================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



                                   FORM 10-QSB

(Mark One)
/ X /    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
         OF THE SECURITIES EXCHANGE ACT OF 1934

         For the quarterly period ended September 30, 2007
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 0-26059

                               CIRTRAN CORPORATION
                               -------------------
             (Exact name of registrant as specified in its charter)

                    Nevada                               68-0121636
        ----------------------------         -----------------------------------
      (State or other jurisdiction of        (I.R.S. Employer Identification No)
       incorporation or organization)

            4125 South 6000 West
            West Valley City, Utah                          84128
   ----------------------------------------             --------------
   (Address of Principal Executive Offices)              (Zip Code)

                                 (801) 963-5112
                         (Registrant's telephone number)

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the proceeding
12 months 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 a shell company (as defined in
Rule 12b-2 of the Exchange Act.     Yes  X  No
                                ---     ---

The number of shares outstanding of the issuer's common stock as of November 14,
2007: 1,030,352,371

Transitional Small Business Disclosure Format (check one): Yes      No  X
                                                               ---     ---





                                       1
<PAGE>

Table of Contents
                                                                           Page
PART I - FINANCIAL INFORMATION

Item 1.  Condensed Consolidated Financial Statements

         Balance Sheets as of September 30, 2007, and                        3
         December 31, 2006 (unaudited)

         Statements of Operations for the Three and Nine Months ended        4
         September 30, 2007, and 2006 (unaudited)

         Statements of Cash Flows for the Nine Months ended                  5
         September 30, 2007, and 2006 (unaudited)

         Notes to Condensed Consolidated Financial Statements                7
         (unaudited)

Item 2.  Management's Discussion and Analysis or Plan of Operation          21

Item 3.  Controls and Procedures                                            45

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                  47

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds        49

Item 4.  Submission of Matters to a Vote of Security Holders                50

Item 5.  Other Information                                                  51

Item 6   Exhibits                                                           54

Signatures                                                                  56



                                       2
<PAGE>

                      CIRTRAN CORPORATION AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)



                                                 September 30,     December 31,
                                                     2007             2006
--------------------------------------------------------------------------------

ASSETS
Current Assets
Cash and cash equivalents                       $       99,442   $      146,050
Trade accounts receivable, net of
  allowance for doubtful
  accounts of $14,181 and $14,181,
  respectively                                       1,889,320          982,096
Inventory, Net of reserve of $866,354
  and $866,354, respectively                         2,048,984        1,960,013
Prepaid Deposits                                       153,920           80,925
Investment Receivables                                       -          241,744
Other                                                  350,564          213,212
--------------------------------------------------------------------------------
Total Current Assets                                 4,542,230        3,624,040

Investment in Securities, at Cost                    2,570,000          300,000

Deferred Offering Costs, Net                           151,072          296,103

Long Term Receivables                                1,665,000        1,665,000

Property and Equipment, Net                          1,020,366        2,678,454

Intellectual Property, Net                           2,179,944        2,451,408

Other Assets                                            49,717          114,733
--------------------------------------------------------------------------------

Total Assets                                    $   12,178,329   $   11,129,738
================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts payable                                $    1,390,695   $    1,135,527
Distribution payable                                 1,256,640                -
Accrued liabilities                                  1,606,637          607,649
Deferred revenue                                        79,361          191,396
Derivative liability                                 2,725,261        3,362,626
Convertible debenture                                3,114,715        2,746,047
Current maturities of long-term
  notes payable                                        462,094          444,436
Notes payable to stockholders                          145,000                -
--------------------------------------------------------------------------------
Total Current Liabilities                           10,780,403        8,487,681
--------------------------------------------------------------------------------

Long-Term Notes Payable, Less
  Current Maturities                                         -        1,023,110
--------------------------------------------------------------------------------

   Total Liabilities                                10,780,403        9,510,791

Commitments and Contingencies
Minority Interest                                    1,091,360                -

