UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                             ----------------------

                                   FORM 10-Q/A
                                 AMENDMENT NO. 1

(Mark One)

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

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

                                       OR

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

                   For the transition period from ___ to ___.

         COMMISSION FILE NUMBER 0-29794

                                 PUBLICARD, INC.
             (Exact name of registrant as specified in its charter)

         PENNSYLVANIA                                      23-0991870
(State or other jurisdiction of                        (I.R.S. Employer
  incorporation or organization)                      Identification No.)

       620 FIFTH AVENUE, 7th FLOOR, NEW YORK, NY           10020
       (Address of principal executive offices)          (Zip code)

       Registrant's telephone number, including area code: (212) 651-3102

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

YES   [X]    No [ ].

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes   [ ]    No  [X]

  Number of shares of Common Stock outstanding as of April 30, 2002: 24,153,402



EXPLANATORY NOTE

         This Amendment No. 1 to PubliCARD Inc.'s quarterly report on Form 10-Q
for the period ended March 31, 2002, is filed to include restated financial
statements. As discussed in Note 1 to the consolidated financial statements
included in Part I, Item 1 and Management's Discussion and Analysis of Financial
Condition and Results of Operations included in Part I, Item 2, the Company
adopted the provisions of Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets" ("SFAS No. 142"), effective January 1,
2002. Upon the adoption of SFAS No. 142, the Company failed to separate
identifiable definite lived intangible assets from goodwill. As a result, the
Company did not record the amortization expense associated with identifiable
definite lived intangibles amounting to $144,000 in each of the first three
quarters of 2002. The accompanying unaudited consolidated financial statements
have been restated to reflect such amortization. Accordingly, goodwill and
intangibles, total assets and shareholders' equity as of March 31, 2002 have
been reduced by $144,000 and the net loss for the three months ended March 31,
2002 has been increased by $144,000. This restatement has no impact on cash
balances or net cash flow for any period either historically or going forward.
Except as described in this Explanatory Note, this Form 10-Q/A does not reflect
events occurring after the filing of the original Form 10-Q on May 3, 2002, or
modify or update those disclosures in any material way other than as required to
reflect the effects of the restatement.

                                       1



PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                                 PUBLICARD, INC.
                            AND SUBSIDIARY COMPANIES

                        CONSOLIDATED BALANCE SHEETS AS OF
                      MARCH 31, 2002 AND DECEMBER 31, 2001
                        (IN THOUSANDS EXCEPT SHARE DATA)



                                                                                             MARCH 31,                DECEMBER 31,
                                                                                               2002                      2001
                                                                                               ----                      ----
                                                                                            (unaudited)
                                                                                          (As restated-
                                                                                            See Note 8)
                                                                                                                
                                        ASSETS
Current assets:
     Cash, including short-term investments of $3,463 in 2002 and $4,199 in 2001             $    3,667                 $    4,479
     Trade receivables, less allowance for doubtful accounts (2002-$194, 2001 - $216)             1,340                      1,410
     Inventories                                                                                    453                        557
     Other                                                                                          368                        770
                                                                                             ----------                 ----------
          Total current assets                                                                    5,828                      7,216
                                                                                             ----------                 ----------
Equipment and leasehold improvements, net                                                           541                        596
Goodwill and intangibles                                                                          2,659                      2,803
Other assets                                                                                      6,768                      6,782
                                                                                             ----------                 ----------
                                                                                             $   15,796                 $   17,397
                                                                                             ==========                 ==========
                         LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
     Trade accounts payable                                                                  $      727                 $    1,206
     Accrued liabilities                                                                          3,699                      3,379
                                                                                             ----------                 ----------
          Total current liabilities                                                               4,426                      4,585

Other non-current liabilities                                                                     5,181                      5,328
                                                                                             ----------                 ----------
          Total liabilities                                                                       9,607                      9,913
                                                                                             ----------                 ----------

Shareholders' equity:
     Class A Preferred Stock, Second Series, no par value: 1,000 shares authorized;
          780 shares issued and outstanding                                                       3,900                      3,900
     Common shares, $0.10 par value: 40,000,000 shares authorized; 24,153,402
          shares issued and outstanding                                                           2,415                      2,415
     Additional paid-in capital                                                                 107,098                    107,098
     Accumulated deficit                                                                       (106,100)                  (104,831)
     Other comprehensive loss                                                                    (1,124)                    (1,098)
                                                                                             ----------                 ----------
          Total shareholders' equity                                                              6,189                      7,484
                                                                                             ----------                 ----------
                                                                                             $   15,796                $   17,397
                                                                                             ==========                 ==========


The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.

                                       2



                                 PUBLICARD, INC.
                            AND SUBSIDIARY COMPANIES

                    CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                 FOR THREE MONTHS ENDED MARCH 31, 2002 AND 2001
                        (IN THOUSANDS EXCEPT SHARE DATA)
                                   (UNAUDITED)



                                                                                                2002                      2001
                                                                                                ----                      ----
                                                                                          As restated-See Note 8)
                                                                                                                  
Net sales                                                                                 $      1,199                  $     1,520

Cost of sales                                                                                      636                          832
                                                                                          ------------                  -----------
     Gross margin                                                                                  563                          688
                                                                                          ------------                  -----------
Operating expenses:
     General and administrative                                                                    933                        1,302
     Sales and marketing                                                                           427                        1,293
     Product development                                                                           119                          922
     Stock compensation                                                                              -                           15
     Amortization of goodwill and intangibles                                                      144                          660
                                                                                          ------------                  -----------
                                                                                                 1,623                        4,192
                                                                                          ------------                  -----------
     Loss from operations                                                                       (1,060)                      (3,504)
                                                                                          ------------                  -----------
Other income (expenses):
     Interest income                                                                                14                          207
     Interest expense                                                                              (15)                         (19)
     Cost of pensions - non-operating                                                             (206)                        (216)
     Other income (expenses)                                                                        (2)                          23
                                                                                          ------------                  -----------
                                                                                                  (209)                          (5)
                                                                                          ------------                  -----------
Net loss                                                                                  $     (1,269)                 $    (3,509)
                                                                                          ============                  ===========
Basic and diluted loss per common share                                                   $       (.05)                 $      (.14)
                                                                                          ============                  ===========
Weighted average shares outstanding                                                         24,153,402                   24,237,402
                                                                                          ============                  ===========


The accompanying notes to the consolidated financial statements are an integral
part of these statements.

                                       3



                                 PUBLICARD, INC.
                            AND SUBSIDIARY COMPANIES

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                    FOR THE THREE MONTHS ENDED MARCH 31, 2002
                        (IN THOUSANDS EXCEPT SHARE DATA)
                                   (UNAUDITED)
                            (AS RESTATED-SEE NOTE 8)



                                                   Common Shares                                             Other
                                  Class A          -------------         Additional                        Comprehen-       Share-
                                 Preferred        Shares                  Paid-in       Accumulated           sive         holders'
                                   Stock          Issued      Amount      Capital         Deficit             Loss          Equity
                                   -----          ------      ------      -------         -------             ----          ------
                                                                                                      
Balance - December 31, 2001      $   3,900      24,153,402   $  2,415    $  107,098     $  (104,831)       $   (1,098)     $  7,484
Comprehensive Loss:
 Net loss                                -               -          -             -          (1,269)                -        (1,269)
 Foreign currency
   translation adjustment                -               -          -             -               -               (26)          (26)
                                 ---------      ----------   --------    ----------     -----------        ----------      --------
    Comprehensive loss                                                                                                       (1,295)
                                                                                                                           --------
Balance - March 31, 2002         $   3,900      24,153,402   $  2,415    $  107,098     $  (106,100)       $   (1,124)     $  6,189
                                 =========      ==========   ========    ==========     ===========        ==========      ========


The accompanying notes to the consolidated financial statements are an integral
part of this statement.

                                       4



                                 PUBLICARD, INC.
                            AND SUBSIDIARY COMPANIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
                                 (IN THOUSANDS)
                                   (UNAUDITED)



                                                                                                       2002                2001
                                                                                                       ----                ----
                                                                                                  (As restated-
                                                                                                    See Note 8)
                                                                                                                    
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                                                         $  (1,269)          $  (3,509)
     Adjustments to reconcile net loss to net cash used in operating activities:
          Amortization of goodwill and intangibles                                                          144                 660
          Stock compensation expense                                                                          -                  16
          Depreciation                                                                                       47                  70
          Changes in assets and liabilities                                                                 243              (1,245)
                                                                                                      ---------           ---------
                     Net cash used in operating activities                                                 (835)             (4,008)
                                                                                                      ---------           ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Capital expenditures                                                                                     -                 (14)
     Investment in TecSec, Incorporated                                                                       -                 (25)
     Proceeds from discontinued operations                                                                   24                 176
                                                                                                      ---------           ---------
                     Net cash provided by investing activities                                               24                 137
                                                                                                      ---------           ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Costs incurred from private placement of Class A Preferred Stock                                         -                 (35)
                                                                                                      ---------           ---------
                     Net cash used in financing activities                                                    -                 (35)
                                                                                                      ---------           ---------

Effect of exchange rate changes on cash and cash equivalents                                                 (1)                 (5)
                                                                                                      ---------           ---------

Net decrease in cash                                                                                       (812)             (3,911)
Cash - beginning of period                                                                                4,479              17,049
                                                                                                      ---------           ---------
Cash - end of period                                                                                  $   3,667           $  13,138
                                                                                                      =========           =========


The accompanying notes to the consolidated financial statements are an integral
part of these statements.

