Veridicom International Inc · 424B3 · On 7/19/05

Filed On 7/19/05 5:24pm ET   ·   SEC File 333-124367   ·   Accession Number 1144204-5-22007

Prospectus   ·   Rule 424(b)(3)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B3       Prospectus                                            83    433K 

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                                                Filed pursuant to Rule 424(b)(3)
              under the Securities Act of 1933, as amended (File No. 333-124367)

Prospectus                                                                      

 VERIDICOM INTERNATIONAL, INC.
28,431,496 SHARES OF
COMMON STOCK

      This prospectus relates to the resale by the selling stockholders of up to
28,431,496 shares of our common stock, including up to 8,031,496 shares of      
common stock underlying secured convertible notes in a principal amount of      
$5,100,000 and up to 20,400,000 issuable upon the exercise of common stock      
purchase warrants. The secured convertible notes are convertible into our common
stock at $1.27. The selling stockholders may sell common stock from time to time
in the principal market on which the stock is traded at the prevailing market   
price or in negotiated transactions. The selling stockholders may be deemed     
underwriters of the shares of common stock, which they are offering. We will pay
the expenses of registering these shares.                                       

Our common stock is registered under Section 12(g) of the Securities
Exchange Act of 1934 and is listed on the Over-The-Counter Bulletin Board under 
the symbol "VRDI.ob". The last reported sales price per share of our common     
stock as reported by the Over-The-Counter Bulletin Board on June 21, 2005, was  
$1.40.                                                                          

Investing in these securities involves significant risks. See "Risk 
Factors" beginning on page 8.                                                   

   Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a     
criminal offense.                                                               

 The date of this prospectus is July 18, 2005.

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PROSPECTUS SUMMARY

   The following summary highlights selected information contained in this
prospectus. This summary does not contain all the information you should        
consider before investing in the securities. Before making an investment        
decision, you should read the entire prospectus carefully, including the "risk  
factors" section, the financial statements and the notes to the financial       
statements.                                                                     

 VERIDICOM INTERNATIONAL, INC.

    We have five subsidiaries: (i) Esstec, Inc., (ii) Essential Tec Pakistan
(Private) Limited, (iii) Veridicom Inc., (iv) Cavio Corporation and (v)         
Veridicom International (Canada) Inc.                                           

      Esstec, Inc. is a professional services company that focuses on e-commerce
initiatives, interactive multimedia, and mobile software applications for       
clients in various industries, including the telecommunications and             
entertainment industries.                                                       

      Pakistan Ltd. was incorporated on April 19, 2000 to establish the business
of software development for the international markets and to export software and
technology. Esstec, Inc. owns approximately 63.4% of Pakistan Ltd.              

   Veridicom Inc. designs, manufactures and delivers hardware and software
products that enable strong authentication solutions based on fingerprint       
biometrics. Veridicom Inc. markets a complete fingerprint biometrics platform on
which applications can be built.                                                

      Cavio Corporation produces technology tools designed to protect users from
fraud, misrepresentation, security and privacy issues by allowing users to      
biometrically authenticate themselves to secure control access and confirm      
identity across a number of industries.                                         

Veridicom International (Canada) Inc. was formed to be our Canadian 
operating company.                                                              

      For the year ended December 31, 2004, we generated $384,853 in revenue and
a net loss of $3,720,261. As a result of recurring losses from operations and a 
net deficit in working capital, our auditors, in their report dated February 11,
2005, have expressed substantial doubt about out ability to continue as a going 
concern.                                                                        

 Our executive offices are located at 3800-999 3rd Avenue, Seattle, WA
98014, and our telephone number is (206) 224-6206. We are a Delaware            
corporation.                                                                    

The Offering                                                                    

Common stock offered by                                                         
selling stockholders   ...................... Up to 28,431,496 shares, including
                          the following:

                                        -  up to 8,031,496 shares of
                                                 common stock underlying secured
                                          convertible notes in the
                                                principal amount of $5,100,000
                                                 (includes a good faith estimate
                                              of the shares underlying the
                                              callable secured convertible
                                             notes to account for market
                                               fluctuations antidilution and
                                               price protection adjustments,
                                    respectively), and

                                         -  up to 20,400,000 shares of
                                                common stock issuable upon the
                                          exercise of common stock
                                                 purchase warrants at an average
                                             exercise price of $4.00 per
                                              share (includes a good faith
                                        estimate of the shares
                                                underlying warrants to account
                                                for antidilution adjustments).

                                                This number represents 179.47%
                                            of our current outstanding
                        stock.

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Common stock to be outstanding                                                  
after the offering..........................  Up to 44,273,603 shares.          

Use of  proceeds............................  We  will  not  receive  any       
                                         proceeds from the sale of the
                                          common stock. However, we will
                                         receive the sale price of any
                                       common stock we sell to the
                                             selling stockholder upon exercise
                                             of the warrants. We expect to use
                                          the proceeds received from the
                                             exercise of the warrants, if any,
                                       for general working capital
                     purposes.

Over-The-Counter Bulletin Board Symbol.....   VRDI                              

    The above information regarding common stock to be outstanding after the
offering is based on 15,842,107 shares of common stock outstanding as of June   
21, 2005 and assumes the subsequent conversion of our issued secured convertible
notes and exercise of warrants by our selling stockholders.                     

      To obtain funding for the purpose of payment of legal settlements, general
corporate and operating purposes, including product development and             
enhancements, sales and marketing efforts and payment of consulting and legal   
fees, we entered into a Securities Purchase Agreement with New Millennium       
Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd., AJW  
Partners, LLC, Alpha Capital, Enable Growth Partners L.P., Whalehaven Capital   
Fund Limited Meadowbrook Opportunity Fund LLC and TCMP3 Partners on February 25,
2005 for the sale of (i) $5,100,000 in callable secured convertible notes and   
(ii) stock purchase warrants to buy an aggregate of 10,200,000 shares of our    
common stock. This prospectus relates to the resale of the common stock         
underlying these callable secured convertible notes and warrants.               

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On February 25, 2005, the investors purchased $1,700,000 in callable
secured convertible notes and received warrants to purchase an aggregate of     
3,400,000 shares of our common stock. Between April 29, 2005 and May 9, 2005,   
the investors purchased an additional $1,700,000 in callable secured convertible
notes and received warrants to purchase an aggregate of 3,400,000 shares of our 
common stock.                                                                   

      The investors are obligated to provide us with an additional $1,700,000 to
be funded within five business days of the effectiveness of this registration   
statement, so long as our common stock is listed on the American Stock Exchange.

     The callable secured convertible notes bear interest at 10%, mature three
years from the date of issuance, and the principal is convertible into our      
common stock, at the investors' option, at $1.27. Based on this conversion      
price, the $5,100,000 callable secured convertible notes, excluding interest,   
are convertible into 4,015,748 shares of our common stock. Interest on the      
callable secured convertible notes can be paid, at our option, in cash or common
stock based upon the conversion price. If an event of default occurs and is     
continuing, the conversion price of the callable secured convertible notes will 
be equal to the lesser of (i) $0.91 or (ii) 50.0% of the daily volume weighted  
average price of our common stock for the 5 days prior to the date a conversion 
notice is sent to us.                                                           

     We may prepay the callable secured convertible notes in the event that no
event of default exists, and there are a sufficient number of shares available  
for conversion of the callable secured convertible notes. The full principal    
amount of the callable secured convertible notes is due upon default under the  
terms of callable secured convertible notes. In addition, we have granted the   
investors a security interest in substantially all of our assets and            
intellectual property as well as registration rights.                           

    The warrants are exercisable until five years from the date of issuance.
Half of the warrants are designated as Series A Warrants and have an exercise   
price of $3.00 per share and the other half are designated as Series B Warrants 
and have an exercise price of $5.00 per share. In addition, the exercise price  
of the warrants is adjusted in the event we issue common stock at a price below 
market.                                                                         

The investors have contractually agreed to restrict their ability to
convert the callable secured convertible notes and exercise the warrants and    
receive shares of our common stock such that the number of shares of our common 
stock held by them and their affiliates after such conversion or exercise does  
not exceed 4.99% of our then issued and outstanding shares of our common stock. 

In addition to the foregoing issuances, for services provided in    
connection with the foregoing financing transaction we issued warrants to       
purchase an aggregate 207,087 shares of our common stock to certain selling     
stockholders. An aggregate of 100,000 of such warrants have an exercise price of
$3.50 per share and the remaining 107,087 warrants have an exercise price of    
$1.27 per share.                                                                

     See the "Selling Stockholders" and "Risk Factors" sections for a complete
description of the callable secured convertible notes.                          

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RISK FACTORS

   This investment has a high degree of risk. Before you invest you should
carefully consider the risks and uncertainties described below and the other    
information in this prospectus. If any of the following risks actually occur,   
our business, operating results and financial condition could be harmed and the 
value of our stock could go down. This means you could lose all or a part of    
your investment.                                                                

Risks Related to Our Financial Results

Our stock price is volatile and could decline in the future.                    

The price of our common stock has been volatile in the past and will
likely continue to fluctuate in the future. The stock market in general and the 
market for shares of technology stocks in particular has experienced extreme    
stock price fluctuations. In some cases, these fluctuations have been unrelated 
to the operating performance of the affected companies. Many companies in the   
technology and related industries, including us, have experienced dramatic      
volatility in the market prices of their common stock.                          

We have an accumulated deficit, are not currently profitable and expect to incur
significant expenses in the future as we implement our new business model, which
may reduce our profitability.                                                   

    We have incurred a cumulative net loss since inception and are currently
experiencing negative cash flow. We expect to continue to experience negative   
cash flow and operating losses for the foreseeable future as we continue to make
significant expenditures for acquisitions, sales and marketing, international   
expansion, infrastructure development and general and administrative functions, 
in light of our new business model. As a result, we will need to generate       
significant revenues to achieve profitability. If our revenues grow more slowly 
than we anticipate, or if our operating expenses exceed expectations, we may    
experience reduced profitability.                                               

Our auditors have indicated uncertainty concerning our ability to continue      
operations as a going concern.                                                  

      Our auditors have indicated uncertainty concerning our ability to continue
as a going concern as of the most recent audited financial statements. We cannot
assure you that our ability to obtain additional customers or financing sources 
will be impaired as a result of this qualification. Additionally, we cannot     
assure you that our proposed projects and services, if fully developed, can be  
successfully marketed or that we will ever achieve significant revenues or      
profitable margins and therefore remain a going concern.                        

We will be required to raise additional capital to fund our operations.         

We completed two of three rounds of a private placement to raise an 
aggregate of $5,100,000. The first of three equal installments of $1,700,000 was
received in February, 2005, the second installment was received between April,  
2005 and May, 2005 and the final closing of $1,700,000 is contingent upon       
triggering events set forth in the Securities Purchase Agreement. If we cannot  
complete the third installment of this placement and cannot raise needed funds  
on acceptable terms, we will not be able to develop or enhance our products,    
take advantage of future opportunities or respond to competitive pressures or   
unanticipated requirements. To the extent we raise additional capital by issuing
equity securities, our stockholders may experience substantial dilution. Also,  
any new equity securities may have greater rights, preferences or privileges    
than our existing common stock. A material shortage of capital will require us  
to take drastic steps such as reducing our level of operations, disposing of    
selected assets or seeking an acquisition partner. If cash is insufficient, we  
will not be able to continue operations.                                        

We will be required to amend our previous periodic reports filed with the       
Securities and Exchange Commission.                                             

    We have failed to timely respond to comments generated by the Securities
and Exchange Commission on several of our previously filed periodic reports. In 
addition, our previous auditors resigned largely as a result of periodic reports
being filed prior to their review. Although we are currently working with our   
new auditors to address these concerns, we will be required to amend certain    
previously filed periodic reports and there can be no assurance that we will not
be required to restate previously filed financial statements, or be subject to  
regulatory action by the Securities and Exchange Commission. Any of these       
actions would have a material adverse effect on us and the price of our common  
stock.                                                                          

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If we fail to maintain effective internal controls over financial reporting, the
price of our Common Stock may be adversely affected.                            

  Our internal controls over financial reporting may have weaknesses and
conditions that need to be addressed, the disclosure of which may have an       
adverse impact on the price of our common stock. We are required to establish   
and maintain appropriate internal controls over financial reporting. Failure to 
establish those controls, or any failure of those controls once established,    
could adversely impact our public disclosures regarding our business, financial 
condition or operating results. In addition, management's assessment of our     
internal controls over financial reporting may identify weaknesses and          
conditions that need to be addressed in our internal controls over financial    
reporting or other matters that may raise concerns for investors. Any actual or 
perceived weaknesses and conditions that need to be addressed in our internal   
controls over financial reporting, disclosure of management's assessment of our 
internal controls over financial reporting or disclosure of our public          
accounting firm's attestation to or report on management's assessment of our    
internal controls over financial reporting may have an adverse impact on the    
price of our common stock.                                                      

 Risks Related To Our Business

We face intense competition from other biometric security solution providers as 
well as identification and security systems providers.                          

    A significant number of established and startup companies have developed
or are developing hardware for fingerprint biometric security applications that 
currently compete or will compete directly with those products designed,        
developed and sold by us. Other companies have developed or are developing and  
marketing biometric security applications for the recognition of fingerprints   
that currently compete or will compete with those products designed, developed  
and sold by us. Some of these companies have developed or are developing and    
marketing semiconductor or optically based direct contact fingerprint image     
capture devices. Other companies have developed or are developing and marketing 
other methods of biometric identification such as retinal blood vessel or iris  
pattern, facial structure, or voice recognition.                                

      If one or more of these technologies or approaches were widely adopted, it
would significantly reduce the potential market for our products. Our products  
also compete with non-biometric technologies such as certificate authorities and
traditional keys, cards, surveillance systems and passwords. Many competitors   
offering products that are competitive with our products and services have      
significantly more cash and resources than us. The biometric security market is 
a rapidly evolving and intensely competitive market, and we believe that        
additional competitors may enter the market and become significant long-term    
competitors.                                                                    

   We expect competition to increase and intensify in the near term in the
biometrics markets. Companies competing with us may introduce products that are 
competitively priced, have increased performance or functionality or incorporate
technological advances not yet developed or implemented by us.                  

Some present and potential competitors have financial, marketing, research, and 
manufacturing resources substantially greater than we have.                     

    In order to compete effectively in this environment, we must continually
develop and market new and enhanced products at competitive prices and must have
the resources available to invest in significant research and development       
activities. The failure to do so could have a material adverse effect on its    
business operations, financial results and stock price.                         

We will need to raise additional equity or debt financing in the future.        

    We will need to raise financing in the future to fund our operations. If
successful in raising additional financing, we may not be able to do so on terms
that are not excessively dilutive to our existing stockholders or less costly   
than existing sources of financing. Failure to secure additional financing in a 
timely manner and on favorable terms if and when needed in the future could have
a material adverse effect on our financial performance, balance sheet and stock 
price and require us to implement cost reduction initiatives and curtail        
operations.                                                                     

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Our business will not grow unless the market for our security solutions expands 
both domestically and internationally.                                          

A large portion of our revenues is derived from the sale of security
products and services. We cannot accurately predict the future growth rate, if  
any, or the ultimate size of the biometric technology market. The expansion of  
the market for our products and services depends on a number of factors,        
including:                                                                      

    o     the cost, performance and reliability of its products and services
and the products and services of our competitors;       

o     customers' perception of the benefit of biometric security    
solutions;                                              

    o     public perceptions of the intrusiveness of these solutions and the
            manner in which firms are using the biometric information collected;

o     public perceptions regarding the confidentiality of private   
information;                                            

o     customers' satisfaction with our products and services; and   

o     marketing efforts and publicity regarding these products and  
services.                                               

      Certain groups have publicly objected to the use of biometric products for
some applications on civil liberties grounds and legislation has been proposed  
to regulate the use of biometric security products. From time to time,          
fingerprint recognition and other biometrics technologies have been the focus of
organizations and individuals seeking to curtail or eliminate the use of these  
technologies on the grounds that these technologies may be used to diminish     
personal privacy rights. In the event that such initiatives result in           
restrictive legislation, the market for fingerprint recognition products may be 
adversely affected. Even if biometric markets develop as we hope, our products  
and services may not gain wide market acceptance. Even if biometric security    
solutions gain wide market acceptance, our products and services may not        
adequately address the market requirements.                                     

The biometrics industry is characterized by rapid technological change and      
evolving industry standards, which could render our existing products obsolete. 

      Our future success will depend upon our ability to develop and introduce a
variety of new products and services and enhancements to these new products and 
services in order to address the changing and sophisticated needs of the        
marketplace. Frequently, technical development programs in the biometrics       
industry require assessments to be made of the future directions of technology  
and technology market generally, which are inherently difficult to predict.     

Delays in introducing new products, services and enhancements, the failure to   
choose correctly among technical alternatives or the failure to offer innovative
products and services at competitive prices may cause customers to forego       
purchases of our products and services and purchase those of our competitors.   

     The development of new or enhanced products and services is a complex and
uncertain process that requires the accurate anticipation of technological and  
market trends. We may experience development, marketing and other technological 
difficulties that may delay or limit our ability to respond to technological    
changes, evolving industry standards, competitive developments or customer      
requirements. You should also be aware that:                                    

o     Our technology may become obsolete upon the introduction of   
alternative technologies;                               

      o     We may incur substantial costs if we need to modify our products and
services to respond to these alternative technologies;  

o     We may not have sufficient resources to develop or acquire new
        technologies or to introduce new products or services capable of
competing with future technologies;                     

o     We may be unable to acquire the rights to use the intellectual
property necessary to implement new technology; and     

  o     When introducing new or enhanced products or services, we may be
           unable to effectively manage the transition from older products and
services.                                               

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   Continued participation by us in the market for biometric products that
are linked to forensic quality databases under the jurisdiction of governmental 
agencies may require the investment of resources in upgrading our products and  
technology in order for us to compete and to meet regulatory and statutory      
standards. We may not have adequate resources available to us or may not        
adequately keep pace with appropriate requirements in order to effectively      
compete in the marketplace.                                                     

Defects in our products and services could diminish demand for our products and 
services, which may harm our business.                                          

     Because our products and services are complex, they may contain errors or
defects that are not found until after they are used by our customers. Errors or
defects that subsequently arise could seriously harm our reputation and its     
ability to generate sales to new or existing customers.                         

Our products and services are used in systems with other vendors'   
products. These products and services can be adequately tested only when they   
are successfully integrated with these systems. Errors may be found in new      
products or releases after shipment and our products and services may not       
operate as expected. Errors or defects in our products and services could result
in:                                                                             

o     loss of revenues and increased service and warranty costs;    

o     delay in market acceptance;                                   

o     loss of salaries; and                                         

o     injury to our reputation.                                     

We may be subject to loss in market share and market acceptance as a result of  
manufacturing errors, delays or shortages.                                      

    Performance failure in our products or certain of our services may cause
loss of market share, delay in or loss of market acceptance, additional warranty
expense or product recall, or other contractual liabilities. The complexity of  
certain of the fingerprint recognition systems make the manufacturing and       
assembly process of such products, especially in volume, complex. This may in   
turn lead to delays or shortages in the availability of certain products, or, in
some cases, the unavailability of certain products. The negative effects of any 
delay or failure could be exacerbated if the delay or failure occurs in products
or services that provide personal security, secure sensitive computer data,     
authorize significant financial transactions or perform other functions where a 
security breach could have significant consequences.                            

If a product or service launch is delayed or is the subject of an   
availability shortage because of problems with our ability to manufacture or    
assemble the product or service successfully on a timely basis, or if a product 
or service otherwise fails to meet performance criteria, we may lose revenue    
opportunities entirely and/or experience delays in revenue recognition          
associated with a product or service in addition to incurring higher operating  
expenses during the period required to correct the defects. We may be subject to
repair, replacement, reimbursement and liability claims for products that fail  
to work or to meet applicable performance criteria.                             

    There is a risk that for unforeseen reasons we may be required to repair
or replace a substantial number of products in use or to reimburse customers for
products that fail to work or meet strict performance criteria. We attempt to   
limit remedies for product or service failure to the repair or replacement of   
malfunctioning or noncompliant products or services, and also attempts to       
exclude or minimize exposure to product and related liabilities by including in 
its standard agreements warranty disclaimers and disclaimers for consequential  
and related damages as well as limitations on its aggregate liability. From time
to time, in certain complex sale or licensing transactions, each entity may     
negotiate liability provisions that vary from such standard forms.              

Our existing and proposed international business exposes us to additional risks 
that may result in future additional costs or limit the market for product      
sales.                                                                          

     Products and services provided to our international customers account for
a significant part of our revenues. In addition, key component of our business  
plan is to expand our reach in our foreign markets. Conducting business outside 
of the United States subjects us to additional risks, including:                

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o     changes in regulatory requirements;                           

o     reduced protection of intellectual property rights;           

o     evolving privacy laws;                                        

o     tariffs and other trade barriers;                             

o     difficulties in staffing and managing foreign operations;     

o     problems in collecting accounts receivable; and               

o     difficulties in authenticating customer information.          

  We will face risks inherent to new ventures in each new market that we
enter, including a lack of acceptance of our business model. We may also incur  
substantial costs related to entering into new markets, which may not be        
recoverable if we are unsuccessful in these markets. Failure to recover these   
costs and expenses may materially adversely impact our cash flow and ability to 
meet our regular operating expenses, which may, in turn harm our ability to     
serve our customers and our competitive position to obtain new customers.       

     In addition, a portion of our technology base is in Pakistan. We could be
adversely affected by any major hostilities involving Pakistan, which result in 
the interruption or curtailment of trade between Pakistan and its trading       
partners. For example, if the United States or any of its trading partners      
reinstitutes the recently lifted trade sanctions, it may adversely impact our   
ability to continue our Pakistani operations.                                   

If we fail to attract and retain employees, our growth could be limited and our 
costs could increase, which may adversely affect our results of operations and  
financial position.                                                             

 Our future success depends in large part upon our ability to attract,
train and retain highly skilled executive-level management and creative and     
technical personnel. The competition in the technology industry for such        
personnel is intense, and we cannot be sure that we will be successful in       
attracting, training and retaining such personnel. Some of our employees and    
executive officers have joined our company recently, and all employees are      
subject to "at will" employment. High turnover resulting in additional training 
expense would decrease its profitability. We cannot guarantee that we will be   
able to replace any of our management personnel in the event their services     
become unavailable.                                                             

Our failure to maintain the proprietary nature of our technology, intellectual  
property and manufacturing processes could have a material adverse effect on our
business, operating results and financial condition and on our ability to       
compete effectively.                                                            

   We principally rely upon patent, trademark, copyright, trade secret and
contract law to establish and protect our proprietary rights. There is a risk   
that claims allowed on any patents or trademarks that we hold may not be broad  
enough to protect our technology. In addition, our patents or trademarks may be 
challenged, invalidated or circumvented and management cannot be certain that   
the rights granted thereunder will provide us with competitive advantages.      
Moreover, any current or future issued or licensed patents, or trademarks, or   
currently existing or future developed trade secrets or know-how may not afford 
sufficient protection against competitors with similar technologies or          
processes, and the possibility exists that certain of our already issued patents
or trademarks may infringe upon third party patents or trademarks or be designed
around by others.                                                               

In addition, there is a risk that others may independently develop  
proprietary technologies and processes, which are the same as, substantially    
equivalent or superior to those possessed by us or become available in the      
market at a lower price.                                                        

 There is a risk that we have infringed or in the future will infringe
patents or trademarks owned by owners, that we will need to acquire licenses    
under patents or trademarks belonging to others for technology potentially      
useful or necessary to us and that licenses will not be available on acceptable 
terms, if at all.                                                               

We may have to litigate to enforce our patents or trademarks or to  
determine the scope and validity of other parties' proprietary rights.          
Litigation could be very costly and divert management's attention. An adverse   
outcome in any litigation may have a severe negative effect on our financial    
results and stock price. To determine the priority of inventions, we may have to
participate in interference proceedings declared by the United States Patent and
Trademark Office or oppositions in foreign patent and trademark offices, which  
could result in substantial cost to us and limitations on the scope or validity 
our patents or trademarks.                                                      

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    We also rely on trade secrets and proprietary know-how, which we seek to
protect by confidentiality agreements with our employees, consultants, service  
providers and third parties. There is a risk that these agreements may be       
breached, and that the remedies available to us may not be adequate. In         
addition, our trade secrets and proprietary know-how may otherwise become known 
to or be independently discovered by others.                                    

Failure to increase our brand awareness could limit our ability to compete      
effectively.                                                                    

   If the marketplace does not associate us with high-quality products and
services, we may be unable to keep our existing customers, attract new customers
or successfully introduce new products and services. Competitive and other      
pressures may require us to increase our marketing expenses to promote our brand
name, and the benefits associated with brand creation may not outweigh the risks
and costs associated with establishing our brand name. Our failure to develop a 
strong brand name or the incurrence of excessive costs associated with          
establishing our brand name may harm our business.                              

We have a lengthy sales and implementation cycle, which increases the cost of   
completing sales and renders completion of sales less predictable.              

     If we are unable to license our products and services to new customers on
a timely basis or if our existing and proposed customers and their end-users    
suffer delays in the implementation and adoption of its services, our revenue   
may be limited and business and prospects may be harmed. Our customers must     
evaluate our technology and integrate our products and services into the        
products and services they provide. In addition, our customers may need to adopt
a comprehensive sales, marketing and training program in order to effectively   
implement some of its products. For these and other reasons, the cycle          
associated with establishing licenses and implementing our products can be      
lengthy.                                                                        

Our success depends on our ability to grow and develop our direct and indirect  
distribution channels and the inability to do so could adversely affect future  
operating results.                                                              

   Our failure to grow and develop our direct sales channel or to increase
the number of our indirect distribution channels could have a material adverse  
effect on its business, operating results and financial condition. We must      
continue to develop relationships with existing channel partners or they may    
choose to devote greater resources to supporting the products of competitors.   

We may be adversely impacted by the events of and actions in response to        
September 11, 2001. A recurrence of terrorist attacks may have a material       
adverse impact on our business plan, operations and financial condition.        

     We may be adversely affected by the events of September 11, 2001, and the
war in Iraq. At this time, the long term effects of these events, or other      
similar or related events that may occur in the future, on the biometrics       
industry or on worldwide economic conditions. We cannot assure you that our     
business plan, will not be adversely impacted by future terrorist attacks or    
actions taken in response to those attacks.                                     

 Risks Relating To Our Current Financing Arrangement

There are a large number of shares underlying our callable secured convertible  
notes, and warrants that may be available for future sale and the sale of these 
shares may depress the market price of our common stock.                        

    As of June 21, 2005, we had 15,842,107 shares of common stock issued and
outstanding and callable secured convertible notes outstanding or an obligation 
to issue callable secured convertible notes that may be converted into an       
estimated 8,050,513 shares of common stock at current market prices, and        
outstanding warrants or an obligation to issue warrants to purchase 10,200,000  
shares of common stock. In addition, the number of shares of common stock       
issuable upon conversion of the outstanding callable secured convertible notes  
may increase if there is an event of default. All of the shares, including all  
of the shares issuable upon conversion of the notes and upon exercise of our    
warrants, may be sold without restriction. The sale of these shares may         
adversely affect the market price of our common stock.                          

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If there is an event of default, the continuously adjustable conversion price   
feature of our callable secured convertible notes become applicable, which could
have a depressive effect on the price of our common stock.                      

Upon an event of default the callable secured convertible notes are 
convertible into shares of our common stock at a 50% discount to the trading    
price of the common stock prior to the conversion. The significant downward     
pressure on the price of the common stock as the selling stockholder converts   
and sells material amounts of common stock could have an adverse effect on our  
stock price. In addition, not only the sale of shares issued upon conversion or 
exercise of notes, warrants and options, but also the mere perception that these
sales could occur, may adversely affect the market price of the common stock.   