Stockholders' Equity
Common stock, par value $0.001;
  authorized 1,500,000,000 shares;
  issued and outstanding shares:
  951,405,002 and 656,170,424                          951,400          656,165
Employee receivable                                    (66,000)         (66,000)
Additional paid-in capital                          25,066,355       23,210,461
Accumulated deficit                                (25,645,189)     (22,181,679)
--------------------------------------------------------------------------------
Total Stockholders' Equity                             306,566        1,618,947
--------------------------------------------------------------------------------
Total Liabilities and
Stockholders' Equity                            $   12,178,329   $   11,129,738
================================================================================

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

                                       3
<PAGE>

                      CIRTRAN CORPORATION AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)



                         For the Three Months Ended   For the Nine Months Ended
                               September 30,               September 30,
                         --------------------------  --------------------------
                             2007         2006           2007          2006
-------------------------------------------------------------------------------

Net Sales                $  3,533,555  $  3,044,853  $  8,700,004  $  7,007,118
Cost of Sales              (1,723,568)   (2,307,237)   (4,135,494)   (4,529,641)
-------------------------------------------------------------------------------

Gross Profit                1,809,987       737,616     4,564,510     2,477,477
-------------------------------------------------------------------------------

Operating Expenses
Selling, general and
  administrative
  expenses                  2,529,784     1,062,570     7,077,802     3,826,899
Non-cash employee
  compensation expense              -             -        75,385        65,616
-------------------------------------------------------------------------------
Total Operating
  Expenses                  2,529,784     1,062,570     7,153,187     3,892,515
-------------------------------------------------------------------------------

Income (Loss) From
 Operations                  (719,797)     (324,954)   (2,588,677)   (1,415,038)
-------------------------------------------------------------------------------

Other Income (Expense)
Interest                     (584,328)     (693,494)   (2,044,116)   (2,330,309)
Gain on settlement          1,168,623             -     1,168,623             -
Gain on sale/leaseback         19,752             -        40,020             -
Gain on forgiveness
  of debt                           -             -        23,748         6,930
Gain (loss) on
  derivative valuation        198,648    (1,961,840)      (63,108)     (174,187)
-------------------------------------------------------------------------------
Total Other Expense,
  Net                         802,695    (2,655,334)     (874,833)   (2,497,566)
-------------------------------------------------------------------------------

Net Income (Loss)        $     82,898  $ (2,980,288) $ (3,463,510) $ (3,912,604)
-------------------------------------------------------------------------------

Basic (income) loss per
  common share           $          -  $          -  $          -  $          -
-------------------------------------------------------------------------------
Diluted (income) loss
  per common share       $          -  $          -  $          -  $          -
-------------------------------------------------------------------------------







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


                                       4
<PAGE>

                      CIRTRAN CORPORATION AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


For the Nine Months Ended September 30,              2007              2006
--------------------------------------------------------------------------------

Cash flows from operating activities
Net income (loss)                               $   (3,463,510)  $   (3,912,604)
Adjustments to reconcile net loss to net
cash used in operating activities:
  Depreciation and amortization                        639,914          353,793
  Accretion expense                                  1,633,667        1,924,996
  Provision for doubtful accounts                            -         (155,757)
  Gain on forgiveness of debt                          (23,748)          (6,930)
  Gain on sale - leaseback                             (40,031)               -
  Gain on settlement                                (1,168,623)               -
  Non-cash compensation expense                         75,386           57,756
  Options issued to attorneys and consultants
    for services                                             -           59,851
  Change in valuation of derivative                     63,109          174,187
Changes in assets and liabilities:
  Trade accounts receivable                           (907,226)      (1,079,913)
  Prepaid Deposits                                     (72,995)         142,188
  Inventories                                          (88,970)         864,158
  Prepaid expenses and other assets                    (72,335)        (259,946)
  Accounts payable                                     264,443         (198,967)
  Accrued liabilities                                  352,031           45,281
  Deferred revenue                                    (112,035)         480,247
  Intangibles                                                -         (120,000)
--------------------------------------------------------------------------------

  Total adjustments                                    542,587        2,280,944
--------------------------------------------------------------------------------

  Net cash used in operating activities             (2,920,923)      (1,631,660)
--------------------------------------------------------------------------------

