsequent to the effective date of the agreement. As of the date of this filing, the registration is not effective, and is pending review by the Securities and Exchange Commission.

 

In December 2019, an outbreak of a novel strain of coronavirus originated in Wuhan, China (“COVID-19”) and has since spread worldwide, including to the Unites States, posing public health risks that have reached pandemic proportions (the “COVID-19 Pandemic”). The COVID-19 Pandemic poses a threat to the health and economic wellbeing of our employees, customers and vendors. Like most businesses world-wide, the COVID-19 Pandemic has impacted the Company financially; delaying the beginning of production.

 

Principles of Consolidation

 

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, SmartMetric Australia Pty. Ltd.  All significant intercompany accounts and transactions have been eliminated in consolidation.

 

6

 

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to income taxes and contingencies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. 

 

Research and Development

 

Research and development costs are charged to expense as incurred. Our research and development expenses consist primarily of expenditures for electronics design and engineering, software design and engineering, component sourcing, component engineering, manufacturing, product trials, compensation and consulting costs.

 

Recent Accounting Pronouncements

 

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.

 

Loss Per Share of Common Stock

 

In accordance with FASB ASC 260, “Earnings Per Share,” the basic loss per share is computed by dividing the loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Basic net loss per share excludes the dilutive effect of stock options or warrants and convertible notes. Diluted net earnings (loss) per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents, consisting of shares that might be issued upon exercise of common stock options and warrants. In periods where losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. As of December 31, 2020 and 2019, 112,170,182  and 28,153,406 dilutive shares were excluded from the calculation of diluted loss per common share, with all dilutive shares being Common stock warrants at December 31, 2020 and 2019, as their effect would be anti-dilutive.

 

Stock-Based Compensation

 

The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation and ASC 505-50, Equity-Based Payments to Non-Employees. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued and are recognized over the employees required service period, which is generally the vesting period.

 

7

 

 

 

Fair value of financial instruments

 

The Company measures fair value in accordance with ASC 820 - Fair Value Measurements. ASC 820 defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurements. ASC 820 establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by ASC 820 are:

 

Level 1 - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

 

Level 2 - Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

 

Level 3 - Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Valuation of instruments includes unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

 

As defined by ASC 820, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale, which was further clarified as the price that would be received to sell an asset or paid to transfer a liability (“an exit price”) in an orderly transaction between market participants at the measurement date.

 

The reported fair values for financial instruments that use Level 2 and Level 3 inputs to determine fair value are based on a variety of factors and assumptions. Accordingly, certain fair values may not represent actual values of the Company’s financial instruments that could have been realized as of December 31, 2020 or that will be recognized in the future, and do not include expenses that could be incurred in an actual settlement. The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, receivables from related parties, prepaid expenses and other, accounts payable, accrued liabilities, and related party and third-party notes payables approximate fair value due to their relatively short maturities. The Company’s notes payable to related parties approximates the fair value of such instrument based upon management’s best estimate of terms that would be available to the Company for similar financial arrangements at December 31, 2020.

 

Financial assets and liabilities measured at fair value on a recurring basis are summarized below as of December 31, 2020:

 

 

    Level 1     Level 2     Level 3     Total  
Liabilities                        
Derivative Financial Instruments   $ -     $ -     $ 65,000     $ 65,000  

 

8 

 

 

As of December 31, 2020, the Company’s stock price was $0.02, risk-free discount rate of 0.10% and volatility of 340.54%

 

The following table provides a summary of the changes in fair value, including net transfers in and/or out, of the derivative financial instruments, measured at fair value on a recurring basis using significant unobservable inputs for the six months ending December 31, 2020:

  

    Amount  
Balance June 30, 2020   $ -0-  

Discount to mezzanine equity

    100,923

Financing costs recorded

    49,324

Derivative reclassed to additional paid in capital

    (197,812 )
Change in fair market value of derivative liabilities     112,565  
Balance December 31, 2020   $ 65,000  

 

The following tables provides a summary of the changes in fair value, including net transfers in and/or out, of the derivative financial instruments, measured at fair value on a recurring basis using significant unobservable inputs for the three months ended December 31, 2020:

 

    Amount  
Balance September 30, 2020   $ 42,767  
Discount to mezzanine equity     70,923  
Financing cost recorded     35,493  
Derivative reclassed to additional paid in capital     (197,812 )
Change in fair market value of derivative liabilities     113,629  
Balance December 31, 2020   $ 65,000  

 

NOTE 3 PREPAID EXPENSES

 

Prepaid expenses represent the unexpired terms of various consulting agreements as well as advance rental payments. Prepaid expenses at December 31, 2020 were $4,875.

 

NOTE 4 - COMMITMENTS AND CONTINGENCIES

 

Lease Agreement

 

The Company’s main office is in Las Vegas, Nevada. Rent expense under all leases for the six months ended December 31, 2020 and 2019 was $2,433 and $2,303 respectively. The Company maintains only one office. This office is in Las Vegas, NV and is a month-to-month lease.

 

Related Party Transactions

 

The Company’s Chief Executive Officer has made cash advances to the Company with an aggregate amount due of $4,286 and $0 as of December 31, 2020 and June 30, 2020, respectively. These advances bear interest at 7.00% per annum.

 

As of December 31, 2020 and June 30, 2020, the Company has accrued the amounts of $744,115 and $759,948, respectively, as deferred Officer’s salary for the difference between the president’s annual salary and the amounts paid. 

 

As a result of these shareholder loans and deferred officer salary, the Company has accrued a balance of $175,664 and $149,481 as interest payable as of December 31, 2020 and June 30, 2020.

 

On September 11, 2017, we received a license to certain patents from Chaya Hendrick, our founder and CEO, related to our technologies until the expiration of the patents. As consideration, we issued Chaya Hendrick, or her assigns, (i) 200,000 shares of Series B Convertible Preferred Stock, (ii) a royalty equal to 5% of gross revenues derived from products sold related to the patents, and (iii) certain minimum required payments beginning at $50,000 and doubling each year thereafter. The Series B Preferred Shares may be converted at the election of holder on a basis for 50 common shares for each preferred share at any time or an aggregate of 10,000,000 common shares in exchange for all 200,000 preferred shares.

 

Our CEO maintains an employment agreement that stipulates a $190,000 annual salary. This agreement is in effect until mutual agreement between its CEO and the Company to terminate.