                                       5



                                 PUBLICARD, INC.
                            AND SUBSIDIARY COMPANIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF THE BUSINESS

         PubliCARD, Inc. ("PubliCARD" or the "Company") was incorporated in the
Commonwealth of Pennsylvania in 1913. PubliCARD entered the smart card industry
in early 1998, and began to develop solutions for the conditional access,
security, payment system and data storage needs of industries utilizing smart
card technology. In 1998 and 1999, the Company made a series of acquisitions to
enhance its position in the smart card industry. In March 2000, PubliCARD's
Board of Directors (the "Board"), together with its management team, determined
to integrate its operations and focus on deploying smart card solutions, which
facilitate secure access and transactions. To effect this new business strategy,
in March 2000, the Board adopted a plan of disposition pursuant to which the
Company divested its non-core operations. See Note 5 for a discussion on the
disposition plan.

         In July 2001, after evaluating the timing of potential future revenues,
PubliCARD's Board decided to shift the Company's strategic focus. While the
Board remained confident in the long-term prospects of the smart card business,
the timing of public sector and corporate initiatives in wide-scale, broadband
environments utilizing the Company's smart card reader and chip products had
become more uncertain. Given the lengthened time horizon, the Board did not
believe it would be prudent to continue to invest the Company's current
resources in the ongoing development and marketing of these technologies.
Accordingly, the Board determined that shareholders' interests will be best
served by pursuing strategic alliances with one or more companies that have the
resources to capitalize more fully on the Company's smart card reader and
chip-related technologies. In connection with this shift in the Company's
strategic focus, workforce reductions and other measures were implemented to
achieve cost savings.

         At present, PubliCARD's sole operating activities are conducted through
its Infineer Ltd. subsidiary ("Infineer"), which designs smart card platform
solutions for educational and corporate sites. The Company's future plans
revolve around an acquisition strategy focused on businesses in areas outside
the high technology sector while continuing to support the expansion of the
Infineer business.

LIQUIDITY AND GOING CONCERN CONSIDERATIONS

         These consolidated financial statements contemplate the realization of
assets and the satisfaction of liabilities in the normal course of business. The
Company has incurred operating losses, a substantial decline in working capital
and negative cash flow from operations for the three months ended March 31, 2002
and years 2001, 2000 and 1999. The Company has also experienced a substantial
reduction in its cash and short-term investments, which declined from $17.0
million at December 31, 2000 to $3.7 million at March 31, 2002, and has an
accumulated deficit of $106.1 million at March 31, 2002.

         Although the Company believes that existing cash and short term
investments may be sufficient to meet the Company's obligations and capital
requirements at its currently anticipated levels of operations through December
31, 2002, additional working capital will be necessary in order to fund the
Company's current business plan and to ensure it is able to fund its pension and
environmental obligations. While the Company is actively considering various
funding alternatives, the Company has not secured or entered into any
arrangements to obtain additional funds. There can be no assurance that the
Company will be able to obtain additional funding on acceptable terms or at all.
If the Company cannot raise additional capital to continue its present level of
operations it may not be able to meet its obligations, take advantage of future
acquisition opportunities or further develop or enhance its product offering,
any of which could have a material adverse effect on its business and results of
operations and could lead to the Company being required to seek bankruptcy
protection. These conditions raise substantial doubt about the Company's ability
to continue as a going concern. The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
The auditors' report on the Company's Consolidated Financial Statements for the
year ended December 31, 2001 contained an emphasis paragraph

                                       6



                                 PUBLICARD, INC.
                            AND SUBSIDIARY COMPANIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

concerning substantial doubt about the Company's ability to continue as a going
concern.

PRINCIPLES OF CONSOLIDATION

         The consolidated financial statements include the accounts of PubliCARD
and its wholly-owned subsidiaries. All intercompany transactions are eliminated
in consolidation.

BASIS OF PRESENTATION

         The accompanying unaudited consolidated financial statements reflect
all normal and recurring adjustments that are, in the opinion of management,
necessary to present fairly the financial position of the Company and its
subsidiary companies as of March 31, 2002 and the results of their operations
and cash flows for the three months ended March 31, 2002 and 2001. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted. These financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Form 10-K for
the year ended December 31, 2001, as amended.

EARNINGS (LOSS) PER COMMON SHARE

         Basic net income (loss) per common share is based on net income divided
by the weighted average number of common shares outstanding during each period.
Diluted net income (loss) per common share assumes issuance of the net
incremental shares from stock options, warrants and convertible preferred stock
at the later of the beginning of the year or date of issuance. Diluted net
income (loss) per share was the same as basic net income (loss) per share since
the effect of stock options, warrants and convertible preferred stock were
antidilutive.

REVENUE RECOGNITION AND ACCOUNTS RECEIVABLE.

         Revenue from product sales and software license fees is recorded upon
shipment if a signed contract exists, the fee is fixed and determinable, the
collection of the resulting receivable is probable and the Company has no
obligation to install the product or solution. If the Company is responsible for
installation, revenue from product sales and software is recognized upon client
acceptance or "go live" date. Revenue from maintenance and support fees is
recognized ratably over the contract period. Provisions are recorded for
estimated warranty repairs and returns at the time the products are shipped.
Should changes in conditions cause management to determine that revenue
recognition criteria are not met for certain future transactions, revenue
recognized for any reporting period could be adversely affected.

         The Company performs ongoing credit evaluations of its customers and
adjusts credit limits based upon payment history and the customer's credit
worthiness. The Company continually monitors collections and payments from its
customers and maintains a provision for estimated credit losses based upon
historical experience and any specific customer collection issues that it has
identified. While such credit losses have historically been within management's
expectations and the provisions established, there is no assurance that the
Company will continue to experience the same credit loss rates as in the past.

RECENT ACCOUNTING PRONOUNCEMENTS

         In June 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 141, "Business Combinations" ("SFAS No.
141") and Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets" ("SFAS No. 142").

         SFAS No. 141 addresses financial accounting and reporting for business
combinations. This new statement requires that all business combinations be
accounted for using one method (the purchase method), intangible assets be
recognized apart from goodwill if they meet certain criteria and disclosure of
the primary reasons for a business combination and the allocation of the
purchase price paid to the assets acquired and liabilities assumed by major
balance sheet caption. The provisions of this statement apply to all business
combinations initiated after June 30, 2001.

                                       7



                                 PUBLICARD, INC.
                            AND SUBSIDIARY COMPANIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

         SFAS No. 142 addresses financial accounting and reporting for acquired
goodwill and other intangible assets. Under this new statement, goodwill and
intangible assets that have indefinite useful lives will not be amortized, but
rather will be tested at least annually for impairment, or earlier if
circumstances or events indicate that impairment may have occurred, based on the
specific guidance of this statement. This may result in future write-downs or
the write-off of such assets. In addition, this statement requires disclosure of
information about goodwill and other intangible assets in the years subsequent
to their acquisition that was not previously required. The provisions of this
statement are required to be applied starting with fiscal years beginning after
December 15, 2001. However, goodwill and intangible assets acquired after June
30, 2001 were subject immediately to the non-amortization and amortization
provisions of this statement. The Company adopted this statement on January 1,
2002. The Company completed the initial impairment test in the first quarter of
2002 which did not result in an impairment of goodwill. The provisions of SFAS
No. 142 are effective for periods after adoption and retroactive application is
not permitted. Therefore, the historical results of periods prior to 2002 in the
Company's Consolidated Statements of Operations do not reflect the effect of
SFAS No. 142 and, accordingly, the first three months of 2001 included
amortization expense of $431,000. Excluding goodwill amortization, the pro forma
net loss for the three months ended March 31, 2001, was $3.1 million, or $.13
per share.

         In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"). SFAS No. 144
addresses financial accounting and reporting for the impairment or disposal of
long-lived assets. SFAS No. 144 supercedes SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of", and
the accounting and reporting provisions of APB Opinion No. 30, "Reporting the
Results of Operations - Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions", for the disposal of a segment of a business. This statement also
amends ARB No. 51, "Consolidated Financial Statements", to eliminate the
exception to consolidation for a subsidiary for which control is likely to be
temporary. The provisions of this statement are required to be applied starting
with fiscal years beginning after December 15, 2001. The Company adopted SFAS
No. 144 in the first quarter of fiscal 2002 and determined that adoption of this
statement did not have an effect on the Company's results of operations or
financial position.

INVENTORIES

         Inventories are stated at lower of cost (first-in, first-out method) or
market. The Company evaluates the need to record adjustments for impairment of
inventory on a quarterly basis. Inventory in excess of the Company's estimated
usage requirements is written down to its estimated net realizable value.
Inherent in the estimates of net realizable value are management's estimates
related to the Company's production schedules, customer demand, possible
alternative uses and the ultimate realization of potentially excess inventory.
Inventories as of March 31, 2002 and 2001 consisted of the following (in
thousands):



                                                                 2002             2001
                                                                 ----             ----
                                                                           
Raw materials and supplies                                      $ 302            $ 389
Work-in-process                                                    22               37
Finished goods                                                    129              131
                                                                -----            -----
                                                                $ 453            $ 557
                                                                =====            =====


NOTE 2 - GOODWILL AND INTANGIBLES

         Goodwill is the excess of the purchase price and related costs over the
value assigned to the net tangible and intangible assets relating to the
November 1999 acquisition of Infineer. As discussed above, upon adoption of SFAS
No. 142 on January 1, 2002, the Company ceased amortizing the remaining
goodwill.

