U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended September
30, 2015
¨
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from to
Commission File No. 000-54853
SMARTMETRIC, INC. |
(Exact name of small business issuer 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 89109 |
(Address of principal executive offices) |
(702) 990-3687 |
(Issuer’s telephone number) |
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 x
No ¨
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted 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 and post such files). Yes x
No ¨
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
Large accelerated filer |
¨ |
Accelerated filer |
¨ |
Non-accelerated filer |
¨ |
Smaller reporting company |
x |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨
No x
As of November 5, 2015, there were 188,957,814
shares issued and outstanding of the registrant’s common stock.
INDEX
SMARTMETRIC, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
| |
September 30, | | |
June 30, | |
| |
2015 | | |
2015 | |
| |
(Unaudited) | | |
| |
Assets | |
| | | |
| | |
Current assets: | |
| | | |
| | |
Cash | |
$ | 27,876 | | |
$ | 44,516 | |
Prepaid expenses and other current assets | |
| 61,417 | | |
| 84,417 | |
| |
| | | |
| | |
Total current assets | |
| 89,293 | | |
| 128,933 | |
| |
| | | |
| | |
Total assets | |
$ | 89,293 | | |
$ | 128,933 | |
| |
| | | |
| | |
Liabilities and Stockholders' Deficit | |
| | | |
| | |
| |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable and accrued expenses | |
$ | 486,208 | | |
$ | 439,828 | |
Liability for stock to be issued | |
| 342,173 | | |
| 382,541 | |
Deferred Officer salary | |
| 315,015 | | |
| 267,515 | |
Shareholder loan | |
| 460 | | |
| 13,960 | |
| |
| | | |
| | |
Total current liabilities | |
| 1,143,856 | | |
| 1,103,844 | |
| |
| | | |
| | |
Commitments and contingencies | |
| | | |
| | |
| |
| | | |
| | |
Stockholders' deficit: | |
| | | |
| | |
Preferred stock, $.001 par value; 5,000,000 shares authorized, 410,000 shares issued and outstanding | |
| 410 | | |
| 410 | |
Common stock, $.001 par value; 300,000,000 shares authorized, 188,957,814 and 186,407,814 shares issued and outstanding , respectively | |
| 188,958 | | |
| 186,408 | |
Additional paid-in capital | |
| 20,160,274 | | |
| 19,865,824 | |
Accumulated deficit | |
| (21,404,205 | ) | |
| (21,027,553 | ) |
| |
| | | |
| | |
Total stockholders' deficit | |
| (1,054,563 | ) | |
| (974,911 | ) |
| |
| | | |
| | |
Total liabilities and stockholders' deficit | |
$ | 89,293 | | |
$ | 128,933 | |
See notes to condensed consolidated financial
statements.
SMARTMETRIC, INC. AND SUBSIDIARY
Condensed Consolidated Statements Of
Operations
(Unaudited)
| |
Three Months | | |
Three Months | |
| |
Ended | | |
Ended | |
| |
September | | |
September | |
| |
30, | | |
30, | |
| |
2015 | | |
2014 | |
| |
| | |
| |
Revenues | |
$ | - | | |
$ | - | |
| |
| | | |
| | |
Expenses: | |
| | | |
| | |
Officer's salary | |
| 47,500 | | |
$ | 47,500 | |
Other general and administrative | |
| 268,034 | | |
$ | 456,022 | |
Research and development | |
| 61,118 | | |
$ | 48,480 | |
| |
| | | |
| | |
Total operating expenses | |
| 376,652 | | |
| 552,002 | |
| |
| | | |
| | |
Loss from operations before income taxes | |
| (376,652 | ) | |
| (552,002 | ) |
| |
| | | |
| | |
Income taxes | |
| - | | |
| - | |
| |
| | | |
| | |
Net loss | |
$ | (376,652 | ) | |
$ | (552,002 | ) |
| |
| | | |
| | |
Net loss per share, basic and diluted | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
| |
| | | |
| | |
Weighted average number of common shares outstanding, basic and diluted | |
| 187,029,010 | | |
| 170,330,575 | |
See notes to condensed consolidated financial
statements.
SMARTMETRIC, INC. AND SUBSIDIARY
Condensed Consolidated Statements of
Cash Flows
(Unaudited)
| |
Three Months | | |
Three Months | |
| |
Ended | | |
Ended | |
| |
September | | |
September | |
| |
30, | | |
30, | |
| |
2015 | | |
2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |
| | | |
| | |
Net loss | |
$ | (376,652 | ) | |
$ | (552,002 | ) |
| |
| | | |
| | |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
Amortization | |
| - | | |
| 375 | |
Common stock and warrants issued and issuable for services | |
| 82,367 | | |
| 202,254 | |
| |
| | | |
| | |
Changes in assets and liabilities | |
| | | |
| | |
(Increase) decrease in prepaid expenses and other current assets | |
| 23,000 | | |
| (212,000 | ) |
(Increase) decrease in advances to shareholder | |
| (13,500 | ) | |
| 9,522 | |
Increase (decrease) in accounts payable and accrued expenses | |
| 46,380 | | |
| (1,817 | ) |
Increase (decrease) in deferred officer's salary | |
| 47,500 | | |
| 47,500 | |
| |
| | | |
| | |
Net cash used in operating activities | |
| (190,905 | ) | |
| (506,168 | ) |
| |
| | | |
| | |
CASH FLOWS FROM INVESTING ACTIVITIES | |
| - | | |
| - | |
| |
| | | |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES | |
| | | |
| | |
Loans from related parties | |
| - | | |
| 22,478 | |
Proceeds from sale of common stock | |
| 214,633 | | |
| 307,662 | |
Liability for stock to be issued | |
| (40,368 | ) | |
| 282,631 | |
| |
| | | |
| | |
Net cash provided by financing activities | |
| 174,265 | | |
| 612,771 | |
| |
| | | |
| | |
NET (DECREASE) INCREASE IN CASH | |
| (16,640 | ) | |
| 106,603 | |
| |
| | | |
| | |
CASH | |
| | | |
| | |
BEGINNING OF PERIOD | |
| 44,516 | | |
| 97,924 | |
| |
| | | |
| | |
END OF PERIOD | |
$ | 27,876 | | |
$ | 204,527 | |
| |
| | | |
| | |
CASH PAID DURING THE PERIOD FOR: | |
| | | |
| | |
Income taxes | |
$ | - | | |
$ | - | |
Interest | |
$ | - | | |
$ | - | |
See notes to condensed consolidated financial
statements.