 

Litigation

 

From time to time we may be a defendant or plaintiff in various legal proceedings arising in the normal course of our business. As of the date of this Quarterly Report, there are no material pending legal or governmental proceedings relating to us or properties to which we are a party, and, to our knowledge, there are no material proceedings to which any of our directors, executive officers or affiliates are a party adverse to us or which have a material interest adverse to us.

 

9

 

 

NOTE 5 - DEBT

 

On April 17, 2020, we received funds under the Paycheck Protection Program, a part of the CARES Act. The loan is serviced by Chase Bank, and the application for these funds required us to, in good faith, certify that the current economic uncertainty made the loan necessary to support our ongoing operations. We used the funds for payroll and related costs. The receipt of these funds, and the forgiveness of the loan attendant to these funds, is dependent on our ability to adhere to the forgiveness criteria. The loan bears interest at a rate of 0.98% per annum and matures on April 6, 2022, with the first payment being deferred until April 17, 2021. Under the terms of the PPP, certain amounts may be forgiven if they are used in accordance with the CARES Act. The Company believes that the full amount of the $20,832 Paycheck Protection Program loan will be forgiven and therefore the entire loan is classified as current liability in the accompanying Balance Sheet.

 

On March 5, 2020, the Company issued a $35,000 10% convertible note to the investor in relation to the equity financing agreement (Note 6). The note was due on December 5, 2020 and is convertible at a rate of $0.0175 per share which resulted in a discount from the beneficial conversion feature totaling $5,000. During the year ended June 30, 2020, $2,127 of the debt discount was amortized. For the three month period ended September 31, 2020, $3,804 of the debt discount was amortized. As of December 31, 2020, all $5,000 of the debt discount was fully amortized and the note was at its full amount of $35,000. As of December 31, 2020, the note has not been paid and currently is in default. The default conversion rate is convertible at a variable rate. Accordingly, the Company concluded there is an embedded derivative which was required to be bifurcated and accounted for as a derivative liability. The Company chose to use the Black Scholes model to calculate the derivative liability. The assumptions in the derivative liability calculation included the price of the Company’s common stock of $0.0070 at the valuation date, term of zero, a risk free rate of between $0.0010 and $0.0011 and a volatility rate of between 337% and 341%.

 

NOTE 6 STOCKHOLDERS’ DEFICIT

 

Preferred Stock

 

As of December 31, 2020, the Company has 5,000,000 shares of Class B preferred stock, par value $0.001, authorized and 610,000 shares issued and outstanding.

 

On December 11, 2009, the Company filed a Certificate of Designation with the State of Nevada, to designate 500,000 shares of preferred stock as Series B Convertible Preferred Stock (“Series B Convertible Preferred Stock”). Effective November 5, 2014, the number of shares designated as Series B Convertible Preferred Stock was increased to 5,000,000 shares.

 

Each share of Series B Convertible Preferred Stock has a par value of $0.001, and a stated value equal to $5.00 (“Stated Value”). Holders of the Series B Convertible Preferred Stock are entitled to receive dividends or other distributions with the holders of the common stock of the Company on an as converted basis when, as, and if declared by the directors of the Company. Holders of the Series B Convertible Preferred Stock are entitled to convert each share of the Series B Convertible Preferred Stock into fifty (50) shares of common stock.

 

Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, holders of the Series B Convertible Preferred Stock are entitled to receive out of the assets, whether capital or surplus, of the Company an amount equal to the Stated Value, pro rata with the holders of the common stock.

 

The Company issued 200,000 Series B preferred shares upon its inception in 2004.

 

In October 2015, the Company issued 200,000 Series B preferred shares.

 

On September 11, 2017, the Company issued an additional 210,000 shares of Series B preferred shares to its CEO, Chaya Hendrick, in consideration for grant of exclusive rights to the licensed patent.

 

10

 

 

NOTE 6 STOCKHOLDERS’ DEFICIT (CONTINUED)

 

Class A Common Stock

 

During the three month period ending December 31, 2019, the Company increased its total number of shares of authorized capital stock to 600,000,000 shares, par value $0.001 per share.

 

Common Stock

 

As of December 31, 2020, the Company had 416,590,136 shares of common stock issued and outstanding.

 

  During the three months ended December 31, 2020, the Company sold 16,500,000 shares of common stock for net proceeds of $82,455. With these issuances the company also issued warrants to purchase: (i) 16,500,000 shares at prices ranging from $0.05 to $0.10 per share and (ii) 16,500,000 shares at prices ranging from $0.10 to $0.20 and (iii) 1,500,000 at a price of $0.30.  The warrants expire at various times through December 21, 2022. None of the 16,500,000 shares were issued during the quarter ended December 31, 2020, and were recognized as stock payable.

 

  During the three months ended December 31, 2020, the Company issued 32,034,876 shares for $75,000, of which 15,000,000  were issued from stock payable and 16,034,876 were converted from 78,100 Preferred shares.

 

  During the three months ended December 31, 2019, the Company sold for cash 40,675,000 shares of common stock and warrants to purchase: (i) 825,000 shares at a price ranging between $0.20 and  $0.25  per share for net proceeds of $214,510. The warrants expire at various times through November 1, 2021. None of these shares were issued during the quarter ended December 31, 2019, with all 40,675,000 shares being recorded as stock payable.  During the three months ended December 31, 2019, the Company issued 6,100,696 common shares.  Of these shares, 3,730,000  were issued from stock payable and 2,370,696 were converted from Preferred shares.

 

Equity Financing Agreement

 

On March 5, 2020, the Company entered into an equity financing agreement with GHS Investments, LLC, a Nevada limited liability company (“Investor”). Pursuant to the agreement, the Company agrees the sell to the investor an indeterminate amount of shares of the Company’s common stock, par value $0.001 per share, up to an aggregate price of four million dollars ($4,000,000).

   

Pursuant to the agreement, the Company is required, to within sixty (60) calendar days upon the date of execution of this agreement, use its best efforts to file with the SEC a registration statement or registration statements (as is necessary) on Form S-1, covering the resale of all of the registrable securities, which registration statement(s) shall state that, in accordance with Rule 416 promulgated under the 1933 Act, such registration statement also covers such indeterminate number of additional shares of Common Stock as may become issuable upon stock splits, stock dividends or similar transactions. Pursuant to this equity financing agreement, the Company filed the Registration S-1 on August 6, 2020. The Registration Statement is not effective as of the date of this filing, and is currently being reviewed by The Securities and Exchange Commission.