The issuance of shares upon conversion of the callable secured convertible notes
and exercise of outstanding warrants may cause immediate and substantial        
dilution to our existing stockholders.                                          

      The issuance of shares upon conversion of the callable secured convertible
notes and exercise of warrants may result in substantial dilution to the        
interests of other stockholders since the selling stockholders may ultimately   
convert and sell the full amount issuable on conversion. Although the selling   
stockholders may not convert their callable secured convertible notes and/or    
exercise their warrants if such conversion or exercise would cause them to own  
more than 4.99% of our outstanding common stock, this restriction does not      
prevent the selling stockholders from converting and/or exercising some of their
holdings and then converting the rest of their holdings. In this way, the       
selling stockholders could sell more than this limit while never holding more   
than this limit. There is no upper limit on the number of shares that may be    
issued which will have the effect of further diluting the proportionate equity  
interest and voting power of holders of our common stock, including investors in
this offering.                                                                  

If we are required for any reason to repay our outstanding callable secured     
convertible notes, we would be required to deplete our working capital, if      
available, or raise additional funds. Our failure to repay the callable secured 
convertible notes, if required, could result in legal action against us, which  
could require the sale of substantial assets.                                   

On February 25, 2005, we entered into a Security Purchase Agreement 
involving the sale of an aggregate of $5,100,000 principal amount of callable   
secured convertible notes and stock purchase warrants to buy 10,200,000 shares  
of our common stock. The callable secured convertible notes are due and payable,
with 10% interest, three years from the date of issuance, unless sooner         
converted into shares of our common stock. Although we currently have $3,400,000
callable secured convertible notes outstanding, the investor is obligated to    
purchase additional callable secured convertible notes in the aggregate amount  
of $1,700,000. In addition, any event of default such as our failure to repay   
the principal or interest when due, our failure to issue shares of common stock 
upon conversion by the holder, our failure to timely file a registration        
statement or have such registration statement declared effective, breach of any 
covenant, representation or warranty in the Securities Purchase Agreement or    
related convertible note, the assignment or appointment of a receiver to control
a substantial part of our property or business, the filing of a money judgment, 
writ or similar process against us in excess of $100,000, the commencement of a 
bankruptcy, insolvency, reorganization or liquidation proceeding against us and 
the delisting of our common stock could require the early repayment of the      
callable secured convertible notes, including a default interest rate of 15% on 
the outstanding principal balance of the notes if the default is not cured      
within the specified grace period. We anticipate that the full amount of the    
callable secured convertible notes will be converted into shares of our common  
stock, in accordance with the terms of the callable secured convertible notes.  
If we are required to repay the callable secured convertible notes, we would be 
required to use our limited working capital and raise additional funds. If we   
were unable to repay the notes when required, the note holders could commence   
legal action against us and foreclose on all of our assets to recover the       
amounts due. Any such action would require us to curtail or cease operations.   

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Risks Related To This Offering

There is no assurance of an established public trading market, which would      
adversely affect the ability of investors in our company to sell their          
securities in the public markets.                                               

    Although our common stock trades on the Over-the-Counter Bulleting Board
(the "OTCBB"), a regular trading market for the securities may not be sustained 
in the future. The NASD has enacted recent changes that limit quotations on the 
OTCBB to securities of issuers that are current in their reports filed with the 
Securities and Exchange Commission. The effect on the OTCBB of these rule       
changes and other proposed changes cannot be determined at this time. The OTCBB 
is an inter-dealer, Over-The-Counter market that provides significantly less    
liquidity than the NASD's automated quotation system (the "NASDAQ Stock         
Market"). Quotes for stocks included on the OTCBB are not listed in the         
financial sections of newspapers as are those for The Nasdaq Stock Market.      
Therefore, prices for securities traded solely on the OTCBB may be difficult to 
obtain and holders of common stock may be unable to resell their securities at  
or near their original offering price or at any price. Market prices for our    
common stock will be influenced by a number of factors, including:              

o     the issuance of new equity securities;                        

o     changes in interest rates;                                    

     o     competitive developments, including announcements by competitors of
        new products or services or significant contracts, acquisitions,
      strategic partnerships, joint ventures or capital commitments;

o     variations in quarterly operating results;                    

o     change in financial estimates by securities analysts;         

o     the depth and liquidity of the market for our common stock;   

     o     investor perceptions of our company and the technologies industries
generally; and                                          

o     general economic and other national conditions.               

The limited prior public market and trading market may cause volatility in the  
market price of our common stock.                                               

      Our common stock is currently traded on a limited basis on the OTCBB under
the symbol "VRDI." The quotation of our common stock on the OTCBB does not      
assure that a meaningful, consistent and liquid trading market currently exists,
and in recent years such market has experienced extreme price and volume        
fluctuations that have particularly affected the market prices of many smaller  
companies like us. Our common stock is thus subject to volatility. In the       
absence of an active trading market:                                            

      o     investors may have difficulty buying and selling or obtaining market
quotations;                                             

o     market visibility for our common stock may be limited; and    

 o     a lack of visibility for our common stock may have a depressive
effect on the market for our common stock.              

Our common stock could be considered a "penny stock."                           

      Our common stock could be considered to be a "penny stock" if it meets one
or more of the definitions in Rules 15g-2 through 15g-6 promulgated under       
Section 15(g) of the Securities Exchange Act of 1934, as amended. These include 
but are not limited to the following: (i) the stock trades at a price less than 
$5.00 per share; (ii) it is NOT traded on a "recognized" national exchange;     
(iii) it is NOT quoted on The Nasdaq Stock Market, or even if so, has a price   
less than $5.00 per share; or (iv) is issued by a company with net tangible     
assets less than $2.0 million, if in business more than a continuous three      
years, or with average revenues of less than $6.0 million for the past three    
years. The principal result or effect of being designated a "penny stock" is    
that securities broker-dealers cannot recommend the stock but must trade in it  
on an unsolicited basis.                                                        

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Broker-dealer requirements may affect trading and liquidity.                    

      Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rule
15g-2 promulgated thereunder by the SEC require broker-dealers dealing in penny 
stocks to provide potential investors with a document disclosing the risks of   
penny stocks and to obtain a manually signed and dated written receipt of the   
document before effecting any transaction in a penny stock for the investor's   
account.                                                                        

     Potential investors in our common stock are urged to obtain and read such
disclosure carefully before purchasing any shares that are deemed to be "penny  
stock." Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve 
the account of any investor for transactions in such stocks before selling any  
penny stock to that investor. This procedure requires the broker-dealer to (i)  
obtain from the investor information concerning his or her financial situation, 
investment experience and investment objectives; (ii) reasonably determine,     
based on that information, that transactions in penny stocks are suitable for   
the investor and that the investor has sufficient knowledge and experience as to
be reasonably capable of evaluating the risks of penny stock transactions; (iii)
provide the investor with a written statement setting forth the basis on which  
the broker-dealer made the determination in (ii) above; and (iv) receive a      
signed and dated copy of such statement from the investor, confirming that it   
accurately reflects the investor's financial situation, investment experience   
and investment objectives. Compliance with these requirements may make it more  
difficult for holders of our common stock to resell their shares to third       
parties or to otherwise dispose of them in the market or otherwise.             

Shares eligible for future sale may adversely affect the market price of our    
common stock, as the future sale of a substantial amount of our restricted stock
in the public marketplace could reduce the price of our common stock.           

      From time to time, certain of our stockholders may be eligible to sell all
or some of their shares of common stock by means of ordinary brokerage          
transactions in the open market pursuant to Rule 144, promulgated under the     
Securities Act ("Rule 144"), subject to certain limitations. In general,        
pursuant to Rule 144, a stockholder (or stockholders whose shares are           
aggregated) who has satisfied a one-year holding period may, under certain      
circumstances, sell within any three-month period a number of securities which  
does not exceed the greater of 1% of the then outstanding shares of common stock
or the average weekly trading volume of the class during the four calendar weeks
prior to such sale. Rule 144 also permits, under certain circumstances, the sale
of securities, without any limitations, by a non-affiliate of our company that  
has satisfied a two-year holding period. In addition, we completed the first of 
three rounds of a private placement in February 2005, whereby we granted the    
investors in the private placement certain registration rights with respect to  
the shares of common stock underlying their securities. Any substantial sale of 
common stock pursuant to Rule 144 or pursuant to any resale prospectus may have 
an adverse effect on the market price of our securities.                        

Certain provisions of our Certificate of Incorporation and Delaware law and may 
make it more difficult for a third party to effect a change- in-control.        

 Our Certificate of Incorporation authorizes the Board of Directors to
issue up to 2,000,000 shares of preferred stock. The preferred stock may be     
issued in one or more series, the terms of which may be determined at the time  
of issuance by the Board of Directors without further action by the             
stockholders. These terms may include voting rights including the right to vote 
as a series on particular matters, preferences as to dividends and liquidation, 
conversion rights, redemption rights and sinking fund provisions. The issuance  
of any preferred stock could diminish the rights of holders of our common stock,
and therefore could reduce the value of such common stock. In addition, specific
rights granted to future holders of preferred stock could be used to restrict   
our ability to merge with, or sell assets to, a third party. The ability of the 
Board of Directors to issue preferred stock could make it more difficult, delay,
discourage, prevent or make it more costly to acquire or effect a               
change-in-control.                                                              

   In addition, we are also subject to Section 203 of the Delaware General
Corporation Law that, subject to certain exceptions, prohibits a Delaware       
corporation from engaging in any business combination with any interested       
stockholder for a period of three years following the date that the stockholder 
became an interested stockholder. The preceding provisions of our Certificate of
Incorporation, as well as Section 203 of the Delaware General Corporation Law,  
could discourage potential acquisition proposals, delay or prevent a            
change-in-control and prevent changes in our management, even if such things    
would be in the best interests of our stockholders.                             

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 USE OF PROCEEDS

     This prospectus relates to shares of our common stock that may be offered
and sold from time to time by the selling stockholders. We will not receive any 
proceeds from the sale of shares of common stock in this offering. However, we  
will receive the sale price of any common stock we sell to the selling          
stockholder upon exercise of the warrants. We expect to use the proceeds        
received from the exercise of the warrants, if any, for general working capital 
purposes. However, the selling stockholders will be entitled to exercise the    
warrants on a cashless basis if the shares of common stock underlying the       
warrants are not then registered pursuant to an effective registration          
statement. In the event that the selling stockholder exercises the warrants on a
cashless basis, then we will not receive any proceeds. In addition, we have     
received gross proceeds of $3,400,000 from the sale of the callable secured     
convertible notes and the investors are obligated to provide us with an         
additional $1,700,000 within five days of this prospectus being declared        
effective. The proceeds received from the sale of the callable secured          
convertible notes will be used for payment of legal settlements, general        
corporate and operating purposes, including product development and             
enhancements, sales and marketing efforts and payment of consulting and legal   
fees.                                                                           

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    Our common stock is traded on the OTC Bulletin Board, referred to herein
as the OTCBB, under the symbol "VRDI.ob." Prior to February 23, 2004, our common
stock traded under the symbol "AVRT.ob." The following table sets forth the high
and low bid prices of our Common Stock, as reported by the OTCBB for each       
quarter since our stock began trading on the OTCBB. The quotations set forth    
below reflect inter-dealer prices, without retail mark-up, markdown or          
commission and may not represent actual transactions.                           

                                                      2005
                                                      -----------    -----------
                                                        High*           Low*
                                                      -----------    -----------
1st Quarter ........................................  $      2.95    $      1.31

                                                      2004
                                                      -----------    -----------
                                                        High*           Low*
                                                      -----------    -----------
1st Quarter ........................................  $      8.00    $      4.00
2nd Quarter ........................................         5.70           3.45
3rd Quarter ........................................         5.50           1.50
4th Quarter ........................................         4.00           2.30

                                                      2003
                                                      -----------    -----------
                                                       High           Low*
                                                      -----------    -----------
1st Quarter ........................................  $      3.50    $      1.06
2nd Quarter ........................................         6.00           2.94
3rd Quarter ........................................         7.00           1.20
4th Quarter ........................................         6.00           3.45

* The high and low per share prices reflect our stock split that occurred on    
April 23, 2003 (1:7 stock reverse split).                                       

      As of June 21, 2005, there were approximately 657 holders of record of our
common stock.                                                                   

  We have appointed U. S. Stock Transfer Corporation, 1745 Gardena Ave.,
Glendale, CA 91204-2991, as transfer agent for our shares of Common Stock.      

Equity Compensation Plan Information                                            

      The following table summarizes our equity compensation plan information as
of December 31, 2004.                                                           

   On February 7, 2005, the Board of Directors of the Company approved the
granting of 1,025,000 shares to officers, directors and employees of the Company
under the 2004 Stock Option Plan.                                               

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                                                        · Enlarge/Download Table

                                                                                              Number of Shares 
                                                                                            Remaining Available
                                                 Number of Shares to                        for Future Issuance
                                                   Be Issued upon                               Under Equity   
                                                     Exercise of        Weighted-Average     Compensation Plans
                                                     Outstanding        Exercise Price of    (Excluding Shares 
                                                  Options, Warrants   Outstanding Options,      Reflected in   
                                                     and Rights        Warrants and Rights      Column (a))    
                  Plan Category(1)                       (a)                   (b)                  (c)        
                  ----------------                 ----------------      ----------------     ---------------- 
                                                                                                               
Equity Compensation plans approved by                                                                          
      stockholders..............................                                                               

         2004 Stock Option Plan                       1,025,000                $1.79               975,000     

         2000 EssTec Plan                             1,451,708                $2.54               548,292     

         1999 Alpha Virtual Plan                      1,058,082                $1.40             4,441,918     

Equity Compensation plans not approved by                                                                      
      stockholders..............................             --                   --                    --     
      Total.....................................      3,534,790                $1.98             5,965,210     

 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND PLAN OF OPERATIONS

Overview                                                                        

We were incorporated in Delaware on September 9, 1987 under the name
Perceptronics, Inc. From our inception through fiscal 2000, we were engaged in  
the design, development and manufacture of computer-based simulation systems for
training and decision support. These systems included both hardware and software
and are used to train personnel in the use of various military and commercial   
equipment. Much of our simulator business was in the foreign defense industry.  
The tightening of defense budgets worldwide, combined with the continuing       
consolidation and competition in the defense industry, negatively impacted the  
growth and profit opportunities for small companies such as ours. As a result,  
in July 2000, we refocused our business. In connection with the refocus, we sold
the assets related to our computer based simulation system line of business to a
developer and manufacturer of specialized defense simulation products. We then  
commenced development of commercial products in the area of Internet            
collaboration.                                                                  

     However, we lacked the funds necessary to exploit our developed products.
As a result, in October 2002, we entered into a license agreement with our then 
principal stockholder, Global Alpha Corporation ("GAC") pursuant to which GAC   
was granted an exclusive license to our software and systems commonly referred  
to as the "IC3D Framework" (the "System"). The System encompassed substantially 
all of our software including software developed to support multi-user online   
collaborative interactivity in a broad variety of applications employing a      
variety of virtual media over a number of networks including the Internet and   
intra-nets. Under the license agreement, GAC agreed to pay us a license fee of  
10% of the revenue generated from the sale or use of the System up to $1.0      
million, 9% up to $2.0 million, 8% up to $3.0 million and, thereafter, 7% of the
revenue generated. No revenue has been generated to date.                       

   In connection with the license agreement, in October 2002 we terminated
substantially all of our employees, and except for our license agreement, ceased
all of our prior operating activities. Our principal activities became directed 
to reducing our liabilities and seeking possible acquisitions. Management's     
objective was to acquire an operating company that has experienced management   
and the potential for profitable growth in exchange for our securities.         

   On April 28, 2003, we entered into an Agreement and Plan of Merger with
EssTec, Inc., a privately-held Nevada corporation ("EssTec"). In accordance with
the merger, on May 8, 2003, we, through our wholly-owned subsidiary, Alpha      
Acquisition Corporation, a Nevada corporation, acquired EssTec in exchange for  
4,259,496 shares of our Common Stock. The transaction contemplated by the       
agreement was intended to be a "tax-free" reorganization pursuant to the        
provisions of Section 351 and 368(a)(1)(A) of the Internal Revenue Code of 1986,
as amended.                                                                     

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On May 8, 2003, in connection with the EssTec merger, we changed our
fiscal year end from March 31 to December 31.                                   

      On November 25, 2003, we entered into an Agreement and Plan of Merger with
Veridicom, Inc., a privately-held California corporation ("Veridicom"). In      
accordance with the merger, on November 25, 2003, we, through our wholly-owned  
subsidiary, A/V Acquisition Corporation, a Nevada corporation, acquired         
Veridicom in exchange for 3,500,000 shares of our Common Stock; 3,250,000 shares
were issued to the holders of Veridicom stock and 250,000 shares were issued    
into escrow to cover indemnification obligations, if any, of Veridicom. The     
transaction contemplated by the agreement was intended to be a "tax-free"       
reorganization pursuant to the provisions of Section 351 and 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended.                                      

     On January 16, 2004, we entered into an Agreement and Plan of Merger with
Cavio Corporation, a privately-held Washington corporation ("Cavio"). In        
accordance with the merger, on February 20, 2004, we, through our wholly-owned  
subsidiary, A/VII Corporation, a Nevada corporation, acquired Cavio in exchange 
for 5,119,140 shares of our Common Stock. The transaction contemplated by the   
agreement was intended to be a "tax-free" reorganization pursuant to the        
provisions of Section 351 and 368(a)(1)(A) of the Internal Revenue Code of 1986,
as amended.                                                                     

Description of the Company Post-Merger                                          

  Following the merger with Cavio, we realigned our business strategy to
leverage the core operations of each of our subsidiaries. We have five          
operational subsidiaries: Esstec, Essential Tec Pakistan (Private) Limited      
("Pakistan Ltd."), Veridicom Inc., Cavio, and Veridicom International (Canada)  
Inc. ("Canada Inc.").                                                           

 Our core strategy is to build a comprehensive authentication suite of
products and services, with market-specific applications that leverage the core 
identity management infrastructure. We believe there is a significant need for  
an auditable, scalable product solution capable of linking an individual to a   
specific electronic event or transaction -- a strong authentication solution    
that safeguards legitimate interests and adheres to emerging electronic commerce
legislation. Our identity management solutions employ public key infrastructure 
and a "virtual token" based technology to control, audit and monitor the        
identification processes for electronic events and transactions.                

   We will focus on transforming the market for biometrics and growing the
market beyond traditional security applications. In particular, the strategy    
will be to expand the traditional security offerings to include security and    
convenience value propositions for commercial or point-of-sale transactions. By 
developing customizable applications as well as authentication technology, we   
are endeavoring that our brand become synonymous with secure, authenticated     
transactions.                                                                   

    We offer a solution that we believe not only addresses an organization's
current requirements for stronger and more scalable authentication and          
authorization, but also addresses a future vision for security, via a           
combination of centralized and distributed identity repositories and            
administration tools. Utilizing biometric technology, we provide organizations  
with an authentication solution that also provides users with increased         
convenience by reducing the reliance on passwords.                              

  We have a strong management team with combined experience in sales and
marketing, vertical market knowledge, technology development, and hardware      
integrated circuit design. In addition, we will have access to a network of     
advisors and consultants with significant expertise in technology, government,  
security, and financial services. These advisors will be invited to form a more 
formal advisory board to provide strategic direction for products and services, 
and, they may be leveraged to provide targeted business development contacts in 
key target markets.                                                             

There are several factors that management believes will provide new 
opportunities or present new challenges for us. We believe that regulatory,     
technological, and cultural changes will create new opportunities. International
distribution arrangements are currently in place, while new channels are being  
developed.                                                                      

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 Since March 1, 2004, we have undertaken a comprehensive review of all
pre-merger operations. This on-going review has included all facets of          
operations, including the supply chain, product development, previous sales and 
marketing agreements, internal controls and reporting systems. Based on this    
review, we have decided that a thorough reorganization of all of the companies  
is warranted, including a re-evaluation of the supply chain, method of          
manufacture, product strategy and other organizational procedures. Although     
distracting in the short-term, we believe that this review is in the long-term  
best interests of the Company and our stockholders. As part of the              
reorganization, we closed our Sunnyvale, California offices on April 15, 2004 in
favor of a more cost effective and efficient development environment in the     
Pacific Northwest.                                                              

Critical Accounting Policies Used in Financial Statements                       

We prepare our financial statements in accordance with accounting   
principles generally accepted in the United States. The preparation of these    
financial statements requires management to make estimates and assumptions that 
affect the reported amounts of assets and liabilities and the 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.      
Management's estimates and judgments are based on historical experience and     
various other factors that are believed to be reasonable under the              
circumstances, the results of which form the basis for making judgments about   
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different   
assumptions or conditions.                                                      

 Veridicom International, Inc., ("we," "us," "our," or the "Company"),
formerly known as Alpha Virtual, Inc. is a Delaware Corporation formerly        
headquartered in California that was formed on September 9, 1987. The name of   
the Company was changed to Veridicom International, Inc. in February 2004. The  
Company consolidated its corporate offices in Seattle, Washington, and          
Vancouver, British Columbia in April 2004.                                      

Going Concern                                                                   

   Our financial statements have been presented on the basis that we are a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. As of December 31, 2004 we have
incurred a net loss of $3,720,261 and have a working capital deficit, which     
raises doubt about our ability to continue as a going concern. We are currently 
devoting our efforts to raising additional capital and investigating potential  
merger candidates. Our ability to continue as a going concern is dependent upon 
our ability to develop additional sources of capital, and ultimately, achieve   
profitable operations. The accompanying financial statements do not include any 
adjustments that might result from the outcome of these uncertainties.          

Mergers                                                                         

  On April 28, 2003 we entered into an Agreement and Plan of Merger with
Esstec Inc., a privately held Nevada corporation ("Esstec"),. In accordance with
the Merger, on May 8, 2003, we, through our wholly owned subsidiary, Alpha      
Acquisition Corporation ("AAC"), a Nevada Corporation, acquired Esstec in       
exchange for 4,259,496 shares of the Alpha's common stock. For accounting       
purposes Esstec acquired Alpha in a reverse merger under the purchase method of 
accounting. The financial statements in the filings of Alpha became those of    
Esstec. The legal entity (Alpha) retained its name until it was changed to      
Veridicom International, Inc. in February 2004. Thus, the financial statements  
are still those of "Esstec, Inc."                                               

      On November 25, 2003, we entered into an Agreement and Plan of Merger with
Veridicom, Inc. ("Veridicom Inc."), a California corporation, through AAC       
whereby we acquired Veridicom Inc. in exchange for 3,500,000 shares of Veridicom
Inc.'s common stock. 3,250,000 shares were issued to the holders of Veridicom   
Inc.'s stock, and 250,000 shares were issued into escrow to cover Veridicom     
Inc.'s indemnification obligations, if any. Veridicom's stockholders owned      
approximately 35% of our common stock outstanding as of November 25, 2003.      

     On January 16, 2004, we entered into an Agreement and Plan of Merger with
Cavio Corporation, a privately held Washington corporation ("Cavio"). The merger
became effective on February 20, 2004 following a special meeting of Cavio's    
stockholders. In accordance with the merger, on February 20, 2004, through its  
wholly owned subsidiary, A/VII Acquisition Corporation, a Nevada corporation,   
acquired Cavio in exchange for 5,119,140 shares of our common stock. We recorded
goodwill of $3,792,019 for this acquisition.                                    

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   Cash                                    $   164,791
   Receivables                                  14,043
   Stock subscription receivable               129,821
   Prepaid expenses                              4,874
   Fixed assets, net                           109,473
                                           -----------
                                               423,002
                                           -----------
Less liabilities assumed                                
    Accounts payable and accrued expenses      (694,009)
    Loans payable                               (28,693)
                                           -----------
                                               (722,702)
                                           -----------
Net liabilities                             $  (299,700)
                                           ===========
Net liabilities assumed                     $   299,700 
Stock issued for acquisition                    299,700 
Common stock issued into escrow               3,192,619 
                                           -----------
Goodwill                                    $ 3,792,019 
                                           ===========

 The following unaudited proforma condensed consolidating statement of
operations for the year period ended December 31, 2004 gives effect to the above
transaction as if it had occurred on January 1, 2004.                           

                                                        · Enlarge/Download Table

                 Veridicom        Cavio Corporation       Proforma             Proforma      
             International Inc.    for the period        Adjustments         Consolidated    
              Consolidated for    from November 01,                                          
               the year ended     2003 to February                                           
             December 31, 2004        19, 2004                                               
            ------------------   ------------------   ------------------  ------------------ 
                                                                                             
Revenues    $          384,853   $               --   $               --  $          384,853 
(Expenses)          (4,196,622)            (481,715)                  --          (4,678,337)
Other                   91,508               (3,367)                  --              88,141 
            ==================   ==================   ==================  ================== 
Net loss    $       (3,720,261)  $         (485,082)  $               --  $       (4,205,343)

Operations                                                                      

 We have five operational subsidiaries: Esstec, Essential Tec Pakistan
(Private) Limited ("Pakistan Ltd."), Veridicom Inc., Cavio, and Veridicom       
International (Canada) Inc. ("Canada Inc.").                                    

Esstec is a professional services company that focuses on e-commerce
initiatives, interactive multimedia, and mobile software applications for       
clients in various industries, including the telecommunications and             
entertainment industries. During 2004, Esstec did not have any significant      
revenues or incur any significant expenses.                                     

      Pakistan Ltd. was incorporated on April 19, 2000 to establish the business
of software development for the international markets and to export software and
technology. Esstec owns approximately 63.4% of Pakistan Ltd.                    

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   Veridicom Inc. designs, manufactures and delivers hardware and software
products that enable strong authentication solutions based on fingerprint       
biometrics. Veridicom Inc. markets a complete fingerprint biometrics platform on
which applications can be built.                                                

 Cavio produces technology tools designed to protect users from fraud,
misrepresentation, security and privacy issues by allowing users to             
biometrically authenticate themselves to secure control access and confirm      
identity across a number of industries.                                         

    On January 21, 2004, Canada Inc. was formed to be the Canadian operating
company for the public company.                                                 

Consolidation                                                                   

    The consolidated financial statements include the accounts of us and our
subsidiaries Esstec, Pakistan Ltd., Veridicom, Cavio, and Canada Inc. All       
significant intercompany balances and transactions have been eliminated in      
consolidation.                                                                  

Minority Interest                                                               

    Minority interest reflects the ownership of minority shareholders in the
equity of Pakistan Ltd., a consolidated subsidiary less than wholly owned.      

Reclassifications                                                               

    For comparative purposes, prior year's consolidated financial statements
have been reclassified to conform to report classifications of the current year.

Goodwill                                                                        

   Goodwill was recorded at its purchase price and is not being amortized.
Pursuant to SFAS 142 ("Goodwill and Other Intangible Assets") and SFAS 144      
("Accounting for the Impairment or Disposal of Long-Lived Assets"), we have     
evaluated our goodwill for impairment and determined that the fair value of our 
goodwill is $4,728,546.                                                         

Valuation of the Company's Common Stock                                         

    Unless otherwise disclosed, all stock based transactions entered into by
us have been valued at the market value of our common stock on the date the     
transaction was entered into or have been valued using the Modified             
Black-Scholes Model to estimate the fair market value.                          

Concentrations of Credit Risk                                                   

   Financial instruments, which potentially expose us to concentrations of
credit risk, consist primarily of trade accounts receivable. We maintain        
reserves for potential credit losses and such losses, in the aggregate, have not
exceeded management's expectations.                                             

Advertising Expenses                                                            

     We expense advertising costs as incurred. During the years ended December
31, 2004 and 2003, we did not have significant advertising costs.               