Cash flows from investing activities
Intangibles purchased with cash                        (45,202)        (556,163)
Proceeds for sale of property                        2,500,000                -
ABS assets acquired with cash                                -       (1,125,000)
Cash issued on LOC                                    (109,633)         (40,000)
Purchase of property and equipment                    (209,398)        (262,100)
--------------------------------------------------------------------------------

  Net cash provided by (used in)
   investing activities                              2,135,767       (1,983,263)
--------------------------------------------------------------------------------

Cash flows from financing activities
Proceeds from notes payable to stockholders            355,000                -
Payments from notes payable to stockholders           (210,000)               -
Proceeds from notes payable                                  -        1,500,000
Principal payments on LTD                           (1,255,452)               -
Principal payments on notes payable                          -          (26,155)
Proceeds from notes payable to related parties               -          110,837
Payment on notes payable to related parties                  -         (206,643)
Proceeds from sale of interest in AfterBev           1,848,000                -
Proceeds from stock issued in private placement              -        1,500,000
Exercise of options issued to attorneys and
  consultants for services                               1,000           26,376
================================================================================

  Net cash provided by financing activities            738,548        2,904,415
================================================================================

Net increase (decrease) in cash and cash
equivalents                                            (46,608)        (710,508)

Cash and cash equivalents at beginning of year         146,050        1,427,865
================================================================================

Cash and cash equivalents at end of period      $       99,442   $      717,357
================================================================================


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

                                       5
<PAGE>

                      CIRTRAN CORPORATION AND SUBSIDIARIES
     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)

For the Nine Months Ended September 30,                2007              2006
--------------------------------------------------------------------------------
Supplemental disclosure of cash flow
information

Cash paid during the period for interest           $         -      $   119,552

Noncash investing and financing activities

Issuance of stock and options for settlement
  of litigation                                              -          464,187
Stock issued for settlement of accrued
  interest                                             100,000          130,000
Common Stock issued for partial conversion
  of Convertible Debenture                           1,965,473        1,910,477
Reclassification accounts receivable to notes
  receivable                                                 -        1,665,000
   and accrued compensation                                  -           54,000
ABS assets acquired in exchange for guaranteed
  payment and reduction of claim                             -        1,185,000
Warrants issued with derivative liability
  features                                                   -          955,520
Options granted and exercised in partial
  settlement of payable                                  9,270           18,974
Common Stock issued for the 1.2 for 1
  forward split                                        140,572                -
Deferred gain on the sale and leaseback of
  office building                                      810,736                -
Investment in Play Beverage Group, LLC                 750,000                -
Gain on settlement                                     351,377                -





















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

                                       6
<PAGE>

                      CIRTRAN CORPORATION AND SUBSIDIARIES

                     NOTES TO CONDENSED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of  Presentation  -- The Company  consolidates  all of its  majority-owned
subsidiaries  and companies  over which the Company  exercises  control  through
majority voting rights. The Company accounts for its investments in common stock
of other  companies that the Company does not control but over which the Company
exert  significant  influence  using the equity method,  with its share of their
results classified as revenues.

Condensed   Financial   Statements  --  The  accompanying   unaudited  condensed
consolidated  financial  statements include the accounts of CirTran  Corporation
and its subsidiaries (the "Company").  These financial  statements are condensed
and, therefore,  do not include all disclosures  normally required by accounting
policies  generally  accepted in the United States of America.  These statements
should be read in conjunction  with the Company's  annual  financial  statements
included in the  Company's  Annual  Report on Form 10-KSB.  In  particular,  the
Company's  significant  accounting  policies  were  presented  as  Note 1 to the
consolidated  financial  statements  in that  Annual  Report.  In the opinion of
management, all adjustments necessary for a fair presentation have been included
in the accompanying  condensed  consolidated financial statements and consist of
only normal recurring  adjustments.  The results of operations  presented in the
accompanying  condensed consolidated financial statements for the three and nine
months ended September 30, 2007, are not  necessarily  indicative of the results
that may be expected for the full year ending December 31, 2007.