 

Following effectiveness of the Registration Statement, the Company shall have the discretion to deliver puts to GHS and GHS will be obligated to purchase shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) based on the investment amount specified in each put notice. The maximum amount that the Company shall be entitled to put to GHS in each put notice shall not exceed two hundred percent (200%) of the average daily trading dollar volume of the Company’s Common Stock during the ten (10) trading days preceding the put, so long as such dollar amount does not exceed $500,000. Pursuant to the Equity Financing Agreement, GHS and its affiliates will not be permitted to purchase and the Company may not put shares of the Company’s Common Stock to GHS that would result in GHS’s beneficial ownership, equaling more than 4.99% of the Company’s outstanding Common Stock. The price of each put share shall be equal to eighty percent (80%) of the Market Price (as defined in the Equity Financing Agreement). Puts may be delivered by the Company to GHS until the earlier of thirty-six (36) months after the effectiveness of the Registration Statement.

 

Concurrently with the execution of the equity financing agreement, the company entered into a convertible promissory note, for the principal balance of $35,000. Per the terms of the convertible note agreement, the Company agrees to pay the investor interest at the rate of ten percent (10%) until it became due on December 5, 2020. The holder shall have the right at any time to convert all or any part of the outstanding and unpaid principal and interest at a fixed conversion price of $0.0175. See Note 5. The $35,000 has been recognized as deferred financing costs in current assets on the accompanying Consolidated Balance Sheet, and will be charged against the gross proceeds of each put when received.  Although the Company has not as of yet put to GHS, the agreement is in effect for three years, through March, 2023, and as the Company does plan to put to GHS, the Company has determined it is proper for the deferred costs to remain for the length of the agreement.

 

11

 

 

NOTE 6 STOCKHOLDERS’ DEFICIT (CONTINUED)

 

Warrants

 

From time to time the Company granted warrants in connection with private placements of securities, as described herein.

 

As of December 31, 2020, and June 30, 2020, the following is a breakdown of the warrant activity:

 

Range of Exercise Prices   Number of
Warrants
Outstanding
    Weighted-Average
Contractual Life
Remaining in Years
    Weighted-
Average
Exercise Price
    Number
Exercisable
    Weighted-
Average
Exercise Price
 
Warrants Outstanding and Exercisable at December 31, 2020:                                        
$0.05 - $1.00     112,170,182       1.27     $ 0.28       112,170,182     $ 0.28  
                                         
Warrants Outstanding and Exercisable at June 30, 2020:                                        
                                         
$0.05 - $1.00     53,280,406       1.12     $ 0.33       53,280,406     $ 0.33  

 

Warrant Activity:

 

December 31, 2020:

 

Outstanding - June 30, 2020     53,280,406  
Issued     66,500,000  
Exercised      
Expired     (7,610,224 )
Outstanding - December 31, 2020     112,170,182  

 

December 31, 2019:

 

Outstanding - June 30, 2019     26,526,234  
Issued     7,162,500  
Exercised      
Expired     (5,535,328 )
Outstanding - December 31, 2019     28,153,406  

 

At December 31, 2020, all 108,170,182 warrants are vested and all 112,170,182 warrants expire at various times prior to September 21, 2022.

   

NOTE 7 MANDATORY REDEEMABLE CONVERTIBLE PREFERRED STOCK

 

Issuances of Series C Mandatory Redeemable Convertible Preferred Stock

 

On January 10, 2019, the Board of Directors of the Company adopted a resolution pursuant to the Company’s Certificate of Incorporation, as amended, providing for the designations, preferences and relative, participating, optional and other rights, and the qualifications, limitations and restrictions, of the Series C Convertible Preferred Stock.

 

On January 14, 2019, the Company filed a Certificate of Designations for a Series C Convertible Preferred Stock. The authorized number of Series C Convertible Preferred Stock is 1,000,000 shares, par value 0.001. The Series C Preferred Stock will, with respect to dividend rights and rights upon liquidation, winding-up or dissolution, rank: (a) senior with respect to dividends and right of liquidation with the Company’s common stock, (b) junior with respect to dividends and right of liquidation with respect to the Company’s Series B Preferred Stock; and (c) junior with respect to dividends and right of liquidation to all existing indebtedness of the Company. Series C Preferred Stock will carry an annual ten percent (10%) cumulative dividend, compounded daily, payable solely upon redemption, liquidation or conversion. The Company will have a right, at any time in the period of 180 days from the date of the issuance, at the Company’s option, to redeem all or any portion of the Series C Preferred Stock at prices ranging from 105% to 130%, based on the passage of time.

 

12

 

 

NOTE 7 MANDATORY REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONTINUED)

 

The number of Series C, mandatory redeemable convertible preferred stock shares issued and outstanding were 143,050 and 117,200, respectively, for December 31, 2020 and June 30, 2020.

 

The Holder shall have the right at any time during the period beginning on the date which is six (6) months following the Issuance Date, to convert all or any part of the outstanding Series C Preferred Stock into fully paid and non-assessable shares of Common Stock at the Variable Conversion Price. The “Variable Conversion Price” shall mean 71% multiplied by the Market Price (representing a discount rate of 29%). “Market Price” means the average of the two (2) lowest Trading Prices (as defined here) for the Common Stock during the fifteen (15) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date.

 

The Preferred shares are convertible at 71% of the average market price of the Company’s stock based on the lowest two (2) market closes fifteen (15) days prior. Consequently, the shares were converted at different rates. The Company analyzed the conversion feature and determined it was required to be bifurcated and recognized as a derivative liability. Three batches of Preferred shares were subject to derivative liability valuation based on the Black Scholes Merton pricing model. As the fair value of each of the three derivative and the shares issued at inception were in excess of the face amount of the Preferred shares, the Company recorded a discount in the amount of $35,000  to be amortized utilizing the effective interest method of accretion over the term of the note.

 

Balance, June 30, 2020:   $ 42,767  
Unamortized discount originated from derivative liabilities:     (29,585 )
Financing costs recorded:     (13,831 )
Derivative liability:     1,064  
Preferred stock dividend:     (415 )
Balance, December 31, 2020   $ -0-  

 

On the date which is eighteen (18) months following the Issuance Date or upon the occurrence of an Event of Default (the “Mandatory Redemption Date”), the Company shall redeem all of the shares of Series C Preferred Stock of the Holder (which have not been previously redeemed or converted). With five (5) days of the Mandatory Redemption Date, the Company shall make payment to each Holder of an amount in cash equal to the total number of shares of Series C Preferred Stock held by such Holder multiplied by the then current Stated Value.