                                       8



                                 PUBLICARD, INC.
                            AND SUBSIDIARY COMPANIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Through December 31, 2001, goodwill had been amortized over a five year life.
Intangible assets consist of completed technology identified as of the
acquisition date and are amortized over a five year life.

         The Company performed an initial review for impairment of goodwill as
of January 1, 2002 and determined that no impairment existed at that date. The
Company determined the fair value of its sole reporting unit primarily using two
approaches: a market approach technique and a discounted cash flow valuation
technique. The market approach relied primarily on the implied fair value using
a multiple of revenues for several entities with comparable operations and
economic characteristics. Significant assumptions used in the discounted cash
valuation included estimates of future cash flows, future short-term and
long-term growth rates and estimated cost of capital for purposes of arriving at
a discount factor.

         Goodwill and intangible assets consist of the following (in thousands):



                         MARCH 31, 2002                           DECEMBER 31, 2001
                         --------------                           -----------------
               GROSS      ACCUMULATED                  GROSS         ACCUMULATED
               AMOUNT     AMORTIZATION       NET       AMOUNT        AMORTIZATION        NET
               ------     ------------       ---       ------        ------------        ---
                                                                     
Goodwill       $2,062        $   916       $ 1,146     $2,062           $   916        $  1,146
Completed
technology      2,882          1,369         1,513      2,882             1,225           1,657
               ------        -------       -------     ------           -------        --------
               $4,944        $ 2,285       $ 2,659     $4,944           $ 2,141        $  2,803
               ======        =======       =======     ======           =======        ========


         Amortization of goodwill and intangibles for the three months ended
March 31, 2002 and 2001 was $144,000 and $660,000, respectively.

NOTE 3 - INVESTMENTS

         In December 2000, the Company acquired an ownership interest in TecSec,
Incorporated, a Virginia corporation ("TecSec"), for $5.1 million. TecSec
develops and markets encryption products and solutions, which are designed to
enable the next generation information security for the enterprise,
multi-enterprise e-business and other markets. The TecSec investment, amounting
to a 5% ownership interest on a fully diluted basis, has been accounted for at
cost and could be subject to write-down in future periods if it is determined
that the investment is impaired and not recoverable. The Company has certain
anti-dilutive rights whereby its ownership interest may be increased following
contributions of additional third-party capital. If TecSec is not successful in
executing its business plan or in obtaining sufficient capital on acceptable
terms or at all, the Company's investment in TecSec could be permanently
impaired and subject to a significant write-down.

         In conjunction with the decision to exit the smart card reader and chip
business, in September 2001, the Company formed a new minority-owned affiliate,
Mako Technologies LLC ("Mako"), to market its smart card reader and chip
technologies. The Company contributed certain inventories and equipment valued
at $238,000, in exchange for a 31% fully diluted ownership interest in Mako. The
Company also granted a perpetual license of its reader and chip technology to
Mako in exchange for royalties based on sales over the next two years. After
reducing headcount and reassessing business potential, a decision was made to
liquidate Mako and terminate the license agreement. Pending the final wind-down
of this venture, the Company wrote-off the entire investment in Mako in the
first quarter of 2002. During early 2002, the Company also realized proceeds of
$224,000 from the sale of smart card reader and chip inventory, which had been
previously written-off. The Mako write-off and inventory proceeds are reflected
in "Other income (expenses)".

NOTE 4 - SEGMENT DATA

                                       9



                                 PUBLICARD, INC.
                            AND SUBSIDIARY COMPANIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

         As a result of the disposition of certain operations (See Note 5) and
because the Company predominantly operates in one industry, that being the
deployment of smart card solutions which facilitate secure access and
transactions, the Company reports as a single segment. Sales by geographical
areas for the three months ended March 31, 2002 and 2001 are as follows (in
thousands):



                                                          2002                           2001
                                                          ----                           ----
                                                                                 
United States                                           $    283                       $    635
Europe                                                       896                            822
Rest of world                                                 20                             63
                                                        --------                       --------
                                                        $  1,199                       $  1,520
                                                        ========                       ========


         The Company has operations in the United States and United Kingdom.
Identifiable assets by country as of March 31, 2002 and December 31, 2001 are as
follows (in thousands):



                                                          2002                           2001
                                                          ----                           ----
                                                                                 
United States                                           $ 10,847                       $ 12,037
United Kingdom                                             2,290                          2,557
                                                        --------                       --------
                                                        $ 13,137                       $ 14,594
                                                        ========                       ========


NOTE 5 - DISCONTINUED OPERATIONS

         In March 2000, the Company's Board adopted a plan to dispose of the
operations of the Company's Greenwald Industries Inc. ("Greenwald"), Greenwald
Intellicard Inc. ("Greenwald Intellicard"), Greystone Peripherals, Inc.
("Greystone") and Amazing Smart Card Technologies, Inc. ("Amazing")
subsidiaries. These subsidiaries designed, manufactured and distributed
mechanical and smart card laundry solutions, hard disk duplicators and smart
cards. In the fourth quarter of 1999, the Company recorded a loss of $2.0
million related to the disposition plan, net of the expected gain on the
disposition of these businesses. The loss provision was based on estimates of
the proceeds expected to be realized on the dispositions and the results of
operations through the disposition or wind-down dates.

         On June 29, 2000, the Company completed the sale of substantially all
of the assets of Greenwald and Greenwald Intellicard to The Eastern Company
("Eastern") for $22.5 million in cash, less $1.75 million held in escrow to
secure the payment of certain indemnification obligations. As part of the
transaction, Eastern assumed certain liabilities of Greenwald and Greenwald
Intellicard, including certain contractual liabilities, accounts payable and
accrued liabilities. In the third quarter of 2000, the Company recognized a gain
of $4.3 million principally related to the sale of Greenwald and Greenwald
Intellicard.

         In the second quarter of 2001, the Company revised its estimates of
proceeds and expenses associated with the wind-down of Amazing and Greystone,
which has been substantially completed, and recognized a gain of $2.4 million,
which had been previously deferred pending resolution of certain contingencies.
The amounts the Company will ultimately realize from its discontinued operations
could differ from the amounts estimated and could therefore result in additional
charges or gains in future periods.

         The results of the operations of Greenwald, Greenwald Intellicard,
Amazing and Greystone have been reflected as discontinued operations.

         Summarized balance sheet information with respect to the discontinued
operations as of March 31, 2002 is as follows (in thousands):

                                       10



                                 PUBLICARD, INC.
                            AND SUBSIDIARY COMPANIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


                                                                           
Non-current assets (cash held in escrow)                                      $ 2,128
Disposition reserves                                                           (1,256)
                                                                              -------
Net assets of discontinued operations                                         $   872
                                                                              =======


NOTE 6 - SUPPLEMENTAL CASH FLOW INFORMATION

         Changes in assets and liabilities reflected in the Consolidated
Statements of Cash Flows consisted of the following for the three months ended
March 31, 2002 and 2001 (in thousands):



                                                   2002                      2001
                                                   ----                      ----
                                                                     
Trade receivables                                $     44                  $    54
Inventories                                            94                     (618)
Other current assets                                  400                     (120)
Other assets                                           (9)                     (96)
Trade accounts payable                               (468)                     101
Accrued liabilities                                   328                     (457)
Other non-current liabilities                        (146)                    (109)
                                                 --------                  -------
                                                 $    243                  $(1,245)
                                                 ========                  =======


No cash was paid for interest or income taxes in 2002 and 2001.

NOTE 7 - SUBSEQUENT EVENT

         The Company sponsors a defined benefit pension plan that was frozen in
1993. The assets of the defined benefit pension plan are managed by an outside
trustee and invested primarily in equity and fixed income securities. PubliCARD
common stock represented 1.2% of plan assets as of December 31, 2001.
Contributions to the plan were $1.1 million and $1.2 million in fiscal 2001 and
2000, respectively. For 2002, the minimum required contributions are expected to
be $1.1 million. The Company failed to make the required quarterly contribution
to the plan due April 15, 2002, in the amount of $253,000. Pursuant to Federal
tax law, interest will begin accruing on the obligation.

         The Company will provide notice of its failure to make the required
contribution to the Pension Benefit Guaranty Corporation by May 15, 2002 and to
the plan participants by June 15, 2002. Should the Company fail to make the
required contributions to the plan for 2002, it could be subject to interest,
penalties, liens on assets and ultimately a forced plan termination. There is no
assurance that the Company will make the required contributions.

NOTE 8 - RESTATEMENT

         As discussed in Note 1, the Company adopted the provisions of SFAS No.
142 effective January 1, 2002. Upon the adoption of SFAS No. 142, the Company
failed to separate identifiable definite lived intangible assets from goodwill.
As a result, the Company did not record the amortization expense associated with
identifiable definite lived intangibles amounting to $144,000 in each of the
first three quarters of 2002. The accompanying unaudited consolidated financial
statements have been restated to reflect such amortization. Accordingly,
goodwill and intangibles, total assets and shareholders' equity as of March 31,
2002 have been reduced by $144,000 and the net loss for the three months ended
March 31, 2002 has been increased by $144,000.