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 three months ended September 30, 2015 are not necessarily indicative of the results
that may be expected for the year ending June 30, 2016. 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, 2015, as filed with the Securities
and Exchange Commission.
Going Concern
As shown in the accompanying condensed consolidated
financial statements the Company has sustained recurring losses of $376,652 and $552,002 for the three months ended September 30,
2015 and 2014 respectively, and has an accumulated deficit of $21,404,205 at September 30, 2015. The Company has spent
a substantial portion of its time and capital resources 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 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.
|
NOTE 2 - |
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES |
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.
SMARTMETRIC
INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
|
NOTE 2 - |
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED) |
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.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments
and other short-term investments with an initial maturity of three months or less to be cash equivalents. Any amounts
of cash in financial institutions over FDIC insured limits exposes the Company to cash concentration risk. The Company had no cash
equivalents at September 30, 2015 and 2014.
Fair Value of Financial Instruments
The carrying amounts reported in the condensed consolidated
balance sheet for cash, accounts payable, and accrued expenses approximate fair value because of the immediate or short-term maturity
of these financial instruments.
ASC 820 defines fair value, provides a consistent
framework for measuring fair value under generally accepted accounting principles and expands fair value financial statement disclosure
requirements. ASC 820’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily
obtainable data from independent sources, while unobservable inputs reflect our market assumptions. ASC 820 classifies these inputs
into the following hierarchy:
Level 1 inputs: Quoted prices for identical instruments
in active markets.
Level 2 inputs: Quoted prices for similar instruments
in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations
whose inputs are observable or whose significant value drivers are observable.
Level 3 inputs: Instruments with primarily unobservable
value drivers.
Research and Development
The Company annually incurs costs on activities that
relate to research and development of new technology and products. Research and development costs are expensed as incurred.
Revenue Recognition
The Company has not recognized revenues to date. The
Company anticipates recognizing revenue in accordance with the contracts it enters into for the sale and distribution of its products.
SMARTMETRIC INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
|
NOTE 2 - |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
Accounts Receivable
The Company will extend credit based on its evaluation
of the customers’ financial condition, generally without requiring collateral. Exposure to losses on receivables
is expected to vary by customer due to the financial condition of each customer. The Company will monitor exposure to
credit losses and maintains allowances for anticipated losses considered necessary under the circumstances. The Company
has not recorded any receivables, and therefore no allowance for doubtful accounts.
Uncertainty in Income Taxes
GAAP requires the recognition and measurement of
uncertain income tax positions using a “more-likely-than-not” approach. Management evaluates Company
tax positions on an annual basis and has determined that as of June 30, 2015 no accrual for uncertain income tax positions is necessary.
The Company files income tax returns in the United
States ("U.S.") federal jurisdiction. Generally, the Company is no longer subject to U.S. federal examinations
by tax authorities for fiscal years prior to 2011. The Company does not file in any other jurisdiction and remains open
for audit for all tax years as the statute of limitations does not begin until the returns are filed.
Advertising Costs
The Company will expense the cost associated with
advertising as incurred.
Equipment
Equipment is stated at cost. Depreciation
is computed using the straight-line method over the estimated economic useful lives of the assets ranging from 3 - 5 years.
Impairment of Long-Lived Assets
Long-lived assets are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. The Company
does not perform a periodic assessment of assets for impairment in the absence of such information or indicators. Conditions
that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant
change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying
amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, the Company recognizes
an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment
loss based on the difference between the carrying amount and estimated fair value.
Loss Per Share of Common Stock
Basic net loss per common share is computed using
the weighted average number of common shares outstanding. The calculation of diluted earnings per share ("EPS")
includes consideration of dilution arising from common stock equivalents, such as stock issuable pursuant to the exercise of stock
options and warrants. Common stock equivalents were not included in the computation of diluted earnings per share on
the consolidated statement of operations due to the fact that the Company reported a net loss and to do so would be anti-dilutive
for the periods presented.
Stock-Based Compensation
The Company measures expense for issuances of stock-based
compensation to employees and others at fair value of the stock and warrants issued, as this is more reliable than the fair value
of the services received complete. The fair value of the equity instrument is charged directly to compensation expense and additional
paid-in capital.
SMARTMETRIC INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
Reclassifications
Certain amounts in the prior period condensed consolidated
financial statements have been reclassified for comparative purposes to conform to the presentation in the current period condensed
consolidated financial statements. These reclassifications had no effect on previously reported results.
|
NOTE 3 - |
PREPAID EXPENSES |
Prepaid expenses represent the unexpired terms of
various consulting agreements and expire through January 2016, as well as advance rental payments. The Company issued
common stock and warrants as consideration for the consulting services, and were valued based on the stock price or computed warrant
value at the time of the respective agreements.