 

All shares of mandatorily redeemable convertible preferred stock have been presented outside of permanent equity in accordance with ASC 480, Classification and Measurement of Redeemable Securities. The Company accretes the carrying value of its Series C mandatory redeemable convertible preferred stock to its estimate of fair value (i.e. redemption value) at period end.

 

The carrying value of the Series C mandatory redeemable convertible preferred stock at December 31, 2020 and 2019 was $119,083 and $86,564 net of discount, respectively. There were 73,150 Preferred C shares issued for net proceeds of  $66,500 and 78,100 Preferred C shares converted to 16,034,876 Common shares for the three months ended December 31, 2020.

 

NOTE 8 INCOME TAXES

 

The Company provides for income taxes at the end of each interim period based on the estimated effective tax rate for the full fiscal year. Cumulative adjustments to the Company’s estimate are recorded in the interim period in which a change in the estimated annual effective rate is determined.

 

The Company has estimated its effective tax rate to be 0%, based primarily on losses incurred and the uncertainty of realization of the tax benefit of such losses.

 

NOTE 9 SUBSEQUENT EVENTS 

 

In accordance with ASC 855-10, the Company has reviewed its operations subsequent to December 31, 2020 to the date these financial statements were issued. Between January 1, 2021 and February 22, 2021, the Company issued 4,808,975 shares of common stock. Of this amount, all 4,808,975 shares were issued from Preferred C shares that were converted.

  

13

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Overview

 

SmartMetric, Inc. (“SmartMetric” or the “Company”) was incorporated pursuant to the laws of Nevada on December 18, 2002. SmartMetric is a company engaged in the technology industry. SmartMetric has an issued patent covering technology that involves connection to networks using data cards (smart cards and EMV cards). In addition, SmartMetric holds the sole license to five issued patents covering features of its biometric fingerprint activated cards. SmartMetric’s main products are a fingerprint sensor activated payments card and a security card with a finger sensor and fully functional fingerprint reader embedded inside the card. The cards have a rechargeable battery allowing for portable biometric identification and card activation. These cards are herein sometimes referred to as a biometric card or the SmartMetric Biometric Card.

 

The SmartMetric Biometric Technology and Products

 

SmartMetric’s founder Chaya Hendrick, is the originator and inventor of various miniature biometric activated cards, including the SmartMetric biometric fingerprint activated payments card with an embedded fully functional fingerprint reader inside. The card is the size and thickness of a standard credit card.

 

The SmartMetric biometric payments card provides for high level security for credit and debit cards by adding biometric authentication and activation to Europay, MasterCard and Visa (“EMV”) chip cards in use around the world. The SmartMetric biometric payments card has been manufactured to be totally interoperable with existing EMV chip card readers, ATMs as well as banking payments infrastructure. Using the advanced electronic miniaturization by SmartMetric to make its biometric credit/debit cards the Company has also created a multi-functional biometric building access control and logical network access card.

 

SmartMetric has commenced efforts towards creating a biometric health insurance card with memory for storing a person’s medical files, including medical images. This allows a person to securely take with them their private medical files inside the card when traveling away from home. For the first time, a person’s complete medical files can be stored in a credit card-sized card and the information is only able to be accessed by the card holder’s own fingerprint. The company is in discussion with significant health membership organizations concerning the offering of the SmartMetric Biometric Medical Records card to their respective members.

 

14

 

 

SmartMetric has developed its rechargeable battery powered fingerprint reader that is of a scale that fits “inside” a standard credit or debit card. The cardholder has stored inside the card his or her fingerprint. To activate the card the person swipes the fingerprint sensor, the sensor is connected to an internal microprocessor that manages the fingerprint sensor fingerprint image capture and comparison matching with the pre-stored fingerprint of the cardholder held in the internal electronic memory of the card. The card has a surface mounted EMV chip as found on EMV banking chip cards that is activated or turned on only after a card holder’s fingerprint has been scanned and verified using the SmartMetric miniature “in-card” biometric scanner.

 

There are over nine (9) billion EMV chip cards used by banks around the world for credit cards, ATM cards and debit cards according to EMVco. SmartMetric sees this existing user base as a natural market for its advanced biometric activated card technology for the credit and debit card market. SmartMetric has established a network of card manufacturers and technology distributors to market its in-card biometric products to card issuing banks and in the case of the SmartMetric biometric security card, to businesses.

 

SmartMetric has completed development of its biometric card and is now actively marketing its card to major card issuing banks throughout the world in partnership with established card distributors and dealers, though no cards have been sold as of the date of this filing.

 

SmartMetric has also developed a multi-function logical and physical access security card this size and thickness of a standard credit card. Utilizing the small size breakthroughs by the Company in its biometric payments card development, SmartMetric has successfully developed a biometric security card that is the size and thickness of a standard credit card that can easily fit inside a person’s wallet.

 

As with the biometric payments card, the SmartMetric security card has an internal rechargeable battery that is used to power the card’s internal processor used in the biometric fingerprint scan. All functions and operations of the card are subject to a valid fingerprint scan and match of the card user.

 

In Card Fingerprint Matching and Verification

 

The SmartMetric Biometric card incorporates a rechargeable, lithium polymer battery. This battery is rechargeable, very thin and has been designed by SmartMetric to fit inside the SmartMetric fingerprint credit card sized card. This battery is manufactured by a third party unaffiliated with the Company to SmartMetric’s specifications. This battery is embedded inside the card.

 

Other components needed for manufacture of the SmartMetric Biometric Card include, but are not limited to, sensors, microchips, memory chips and processor chips. The ultra-thin circuit board developed by SmartMetric has, in total, nearly 200 active and passive components. The sources and availability of these materials are numerous, readily available and should not affect the ability of SmartMetric to meet future demand. The supply of memory processors and passive components may be interrupted at any time based on global supply/demand issues. We have not experienced component supply issues to date and the Company, as a matter of policy, has alternative component sources to mitigate and protect against supply chain issues.

 

15

 

 

The biometric card has been designed to offer the option of a built-in radio frequency transmitter for contactless access and identity verification. The RFID contactless chip transmission is turned on using the card users fingerprint verification.

 

The thinness form factor of many of the components, has also resulted in the Company having to develop its own process for high volume electronic assembly. The Company has also successfully overcome the challenge of developing a process of encapsulating the electronics in plastic to create the credit card sized biometric fingerprint activated card that also has an internal rechargeable battery.