Principles of Consolidation -- The consolidated financial statements include the
accounts  of CirTran  Corporation,  and its wholly  owned  subsidiaries,  Racore
Technology Corporation,  CirTran-Asia Inc., CirTran Products,  Inc., and CirTran
Media Corp.  (formerly  known as Diverse Media Group  Corporation)  (see Note 7,
Commitments  And  Contingencies  below),  PFE  Properties,  LLC,  CirTran Online
Corporation and CirTran  Beverage Corp. (see Note 4,  Investments,  below).  All
significant intercompany transactions have been eliminated in consolidation.

Impairment  of Long-Lived  Assets -The Company  reviews its  long-lived  assets,
including  intangibles,  for impairment when events or changes in  circumstances
indicate that the carrying value of an asset may not be recoverable. The Company
evaluates,  at each balance sheet date,  whether events and  circumstances  have
occurred  that  indicate  possible  impairment.  The Company uses an estimate of
future  undiscounted  net cash flows from the  related  asset or group of assets
over their remaining life in measuring whether the assets are recoverable. As of
September 30, 2007, the Company does not consider any of its  long-lived  assets
to be impaired.

Long-lived  asset  costs are  amortized  over the  estimated  useful life of the
asset,  which is  typically 5 - 7 years.  Amortization  expense was $105,757 and
$3,837 for the three months ended  September 30, 2007 and 2006, and $316,619 and
$11,511 for the nine months ended September 30, 2007 and 2006, respectively.

Registration Payment Arrangements - On January 1, 2007, the Company adopted FASB
Staff  Position  ("FSP")  EITF  00-19-2,  Accounting  for  Registration  Payment
Arrangements  ("FSP  00-19-2").  Under FSP 00-19-2 and  Statement  of  Financial
Accounting   Standards  No.  5,  Accounting  for  Contingencies  ("SFAS  5"),  a
registration  payment  arrangement  is an  arrangement  where  (a)  the  Company
endeavors to file a registration  statement for certain  securities with the SEC
and have the  registration  statement  declared  effective within a certain time
period;  and/or (b) the Company will endeavor to keep a  registration  statement


                                       7
<PAGE>

effective for a specified  period of time; and (c) transfer of  consideration is
required  if the  Company  fails to meet those  requirements.  When the  Company
issues an instrument with these registration payment  requirements,  the Company
estimates  the amount of  consideration  that is likely to be paid out under the
agreement  and offsets the amount of the  liability  against the proceeds of the
instrument  issued.  The estimate is  re-evaluated  at the end of each reporting
period, with any changes recorded as a registration penalty in the statements of
operations.  As further  described in Note 7, the Company has  instruments  that
contain registration payment  arrangements.  The effect of implementing this FSP
has  not  had  a  material  effect  on  the  financial  statements  because  the
probability  of payment  under the terms of the  agreements  is considered to be
remote.

NOTE 2 - REALIZATION OF ASSETS

The accompanying  condensed consolidated financial statements have been prepared
in conformity with accounting principles generally accepted in the United States
of  America.  The  Company  has a  history  of  losses  including  a net loss of
$3,463,510  for the nine months ended  September  30, 2007.  As of September 30,
2007,  and  December  31,  2006,  the  Company  had an  accumulated  deficit  of
$25,645,189  and  $22,181,679,  respectively  The Company had a working  capital
deficit of $4,981,533  and $4,863,641 as of September 30, 2007, and December 31,
2006,  respectively.   In  addition,  the  Company's  operations  used  cash  of
$2,920,923  and  $1,631,660  for the nine months ended  September 30, 2007,  and
2006, respectively. These conditions raise substantial doubt about the Company's
ability to continue as a going concern.

In view of the matters described in the preceding paragraph, recoverability of a
major portion of the recorded asset amounts shown in the accompanying  condensed
consolidated  balance  sheets is  dependent  upon  continued  operations  of the
Company,  which in turn is  dependent  upon the  Company's  ability  to meet its
financing  requirements  on a continuing  basis,  to maintain or replace present
financing,  to acquire additional capital from investors,  and to succeed in its
future operations.  Along with the continued operation of the Company, there are
several new programs in  development.  These programs  represent a new direction
for the  Company  into  consumer  products  contract  manufacturing  &  beverage
manufacturing  and  distribution  and  marketing.  These new  programs  have the
potential to carry higher profit margins than electronic  manufacturing and as a
result,  the Company is investing  substantial  resources into developing  these
activities.  The financial statements do not include any adjustments relating to
the  recoverability  and classification of recorded asset amounts or amounts and
classification  of  liabilities  that might be  necessary  should the Company be
unable to continue in existence.