SMARTMETRIC INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
Patent License Agreement
Effective August 1, 2004, the Company executed a
license agreement with Applied Cryptography, Inc. (“ACI”), a corporation controlled by the Company’s president
and the owner of certain technology. Pursuant to the license agreement, the Company has the right to make use of this technology
for the purpose of developing software and systems to be used by the Company to provide any or all of the following: 1) secure
transactions over the Internet from home and office computers; 2) an automatic method for connecting to remote computers; 3) a
method of developing targeted advertising to home and/or office computers; and 4) identity verification and access control as provided
for in the patent. Pursuant to this license agreement, ACI is to receive 2% of all revenues generated by the Company on products
which utilize this patented technology. The license fee is to be paid within 45 days of the end of each quarter. In the event no
revenues are generated through the use of any of the licensed patents during a given quarter, no money shall be owed ACI for such
quarter. ACI has the right to rescind the license agreement and reclaim all rights and interest in the patents if certain events,
such as the Company’s filing for bankruptcy protection or reorganization, occur. The license agreement remains in effect
for the lives of the patents. The Company may utilize the technological applications anywhere in the world without limitation. Upon
execution of the Assignment and Assumption Agreement on December 11, 2009 (see Note 6), the Patent License Agreement was terminated.
During November 2012, the Company acquired license
rights to ACI's Medical Keyring Device technology in consideration of the Company's issuance to ACI of 200,000 shares of its Series
B Convertible Preferred Stock.
During September 2013, the Company acquired license
rights to ACI's BioCentric Cloud Device technology in consideration of the Company's issuance to ACI of 200,000 shares of its Series
B Convertible Preferred Stock. Effective November 5, 2014, the Company increased the number of preferred shares designated as Series
B, and accordingly, the shares were issued to ACI on November 10, 2014.
Lease Agreement
In February 2012, the company entered into a facilities
lease in Buenos Aires, Argentina for its manufacturing activities. The lease term is from March 1, 2012 through January 31, 2015.
The Company terminated this lease and vacated its Argentina facility in February, 2014. The Company also utilizes offices in Australia,
Israel and Las Vegas, Nevada. The Company’s main office is located in Las Vegas, Nevada. Rent expense under all leases for
the three months ended September 30, 2015 and 2014 was $7,179 and $7,222, respectively.
Related Party Transactions
The Company’s Chief Executive Officer has made
cash advances to the Company with an aggregate amount due of $460 and $13,960 at September 30, 2015 and June 30, 2015, respectively.
These advances bear interest at the rate of five percent (5%) per annum.
The Company has accrued the amounts of $315,015 and
$267,515 at September 30, 2015 and June 30, 2015, respectively, as deferred Officer’s salary, for the difference between
the Chief Executive Officer’s annual salary and the amounts paid.
On February 11, 2015, the Company entered into a
security agreement (the “Agreement”) with Chaya Hendrick, the Company’s chief executive officer (“Executive”),
pursuant to which the Company granted Executive a continuing security interest in all of the Company’s assets, which are
existing now or arise after the date of the Agreement, until such time that the Company repays all loans and accrued but unpaid
salary owed to Executive. As of the date of the Agreement, the Company had loans and accrued but unpaid salary owed to Executive
in the aggregate principal amount of $270,015.
SMARTMETRIC INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
|
NOTE 5 - |
STOCKHOLDERS’ EQUITY (DEFICIT) |
Preferred Stock
As of September 30, 2015, the Company has 5,000,000
shares of preferred stock, par value $0.001, authorized and 410,000 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 the preferred stock to be designated 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 1,000,000 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 all or any one (1) 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 (“liquidation”), 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.
On December 11, 2009, the Company entered into an
Assignment and Assumption Agreement with ACI (the “assignment and Assumption Agreement”). In accordance with the Assignment
and Assumption Agreement, ACI conveyed, assigned and transferred to the Company all of ACI’s rights, title and interest in
and to the Patent (see Note 5) and delegated to the Company all of its duties and obligations to be performed under the Patent;
and the Company hereby accepts the assignment of all of ACI’s rights, title and interest to the Patent and the rights and
delegation of duties and obligations and agrees to be bound by and to assume such duties and obligations.
In consideration for the assignment of the Patent,
the Company issued 200,000 shares of Series B Convertible Preferred Stock. ACI may only convert these shares into common shares
(in accordance with the conversion terms noted herein) upon delivering to the Company, a third party valuation of the assigned
Patent conducted by a nationally qualified accounting firm or IP law firm mutually agreed upon between the Company and ACI, indicating
that such Patent is valued at a minimum of $1,000,000.
On November 12, 2012, the Company issued 200,000
shares of its Series B Convertible Preferred Stock to ACI in consideration for ACI’s patent relating to the Medical Keyring
Device.
In July 2013, ACI elected to convert 190,000 shares
of Series B Convertible Preferred Stock, issued in 2012, into 9,500,000 shares of the Company’s common stock.
During September 2013, the Company acquired license
rights to ACI's BioCentric Cloud Device technology in consideration of the Company's issuance to ACI of 200,000 shares of its Series
B Convertible Preferred Stock. Effective November 5, 2014, the Company increased the number of preferred shares designated as Series
B, and accordingly, the shares were issued to ACI on November 10, 2014.