                                       11



                                 PUBLICARD, INC.
                            AND SUBSIDIARY COMPANIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                                       12



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

                   THREE MONTHS ENDED MARCH 31, 2002 AND 2001

RESTATEMENT

         As discussed in Note 1 to the consolidated financial statements, the
Company adopted the provisions of Statement of Financial Accounting Standards
No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142"), effective
January 1, 2002. Upon the adoption of SFAS No. 142, the Company failed to
separate identifiable definite lived intangible assets from goodwill. As a
result, the Company did not record the amortization expense associated with
identifiable definite lived intangibles amounting to $144,000 in each of the
first three quarters of 2002. The accompanying unaudited consolidated financial
statements have been restated to reflect such amortization. Accordingly,
goodwill and intangibles, total assets and shareholders' equity as of March 31,
2002 have been reduced by $144,000 and the net loss for the three months ended
March 31, 2002 has been increased by $144,000. The discussion below reflects the
impact of the restatement.

         Management's Discussion and Analysis of Financial Condition and Results
of Operations and other sections of this Form 10-Q contains forward-looking
statements, including (without limitation) statements concerning possible or
assumed future results of operations of PubliCARD preceded by, followed by or
that include the words "believes," "expects," "anticipates," "estimates,"
"intends," "plans" or similar expressions. For those statements, we claim the
protection of the safe harbor for forward-looking statements contained in the
U.S. Private Securities Litigation Reform Act of 1995. Forward-looking
statements are not guarantees of future performance. They involve risks,
uncertainties and assumptions. You should understand that the possible
consequences of such statements made under "Factors That May Affect Future
Results" and elsewhere in this document could affect our future results and
could cause those results to differ materially from those expressed in such
forward-looking statements.

OVERVIEW

         PubliCARD was incorporated in the Commonwealth of Pennsylvania in 1913.
PubliCARD entered the smart card industry in early 1998, and began to develop
solutions for the conditional access, security, payment system and data storage
needs of industries utilizing smart card technology. In 1998 and 1999, the
Company made a series of acquisitions to enhance its position in the smart card
industry. In March 2000, PubliCARD's Board, together with its management team,
determined to integrate its operations and focus on deploying smart card
solutions, which facilitate secure access and transactions. To effect this new
business strategy, in March 2000, the Board adopted a plan of disposition
pursuant to which the Company divested its non-core operations. See Note 5 to
the Consolidated Financial Statements for a discussion on the disposition plan.

         In July 2001, after evaluating the timing of potential future revenues,
PubliCARD's Board decided to shift the Company's strategic focus. While the
Board remained confident in the long-term prospects of the smart card business,
the timing of public sector and corporate initiatives in wide-scale, broadband
environments utilizing the Company's smart card reader and chip products had
become more uncertain. Given the lengthened time horizon, the Board did not
believe it would be prudent to continue to invest the Company's current
resources in the ongoing development and marketing of these technologies.
Accordingly, the Board determined that shareholders' interests will be best
served by pursuing strategic alliances with one or more companies that have the
resources to capitalize more fully on the Company's smart card reader and
chip-related technologies. In connection with this shift in the Company's
strategic

                                       13



focus, workforce reductions and other measures were implemented to achieve cost
savings.

         At present, PubliCARD's sole operating activities are conducted through
its Infineer subsidiary, which designs smart card platform solutions for
educational and corporate sites. The Company's future plans revolve around an
acquisition strategy focused on businesses in areas outside the high technology
sector while continuing to support the expansion of the Infineer business.

         PubliCARD's financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
Consolidated Financial Statements, the Company has incurred operating losses and
requires additional capital to meet its obligations and accomplish the Company's
business plan, which raises substantial doubt about its ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2002 COMPARED TO THREE MONTHS ENDED MARCH 31, 2001

         SALES. Revenues are generated from product sales, licenses of software
products, installation and maintenance contracts. Consolidated net sales
decreased to $1.2 million in 2002 compared to $1.5 million for 2001. The 2001
figure included $480,000 of revenues associated with the smart card reader and
chip business, which the Company exited in July 2001. Sales related to smart
card platform solutions for educational and corporate sites increased 15% from
the prior year period.

         GROSS MARGIN. Cost of sales consists primarily of material, personnel
costs and overhead. Gross margin as a percentage of net sales increased slightly
to 47% in 2002 from 45% in 2001. The increase in gross margin is attributed to
the exiting of its smart card reader and chip business, which carried lower
gross margins than sales of smart card platform solutions for educational and
corporate sites.

         SALES AND MARKETING EXPENSES. Sales and marketing expenses consist
primarily of personnel and travel costs, public relations, trade shows and
marketing materials. Sales and marketing expenses were $427,000 in 2002 compared
to $1.3 million in 2001. The decrease is mainly due to headcount reductions
associated with the Company's July 2001 repositioning action.

         PRODUCT DEVELOPMENT EXPENSES. Product development expenses include
expenses associated with the development of new products and enhancements to
existing products. Product development expenses consist primarily of personnel
and travel costs, independent consultants and contract engineering services.
Product development expenses amounted to $119,000 in 2002 compared to $922,000
in 2001. Expenses decreased in 2002 primarily due to headcount reductions
associated with the Company's July 2001 repositioning action.

         GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses consist primarily of personnel and related costs for general corporate
functions, including finance and accounting, human resources, risk management
and legal. General and administrative expenses for the quarter ended March 31,
2002 decreased by approximately 28% to $933,000 from $1.3 million for 2001. The
decrease is mainly due to headcount reductions associated with the Company's
July 2001 repositioning action.

         STOCK COMPENSATION EXPENSE. Stock-based compensation recorded in 2001
principally related to the issuance of a stock award and a below market stock
option grant to an executive hired in late 1999.

         AMORTIZATION OF GOODWILL AND INTANGIBLES. In accordance with SFAS No.
142, no amortization

                                       14



expense for goodwill will be recorded in current and future periods. Goodwill
and other intangibles will be subject to an annual review for impairment or
earlier if circumstances or events indicate that impairment may have occurred.
This may result in future write-downs or the write-off of such assets. The 2002
figures do not reflect any amortization expense relating to goodwill. As such,
amortization expense decreased from $660,000 in 2001 to $144,000 in 2002.

         The Company performed an initial review for impairment of goodwill as
of January 1, 2002 and determined that no impairment existed at that date. The
Company determined the fair value of its sole reporting unit primarily using two
approaches: a market approach technique and a discounted cash flow valuation
technique. The market approach relied primarily on the implied fair value using
a multiple of revenues for several entities with comparable operations and
economic characteristics. Significant assumptions used in the discounted cash
valuation included estimates of future cash flows, future short-term and
long-term growth rates and estimated cost of capital for purposes of arriving at
a discount factor.

         OTHER INCOME AND EXPENSE. Interest income decreased to $14,000 for 2002
from $207,000 for 2001 principally due to lower cash balances. Cost of pensions,
which represents amounts related to discontinued product lines and related plant
closings in prior years, principally relates to pension expense associated with
the Company's frozen defined benefit pension plan.

LIQUIDITY

         The Company has financed its operations over the last three years
primarily through the sale of capital stock and the sale of non-core businesses.
During the three months ended March 31, 2002, cash, including short-term
investments, decreased by $812,000 to $3.7 million as of March 31, 2002.

         Operating activities utilized cash of $835,000 for the quarter ended
March 31, 2002 and principally consisted of the loss from continuing operations
of $1.3 million offset by a decrease in assets and liabilities of $252,000 and
depreciation and amortization of $191,000.

         Investing activities provided cash of $24,000 in 2002 and consisted
principally of the release of escrowed funds in connection with previously
discontinued operations.

         The Company has experienced negative cash flow from operating
activities in the past and expects to experience negative cash flow in 2002. In
addition to funding operating and capital requirements and corporate overhead,
future uses of cash include the following:

         -        The Company sponsors a defined benefit pension plan, which was
                  frozen in 1993. As of December 31, 2001, the actuarial present
                  value of accrued liabilities exceeded the plan assets by
                  approximately $5.5 million. The annual required contribution
                  to the plan is expected to be approximately $1.1 million in
                  2002. Since the plan is significantly underfunded, the Company
                  expects that the annual contribution requirements beyond 2002
                  will continue to be significant.

                  In April 2002, the Company failed to make the required
                  quarterly contribution to the plan due April 15, 2002, in the
                  amount of $253,000. Pursuant to Federal tax law, interest will
                  begin accruing on the obligation. The Company will provide
                  notice of its failure to make the required contribution to the
                  Pension Benefit Guaranty Corporation by May 15, 2002 and to
                  the plan participants by June 15, 2002. Should the Company
                  fail to make the required contributions to the plan for 2002,
                  it could be subject to interest, penalties, liens on assets
                  and ultimately a forced plan termination. There is no
                  assurance that the Company will make the required
                  contributions.

