I know from a past discussion that you are familiar with Apples foray into fingerprint technology--to enable

security. In fact, you have pertinently informed me that it would not be adequate for a hypothetical Near Field Communications payment technology system. Do you have a reaction, or a preliminary opinion, on the new iPhone 5S and 5Cs implementation of a fingerprint reader? We welcome apples use of biometrics in their phones in that it validates the superiority of a fingerprint over a password. Our approach as a company has been to replace the vulnerable ATM number and make a fingerprint even smaller than what apple has done so that it fits inside a credit cardthe security issue with NFC is that it is using radio waves connected to a received [and they can be intercepted]. Apples system is being used to turn a phone off and on and it does not overcome the issue of hackers and they can access the phone once it is turned on. Smart Phones can actually be turned on, even the Apple phones with malicious software. Malicious people can use the phones and interrogate the software on the phones. NSA and police reportspeople using phone when they think it is turned off as a means to listen in to a room when they think a phone is turned off. An instance when people actually think the phone is turned off. There are severe security issues. Always connected means always hackable. Apple is using biometrics to replace the password. SmartMetric thoroughly endorses and embraces the fact that Apple is using it. Everyone in the security industry knowns that passwords are very vulnerableIt is definitely an advancement in terms of security but does not overcome network hackability. An August 3rd Press Release discusses your work on biometric form factors. Here are two questions, (1) is a fingerprint reader, such as used in the new iPhone a biometric form factor; (2) how far into the future would you estimate successful adoption and prevalence of biometric facial recognition? Working on fingerprint activiation and facial recognition for validation next year in 2014. It is for a high security card product. It seems that fingerprint reading technology could also be used in tablet devices, such as the iPad? Yes, no question. SmarMetric has been working toward rolling out a product with a major pharmacy chain; though you have declined to say which one. Can you offer any comment on the status, I notice that your 8GB medical key ring is listed as Sold out on your web site? Very pleased with our trial release, early release of the product. Outside of negotations and arrangements to specify pharmacy chain until they are finalized. Also happy with discussions that are going on overseas. Believe we will see substantial sales in the next 12 months. Very happy that we have been able to make sales after two weeks of radio campaign marketing with WABC in New York. From what I have learned you have a top attorney working for you in asserting your claim against MasterCard and Visa. Is there also a Wagner or an Anderson on the case? The law firm is called Wagner, Anderson, & Bright. They are based in California. The lead attorney is Mr. Patrick Bright. It is a big case, Mr. Bright has assistance? Mr Bright has other attorneys. We also have a woman who was on the international marketing for MasterCard; based out of their office in Purchase, NY.

Though you are asking for a record sum, $13.4 billion, to my knowledge neither defendant has mentioned your specific case in their SEC filings? We are perturbed by that. According to our SEC counsel it is a serious breach of securities law, but that is only our opinion. It is our legal advice that any company that is involved in a major litigation has to disclose it to their shareholders. Can you comment on the existence and availability of warrants; some investors like to use derivatives at a time of an event such as your IP trial? Warrants are not listed and are part of the most recent fund raising for the company. The share count would rise if warrants are exercised. The amount of warrants are small in relation to our shares. Can you comment on the motions for summary judgment from each side (I recall Vringos stock surging to an all time high pursuant to the Judges denials of the defenses MSJ)? We moved first for summary judgment in the wake of discovery and after two Markman hearings and the federal appeals court hearing. Moved for MSJ on basis of infringement and also on the question of damages, our 13.4B claim against both V and MA. While this seems like a fantastically large amount of money, which it is, it is based on introduction of the accused technology. Are dealing with arguably the worlds two largest financial institutions. This is why at the end of the day with the calculations are so astronomic. 446 is valid until 2020. It has also been publicly admitted that they have issued and aggressively contrinue to issue these cards. V and MA have also put forward motions after we put forward ours. They have put forward a summary judgment to have the case dismissed. WE do not want to prejudge or second guess the judge. We prefer not to comment on the outcome of this hearing. Nor to speculate on its impact on our share price. Are there specific details from your expert reports that you think are especially valuable to the investing community? That is a good question. It is a Pandoras Box if I answer it. Given the judge will be hearing the argument in two weeks the companys legal is not to make any comment. Is there a new trial date? The judge has said that depending on the oucome of the hearing on September 25, it would be up to the judge to set a new date for a trial by juryof course, it is all contingent by what is ruled by the judge on the 25th. There is a personal emphasis from me on your IP trial. Let me say that your business does seem to have several prospects aside from what could be lucrative litigation, which is quite favorable. Are you familiar with some of the other corporations that may be significantly affected by IP licensing activities, perhaps Vringo the winner of a big trial against last year? There are two issues. One is the question of non producing or non product companies set up purely to litigate IP against alleged infringers. My view as a company involved in patent litigation is that the costs for the small inventor are so high now that it has forced a lot of the individual inventors into financing types and Wall Street trypes who then underwrite the litigation and legal defense of the patents. These

entities that have been set up by Wall Street are often referred to as Patent Trolls. The economic imbalance where the small inventor is actually having to partner with or actually sell off their patents to these entities that have infringed. The real issue is the cost of legal proceedings for an inventor to pursue their rights in court. Another issue that has come out of our experience is that large corporations prefer to litigate against inventors using their economic powersUsing costsly trials and legal proceedings to wear down an individual inventor who goes bankrupt in asserting their legal rights. There is a huge problem right now, not just with trolls SmartMetric is lucky to have the resources to defend our patent and prosecute what we view as patent infringement. A lot of inventors are not in the lucky position that we are in. Lastly, in the event that you are awarded anything close to what you are claiming, is some sort of capital return to shareholders, perhaps through a dividend likely? Dont count your chickens until they are hatched. We are very conservative. We are not basing our fortunes in the future of the company on this patent litigation. Apples move into biometrics clearly validates them as a better technology on the use of passwords. As a company we would make a determination, in the event that we win in the court substantial amounts of money, we would make a determination on whether it would be reinvested into new products and further research and development and also whether there would be a dividend to shareholders. A decision on a dividend has not been decided by the company. Money in the companys bank account would have a positive effect on our share price.