Fair Value of Financial Instruments                                             

The carrying amounts of cash, accounts receivable, notes payables,  
accounts payable, and accrued expenses approximate fair value because of the    
short maturity of these items.                                                  

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Recently Issued Accounting Pronouncements                                       

      In December 2004, the FASB issued SFAS No.123 (revised 2004), "Share-Based
Payment" ("SFAS 123(R)"). SFAS 123(R) will provide investors and other users of 
financial statements with more complete and neutral financial information by    
requiring that the compensation cost relating to share-based payment            
transactions be recognized in financial statements. That cost will be measured  
based on the fair value of the equity or liability instruments issued. SFAS     
123(R) covers a wide range of share-based compensation arrangements including   
share options, restricted share plans, performance-based awards, share          
appreciation rights, and employee share purchase plans. SFAS 123(R) replaces    
SFAS No. 123, "Accounting for Stock-Based Compensation", and supersedes APB     
Opinion No. 25, "Accounting for Stock Issued to Employees". SFAS 123, as        
originally issued in 1995, established as preferable a fair-value-based method  
of accounting for share-based payment transactions with employees. However, that
Statement permitted entities the option of continuing to apply the guidance in  
Opinion 25, as long as the footnotes to financial statements disclosed what net 
income would have been had the preferable fair-value-based method been used.    
Public entities (other than those filing as small business issuers) will be     
required to apply SFAS 123(R) as of the first interim or annual reporting period
that begins after June 15, 2005. The Company has evaluated the impact of the    
adoption of SFAS 123(R), and believes that it could have an impact to the       
Company's overall results of operations depending on the number of stock options
granted in a given year.                                                        

    In December 2004, the FASB issued SFAS No.153, "Exchanges of Nonmonetary
Assets, an amendment of APB Opinion No. 29, Accounting for Nonmonetary          
Transactions." The amendments made by SFAS 153 are based on the principle that  
exchanges of nonmonetary assets should be measured based on the fair value of   
the assets exchanged. Further, the amendments eliminate the narrow exception for
nonmonetary exchanges of similar productive assets and replace it with a broader
exception for exchanges of nonmonetary assets that do not have commercial       
substance. Previously, Opinion 29 required that the accounting for an exchange  
of a productive asset for a similar productive asset or an equivalent interest  
in the same or similar productive asset should be based on the recorded amount  
of the asset relinquished. Opinion 29 provided an exception to its basic        
measurement principle (fair value) for exchanges of similar productive assets.  
That exception required that some nonmonetary exchanges, although commercially  
substantive, to be recorded on a carryover basis. By focusing the exception on  
exchanges that lack commercial substance, the FASB believes SFAS No.153 produces
financial reporting that more faithfully represents the economics of the        
transactions. SFAS No.153 is effective for nonmonetary asset exchanges occurring
in fiscal periods beginning after June 15, 2005. Earlier application is         
permitted for nonmonetary asset exchanges occurring in fiscal periods beginning 
after the date of issuance. The provisions of SFAS No.153 shall be applied      
prospectively. The Company has evaluated the impact of the adoption of SFAS 153,
and does not believe the impact will be significant to the Company's overall    
results of operations or financial position.                                    

In November 2004, the FASB issued SFAS No. 151 "Inventory Costs, an 
amendment of ARB No. 43, Chapter 4 (" SFAS No. 151". The amendments made by SFAS
151 clarify that abnormal amounts of idle facility expense, freight, handling   
costs, and wasted materials (spoilage) should be recognized as current-period   
charges and require the allocation of fixed production overheads to inventory   
based on the normal capacity of the production facilities. The guidance is      
effective for inventory costs incurred during fiscal years beginning after June 
15, 2005. Earlier application is permitted for inventory costs incurred during  
fiscal years beginning after November 23, 2004. The Company has evaluated the   
impact of the adoption of SFAS 151, and does not believe the impact will be     
significant to the Company's overall results of operations or financial         
position.                                                                       

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain  
Financial Instruments with Characteristics of Both Liabilities and Equity,"     
which is effective for financial instruments entered into or modified after May 
31, 2003, and otherwise is effective at the beginning of the first interim      
period beginning after June 15, 2003. SFAS No. 150 establishes standards for how
an issuer classifies and measures certain financial instruments with            
characteristics of both liabilities and equity. The adoption of this standard   
did not have a material impact on the Company's financial statements.           

In April 2003, FASB issued SFAS No. 149, "Accounting for Derivative 
Instruments and Hedging Activities," which is effective for contracts entered   
into or modified after June 30, 2003 and for hedging relationships designated   
after June 30, 2003. This statement amends and clarifies financial accounting   
and reporting for derivative instruments including certain instruments embedded 
in other contracts and for hedging activities under SFAS No. 133, "Accounting   
for Derivative Instruments and Hedging Activities." The adoption of this        
standard did not have a material impact on the Company's financial statements.  

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In January 2003, the FASB issued FIN 46, "Consolidation of Variable 
Interest Entities." FIN 46 clarifies the application of Accounting Research     
Bulletin No. 51, "Consolidated Financial Statements," for certain entities which
do not have sufficient equity at risk for the entity to finance its activities  
without additional subordinated financial support from other parties or in which
equity investors do not have the characteristics of a controlling financial     
interest ("variable interest entities"). Variable interest entities will be     
required to be consolidated by their primary beneficiary. The primary           
beneficiary of a variable interest entity is determined to be the party that    
absorbs a majority of the entity's expected losses, receives a majority of its  
expected returns, or both, as a result of holding variable interests, which are 
ownership, contractual, or other pecuniary interests in an entity. FIN 46       
applies immediately to variable interest entities created after January 31,     
2003, and to variable interest entities in which an enterprise obtains an       
interest after that date. It applies in the first fiscal year or interim period 
beginning after December 15, 2003, to variable interest entities in which an    
enterprise holds a variable interest that it acquired before February 1, 2003.  
FIN 46 applies to public enterprises as of the beginning of the applicable      
interim or annual period. The Company's adoption of FIN 46 did not have any     
impact upon the Company's financial condition or results of operations.         

  In March 2004, the FASB approved the consensus reached on the Emerging
Issues Task Force (EITF) Issue No. 03-1, "The Meaning of Other-Than-Temporary   
Impairment and Its Application to Certain Investments." The objective of this   
Issue is to provide guidance for identifying impaired investments. EITF 03-1    
also provides new disclosure requirements for investments that are deemed to be 
temporarily impaired. In September 2004, the FASB issued a FASB Staff Position  
(FSP) EITF 03-1-1 that delays the effective date of the measurement and         
recognition guidance in EITF 03-1 until after further deliberations by the FASB.
The disclosure requirements are effective only for annual periods ending after  
June 15, 2004. The Company has evaluated the impact of the adoption of the      
disclosure requirements of EITF 03-1 and does not believe it will have an impact
to the Company's overall combined results of operations or combined financial   
position. Once the FASB reaches a final decision on the measurement and         
recognition provisions, the Company will evaluate the impact of the adoption of 
EITF 03-1.                                                                      

Inventory                                                                       

     Inventory consists primarily of various sensors, combos and parallel port
units. Inventory is valued at lower of cost (first-in, first-out) or market.    

Furniture and Equipment                                                         

Furniture and equipment are recorded at cost. Depreciation and      
amortization expense is provided on a straight-line basis using estimated useful
lives of 3-7 years. Depreciation expense was $47,188 and $18,015 for the years  
ended December 31, 2004 and 2003, respectively. Maintenance and repairs are     
charged to expense as incurred and expenditures for major improvements are      
capitalized. When assets are retired or otherwise disposed of, the property     
accounts are relieved of costs and accumulated depreciation and any resulting   
gain or loss is credited or charged to operations.                              

Patents                                                                         

     At the acquisition of Veridicom, the Company evaluated the unused patents
and determined the costs to secure the patents outweighed their intended use and
was unable to find a party interested in purchasing the patents. The patents    
were originally recorded at cost and were being amortized on a straight-line    
basis over 15 years. The Company has valued the patents at $200,000. The Company
is not amortizing the patents.                                                  

Cash and Cash Equivalents                                                       

      For purposes of reporting cash flows, the Company considers all funds with
original maturities of three months or less to be cash equivalents.             

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Income Taxes                                                                    

The Company recognizes deferred tax assets and liabilities for the  
expected future income tax consequences of events that have been recognized in  
the Company's financial statements. Under this method, deferred tax assets and  
liabilities are determined based on temporary differences between the financial 
carrying amounts and the tax bases of assets and liabilities using enacted tax  
rates in effect in the periods in which the temporary differences are expected  
to reverse. Valuation allowances are established when necessary to reduce       
deferred tax assets to the amount expected to be realized. Income tax expense   
represents the tax payable for the current period and the change during the     
period in deferred tax assets and liabilities. The Company has a net operating  
loss carry forward of approximately $3,800,000 expiring beginning in 2020.      

Revenue Recognition                                                             

Sales of services are recorded when performed in accordance with    
contracts. Revenues from software sales are recorded in accordance with SOP 97-2
'Software Revenue Recognition', which requires that revenue recognized from     
software arrangements be allocated to the various elements of the arrangement   
based on the relative fair market values of the elements, such as software      
products, upgrades, enhancements, post contract customer support, installation  
or training. Revenue from product services are recognized at the time services  
are provided.                                                                   

      For fixed fee contracts, Esstec recognizes revenue based on the percentage
completed, calculated as either the number of direct labor hours in the project 
to date divided by the estimated total direct labor hours, or based upon the    
completion of specific task benchmarks. It is Esstec's policy to record contract
losses in their entirety in the period in which such losses can be estimated.   
Any revenues associated with pre-payments or pre-billings are deferred until    
revenue is earned. For non-fixed fee jobs, revenue is recognized as services are
performed and adjusted to realization value, if necessary.                      

Pakistan Ltd. recognizes revenue at the point/time the software is  
delivered/exported.                                                             

    Veridicom Inc. recognizes revenues at the point of shipment of products.

Use of Estimates in the Preparation of Financial Statements                     

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

Comprehensive Loss                                                              

     The Company utilizes Statement of Financial Accounting Standards ("SFAS")
No. 130. "Reporting Comprehensive Income." This statement establishes standards 
for reporting comprehensive loss and its components in a financial statement.   
Comprehensive loss as defined includes all changes in equity (net assets) during
a period from non-owner sources. Examples of items to be included in            
comprehensive loss, which are excluded from net loss, include foreign currency  
translation adjustments and unrealized gains and losses on available-for-sale   
securities. Comprehensive loss presented in these consolidated financial        
statements resulted from translations of foreign currency financial statements. 

Foreign Currency Translation                                                    

    Pakistan Ltd. considers the Pakistan Rupee to be the functional currency
of its operations. Cavio and Canada Inc. consider the Canadian Dollar to be the 
functional currency of their operations. The reporting currency of the Company  
is the U.S. dollar; accordingly, all amounts included in the financial          
statements have been translated into U.S. dollars.                              

                                                                · Download Table

Exchange Rates              For the year Ending 2004       For the Year Ending 2003
--------------------        -----------------------------  ------------------------
                                                                                   
Rupee Average               .01715                         .017331                 
Rupee Period end            .01682                         .017479                 
Canadian Dollar Average     .76847                                                 
Canadian Dollar Period end  .83084                                                 

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Software Development Costs                                                      

   The software development costs are expensed as research and development
costs as incurred until the software reached technological feasibility in       
accordance with Statement of Financial Accounting Standards No. 86, "Accounting 
for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed"    
("SFAS 86").                                                                    

Earnings Per Common Share                                                       

The Company computes earnings per common share in accordance with   
Statement of Financial Accounting Standards No. 128, "Earnings per Share" (SFAS 
No. 128). The Statement requires dual presentation of basic and diluted EPS on  
the face of the income statement for all entities with complex capital          
structures and requires a reconciliation of the numerator and denominator of the
basic EPS computation to the numerator and denominator of the diluted EPS       
computation. Basic loss per share is computed by dividing loss available to     
common shareholders by the weighted average number of common shares outstanding.
The computation of diluted loss per share is similar to the basic loss per share
computation except the denominator is increased to include the number of        
additional shares that would have been outstanding if the dilutive potential    
common shares had been issued. In addition, the numerator is adjusted for any   
changes in income or loss that would result from the assumed conversions of     
those potential shares. However, such presentation is not required if the effect
is antidilutive. Due to losses during the years ended December 31, 2004 and     
2003, no presentation is made.                                                  

Results of Operations - Years Ended December 31, 2004 and 2003                  

The following table sets forth certain statement of operations data for the     
years ended December 31, 2004 and 2003:                                         

                                                  2004            2003
                                                  ------------    ------------
Revenues                                                                        
          Net revenue                             $    384,853    $    281,997
          Cost of goods sold                           212,063         116,007
                                                  ------------    ------------
          Gross profit (loss)                          172,790         165,990

Operations                                                                      
          General & administrative expense           3,441,793       1,727,517
          Research & development expense               490,674              --
          Technical operations expense                   4,903              --
          Depreciation expense                          47,188          18,105
          Impairment of goodwill                            --       1,809,648
                                                  ------------    ------------
           Income (loss) from operations             (3,811,768)     (3,389,280)

Other income                                                                    
          Other income (loss)                          179,344           6,692
           Interest expense                             (94,145)        (60,835)
          Gain on forgiveness of debt                       --         556,104
          Impairment charges, other assets                  --              --
                                                  ------------    ------------
Income (loss) before minority                             
             interest                                (3,726,569)     (2,887,319)

Minority interest                                         6,308           4,629 
                                                  ------------    ------------
Net (loss) income                                    (3,720,261)     (2,882,690)

Other comprehensive income (loss):                                              
           Foreign currency translation                (141,695)           (741)
                                                  ------------    ------------
Total comprehensive income (loss)                  $ (3,861,263)   $ (2,883,431)

Earnings (loss) per share:                                                      
Basic and fully diluted (loss)                                            
     per common share                              $      (0.27)   $      (0.51)

Weighted average common shares                                                  
  outstanding basic and fully diluted               14,415,829       5,662,025

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General                                                                         

      Following the completion of the transaction with EssTec and Veridicom Inc.
in 2003 and with Cavio in February 2004, we have been engaged primarily in      
aligning the operations of the subsidiaries with the objective of streamlining  
and consolidating operations as necessary, reducing costs and seeking additional
capital.                                                                        

      As part of the process of streamlining and consolidation of operations, we
closed and relocated our Sunnyvale, California facility in April 2004. The      
direct costs incurred for this amounted to $31,575.                             

 Since May 2004, we have focused our resources on product development,
including hardware and software enhancements, as well as on marketing efforts.  

Net Revenue                                                                     

     Net revenue for fiscal 2004 of $384,853 increased by $102,856 compared to
fiscal 2003. Net revenue in fiscal 2004 is mainly in respect of sales of        
capacitive fingerprint sensors, computer peripherals and software related to the
use of our fingerprint authentication technology, whereas net revenue in fiscal 
2003 was mainly in respect of software development and consulting services      
provide by EssTec. Such revenue in 2004 was not significant.                    

Cost of Goods Sold                                                              

      Cost of goods sold during 2004 was mainly for product components purchased
from suppliers and the cost of finished products from existing inventory. These 
amounted to $212,063 in fiscal 2004 and increased by $96,056 compared to fiscal 
2003. This is due to the corresponding increase in net revenues. Cost of goods  
sold during 2003 were direct costs incurred by EssTec for the software          
development and consulting services rendered.                                   

Gross Profit                                                                    

The gross profit in fiscal 2004 of $172,790 was 44.9% of net sales  
compared to gross profit of $165,990 which was 58.9% of net sales in fiscal     
2003. The variance in the gross profit of $6,799 is due to the change in revenue
sources and product mix during the comparable periods.                          

General and Administrative Expenses                                             

    General and administrative expenses, which include non-cash compensation
expense of, $359,100 amounted to $3,441,793 in fiscal 2004 compared to          
$1,727,517 in fiscal 2003. This increase of $1,714,276 in general and           
administrative expenses is mainly in respect of:                                

     o     Salaries, which increased from $253,500 in 2003 to $775,000 in 2004
       as a result of the hiring of new software development, hardware
development and administrative staff;                   

    o     Consulting expense, increased from $139,500 in 2003 to $775,000 in
          2004. This increase includes $210,000 for sales representatives in
           the USA, $105,000 for investment consultancy services, $150,000 for
            remittances to our Pakistan operations for software development work
    and $92,000 for independent contractors of our operations in
Sunnyvale;                                              

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     o     Professional services expense which increased from $336,400 in 2003
         to $607,000 in 2004 due to substantial increase in accounting and
audit fees;                                             

      o     Travel expenses, which increased from $93,000 in 2003 to $242,000 in
2004;                                                   

    o     Rent expenses, which increased from $13,000 in 2003 to $145,838 in
     2004 due to formation of the Canadian subsidiary and mergers;

      o     Office administration expenses, which increased from $17,000 in 2003
to $108,898 in 2004.                                    

Research and Development                                                        

  Research and development expenditure for the fiscal 2004 was $490,674,
compared to $20,689 in 2003 which was included in general and administrative    
expenses in the 2003 financial statements. The increase in this expense is      
mainly in respect of salaries for personnel in product development, including   
hardware and software enhancements.                                             

Interest Expense                                                                

Interest expense in fiscal 2004 amounting to $94,145 was mostly for 
accrued interest on notes payable, compared to interest expense of $60,835 in   
fiscal 2003. The higher interest expense in fiscal 2004 is was mainly in respect
of certain new borrowings during the year.                                      

Liquidity and Capital Resources                                                 

      To obtain funding for the purpose of payment of legal settlements, general
corporate and operating purposes, including product development and             
enhancements, sales and marketing efforts and payment of consulting and legal   
fees, we entered into a Securities Purchase Agreement with New Millennium       
Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd., AJW  
Partners, LLC, Alpha Capital, Enable Growth Partners L.P., Whalehaven Capital   
Fund Limited, Meadowbrook Opportunity Fund LLC and TCMP3 Partners on February   
25, 2005 for the sale of (i) $5,100,000 in callable secured convertible notes   
and (ii) stock purchase warrants to buy 10,200,000 shares of our common stock.  
This prospectus relates to the resale of the common stock underlying these      
callable secured convertible notes and warrants. Provided that the terms and    
conditions of the Securities Purchase Agreement are satisfied, the investors are
obligated to provide us with an aggregate of $5,100,000 as follows:             

o     $1,700,000 was disbursed on February 25, 2005;                

      o     $1,700,000 was disbursed between April 29, 2005 and May 9, 2005; and

  o     $1,700,000 will be disbursed within five days of this prospectus
          being declared effective, so long as our common stock is listed on
the American Stock Exchange.                            

Accordingly, we have received a total of $3,400,000 pursuant to the 
Securities Purchase Agreement.                                                  

     The callable secured convertible notes bear interest at 10%, mature
three years from the date of issuance, and the principal is convertible into our
common stock, at the investors' option, at $1.27. Interest on the callable      
secured convertible notes can be paid, at our option, in cash or common stock   
based upon the conversion price. If an event of default occurs and is           
continuing, the conversion price of the callable secured convertible notes will 
be equal to the lesser of (i) $0.91 or (ii) 50.0% of the daily volume weighted  
average price of our common stock for the 5 days prior to the date a conversion 
notice is sent to us. The full principal amount of the callable secured         
convertible notes is due upon default under the terms of secured convertible    
notes. The warrants are exercisable until five years from the date of issuance. 
Half of the warrants are designated as Series A Warrants and have an exercise   
price of $3.00 per share and the other half are designated as Series B Warrants 
and have an exercise price of $5.00 per share. The conversion price of the      
callable secured convertible notes and the exercise price of the warrants may be
adjusted in certain circumstances such as if we pay a stock dividend, subdivide 
or combine outstanding shares of common stock into a greater or lesser number of
shares, or take such other actions as would otherwise result in dilution of the 
selling stockholder's position. The selling stockholders have contractually     
agreed to restrict their ability to convert or exercise their warrants and      
receive shares of our common stock such that the number of shares of common     
stock held by them and their affiliates after such conversion or exercise does  
not exceed 4.99% of the then issued and outstanding shares of common stock. In  
addition, we have granted the investors a security interest in substantially all
of our assets and intellectual property and registration rights.                

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      As a result of the foregoing financing, we currently have sufficient funds
on hand to fund our operations for the second quarter. We intend to complete the
second and third rounds of our private placement financing to fund our current  
and future operations. If successful in completing this financing, we may not be
able to do so on terms that are not excessively dilutive to our existing        
stockholders or less costly than existing sources of financing. Failure to      
secure additional financing in a timely manner and on favorable terms if and    
when needed in the future could have a material adverse effect on our financial 
performance, balance sheet and stock price and require us to implement cost     
reduction initiatives and curtail operations.                                   

Off-Balance Sheet Arrangements                                                  

None.                                                               

Dividends and Distributions                                                     

We have not paid any cash dividends to date. We intend to retain our
future earnings, if any, and we do not anticipate paying cash dividends on      
either class of our stock in the foreseeable future.                            

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BUSINESS

Overview                                                                        

Veridicom International, Inc., a Delaware corporation (hereinafter  
sometimes referred to as the "Company," "we," and "us"), incorporated on        
September 9, 1987, under the name Perceptronics, Inc. From our inception through
fiscal 2000, we were engaged in the design, development and manufacture of      
computer-based simulation systems for training and decision support. These      
systems included both hardware and software and were used to train personnel in 
the use of various military and commercial equipment. Much of our simulator     
business was in the foreign defense industry. The tightening of defense budgets 
worldwide, combined with the continuing consolidation and competition in the    
defense industry, negatively impacted the growth and profit opportunities for   
small companies such as ours. As a result, in July 2000, we refocused our       
business. In connection with the refocus, we sold the assets related to our     
computer based simulation system line of business to a developer and            
manufacturer of specialized defense simulation products. We then commenced      
development of commercial products in the area of Internet collaboration.       

     However, we lacked the funds necessary to exploit our developed products.
As a result, in October 2002, we entered into a license agreement with our then 
principal stockholder, Global Alpha Corporation ("GAC") pursuant to which GAC   
was granted an exclusive license to our software and systems commonly referred  
to as the "IC3D Framework" (the "System"). The System encompassed substantially 
all of our software including software developed to support multi-user online   
collaborative interactivity in a broad variety of applications employing a      
variety of virtual media over a number of networks including the Internet and   
intra-nets. Under the license agreement, GAC agreed to pay us a license fee of  
10% of the revenue generated from the sale or use of the System up to $1.0      
million, 9% up to $2.0 million, 8% up to $3.0 million and, thereafter, 7% of the
revenue generated. No revenues have been generated to date.                     

   In connection with the license agreement, in October 2002 we terminated
substantially all of our employees, and except for our license agreement, ceased
all of our prior operating activities. Our principal activities became directed 
to reducing our liabilities and seeking possible acquisitions. Management's     
objective was to acquire an operating company that has experienced management   
and the potential for profitable growth in exchange for our securities.         

   On April 28, 2003, we entered into an Agreement and Plan of Merger with
EssTec, Inc., a privately-held Nevada corporation ("EssTec"). In accordance with
the merger, on May 8, 2003, we, through our wholly-owned subsidiary, Alpha      
Acquisition Corporation, a Nevada corporation, acquired EssTec in exchange for  
4,259,496 shares of our common stock. The transaction contemplated by the       
agreement was intended to be a "tax-free" reorganization pursuant to the        
provisions of Section 351 and 368(a)(1)(A) of the Internal Revenue Code of 1986,
as amended.                                                                     

On May 8, 2003, in connection with the EssTec merger, we changed our
fiscal year end from March 31 to December 31.                                   

      On November 25, 2003, we entered into an Agreement and Plan of Merger with
Veridicom, Inc., a privately-held California corporation ("Veridicom"). In      
accordance with the merger, on November 25, 2003, we, through our wholly-owned  
subsidiary, A/V Acquisition Corporation, a Nevada corporation, acquired         
Veridicom in exchange for 3,500,000 shares of our common stock; 3,250,000 shares
were issued to the holders of Veridicom stock and 250,000 shares were issued    
into escrow to cover indemnification obligations, if any, of Veridicom. The     
transaction contemplated by the agreement was intended to be a "tax-free"       
reorganization pursuant to the provisions of Section 351 and 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended.                                      

     On January 16, 2004, we entered into an Agreement and Plan of Merger with
Cavio Corporation, a privately-held Washington corporation ("Cavio"). The merger
became effective on February 20, 2004 following a special meeting of Cavio's    
stockholders. In accordance with the merger, on February 20, 2004, we, through  
our wholly-owned subsidiary, A/VII Acquisition Corporation, a Nevada            
corporation, acquired Cavio in exchange for 5,119,140 shares of our common      
stock. The transaction contemplated by the agreement was intended to be a       
"tax-free" reorganization pursuant to the provisions of Section 351 and         
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended.                  

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Recent Developments                                                             

We officially changed our name from Alpha Virtual, Inc. to Veridicom
International, Inc. on February 23, 2004 and following the name change, shares  
of our common stock are traded under the symbol "VRDI" on the OTC Bulletin Board
(the "OTCBB").                                                                  

     On February 25, 2005, we completed the first of three rounds of a private
placement whereby we will issue up to an aggregate of $5,100,000 worth of 10%   
callable secured notes convertible into shares of common stock, and warrants to 
purchase up to an aggregate of 10,200,000 shares of our common stock to certain 
accredited investors. The first of three equal installments of $1,700,000 was   
received in February, 2005, the second was received between April, 2005 and May,
2005 and the final closing of $1,700,000 is contingent upon triggering events   
set forth in the Securities Purchase Agreement.                                 

On March 8, 2005, we announced that MCP Asia Ltd, an investment and 
consulting firm from Hong Kong, together with Fook Vo Holding Ltd ("Fook Vo")   
based in Macau, are in discussions to provide the Company with marketing and    
sales services in the Hong Kong, Macau and China regions.                       

From March 10 to March 16, 2005, we exhibited at CeBIT 2005 at the  
Hannover Fairgrounds in Hannover, Germany. CeBIT offers a forum for             
business-to-business, "B2B", solutions.                                         

On March 14, 2005 we announced the appointment of two new European  
representatives to expand our growing presence in the European marketplace. Mr. 
Theo Musallam is based in Zurich and will be representing us in Switzerland and 
Mr. Guenther Klix is based in Munich and will be representing us in Germany.    

Description of the Company Post-Merger                                          

General                                                                         

  Following the merger with Cavio, we realigned our business strategy to
leverage the core operations of each of our subsidiaries. We have five          
operational subsidiaries: EssTec, Esstec Pakistan, Veridicom Inc., Cavio, and   
Veridicom Canada.                                                               

 Since March 1, 2004, we have undertaken a comprehensive review of all
pre-merger operations. This on-going review has included all facets of          
operations, including the supply chain, product development, previous sales and 
marketing agreements, internal controls and reporting systems. Based on this    
review, we have decided that a thorough reorganization of all of the companies  
is warranted, including a re-evaluation of the supply chain, method of          
manufacture, product strategy and other organizational procedures. Although     
distracting in the short-term, we believe that this review is in the long-term  
best interests of the Company and our stockholders. As part of the              
reorganization, we closed our Sunnyvale, California offices on April 15, 2004 in
favor of a more cost effective and efficient development environment in the     
Pacific Northwest.                                                              

 Our core strategy is to build a comprehensive authentication suite of
products and services, with market-specific applications that leverage the core 
identity management infrastructure. We believe there is a significant need for  
an auditable, scalable product solution capable of linking an individual to a   
specific electronic event or transaction - a strong authentication solution that
safeguards legitimate interests and adheres to emerging electronic commerce     
legislation. Our identity management solutions employ public key infrastructure 
and a "virtual token" based technology to control, audit and monitor the        
identification processes for electronic events and transactions.                

   We will focus on transforming the market for biometrics and growing the
market beyond traditional security applications. In particular, the strategy    
will be to expand the traditional security offerings to include security and    
convenience value propositions for commercial or point-of-sale transactions. By 
developing customizable applications as well as authentication technology, we   
are endeavoring that our brand become synonymous with secure, authenticated     
transactions.                                                                   

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    We offer a solution that we believe not only addresses an organization's
current requirements for stronger and more scalable authentication and          
authorization, but also addresses a future vision for security, via a           
combination of centralized and distributed identity repositories and            
administration tools. Utilizing biometric technology, we provide organizations  
with an authentication solution that also provides users with increased         
convenience by reducing the reliance on passwords.                              