 

Standard credit card manufacturing utilizes machines that require high pressure and high temperature in fusing top and bottom sheets of plastic together thereby encasing any electronics inside the card. Given the complexity of the card’s electronics and vulnerability to an assembly process involving high heat and high pressure, damage to the electronic circuitry was a major challenge for the Company to overcome. Research and development activities of the Company allowed the Company to achieve this ability through a trade secret process that protects the silicon and internal battery that is mounted directly onto the card’s internal electronics circuit board.

 

The Security Technology Industry

 

SmartMetric Biometric Multi-Function Security Card

 

The Access management market is estimated to grow from USD 8.09 billion in 2016 to USD 14.82 billion by 2021

 

SmartMetric has developed a multi-function logical and physical access security card this size and thickness of a standard credit card. Utilizing the small size breakthroughs by the Company in its biometric payments card development, SmartMetric has successfully developed a biometric security card that can easily fit inside a person’s wallet.

 

As with the biometric payments card, the SmartMetric security card has an internal rechargeable battery that is used to power the card’s internal processor used in the biometric fingerprint scan. All functions and operations of the card are subject to a valid fingerprint scan and match of the card user.

 

The main features of the SmartMetric biometric security card are:

 

  1. Logical access smartcard card chip for insertion into a card reader attached to a computer or network
     
  2. RFID transceiver for physical access i.e. doorways, elevators, etc.
     
  3. Validation indicator light that glows green immediately following a fingerprint validation
     
  4. Rechargeable battery to power the card
     
  5. Size and thickness of a credit card
     
  6. Changeable security code on reverse of card for additional log on security

 

Cybersecurity and identity validation for network access control, physical building entry and secure on-the-spot identity security is now handled by the revolutionary biometric activated cyber and ID multi-function security card which has been developed by SmartMetric after over a decade of R&D.

 

From governments to the workplace, better, stronger security is desired across the enterprise. Our new biometric multifunction security card provides a revolutionary biometric based solution that is portable, easily integrated and backward compatible to existing backend security infrastructure.

 

The new multifunction biometric security card by SmartMetric is a revolutionary leap forward in the Cyber and Access Security world according to SmartMetric.

 

16

 

 

Biometrics

 

Biometric technologies identify users by electronically capturing a specific biological or behavioral characteristic of that individual, such as a fingerprint or voice or facial feature, and creating a unique digital identifier from that characteristic. Because this process relies on largely unalterable human characteristics, positive identification can be achieved independent of any information possessed by the individual seeking authorization.

 

The process of identity authentication typically requires that a person present for comparison with one or more of the following factors:

 

  Something known such as a password, PIN or mother’s maiden name;
     
  Something carried such as a token, card, or key; or
     
  something physical such as fingerprint, voice pattern, signature motion, facial shape or other biological or behavioral characteristic.

 

Comparison of biological and behavioral characteristics has historically been the most reliable and accurate of the three factors but has also been the most difficult and costly to implement into a single product that can automatically verify the identity of a user accessing a computer network or the Internet. However, recent advances in biometric collection technologies (both biometric hardware products and their associated processing software) have increased the speed and accuracy and reduced the cost of implementing biometrics in commercial environments. Management believes that individuals, website operators, government organizations, and businesses will increasingly use this method of identity authentication.

 

Biometrics refers to the automatic identification of a person based on his/her physiological or behavioral characteristics. This method of identification is preferred over traditional methods involving passwords and personal identification numbers (“PINs”) for two reasons: (i) the person to be identified is required to be physically present at the point of identification to be identification; and (ii) identification based on biometric techniques obviates the need to remember a password or carry a token. By replacing PINs, biometric techniques can potentially prevent unauthorized access to or fraudulent use of cellular phones, Biometric cards, desktop PCs, workstations and computer networks. It can be used during transactions conducted via telephone and Internet (e-commerce and e-banking). In automobiles, biometrics could replace keys-less entry devices. The SmartMetric fingerprint activated credit card that has the fingerprint encased inside the credit card has been developed to replace the less secure PIN’s for credit and debit cards.

 

PINs and passwords may be forgotten, may be hacked and token-based methods of identification, e.g., passports and driver’s licenses, may be forged, stolen or lost. Various types of biometric systems are being used for real-time identification, with the most popular based on facial recognition and fingerprint matching. Other biometric systems utilize iris and retinal scanning, speech, facial thermograms and hand geometry. Of the biometric options available to work with a credit or debit card, fingerprint scanning is the only biometric methodology that has been successfully reduced in size to fit inside such cards.

 

A biometric system is essentially a pattern recognition system, which makes a personal identification by determining the authenticity of a specific physiological or behavioral characteristic possessed by the user. An important issue in designing a practical system is to determine how an individual is identified.

 

There are two different ways to resolve a person’s identity; verification and identification. Verification (Am I whom I claim I am?) involves confirming or denying a person’s claimed identity. In identification, one has to establish a person’s identity (Who am I?).

 

As stated above, the SmartMetric fingerprint biometric card has been designed as a credit-card sized card embedded with an integrated circuit, contact chip and biometric fingerprint sensor. The SmartMetric card has been designed to provide not only memory capacity, but also computational capability along with secure non-refutable identification of the user. We believe that the self-containment of SmartMetric’s card makes it substantially resistant to attack, as it will not need to depend upon vulnerable external resources. Because of this characteristic, we expect that the SmartMetric biometric card may be used in different applications, which require strong security protection and authentication.

 

The physical structure of a card is specified by the International Standards Organization (“ISO”). Generally, this structure is made up of three elements: (i) the plastic card, which is the most basic one and has the dimensions of 85.60mm x 53.98 x 0.80mm; (ii) an electronic circuit board inlay; and (iii) a contact chip that are embedded in the card.

  

The SmartMetric card has been designed to conform to ISO standards. The electronic circuit inlay is a part of, and not distinct from, the biometric card.

  

The communication line between the card and ATMs and other standard Smart Card reading devices is bi-directional serial transmission, which conforms to ISO standards. Card commands and input data are sent to the chip that responds with status words and output data upon the receipt of these commands and data. Information is sent in half duplex mode (transmission of data is in one direction at a time). This protocol, together with the restriction of the bit rate, is designed to prevent data attack on the card. Other data protection systems are utilized inside the card including advanced encryption.

 

In general, the size, the thickness and bend requirements for the biometric card were designed to protect the card from being spoiled physically.

 

17

 

 

Recent Developments

 

The COVID-19 has had an impact on SmartMetric’s final card production. While the delays are due to supply line disruption, the Company is confident that these delays will be short-lived based on advice from our manufacturing partners, manufacturing alternatives and alternative supply lines that are being put into place by the Company.