In accordance with Staff Accounting Bulletin (“SAB”)
topic 5G “Transfers of Non-monetary Assets by Promoters and Shareholders” the Company recorded these transactions at
ACI’s carrying basis of the Patents, which was $0.
SMARTMETRIC INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
|
NOTE 5 - |
STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED) |
Class A Common Stock
As of September 30, 2015, the Company has 50,000,000
shares of Class A common stock, par value $0.001, authorized and no shares issued and outstanding. In October 2003, the Company
issued 50,000,000 shares of Class A common stock at par value ($50,000). These shares were converted into 50,000,000 shares of
common stock in 2006.
Common Stock
The Company was incorporated on December 18, 2002,
with 45,000,000 shares of Common Stock, par value $0.001. The articles of incorporation were amended in 2006 to increase the number
of authorized shares to 100,000,000 shares, in 2009 to increase the number of authorized shares to 200,000,000, and in July 2015
to increase the number of authorized shares to 300,000,000.
As of September 30, 2015, the Company has 188,957,814
shares of common stock issued and outstanding.
SMARTMETRIC INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
|
NOTE 5 - |
STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED) |
During the three months ended
September 30, 2014, the Company sold for cash 4,893,731 shares and twenty-four month warrants to purchase: (i) 1,375,000 shares
at $0.70 per share, and (ii) 724,500 shares at $1.00 per share, for net proceeds of $307,662.
During the three months ended
December 31, 2014, the Company sold for cash 1,599,994 shares and twelve month warrants to purchase: (i) 1,187,500 shares at $0.70
per share, and (ii) 598,500 shares at $1.00 per share, for net proceeds of $95,750.
During the three months ended
March 31, 2015, the Company sold for cash 4,425,000 shares and twelve month warrants to purchase: (i) 2,375,000 shares at $0.70
per share, and (ii) 1,197,000 shares at $1.00 per share, for net proceeds of $189,557.
During the three months ended
March 31, 2015, the Company issued 296,250 shares for consulting services valued at $17,775, based on the stock price at the time
of the respective agreements underlying the services provided.
During the three months ended
June 30, 2015, the Company sold for cash 4,362,500 shares and twenty-four month warrants to purchase: (i) 2,668,750 shares at $0.70
per share, and (ii) 1,345,050 shares at $1.00 per share, for net proceeds of $212,934.
During the three months ended
June 30, 2015, the Company issued 1,415,062 shares for consulting services valued at $71,435, based on the stock price at the time
of the respective agreements underlying the services provided.
During the three months ended
September 30, 2015, the Company sold for cash 2,150,000 shares and warrants to purchase: (i) 2,687,500 shares at $0.70 per share,
and (ii) 1,354,500 shares at $1.00 per share, for net proceeds of $214,633. The warrants expire at various times through June 2016.
Warrants
From time to time the Company granted warrants in
connection with private placements of securities, as described herein.
In October 2009, the Company
executed a warrant agreement with an investor relations company for 5,000,000 warrants to be issued in two tranches. The first
tranche of 2,500,000 warrants (the “October warrants”) has been issued in October 2009, and the second tranche of 2,500,000
warrants has been issued on March 31, 2010 (the “March warrants”). The October warrants, which were set to expire
October 25, 2014(as extended) but have been further extended by the Company to expire on October 25, 2015, have strike prices as
follows: 1,000,000 at $0.10 per share; 1,000,000 at $0.15 per share; and 500,000 at $0.20 per share. The March warrants, which
were set to expire March 29, 2015 (as extended) but have been further extended by the Company to expire on March 29, 2016, have
strike prices as follows: 500,000 at $0.20 per share; 1,000,000 at $0.25 per share; and 1,000,000 at $0.30 per share.
In June 2011, the Company issued
warrants to purchase 1,000,000 shares of its common stock at an exercise price of $0.50 per share as partial consideration for
a consulting agreement. These warrants were set to expire on June 3, 2014 (as extended) but have were further extended
by the Company and expired on June 3, 2015.
In connection with the extension
of the above referenced warrants during the year ended June 30, 2014, which were partial consideration in connection with a new
consulting agreement, the Company assigned a value of $209,300 using the Black-Scholes option pricing model. The Company is recording
the charge to consulting expenses over the term of the new consulting agreement. During the year ended June 30, 2014, the Company
recorded $174,417 to consulting expenses, included as a component of other general and administrative expenses.
In July 2015, the Company issued
warrants to purchase 300,000 shares of its common stock at an exercise price of $0.01 per share, as partial consideration for a
consulting agreement. The Company valued the warrants using the Black-Scholes method with the following criteria: stock price of
$0.14; strike price of $0.01; volatility 150% and interest rate of 1.71%. The criteria yielded a warrant value of $0.14, resulting
in a value of $42,000 for the 300,000 warrants. The Company is recording the charge to consulting expense over the three-month
term of the consulting agreement. During the three months ended September 30, 2015, the Company recorded a charge of $35,000 to
consulting expense, which is included in other general and administrative expenses in the condensed consolidated statement of operations.