  We have a strong management team with combined experience in sales and
marketing, vertical market knowledge, technology development, and hardware      
integrated circuit design. In addition, we will have access to a network of     
advisors and consultants with significant expertise in technology, government,  
security, and financial services. These advisors will be invited to form a more 
formal advisory board to provide strategic direction for products and services, 
and, they may be leveraged to provide targeted business development contacts in 
key target markets.                                                             

There are several factors that management believes will provide new 
opportunities or present new challenges for us. We believe that regulatory,     
technological, and cultural changes will create new opportunities. International
distribution arrangements are currently in place, while new channels are being  
developed.                                                                      

Product and Services Overview                                                   

      We provide a suite of identity management products, including hardware and
software that utilize public key infrastructure (PKI), secure token-based       
technology, and fingerprint biometrics to authenticate and manage personal      
identities for a wide variety of applications and transactions. This platform   
provides a biometrically authenticated digital signature for financial, travel, 
and other applications. Veridicom's patented authentication and transaction     
technology enables real-time authentication of individuals anytime, anywhere,   
via the Internet, point-of-sale, security kiosk, and mobile devices.            

Identity Management Infrastructure                                              

 Our core strategy is to build a comprehensive authentication suite of
products and services, with market-specific applications that leverage the core 
identity management infrastructure.                                             

     We believe that there is a significant need for an auditable and scalable
product solution capable of linking an individual to a specific electronic event
or transaction -- a strong authentication solution that safeguards legitimate   
business interests. Our identity management solutions employ public key         
infrastructure and a "virtual token" based technology to control, audit and     
monitor the identification processes for electronic events. We believe this     
provides organizations with several benefits:                                   

   o     Deployments of biometric technology provide strong authentication
            and validation of a user's identity eliminating the sole reliance on
the vulnerable password/PIN infrastructure;             

      o     Enterprise middleware systems can move authenticated events securely
in real-time over the Internet through a "trusted path";

o     Creates an irrefutable and legally recognized "card-present"  
       scenario for events conducted for previously anonymous Internet
credit card transactions; and                           

   o     Allows for the audit and assignment of a digital signature to any
           electronic event proving without question the time and origin of an
event and actual event occurrence.                      

  We believe that our product portfolio allows organizations to leverage
investments in existing IT infrastructure.                                      

      We have an extensive portfolio of products and services that are currently
available to customers, or that are available subject to customization and      
specific requirements definition. However, we realize the need to continue an   
aggressive product development strategy to meet the needs of the marketplace and
advance the adoption of biometrics. Management believes that in general the     
industry faces continuous pressures to reduce the cost of devices and solutions 
in order to provide a greater ROI to organizations. As such, we endeavor to     
deliver additional products that provide a high degree of application           
flexibility to the end user. It is expected that we will build our products to  
meet the needs of both current and future state-of-the-art technology and will  
incorporate third party technology solutions where needed.                      

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      The following table outlines our current and short-term product portfolio:

Product                                               Description   
-------                                               -----------   
   FPS200                          Solid state silicon fingerprint sensor,
           256 x 300 array

VKI                             Portable identity device with USB   
                                      connectivity, on board fingerprint sensor,
                               flash memory, and security software

Middleware                                                                

Product                                               Description   
-------                                               -----------   
  Cavio 3.0 Identity Server       Robust Enterprise level authentication
                                server for Windows, Linux platforms.

  VAS Hosted Service              Hosted authentication service from our
       data center

      SDK                             SDK's available for customer customization
     and OEMs.

Applications                                                              

Product                                               Description   
-------                                               -----------   
Digital Signature               Biometric signature attached to     
                                 transactions or events. This provides
                             significantly more secure signing
                               capabilities than current PIN-based
         certificates.

    VPAS                            Veridicom Personal Authentication Suite.
                                  This application is a bundled solution
                                that allows PC or network logon, and
                           secure logon to web site or web
         applications.

Intellectual Property                                                           

  With a pedigree born out of Lucent Technologies and Bell Labs, we have
several international patents for our technology, as well as several pending    
patent applications.                                                            

U.S. Patents Issued                                                             

U.S. Patent No.        Title                                                    
---------------        -----                                                    
5,991,408              Identification and Security Using Biometric Measurements 

6,016,355              Capacitive Fingerprint Acquisition Sensor                

6,049,620              Capacitive Fingerprint Sensor With Adjustable Gain       

6,330,345              Automatic Adjustment Processing For Sensor Devices       

6,331,452              Method of Fabricating Integrated Circuit Package with    
Opening Allowing Access to Die    

6,546,122              Method For Combining Fingerprint Templates Representing  
                 Various Sensed Areas of a Fingerprint to Derive One
                 Various Sensed Areas of a Fingerprint to Derive One
               Fingerprint Template Representing The Fingerprint

6,538,456              Capacitive Fingerprint Sensor with Adjustable Gain       

6,535,622              Method for Imaging Fingerprints and Concealing Latent    
Fingerprints                      

6,538,456              Capacitive Fingerprint Sensor with Adjustable Gain       

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Patent Applications                                                             

U.S. Patent App. Serial    Title                                                
-----------------------    -----                                                
10/089,987                 Spoof Detection for Biometric Sensing Systems        

10/288,554                 Method & System for Capturing Fingerprints from      
Multiple Swipe            

Industry Overview                                                               

    We believe that in the wake of the tragic events of September 11 and the
heightened security risks posed by the prospect of random acts of terrorism,    
biometrics and the field of identity management are at the forefront of         
technological development. However, we believe that the tendency to-date has    
been for vendors to develop proprietary software and hardware that focuses on   
one segment of the identity verification and management equation. Because of    
their proprietary nature, many biometric technology products are inconsistent,  
impractical or incompatible with not only the existing `real world' needs and   
systems, but also other biometric products.                                     

   Fingerprint recognition technology continues to dominate the market for
biometric authentication, and management believes that this will continue for   
the foreseeable future due to its combination of accuracy, ease of use, and cost
effectiveness.                                                                  

      We believe that there are several increasingly important trends positively
affecting the need for biometric technology:                                    

 o     the need to protect increasing amounts of sensitive and private
         information. Increased digitization of travel, medical, financial
          and security information requires stronger, less fallible modes of
user authentication;                                    

      o     the increased amount of information has resulted in increased access
          requirements for corporate and personal uses. Physical and logical
           access requirements demands a more streamlined approach to identity
management;                                             

o     increased travel security requirements demand leading edge    
            identification technology to improve security while streamlining the
travel process; and                                     

     o     information access requirements have increased the proliferation of
        passwords. Unfortunately, as password requirements increase, the
costs of managing passwords becomes prohibitive.        

  Given the trends described above, we believe that there are inevitably
going to be organizations that believe they can offer a variety of services or  
products that incorporate biometrics and may compete with our technology.       

Competitive Overview                                                            

  As the opportunities for strong authentication solutions increases, so
will the competition. With significant brand recognition, patent portfolio, and 
technology solutions, we believe that we are well protected against increased   
competition. Furthermore, we believe that increased competition indirectly      
validates the business model and market potential for our solutions. The        
following companies have been identified as potential competitors due to their  
biometric focus and product mix: Identix, Bioscrypt, SAGEM, UPEK, Atrua,        
Authentec,                                                                      

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  In addition to the above-mentioned entities, it is conceivable that we
could face future indirect competition and market encroachment from companies   
such as VeriSign International and RSA, which currently offer alternative       
security and digital identity solutions not based on biometrics. However, these 
organizations could also present interesting partnering opportunities via       
bundled service offerings.                                                      

Market Influences                                                               

There are several factors that the Company believes will provide new
opportunities or present new challenges for us. We believe that the primary     
market influences relate to regulatory, technological and cultural changes.     

Regulatory Changes                                                              

Regulatory issues will continue to change the landscape for our     
technology. We believe that many of these legislative changes will present      
significant opportunities, such as:                                             

    o     HIPA - Health Insurance Portability and Accountability Act governs
      the privacy of health information, and securing access to that
            information. We believe that biometrics is well suited to this task.

    o     US-VISIT - The US Government is mandating that all visitors to the
  US be fingerprinted and have a digital photo taken. The US
           Government will soon require a biometric template (fingerprint) and
digital photo in passports.                             

o     Department of Defense - The US and other defense agencies are 
     increasing security requirements at facilities and increasing
           security surrounding information assets. We believe that biometrics
is well suited to meeting this challenge.               

   o     National ID cards - Canada, UK, US, Italy, Australia, Bosnia, and
       other nations are evaluating national ID card programs. Many of
 these nations are also considering adding biometrics, and
          fingerprints in particular, as components of that ID card program.

o     Electronic Voting - Many municipal, regional, and national    
           governments are contemplating and/or implementing electronic voting
    systems to avoid the voting debacle that plagued the 2000 US
 presidential election. As such, there is a strong need to
    authenticate voters for onsite and remote electronic voting.

Technological Changes                                                           

   The biometrics industry is rapidly changing and we aim to remain at the
leading edge of technology. In addition, we will focus on inventing, developing,
and commercializing those technologies that we believe offer additional value to
our customers.                                                                  

Cultural Changes                                                                

 Biometrics is still a new technology to the majority of consumers and
employees around the world. However, we believe that recent mandates by the U.S.
government requiring biometrics in passports and other security initiatives are 
facilitating public acceptance and rollout of biometrics. In addition, as       
information security becomes increasingly important to an organization's risk   
management policies, we believe that biometrics is getting increased attention  
for implementation at workplaces. As workplace enrollment increases, we believe 
that personal use of biometrics will increase accordingly. In addition, our     
suite of applications is targeted to drive more rapid adoption rate of          
biometric-based solutions.                                                      

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Market Segments                                                                 

Financial Services                                                              

  The financial services industry has been slow to adopt biometrics as a
core service offering. We believe that this is due to a number of factors,      
including cost, customer demand, risk vs. ROI of implementation, and            
availability of applications. We aim to change this scenario by offering        
financial services firms a variety of solutions aimed at increasing security;   
increasing convenience and offering a variety of authentication applications    
suitable for a broad organizational rollout.                                    

     We will initially target those financial institutions that have the scale
and market influence to push biometrics to their markets, as well as those      
institutions that are known for differentiating their service offering by       
providing leading edge technology and services. The strategy will be to         
concurrently encourage use of biometrics by other industries, encouraging the   
financial institutions to take notice.                                          

Travel & Transportation                                                         

      Travel providers are looking for new ways to generate revenue and increase
both safety and the convenience aspects of travel for their passengers. We plan 
to propose our solution as a business opportunity, not just a security solution.
It is expected that travelers will be charged user and/or transaction fees by   
the travel provider in exchange for additional benefits gained by using the     
system. Target customers within this market segment include travel agents,      
travel reservations, airlines, airports, hotels, and other travel service       
providers.                                                                      

We currently have an agreement with Uniglobe, which is part of an   
international travel service provider, to pilot its technology for the purposes 
of confirming individual client itineraries and to approve the processing of    
travel service purchases with client customized payment instructions. Following 
the successful rollout, it is planned that this model will be expanded to       
include other industry travel partners such as airlines, hotels, etc.           

Public Sector                                                                   

We believe that there are many opportunities in the public sector,  
including eGovernment, health care, and education. We believe that the          
authentication product suite has far reaching implications for members of this  
unique but broad-based environment.                                             

  Specifically, we believe that our products are ideally suited to mimic
traditional dynamic environments, for example, in the fields of electronic      
education, and industry accreditization. The authentication suite overcomes     
previously unaddressed variables including geographic diversity, can handle     
multiple users interacting in real-time and can control varying levels of       
clearance and access to allow for the appropriate flow of information.          

While we recognize that government opportunities offer potential for
future sales, we also recognize that they generally yield a longer sales cycle  
to close. To that end, we are focusing on establishing strategic relationships  
and partnerships with a variety of public sector organizations and allied       
complementary markets to further our efforts within this market.                

Retail                                                                          

We intend to actively pursue partnerships with leading retail       
organizations for product distribution purposes. It is expected that selected   
retailers will have the ability to sell components of the Authentication Service
bundle and accordingly to share in revenues generated from the product/service  
sale. It is expected that additional transaction related fees will generally not
be shared with partners as support and ongoing customer relationships will be   
managed by us.                                                                  

    The strategy in pursuing the retail market is twofold: First, we believe
that customers will be attracted to the VPAS product as a means of improving    
security and convenience for PC and web logon. As their comfort with the        
technology increases, we believe that these users will gravitate towards using  
other services within the Veridicom Authentication Service (digital signatures, 
authenticated payment, etc). Second, as more scanners get deployed into the     
market, we believe that other organizations could be inclined to adopt the      
Veridicom International solution to keep up with the demands of their customers.

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Distribution                                                                    

We will approach our markets via a combination of direct sales and  
partnerships with international systems integrators and resellers. Some         
distributors are already in place as they were inherited from our previous      
structure, and, as such, we are currently in the process of evaluating the      
performance and suitability of those partners as we move forward.               

Direct Sales                                                                    

      We have a number of direct sales representatives in various regions around
the world. These representatives will be responsible for both direct sales to   
strategic customers as well as supporting the network of channel partners and   
OEM relationships in various geographic regions.                                

Development and Distribution Partners                                           

   Distribution partners will be evaluated based on performance, strategic
value, future potential and/or additional value-add. Software Development Kits  
will be available to enable integration partners, development partners, and     
OEM's to develop specific applications or other devices around our product      
family.                                                                         

OEM Integration                                                                 

      We will also endeavor to integrate our sensors and authentication software
with OEM's and computer manufacturers. In addition, we believe that further     
opportunities exist by integrating sensor chips with mobile devices such as     
PDA's and mobile phones.                                                        

Promotion                                                                       

A variety of strategies will be employed to promote our product and 
service portfolio. These initiatives include:                                   

o     Bundling of our services;                                     

o     Bundling with third party applications and software;          

o     Joint partnerships with leading industry organizations;       

o     Trade shows;                                                  

o     Leverage personal contacts and utilize network of key industry
advisors; and                                           

      o     Leverage network of investment brokers and their clients. Transition
investor support to market support.                     

Research and Development                                                        

      Research and development expenditure for the fiscal 2004 was approximately
$490,674. Research and development expenditure are in respect of salaries for   
personnel in product development, including hardware and software enhancements. 

Legislative Actions and Potential New Accounting Pronouncements                 

    In order to comply with the newly adopted Sarbanes-Oxley Act of 2002 and
proposed accounting changes by the Securities and Exchange Commission, we may be
required to increase our internal controls, hire additional personnel and       
additional outside legal, accounting and advisory services, all of which could  
cause our general and administrative costs to increase. Proposed changes in the 
accounting rules, including legislative and other proposals to account for      
employee stock options as compensation expense among others, could increase the 
expenses that we report under Generally Accepted Accounting Principles and could
adversely affect our operating results.                                         

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 EMPLOYEES

      As of March 17, 2005, we had 43 full-time employees, as well as 1 contract
employee on monthly retainer and/or commission.                                 

      None of our employees are covered by a collective bargaining agreement. We
have never experienced a work stoppage and we believe that we have satisfactory 
working relations with our employees.                                           

 DESCRIPTION OF PROPERTIES

Our executive offices are located at 3800-999 3rd Avenue, Seattle,  
Washington. We have an agreement for use of office space at this location under 
an annual rental agreement. Under the terms of the agreement, we have the option
to increase or decrease office space utilization on a monthly basis.            

We also maintain an office in Canada located at 21 Water Street, 5th
Floor, Vancouver, British Columbia. We lease approximately 8,200 square feet of 
office space located at this location under a three-year lease, which expires in
February 2007.                                                                  

We also maintain short-term tenancies for office space located in   
Washington, DC., London (UK) and Lahore (Pakistan).                             

All of our facilities are in good repair.                           

      We believe that our existing facilities will be adequate to meet our needs
for the foreseeable future. Should we need additional space, management believes
it will be able to secure additional space at commercially reasonable rates.    

 LEGAL PROCEEDINGS

   Five former employees of Veridicom, Inc. (which we acquired in November
2003) filed claims against us between May and July of 2003 with the Labor       
Commissioner in the State of California. The former employees allege that we owe
unpaid wages, salaries and vacation pay for various periods between July 2000   
and November 2003 amounting to a total of $111,651. We have accrued for this    
liability in our financial statements as at December 31, 2004.                  

  On March 21, 2005 one of the claimants signed a letter of agreement to
convert his claim of $ 61,053.53 into stock based on the closing price of our   
common stock on that day of $2.40 per share, or a total of 25,439 shares for his
entire claim. However, this settlement is subject to obtaining certain waivers  
and documents from the holders of our Callable Secured Convertible Notes        

     If and when the above settlement is completed, the balance of outstanding
claims against us will be $50,597.                                              

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MANAGEMENT                                                                      

DIRECTORS AND EXECUTIVE OFFICERS                                                

Our executive officers and directors and their respective ages and  
positions as of June 21, 2005 are as follows:                                   

Name                  Age      Position                                         
----                  ---      --------                                         
Paul Mann             46       President, Chief Executive Officer and Director  
Saif Mansour          30       Director                                         
Bill Cheung           33       Director                                         
Jeremy Coles          50       Director                                         
Shannon McCallum      40       Director                                         
Bashir Jaffer         59       Chief Financial Officer and Secretary            
Terry Laferte         45       Vice President, Technical Operations             
Cameron Adams         32       Vice President, Strategic Development & Sales    
Hamid Baradaran       44       Vice President, Hardware Development and         
Manufacturing 

    Paul Mann, President, Chief Executive Officer and Director. Mr. Mann has
held a variety of international posts throughout Europe including: Sales and    
Marketing Manager, Erith PLC, England; National Sales and Marketing Director,   
Eurodata Limited, UK; and Sales and Marketing Director ASB Grunland,            
Ludwigsburgh, Germany. In Canada, Mr. Mann has served as President of an        
international business referral service linking global trade opportunities, and 
has worked to spearhead the international sales and marketing initiatives of The
Business Development Corporation. Mr. Mann's background in international trade  
and international business development led to the creation of Cavio and since   
its inception in 1998, he has been its Chief Executive Officer.                 

Saif Mansour, Director. Mr. Mansour was appointed to our Board of   
Directors in June 2002. Mr. Mansour served as our president until March 2003 and
also served as our VP, Strategic Planning. Mr. Mansour previously worked in the 
venture capital industry.                                                       

     Bill Cheung, Director. Mr. Cheung was appointed to our Board of Directors
in May 2003. Mr. Cheung has been a partner of Manhattan Capital Partners, Inc., 
an investment advisory company, since 2002. Prior to that, Mr. Cheung spent ten 
years in the industrial manufacturing industry as a partner of National Plastics
(China)and Sino Energy (Hong Kong).                                             

     Jeremy Coles, Director. Mr. Coles was appointed to our Board of Directors
in June 2004. Mr. Coles has been a managing director at Beaufort International  
Associates Limited since September 1998. Prior to that, Mr. Coles was a         
self-employed research and marketing consultant.                                

  Shannon McCallum, Director. Mr. McCallum was appointed to our Board of
Directors in June 2004. Mr. McCallum has been employed with the U.S. Department 
of Defense for the past five years, where he has provided security risk         
management services for homeland defense matters. Mr. McCallum was previously   
president of The McCallum Risk Company, a private consulting company            
specializing in eCommerce risk, fraud detection and IT security infrastructure  
evaluations for homeland security. Mr. McCallum was also Manager, Internet Fraud
Investigations & Security for Travelocity.com, a leading provider of online     
travel services.                                                                

Bashir Jaffer, Chief Financial Officer and Secretary. Mr. Jaffer was
appointed as our Chief Financial Officer on March 1, 2004. Mr. Jaffer has been a
member of the Canadian Institute of Chartered Accountants since 1976. He is also
a Fellow of the Institute of Chartered Accountants of England and Wales. From   
1998 to 2003, Mr. Jaffer was the owner and President of a travel management     
company. From 1983 to 1998, Mr. Jaffer was a partner at a firm of chartered     
accountants located in Vancouver, British Columbia. Prior to that, Mr. Jaffer   
worked for a public company and an international firm of chartered accountants  
located in London, England. Mr. Jaffer also worked at KPMG (formerly Thorne     
Riddell) and PricewaterhouseCoopers (formerly Coopers & Lybrand) both located in
Vancouver, British Columbia.                                                    

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     Terry Laferte, VP, Technical Operations. Mr. Laferte was appointed as our
Vice President, Technical Operations on March 1, 2004. Mr. Laferte has a 20-year
track record in IT team leadership and project management. From 2000 to 2004,   
Mr. Laferte was responsible for leading the development of technology           
applications for Cavio. From 1993 to 2000, Mr. Laferte managed all software     
development for the Canadian Securities Registration Systems located in         
Vancouver, British Columbia. From 1986 to 1993, Mr. Laferte was a senior        
consultant with SHL System house Ltd. Located in Edmonton, Alberta.             

     Cameron Adams, VP, Strategic Development & Sales. Mr. Adams was appointed
as our Vice President, Strategic Development & Sales in September, 2004. From   
2001 to 2004, Mr. Adams guided the product and marketing strategies of Cavio.   
From 2000 to 2001, Mr. Adams served as VP, Marketing at Aerovistas.net, Inc., an
Internet start-up, located in Vancouver, British Columbia, serving              
transportation and aviation clients. Since 1998, Mr. Adams has also served as   
President of his own private consulting practice, Airport Financial Services,   
Ltd., where he provides business development and planning services.             

      Hamid Baradaran, VP, Hardware Development and Manufacturing. Mr. Baradaran
joined our company as our Vice President, Hardware Development and Manufacturing
in July, 2004. Mr. Baradaran has over twenty-one years of diverse research and  
development experience with leading telecommunication/ data communication       
corporations. Mr. Baradaran also has over 15 years direct experience in hardware
design and manufacturing, including IC and systems level design, having served  
as the director of hardware development in Califonia with Gluos Networks from   
2002 to 2004, with Othios from 2000 to 2002 and with Alcatel USA from 1996. Mr. 
Baradaran has previously developed new products and has particular strengths in 
high-speed digital design, printed circuit board design, high-speed signal      
integrity, high-speed PCB layout, system electromechanical design & mechanical  
design. Mr. Baradaran has a Bachelor of Science in Electrical Engineering,      
received in 1982 from California State University, Fullerton, California. He has
also been the recipient of several patents and awards.                          

There are no family relationships between any of our directors or   
executive officers.                                                             

Executive Officers                                                              

  We have an employment agreement with Paul Mann. The remaining officers
serve at the discretion of our board of directors and hold office until their   
successor is elected and qualified or until their earlier resignation or        
removal.                                                                        

Board Committees                                                                

    Our Board does not maintain a separate audit, nominating or compensation
committee. Functions customarily performed by such committees are performed by  
our Board as a whole. We are not required to maintain such committees under the 
applicable rules of the Over-the-Counter Bulletin Board. None of our independent
directors qualify as an "audit committee financial expert."                     

     The Board of Directors has not adopted a specific process with respect to
security holder communications, but security holders wishing to communicate with
the Board of Directors may do so by mailing such communications to the Board of 
Directors at our offices.                                                       

Code of Ethics                                                                  

   We have not yet adopted a "code of ethics", as defined by the SEC, that
applies to our Chief Executive Officer, Chief Financial Officer, principal      
accounting officer or controller and persons performing similar functions. We   
are in the process of drafting and adopting a Code of Ethics.                   

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Director Compensation                                                           

      Directors are reimbursed for reasonable out-of-pocket expenses incurred in
connection with attendance at Board meetings. Directors are also eligible to    
receive annual stock option grants approved by the Board.                       

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EXECUTIVE COMPENSATION

     The following table sets forth the annual and long-term compensation paid
to our Chief Executive Officer and the other executive officers who earned more 
than $100,000 per year at the end of the last completed fiscal year. We refer to
all of these officers collectively as our "named executive officers."           

Summary Compensation Table

Summary Compensation Table                                                      

                                                        · Enlarge/Download Table

Annual Compensation                                                                                        
-----------------------------------------------------------------------------------------------------------
(a)                                           (b)          (c)          (d)          (e)            (f)    
                                           ---------   ----------   ----------   ----------     -----------
                                                                                    Other        Restricted
                                                                                    Annual         Stock   
Name and                                                  Salary       Bonus     Compensation      Award(s)
Principal Position                           Year           ($)         ($)           ($)            ($)   
-----------------------------------------------------------------------------------------------------------
Three years 2001 - 2003                                                                                    
-----------------------------------------------------------------------------------------------------------
                                                                                                           
Charles Lesser, Former President (1)         2003          69,631                14,369 (2)                
                                             2002                                                          
                                             2001                                                          
Current year, 2004                                                                                         

Jeremy Coles, Director                       2004                                                          
Shannon McCallum, Director                   2004                                                          
Paul Mann, CEO and President                 2004         175,000                                          
Bashir Jaffer, CFO                           2004         100,000 (4)                                      
Terry Laferte, VP Software Development       2004         100,000                                          
Cameron Adams, VP Strategic Devt & Sales     2004         100,000                                          
Hamid Baradaran, VP Hardware Development     2004         100,000                                          
-----------------------------------------------------------------------------------------------------------

Summary Compensation Table (cont.)                                              

                                                                · Download Table

                                                       Long Term Compensation       
                                              --------------------------------------
Annual Compensation                            Awards                      Payouts  
------------------------------------------------------------------------------------
(a)                                              (g)           (h)           (i)    
                                              ----------   -----------   -----------
                                              Securities                   All Other
                                              Underlying      LTIP          Compen- 
Name and                                       Options/      Payouts        sation  
Principal Position                             SARs (#)        ($)           ($)    
------------------------------------------------------------------------------------
Three years 2001 - 2003                                                             
------------------------------------------------------------------------------------
                                                                                    
Charles Lesser, Former President (1)           60,000 (3)                           

Current year, 2004                                                                  
Jeremy Coles, Director                         50,000                               
Shannon McCallum, Director                    100,000                               
Paul Mann, CEO and President                  200,000 (5)                           
Bashir Jaffer, CFO                            100,000                               
Terry Laferte, VP Software Development         50,000                               
Cameron Adams, VP Strategic Devt & Sales      100,000                               
Hamid Baradaran, VP Hardware Development      100,000                               
------------------------------------------------------------------------------------

(1)   Retained in April 2003.                                                   

(2)   Represents premiums paid on an insurance policy.                          

(3)   Options were originally granted on April 1, 2003 vesting 2,500 shares per 
      month over a period of 24 months. Mr. Lesser resigned in February 2004 and
     at that time 24,000 options were vested, the exercise of these options is
uncertain                                                           

(4)   Remuneration for certain officers is paid in Canadian currency at $130,000
per annum. These have been stated above as US $100,000 per annum    

(5)   Stock options to the CEO & President consist of 150,000 options under the 
     terms of his employment agreement and 50,000 options under the 2004 Stock
Option Plan                                                         

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Option/SAR Information                                                          

      The following table sets forth option granted by us to the named executive
officers in the most recent fiscal year.                                        

Options/SAR Grants in Last Fiscal Year
 Individual Grants

                                                        · Enlarge/Download Table

                                                            No.of               Percent                                       
                                                         Securities            of Total                                       
                                                         Underlying           Options/SARs         Exercise                   
                                                        Options/SARs           Granted to           or Base                   
                                                           Granted            Employees in           Price        Expiration  
Officer                                                      (#)            Fiscal Year (1)(2)       ($/Sh)          Date     
---------------------------------------------------  -------------------  ---------------------  -------------  --------------
                                                                                                                              
Paul Mann, CEO and President                               200,000              19.51%                $1.79       See Note (3)

Bashir Jaffer, CFO and Secretary                           100,000               9.76%                                        

Terry Laferte, VP Technical Operations                      50,000               4.88%                                        

Cameron Adams, VP Strategic Development & Sales            100,000               9.76%                                        

Hamid Baradaran, VP Hardware Development and                                                                                  
  Manufacturing                                            100,000               9.76%                                        

(1)   1,025,000 shares were issued granted in February 2005                     

(2)   Options vest monthly over 24 months from the date of Grant for Directors  
  and employees who were with the Company from March 1, 2004 to June 30,
2004. Options vest monthly over 24 months from the date of Grant for
   Directors and employees who were with the Company from March 1, 2004 to
     June 30, 2004. For directors and employees who joined on or after July 1,
2004 the options vest monthly over 36 months from the grant date.   