 

GHS Equity Financing Agreement and Registration Rights Agreement

 

On March  5, 2020, the Company entered into an equity financing agreement (the “Equity Financing Agreement”), and a registration rights agreement (the “Registration Rights Agreement”) with GHS Investments LLC, a Nevada limited liability company (“GHS”). Under the terms of the Equity Financing Agreement, GHS agreed to provide the Company with up to $4,000,000 over the course of 36 months in return for shares of the Company’s common stock. The 36-month period will commence upon effectiveness of a registration statement on Form S-1 (the “Registration Statement”) filed with the U.S. Securities and Exchange Commission (the “Commission”) on August 6, 2020.

 

Following effectiveness of the Registration Statement, the Company shall have the discretion to deliver puts to GHS and GHS will be obligated to purchase shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) based on the investment amount specified in each put notice. The maximum amount that the Company shall be entitled to put to GHS in each put notice shall not exceed two hundred percent (200%) of the average daily trading dollar volume of the Company’s Common Stock during the ten (10) trading days preceding the put, so long as such amount does not exceed $500,000. Pursuant to the Equity Financing Agreement, GHS and its affiliates will not be permitted to purchase, and the Company may not put shares of the Company’s Common Stock to GHS that would result in GHS’s beneficial ownership equaling more than 4.99% of the Company’s outstanding Common Stock. The price of each put share shall be equal to eighty percent (80%) of the Market Price (as defined in the Equity Financing Agreement). Puts may be delivered by the Company to GHS until the earlier of thirty-six (36) months after the effectiveness of the Registration Statement, the date on which GHS has purchased an aggregate of $4,000,000 worth of Common Stock under the terms of the Equity Financing Agreement, or at such time that the Registration Statement is no longer in effect. Additionally, in accordance with the Equity Financing Agreement, the Company issued GHS a convertible promissory note in the principal amount of $35,000 and a 9 month maturity date (the “Commitment Note”), with the first $20,000 of the Commitment Note deemed earned upon execution of the Equity Financing Agreement and the remaining $15,000 of the Commitment Note deemed earned upon payment by GHS of the Company’s legal fees. As of December 31, 2020, the note has not been paid.

 

The Registration Rights Agreement provides that the Company shall (i) use its best efforts to file with the Commission the Registration Statement within 60 days of the date of the Registration Rights Agreement; and (ii) have the Registration Statement declared effective by the Commission within 30 days after the date the Registration Statement is filed with the Commission, but in no event more than 90 days after the Registration Statement is filed.

 

Going Concern

 

The condensed consolidated financial statements do not include any adjustments relating to the carrying amounts of recorded assets or the carrying amounts and classification of recorded liabilities that may be required should the Company be unable to continue as a going concern.

 

As shown in the accompanying consolidated financial statements the Company has incurred recurring losses of $457,728 for the three month period ending December 31, 2020 and has incurred a cumulative loss of $28,454,728 since inception (December 18, 2002).   The Company is currently in the development stage and has spent a substantial portion of its time in the development of its technology.

 

There is no guarantee that the Company will be able to raise enough capital or generate revenues to sustain its operations.  These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

Management believes that the Company’s capital requirements will depend on many factors.  These factors include the final phase of development and mass production being successful as well as product implementation and distribution.

 

The consolidated financial statements do not include any adjustments relating to the carrying amounts of recorded assets or the carrying amounts and classification of recorded liabilities that may be required should the Company be unable to continue as a going concern. 

 

18

 

 

In December 2019, an outbreak of a novel strain of coronavirus originated in Wuhan, China (“COVID-19”) and has since spread worldwide, including to the Unites States, posing public health risks that have reached pandemic proportions (the “COVID-19 Pandemic”). The COVID-19 Pandemic poses a threat to the health and economic wellbeing of our employees, customers and vendors. Like most businesses world-wide, the COVID-19 Pandemic has impacted the Company financially; however, management cannot presently predict the scope and severity with which COVID-19 will impact our business, financial condition, results of operations and cash flows.

 

Critical Accounting Policies

 

We have prepared our financial statements in conformity with accounting principles generally accepted in the United States, which requires management to make significant judgments and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. We base these significant judgments and estimates on historical experience and other applicable assumptions we believe to be reasonable based upon information presently available. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have historically been minor and have been included in the financial statements as soon as they became known. Actual results could materially differ from our estimates under different assumptions, judgments or conditions.

 

All of the Company’s significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, to our financial statements, included elsewhere in this Quarterly Report. We have identified the following as our significant accounting policies and estimates, which are defined as those that are reflective of significant judgments and uncertainties, are the most pervasive and important to the presentation of our financial condition and results of operations and could potentially result in materially different results under different assumptions, judgments or conditions.

 

We believe the following critical accounting policies reflect our more significant estimates and assumptions used in the preparation of our financial statements:

 

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

 

Research and Development Costs - Research and development costs are charged to expense as incurred. Our research and development expenses consist primarily of expenditures for electronics design and engineering, software design and engineering, component sourcing, component engineering, manufacturing, product trials, compensation and consulting costs.

 

Results of Operations

 

Comparison of the Three Months Ended December 31, 2020 and 2019

 

Our results of operations have varied significantly from year to year and quarter to quarter and may vary significantly in the future. We did not have revenue for the three months ending December 31, 2020 and 2019. Net loss for the three months ended December 31, 2020 and 2019 were $457,728  and $240,876, respectively, resulting from the operational activities described below.

 

Operating Expenses

 

Operating expense totaled $178,916 and $222,813 during the three months ended December 31, 2020 and 2019, respectively. The decrease in operating expenses is the result of lower consulting expenses.

 

    Quarter Ended
December 31
    Change in 2020
Versus 2019
 
    2020     2019     $     %  
Operating expense                                
Officer salary   $ 47,500     $ 47,500     $       (0 )%
Research and development     21,733       25,594       (3,861 )     (15.1 )%
General and administrative     109,683       149,719       (40,036 )     (26.7 )%
Total operating expense   $ 178,916     $ 222,813     $ (43,897 )     (19.7 )%

 

19

 

 

Research and Development

 

Research and development expenses totaled $21,733 and $25,594 for the three months ended December 31, 2020 and 2019, respectively. The decrease of $3,861, or 15.1%, in 2020 compared to 2019 was primarily attributable to decreased engineering expenses. Our research and development expenses consist primarily of expenditures related to engineering.