NOTE 3 - Inventory

Inventories are composed of the following:


                                             September 30,     December 31,
                                                 2007             2006
    ------------------------------------------------------------------------
    Raw Materials                           $    1,955,844   $    1,739,619
    Work in Process                                213,534          463,023
    Finished Goods                                 745,960          623,725
    Allowance / Reserve                           (866,354)        (866,354)
                                            --------------------------------

        Totals                              $    2,048,984   $    1,960,013
                                            ================================



                                       8
<PAGE>

NOTE 4 - InveSTMENTS

In May 2007, the Company formed CirTran Beverage Corp.  ("CBC"),  a wholly owned
subsidiary to arrange for the  manufacture,  marketing and  distribution  of the
Playboy  licensed  energy  drinks and  flavored  water  beverages,  and  related
merchandise through various distribution channels,  including traditional retail
channels as well as catalogs, internet, live shopping and other channels.

During the nine months ended September 30, 2007, the Company, along with several
other investors,  formed After Bev Group, LLC ("AfterBev").  CBC contributed its
expertise  for an  84%  interest  in  AfterBev,  and  the  additional  investors
contributed  $500,000  for  a  16%  interest  in  AfterBev.  Subsequent  to  the
formation,  After Bev  purchased  a 50%  ownership  in Play  Beverage  Group LLC
("PlayBev")  for $500,000 using the cash received  during its formation,  and an
additional  $250,000  raised in the form of notes payable.  CirTran has recorded
the investment at its cost of $750,000,  and has also recorded notes payable for
$250,000 and a minority  interest of  $500,000.  During the third  quarter,  the
company met some obligations on behalf of After Bev and was able to increase its
ownership to 51% in Play Beverages, LLC.

As of September 30, 2007,  additional  investors purchased from CBC a 12% profit
interest in AfterBev for $748,000 and an additional 16%  membership  interest in
AfterBev for $1,100,000.  This brought CBC's ownership in AfterBev to 68% with a
56% interest in profits of AfterBev. The sale of interest credited an additional
minority  interest  in  AfterBev  of  $591,360  and  distributions   payable  of
$1,256,640.

NOTE 5 - BASIC AND DILUTED NET LOSS PER SHARe

Basic  loss per  share is  calculated  by  dividing  loss  available  to  common
shareholders by the weighted-average  number of common shares outstanding during
each period.  Diluted loss per share is  similarly  calculated,  except that the
weighted-average number of common shares outstanding would include common shares
that may be issued  subject to existing  rights  with  dilutive  potential  when
applicable.  The Company had 913,977,773 and 353,250,000 in potentially issuable
common shares at September 30, 2007, and September 30, 2006, respectively,  that
were excluded from the calculation of diluted loss per share because the effects
would be anti-dilutive.

NOTE 6 - RELATED PARTY TRANSACTIONS

Notes Payable to  Stockholders  -- During the second quarter 2007, the President
of the Company loaned the Company a net amount of $70,000,  of which $10,000 was
repaid in the third  quarter of 2007.  Another  shareholder,  loaned the Company
$450,000, of which $200,000 was repaid in third quarter 2007. The balance of the
loan  remains  due on  demand.  The loans  were  recorded  as notes  payable  to
stockholders.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

Registration Rights -In December 2005, in connection with the Company's issuance
of a  convertible  debenture  to  Cornell  Capital  Partners,  L.P.  ("Cornell")
(discussed below in Note 9), the Company granted to Cornell registration rights,
pursuant to which the Company agreed to file,  within 120 days of the closing of
the purchase of the debenture,  a registration  statement to register the resale
of  shares  of the  Company's  common  stock  issuable  upon  conversion  of the
debenture.  The  Company  also  agreed  to use its  best  efforts  to  have  the
registration  statement  declared  effective  within 270 days  after  filing the
registration  statement.  In the event the initial registration statement is not
filed by the scheduled filing deadline then as partial relief for the damages to
any holder of registrable securities, the Company will pay as liquidated damages
either a cash amount or in shares of the Company's  common  stock,  within three


                                       9
<PAGE>

business days,  equal to two percent of the liquidated  value of the convertible
debentures  outstanding  for each thirty day period after the  scheduled  filing
deadline,  during which the initial  registration  statement has not been filed.
The  Company  agreed to  register  the  resale of up to  32,608,696  shares  and
10,000,000 warrants, and to keep such registration statement effective until all
of the shares issuable upon conversion of the debenture have been sold.