(3)   The shares will be free trading at the time of exercise of vested options.
     Options can only be exercised one year following the date of grant of the
 options. Options expire 5 years after the grant date or 90 days after
cessation of employment or directorship                             

Employment Agreements with Executive Officers                                   

  We entered into an employment agreement with our current President and
Chief Executive Officer, Paul Mann. The term of the agreement is one year and   
was effective as of the closing of the Cavio merger and is automatically        
renewable. Under the terms of the agreement, Mr. Mann receives a base salary of 
$175,000 and is eligible for an additional bonus based on our revenue           
performance. Under the terms of this employment agreement, Mr. Mann is also     
entitled to a ten-year stock option for 150,000 shares of our common stock at an
exercise price of $3.50 per share.                                              

   We have not entered into employment agreements with our other executive
officers.                                                                       

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We have entered into indemnification agreements with certain of our 
directors and executive officers pursuant to which we have agreed to indemnify  
any officer or director against all costs associated with the defense of any    
action brought against him or her in his/her capacity as our officer or         
director.                                                                       

We have entered into agreements with Manhattan Capital Partners     
("Manhattan") and its affiliates to provide consulting and stock placement      
services. We paid Manhattan a total of $316,028 during the year ended December  
31, 2004 and $205,673 during the year ended December 31, 2003. At December 31,  
2003 Manhattan had advanced to us $110,005 in a non-interest bearing short-term 
loan, which was repaid in 2004. We have amounts outstanding for prior services  
rendered by affiliates of Manhattan totaling an additional $208,771 and are     
negotiating to reduce the amounts owed under this agreement. Manhattan is       
related due to one of the principals who is one of our directors.               

   We have an unsecured, non-interest bearing short-term advance from Paul
Mann, our CEO and President, in the amount of $218,899 as of December 31, 2004. 
These advances are without any specified repayment terms.                       

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     We had an unsecured short term loan from Tall Enterprises Ltd. (a company
controlled by Terry Laferte, one of our officers) amounting to $64,000 as at    
December 31, 2004; bearing interest at 7% per annum and due on or before June   
30, 2005. Thos loan was paid in full in March 2005.                             

We have an unsecured loan from Global Ventures Advisors, a company  
controlled by a director of our subsidiary in Pakistan, Essential Tec Pakistan  
(Private) Ltd., as at December 31, 2004 amounting to $416,214; bearing interest 
at 12% per annum and due on or before June 30, 2006, with an option to convert  
to common stock in the event of default in repayment by the Company.            

   On November 3, 2003, Veridicom Inc. our subsidiary, entered into a five
year Marketing and Distribution Agreement with Biocom Co. Ltd., ("Biocom") a    
Korean corporation and Gyung Min Kim, our former director. Under the terms of   
this Agreement Biocom was appointed as our exclusive distributor for all the    
sale and servicing of the Company's products in Korea.                          

We believe that the terms of all of the above transactions are      
commercially reasonable and no less favorable to us than we could have obtained 
from an unaffiliated third party on an arm's length basis. Our policy requires  
that all related parties recuse themselves from negotiating and voting on behalf
of our company in connection with related party transactions.                   

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the beneficial 
ownership of our common stock as of June 21, 2005 by:                           

    o     each person known by us to be the beneficial owner of more than 5%
of our Common Stock;                                    

o     each of our directors;                                        

o     each of our executive officers; and                           

o     our executive officers and directors as a group.              

      Beneficial ownership is determined in accordance with the rules of the SEC
and includes voting and investment power. Under SEC rules, a person is deemed to
be the beneficial owner of securities which may be acquired by such person upon 
the exercise of options and warrants or the conversion of convertible securities
within 60 days from the date on which beneficial ownership is to be determined. 
Each beneficial owner's percentage ownership is determined by dividing the      
number of shares beneficially owned by that person by the base number of        
outstanding shares, increased to reflect the beneficially-owned shares          
underlying options, warrants or other convertible securities included in that   
person's holdings, but not those underlying shares held by any other person.    

Unless indicated otherwise, the address for each person named is c/o
Veridicom International, Inc., 3800-999 3rd Avenue, Seattle, Washington         
98104-4023.                                                                     

                                                        · Enlarge/Download Table

                                                                Amount and Nature of                     
Named Executive Officers and Directors:                         Beneficial Ownership  Percentage of Class

---------------------------------------                         --------------------  -------------------
                                                                                                         
Paul Mann, Director, President, Chief Executive Officer             3,063,267 (1)             19.3%      

Bashir Jaffer, Chief Financial Officer and Secretary                        0                  0.0%      

Terry Laferte, VP, Technical Operations                               277,454                  1.7%      

Cameron Adams, VP, Strategic Development and Sales                          0                  0.0%      

Hamid Baradaran, VP, Hardware Development & Manufacturing                   0                  0.0%      

Bill Cheung, Director                                                 713,572 (2)              4.5%      

Saif Mansour, Director                                                 50,000 (3)              0.3%      

Shannon McCallum, Director                                                  0                  0.0%      

Jermey Coles, Director                                                 16,634 (4)              0.1%      

All current directors and named officers as a group (9 in all)      4,120,927 (5)             26.0%      

5% Stockholders:                                                                                         

Ik Ju Kwun                                                                                               
102-805 Seocho-Samsung-Raemian                                                                           
APT Seocho-gu, Seocho-dong, Seoul                                                                        
Republic of Korea 137-070                                           1,498,682 (2)(6)           9.5%      

Mohammed I S Bin Hezaim                                                                                  
C/o Khaled Al Saadi                                                                                      
Noriba Bank                                                                                              
P.O. Box 18189                                                                                           
Manama                                                                                                   
Bahrain                                                               952,953                  6.0%      

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(1)   Includes options to purchase 150,000 shares of Common Stock.              

(2)   Includes (i) options to purchase 285,714 shares of Common Stock, owned by 
  Manhattan Capital Partners, LLC of which Mr. Cheung is a partner, (ii)
options to purchase 150,000 shares of Common Stock and (iii) 277,858
shares of Manhattan Capital Partners.                               

(3)   Includes options to purchase 50,000 shares of Common Stock.               

(4)   Includes warrants to purchase 16,634 shares of Common Stock exercisable.  

(5)   Includes options and warrants to purchase an aggregate of 652,348 shares  
of Common Stock.                                                    

(6)   Includes 979,376 shares held in the name of Biocom Co., Ltd. Mr. Kwun is  
the president of Biocom Co., Ltd.                                   

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DESCRIPTION OF SECURITIES TO BE REGISTERED

COMMON STOCK                                                                    

   We are authorized to issue up to 60,000,000 shares of common stock, par
value $.001. As of April 21, 2005, there were 15,842,107 shares of common stock 
outstanding. Holders of the common stock are entitled to one vote per share on  
all matters to be voted upon by the stockholders. Holders of common stock are   
entitled to receive ratably such dividends, if any, as may be declared by the   
Board of Directors out of funds legally available therefor. Upon the            
liquidation, dissolution, or winding up of our company, the holders of common   
stock are entitled to share ratably in all of our assets which are legally      
available for distribution after payment of all debts and other liabilities and 
liquidation preference of any outstanding common stock. Holders of common stock 
have no preemptive, subscription, redemption or conversion rights. The          
outstanding shares of common stock are validly issued, fully paid and           
nonassessable.                                                                  

  We have appointed U. S. Stock Transfer Corporation, 1745 Gardena Ave.,
Glendale, CA 91204-2991, as transfer agent for our shares of Common Stock.      

INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

      Our bylaws provide for the indemnification of our directors to the fullest
extent permitted by the Delaware General Corporation Law. Our bylaws further    
provide that our Board of Directors has sole discretion to indemnify our        
officers and other employees. We may limit the extent of such indemnification by
individual contracts with our directors and executive officers, but have not    
done so. We are required to advance, prior to the final disposition of any      
proceeding, promptly on request, all expenses incurred by any director or       
executive officer in connection with that proceeding on receipt of an           
undertaking by or on behalf of that director or executive officer to repay those
amounts if it should be determined ultimately that he or she is not entitled to 
be indemnified under our bylaws or otherwise. We are not, however, required to  
advance any expenses in connection with any proceeding if a determination is    
reasonably and promptly made by our Board of Directors by a majority vote of a  
quorum of disinterested Board members that (a) the party seeking an advance     
acted in bad faith or deliberately breached his or her duty to us or our        
stockholders and (b) as a result of such actions by the party seeking an        
advance, it is more likely than not that it will ultimately be determined that  
such party is not entitled to indemnification pursuant to the applicable        
sections of our bylaws.                                                         

   Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act" or "Securities Act") may be permitted to directors,      
officers or persons controlling us pursuant to the foregoing provisions, or     
otherwise, we have been advised that in the opinion of the Securities and       
Exchange Commission, such indemnification is against public policy as expressed 
in the Act and is, therefore, unenforceable.                                    

PLAN OF DISTRIBUTION

  The selling stockholders and any of their respective pledgees, donees,
assignees and other successors-in-interest may, from time to time, sell any or  
all of their shares of common stock on any stock exchange, market or trading    
facility on which the shares are traded or in private transactions. These sales 
may be at fixed or negotiated prices. The selling stockholders may use any one  
or more of the following methods when selling shares:                           

o     ordinary brokerage transactions and transactions in which the 
broker-dealer solicits the purchaser;                   

  o     block trades in which the broker-dealer will attempt to sell the
          shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;             

o     purchases by a broker-dealer as principal and resale by the   
broker-dealer for its account;                          

o     an exchange distribution in accordance with the rules of the  
applicable exchange;                                    

o     privately-negotiated transactions;                            

    o     short sales that are not violations of the laws and regulations of
any state or the United States;                         

  o     broker-dealers may agree with the selling stockholders to sell a
        specified number of such shares at a stipulated price per share;

o     through the writing of options on the shares;                 

o     a combination of any such methods of sale; and                

o     any other method permitted pursuant to applicable law.        

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  The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus. The selling    
stockholders shall have the sole and absolute discretion not to accept any      
purchase offer or make any sale of shares if they deem the purchase price to be 
unsatisfactory at any particular time.                                          

    The selling stockholders may also engage in short sales against the box,
puts and calls and other transactions in our securities or derivatives of our   
securities and may sell or deliver shares in connection with these trades.      

      The selling stockholders or their respective pledgees, donees, transferees
or other successors in interest, may also sell the shares directly to market    
makers acting as principals and/or broker-dealers acting as agents for          
themselves or their customers. Such broker-dealers may receive compensation in  
the form of discounts, concessions or commissions from the selling stockholders 
and/or the purchasers of shares for whom such broker-dealers may act as agents  
or to whom they sell as principal or both, which compensation as to a particular
broker-dealer might be in excess of customary commissions. Market makers and    
block purchasers purchasing the shares will do so for their own account and at  
their own risk. It is possible that a selling stockholder will attempt to sell  
shares of common stock in block transactions to market makers or other          
purchasers at a price per share which may be below the then market price. The   
selling stockholders cannot assure that all or any of the shares offered in this
prospectus will be issued to, or sold by, the selling stockholders. The selling 
stockholders and any brokers, dealers or agents, upon effecting the sale of any 
of the shares offered in this prospectus, may be deemed to be "underwriters" as 
that term is defined under the Securities Act of 1933, as amended, or the       
Securities Exchange Act of 1934, as amended, or the rules and regulations under 
such acts. In such event, any commissions received by such broker-dealers or    
agents and any profit on the resale of the shares purchased by them may be      
deemed to be underwriting commissions or discounts under the Securities Act.    

     We are required to pay all fees and expenses incident to the registration
of the shares, including fees and disbursements of counsel to the selling       
stockholders, but excluding brokerage commissions or underwriter discounts.     

    The selling stockholders, alternatively, may sell all or any part of the
shares offered in this prospectus through an underwriter. No selling stockholder
has entered into any agreement with a prospective underwriter and there is no   
assurance that any such agreement will be entered into.                         

   The selling stockholders may pledge their shares to their brokers under
the margin provisions of customer agreements. If a selling stockholder defaults 
on a margin loan, the broker may, from time to time, offer and sell the pledged 
shares. The selling stockholders and any other persons participating in the sale
or distribution of the shares will be subject to applicable provisions of the   
Securities Exchange Act of 1934, as amended, and the rules and regulations under
such act, including, without limitation, Regulation M. These provisions may     
restrict certain activities of, and limit the timing of purchases and sales of  
any of the shares by, the selling stockholders or any other such person. In the 
event that the selling stockholders are deemed affiliated purchasers or         
distribution participants within the meaning of Regulation M, then the selling  
stockholders will not be permitted to engage in short sales of common stock.    
Furthermore, under Regulation M, persons engaged in a distribution of securities
are prohibited from simultaneously engaging in market making and certain other  
activities with respect to such securities for a specified period of time prior 
to the commencement of such distributions, subject to specified exceptions or   
exemptions. In regards to short sells, the selling stockholder can only cover   
its short position with the securities they receive from us upon conversion. In 
addition, if such short sale is deemed to be a stabilizing activity, then the   
selling stockholder will not be permitted to engage in a short sale of our      
common stock. All of these limitations may affect the marketability of the      
shares.                                                                         

      We have agreed to indemnify the selling stockholders, or their transferees
or assignees, against certain liabilities, including liabilities under the      
Securities Act of 1933, as amended, or to contribute to payments the selling    
stockholders or their respective pledgees, donees, transferees or other         
successors in interest, may be required to make in respect of such liabilities. 

If the selling stockholders notify us that they have a material     
arrangement with a broker-dealer for the resale of the common stock, then we    
would be required to amend the registration statement of which this prospectus  
is a part, and file a prospectus supplement to describe the agreements between  
the selling stockholders and the broker-dealer.                                 

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 PENNY STOCK

The Securities and Exchange Commission has adopted Rule 15g-9 which 
establishes the definition of a "penny stock," for the purposes relevant to us, 
as any equity security that has a market price of less than $5.00 per share or  
with an exercise price of less than $5.00 per share, subject to certain         
exceptions. For any transaction involving a penny stock, unless exempt, the     
rules require:                                                                  

     o     that a broker or dealer approve a person's account for transactions
in penny stocks; and                                    

    o     the broker or dealer receive from the investor a written agreement
          to the transaction, setting forth the identity and quantity of the
penny stock to be purchased.                            

    In order to approve a person's account for transactions in penny stocks,
the broker or dealer must                                                       

      o     obtain financial information and investment experience objectives of
the person; and                                         

o     make a reasonable determination that the transactions in penny
         stocks are suitable for that person and the person has sufficient
      knowledge and experience in financial matters to be capable of
evaluating the risks of transactions in penny stocks.   

 The broker or dealer must also deliver, prior to any transaction in a
penny stock, a disclosure schedule prescribed by the Commission relating to the 
penny stock market, which, in highlight form:                                   

o     sets forth the basis on which the broker or dealer made the   
suitability determination; and                          

     o     that the broker or dealer received a signed, written agreement from
the investor prior to the transaction.                  

Disclosure also has to be made about the risks of investing in penny
stocks in both public offerings and in secondary trading and about the          
commissions payable to both the broker-dealer and the registered representative,
current quotations for the securities and the rights and remedies available to  
an investor in cases of fraud in penny stock transactions. Finally, monthly     
statements have to be sent disclosing recent price information for the penny    
stock held in the account and information on the limited market in penny stocks.

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SELLING STOCKHOLDERS

      The table below sets forth information concerning the resale of the shares
of common stock by the selling stockholders. We will not receive any proceeds   
from the resale of the common stock by the selling stockholders. We will receive
proceeds from the exercise of the warrants unless the selling stockholders      
exercise the warrants on a cashless basis. Assuming all the shares registered   
below are sold by the selling stockholders, none of the selling stockholders    
will continue to own any shares of our common stock.                            

The following table also sets forth the name of each person who is  
offering the resale of shares of common stock by this prospectus, the number of 
shares of common stock beneficially owned by each person, the number of shares  
of common stock that may be sold in this offering and the number of shares of   
common stock each person will own after the offering, assuming they sell all of 
the shares offered.                                                             

                                                        · Enlarge/Download Table

------------------- ----------------- ------------- ------------- ------------ -------------- ------------ -------------
                                          Total                                                                         
                      Total Shares of   Percentage                                                           Percentage 
                       Common Stock     of Common     Shares of                                 Beneficial   of Common  
                       Issuable Upon      Stock,     Common Stock   Beneficial  Percentage of   Ownership   Stock Owned 
                       Conversion of     Assuming     Included in   Ownership   Common Stock    After the      After    
        Name            Notes              Full       Prospectus    Before the  Owned Before    Offering     Offering   
                      and/or Warrants*   Conversion                 Offering**   Offering**        (9)           (9)    

------------------- ----------------- ------------- ------------- ------------ -------------- ------------ -------------
                                                                                                                        
AJW Offshore, Ltd.      3,762,992          19.18%     Up to         832,775 (1)      4.99%          --            --    
(2)(8)                                                7,525,984                                                         
                                                      shares of                                                         
                                                      common stock                                                      
------------------- ----------------- ------------- ------------- ------------ -------------- ------------ -------------
AJW Qualified           3,261,260          17.06%     Up to         832,775 (1)      4.99%          --            --    
Partners, LLC (2)(8)                                  6,522,520                                                         
                                                      shares of                                                         
                                                      common stock                                                      
------------------- ----------------- ------------- ------------- ------------ -------------- ------------ -------------
AJW Partners, LLC       1,170,709           6.88%     Up to         832,775 (1)      4.99%          --            --    
(2)(8)                                                2,341,417                                                         
                                                      shares of                                                         
                                                      common stock                                                      
------------------- ----------------- ------------- ------------- ------------ -------------- ------------ -------------
New Millennium            167,244           1.04%     Up to         167,356 (1)      1.10%          --            --    
Capital Partners                                      334,488                                                           
II, LLC (2)(8)                                        shares of                                                         
                                                      common stock                                                      
------------------- ----------------- ------------- ------------- ------------ -------------- ------------ -------------
Alpha Capital           1,672,441           9.54%     Up to         832,775 (1)      4.99%          --            --    
(3)(8)                                                3,344,882                                                         
                                                      shares of                                                         
                                                      common stock                                                      
------------------- ----------------- ------------- ------------- ------------ -------------- ------------ -------------
Enable Growth             836,220           5.01%     Up to         832,775 (1)      4.99%          --            --    
Partners L.P. (4)(8)                                  1,672,441                                                         
                                                      shares of                                                         
                                                      common stock                                                      
------------------- ----------------- ------------- ------------- ------------ -------------- ------------ -------------
Whalehaven Capital      1,672,441           9.54%     Up to         832,775 (1)      4.99%          --            --    
Fund Limited (5)(8)                                   3,344,882                                                         
                                                      shares of                                                         
                                                      common stock                                                      
------------------- ----------------- ------------- ------------- ------------ -------------- ------------ -------------
Meadowbrook Opportunity 1,003,465           5.95%     Up to         832,775 (1)      4.99%          --            --    
Fund LLC (6)(8)                                       2,006,929                                                         
                                                      shares of                                                         
                                                      common stock                                                      
------------------- ----------------- ------------- ------------- ------------ -------------- ------------ -------------
TCMP3 Partners            668,976           4.05%     Up to         669,424 (1)      4.27%          --            --    
(7)(8)                                                1,337,953                                                         
                                                      shares of                                                         
                                                      common stock                                                      
------------------- ----------------- ------------- ------------- ------------ -------------- ------------ -------------

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* This column represents an estimated number based on a current conversion price
of $1.27, divided into the principal amount.                                    

** These columns represent the aggregate maximum number and percentage of shares
that the selling stockholders can own at one time (and therefore, offer for     
resale at any one time) due to their 4.99% limitation.                          

   The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as amended,  
and the information is not necessarily indicative of beneficial ownership for   
any other purpose. Under such rule, beneficial ownership includes any shares as 
to which the selling stockholders has sole or shared voting power or investment 
power and also any shares, which the selling stockholders has the right to      
acquire within 60 days. The actual number of shares of common stock issuable    
upon the conversion of the secured convertible notes is subject to adjustment   
depending on, among other factors, the future market price of the common stock, 
and could be materially less or more than the number estimated in the table.    

(1) The actual number of shares of common stock offered in this prospectus, and 
included in the registration statement of which this prospectus is a part,      
includes such additional number of shares of common stock as may be issued or   
issuable upon conversion of the secured convertible notes and exercise of the   
related warrants by reason of any stock split, stock dividend or similar        
transaction involving the common stock, in accordance with Rule 416 under the   
Securities Act of 1933, as amended. However the selling stockholders have       
contractually agreed to restrict their ability to convert their secured         
convertible notes or exercise their warrants and receive shares of our common   
stock such that the number of shares of common stock held by them in the        
aggregate and their affiliates after such conversion or exercise does not exceed
4.99% of the then issued and outstanding shares of common stock as determined in
accordance with Section 13(d) of the Exchange Act. Accordingly, the number of   
shares of common stock set forth in the table for the selling stockholders      
exceeds the number of shares of common stock that the selling stockholders could
own beneficially at any given time through their ownership of the secured       
convertible notes and the warrants. In that regard, the beneficial ownership of 
the common stock by the selling stockholder set forth in the table is not       
determined in accordance with Rule 13d-3 under the Securities Exchange Act of   
1934, as amended.                                                               

(2) Some of the selling stockholders are affiliates of each other because they  
are under common control. AJW Partners, LLC is a private investment fund that is
owned by its investors and managed by SMS Group, LLC. SMS Group, LLC, of which  
Mr. Corey S. Ribotsky is the fund manager, has voting and investment control    
over the shares listed below owned by AJW Partners, LLC. AJW Offshore, Ltd.,    
formerly known as AJW/New Millennium Offshore, Ltd., is a private investment    
fund that is owned by its investors and managed by First Street Manager II, LLC.
First Street Manager II, LLC, of which Corey S. Ribotsky is the fund manager,   
has voting and investment control over the shares owned by AJW Offshore, Ltd.   
AJW Qualified Partners, LLC, formerly known as Pegasus Capital Partners, LLC, is
a private investment fund that is owned by its investors and managed by AJW     
Manager, LLC, of which Corey S. Ribotsky and Lloyd A. Groveman are the fund     
managers, have voting and investment control over the shares listed below owned 
by AJW Qualified Partners, LLC. New Millennium Capital Partners II, LLC, is a   
private investment fund that is owned by its investors and managed by First     
Street Manager II, LLC. First Street Manager II, LLC, of which Corey S. Ribotsky
is the fund manager, has voting and investment control over the shares owned by 
New Millennium Capital Partners II, LLC.                                        

(3) Alpha Capital is a private investment fund that is owned by all its         
investors and managed by Mr. Konrad Ackerman. Mr. Konrad Ackerman may be deemed 
the control person of the shares owned by such entity, with final voting power  
and investment control over such shares.                                        

(4) Enable Growth Partners is a professional hedge fund that is a Delaware      
Registered Limited Partnership. Mitch Levine is the Managing Partner and control
person.                                                                         

(5) Whalehaven Funds Limited is a professional hedge fund incorporated in       
Bermuda. The control persons are Evan Schemenauer, Arthur Jones, and Jennifer   
Kelly, directors.                                                               

(6) Meadowbrook Opportunity Fund LLC is a private investment fund that is owned 
by all its investors and managed by Meadowbrook Capital Management LLC.         
Meadowbrook Capital Management LLC is managed by MYR Partners LLC. Michael      
Ragins may be deemed the control person of the shares owned by Meadowbrook      
Opportunity Fund LLC, with final voting power and investment control over such  
shares.                                                                         

(7) TCMP3 Partners is a professional hedge fund that is a Delaware Registered   
Limited Partnership. The control persons are Walter Schenker and Steve Slawson. 

(8) We have been notified by the selling stockholders that they are not         
broker-dealers or affiliates of broker-dealers and that they believe they are   
not required to be broker-dealers.                                              

(9) Assumes that all securities registered will be sold.                        

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TERMS OF SECURED CONVERTIBLE NOTES

      To obtain funding for our ongoing operations, we entered into a Securities
Purchase Agreement with nine accredited investors on February 25, 2005 for the  
sale of (i) $5,100,000 in callable secured convertible notes and (ii) warrants  
to buy 10,200,000 shares of our common stock. This prospectus relates to the    
resale of the common stock underlying these secured convertible notes and       
warrants. The investors are obligated to provide us with an aggregate of        
$5,100,000 as follows:                                                          

o     $1,700,000 was disbursed on February 25, 2005;                

o     $1,700,000 was disbursed between April, 2005 and May, 2005    

  o     $1,700,000 will be disbursed within five days of this prospectus
          being declared effective, so long as our common stock is listed on
the American Stock Exchange.                            

Accordingly, we have received a total of $3,400,000 pursuant to the 
Securities Purchase Agreement. The funds from the sale of the callable secured  
convertible notes will be used for business development purposes, business      
acquisitions, working capital needs, pre-payment of interest, payment of        
consulting and legal fees and borrowing repayment.                              

     The callable secured convertible notes bear interest at 10%, mature three
years from the date of issuance, and the principal is convertible into our      
common stock, at the investors' option, at $1.27. Interest on the callable      
secured convertible notes can be paid, at our option, in cash or common stock   
based upon the conversion price. If an event of default occurs and is           
continuing, the conversion price of the callable secured convertible notes will 
be equal to the lesser of (i) $0.91 or (ii) 50.0% of the daily volume weighted  
average price of our common stock for the 5 days prior to the date a conversion 
notice is sent to us. The full principal amount of the callable secured         
convertible notes is due upon default under the terms of secured convertible    
notes. The warrants are exercisable until five years from the date of issuance. 
Half of the warrants are designated as Series A Warrants and have an exercise   
price of $3.00 per share and the other half are designated as Series B Warrants 
and have an exercise price of $5.00 per share. In addition, the conversion price
of the secured convertible notes and the exercise price of the warrants will be 
adjusted in the event that we issue common stock at a price below the fixed     
conversion price, below market price, with the exception of any securities      
issued in connection with the Securities Purchase Agreement. The conversion     
price of the callable secured convertible notes and the exercise price of the   
warrants may be adjusted in certain circumstances such as if we pay a stock     
dividend, subdivide or combine outstanding shares of common stock into a greater
or lesser number of shares, or take such other actions as would otherwise result
in dilution of the selling stockholder's position. The selling stockholders have
contractually agreed to restrict their ability to convert or exercise their     
warrants and receive shares of our common stock such that the number of shares  
of common stock held by them and their affiliates after such conversion or      
exercise does not exceed 4.99% of the then issued and outstanding shares of     
common stock. In addition, we have granted the investors a security interest in 
substantially all of our assets and intellectual property and registration      
rights.                                                                         

    The warrants are exercisable until five years from the date of issuance.
Half of the warrants are designated as Series A Warrants and have an exercise   
price of $3.00 per share and the other half are designated as Series B Warrants 
and have an exercise price of $5.00 per share. The selling stockholders will be 
entitled to exercise the warrants on a cashless basis if the shares of common   
stock underlying the warrants are not then registered pursuant to an effective  
registration statement. In the event that the selling stockholder exercises the 
warrants on a cashless basis, then we will not receive any proceeds. In         
addition, the exercise price of the warrants will be adjusted in the event we   
issue common stock at a price below market, with the exception of any securities
issued as of the date of this warrant or issued in connection with the callable 
secured convertible notes issued pursuant to the Securities Purchase Agreement, 
dated February 25, 2005.                                                        

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   Upon the issuance of shares of common stock below the market price, the
exercise price of the warrants will be reduced accordingly. The market price is 
determined by averaging the last reported sale prices for our shares of common  
stock for the five trading days immediately preceding such issuance as set forth
on our principal trading market. The exercise price shall be determined by      
multiplying the exercise price in effect immediately prior to the dilutive      
issuance by a fraction. The numerator of the fraction is equal to the sum of the
number of shares outstanding immediately prior to the offering plus the quotient
of the amount of consideration received by us in connection with the issuance   
divided by the market price in effect immediately prior to the issuance. The    
denominator of such issuance shall be equal to the number of shares outstanding 
after the dilutive issuance.                                                    

  The conversion price of the secured convertible notes and the exercise
price of the warrants may be adjusted in certain circumstances such as if we pay
a stock dividend, subdivide or combine outstanding shares of common stock into a
greater or lesser number of shares, or take such other actions as would         
otherwise result in dilution of the selling stockholder's position.             