 

General and Administrative

 

General and administrative expenses totaled $109,683 and $149,719 for the three months ended December 31, 2020 and 2019, respectively. The decrease of $40,036 or 26.7%, in 2020 compared to 2019 was primarily the result of a decrease in consulting expenses. Our general and administrative expenses consist primarily of expenditures related to employee compensation, legal, accounting and tax, other professional services, and general operating expenses.

 

Other Expense

 

Other income (expense) totaled $166,266 and $13,825 for the three months ended December 31, 2020 and 2019, respectively.

 

    Quarter Ended
December 31
    Change in 2020
Versus 2019
 
    2020     2019     $     %  
                         
Loss on change in derivatives     113,629       -0-       113,629       0.0 %
Interest Expense     52,637       13,825       38,812       280.7 %
Total other (income) expense   $ 166,266     $ 13,825     $ 152,441       1102.6 %

  

Interest income (expense)

 

We had net interest expense of $52,637 in the three months ended December 31, 2020 compared to $13,825 net interest expense for the three months ended December 31, 2019. The increase of $38,812 was attributable to non-cash financing expense related to derivative liability valuation.

 

Comparison of the Six Months Ended December 31, 2020 and 2019

 

Our results of operations have varied significantly from year to year and quarter to quarter and may vary significantly in the future. We did not have revenue for the six months ending December 31, 2020 and 2019. Net loss for the three months ended December 31, 2020 and 2019 were $683,664  and $467,898, respectively, resulting from the operational activities described below.

 

Operating Expenses

 

Operating expense totaled $373,218 and $424,284 during the six months ended December 31, 2020 and 2019, respectively. The decrease in operating expenses is the result of lower consulting expenses.

 

    Six Months Ended
December 31
    Change in 2020
Versus 2019
 
    2020     2019     $     %  
Operating expense                                
Officer salary   $ 95,000     $ 95,000     $       (0 )%
Research and development     43,939       46,706       (2,767 )     (5.9 )%
General and administrative     234,279       282,578       (48,299 )     (17.1 )%
Total operating expense   $ 373,218     $ 424,284     $ (51,066 )     (12.0 )%

 

Research and Development

 

Research and development expenses totaled $43,939 and $46,706 for the six months ended December 31, 2020 and 2019, respectively. The decrease of $2,767, or 5.9%, in 2020 compared to 2019 was primarily attributable to decreased engineering expenses. Our research and development expenses consist primarily of expenditures related to engineering.

 

20

 

 

General and Administrative

 

General and administrative expenses totaled $234,279 and $282,578 for the six months ended December 31, 2020 and 2019, respectively. The decrease of $48,299 or 17.1%, in 2020 compared to 2019 was primarily the result of a decrease in consulting expenses. Our general and administrative expenses consist primarily of expenditures related to employee compensation, legal, accounting and tax, other professional services, and general operating expenses.

 

Other Expense

 

Other income (expense) totaled $193,871 and $27,651 for the six months ended December 31, 2020 and 2019, respectively.

 

    Six Months Ended
December 31
    Change in 2020
Versus 2019
 
    2020     2019     $     %  
                         
Loss on change in derivatives     112,565       -0-       112,565       0.0 %
Interest Expense     81,306       27,651       53,655       194.0 %
Total other (income) expense   $ 193,871     $ 27,651     $ 166,220       601.1 %
                                   

Interest income (expense)

 

We had net interest expense of $81,306 in the six months ended December 31, 2020 compared to $27,651 net interest expense for the six months ended December 31, 2019. The increase of $53,655 was attributable to non-cash financing expense related to derivative liability valuation.

 

Liquidity and Capital Resources

 

We have incurred losses since our inception in 2002 as a result of significant expenditures for operations and research and development and the lack of any revenue. We have an accumulated deficit of $28,454,728 as of December 31, 2020 and anticipate that we will continue to incur additional losses for the foreseeable future. Through December 31, 2020, we have funded our operations through the private sale of our equity securities and exercises of options and warrants, resulting in gross proceeds of approximately $26.2 million from inception through December 31, 2020.

 

   

Six months ended

December 31,

    Change in 2020
versus 2019
 
    2020     2019     $     %  
                   
Cash at beginning of period   $ 71,377     $ 10,161     $ 61,216       602.5 %
Net cash used in operating activities     333,937       382,252       (48,315)       (12.6 %)
Net cash used in investing activities                        
Net cash provided by financing activities     284,151       425,564       (141,513 )     (33.2 )%
Cash at end of period   $ 21,591     $ 53,473     $ (31,882 )     (59.6 )%

 

Net Cash Used in Operating Activities

 

Net cash used in operating activities was $333,937  and $382,252 for the six months ended December 31, 2020 and 2019, respectively. The decrease of $48,315   in cash used during 2020 compared to 2019 was primarily attributable to an increase in consultant costs.

 

21

 

 

Net Cash Used in Investing Activities

 

Cash used in investing activities was $0 and $0 for the six months ended December 31, 2020 and 2019, respectively.

 

Net Cash Provided by Financing Activities

 

During the six months ended December 31, 2020, net cash provided by financing activities was 284,151, compared to $425,564 for the six months ended December 31, 2019. The decrease of $141,513  was due to lower sales of the Company’s securities in private placements. We continue to seek funding through private placement sales of equity to fund our continued operations, sales and marketing and ongoing research and development programs.

 

Equity Financing Agreement

 

On March 5, 2020, the Company entered into an equity financing agreement with GHS Investments, LLC, a Nevada limited liability company (“Investor”). Pursuant to the agreement, the Company agrees the sell to the investor an indeterminate amount of shares of the Company’s common stock, par value $0.001 per share, up to an aggregate price of four million dollars ($4,000,000).

 

Pursuant to the agreement, the Company is required, to within sixty (60) calendar days upon the date of execution of this Agreement, use its best efforts to file with the SEC a Registration Statement or Registration Statements (as is necessary) on Form S-1, covering the resale of all of the Registrable Securities, which Registration Statement(s) shall state that, in accordance with Rule 416 promulgated under the 1933 Act, such Registration Statement also covers such indeterminate number of additional shares of Common Stock as may become issuable upon stock splits, stock dividends or similar transactions.

 

On March 5, 2020, the Company issued a $35,000 10% convertible note to the investor in relation to the equity financing agreement. The note was due on December 5, 2020 and is convertible at a rate of $0.0175 per share which resulted in a discount from the beneficial conversion feature totaling $5,000. During the year ended June 30, 2020, $2,127 of the debt discount was amortized. For the three month period ended September 31, 2020, $3,804 of the debt discount was amortized. As of December 31, 2020, all $5,000 of the debt discount was fully amortized and the note was at its full amount of $35,000. As of December 31, 2020, the note has not been paid and currently is in default.