In August 2006, in connection with the Company's issuance of another convertible
debenture  to  Cornell,  the  Company  entered  into  an  amended  and  restated
registration  rights  agreement with Cornell,  which superseded the registration
rights agreement from the December 2005 debenture  transaction.  Pursuant to the
amended registration rights agreement, the Company agreed to file a registration
statement  to  register  the  resale  of shares of the  Company's  common  stock
issuable  upon  conversion  of  both  debentures.   In  the  event  the  initial
registration  statement is not filed by the  scheduled  filing  deadline then as
partial  relief for the  damages to any holder of  registrable  securities,  the
Company will pay as liquidated  damages either a cash amount or in shares of the
Company's common stock,  within three business days, equal to two percent of the
liquidated value of the convertible  debentures  outstanding for each thirty day
period  after  the  scheduled   filing   deadline,   during  which  the  initial
registration  statement  has not been  filed.  The  Company  agreed  to file the
registration  statement by October 30, 2006.  The Company also agreed to use its
best efforts to have the registration  statement  declared  effective within 270
days after filing the registration statement. The Company agreed to register the
resale of up to  74,291,304  shares and  15,000,000  warrants,  and to keep such
registration   statement  effective  until  all  of  the  shares  issuable  upon
conversion of the debenture  have been sold.  The Company  subsequently  entered
into several extension  agreements with Cornell to extend the filing date of the
registration  statement to December 15, 2007. As of the date of this Report,  no
such registration statement has been filed.

On July 20, 2006,  the Company  entered into a lockdown  agreement  with Cornell
(the "Cornell  Agreement")  related to the first Cornell Debenture (See Note 9.)
Pursuant to the Cornell Agreement,  Cornell agreed that it would not convert any
of the  principal  or interest on the Cornell  Debenture  or exercise any of the
Warrants  granted to Cornell until the Company had taken the steps  necessary to
increase  its  authorized  capital.  As such,  the Company was able to lock down
106,900,000  shares  underlying  the Cornell  Debenture  and  25,000,000  shares
underlying  the  Cornell  Warrants  (See Note 9.) On April 30,  2007 the Company
increased the number of its authorized shares to 1,500,000,000.  The increase in
the number of authorized shares provided adequate coverage for the conversion of
the Cornell  Debenture and therefore  negated the need for the Cornell  Lockdown
Agreement.

Diverse  Talent  Group  Transaction  - In March 2006,  the Company  formed a new
subsidiary,  Diverse  Media Group  Corporation  ("DMG"),  to provide  end-to-end
services to the direct response and entertainment  industries.  The new division
provides   product   marketing,   production,   media  funding  and  merchandise
manufacturing  services.  On May 26, 2006,  DMG entered into an  assignment  and
exclusive  services  agreement  with Diverse  Talent  Group,  Inc., a California
corporation,  ("DT").  The  Services  Agreement  had a 5-year  term and was made
effective as of April 1, 2006.  Pursuant to the Services  Agreement,  DMG and DT
entered into an exclusive operating relationship whereby DMG agreed to outsource
its talent agency  operations to DT and to provide  financing to DT to assist in
DT's growth.  Under the Services  Agreement,  DMG and DT created a  relationship
whereby DT would  operate  exclusively  under the DMG  business  structure.  The
project did not generate the type of synergy  that was  anticipated,  and it was
concluded  that it would be in the best interest of the Company to terminate the
relationship with DT.