The selling stockholders have contractually agreed to restrict their
ability to convert their secured convertible notes or exercise their warrants   
and receive shares of our common stock such that the number of shares of common 
stock held by them in the aggregate and their affiliates after such conversion  
or exercise does not exceed 4.99% of the then issued and outstanding shares of  
common stock.                                                                   

      A complete copy of the Securities Purchase Agreement and related documents
are filed with the SEC as exhibits to our Form SB-2 relating to this prospectus 
or incorporated by reference therein.                                           

 LEGAL MATTERS

 Sichenzia Ross Friedman Ference LLP, New York, New York will issue an
opinion with respect to the validity of the shares of common stock being offered
hereby. Sichenzia Ross Friedman Ference LLP is also the owner of 50,000 shares  
of our common stock, which were issued in connection with the provision of legal
services.                                                                       

 EXPERTS

 Our financial statements as of December 31, 2004, and for each of the
years in the two year period then ended, have been included herein in reliance  
upon the report of AJ. Robbins, PC, independent registered public accounting    
firm, appearing elsewhere herein, and upon authority of said firm as experts in 
accounting and auditing.                                                        

 AVAILABLE INFORMATION

    We have filed a registration statement on Form SB-2 under the Securities
Act of 1933, as amended, relating to the shares of common stock being offered by
this prospectus, and reference is made to such registration statement. This     
prospectus constitutes the prospectus of Veridicom International, Inc., filed as
part of the registration statement, and it does not contain all information in  
the registration statement, as certain portions have been omitted in accordance 
with the rules and regulations of the Securities and Exchange Commission.       

We are subject to the informational requirements of the Securities  
Exchange Act of 1934 which requires us to file reports, proxy statements and    
other information with the Securities and Exchange Commission. Such reports,    
proxy statements and other information may be inspected at public reference     
facilities of the SEC at Judiciary Plaza, 450 Fifth Street N.W., Washington D.C.
20549. Copies of such material can be obtained from the Public Reference Section
of the SEC at Judiciary Plaza, 450 Fifth Street N.W., Washington, D.C. 20549 at 
prescribed rates. Because we file documents electronically with the SEC, you may
also obtain this information by visiting the SEC's Internet website at          
http://www.sec.gov.                                                             

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)

 INDEX TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2004 and 2003                                  

Report of Independent Registered Public Accounting Firm                     F-1 

Consolidated Balance Sheet                                                  F-2 

Consolidated Statements of Operations and Other Comprehensive Income (Loss) F-3 

Consolidated Statements of Changes in Stockholders' Equity (Deficit)        F-4 

Consolidated Statements of Cash Flows                                       F-6 

Notes to Consolidated Financial Statements                                  F-7 

For the Quarter Ended March 31, 2005 and 2004                                   

Consolidated Balance Sheets as of March 31, 2005 and December 31, 2004      F-22

Consolidated Statements of Operations and Other Comprehensive Income            
(Loss) for the three months ended March 31, 2005 and 2004                   F-23

Consolidated Statements of Cash Flows for the three months ended                
March 31, 2005 and 2004                                                     F-24

Notes to Unaudited Consolidated Financial Statements                        F-25

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 AJ. ROBBINS, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
216 SIXTEENTH STREET
 SUITE 600
DENVER, COLORADO 80202

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders                                      
Veridicom International, Inc.                                                   
Seattle, Washington                                                             

We have audited the accompanying consolidated balance sheet of Veridicom        
International, Inc.. as of December 31, 2004, and the related consolidated      
statements of operations, changes in stockholders' equity, and cash flows for   
each of the years in the two year period then ended. These consolidated         
financial statements are the responsibility of the Company's management. Our    
responsibility is to express an opinion on these consolidated financial         
statements based on our audits.                                                 

We conducted our audits in accordance with the standards of the Public Company  
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the          
consolidated financial statements are free of material misstatement. An audit   
includes examining, on a test basis, evidence supporting the amounts and        
disclosures in the consolidated financial statements. An audit also includes    
assessing the accounting principles used and significant estimates made by      
management, as well as evaluating the overall financial statement presentation. 
We believe that our audits provide a reasonable basis for our opinion.          

In our opinion, the consolidated financial statements referred to above present 
fairly, in all material respects, the financial position of Veridicom           
International, Inc. as of December 31, 2004, and the results of its operations  
and its cash flows for each of the years in the two year period then ended in   
conformity with generally accepted accounting principles in the United States of
America.                                                                        

The accompanying financial statements have been prepared assuming that the      
Company will continue as a going concern. As discussed in Note 1 to the         
financial statements, the Company has suffered recurring losses from operations 
that raises substantial doubt about the entity's ability to continue as a going 
concern. Management's plans in regard to these matters are also described in    
Note 1. The financial statements do not include any adjustments that might      
result from the outcome of this uncertainty.                                    

 AJ. ROBBINS, P.C.
CERTIFIED PUBLIC ACCOUNTANTS

Denver, Colorado                                                                
February 11, 2005                                                               

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
CONSOLIDATED BALANCE SHEET
 December 31, 2004

ASSETS
Current assets                                                                  
          Cash                                                  $     53,866
          Accounts receivable, net                                    15,791
          Accounts receivable, related party                          32,794
          Subscriptions Receivable                                   420,000
          Inventory                                                   72,793
          Other current assets                                        26,603
                                                                ------------
                      Total current assets                           621,847

Furniture & equipment, net                                             206,697  
Patents                                                                200,000  
Goodwill                                                             4,728,546  
Other assets                                                             3,302  
                                                                ------------
                                                                $  5,760,392
                                                                ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities                                                             
          Accounts payable                                      $  1,808,828
          Accrued expenses                                           785,889
          Due to related party                                       610,003
          Notes payable, related party                               582,681
          Notes payable                                              254,549
          Other current liabilities                                   37,799
                                                                ------------
Total current liabilities                                            4,079,749  

Minority interest                                                       18,698  

Commitments and Contingencies                                                   
Stockholders' equity                                                            
Preferred stock $.001 par value                                                 
2,000,000 authorized -0-                                                    
issued and outstanding                                                      

Common stock, $.001 par value, 60,000,000 authorized;                           
15,781,107 issued and outstanding                                       15,781

Additional paid in capital                                           13,591,671 
Accumulated other comprehensive loss                                   (144,695)
Accumulated (deficit)                                               (11,800,812)
                                                                 -------------
Total stockholders' equity                                            1,661,945 
                                                                 -------------
                                                                 $   5,760,392
                                                                 =============

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
 CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

                                                                · Download Table

                                                       2004           2003     
                                                   ------------   ------------ 
                                                                               
Revenues                                                                       
            Net revenue                            $    384,853   $    281,997 
            Cost of goods sold                          212,063        116,007 
                                                   ------------   ------------ 
            Gross profit                                172,790        165,990 

Operations                                                                     
            General & administrative expense          3,441,793      1,727,517 
            Research & development expense              490,674             -- 
            Technical operations expense                  4,903             -- 
            Depreciation expense                         47,188         18,105 
            Impairment of goodwill                           --      1,809,648 
                                                   ------------   ------------ 
            Income (loss) from operations            (3,811,768)    (3,389,280)

Other income                                                                   
            Other income (expense)                      179,344          6,692 
            Interest expense                            (94,145)       (60,835)
            Gain on forgiveness of debt                      --        556,104 
                                                   ------------   ------------ 
            (Loss) before minority interest          (3,726,569)    (2,887,319)

Minority interest                                         6,308          4,629 
                                                   ------------   ------------ 
Net (loss)                                           (3,720,261)    (2,882,690)

Other comprehensive (loss):                                                    
            Foreign currency translation               (141,002)          (741)
                                                   ============   ============ 
Total comprehensive (loss)                         $ (3,861,263)  $ (2,883,431)
                                                   ============   ============ 
 (Loss) per share: Basic and fully diluted (loss)                              
   per common share                                $      (0.27)  $      (0.51)
                                                   ============   ============ 
Weighted average common shares                                                 
   Outstanding, basic and fully diluted              14,415,829      5,662,025 
                                                   ============   ============ 

 SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

                                                        · Enlarge/Download Table

                                                                                     Accumulated                                  
                                    $.001      Common                    Additional     Other                          Total      
                   Common Stock   par value     Stock      Deferred       Paid In    Comprehensive  Accumulated    Stockholders'  
                       Shares       Amount    Committed  Compensation     Capital        Loss        (Deficit)    Equity (Deficit)
                       ------       ------    ---------  ------------     -------        ----        ---------    --------------  
                                                                                                                                  

Balances,                                                                                                                         
December 31, 2002      4,259,496   $  4,259  $  10,000   $ (477,141)   $  5,129,790  $   (2,952)   $ (5,197,861)  $   (533,905)   

Reverse merger                                                                                                                    
with                                                                                                                              
Alpha Virtual,                                                                                                                    
Inc.                   1,515,897      1,516         --           --       1,003,308          --              --      1,004,824    

Amortization of                                                                                                                   
deferred                                                                                                                          
compensation                  --         --         --      477,141              --          --              --        477,141    

Sales of common                                                                                                                   
stock                                                                                                                             
net of offering                                                                                                                   
costs                                                                                                                             
of $106,603              155,296        155         --           --         619,445          --              --        619,600    

Stock issued for                                                                                                                  
services                  20,000         20         --           --          58,780          --              --         58,800    

Stock issued in                                                                                                                   
acquisition of                                                                                                                    
Veridicom, Inc.        3,500,000      3,500         --           --         414,760          --              --        418,260    

Stock options                                                                                                                     
granted                                                                                                                           
for service                   --         --         --           --          54,520          --              --         54,520    

Foreign currency                                                                                                                  
translation                                                                                                                       
adjustment                    --         --         --           --              --        (741)             --           (741)   

Net (loss)                    --         --         --           --              --          --      (2,882,690)    (2,882,690)   
                      ----------   --------  ---------   ----------    ------------  ----------    ------------   ------------    

Balances,                                                                                                                         
December 31, 2003      9,450,689   $  9,450  $  10,000   $       --    $  7,280,603  $   (3,693)   $ (8,080,551)  $   (784,191)   

Sales of common                                                                                                                   
stock                                                                                                                             
net of offering                                                                                                                   
costs                                                                                                                             
of $673,978            1,020,578      1,021         --           --       2,040,063          --              --      2,041,084    

Stocks issued for                                                                                                                 
conversion of debt       157,140        157         --           --         164,843          --              --        165,000    

Stocks issued as                                                                                                                  
loan                                                                                                                              
fee (Beaufort)            25,000         25         --           --         106,225          --              --        106,250    

Stock issued in                                                                                                                   
Cavio                                                                                                                             
merger                 5,119,140      5,119         --           --         424,401          --              --        429,520    

Stock options                                                                                                                     
granted                                                                                                                           
for CEO                       --         --         --           --         359,100          --              --        359,100    

Exercise of Stock                                                                                                                 
options                    8,560          9         --           --          13,817          --              --         13,826    

Cavio's                                                                                                                           
subscription                                                                                                                      
received                      --         --         --           --       3,192,619          --              --      3,192,619    

Common stock                                                                                                                      
committed                                                                                                                         
reclassified                  --         --    (10,000)          --          10,000          --              --             --    

Foreign currency                                                                                                                  
translation                                                                                                                       
adjustment                    --         --         --           --              --    (141,002)             --       (141,002)   

Net (loss)                    --         --         --           --              --          --      (3,720,261)    (3,720,261)   
                      ----------   --------  ---------   ----------    ------------  ----------    ------------   ------------    

Balances,                                                                                                                         
December 31, 2004     15,781,107   $ 15,781  $      --   $       --    $ 13,591,671  $ (144,695)   $(11,800,812)  $  1,661,945    
                      ==========   ========  =========   ==========    ============  ==========    ============   ============    

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
CONSOLIDATED STATEMENTS CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

                                                        · Enlarge/Download Table

                                                                                   2004           2003     
                                                                               ------------    ----------- 
                                                                                                           
Cash flows from operating activities                                                                       
Net loss before minority interest                                              $ (3,726,569)   $(2,887,319)

Adjustments to reconcile net loss to net cash (used in) operating activities:                              
            Depreciation and amortization                                            47,188         18,105 
            Bad debt expense                                                             --         38,216 
            Impairment of goodwill                                                       --      1,809,648 
            Stock based compensation                                                359,100        531,661 
            Common Stock issued for debt conversion                                (165,000)            -- 
            Common stock issued for loan fee                                        106,250             -- 
            Common stock issued for services rendered                                    --         58,800 
            Transfer of equipment to Cavio                                               --         18,336 
            Gain on Forgiveness of Debt                                                  --       (556,104)
(Increase) / decrease in:                                                                                  
            Accounts receivable                                                      11,749         (7,901)
            Related party receivables                                                45,166        (50,404)
            Subscriptions Receivable                                               (420,000)            -- 
            Inventory                                                                17,010             -- 
            Other assets                                                            (11,474)        88,480 
Increase / (decrease) in :                                                                                 
            Accounts payable                                                        605,443       (145,628)
            Accrued expenses                                                        (98,880)        37,065 
            Due to related parties                                                  234,304        157,059 
            Other current liabilities                                                37,799             -- 
            Deferred compensation                                                        --       (140,618)
                                                                               ------------   ------------ 
Net cash (used in) operating activities                                          (2,957,914)    (1,030,604)
                                                                               ------------   ------------ 
Cash flows from investing activities                                                                       
            Cash acquired through merger and acquisition                            164,791        184,001 
            Purchase of equipment                                                   (70,609)       (19,314)
                                                                               ------------   ------------ 
Net cash provided by (used in) investing activities                                  94,182        164,687 
                                                                               ------------   ------------ 

Cash flows from financing activities                                                                       
            Net proceeds from note payable                                          582,681        346,549 
            Payments on notes payable                                              (130,000)       (20,000)
            Payment on capital lease obligation                                          --         (5,423)
            Collection of subscription receivable                                   129,821             -- 
            Payment of offering costs/commission                                   (673,968)            -- 
            Sale of minority interest                                                    --         29,635 
            Proceeds from sale of common stock and warrants                       3,023,699        619,600 
                                                                               ------------    ----------- 
Net cash provided by financing activities                                         2,932,233        970,361 
                                                                               ------------    ------------
Effect of exchange rate changes on cash                                            (141,002)          (741)
                                                                               ------------    ------------
Net increase (decrease) in cash                                                     (72,501)       103,703 
Cash, beginning of period                                                           126,367         22,664 
                                                                               ------------    ----------- 
Cash, end of period                                                                 $53,866       $126,367 
                                                                               ============    =========== 
Supplemental disclosures of cash flow information                                                          
Interest paid                                                                        22,676             -- 
Income taxes paid                                                                                          

 SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             

Background                                                                      

Veridicom International, Inc., (the Company, formerly known as Alpha Virtual,   
Inc. ("Alpha") is a Delaware Corporation formerly headquartered in California   
that was formed on September 9, 1987. The name of the Company was changed to    
Veridicom International, Inc. in February 2004. The Company consolidated its    
corporate offices in Seattle, Washington, and Vancouver, British Columbia in    
April 2004.                                                                     

Going Concern                                                                   

The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company has incurred a net 
loss during 2004 of $3,720,261 and has a working capital deficit, which raises  
doubt about its ability to continue as a going concern. The Company is currently
devoting its efforts to raising additional capital and investigating potential  
merger candidates. The Company's ability to continue as a going concern is      
dependent upon its ability to develop additional sources of capital, and        
ultimately, achieve profitable operations. The accompanying financial statements
do not include any adjustments that might result from the outcome of these      
uncertainties.                                                                  

Mergers                                                                         

On April 28, 2003 the Company and Esstec Inc., a privately held Nevada          
corporation, entered into an Agreement and Plan of Merger. In accordance with   
the Merger, the Company, a Nevada Corporation, acquired Esstec in exchange for  
4,276,162 shares of Alpha's common stock. For accounting purposes Esstec        
acquired Alpha in a reverse merger under the purchase method of accounting. The 
financial statements in the filings of Alpha became those of Esstec. The legal  
entity (Alpha) retained its name until it was changed to Veridicom              
International, Inc. in February 2004. Thus, the financial statements are still  
those of "Esstec, Inc."                                                         

On November 25, 2003, the Company entered into an Agreement and Plan of Merger  
with Veridicom, Inc. (Veridicom), a California corporation, through AAC, a      
Nevada corporation, whereby the Company acquired Veridicom in exchange for      
3,500,000 shares of Veridicom's common stock. 3,250,000 shares were issued to   
the holders of Veridicom's stock, and 250,000 shares were issued into escrow to 
cover Veridicom's indemnification obligations, if any. Veridicom's stockholders 
owned approximately 35% of the Company's outstanding common stock as of November
25, 2003.                                                                       

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On January 16, 2004, the Company entered into an Agreement and Plan of Merger   
with Cavio Corporation, a privately held Washington corporation ("Cavio"). The  
merger became effective on February 20, 2004. In accordance with the merger, on 
February 20, 2004, through its wholly owned subsidiary, A/VII Acquisition       
Corporation, acquired Cavio in exchange for 5,119,140 shares of the Company's   
common stock. The Company recorded goodwill of $3,792,019 for this acquisition. 

Cash                                    $   164,791                   
Receivables                                  14,043                   
Stock subscription receivable               129,821                   
Prepaid expenses                              4,874                   
Fixed assets, net                           109,473                   
                     -----------
                         423,002
                     -----------
Less liabilities assumed                                              
Accounts payable and accrued expenses      (694,009)                  
Loans payable                               (28,693)                  
                     -----------
                         (722,702)
                     -----------
Net liabilities                              $  (299,700)                       
                     ===========
Net liabilities assumed                      $   299,700                        
Stock issued for acquisition                     299,700                        
Common stock issued into escrow                3,192,619                        
                     -----------
Goodwill                                     $ 3,792,019                        
                     ===========

The following unaudited proforma condensed consolidating statement of operations
for the year period ended December 31, 2004 gives effect to the above           
transaction as if it had occurred on January 1, 2004.                           

                                                        · Enlarge/Download Table

             Veridicom International Inc.    Cavio Corporation for the period                                             
            Consolidated for the year ended     from November 01, 2003 to                                                 
                   December 31, 2004                February 19, 2004          Proforma Adjustments  Proforma Consolidated
            -------------------------------     -------------------------      --------------------  ---------------------
                                                                                                                          
Revenues           $   384,853                       $       --                        $ --              $   384,853      
(Expenses)          (4,196,622)                        (481,715)                         --               (4,678,337)     
Other                   91,508                           (3,367)                         --                   88,141      
                   -----------                       ----------                        ----              -----------      
Net loss           $(3,720,261)                      $ (485,082)                       $ --              $(4,205,343)     
                   ===========                       ==========                        ====              ===========      

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Operations                                                                      

The Company has five subsidiaries: Esstec, Essential Tec Pakistan (Private)     
Limited ("Pakistan Ltd."), Veridicom Inc., Cavio, and Veridicom International   
(Canada) Inc. ("Canada Inc.").                                                  

Esstec is a professional services company that focuses on e-commerce            
initiatives, interactive multimedia, and mobile software applications for       
clients in various industries, including the telecommunications and             
entertainment industries. During 2004, Esstec did not have any significant      
revenues or incur any significant expenses.                                     

Pakistan Ltd. was incorporated on April 19, 2000 to establish the business of   
software development for the international markets and to export software and   
technology. Esstec owns approximately 63.4% of Pakistan Ltd.                    

Veridicom Inc. designs, manufactures and delivers hardware and software products
that enable strong authentication solutions based on fingerprint biometrics.    
Veridicom Inc. markets a complete fingerprint biometrics platform on which      
applications can be built.                                                      

Cavio produces technology tools designed to protect users from fraud,           
misrepresentation, security and privacy issues by allowing users to             
biometrically authenticate themselves to secure control access and confirm      
identity across a number of industries.                                         

On January 21, 2004, Canada Inc. was formed to be the Canadian operating company
for the public company.                                                         

Consolidation                                                                   

The consolidated financial statements include the accounts of the Company and   
its subsidiaries Esstec, Pakistan Ltd., Veridicom, Cavio, and Canada Inc. All   
significant intercompany balances and transactions have been eliminated in      
consolidation.                                                                  

Minority Interest                                                               

Minority interest reflects the ownership of minority shareholders in the equity 
of Pakistan Ltd., a consolidated subsidiary less than wholly owned.             

Reclassifications                                                               

For comparative purposes, prior year's consolidated financial statements have   
been reclassified to conform to report classifications of the current year.     

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill                                                                        

Goodwill was recorded at its purchase price and is not being amortized. Pursuant
to statements of financial accounting standards 142 ("Goodwill and Other        
Intangible Assets") and SFAS 144 ("Accounting for the Impairment or Disposal of 
Long-Lived Assets"), the company has evaluated its goodwill for impairment and  
determined that the fair value of its goodwill is $4,728,546.                   

Valuation of the Company's Common Stock                                         

Unless otherwise disclosed, all stock based transactions entered into by the    
Company have been valued at the market value of the Company's common stock on   
the date the transaction was entered into or have been valued using the         
Black-Scholes Model to estimate the fair market value.                          

Concentrations of Credit Risk                                                   

Financial instruments, which potentially expose the Company to concentrations of
credit risk, consist primarily of trade accounts receivable. The Company        
maintains reserves for potential credit losses and such losses, in the          
aggregate, have not exceeded management's expectations.                         

Advertising Expenses                                                            

The Company expenses advertising costs as incurred. During the years ended      
December 31, 2004 and 2003, the Company did not have significant advertising    
costs.                                                                          

Fair Value of Financial Instruments                                             

The carrying amounts of cash, accounts receivable, notes payables, accounts     
payable, and accrued expenses approximate fair value because of the short       
maturity of these items.                                                        

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS                                       

In December 2004, the FASB issued SFAS No.123 (revised 2004), "Share-Based      
Payment" ("SFAS 123(R)"). SFAS 123(R) will provide investors and other users of 
financial statements with more complete and neutral financial information by    
requiring that the compensation cost relating to share-based payment            
transactions be recognized in financial statements. That cost will be measured  
based on the fair value of the equity or liability instruments issued. SFAS     
123(R) covers a wide range of share-based compensation arrangements including   
share options, restricted share plans, performance-based awards, share          
appreciation rights, and employee share purchase plans. SFAS 123(R) replaces    
SFAS No. 123, "Accounting for Stock-Based Compensation", and supersedes APB     
Opinion No. 25, "Accounting for Stock Issued to Employees". SFAS 123, as        
originally issued in 1995, established as preferable a fair-value-based method  
of accounting for share-based payment transactions with employees. However, that
Statement permitted entities the option of continuing to apply the guidance in  
Opinion 25, as long as the footnotes to financial statements disclosed what net 
income would have been had the preferable fair-value-based method been used.    
Public entities (other than those filing as small business issuers) will be     
required to apply SFAS 123(R) as of the first interim or annual reporting period
that begins after June 15, 2005. The Company has evaluated the impact of the    
adoption of SFAS 123(R), and believes that it could have an impact to the       
Company's overall results of operations depending on the number of stock options
granted in a given year.                                                        

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In December 2004, the FASB issued SFAS No.153, "Exchanges of Nonmonetary Assets,
an amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions."   
The amendments made by SFAS 153 are based on the principle that exchanges of    
nonmonetary assets should be measured based on the fair value of the assets     
exchanged. Further, the amendments eliminate the narrow exception for           
nonmonetary exchanges of similar productive assets and replace it with a broader
exception for exchanges of nonmonetary assets that do not have commercial       
substance. Previously, Opinion 29 required that the accounting for an exchange  
of a productive asset for a similar productive asset or an equivalent interest  
in the same or similar productive asset should be based on the recorded amount  
of the asset relinquished. Opinion 29 provided an exception to its basic        
measurement principle (fair value) for exchanges of similar productive assets.  
That exception required that some nonmonetary exchanges, although commercially  
substantive, to be recorded on a carryover basis. By focusing the exception on  
exchanges that lack commercial substance, the FASB believes SFAS No.153 produces
financial reporting that more faithfully represents the economics of the        
transactions. SFAS No.153 is effective for nonmonetary asset exchanges occurring
in fiscal periods beginning after June 15, 2005. Earlier application is         
permitted for nonmonetary asset exchanges occurring in fiscal periods beginning 
after the date of issuance. The provisions of SFAS No.153 shall be applied      
prospectively. The Company has evaluated the impact of the adoption of SFAS 153,
and does not believe the impact will be significant to the Company's overall    
results of operations or financial position.                                    

In November 2004, the FASB issued SFAS No. 151 "Inventory Costs, an amendment of
ARB No. 43, Chapter 4 (" SFAS No. 151". The amendments made by SFAS 151 clarify 
that abnormal amounts of idle facility expense, freight, handling costs, and    
wasted materials (spoilage) should be recognized as current-period charges and  
require the allocation of fixed production overheads to inventory based on the  
normal capacity of the production facilities. The guidance is effective for     
inventory costs incurred during fiscal years beginning after June 15, 2005.     
Earlier application is permitted for inventory costs incurred during fiscal     
years beginning after November 23, 2004. The Company has evaluated the impact of
the adoption of SFAS 151, and does not believe the impact will be significant to
the Company's overall results of operations or financial position.              

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial    
Instruments with Characteristics of Both Liabilities and Equity," which is      
effective for financial instruments entered into or modified after May 31, 2003,
and otherwise is effective at the beginning of the first interim period         
beginning after June 15, 2003. SFAS No. 150 establishes standards for how an    
issuer classifies and measures certain financial instruments with               
characteristics of both liabilities and equity. The adoption of this standard   
did not have a material impact on the Company's financial statements.           

In April 2003, FASB issued SFAS No. 149, "Accounting for Derivative Instruments 
and Hedging Activities," which is effective for contracts entered into or       
modified after June 30, 2003 and for hedging relationships designated after June
30, 2003. This statement amends and clarifies financial accounting and reporting
for derivative instruments including certain instruments embedded in other      
contracts and for hedging activities under SFAS No. 133, "Accounting for        
Derivative Instruments and Hedging Activities." The adoption of this standard   
did not have a material impact on the Company's financial statements.           