SMARTMETRIC INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
As of September 30, 2015 and
June 30, 2015, the following is a breakdown of the activity:
September 30, 2015: | |
| | |
| |
| | |
Outstanding - June 30, 2015 | |
| 29,475,626 | |
Issued | |
| 4,342,000 | |
Exercised | |
| - | |
Expired | |
| (1,175,367 | ) |
Outstanding - September 30, 2015 | |
| 32,642,259 | |
| |
| | |
June 30, 2015: | |
| | |
| |
| | |
Outstanding - June 30, 2014 | |
| 19,004,626 | |
Issued | |
| 11,471,300 | |
Exercised | |
| - | |
Expired | |
| (1,000,000 | ) |
| |
| | |
Outstanding - June 30, 2015 | |
| 29,475,626 | |
SMARTMETRIC INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
|
NOTE 5 - |
STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED) |
At September 30, 2015, all of the 32,642,259 warrants
are vested and 27,342,259 warrants expire at various times through June 30, 2016, 2.5 million warrants expired in October 2015,
2.5 million warrants expire on March 29, 2016, and 300,000 warrants expire on July 12, 2020.
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.
On July 27, 2010, the Company
filed a second amended complaint (the “Visa and MasterCard Complaint”) in the United States District Court, Central
District of California (the “Court”), Case No. 2:10-cv-01864, against MasterCard, Inc. and Visa, Inc. alleging patent
infringement on the Company’s patent, U.S. Patent 6,792,464 (the “ ‘ 464 Patent”) (the “Visa and
MasterCard Case”).
In October 2013, the Federal
District Court, Central District of California, held that the Defendants did not infringe on the ‘464 Patent.
VISA and MasterCard asked the
District Court to award them attorneys' fees and costs approximating $3 million. SmartMetric opposed this request, which SmartMetric
believed was without merit because SmartMetric filed its suit in good faith and had litigated the case in an objectively reasonable
manner.
On March 25, 2015, The Federal
District Court of the Southern District of California denied both Visa and Mastercard’s motion for fees and costs. A notice
of appeal has been lodged with the Court by Mastercard while Visa declined to lodge an appeal and the time for such an appeal by
Visa has now passed.
Item
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Cautionary Notice Regarding Forward-Looking Statements
In this quarterly report on
Form 10-Q (“Report”), references to “SmartMetric,” “SMME,” “the Company,” “we,”
“us,” and “our” refer to Smartmetric, Inc.
The following discussion should
be read in conjunction with our condensed consolidated financial statements and other financial information appearing elsewhere
in this quarterly report. In addition to historical information, the following discussion and other parts of this quarterly report
contain forward-looking statements. You can identify these statements by forward-looking words such as “plan,” “may,”
“will,” “expect,” “intend,” “anticipate,” believe,” “estimate”
and “continue” or similar words. Forward-looking statements include information concerning possible or assumed future
business success or financial results. You should read statements that contain these words carefully because they discuss future
expectations and plans, which contain projections of future results of operations or financial condition or state other forward-looking
information. We believe that it is important to communicate future expectations to investors. However, there may be events in the
future that we are not able to accurately predict or control. Accordingly, we do not undertake any obligation to update any forward-looking
statements for any reason, even if new information becomes available or other events occur in the future.
The forward-looking statements
included herein are based on current expectations that involve a number of risks and uncertainties set forth under “Risk
Factors” in our Annual Report on Form 10-K as of and for the year ended June 30, 2015 and other periodic reports filed
with the United States Securities and Exchange Commission (“SEC”). Accordingly, to the extent that this Report contains
forward-looking statements regarding the financial condition, operating results, business prospects or any other aspect of the
Company, please be advised that the Company’s actual financial condition, operating results and business performance may
differ materially from that projected or estimated by the Company in forward-looking statements. We do not undertake any responsibility
to publicly release any revisions to these forward-looking statements to take into account events or circumstances that occur after
the date of this Report, except as required by law. Additionally, we do not undertake any responsibility to update you on the occurrence
of any unanticipated events which may cause actual results to differ from those expressed or implied by any forward-looking statements.
Overview
Incorporated in 2002, SmartMetric
and its founder and CEO, C. Hendrick, have been engaged in research and development of a biometric security solution which would
authenticate the identity of a person in a self-contained credit card-sized device. SmartMetric’s Biometric Datacard
has been designed to use an on-board finger print sensor which is embedded in the card along with an integrated circuit chip which
will provide varying degrees of encrypted memory 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. To date, SmartMetric has
had no reportable sales revenues.
Recent Developments
There have been no recent developments.
Products
Biometric Fingerprint Activated
Payments and Identity Cards:
Prior plans called for the manufacturing
of the SmartMetric biometric cards after the Company built not only a special factory that meets security conditions of the card
companies but also that the Company configure specialized mass production machines that would allow for the specialized manufacturing
process required to laminate sub micro thin silicon components that are mounted on a circuit board in order to create SmartMetric
biometric credit and debit cards.
The Company has now developed
a pre-lamination encasing technique that provides protection of the card components against heat and pressure experienced during
the card plastic lamination process and as well protecting the card with a thin hardened impervious coating of its circuit board
in order to thwart reverse engineering by those who would seek to copy SmartMetric’s electronics and design.
With the newly developed “pre-lamination
encasing” the Company is now able to safely outsource mass plastic card manufacturing to contract card manufacturers. Thereby
saving SmartMetric significant capital and lead times in achieving high volume manufacturing.
The Company intends to market
its biometric payments card directly to banks as well as forging marketing relationships with banking card Industry companies.
MedicalKeyring:
In the last quarter of 2013
the Company released on a small release basis, its MedicalKeyring product. The release was via limited radio advertising in New
York with the focus on testing the market for the product and radio advertising directing interested consumers to the company website
for information and product purchasing. The Company received interest from the advertising with orders placed on its website. The
numbers of orders placed however were insignificant but did show that there was interest in the product. A small number of user
feedback of the product was obtained which in turn has confirmed the functional use and benefit of the product as a portable storage
device of a person’s medical files while protecting these files with the SmartMetric fingerprint biometric technology. Experience
was also gained in respect of the functionality of the products software that in turn has lead us to undertake further work on
developing and improving the products internal software and interface.