                                       10
<PAGE>

On March 29,  2007,  the Company  entered into a term sheet  agreement  with DT,
which was  followed  up with a  definitive  Settlement  and  Release  Agreement,
Investor Registration Agreement, and an Escrow Agreement all executed on May 15,
2007.  These documents  contain  virtually the same terms and conditions as were
proposed  in the term sheet.  As a result,  the  Company  reached the  following
settlement with DT as of March 30, 2007:

         (i)  The parties  agreed to terminate the original  agreements  and the
              Company  assigned  back to DT all  talent  contracts  and the name
              "Diverse Media Group." DT will cause Diverse Media Group, Inc., to
              issue  9,000,000  shares of its common stock,  which are currently
              traded on the pink sheets,  to an escrow account.  All shares held
              in escrow will be subject to the following  instructions issued to
              the escrow agent:

              a.     The Company may sell shares under the terms and  conditions
                     of Rule 144;
              b.     The  Company  may  sell  shares  pursuant  to an  effective
                     registration under the Securities Act of 1933;
              c.     The Company  and  Diverse  Media  Group,  Inc.  may jointly
                     instruct the agent to disburse shares from escrow;
              d.     In the case of bankruptcy the agent may distribute  shares;
                     and
              e.     Once the  aggregate  amount of all net  proceeds  equals or
                     exceeds  $2,000,000  the agent  shall  deliver  any  unsold
                     shares to Diverse Media Group, Inc.

         (ii) Sale and registration of the shares are limited and are subject to
              Diverse Media Group's first right of refusal on any proposed stock
              sale.

         The sale and registration limitations are as follows:

              (a)    No  stock  may be sold  during  the  first  year  unless  a
                     registration statement is filed.
              (b)    The  number of shares  subject  to  registration  rights is
                     limited based on the total number of outstanding  shares of
                     Diverse Media Group, Inc. stock.
              (c)    Sales of stock in subsequent  years are restricted based on
                     trading volume.

The emphasis on involvement with talent agencies has been reduced because of the
name change from Diverse  Media Group to CirTran Media Corp. as per the terms of
the  agreement,  and  because  of the  termination  of  Trevor  Saliba,  who was
responsible for talent agency related  activities.  It is anticipated  that with
the Company's continued emphasis in marketing products to the direct-to-TV sales
channel  and the  marketing  of the  PlayBev  energy  drink,  both of which  use
celebrity endorsements, that the Company will renew its development efforts with
the talent agencies when the opportunity presents itself.

On August 14, 2007,  9,000,000  shares of DT common stock had been issued to the
Company  and are being  held in escrow as per the terms of the  agreement.  As a
result of the receipt of the DT common  stock,  the  Company  recorded a gain of
$1,168,623.

Manufacturing  Agreement  - On  June  10,  2004,  the  Company  entered  into an
exclusive  manufacturing  agreement with certain developers.  Under the terms of
the agreement,  the Company,  through its wholly-owned subsidiary  CirTran-Asia,
had the  exclusive  right  to  manufacture  certain  products  developed  by the
developers  or any of  their  affiliates.  Had  the  developers  terminated  the
agreement  prior to June 10,  2007,  they  would have been  required  to pay the
Company  $150,000.  The developers did not terminate the agreement,  and on June
10, 2007, the agreement expired according to the terms of the agreement.


                                       11
<PAGE>


New Directors - As of February 1, 2007, Fadi Nora was appointed to the Company's
Board of Directors. As compensation,  he is entitled to a cash payment of $5,000
per quarter,  and stock options to purchase up to a total of 2,000,000 shares of
the Company's common stock as determined by the board. Mr. Nora is also entitled
to a  quarterly  bonus  equal to 0.5% of the  Company's  gross  sales  generated
directly by Mr. Nora for each quarter. In addition,  Mr. Nora receives 5% of all
gross investments made into the Company that are directly generated and arranged
by him if the following  conditions are satisfied:  (i) His sole  involvement in
the process of obtaining the  investment is the  introduction  of the Company to
the potential  investors and that he does not participate in the recommendation,
structuring,  negotiation,  documentation  or  selling of the  investment,  (ii)
neither the  Company  nor the  investor  are  required  to pay any  commissions,
finders fees or similar compensation to any agent, broker,  dealer,  underwriter
or finder in  connection  with the  investment,  and (iii) the Board in its sole
discretion  determines that the investment qualifies for this bonus and that the
bonus  may be paid  with  respect  to the  investment.  Mr.  Nora  will  also be
reimbursed for certain pre-approved expenses.