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In January 2003, the FASB issued FIN 46, "Consolidation of Variable Interest    
Entities." FIN 46 clarifies the application of Accounting Research Bulletin No. 
51, "Consolidated Financial Statements," for certain entities which do not have 
sufficient equity at risk for the entity to finance its activities without      
additional subordinated financial support from other parties or in which equity 
investors do not have the characteristics of a controlling financial interest   
("variable interest entities"). Variable interest entities will be required to  
be consolidated by their primary beneficiary. The primary beneficiary of a      
variable interest entity is determined to be the party that absorbs a majority  
of the entity's expected losses, receives a majority of its expected returns, or
both, as a result of holding variable interests, which are ownership,           
contractual, or other pecuniary interests in an entity. FIN 46 applies          
immediately to variable interest entities created after January 31, 2003, and to
variable interest entities in which an enterprise obtains an interest after that
date. It applies in the first fiscal year or interim period beginning after     
December 15, 2003, to variable interest entities in which an enterprise holds a 
variable interest that it acquired before February 1, 2003. FIN 46 applies to   
public enterprises as of the beginning of the applicable interim or annual      
period. The Company's adoption of FIN 46 did not have any impact upon the       
Company's financial condition or results of operations.                         

In March 2004, the FASB approved the consensus reached on the Emerging Issues   
Task Force (EITF) Issue No. 03-1, "The Meaning of Other-Than-Temporary          
Impairment and Its Application to Certain Investments." The objective of this   
Issue is to provide guidance for identifying impaired investments. EITF 03-1    
also provides new disclosure requirements for investments that are deemed to be 
temporarily impaired. In September 2004, the FASB issued a FASB Staff Position  
(FSP) EITF 03-1-1 that delays the effective date of the measurement and         
recognition guidance in EITF 03-1 until after further deliberations by the FASB.
The disclosure requirements are effective only for annual periods ending after  
June 15, 2004. The Company has evaluated the impact of the adoption of the      
disclosure requirements of EITF 03-1 and does not believe it will have an impact
to the Company's overall combined results of operations or combined financial   
position. Once the FASB reaches a final decision on the measurement and         
recognition provisions, the Company will evaluate the impact of the adoption of 
EITF 03-1.                                                                      

Inventory                                                                       

Inventory consists primarily of various sensors, combos and parallel port units.
Inventory is valued at lower of cost (first-in, first-out) or market.           

Furniture and Equipment                                                         

Furniture and equipment is recorded at cost. Depreciation and amortization      
expense is provided on a straight-line basis using estimated useful lives of 3-7
years. Depreciation expense was $47,188 and $18,015 for the years ended December
31, 2004 and 2003, respectively. Maintenance and repairs are charged to expense 
as incurred and expenditures for major improvements are capitalized. When assets
are retired or otherwise disposed of, the property accounts are relieved of     
costs and accumulated depreciation and any resulting gain or loss is credited or
charged to operations.                                                          

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Patents                                                                         

At the acquisition of Veridicom, the Company evaluated the patents and          
determined the costs to secure the unused patents outweighed their intended use 
and was unable to find a party interested in purchasing the patents. The patents
were originally recorded at cost and were being amortized on a straight-line    
basis over 15 years. The Company has valued the patents at $200,000. The company
is not amortizing the patents.                                                  

Cash and Cash Equivalents                                                       

For purposes of reporting cash flows, the Company considers all funds with      
original maturities of three months or less to be cash equivalents.             

Income Taxes                                                                    

The Company recognizes deferred tax assets and liabilities for the expected     
future income tax consequences of events that have been recognized in the       
Company's financial statements. Under this method, deferred tax assets and      
liabilities are determined based on temporary differences between the financial 
carrying amounts and the tax bases of assets and liabilities using enacted tax  
rates in effect in the periods in which the temporary differences are expected  
to reverse. Valuation allowances are established when necessary to reduce       
deferred tax assets to the amount expected to be realized. Income tax expense   
represents the tax payable for the current period and the change during the     
period in deferred tax assets and liabilities. The Company has a net operating  
loss carry forward of approximately $3,800,000 expiring beginning in 2020.      

Revenue Recognition                                                             

Sales of services are recorded when performed in accordance with contracts.     
Revenues from software sales are recorded in accordance with SOP 97-2 'Software 
Revenue Recognition', which requires that revenue recognized from software      
arrangements be allocated to the various elements of the arrangement based on   
the relative fair market values of the elements, such as software products,     
upgrades, enhancements, post contract customer support, installation or         
training. Revenue from product services are recognized at the time services are 
provided.                                                                       

For fixed fee contracts, Esstec recognizes revenue based on the percentage      
completed, calculated as either the number of direct labor hours in the project 
to date divided by the estimated total direct labor hours, or based upon the    
completion of specific task benchmarks. It is Esstec's policy to record contract
losses in their entirety in the period in which such losses can be estimated.   
Any revenues associated with pre-payments or pre-billings are deferred until    
revenue is earned. For non-fixed fee jobs, revenue is recognized as services are
performed and adjusted to realization value, if necessary.                      

Pakistan Ltd. recognizes revenue at the point/time the software is              
delivered/exported.                                                             

Veridicom Inc. recognizes revenues at the point of shipment of products.        

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Use of Estimates in the Preparation of Financial Statements                     

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

Comprehensive Loss                                                              

The Company utilizes Statement of Financial Accounting Standards ("SFAS") No.   
130. "Reporting Comprehensive Income." This statement establishes standards for 
reporting comprehensive loss and its components in a financial statement.       
Comprehensive loss as defined includes all changes in equity (net assets) during
a period from non-owner sources. Examples of items to be included in            
comprehensive loss, which are excluded from net loss, include foreign currency  
translation adjustments and unrealized gains and losses on available-for-sale   
securities. Comprehensive loss presented in these consolidated financial        
statements resulted from translations of foreign currency financial statements. 

Foreign Currency Translation                                                    

Pakistan Ltd. considers the Pakistan Rupee to be the functional currency of its 
operations. Cavio and Canada Inc. consider the Canadian Dollar to be the        
functional currency of their operations. The reporting currency of the Company  
is the U.S. dollar; accordingly, all amounts included in the financial          
statements have been translated into U.S. dollars.                              

Exchange Rates         For the year Ending 2004     For the Year Ending 2003    
--------------         ------------------------     ------------------------    
Rupee Average                   .01715                      .017331             
Rupee Period end                .01682                      .017479             

Canadian Dollar Average         .76847                                          
Canadian Dollar Period end      .83084                                          

Software Development Costs                                                      

The software development costs are expensed as research and development costs as
incurred until the software reaches technological feasibility in accordance with
Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed" ("SFAS 86").        

Earnings Per Common Share                                                       

The Company computes earnings per common share in accordance with Statement of  
Financial Accounting Standards No. 128, "Earnings per Share" (SFAS No. 128). The
Statement requires dual presentation of basic and diluted EPS on the face of the
income statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS computation to 
the numerator and denominator of the diluted EPS computation. Basic loss per    
share is computed by dividing loss available to common shareholders by the      
weighted average number of common shares outstanding. The computation of diluted
loss per share is similar to the basic loss per share computation except the    
denominator is increased to include the number of additional shares that would  
have been outstanding if the dilutive potential common shares had been issued.  
In addition, the numerator is adjusted for any changes in income or loss that   
would result from the assumed conversions of those potential shares. However,   
such presentation is not required if the effect is antidilutive. Due to losses  
during the years ended December 31, 2004 and 2003, no presentation is made.     

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - ACCOUNTS RECEIVABLE                                                    

In December 1999 the Company sold its PGTS training simulator to an unrelated   
entity. As part of the agreement, the Company is entitled to royalty payments on
future PGTS Training System sales by Eidetics for a four-year period from the   
date of sale. As of December 31, 2004 the Company was owed approximately        
$105,117 in past due royalties. A full allowance was recorded against this      
receivable. The Company continues to pursue collection of these royalties.      

Accounts receivable are in respect of sales of hardware and software to         
customers that the Company expects to collect in 2005.                          

NOTE 3 - FURNITURE AND EQUIPMENT                                                

Furniture and equipment consists of the following:                              

                                                                        2004
                                                                        --------
Tooling equipment                                                       $161,595
Furniture and equipment                                                   33,932
Office equipment                                                          30,954
Computers                                                                278,185
Software                                                                 158,539
Vehicles                                                                  19,818
                                                                        --------
                                                                         683,023
         Less accumulated depreciation and amortization                  476,326
                                                                        --------
                                                                        $206,697
                                                                        ========

NOTE 4 - DCAA AUDIT                                                             

The Company's books and records were subject to audit by the Defense Contract   
Audit Agency (DCAA) for defense contracts serviced by Alpha in 1994. A          
contingent liability of $100,000 had been reserved for over 10 years in the     
Company's books for DCAA audit. No efforts have been made by DCAA to collect on 
this contingent liability and the Company recognized $100,000 of income in the  
current year after the expiration of the 10 year period, which is included in   
other income.                                                                   

NOTE 5 - NOTES PAYABLE - RELATED PARTIES                                        

The Company has notes payable totaling $582,681 bearing interest at rates from  
10%-12% per annum, maturing between January 2004 and June 2007.                 

In August 2004, the Company borrowed $100,000 under a short-term agreement. The 
principal amount and interest of $10,000 was due on September 30, 2004.         
Additional terms of the loan include the issuance of 25,000 shares of the       
Company at $4.25 per share (the closing price on August 30, 2004) as a loan fee 
and the granting of warrants to purchase 100,000 shares of the Company's common 
stock at $3.50 per share. The value of the 25,000 shares of $106,250 has been   
recorded as common stock committed.                                             

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Subsequent to December 31, 2004, the Company has reached a full settlement with 
the lender. Under the settlement terms, the total interest payable is to be     
limited to a maximum of $20,000, of which $10,000 was paid in March 2005. Also, 
$65,000 of the principal was repaid in January 2005. A director of the Company  
is an associate of the lender's parent company.                                 

During the year ending December 31, 2004, 157,140 shares were issued upon       
conversion of $165,000 of notes. These conversions were inadvertently omitted on
the June 30, 2004 and September 30, 2004 quarterly financial statements which   
would have reduced debt by $165,000 and increased equity by the same amount. The
effect of any interest adjustment for the above in the respective quarters is   
not significant.                                                                

The Company has an unsecured short term loan from Tall Enterprises Ltd. (a      
company controlled by Terry Laferte, an officer of the Company) amounting to    
$66,467 as at December 31, 2004; bearing interest at 7% per annum and due on or 
before June 30, 2005. This loan was paid in full in March, 2005.                

The Company has an unsecured loan from Global Ventures Advisors, a company      
controlled by a director of the Company's subsidiary in Pakistan which as of    
December 31, 2004 amounted to $416,214; bearing interest at 12% per annum and   
due on or before June 30, 2006, with an option to convert to common stock in the
event of default in repayment by the Company.                                   

NOTE 6 - STOCK-BASED COMPENSATION                                               

The Company accounts for stock based compensation under Statement of Financial  
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS   
123). The standard requires the Company to present the "fair value" method with 
respect to stock-based compensation of consultants and other non-employees.     

The Company did not change its method of accounting with respect to stock       
options; the Company continues to account for these under the "intrinsic value" 
method. The Company recognized $359,100 as stock based compensation to the      
Company's CEO for the year ended December 31, 2004. This brings the total number
of vested shares to December 31, 2004 to 62,500 out of the total 150,000 shares.

NOTE 7 - RELATED PARTY TRANSACTIONS                                             

The Company has entered into agreements with Manhattan Capital Partners         
("Manhattan") and its affiliates to provide consulting and stock placement      
services. The Company paid Manhattan a total of $316,028 during the year ended  
December 31, 2004. The Company paid Manhattan a total of $205,673 during the    
year ended December 31, 2003. At December 31, 2003 Manhattan had advanced the   
Company $110,005 in a non-interest bearing short-term loan, which was repaid in 
2004. The Company has amounts outstanding for prior services rendered by        
affiliates of Manhattan totaling an additional $208,771 and is negotiating to   
reduce the amounts owed under this agreement. Manhattan is related due to one of
the principals who is a director of the Company.                                

The Company has an unsecured, non-interest bearing short term advances from Paul
Mann, CEO and President of the Company, amounted to $218,899 as of December 31, 
2004. These advances are without any specified repayment terms.                 

On July 15, 2003 the Company entered into a consulting agreement for marketing  
strategy and support services for a term of three months and at the rate of     
$7,000 per month plus the reimbursement of out of pocket expenses. This         
agreement continues and expands Government and commercial marketing activities  
previously undertaken for the OneView Technology, and extends these activities  
to include technology newly available from Esstec and Veridicom.                

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On July 15, 2003 the Company entered into an advisory agreement with the        
principals of the consulting company in the above agreement to join the         
Company's Advisory Board to assist the Company's Board of Directors in          
structuring and advising as to strategic alliances and growth. The agreement is 
for one year and the principals were each granted options to acquire 10,000     
shares of the Company's common stock at $3.50 per share; options vest monthly   
over one year. The options were valued at $54,520, the fair value using the     
Black-Scholes Pricing Model. The average risk rate used was 3.3%, volatility was
estimated at 100% and the expected life was one year.                           

On November 3, 2003, Veridicom Inc. a subsidiary of the Company, entered into a 
five year Marketing and Distribution Agreement with Biocom Co. Ltd., ("Biocom") 
a Korean corporation and Gyung Min Kim, a director of the Company. Under the    
terms of this Agreement Biocom was appointed as the Company's exclusive         
distributor for all the sale and servicing of the Company's products in Korea.  

NOTE 8 - COMMON STOCK                                                           

The Company has authorized 60,000,000 shares of $.001 par value common stock and
2,000,000 shares of $.001 par value preferred stock                             

Common Stock Issued during the Year Ended December 31, 2004                     

During the year ending December 31, 2004 the Company sold 1,020,578 shares of   
common stock for $2,715,062 less offering costs of $673,978.                    

During the year ending December 31, 2004 the Company issued 8,560 shares of     
common stock for $13,826 for the exercise of stock options.                     

Stock Option Plan                                                               

In April 2004 the Company adopted the 2004 Stock Option, Deferred Stock, and    
Restricted Stock Plan (the Plan) effective June 25, 2004, which provides for the
granting of options to officers, directors, consultants, employees, and         
advisors. 2,000,000 shares of common stock are reserved under the Plan for the  
granting of options. The Plan is in effect until June 25, 2014. The options are 
exercisable to purchase stock for a period of up to ten years from the date of  
grant.                                                                          

On February 7, 2005, the Board of Directors of the Company approved the granting
of 1,025,000 shares to officers, directors and employees of the Company under   
the 2004 Stock Option Plan.                                                     

NOTE 9 - COMMITMENTS AND CONTINGENCIES                                          

Employment Agreement                                                            

The Company entered into an employment agreement with its President and Chief   
Executive Officer effective February 20, 2004 for one year providing for an     
annual salary of $175,000, ten-year stock option to purchase 150,000 shares of  
the Company's common stock at $3.50, and an annual bonus of $20,000 for every   
$1.5 million in gross consolidated revenue of the Company for said year. The    
agreement is automatically renewable.                                           

The stock options vest monthly over a twenty-four month period. As of December  
31, 2004, 42% of the options were vested. The fair value of the vested options  
of $359,100 was estimated using the Black-Scholes option pricing model with an  
expected life of five years, a risk-free interest rate of 2.79% and an expected 
volatility of 293%. The fair value of vested options during the year has been   
expensed as stock based compensation.                                           

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On October 31, 2002 the Company's Chief Technology Officer was discharged. On   
November 15, 2002 the two parties entered into a Settlement of Employment       
Agreement whereby the Company agreed to pay and accrued $30,000 in severance pay
with monies received for royalties (See Note 2). The Company will pay 50% of    
monies received up to $30,000.                                                  

Litigation                                                                      

Five former employees of Veridicom, Inc. have filed claims against the Company  
with the Labor Commissioner in the State of California. The former employees    
allege that the Company owes unpaid wages, salaries and vacation pay for various
periods between July 2000 and November 2003 amounting to a total of $111,650.   
Management and legal advisors are reviewing the validity of the claim. The      
Company has accrued for this liability in its financial statements as of        
December 31, 2004.                                                              

On March 28, 2003 the Company and one of the Company's stockholders filed a     
lawsuit in Superior Court against a former CEO of the Company. The lawsuit      
alleges a breach of fiduciary duty, negligence, fraud and breach of contract    
claiming the CEO did not devote his efforts to the Company's product development
and market strategies or maximize the profit of the business. An amount of      
damages has not been determined and the outcome of this lawsuit cannot be       
determined at this time.                                                        

In addition, the Company is a party to a number of other lawsuits arising in the
normal course of business. In the opinion of management, the resolution of these
matters will not have a material adverse effect on the Company's operations,    
cash flows or financial position.                                               

Agreements                                                                      

The Company entered into a Non-Excusive Agreement with KirwanGier for assisting 
in equity placements on August 5, 2004 for a term of six months. The agreement  
was terminated on October 6, 2004. Under the terms of the agreement, the Company
was to issue warrants to purchase 100,000 shares of the Company's common stock  
at $3.50 per share. The Company will not issue these warrants due to            
non-performance on the part of KirwanGier.                                      

The Company has entered into an agreement with Carpe DM on August 23, 2004 for  
investor relations services for a term of one year. The terms of the agreement  
are pending approval of the Board of Directors of the Company and include       
monthly fees of $2,500 to $5,000 and the issuance of warrants to purchase       
150,000 shares of the Company's common stock at $3.50 per share. Additional     
warrants for a further 150,000 shares may be issued at similar terms dependent  
upon attainment of specific performance targets.                                

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On February 25, 2005, the Company completed the first of three rounds of a      
private placement worth $5,100,000 through a placement agent, Joseph Stevens &  
Co. Inc ("JSC"). As consideration for the placement services provided, the      
Company is obligated to issue JSC a warrant to purchase up to 107,087 shares of 
its common stock at an exercise price of $1.27 per share and a warrant to       
purchase up to 100,000 shares of its common stock at an exercise price of $3.50 
per share and cash consideration in the amount of $136,000.                     

Leases                                                                          

In February 2004 the Company entered into a three year operating lease for      
office space. The Company is required to pay basic rent and estimated operating 
expenses. The remaining lease amounts are $197,132 per annum for 2005 and 2006. 

Rent expense was $139,077 and $26,841 for the years ended December 31, 2004 and 
2003, respectively.                                                             

NOTE 10 - PROCEEDS FROM CAPITAL STOCK SUBSCRIPTIONS                             

On January 16, 2004, the Company entered into an Agreement and Plan of Merger   
with Cavio Corporation, a privately held Washington corporation ("Cavio"). The  
merger became effective on February 20, 2004 following a special meeting of     
Cavio's stockholders. In accordance with the terms of the Merger Agreement, the 
Company acquired all outstanding shares of Cavio common stock in exchange for   
5,119,140 shares of the Company's common stock. As of February 20, 2004 Cavio   
had received proceeds from capital stock subscriptions amounting to $3,192,619, 
which represented amounts advanced to Cavio that were intended to be converted  
into capital stock. To complete the merger with the Company, Cavio issued       
1,754,000 shares which were then exchanged for 486,654 shares of the Company's  
common stock (at the exchange ratio of 1: 0.277454 as per the terms of the      
Merger Agreement). The 486,654 shares have been held in trust since consummation
of the Merger, pending confirmation of eligible subscribers and the proceeds of 
$3,192,619 were recorded as a liability in Cavio's financial statements.        

In March, 2005, Cavio and the Company confirmed the subscribers eligible to be  
issued the 486,654 shares of the Company's common stock. The Board of Directors 
of the Company then ratified, approved and accepted the issuance of the         
aforementioned 486,654 shares of the Company's common stock to the subscribers. 
Accordingly, the proceeds from capital stock subscriptions have now been        
recorded as additional paid in capital (APIC) during the year ended December 31,
2004.                                                                           

NOTE 11 - EARNINGS PER SHARE                                                    

                                            For the Year Ended December 31, 2004
                                            ------------------------------------
                                                                       Per
                                             Income        Shares      Share
                                          (Numerator)  (Denominator)  Amount
                                           -----------   -----------  --------
Basic EPS                                                                       
(Loss) available to common stockholders  $(3,720,261)   14,415,829   $(0.26)

Effect of Dilutive Securities                       --            --       --   
                                        -----------    ----------   ------

Diluted EPS                                                                     
(Loss) available to common stockholders  $(3,720,261)   14,415,829   $(0.26)
                                        ===========    ==========   ======

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                            For the Year Ended December 31, 2003
                                            ------------------------------------
                                                                     Per
                                            Income        Shares     Share
                                          (Numerator)  (Denominator)  Amount
                                           -----------   -----------  --------
Basic EPS                                                                       
 (Loss) available to common stockholders   $(2,882,690)   5,662,025   $ (0.51)

Effect of Dilutive Securities                      --            --         --  
                                          -----------    ---------   -------

Diluted EPS                                                                     
 (Loss) available to common stockholders   $(2,882,690)   5,662,025   $ (0.51)
                                          ===========    =========   =======

NOTE 12 GAIN ON CANCELLATION/FORGIVENESS OF DEBT                                

Effective October 31 2002, the Company entered into a License Agreement with its
principal shareholder, Global Alpha Corporation ("GAC") wherein GAC was granted 
an exclusive license to the Company's software and systems commonly referred to 
as the "IC3D Framework" (the "System). The System encompasses substantially all 
of the Company's software including software developed to support multi-user    
online collaborative interactivity in a broad variety of applications employing 
a variety of virtual media over a number of networks including the Internet and 
intra-nets. Under the Agreement, GAC will pay to the Company a license fee of   
ten percent of the revenue generated from the sale or use of the System up to   
$1,000,000, nine percent up to $2,000,000, eight percent up to $3,000,000 and,  
thereafter, seven percent of the revenue generated. A minimum, annual license   
fee of $25,000 for the year ending December 31, 2002 and December 31, 2003 must 
be paid to maintain the exclusive license. At March 31, 2003 the annual license 
fee of $25,000 for 2002 had not been paid and the Company has waived the license
fee based on discussions with GAC setting off the license fee against the short 
term debt of $435,000 owed by the Company to GAC. The Company has sold to GAC   
the IC3D/OneView product in exchange for cancellation of the $435,000 note and  
accrued interest of $45,312 owed by Alpha.                                      

NOTE 13 - OFFICE CLOSING                                                        

On April 15, 2004 the Company permanently closed the offices of Veridicom, Inc. 
in Sunnyvale, California and is currently in the process of integrating and     
consolidating its software and hardware product divisions at its offices in     
Vancouver, British Columbia, Canada. The direct costs incurred by the company   
to-date, with respect to the closure and relocation of the Sunnyvale operations,
amount to $31,575.                                                              

NOTE 14 - SUBSEQUENT EVENTS                                                     

Sale of Common Stocks                                                           

Subsequent to the balance sheet date the Company sold 61,000 shares for         
$100,650. $65,000 of the proceeds was used to extinguish existing debt.         

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Financing agreement                                                             

On February 25, 2005, the Company completed the first of three rounds of a      
private placement whereby the Company will issue up to an aggregate of          
$5,100,000 worth of 10% callable secured notes convertible into shares of common
stock of the Company and warrants to purchase up to an aggregate of 10,200,000  
shares of common stock, of the Company to certain accredited investors. The     
closing of the first and second round of the Private Placement resulted in      
aggregate proceeds to the Company of $3,400,000 and the final closing of        
$1,700,000 is contingent upon triggering events set forth in the Securities     
Purchase Agreement.                                                             

The Notes have a term of 36 months and bear interest at 10% per annum, which is 
payable monthly; provided, however, that the interest rate shall reset at 0% for
any monthly period in which the Company's stock price is greater than 125% of   
the "Initial Market Price," which is defined as 100% of the volume weighted     
average of the Company's common stock for the five days immediately prior to    
closing, as reported on the Over-the-Counter Bulletin Board.                    

The Warrants are exercisable at any time for a period of five years from the    
date of issuance. The Series A Warrants have an exercise price of $3.00 per     
share and the Series B Warrants have an exercise price of $5.00 per share.      

As an inducement to participate in the Private Placement, the Company granted   
the Note Holders a security interest in all of its intellectual property.       