The Company has decided to focus
its engineering development resources on its Biometric payments card product at this point in time rather than spreading its development
resources across two new product releases. Following commercial release of the SmartMetric biometric fingerprint card the company
will move forward with the release of mark 2 MedicalKeyring.
Our ability to continue as a
going concern prior to the generation of sales is almost exclusively dependent upon our ability to raise capital, specifically
through sales of unregistered securities. The ability to raise capital through private placement sales is very unpredictable,
thus greatly influencing the Company’s ability to continue as a going concern.
Research & Development:
The Company’s ongoing
research and development is undertaken by engineering contractors working for SmartMetric in the United States, Israel and Argentina.
Research & Development is
broken up into two areas of engineering. The first is hardware engineering which involves system design, component sourcing and
development as well as assembly and mass production card lamination processes. Second, the company has a research and development
focus on embedded and operational software systems for its biometric products.
The company will have an ongoing
Research & Development effort even after the release of its first biometric card product with the aim of bringing further card
and new biometric products to market based on the company’s expertise in miniature sub micro-electronics.
Sales & Marketing:
SmartMetric anticipates selling
its biometric card to banks as a state of the art protection against identity theft and financial fraud for $50.00 a card.
The company plans to have the card released to the public through banks and financial institutions as a special anti-fraud and
anti-identity theft premium card that is offered to their banking customers. Discussions are being held concerning the offering
by banks directly to their banking customers, the SmartMetric biometric protected card as a premium credit/debit card with a monthly
premium card fee to the consumer set by the banks between $4.95 to $9.95 per month.
The SmartMetric cards made
for use in the financial services industry are EMV chip cards that have the chip in an off state that is turned on after the card
user touches the fingerprint reader sensor. The cards are designed to be fully operative with existing point of sale machines and
ATM’s that take EMV chip cards.
There has been in excess of
1.6 billion EMV chip cards already issued globally. The first phase of marketing and sales by SmartMetric will be concentrated
on regions around the World that already have significant EMV credit and debit card adoption.
The Company is developing a
fingerprint activated identity verification and verified entry card based on the Company’s development of its banking EMV
chip card. The Company foresees a great deal of opportunity in the security and identity validation industries from both Government
and Business customers.
SmartMetric does not believe
its business is seasonal.
Results of Operations
Comparison of the Three
Months Ended September 30, 2015 and 2014
Revenue and Net Loss
For the three months ended September
30, 2015, there was no revenue and a net loss of $376,652. For the three months ended September 30, 2014,
there was no revenue and a net loss of $552,002. This decreased loss of $175,350 or 31.8%
resulted primarily from lower general and administrative expenses.
General
and Administrative Expenses
General and administrative expenses
for the three months ended September 30, 2015 were $268,034, a decrease of $187,988 or 41.2% compared
to $456,022 for the comparable period in 2014. This decrease was primarily attributed to lower consulting expenses and legal and
professional fees.
Research and Development
Expenses
Research and development expenses
for the three months ended September 30, 2015 were $61,118 an increase of $12,638 or 26.1% compared to $48,480 for the comparable
period in 2014. This increase was primarily attributable to higher engineering expenses.
Income Tax Expense
Income tax expense for the nine months ended September
30, 2015 was $0, unchanged from the comparable period in 2014.
Liquidity and Capital Resources
The Company is a development
stage company and has spent a majority of resources and time in developing its technology. There is no guarantee that
the Company can continue to raise enough capital or generate revenues to sustain its operations. These conditions raise
a substantial doubt about the Company’s ability to continue as a going concern. Management believes that the Company’s
capital requirements will depend on a number of factors including the final phase of product development and the development of
its production process 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 amount and classification of recorded
liabilities that may be required should the Company be unable to continue as a going concern.
At September 30, 2015, the Company
had an accumulated deficit of $21,404,205 and it is likely that the Company will incur additional losses in the future.
While we have funded our operations since inception from operations and through private placements of equity securities, there
can be no assurance that adequate financing will continue to be available to us and, if available, on terms that are favorable
to us.
We believe that we will require additional financing
to carry out our intended objectives during the next twelve months. There can be no assurance, however, that such financing will
be available or, if it is available, that we will be able to structure such financing on terms acceptable to us and that it will
be sufficient to fund our cash requirements until we can reach a level of profitable operations and positive cash flows. If we
are unable to obtain the financing necessary to support our operations, we may be unable to continue as a going concern.
A downturn in the United States stock and debt markets
could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise
the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed
to us, or experience unexpected cash requirements that would force us to seek alternative financing. Further, if we issue additional
equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences
or privileges senior to those of existing holders of our shares of common stock or the debt securities may cause us to be subject
to restrictive covenants. There is a risk of dilution whenever the Company sells securities to raise capital. If additional financing
is not available or is not available on acceptable terms, we will have to curtail our operations.
Cash
Our cash balance was $27,876
at September 30, 2015 compared with $44,516 at June 30, 2015. The decrease was primarily attributable to higher than usual general
and administrative costs during the first fiscal quarter.
Net cash used in operating
activities
Net cash used in operating
activities was $190,905 for the three months ended September 30, 2015, a decrease of $315,263, or 62.3%
from the comparable period in 2014. The Company is largely dependent on the capital it raises to fund operations. When
capital is raised the development process is accelerated, and when cash flows are decreased the Company conserves its cash by delaying
development and other operating costs.