 

22

 

  

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are not required to provide the information required by this item as we are considered a smaller reporting company, as defined by Rule 229.10(f)(1).

 

ITEM 4. CONTROLS AND PROCEDURES

 

We maintain “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

In connection with the preparation of this Quarterly Report on Form 10-Q for the quarter ended December 31, 2020, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(c) and 15d-15(e) under the Exchange Act) are not effective to ensure that information required to be disclosed by us in report that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer, as appropriate to allow timely decisions regarding required disclosure.

 

Limitations on Controls

 

Management does not expect that the Company’s disclosure controls and procedures or the Company’s internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and the Company’s chief executive officer and chief financial officer have concluded that the Company’s disclosure controls and procedures are not effective.

 

Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions are being performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties in all of our financially significant processes and have concluded that this control deficiency represented a material weakness. We plan to remediate this weakness over the next 12 months.

 

Notwithstanding the assessment that our disclosure controls and procedures and our internal controls over financial reporting were not effective and that there are material weaknesses as identified herein, we believe that our condensed consolidated financial statements contained in this Quarterly Report fairly present our financial position, results of operations and cash flows for the periods covered thereby in all material respects.

 

Changes in Internal Controls

 

During the three months ended December 31, 2020, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.

 

23

 

 

PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

From time to time we may be a defendant or plaintiff in various legal proceedings arising in the normal course of our business. We know of no material, active, pending or threatened proceeding against us or our subsidiaries, nor are we, or any subsidiary, involved as a plaintiff or defendant in any material proceeding or pending litigation.

 

ITEM 1A. RISK FACTORS

 

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, Item 1A in our Annual Report on Form 10-K for the year ended June 30, 2020 filed with the Commission on October 20, 2020 and our subsequent filings with the Commission, which could materially affect our business, financial condition or future results. These cautionary statements are to be used as a reference in connection with any forward-looking statements. The factors, risks and uncertainties identified in these cautionary statements are in addition to those contained in any other cautionary statements, written or oral, which may be made or otherwise addressed in connection with a forward-looking statement or contained in any of our subsequent filings with the Commission.

 

Below is a risk factor regarding the coronavirus that the Company’s stockholders and potential investors in the Company should consider with respect to the year that will end on June 30, 2021.

 

We face risks related to Novel Coronavirus (COVID-19) which could significantly disrupt our research and development, operations, sales, and financial results.

 

Our business will be adversely impacted by the effects of COVID-19. In addition to global macroeconomic effects, the COVID-19 outbreak and any other related adverse public health developments will cause disruption to our operations and sales activities and our final card production. While the delays to our final card production are due to supply line disruption, these delays may be short-lived based on advice from our manufacturing partners, manufacturing alternatives and alternative supply lines that are being put into place by the Company.

 

Our customers have been and will be disrupted by worker absenteeism, quarantines and restrictions on employees’ ability to work, office and factory closures, disruptions to ports and other shipping infrastructure, border closures, or other travel or health-related restrictions. In addition, COVID-19 or another disease outbreak will in the short-run and may over the longer term adversely affect the economies and financial markets of many countries, resulting in an economic downturn that will affect demand for our products and services and impact our operating results. There can be no assurance that any decrease in sales resulting from COVID-19 will be offset by increased sales in subsequent periods. Although the magnitude of the impact of COVID-19 outbreak on our business and operations remains uncertain, the continued spread of COVID-19 or the occurrence of other epidemics and the imposition of related public health measures and travel and business restrictions will adversely impact our business, financial condition, operating results and cash flows. In addition, we have experienced and will experience disruptions to our business operations resulting from quarantines, self-isolations, or other movement and restrictions on the ability of our employees to perform their jobs that may impact our ability to develop and design our products and services in a timely manner or meet required milestones or customer commitments.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

The following information is given with regard to unregistered securities sold since January 1, 2020 and not previously reported on a Current Report on Form 8-K. The following securities were issued in private offerings pursuant to the exemption from registration contained in the Securities Act and the rules promulgated thereunder in reliance on Section 4(a)(2) thereof of the Securities Act of 1933, as amended and Regulation D and Regulation S promulgated thereunder, relating to offers of securities by an issuer not involving any public offering.

 

  During the three months ended December 31, 2020, the Company sold for cash 16,500,000 shares of common stock and warrants to purchase: (i) 16,500,000 shares at prices ranging from $0.05 to $0.10 per share and (ii) 16,500,000  shares at prices ranging from $0.10 to $0.20 and (iii) 1,500,000 shares at a price of $0.30 for net proceeds of $82,455. The warrants expire at various times through September 21, 2022. None of these shares were issued during the quarter ended December 31, 2020, with all 16,500,000 shares being recorded as stock payable.  During the three months ended December 31, 2020, the Company issued 32,034,876 shares.  Of these shares, 15,000,000  were issued for cash  and 16,034,876 were converted from Preferred shares.

 

24

 

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not Applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

 

INDEX TO EXHIBITS

 

       

Filed or

Furnished

  Incorporated by Reference 
Exhibit No.   Description   Herewith   Form   Exhibit No.   Filing Date
31.1   Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).   X              
                     
31.2   Certification by the Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).   X              
                     
32.1   Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *   X              
                     
32.2   Certification by the Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *   X              
                     
101.INS   XBRL Instance Document X              
                     
101.SCH   XBRL Taxonomy Extension Schema Document X              
                     
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document X              
                     
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document X              
                     
101.LAB   XBRL Taxonomy Extension Label Linkbase Document X              
                     
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document X              

  

* In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed

 

25

 

 

SIGNATURE

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  SMARTMETRIC, INC.
     
Dated:  February 24, 2021 By: /s/ Chaya Hendrick
   

Chaya Hendrick, President,

Chief Executive Officer and Chairman

(Principal Executive Officer)

     
Dated:  February 24, 2021 By: /s/ Jay Needelman
    Jay Needelman, Chief Financial Officer
(Principal Financial Officer)

 

26

 

SmartMetric (QB) (USOTC:SMME)
Historical Stock Chart
From Aug 2021 to Sep 2021 Click Here for more SmartMetric (QB) Charts.
SmartMetric (QB) (USOTC:SMME)
Historical Stock Chart
From Sep 2020 to Sep 2021 Click Here for more SmartMetric (QB) Charts.