As consideration for placement agent services provided by Joseph Stevens & Co.  
Inc. ("JSC") in connection with the Private Placement, the Company is obligated 
to issue JSC a warrant to purchase up to 107,087 shares of its common stock at  
an exercise price of $1.27 per share and a warrant to purchase up to 100,000    
shares of its common stock at an exercise price of $3.50 per share and cash     
consideration in the amount of $136,000.                                        

Stock Option Plan                                                               

On February 7, 2005, the Board of Directors of the Company approved the granting
of 1,025,000 shares to officers, directors and employees of the Company under   
the 2004 Stock Option Plan.                                                     

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
 CONSOLIDATED BALANCE SHEETS

                                                        · Enlarge/Download Table

                                     ASSETS                                            
                                                             March 31     December 31  
                                                               2005           2004     
                                                           ------------   ------------ 
                                                            [UNAUDITED]                
                                                                                       
Current assets                                                                         
    Cash                                                   $    403,948   $     53,866 
    Accounts receivable                                          15,428         15,791 
    Receivable, related party                                   115,262         32,794 
    Subscriptions receivable                                         --        420,000 
    Inventory                                                    70,660         72,793 
    Other current assets                                         21,600         26,603 
                                                           ------------   ------------ 
         Total current assets                                   626,898        621,847 

Furniture & equipment, net                                      192,723        206,697 
Patents                                                         200,000        200,000 
Goodwill                                                      4,728,546      4,728,546 
Deferred financing costs, net                                   387,347             -- 
Other assets                                                      3,305          3,302 
                                                           ------------   ------------ 
                                                           $  6,138,819   $  5,760,392 
                                                           ============   ============ 
                      LIABILITIES AND STOCKHOLDERS' EQUITY                             

Current liabilities                                                                    
    Accounts payable                                       $  1,206,026   $  1,808,828 
    Accrued expenses                                            771,262        785,889 
    Due to related party                                        576,181        610,003 
    Notes payable related party, current portion                     --        166,467 
    Notes payable, current portion                              299,549        254,549 
    Other current liabilities                                    40,374         37,799 
                                                           ------------   ------------ 
         Total current liabilities                            2,823,392      3,663,535 

    Long term debt                                              366,214        416,214 
    Convertible notes payable, net of discount                  438,317             -- 
                                                           ------------   ------------ 
                                                              3,627,923      4,079,749 

Minority interest                                                23,569         18,698 
Stockholders' equity                                                                   
    Common stock, $.001 par value, 60,000,000                                          
    authorized; 15,842,107 and 15,781,107 issued                                       
    and outstanding                                              15,842         15,781 
    Additional paid in capital                               15,743,263     13,591,671 
    Accumulated other comprehensive (loss)                     (141,422)      (144,695)
    Accumulated (deficit)                                   (13,130,356)   (11,800,812)
                                                           ------------   ------------ 
    Stockholders' equity                                      2,487,327      1,661,945 
                                                           ------------   ------------ 
                                                           $  6,138,819   $  5,760,392 
                                                           ============   ============ 

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
 CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
 (Unaudited)

                                                        · Enlarge/Download Table

                                                       Three months     Three months  
                                                           Ended            Ended     
                                                      March 31, 2005   March 31, 2004 
                                                      --------------   -------------- 
Revenues                                                                              
                                                                                      
    Net revenue                                       $       80,576   $      238,975 
    Cost of goods sold                                        22,694          160,038 
                                                      --------------   -------------- 
    Gross profit                                              57,882           78,937 

Expenses                                                                              
    General & administrative expenses                        742,681          781,778 
    Research & development                                   293,323           45,607 
    Depreciation                                              17,267            7,625 
                                                      --------------   -------------- 
    (Loss) from operations                                  (995,389)        (756,073)

Other income / (expense)                                                              
    Other expense                                             (4,637)          (2,434)
    Interest expense                                        (476,321)         (10,697)
    Gain on forgiveness of debt                              151,675               -- 
                                                      --------------   -------------- 
    (Loss) before minority interest                       (1,324,672)        (769,204)

    Minority interest                                         (4,871)           4,320 
                                                      --------------   -------------- 
    Net (loss)                                            (1,329,543)        (764,884)

    Other comprehensive  (loss):                                                      
    Foreign currency translation                               3,273               -- 
                                                      --------------   -------------- 
    Total comprehensive  (loss)                       $   (1,326,270)  $     (764,884)

    (Loss) per share: Basic and fully diluted (loss)                                  
       per common share                               $        (0.09)  $        (0.07)

    Weighted average common shares                                                    
       outstanding basic and fully diluted                15,594,363       11,819,186 

 SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
CONSOLIDATED STATEMENTS CASH FLOWS
 (Unaudited)

                                                        · Enlarge/Download Table

                                                        Three months     Three months  
                                                            Ended            Ended     
                                                       March 31, 2005   March 31, 2004 
                                                       --------------   -------------- 
                                                                                       
Cash flows from operating activities                                                   
Net (loss) before minority interest                    $   (1,324,672)  $     (769,204)

Adjustments to reconcile net (loss) to net cash                                        
  used in operating activities:                                                        
    Depreciation and amortization                              17,267            7,625 
    Stock based compensation                                  179,295           35,910 
    Gain on forgiveness and cancellations of debt            (151,675)              -- 
    Accretion of interest expense on convertible debt         449,385               -- 
(Increase) / decrease in:                                                              
    Accounts receivable                                           364           15,868 
    Related party receivables                                 (82,468)          45,397 
    Inventory                                                   2,133            6,310 
    Prepaid expenses and other assets                           5,003          (29,391)
Increase / (decrease) in :                                                             
    Accounts payable                                         (451,132)           8,087 
    Accrued expenses                                          (14,628)        (148,376)
    Due to related parties                                    (33,821)         (91,745)
    Other current liabilities                                   2,575               -- 
                                                       --------------   -------------- 
Net cash (used in) operating activities                    (1,402,374)        (919,519)
                                                       --------------   -------------- 

Cash flows from investing activities                                                   
    Cash acquired through merger and acquisition                   --          164,791 
    Purchase of property and equipment                         (3,293)          (9,359)
                                                       --------------   -------------- 
Net cash provided by (used in) investing activities            (3,293)         155,432 
                                                       --------------   -------------- 

Cash flows from financing activities                                                   
    Proceeds from convertible notes payable                 1,700,000               -- 
    Payments on notes payable                                (241,467)        (100,000)
    Deferred financing costs                                 (221,707)              -- 
    Collection of subscription receivable                     420,000          129,821 
    Payment of offering costs/commission                       (5,000)        (166,668)
    Proceeds from sale of common stock and options            100,650        1,238,808 
                                                       --------------   -------------- 
Net cash provided by financing activities                   1,752,476        1,101,961 
                                                       --------------   -------------- 
Effect of exchange rate changes on cash                         3,273           (2,040)
                                                       --------------   -------------- 
Net increase in cash                                          350,082          335,834 
Cash, beginning of period                                      53,866          126,367 
                                                       --------------   -------------- 
Cash, end of period                                    $      403,948   $      462,201 
                                                       ==============   ============== 
Supplemental disclosures of cash flow information                                      
Interest paid                                                  10,000           13,906 
Income taxes paid                                                  --               -- 

 SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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VERIDICOM INTERNATIONAL, INC. AND SUBSIDIARIES
 (FORMERLY KNOWN AS ALPHA VIRTUAL, INC.)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION                                                  

The accompanying unaudited consolidated financial statements have been prepared 
in accordance with accounting principles generally accepted in the United States
of America for interim financial information and with the instructions to Form  
10-QSB and Item 310 of Regulation S-B. Accordingly, they do not include all of  
the information and footnotes required by generally accepted accounting         
principles for complete financial statements. The accompanying unaudited        
consolidated financial statements reflect all adjustments that, in the opinion  
of management, are considered necessary for a fair presentation of the financial
position, results of operations, and cash flows for the periods presented. The  
results of operations for such periods are not necessarily indicative of the    
results expected for the full fiscal year or for any future period. The         
accompanying consolidated financial statements should be read in conjunction    
with the audited financial statements included in Form 10-KSB for the fiscal    
year ended December 31, 2004.                                                   

The historical results for the three months ended March 31, 2005 include the    
Company and all its subsidiaries. The historical results for the three months   
ended March 31, 2004 include Cavio Corporation ("Cavio") from the merger date of
February 20, 2004.                                                              

NOTE 2 - OPERATIONS                                                             

GOING CONCERN                                                                   

The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company has incurred a net 
loss of $1,329,543 and has a working capital deficit, which raises doubt about  
its ability to continue as a going concern. The Company is currently devoting   
its efforts to raising additional capital. The Company's ability to continue as 
a going concern is dependent upon its ability to develop additional sources of  
capital, and ultimately, achieve profitable operations. The accompanying        
financial statements do not include any adjustments that might result from the  
outcome of these uncertainties.                                                 

SUBSIDIARIES                                                                    

The Company has five subsidiaries: Esstec, Essential Tec Pakistan (Private)     
Limited ("Pakistan Ltd."), Veridicom Inc., Cavio, and Veridicom International   
(Canada) Inc. ("Canada Inc.").                                                  

Esstec is a professional services company that focuses on e-commerce            
initiatives, interactive multimedia, and mobile software applications for       
clients in various industries, including the telecommunications and             
entertainment industries. During 2004, Esstec did not have any significant      
revenues or incur any significant expenses.                                     

Pakistan Ltd. was incorporated on April 19, 2000 to establish the business of   
software development for the international markets and to export software and   
technology. Esstec owns approximately 63.4% of Pakistan Ltd.                    

Veridicom Inc. designs, manufactures and delivers hardware and software products
that enable strong authentication solutions based on fingerprint biometrics.    
Veridicom Inc. markets a complete fingerprint biometrics platform on which      
applications can be built.                                                      

Cavio produces technology tools designed to protect users from fraud,           
misrepresentation, security and privacy issues by allowing users to             
biometrically authenticate themselves to secure control access and confirm      
identity across a number of industries.                                         

On January 21, 2004, Canada Inc. was formed to be the Canadian operating company
for the public company.                                                         

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CONSOLIDATION                                                                   

The consolidated financial statements include the accounts of the Company and   
our subsidiaries Esstec, Pakistan Ltd., Veridicom, Cavio, and Canada Inc. All   
significant intercompany balances and transactions have been eliminated in      
consolidation.                                                                  

NAME CHANGE                                                                     

The legal entity, Alpha Virtual, Inc. ("Alpha"), retained its name until it was 
changed to Veridicom International, Inc. in February 2004.                      

MINORITY INTEREST                                                               

Minority interest reflects the ownership of minority shareholders in the equity 
of Pakistan Ltd., a consolidated subsidiary less than wholly owned.             

MERGERS                                                                         

On January 16, 2004, we entered into an Agreement and Plan of Merger with Cavio 
Corporation, a privately held Washington corporation ("Cavio"). The merger      
became effective on February 20, 2004 following a special meeting of Cavio's    
stockholders. In accordance with the merger, on February 20, 2004, through its  
wholly owned subsidiary, A/VII Acquisition Corporation, a Nevada corporation,   
acquired Cavio in exchange for 5,119,140 shares of our common stock. We recorded
goodwill of $3,792,019 for this acquisition.                                    

Cash                                    $   164,791                   
Receivables                                  14,043                   
Stock subscription receivable               129,821                   
Prepaid expenses                              4,874                   
Fixed assets, net                           109,473                   
                     -----------
                         423,002
                     -----------
Less liabilities assumed                                                        
Accounts payable and accrued expenses      (694,009)                  
Loans payable                               (28,693)                  
                     -----------
                         (722,702)
                     -----------
Net liabilities                              $  (299,700)                       
                     ===========
Net liabilities assumed                      $   299,700                        
Stock issued for acquisition                     299,700                        
Common stock issued into escrow                3,192,619                        
                     -----------
Goodwill                                     $ 3,792,019                        
                     ===========

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The following unaudited proforma condensed consolidating statement of operations
for the year period ended December 31, 2004 gives effect to the above           
transaction as if it had occurred on January 1, 2004.                           

                                                        · Enlarge/Download Table

                Veridicom                                                                
              International     Cavio Corporation                                        
            Inc. Consolidated    for the period                                          
               for the year     from November 01,                                        
                  ended         2003 to February         Proforma          Proforma      
            December 31, 2004       19, 2004           Adjustments       Consolidated    
            -----------------   -----------------   -----------------  ----------------- 
                                                                                         
Revenues    $         384,853   $              --   $              --  $         384,853 
(Expenses)         (4,196,622)           (481,715)                 --         (4,678,337)
Other                  91,508              (3,367)                 --             88,141 
            -----------------   -----------------   -----------------  ----------------- 
Net loss    $      (3,720,261)  $        (485,082)  $              --  $      (4,205,343)
            =================   =================   =================  ================= 

NEW ENTITY                                                                      

On January 21, 2004 Veridicom International (Canada) Inc. ("Canada") was formed 
to be the Canadian operating company for the public company.                    

RECLASSIFICATIONS                                                               

For comparative purposes, prior period's consolidated financial statements have 
been reclassified to conform to report classifications of the current year.     

GOODWILL                                                                        

Goodwill was recorded at its purchase price and is not being amortized. the     
Company has evaluated its goodwill for impairment pursuant to SFAS 142          
("Goodwill and Other Intangible Assets") and SFAS 144 ("Accounting for the      
Impairment or Disposal of Long-Lived Assets"), and determined that the fair     
value of the Company's goodwill is $4,728,546.                                  

VALUATION OF THE COMPANY'S COMMON STOCK                                         

Unless otherwise disclosed, all stock based transactions entered into by the    
Company have been valued at the market value of our common stock on the date the
transaction was entered into or have been valued using the Black-Scholes Model  
to estimate the fair market value.                                              

CONCENTRATIONS OF CREDIT RISK                                                   

Financial instruments, which potentially expose the Company to concentrations of
credit risk, consist primarily of trade accounts receivable. Aggregate potential
credit losses have so far not exceeded management's expectations.               

ADVERTISING EXPENSES                                                            

We expense advertising costs as incurred. During the period ended March 31,     
2005, we did not have significant advertising costs.                            

FAIR VALUE OF FINANCIAL INSTRUMENTS                                             

The carrying amounts of cash, accounts receivable, notes payables, accounts     
payable, and accrued expenses approximate fair value because of the short       
maturity of these items.                                                        

INVENTORY                                                                       

Inventory consists primarily of various sensors, combos and parallel port units.
Inventory is valued at lower of cost (first-in, first-out) or market.           

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FURNITURE AND EQUIPMENT                                                         

Furniture and equipment are recorded at cost. Depreciation and amortization     
expense is provided on a straight-line basis using estimated useful lives of 3-7
years. Depreciation expense was $17,267 and $7,625 for the three months ended   
March 31, 2005 and 2004, respectively. Maintenance and repairs are charged to   
expense as incurred and expenditures for major improvements are capitalized.    
When assets are retired or otherwise disposed of, the property accounts are     
relieved of costs and accumulated depreciation and any resulting gain or loss is
credited or charged to operations.                                              

PATENTS                                                                         

At the acquisition of Veridicom Inc., we evaluated the unused patents and       
determined the costs to secure the patents outweighed their intended use and    
were unable to find a party interested in purchasing the patents. The patents   
were originally recorded at cost and were being amortized on a straight-line    
basis over 15 years. The Company has valued the patents at $200,000.            

CASH AND CASH EQUIVALENTS                                                       

For purposes of reporting cash flows, we consider all funds with original       
maturities of three months or less to be cash equivalents.                      

INCOME TAXES                                                                    

We recognize deferred tax assets and liabilities for the expected future income 
tax consequences of events that have been recognized in the Company's financial 
statements. Under this method, deferred tax assets and liabilities are          
determined based on temporary differences between the financial carrying amounts
and the tax bases of assets and liabilities using enacted tax rates in effect in
the periods in which the temporary differences are expected to reverse..        
Valuation allowances are established when necessary to reduce deferred tax      
assets to the amount expected to be realized. Income tax expense represents the 
tax payable for the current period and the change during the period in deferred 
tax assets and liabilities. The Company has a net operating loss carry forward  
of approximately $3,800,000 expiring beginning in 2020.                         

REVENUE RECOGNITION                                                             

Sales of services are recorded when performed in accordance with contracts.     
Revenues from software sales are recorded in accordance with SOP 97-2 `Software 
Revenue Recognition', which requires that revenue recognized from software      
arrangements be allocated to the various elements of the arrangement based on   
the relative fair market values of the elements, such as software products,     
upgrades, enhancements, post contract customer support, installation or         
training. Revenue from product services is recognized at the time service is    
provided.                                                                       

For fixed fee contracts, Esstec recognizes revenue based on the percentage      
completed, calculated as either the number of direct labor hours in the project 
to date divided by the estimated total direct labor hours, or based upon the    
completion of specific task benchmarks. It is Esstec's policy to record contract
losses in their entirety in the period in which such losses can be estimated.   
Any revenues associated with pre-payments or pre-billings are deferred until    
revenue is earned. For non-fixed fee jobs, revenue is recognized as services are
performed and adjusted to realization value, if necessary.                      

Pakistan Ltd. Recognizes revenue at the point/time the software is              
delivered/exported.                                                             

Veridicom Inc. recognizes revenues at the point of shipment of products.        

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS                     

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

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COMPREHENSIVE LOSS                                                              

We utilize Statement of Financial Accounting Standards ("SFAS") No. 130         
"Reporting Comprehensive Income." This statement establishes standards for      
reporting comprehensive loss and its components in a financial statement.       
Comprehensive loss as defined includes all changes in equity (net assets) during
a period from non-owner sources. Examples of items to be included in            
comprehensive loss, which are excluded from net loss, include foreign currency  
translation adjustments and unrealized gains and losses on available-for-sale   
securities. Comprehensive loss presented in these consolidated financial        
statements resulted from translations of foreign currency financial statements. 

SOFTWARE DEVELOPMENT COSTS                                                      

Software development costs were expensed as research and development costs as   
incurred until the software reached technological feasibility in accordance with
Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed" ("SFAS 86").        

EARNINGS PER COMMON SHARE                                                       

We compute earnings (loss) per common share in accordance with Statement of     
Financial Accounting Standards No. 128, Earnings Per Share (SFAS No. 128). This 
statement simplifies the standards for computing earnings per share (EPS)       
previously found in Accounting Principles Board Opinion No. 15, Earnings Per    
Share, and makes them more comparable to international EPS standards. SFAS No.  
128 replaces the presentation of primary EPS with a presentation of basic EPS.  
In addition, the Statement requires dual presentation of basic and diluted EPS  
on the face of the income statement for all entities with complex capital       
structures and requires a reconciliation of the numerator and denominator of the
basic EPS computation to the numerator and denominator of the diluted EPS       
computation.                                                                    

NOTE 3 - FOREIGN CURRENCY TRANSLATION                                           

Pakistan Ltd. considers the Pakistan Rupee to be the functional currency of its 
operations. Cavio and Canada Inc. consider the Canadian Dollar to be the        
functional currency of their operations. The reporting currency of the Company  
is the U.S. dollar; accordingly, all amounts included in the financial          
statements have been translated into U.S. dollars.                              

--------------------------------------------------------------------------------
                                            For the period        For the period
                                             Ending                 Ending
Exchange Rates                              March 31, 2005        March 31, 2004
--------------------------------------------------------------------------------
Rupee Average                                   .01683                .01745    
Rupee Period end                                .01684                .01745    
Canadian Dollar Average                         .81500                .76260    
Canadian Dollar Period end                      .82672                .75884    
--------------------------------------------------------------------------------

NOTE 4 - ACCOUNTS RECEIVABLE, RELATED PARTY                                     

The Company inadvertently repaid a note that was previously converted to equity.
The $82,501 is fully recoverable.                                               

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NOTE 5 - FURNITURE AND EQUIPMENT                                                

Furniture and equipment consists of the following:                              

------------------------------------------------------------------------------- 
                                                       March 31,    December 31,
                                                    2005          2004
------------------------------------------------------------------------------- 
Tooling equipment                                      $161,595      $161,595   
Furniture & fixture                                      33,932        33,932   
Office equipment                                         30,954        30,954   
Computer hardware                                       281,225       278,185   
Computer software                                       158,792       158,539   
Vehicles                                                 19,818        19,818   
                                                    --------      --------
                                                     686,316       683,023
Less accumulated depreciation and amortization          493,593       476,326   
                                                    --------      --------
                                                    $192,723      $206,697
------------------------------------------------------------------------------- 

NOTE 6 - NOTES PAYABLE, RELATED PARTIES                                         

During the three months ending March 31, 2005, the Company reached a full       
settlement with a lender. Under the settlement terms, the total interest payable
was to be limited to a maximum of $20,000. The Company paid, in full, $100,000  
and all the accrued interest owed to the lender of $10,000. The Company also    
issued 25,000 shares of the Company's common stock to this lender as a loan fee 
valued at $106,250. A director of the Company is an associate of the lender's   
parent company.                                                                 

NOTE 7 - STOCK-BASED COMPENSATION                                               

The Company accounts for stock based compensation under Statement of Financial  
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS   
123). The standard requires the Company to present the "fair value" method with 
respect to stock-based compensation of consultants and other non-employees.     

The Company did not change its method of accounting with respect to stock       
options; the Company continues to account for these under the "intrinsic value" 
method. The Company recognized $179,295 as stock based compensation to employees
and directors of the Company for the three months ended March 31, 2005.         

NOTE 8 - COMMON STOCK                                                           

Common Stock Issued during the Period to March 31, 2005                         

During the period ending March 31, 2005 the Company sold 61,000 shares of common
stock for $100,650 less offering costs of $5,000.                               

STOCK OPTION PLAN                                                               

In April 2004 the Company adopted the 2004 Stock Option, Deferred Stock, and    
Restricted Stock Plan (the Plan) effective June 25, 2004, which provides for the
granting of options to officers, directors, consultants, employees, and         
advisors. 2,000,000 shares of common stock are reserved under the Plan for the  
granting of options. The Plan is in effect until June 25, 2014. The options are 
exercisable to purchase stock for a period of up to ten years from the date of  
grant.                                                                          

On February 7, 2005, the Board of Directors of the Company approved the granting
of 1,025,000 shares to officers, directors and employees of the Company under   
the 2004 Stock Option Plan.                                                     

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The stock options vest monthly over a sixty-month period. The fair value of the 
vested options of $71,565 was estimated using the Black-Scholes option pricing  
model with an expected life of five years, a risk-free interest rate of 2.43%   
and an expected volatility of 209%. The fair value of vested options during the 
year has been expensed as stock based compensation.                             

On April 22, 2005, the Board of Directors of the Company approved the granting  
of an additional 130,000 shares to employees of the Company under the 2004 Stock
Option Plan.                                                                    

NOTE 9 - COMMITMENTS AND CONTINGENCIES                                          

EMPLOYMENT AGREEMENT                                                            

The Company entered into an employment agreement with its President and Chief   
Executive Officer effective February 20, 2004 for one year providing for an     
annual salary of $175,000, ten-year stock option to purchase 150,000 shares of  
the Company's common stock at $3.50, and an annual bonus of $20,000 for every   
$1.5 million in gross consolidated revenue of the Company for said year. The    
agreement is automatically renewable.                                           

The stock options vest monthly over a twenty-four month period. As at March 31, 
2005, 55% of the options were vested. The fair value of the cumulative vested   
options of $469,705 was estimated using the Black-Scholes option pricing model  
with an expected life of five years, a risk-free interest rate of 2.79% and an  
expected volatility of 293%. The fair value of vested options during the year   
has been expensed as stock based compensation.                                  

LITIGATION                                                                      

Five former employees of Veridicom, Inc. have filed claims against the Company  
with the Labor Commissioner in the State of California. The former employees    
allege that the Company owes unpaid wages, salaries and vacation pay for various
periods between July 2000 and November 2003 amounting to a total of $111,651.   
The Company has accrued for this liability in its financial statements as at    
March 31, 2005.                                                                 

On March 21, 2005 one of the claimants signed a letter of agreement to convert  
his claim of $ 61,054 into stock based on the closing price of our common stock 
on that day of $2.40 per share, or a total of 25,439 shares for his entire      
claim. However, this settlement is subject to obtaining certain waivers and     
documents from the holders of our Callable Secured Convertible Notes.           

In addition, the Company is a party to a number of other lawsuits arising in the
normal course of business. In the opinion of management, the resolution of these
matters will not have a material adverse effect on the Company's operations,    
cash flows or financial position.                                               

On March 28, 2003 the Company and one of the company's stockholders filed a     
lawsuit in Superior Court against a former CEO of the Company. The lawsuit      
alleges a breach of fiduciary duty, negligence, fraud and breach of contract    
claiming the CEO did not devote his efforts to the Company's product development
and market strategies or maximize the profit of the business. An amount of      
damages has not been determined and the outcome of this lawsuit cannot be       
determined at this time.                                                        

NOTE 10 - GAIN ON CANCELLATION/FORGIVENESS OF DEBT                              

In the period ended March 31, 2005, the Company recorded $151,675 of gain on    
forgiveness of debt after reaching settlement agreements with certain vendors to
cancel old accounts payable for reduced cash payments                           

The Company is currently investigating the possibility of revising certain      
pre-merger accounts payable estimated at $270,000.                              

NOTE 12 - CONVERTIBLE NOTES PAYABLE AND LONG TERM DEBT                          

In March 2005, the Company paid $50,000 of its unsecured loan from Global       
Ventures Advisors, a company controlled by a former director of the Company's   
subsidiary in Pakistan. The loan bears interest at 12% per annum and due on or  
before June 30, 2006, with an option to convert to common stock in the event of 
default in repayment by the Company.                                            

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On February 25, 2005, the Company completed the first of three rounds of a      
private placement whereby the Company will issue up to an aggregate of          
$5,100,000 worth of 10% callable secured notes convertible into shares of common
stock of the Company and warrants to purchase up to an aggregate of 10,200,000  
shares of common stock, of the Company to certain accredited investors. The     
closing of the first round of the Private Placement resulted in aggregate       
proceeds to the Company of $1,700,000. Subsequent to March 31, 2005, the Company
completed the second round of the private placement resulting in aggregate      
proceeds amounting to $1,700,000. The third closing of $1,700,000 is contingent 
upon triggering events set forth in the Securities Purchase Agreement. The Notes
have a term of 3 years and bear interest at 10% per annum, which is payable     
monthly; provided, however, that the interest rate shall reset at 0% for any    
monthly period in which the Company's stock price is greater than 125% of the   
"Initial Market Price," which is defined as 100% of the volume weighted average 
of the Company's common stock for the five days immediately prior to closing, as
reported on the Over-the-Counter Bulletin Board. The principal payments begin in
May 2005.                                                                       

The notes are convertible into the Company's common stock at a conversion price 
equal to $1.27, which is seventy percent (70%) of the initial market price of   
$1.81 as defined in the agreement using the Weighted Volume Average Price       
("WVAP"); provided however, that if an event of default shall have occurred and 
be continuing, the conversion price shall be equal to the lesser of (i) fifty   
percent (50%) of the initial market price or (ii) the variable conversion price,
defined as the applicable percentage multiplied by the average of the average   
daily prices for the common stock for the five (5) days prior to the date the   
conversion notice is sent by the holder of the notes to the Company.            

The Company also expensed the related beneficial conversion feature of $402,269 
as interest.                                                                    

The fair value of the beneficial conversion feature for these convertible notes 
and warrants issued was estimated using the Black-Scholes option pricing model  
with an expected life of five years, a risk-free interest rate of 2.43% and an  
expected volatility of 187%. The fair value of the beneficial conversion feature
of $1,297,731 has been capitalized as a discount on notes payable and is being  
amortized as interest expense over the three-year term of the notes.            

The Warrants are exercisable at any time for a period of five years from the    
date of issuance. The Series A Warrants have an exercise price of $3.00 per     
share and the Series B Warrants have an exercise price of $5.00 per share.      

As an inducement to participate in the Private Placement, the Company granted   
the Note Holders a security interest in all of its intellectual property.       

The Company incurred a total of $221,707 in legal expenses and commissions to   
complete the first round of a private placement. These costs are being          
capitalized and amortized over the three-year term of the note.                 

The Company also recorded as deferred finance costs the fair value of 107,087   
warrants issued as consideration for placement agent services provided by Joseph
Stevens & Company Inc. ("JSC") in connection with the Private Placement. The    
fair value of these warrants was estimated at $176,707 using the Black-Scholes  
option pricing model with an expected life of five years, a risk-free interest  
rate of 2.43% and an expected volatility of 187%. The Company also issued an    
additional 100,000 warrants to JSC, which are restricted for one year.          

NOTE 13 - OFFICE CLOSING                                                        

On April 15, 2004 the Company permanently closed the offices of Veridicom, Inc. 
in Sunnyvale, California and is currently in the process of integrating and     
consolidating its software and hardware product divisions at its offices in     
Vancouver, British Columbia, Canada. The direct costs incurred by the company   
to-date, with respect to the closure and relocation of the Sunnyvale operations,
amount to $31,575.                                                              

NOTE 14 - SUBSEQUENT EVENTS                                                     

On April 22, 2005, the Board of Directors of the Company approved the granting  
of an additional 130,000 shares to employees of the Company under the 2004 Stock
Option Plan                                                                     

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 28,431,496 Shares
Common Stock

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

PROSPECTUS

 July 18, 2005

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

      You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that  
which is set forth in this prospectus. We are offering to sell shares of our    
common stock and seeking offers to buy shares of our common stock only in       
jurisdictions where offers and sales are permitted. The information contained in
this prospectus is accurate only as of the date of this prospectus, regardless  
of the time of delivery of this prospectus or any sale of these securities. Our 
business, financial condition, results of operation and prospects may have      
changed after the date of this prospectus.                                      

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 424B3 Filing		Date		First		Last			Other Filings
		4/19/00		2		75
		9/11/01		10
		10/31/02		68					DEF 14C
		11/15/02		68					NT 10-Q
		12/31/02		70					NT 10-Q, 10QSB
		1/31/03		21		62
		2/1/03		21		62
		3/28/03		68		81
		3/31/03		70					10KSB, 10KSB/A, NT 10-K, 3
		4/1/03		39
		4/23/03		14
		4/28/03		15		57			8-K
		5/8/03		15		27			8-K/A, 8-K
		5/31/03		20		61
		6/15/03		20		61
		6/30/03		20		61			10QSB, NT 10-Q, NT 10-K
		7/15/03		66		67			10KSB
		11/1/03		58
		11/3/03		41		67
		11/25/03		16		57			8-K, 3
		12/15/03		21		62
		12/31/03		19		70			NT 10-K, 10KSB
		1/1/04		18		77
		1/16/04		16		76
		1/21/04		19		77
		2/19/04		58
		2/20/04		16		81			3/A, 8-K, 3
		2/23/04		14		28			8-K, 3
		3/1/04		17		40			3
		3/31/04		51		79			10QSB/A, 10QSB, NT 10-Q
		4/15/04		17		82
		6/15/04		21		62
		6/25/04		67		80			3
		6/30/04		40		66			10QSB, 10QSB/A
		7/1/04		40
		8/5/04		68
		8/23/04		68
		8/30/04		65
		9/30/04		65		66			10QSB, NT 10-Q
		10/6/04		68					4
		11/23/04		20		61
		12/31/04		2		77			10KSB
		2/7/05		14		80			4, 3
		2/11/05		2		52
		2/25/05		3		82			8-K
		3/8/05		28
		3/14/05		28
		3/16/05		28
		3/17/05		35
		3/21/05		35		81
		3/31/05		51		82			10KSB, 10QSB/A, NT 10-Q, 10QSB
		4/21/05		44
		4/22/05		81		82
		4/29/05		4		25			8-K, DEF 14A
		5/9/05		4		25			8-K
		6/15/05		20		61
		6/21/05		1		42
		6/30/05		41		66			10QSB
		7/18/05		1		83			8-K
Filed On / Filed As Of		7/19/05
		6/30/06		41		81
		6/25/14		67		80
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