                                       15



         -        In April 1996, a Consent Decree among the Company, the United
                  States Environmental Protection Agency ("EPA") and the
                  Pennsylvania Department of Environmental Protection ("PADEP")
                  was entered by the court which resolved all of the United
                  States' and PADEP's claims against the Company for recovery of
                  costs incurred in responding to releases of hazardous
                  substances at a facility previously owned and operated by the
                  Company. Pursuant to the Consent Decree, the Company will pay
                  a total of $14.4 million plus interest to the United States
                  and the Commonwealth of Pennsylvania. Through March 31, 2002,
                  the Company has made principal payments aggregating $13.2
                  million. In January 2002, the Company and the EPA reached an
                  agreement to extend the due date on the remaining unpaid
                  balance. In return, the EPA was granted a security interest in
                  certain assets held in escrow. The remaining payments totaling
                  $1.3 million, including interest, will be made to the EPA over
                  the next three years and consist of $450,000 in 2002, $431,000
                  in 2003 and $411,000 in 2004. In April 2002, the Company made
                  the required $450,000 payment.

         -        The Company leases certain office space, vehicles and office
                  equipment under operating leases that expire over the next
                  eight years. Minimum payments for operating leases having
                  initial or remaining non-cancelable terms in excess of one
                  year are $317,000 for the remainder of 2002, $412,000 in 2003,
                  $387,000 in 2004 and $348,000 thereafter.

         The Company will need to raise additional capital that may not be
available to it. Although management believes that existing cash and short term
investments may be sufficient to meet the Company's operating and capital
requirements at the currently anticipated level through December 31, 2002,
additional working capital will be necessary in order to fund the current
business plan and to ensure the Company is able to fund the pension and
environmental obligations. While the Company is actively considering various
funding alternatives, it has not secured or entered into any arrangements to
obtain additional capital. There can be no assurance that the Company will be
able to obtain additional funding on acceptable terms or at all. If the Company
cannot raise additional capital to continue its present level of operations it
may not be able to meet its obligations, take advantage of future acquisition
opportunities or further develop or enhance its product offering, any of which
could have a material adverse effect on its business and results of operations.

         The Company currently has no capacity for commercial debt financing.
Should such capacity become available it may be adversely affected in the future
by factors such as higher interest rates, inability to borrow without
collateral, and continued operating losses. Borrowings may also involve
covenants limiting or restricting its operations or future opportunities.

         The Company also currently fails to meet certain requirements for the
continued listing of its common stock on the Nasdaq National Market ("National
Market"). The Company transferred the listing of its common stock to the Nasdaq
SmallCap Market ("SmallCap Market") effective May 2, 2002. Under certain
circumstances, the Company maybe eligible to transfer its listing back to the
national market, however, there is no assurance (i) that the Company will remedy
the identified deficiencies and continue to meet other National Market
quantitative or qualitative listing criteria, (ii) that the Company will
continue to meet the SmallCap Market continued maintenance requirements, (iii)
that any appeal in the event of non-compliance of its common stock will be
successful or (iv) that its common stock will not be delisted. Should the
Company's common stock be delisted, the liquidity of the common stock would be
adversely affected. This could impair the Company's ability to raise capital in
the future. If additional capital is raised through the issuance of equity
securities, the Company's stockholders' percentage ownership of the common stock
will be reduced and stockholders may experience dilution in net book value per
share, or the new equity securities may have rights, preferences or privileges
senior to those of its commons stockholders.

                                       16



         If the Company's liquidity does not improve, it may be unable to
continue as a going concern and could be required to seek bankruptcy protection.
Such an event may result in the Company's common and preferred stock being
negatively affected or becoming worthless. The auditors' report on the Company's
Consolidated Financial Statements for the year ended December 31, 2001 contained
an emphasis paragraph concerning substantial doubt about the Company's ability
to continue as a going concern.

CRITICAL ACCOUNTING POLICIES

         The Company's significant accounting policies are more fully described
in the Notes to the Company's Consolidated Financial Statements included in the
Form 10-K for the year ended December 31, 2001, as amended. Certain accounting
policies require the application of significant judgment by management in
selecting the appropriate assumptions for calculating financial estimates. By
their nature, these judgments are subject to an inherent degree of uncertainty.
The Company considers certain accounting policies related to revenue
recognition, estimates of reserves for receivables and inventories, valuation of
investments and goodwill and pension accounting to be critical policies due to
the estimation processes involved.

         REVENUE RECOGNITION AND ACCOUNTS RECEIVABLE. Revenue from product sales
and software license fees is recorded upon shipment if a signed contract exists,
the fee is fixed and determinable, the collection of the resulting receivable is
probable and the Company has no obligation to install the product or solution.
If the Company is responsible for installation, revenue from product sales and
software is recognized upon client acceptance or "go live" date. Revenue from
maintenance and support fees is recognized ratably over the contract period.
Provisions are recorded for estimated warranty repairs and returns at the time
the products are shipped. Should changes in conditions cause management to
determine that revenue recognition criteria are not met for certain future
transactions, revenue recognized for any reporting period could be adversely
affected.

         The Company performs ongoing credit evaluations of its customers and
adjusts credit limits based upon payment history and the customer's credit
worthiness. The Company continually monitors collections and payments from its
customers and maintains a provision for estimated credit losses based upon
historical experience and any specific customer collection issues that it has
identified. While such credit losses have historically been within management's
expectations and the provisions established, there is no guarantee that the
Company will continue to experience the same credit loss rates as in the past.

         INVENTORIES. Inventories are stated at lower of cost (first-in,
first-out method) or market. The Company evaluates the need to record
adjustments for impairment of inventory on a quarterly basis. Inventory in
excess of the Company's estimated usage requirements is written down to its
estimated net realizable value. Inherent in the estimates of net realizable
value are management's estimates related to the Company's production schedules,
customer demand, possible alternative uses and the ultimate realization of
potentially excess inventory. During 2001, the decision to exit the smart card
reader and chip business resulted in a significant inventory realizability
adjustment. While management deems this adjustment to be non-recurring, a
decrease in future demand for current products could result in an increase in
the amount of excess inventories on hand.

         VALUATION OF INVESTMENTS. The Company periodically assesses the
carrying value of its minority-owned investments for impairment. This assessment
is based upon a review of operations and indications of continued viability,
such as subsequent rounds of financing. As discussed in Note 3 to the Unaudited
Consolidated Financial Statements, during the first quarter of 2002 the Company
made a determination that its minority-owned investment in Mako was impaired.
While management believes that the current carrying value of it investment in
TecSec has not been impaired, different assumptions could affect the
evaluations.

                                       17



         IMPAIRMENT OF GOODWILL. Effective January 1, 2002, the Company adopted
SFAS No. 142. In accordance with the guidelines of this statement, goodwill and
indefinite lived intangible assets are no longer amortized but will be assessed
for impairment on at least an annual basis. SFAS No. 142 also requires that
intangible assets with estimable useful lives be amortized over their respective
estimated useful lives and reviewed for impairment. The Company performed an
initial review for impairment of goodwill as of January 1, 2002 and determined
that no impairment existed at that date. The Company determined the fair value
of its sole reporting unit primarily using two approaches: a market approach
technique and a discounted cash flow valuation technique. The market approach
relied primarily on the implied fair value using a multiple of revenues for
several entities with comparable operations and economic characteristics.
Significant assumptions used in the discounted cash valuation included estimates
of future cash flows, future short-term and long-term growth rates and estimated
cost of capital for purposes of arriving at a discount factor.

         PENSION OBLIGATIONS. The determination of obligations and expense for
pension benefits is dependent on the selection of certain assumptions used by
actuaries in calculating such amounts. These assumptions include, among others,
the discount rate and the expected rate of return on plan assets. Actual results
that differ from assumptions are accumulated and amortized over future periods
and therefore, generally affect the recognized expense and recorded obligation
in such future periods. While management believes that the assumptions are
appropriate, differences in actual experience or significant changes in
assumptions may materially affect the pension obligation and future expense.

RECENT ACCOUNTING PRONOUNCEMENTS

         In June 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 141, "Business Combinations" ("SFAS No.
141") and Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets" ("SFAS No. 142").

         SFAS No. 141 addresses financial accounting and reporting for business
combinations. This new statement requires that all business combinations be
accounted for using one method (the purchase method), intangible assets be
recognized apart from goodwill if they meet certain criteria and disclosure of
the primary reasons for a business combination and the allocation of the
purchase price paid to the assets acquired and liabilities assumed by major
balance sheet caption. The provisions of this statement apply to all business
combinations initiated after June 30, 2001.

         SFAS No. 142 addresses financial accounting and reporting for acquired
goodwill and other intangible assets. Under this new statement, goodwill and
intangible assets that have indefinite useful lives will not be amortized, but
rather will be tested at least annually for impairment, or earlier if
circumstances or events indicate that impairment may have occurred, based on the
specific guidance of this statement. This may result in future write-downs or
the write-off of such assets. In addition, this statement requires disclosure of
information about goodwill and other intangible assets in the years subsequent
to their acquisition that was not previously required. The provisions of this
statement are required to be applied starting with fiscal years beginning after
December 15, 2001. However, goodwill and intangible assets acquired after June
30, 2001 were subject immediately to the non-amortization and amortization
provisions of this statement. The Company adopted this statement on January 1,
2002. The Company completed the initial impairment test in the first quarter of
2002 which did not result in an impairment of goodwill. The provisions of SFAS
No. 142 are effective for periods after adoption and retroactive application is
not permitted. Therefore, the historical results of periods prior to 2002 in the
Company's Consolidated Statements of Operations do not reflect the effect of
SFAS No. 142 and, accordingly, the first three months of 2001 included
amortization expense of $431,000. Excluding goodwill amortization, the pro forma
net loss for the three months ended March 31, 2001, was $3.1 million, or $.13
per share.