Net cash used in investing
activities
Net cash used in investing activities
was $0 for the nine months ended September 30, 2015, unchanged from the comparable period in 2014.
Net cash provided
by financing activities
Net cash provided by financing
activities was $174,265 for the three months ended September 30, 2015, a decrease of $438,506 or 71.6%
from the comparable period in 2014. This decrease was based on lower sales and issuances of equity shares in the period.
Contractual Obligations and
Off-Balance Sheet Arrangements.
There were no off-balance sheet
arrangements at September 30, 2015 and June 30, 2015.
In connection with an Assignment
and Assumption Agreement with Applied Cryptography, Inc. (“ACI”), a corporation controlled by the Company’s president
and the owner of certain technology, ACI conveyed, assigned and transferred to the Company all of ACI's rights, title and interest
in and to its patents (collectively, the “Patent”) and delegated to the Company all of its duties and obligations to
be performed under the Patent.
In consideration for the assignment
of the Patent, the Company issued 200,000 shares of Series B Convertible Preferred Stock. ACI may only convert these shares into
common shares (in accordance with the conversion terms noted herein) upon delivering to the Company, a third party valuation of
the assigned Patent conducted by a nationally qualified accounting firm or IP law firm mutually agreed upon between the Company
and ACI, indicating that such Patent is valued at a minimum of $1,000,000.
Critical accounting policies and estimates
The condensed consolidated financial
statements are prepared in accordance with accounting principles generally accepted in the United States, which require us 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 periods. Management
makes these estimates using the best information available at the time the estimates are made; however actual results could differ
materially from those estimates.
Intangible assets
SmartMetric issued 200,000 of its Series B Convertible
Preferred Stock to ACI during the period in exchange for the Medical Keyring Device. The Company acquired license rights to ACI's
BioCentric Cloud Device technology in consideration of the Company's issuance of 200,000 shares of its Series B Convertible Preferred
Stock.
|
Item 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Our exposure to market risk
for changes in interest rates relates primarily to our short-term investments; thus, fluctuations in interest rates would not have
a material impact on the fair value of these investments. At September 30, 2015, we had $27,876 in cash. A
hypothetical 5% increase or decrease in either short term or long term interest rates would not have a material impact on our earnings
or loss, or the fair market value or cash flows of these instruments.
|
Item 4. |
CONTROLS AND PROCEDURES |
Evaluation of Disclosure 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,
as amended (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 Chief Executive Officer and Chief 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.
We carried out an evaluation,
under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness
of the design and operation of our disclosure controls and procedures. Based on this evaluation, as of September 30, 2015, our
Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective in
ensuring that information required to be disclosed by us in our periodic reports is recorded, processed, summarized and reported,
within the time periods specified for each report and that such information is accumulated and communicated to our management,
including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
In order to correct the foregoing
deficiencies, we plan to take the following remediation measures:
1)
We have committed to the establishment of effective internal audit functions, however, due to the limited resources of the Company
and the limited operations, we plan to defer the establishment of an effective internal audit function until our product is ready
for production and sale.
2)
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, we will implement procedures to ensure that the initiation of transactions, the custody of assets and
the recording of transactions will be performed by capable individuals.
We believe that the foregoing steps will remediate
the deficiencies identified above, and we will continue to monitor the effectiveness of these steps and make any changes that our
management deems appropriate. However, as of September 30, 2015, these steps have not been completed.
A material weakness (within the
meaning of PCAOB auditing standard No. 5) is a deficiency, or a combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements
will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies,
in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention
by those responsible for oversight of the company’s financial reporting.
Our management is aware of the
material weaknesses in our internal control over financial reporting, and has acknowledged the increased possibility of errors
existing in our financial statements as of September 30, 2015. The reportable conditions and other areas of internal
control over financial reporting identified by us as needing improvement have cause an increased possibility of a material misstatement
of our financial statements, however we are not aware of any instance where such reportable conditions or other identified areas
of weakness have resulted in a material misstatement or omission in any report we have filed with or submitted to the Commission. Accordingly,
while we believe that our financial controls were ineffective, we do not believe there to be any material misstatements in our
financial statements at September 30, 2015.
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 effective at that reasonable assurance level.
Changes in Internal Controls
During the three months ended
September 30, 2015, 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.
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. Except as described below, 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.
SmartMetric filed on December 23, 2013
in the Federal Circuit Court a brief in its patent infringement litigation suit brought by SmartMetric against both Visa Inc. and
MasterCard International. SmartMetric’s patent (“464”) infringement litigation ultimately failed with the Court
saying to paraphrase, that since Visa and MasterCard to not exercise control over the issuance of offending cards they can not
be held liable for said infringement.
VISA and MasterCard asked the District
Court to award them attorneys' fees and costs approximating jointly $3 million. SmartMetric opposed this motion, which SmartMetric
argued was without merit because SmartMetric filed its suit in good faith, and had litigated the case in an objectively reasonable
manner.
On March 25, 2015, The Federal District
Court of the Southern District of California denied both Visa and MasterCard’s motion for fees and costs. A notice of appeal
has been lodged with the Court by MasterCard while Visa declined to lodge an appeal and the time for such an appeal by Visa has
now passed.
The “464” Patent was not found
to be invalid and survived motions of invalidation. It also survived two marksman hearings during the course of litigation however
the enforcement of the Patent according to the rulings of the Court need of essence to be brought against those infringing the
patent that are also issuing the cards or exercise control over such infringing card issuance. The SmartMetric issued “464”
Patent still stands as a valid patent owned by SmartMetric.
Not Applicable
| Item 2. | UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
The following summarizes the
securities that we sold during the three months ended September 30, 2015 without registering the securities under the Securities
Act:
During the three months ended
September 30, 2015, the Company sold for cash 2,150,000 shares and warrants to purchase: (i) 2,687,500 shares at $0.70 per share,
and (ii) 1,354,500 shares at $1.00 per share, for net proceeds of $214,633.
Unless otherwise noted in this section,
with respect to the sale of unregistered securities referenced above, all transactions were exempt from registration pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the "1933 Act"), and Regulation S promulgated under the 1933
Act. In each instance, the purchaser had access to sufficient information regarding SmartMetric so as to make an informed investment
decision. More specifically, we had a reasonable basis to believe that each purchaser was an "accredited investor" and
otherwise had the requisite sophistication to make an investment in SmartMetric's securities.
|
Item 3. |
DEFAULTS UPON SENIOR SECURITIES |
None.
|
Item 4. |
MINE SAFETY DISCLOSURES |
N/A.
|
Item 5. |
OTHER INFORMATION |
There were no matters required
to be disclosed on Form 8-K during the three months ended September 30, 2015 which were not disclosed on such form.
The following exhibits are attached
to this Form 10-Q and made a part hereof.
Exhibit No. |
|
Description |
|
|
|
31.1 |
|
Certification of SmartMetric’s Chief Executive Officer pursuant to Rule13a- 14(a) of the Securities Exchange Act of 1934, as amended |
|
|
|
31.2 |
|
Certificate of SmartMetric’s Chief Financial Officer pursuant to Rule13a- 14(a) of the Securities Exchange Act of 1934, as amended |
|
|
|
32.1 |
|
Certification of SmartMetric’s Chief Executive Officer required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended and Section 1350 of Chapter 63 of Title 18 the United States Code (18 U.S.C. 1350) |
|
|
|
32.2 |
|
Certification of SmartMetric’s Chief Financial Officer required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended and Section 1350 of Chapter 63 of Title 18 the United States Code (18 U.S.C. 1350) |
|
|
|
|
|
|
EX-101.INS |
|
XBRL Instance Document |
|
|
|
EX-101.SCH |
|
XBRL Taxonomy Extension Schema Document |
|
|
|
EX-101.CAL |
|
XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
EX-101.DEF |
|
XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
EX-101.LAB |
|
XBRL Taxonomy Extension Labels Linkbase Document |
|
|
|
EX-101.PRE |
|
XBRL Taxonomy Extension Presentation Linkbase Document |
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: November 16, 2015 |
By: |
/s/ C. Hendrick |
|
|
C. Hendrick, President, Chief Executive Officer and Chairman (Principal Executive Officer) |
Dated: November 16, 2015 |
By: |
/s/ Jay Needelman |
|
|
Jay Needelman, Chief Financial Officer (Principal Financial Officer) |
EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE
OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, C. Hendrick, certify that:
1. I have reviewed
this quarterly report on Form 10-Q of Smartmetric, Inc.;
2. Based on my knowledge,
this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge,
the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s
other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; |
|
d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
5. The registrant’s
other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or persons performing the equivalent function):
|
a) |
all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and |
|
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
Dated: November 16, 2015 |
By: |
/s/ C. Hendrick |
|
|
|
C. Hendrick |
|
|
|
Chief Executive Officer |
|
|
|
(principal executive officer) |
|
EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL
AND ACCOUNTING OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Jay Needelman, certify that:
1. I have reviewed this quarterly
report on Form 10-Q of Smartmetric, Inc.;
2. Based on my knowledge,
this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge,
the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s
other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; |
|
d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
5. The registrant’s
other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the
audit committee of registrant’s board of directors (or persons performing the equivalent function):
|
a) |
all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and |
|
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting . |
Dated: November 16, 2015 |
By: |
/s/ Jay Needelman |
|
|
|
Jay Needelman |
|
|
|
Chief Financial Officer (principal financial and accounting officer) |
|
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION
1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY
ACT OF 2002
In connection with the Quarterly Report
of Smartmetric, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2015, as filed with the Securities
and Exchange Commission on the date hereof (the “Report”), I, C Hendrick, Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C. section 1350 of the Sarbanes-Oxley Act of 2002, that:
|
(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
|
|
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
A signed original of this written statement
required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and
Exchange Commission or its staff upon request.
Dated: November 16, 2015 |
By: |
/s/ C. Hendrick |
|
|
|
C. Hendrick |
|
|
|
Chief Executive Officer (Principal Executive Officer) |
|
EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION
1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY
ACT OF 2002
In connection with the Quarterly Report
of Smartmetric, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2015, as filed with the Securities
and Exchange Commission on the date hereof (the “Report”), I, Jay Needelman, Chief Financial Officer of the Company,
certify, pursuant to 18 U.S.C. section 1350 of the Sarbanes-Oxley Act of 2002, that:
|
(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
|
|
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
A signed original of this written statement
required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and
Exchange Commission or its staff upon request.
Dated: November 16, 2015 |
By: |
/s/ Jay Needelman |
|
|
|
Jay Needelman |
|
|
|
Chief Financial Officer (Principal Financial and Accounting Officer) |
|
SmartMetric (PK) (USOTC:SMME)
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부터 6월(6) 2024 으로 7월(7) 2024
SmartMetric (PK) (USOTC:SMME)
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부터 7월(7) 2023 으로 7월(7) 2024