                                       18



FACTORS THAT MAY AFFECT FUTURE RESULTS

         WE HAVE A HISTORY OF OPERATING LOSSES AND NEGATIVE CASH FLOW, WE HAVE
ONGOING FUNDING OBLIGATIONS AND WE NEED TO RAISE ADDITIONAL CAPITAL THAT MAY NOT
BE AVAILABLE TO US. We have incurred losses and experienced negative cash flow
from operating activities in the past, and we expect to incur losses and
experience negative cash flow from operating activities in the foreseeable
future. We incurred losses from continuing operations in 1999, 2000, 2001 and
for the three months ended March 31, 2002 of approximately $16.7 million, $19.7
million, $17.2 million and $1.3 million, respectively. In addition, we
experienced negative cash flow from continuing operating activities of $8.5
million, $18.7 million, $12.2 million and $826,000 in 1999, 2000, 2001 and for
the three month ended March 31, 2002, respectively.

         We also have continuing obligations to fund payments due under the
Consent Decree and an underfunded pension plan. As of March 31, 2002, we were
required to make future aggregate payments of $1.3 million through April 2004 in
connection with the Consent Decree. In January 2002, we reached an agreement
with the EPA to extend the due date on the remaining unpaid balance. In return,
the EPA was granted a security interest in certain assets held in escrow.
Consistent with the general practices of environmental enforcement agencies, the
Consent Decree does not eliminate our potential liability for remediation of
contamination that had not been known at the time of the settlement. In April
2002, we made our required payment of $450,000.

         We sponsor a defined benefit pension plan, which was frozen in 1993. As
of December 31, 2001, the present value of the accrued benefit liabilities of
our pension plan exceeded the plan's assets by approximately $5.5 million. In
addition to the $1.1 million required contribution to the plan in 2002, we are
obligated to make continued contributions to the plan in accordance with the
rules and regulations prescribed by the Employee Retirement Income Security Act
of 1974. Since the plan is significantly underfunded, we expect that the annual
contribution requirements beyond 2002 will continue to be significant. Future
contribution levels depend in large measure on the mortality rate of plan
participants, discount rate and the expected return on the plan assets. In April
2002, we failed to make the required quarterly contribution to the plan due
April 15, 2002, in the amount of $253,000. Pursuant to Federal tax law, interest
will begin accruing on the obligation. We will provide notice of our failure to
make the required contribution to the Pension Benefit Guaranty Corporation by
May 15, 2002 and to the plan participants by June 15, 2002. Should we fail to
make the required contributions to the plan for 2002, we could be subject to
interest, penalties, liens on assets and ultimately a forced plan termination.
There is no assurance that we will make the required contributions.

         We will need to raise additional capital that may not be available to
us. Although we believe existing cash and short term investments may be
sufficient to meet our operating and capital requirements at the currently
anticipated level through December 31, 2002, additional working capital will be
necessary in order to fund our current business plan and to ensure we are able
to fund our pension and environmental obligations. While we are actively
considering various funding alternatives, no arrangement to obtain additional
funding has been secured or entered into. There can be no assurance that we will
be able to obtain additional funding, on acceptable terms or at all. If we
cannot raise additional capital to continue at our present level of operations
we may not be able to meet our obligations, take advantage of future acquisition
opportunities or further develop or enhance our product offering, any of which
could have a material adverse effect on our business and results of operations
and could lead to our being required to seek bankruptcy protection.

         We currently have no capacity for commercial debt financing. Should
such capacity become available to us, we may be adversely affected in the future
by factors such as higher interest rates, inability to borrow without
collateral, and continued operating losses. Borrowings may also involve
covenants limiting or restricting our operations or future opportunities.

                                       19



         WE FACE RISKS ASSOCIATED WITH ACQUISITIONS. An important element of our
new strategic plan involves the acquisition of businesses in areas outside the
technology sectors in which we have recently been engaged, so as to diversify
our asset base. Acquisitions would require us to invest financial resources and
may have a dilutive effect on our earnings or book value per share of common
stock. We cannot assure you that we will consummate any acquisitions in the
future, that any financing required for such acquisitions will be available on
acceptable terms or at all, or that any past or future acquisitions will not
materially adversely affect our results of operations and financial condition.

         Our acquisition strategy generally presents a number of significant
risks and uncertainties, including the risks that:

     -   we will not be able to retain the employees or business relationships
         of the acquired company;

     -   we will fail to realize any synergies or other cost reduction
         objectives expected from the acquisition;

     -   we will not be able to integrate the operations, products, personnel
         and facilities of acquired companies;

     -   management's attention will be diverted to pursuing acquisition
         opportunities and integrating acquired products, technologies or
         companies and will be distracted from performing its regular
         responsibilities;

     -   we will incur or assume liabilities, including liabilities that are
         unknown or not fully known to us at the time of the acquisition; and

     -   we will enter markets in which we have no direct prior experience.

         We cannot assure you that any of the foregoing will not materialize,
which could have an adverse effect on our results of operations and financial
condition.

         OUR TECSEC INVESTMENT MAY BE IMPAIRED OR SUBJECT TO A SIGNIFICANT
WRITE-DOWN IN THE FUTURE. As of March 31, 2002, the carrying value of our
investment in TecSec, a privately held company, was $5.1 million. This
investment has been accounted for at cost and could be subject to write-down in
future periods if it is determined that the investment is permanently impaired
and not recoverable. If TecSec is not successful in executing its business plan
or in obtaining sufficient capital on acceptable terms or at all, our investment
in TecSec could be permanently impaired and subject to a significant write-down.

         THE MARKET'S ACCEPTANCE OF OUR PRODUCTS IS UNCERTAIN. Demand for, and
market acceptance of, our software solutions and products are subject to a high
level of uncertainty due to rapidly changing technology, new product
introductions and changes in customer requirements and preferences. The success
of our products or any future products depends upon our ability to enhance our
existing products and to develop and introduce new products and technologies to
meet customer requirements. We face the risk that our current and future
products will not achieve market acceptance.

         Our future revenues and earnings depend in large part on the success of
these products, and if the benefits are not perceived sufficient or if
alternative technologies are more widely accepted, the demand for our solutions
may not grow and our business and operating results would be materially and
adversely affected.

         WE DEPEND ON A RELATIVELY SMALL NUMBER OF CUSTOMERS FOR A MAJORITY OF
OUR REVENUES. We rely on a limited number of customers in our business. We
expect to continue to depend upon a relatively small number of customers for a
majority of the revenues in our business. For the year ended December 31, 2001,
one customer represented approximately 17% of the Company's sales and 17% of the
accounts receivable balance as of December 31, 2001. For the three months ended
March 31, 2002, no customer represented

                                       20



more than 10% of sales or 10% of the accounts receivable balance as of March 31,
2002.

         We generally do not enter into long-term supply commitments with our
customers. Instead, we bid on a project basis and have supply contracts in place
for each project. Significant reductions in sales to any of our largest
customers would have a material adverse effect on our business. In addition, we
generate significant accounts receivable and inventory balances in connection
with providing products to our customers. A customer's inability to pay for our
products could have a material adverse effect on our results of operations.

         OUR FUTURE SUCCESS DEPENDS ON OUR ABILITY TO KEEP PACE WITH
TECHNOLOGICAL CHANGES AND INTRODUCE NEW PRODUCTS IN A TIMELY MANNER. The rate of
technological change currently affecting the smart card market is particularly
rapid compared to other industries. Our ability to anticipate these trends and
adapt to new technologies is critical to our success. Because new product
development commitments must be made well in advance of actual sales, new
product decisions must anticipate future demand as well as the speed and
direction of technological change. Our ability to remain competitive will depend
upon our ability to develop in a timely and cost effective manner new and
enhanced products at competitive prices. New product introductions or
enhancements by our competitors could cause a decline in sales or loss of market
acceptance of our existing products and lower profit margins.

         Our success in developing, introducing and selling new and enhanced
products depends upon a variety of factors, including:

         -        product selections;

         -        timely and efficient completion of product design and
                  development;

         -        timely and efficient implementation of manufacturing
                  processes;

         -        effective sales, service and marketing;

         -        price; and

         -        product performance in the field.

         Our ability to develop new products also depends upon the success of
our research and development efforts. We may need to devote additional resources
to our research and development efforts in the future. We cannot assure you that
funds will be available for these expenditures or that these funds will lead to
the development of viable products.

         THE HIGHLY COMPETITIVE MARKETS IN WHICH WE OPERATE COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND OPERATING RESULTS. The markets in
which we operate are intensely competitive and characterized by rapidly changing
technology. We compete against numerous companies, many of which have greater
resources than we do, and we believe that competition is likely to intensify.

         We believe that the principal competitive factors affecting us are:

         -        the extent to which products support industry standards and
                  are capable of being operated or integrated with other
                  products;

         -        technical features and level of security;

         -        strength of distribution channels;

         -        price;

         -        product reputation, reliability, quality, performance and
                  customer support;

         -        product features such as adaptability, functionality and ease
                  of use; and

         -        competitor reputation, positioning and resources.

                                       21



         We cannot assure you that competitive pressures will not have a
material adverse effect on our business and operating results. Many of our
current and potential competitors have longer operating histories and
significantly greater financial, technical, sales, customer support, marketing
and other resources, as well as greater name recognition and a larger installed
base of their products and technologies than our company. Additionally, there
can be no assurance that new competitors will not enter our markets. Increased
competition would likely result in price reductions, reduced margins and loss of
market share, any of which would have a material adverse effect on our business
and operating results.

         Our primary competition currently comes from companies offering closed
environment solutions, including small value electronic cash systems and
database management solutions, such as Girovend, MARS, Diebold, CyberMark and
Schlumberger.

         Many of our current and potential competitors have broader customer
relationships that could be leveraged, including relationships with many of our
customers. These companies also have more established customer support and
professional services organizations than we do. In addition, a number of
companies with significantly greater resources than we have could attempt to
increase their presence by acquiring or forming strategic alliances with our
competitors, resulting in increased competition.

         OUR LONG PRODUCT SALES CYCLES SUBJECT US TO RISK. Our products fall
into two categories; those that are standardized and ready to install and use
and those that require significant development efforts to implement within the
purchasers' own systems. Those products requiring significant development
efforts tend to be newly developed technologies and software applications that
can represent major investments for customers. We rely on potential customers'
internal review processes and systems requirements. The implementation of some
of our products involves deliveries of small quantities for pilot programs and
significant testing by the customers before firm orders are received for
production volumes, or lengthy beta testing of software solutions. For these
more complex products, the sales process may take one year or longer, during
which time we may expend significant financial, technical and management
resources, without any certainty of a sale.

         WE MAY BE LIMITED IN OUR USE OF OUR FEDERAL NET OPERATING LOSS
CARRYFORWARDS. As of December 31, 2001, we had federal net operating loss
carryforwards, subject to review by the Internal Revenue Service, totaling
approximately $86.0 million for federal income tax purposes, approximately $25.0
million of which will expire at the end of 2002. We do not expect to earn any
significant taxable income in the next several years, and may not do so until
much later. A federal net operating loss can generally be carried back two or
three years and then forward fifteen or twenty years (depending on the year in
which the loss was incurred), and used to offset taxable income earned by a
company (and thus reduce its income tax liability).

         Section 382 of the Internal Revenue Code provides that when a company
undergoes an "ownership change," that company's use of its net operating losses
is limited in each subsequent year. An "ownership change" occurs when, as of any
testing date, the sum of the increases in ownership of each shareholder that
owns five percent or more of the value of a company's stock as compared to that
shareholder's lowest percentage ownership during the preceding three-year period
exceeds fifty percentage points. For purposes of this rule, certain shareholders
who own less than five percent of a company's stock are aggregated and treated
as a single five-percent shareholder. We may issue a substantial number of
shares of our stock in connection with public and private offerings,
acquisitions and other transactions in the future. In addition, the exercise of
outstanding warrants and options to purchase shares of our common stock may
require us to issue additional shares of our common stock. The issuance of a
significant number of shares of stock could result in an "ownership change." If
we were to experience such an "ownership change," we estimate that virtually all
of our available federal net operating loss carryforwards could not be used to
reduce our taxable income.

                                       22



         The extent of the actual future use of our federal net operating loss
carryforwards is subject to inherent uncertainty because it depends on the
amount of otherwise taxable income we may earn. We cannot give any assurance
that we will have sufficient taxable income in future years to use any of our
federal net operating loss carryforwards before they would otherwise expire.

         OUR PROPRIETARY TECHNOLOGY IS DIFFICULT TO PROTECT AND MAY INFRINGE ON
THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES. Our success depends
significantly upon our proprietary technology. We rely on a combination of
patent, copyright and trademark laws, trade secrets, confidentiality agreements
and contractual provisions to protect our proprietary rights. We seek to protect
our software, documentation and other written materials under trade secret and
copyright laws, which afford only limited protection. We cannot assure you that
any of our applications will be approved, that any new patents will be issued,
that we will develop proprietary products or technologies that are patentable,
that any issued patent will provide us with any competitive advantages or will
not be challenged by third parties. Furthermore, we cannot assure you that the
patents of others will not have a material adverse effect on our business and
operating results.

         If our technology or products is determined to infringe upon the rights
of others, and we were unable to obtain licenses to use the technology, we could
be required to cease using the technology and stop selling the products. We may
not be able to obtain a license in a timely manner on acceptable terms or at
all. Any of these events would have a material adverse effect on our financial
condition and results of operations.

         Patent disputes are common in technology related industries. We cannot
assure you that we will have the financial resources to enforce or defend a
patent infringement or proprietary rights action. As the number of products and
competitors in the smart card market grows, the likelihood of infringement
claims also increases. Any claim or litigation may be time consuming and costly,
cause product shipment delays or require us to redesign our products or enter
into royalty or licensing agreements. Any of these events would have a material
adverse effect on our business and operating results. Despite our efforts to
protect our proprietary rights, unauthorized parties may attempt to copy aspects
of our products or to use our proprietary information and software. In addition,
the laws of some foreign countries do not protect proprietary and intellectual
property rights as effectively as do the laws of the United States. Our means of
protecting our proprietary and intellectual property rights may not be adequate.
There is a risk that our competitors will independently develop similar
technology, duplicate our products or design around patents or other
intellectual property rights.

         THE NATURE OF OUR PRODUCTS SUBJECTS US TO PRODUCT LIABILITY RISKS. Our
customers may rely on certain of our current products and products in
development to prevent unauthorized access to digital content for financial
transactions, computer networks, and real property. A malfunction of or design
defect in certain of our products could result in tort or warranty claims.
Although we attempt to reduce the risk of exposure from such claims through
warranty disclaimers and liability limitation clauses in our sales agreements
and by maintaining product liability insurance, we cannot assure you that these
measures will be effective in limiting our liability for any damages. Any
liability for damages resulting from security breaches could be substantial and
could have a material adverse effect on our business and operating results. In
addition, a well-publicized actual or perceived security breach involving our
conditional access or security products could adversely affect the market's
perception of our products in general, regardless of whether any breach is
attributable to our products. This could result in a decline in demand for our
products, which would have a material adverse effect on our business and
operating results.

         WE MAY HAVE DIFFICULTY RETAINING OR RECRUITING PROFESSIONALS FOR OUR
BUSINESS. Our future success and performance is dependent on the continued
services and performance of our senior management and other key personnel. If we
fail to meet our operating and financial objectives this may make it more
difficult to retain and reward our senior management and key personnel. The loss
of the

                                       23



services of any of our executive officers or other key employees could
materially adversely affect our business.

         Our business requires experienced software programmers, creative
designers and application developers, and our success depends on identifying,
hiring, training and retaining such experienced, knowledgeable professionals. If
a significant number of our current employees or any of our senior technical
personnel resign, or for other reasons are no longer employed by us, we may be
unable to complete or retain existing projects or bid for new projects of
similar scope and revenues. In addition, former employees may compete with us in
the future.

         Even if we retain our current employees, our management must
continually recruit talented professionals in order for our business to grow.
Furthermore, there is significant competition for employees with the skills
required to perform the services we offer. We cannot assure you that we will be
able to attract a sufficient number of qualified employees in the future to
sustain and grow our business, or that we will be successful in motivating and
retaining the employees we are able to attract. If we cannot attract, motivate
and retain qualified professionals, our business, financial condition and
results of operations will suffer.

         OUR INTERNATIONAL OPERATIONS SUBJECT US TO RISK ASSOCIATED WITH
OPERATING IN FOREIGN MARKETS, INCLUDING FLUCTUATIONS IN CURRENCY EXCHANGE RATES,
WHICH COULD ADVERSELY AFFECT OUR OPERATIONS AND FINANCIAL CONDITION. Sales
outside the U. S. represented approximately 76% of total sales for the three
months ended March 31, 2002. Because we derive a substantial portion of our
business outside the United States, we are subject to certain risks associated
with operating in foreign markets including the following:

         -        tariffs and other trade barriers;

         -        difficulties in staffing and managing foreign operations;

         -        currency exchange risks;

         -        export controls related to encryption technology;

         -        unexpected changes in regulatory requirements;

         -        changes in economic and political conditions;

         -        potentially adverse tax consequences; and

         -        burdens of complying with a variety of foreign laws.

         Any of the foregoing could adversely impact the success of our
international operations. We cannot assure you that such factors will not have a
material adverse effect on our future international sales and, consequently, on
our business, operating results and financial condition. In addition,
fluctuations in exchange rates could have a material adverse effect on our
business, operating results and financial condition. To date, we have not
engaged in currency hedging.

         WE ARE SUBJECT TO GOVERNMENT REGULATION. Federal, state and local
regulations impose various environmental controls on the discharge of chemicals
and gases, which have been used in our past assembly processes and may be used
in future processes. Moreover, changes in such environmental rules and
regulations may require us to invest in capital equipment and implement
compliance programs in the future. Any failure by us to comply with
environmental rules and regulations, including the discharge of hazardous
substances, would subject us to liabilities and would materially adversely
affect our operations.

         OUR ARTICLES OF INCORPORATION AND BY-LAWS, CERTAIN CHANGE OF CONTROL
AGREEMENTS, OUR RIGHTS PLAN AND PROVISIONS OF PENNSYLVANIA LAW COULD DETER
TAKEOVER ATTEMPTS.

         Blank check preferred stock. Our board of directors has the authority
to issue preferred stock and to fix the rights, preferences, privileges and
restrictions, including voting rights, of these shares without any

                                       24



further vote or action by the holders of our common stock. The rights of the
holders of any preferred stock that may be issued in the future may adversely
affect the rights of the holders of our common stock. The issuance of preferred
stock could make it more difficult for a third party to acquire a majority of
our outstanding voting stock, thereby delaying, deferring or preventing a change
of control. Such preferred stock may have other rights, including economic
rights, senior to our common stock, and as a result, the issuance of the
preferred stock could limit the price that investors might be willing to pay in
the future for shares of our common stock and could have a material adverse
effect on the market value of our common stock.

         Rights plan. Our rights plan entitles the registered holders of rights
to purchase shares of our class A preferred stock upon the occurrence of certain
events, and may have the effect of delaying, deferring or preventing a change of
control.

         Change of control agreements. We are a party to change of control
agreements, which provide for payments to certain of our directors and executive
officers under certain circumstances following a change of control. Since the
change of control agreements require large cash payments to be made by any
person effecting a change of control, these agreements may discourage takeover
attempts.

         The change of control agreements provide that, if the services of any
person party to a change of control agreement are terminated within three years
following a change of control, that individual will be entitled to receive, in a
lump sum within 10 days of the termination date, a payment equal to 2.99 times
that individual's average annual compensation for the shorter of the five years
preceding the change of control and the period the individual received
compensation from us for personal services. Assuming a change of control were to
occur at the present time, payments in the following amounts would be required:
Mr. Harry I. Freund of $934,000 and Mr. Jay S. Goldsmith of $934,000. If any
such payment, either alone or together with others made in connection with the
individual's termination, is considered to be an excess parachute payment under
the Internal Revenue Code, the individual will be entitled to receive an
additional payment in an amount which, when added to the initial payment, would
result in a net benefit to the individual, after giving effect to excise taxes
imposed by Section 4999 of the Internal Revenue Code and income taxes on such
additional payment, equal to the initial payment before such additional payment
and we would not be able to deduct these initial or additional payments for
income tax purposes.

         Pennsylvania law. We are a Pennsylvania corporation. Anti-takeover
provisions of Pennsylvania law could make it difficult for a third party to
acquire control of us, even if such change of control would be beneficial to our
shareholders.

         OUR STOCK PRICE IS EXTREMELY VOLATILE. The stock market has recently
experienced significant price and volume fluctuations unrelated to the operating
performance of particular companies. The market price of our common stock has
been highly volatile and is likely to continue to be volatile. The future
trading price for our common stock will depend on a number of factors,
including:

         -        continued listing of our common stock on the National Market
                  or SmallCap Market (see "Our stock may be delisted from the
                  Nasdaq System" below);

         -        the volume of activity for our common stock is minimal and
                  therefore a large number of shares placed for sale or purchase
                  could increase its volatility;

         -        our ability to effectively manage our business, including our
                  ability to raise capital;

         -        variations in our annual or quarterly financial results or
                  those of our competitors;

         -        general economic conditions, in particular, the technology
                  service sector;

         -        expected or announced relationships with other companies;

         -        announcements of technological advances innovations or new
                  products by us or our competitors;

                                       25



         -        patents or other proprietary rights or patent litigation; and

         -        product liability or warranty litigation.

         We cannot be certain that the market price of our common stock will not
experience significant fluctuations in the future, including fluctuations that
are adverse and unrelated to our performance.

         OUR STOCK MAY BE DELISTED FROM THE NASDAQ SYSTEM. On February 14, 2002,
we received notice from The Nasdaq Stock Market ("Nasdaq") that our common stock
had failed to maintain a minimum closing bid price of $1.00 over the last 30
consecutive trading days as required by Nasdaq Marketplace rules. We received a
second notice on February 27, 2002, that our common stock also failed to
maintain a market value of public float of $5 million. The Nasdaq had previously
suspended the minimum bid price and market value of public float requirements in
response to market conditions following the September 11 terrorists attacks. The
Nasdaq reinstated these requirements effective January 2, 2002.

         In accordance with the Nasdaq rules, we were provided 90 calendar days,
or until May 15, 2002, to regain compliance with the minimum bid price
requirement and until May 28, 2002 to regain compliance with the market value of
public float requirement. If at any time before May 15, 2002, the closing bid
price of our common stock was at least $1.00 for a minimum of 10 consecutive
trading days, Nasdaq would determine if we were in compliance. However, if we
were unable to demonstrate compliance on or before May 15, 2002, Nasdaq would
provide written notification that our securities would be delisted. At that
time, we may appeal the decision to a Nasdaq Listing Qualification Panel.

         In April 2002, we filed an application to transfer the listing of our
common stock to the SmallCap Market. The application was approved and our common
stock listing was transferred to the Nasdaq SmallCap market effective May 2,
2002. We will now be afforded an additional 90-day grace period to comply with
the $1.00 minimum bid price requirement, which will extend the delisting
determination until August 14, 2002. We may also be eligible for an additional
180-day grace period provided that we meet certain SmallCap Market initial
listing criteria. If we should meet the minimum bid price requirement for 30
consecutive trading days and maintain compliance with all other National Market
listing requirements, we may be eligible to transfer our listing back to the
National Market.

         If we are unable to meet the SmallCap Market minimum maintenance
requirements, we would be subject to delisting from the Nasdaq system. In that
event, after receiving notification that our securities would be delisted, we
may appeal the delisting determination.

         We cannot assure you (i) that we will remedy the identified
deficiencies and continue to meet other National Market quantitative or
qualitative listing criteria, (ii) that we will continue to meet the SmallCap
Market continued maintenance requirements, (ii) that any appeal in the event of
non-compliance of our common stock will be successful or (iv) that our common
stock will not be delisted.

         Should our common stock be delisted, the liquidity of our common stock
would be adversely affected. This could impair our ability to raise capital in
the future. If we are not successful in raising additional capital when required
in sufficient amounts and on terms acceptable to us or at all, we may be
required to scale back the scope of our business plan, which would have a
material adverse effect on our financial condition and results of operations,
and be unable to fund our pension and environmental obligations.

                                       26



ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign currency exchange rate risk

         We conduct operations in the United Kingdom and sell products in
several different countries. Therefore, our operating results may be impacted by
the fluctuating exchange rates of foreign currencies, especially the British
pound, in relation to the U.S. dollar. We do not currently engage in hedging
activities with respect to our foreign currency exposure. We continually monitor
our exposure to currency fluctuations and may use financial hedging techniques
when appropriate to minimize the effect of these fluctuations. Even so, exchange
rate fluctuations may still have a material adverse effect on our business and
operating results.

Market Risk

         We are exposed to market risk primarily through short-term investments.
Our investment policy calls for investment in short-term, low risk instruments.
As of March 31, 2002, short-term investments (principally U.S. Treasury bills)
were $3.5 million. Due to the nature of these investments, any decrease in rates
would not have a material impact on our financial condition or results of
operations.

Investment Risk

         As of March 31, 2002, the value of our investment in TecSec, a
privately held company, was $5.1 million. This investment has been accounted for
at cost and could be subject to write-down in future periods if it is determined
that the investment is permanently impaired and not recoverable. TecSec is
currently evaluating alternative sources of financing to meet ongoing capital
and operating needs. If TecSec is not successful in obtaining sufficient capital
on acceptable terms or at all, our investment in TecSec could be permanently
impaired and subject to a significant write-down.

PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

GENERAL LITIGATION

Various legal proceedings are pending against the Company. The Company considers
all such proceedings to be ordinary litigation incident to the character of its
business. Certain claims are covered by liability insurance. The Company
believes that the resolution of those claims to the extent not covered by
insurance will not, individually or in the aggregate, have a material adverse
effect on the financial position or results of operations of the Company.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

99.1 Certification of periodic report dated March 25, 2003

(b) Report on Form 8-K

None

                                       27



                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                        PUBLICARD, INC.
                                        (Registrant)

Date: March 28, 2003
                                        /s/ Antonio L. DeLise
                                        Antonio L. DeLise, President,
                                        Chief Executive Officer, Chief Financial
                                        Officer

                                       28



                                  CERTIFICATION

I, Antonio L. DeLise, as the President, Chief Executive Officer and Chief
Financial Officer of PubliCARD, Inc., certify that:

1.       I have reviewed this amended quarterly report on Form 10-Q/A of
PubliCARD, Inc.;

2.       Based on my knowledge, this amended quarterly report does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this amended quarterly report;

3.       Based on my knowledge, the financial statements, and other financial
information included in this amended quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this amended
quarterly report.

Date: March 28, 2003                       /s/ Antonio L. DeLise
                                           -------------------------------------
                                           Antonio L. DeLise
                                           President, Chief Executive Officer,
                                           Chief Financial Officer and Secretary

                                       29