As of October 1, 2007,  Don L. Buehner was appointed to the  Company's  Board of
Directors.  As  compensation,  he is  entitled  to a cash  payment of $5,000 per
quarter,  and stock options to purchase up to a total of 2,000,000 shares of the
Company's  common stock as determined by the board.  CirTran has agreed to cover
Mr. Buehner under its D&O Insurance  Policy.  CirTran will reimburse Mr. Buehner
for his expenses  incurred in  connection  with  CirTran's  business,  including
expenses for travel, lodging, meals, beverages, entertainment and other items in
accordance with policies established by CirTran.

NOTE 8 - SALE OF PROPERTY

Property  Sale - On May 4, 2007,  PFE  Properties  LLC  ("PFE"),  a Utah limited
liability  company and subsidiary of the Company,  sold and leased back the land
and building where the Company  presently has its headquarters and manufacturing
facility,  for  $2,500,000.  Of that amount,  an aggregate of $1,233,288 went to
repay PFE's mortgage loan, taxes, fees, commissions, and other expenses. The net
amount to PFE was $1,266,712, which was paid at closing.

In connection  with the sale,  the Company  entered into a Triple Net Lease (the
"Lease")  whereby the Company  agreed to lease the property from the buyer.  The
term of the lease is for 10 years,  with an option to extend the lease for up to
three additional five-year terms. The monthly lease payment will be $17,083.

The Company  recorded a gain on the sale of the  property  of $810,736  which is
being  deferred  over the life of the lease,  in  accordance  with  Statement of
Financial Accounting Standards No. 13.

NOTE 9 - CONVERTIBLE DEBENTURES

Highgate - On May 26, 2005, the Company  entered into an agreement with Highgate
House  Funds Ltd.  ("Highgate")  to issue to Highgate a  $3,750,000,  5% Secured
Convertible Debenture (the "Debenture").  Highgate subsequently changed its name
to Yorkville Advisors, LLC ("Yorkville"), which will be used in this report. The
Debenture is due December 2007 and is secured by all of the Company's property.



                                       12
<PAGE>


Accrued  interest is payable at the time of maturity or conversion.  The Company
may,  at its  option,  elect to pay  accrued  interest  in cash or shares of the
Company's  common stock.  If paid in stock,  the  conversion  price shall be the
closing bid price of the common stock on either the date the interest payment is
due or the date on which the  interest  payment is made.  The balance of accrued
interest  owed at September  30, 2007,  and December 31, 2006,  was $148,335 and
$163,884, respectively.

At any time,  Yorkville  may elect to  convert  principal  amounts  owing on the
Debenture into shares of the Company's  common stock at a conversion price equal
to the lesser of $0.10 per share,  or an amount equal to the lowest  closing bid
price of the  Company's  common stock for the twenty  trading  days  immediately
preceding the conversion  date. The Company has the right to redeem a portion or
the entire  Debenture then  outstanding  by paying 105% of the principal  amount
redeemed plus accrued interest thereon.

Yorkville's  right to convert  principal  amounts  into shares of the  Company's
common stock is limited as follows:

         (i)      Yorkville  may convert up to $250,000  worth of the  principal
                  amount  plus  accrued   interest  of  the   Debenture  in  any
                  consecutive  30-day  period  when  the  market  price  of  the
                  Company's  stock  is  $0.10  per  share or less at the time of
                  conversion;

         (ii)     Yorkville  may convert up to $500,000  worth of the  principal
                  amount  plus  accrued   interest  of  the   Debenture  in  any
                  consecutive  30-day  period  when the  price of the  Company's
                  stock  is  greater  than  $0.10  per  share  at  the  time  of
                  conversion;  provided,  however, that Yorkville may convert in
                  excess of the  foregoing  amounts if the Company and Yorkville
                  mutually agree; and

         (iii)    Upon the occurrence of an event of default,  Yorkville may, in
                  its  sole   discretion,   accelerate  full  repayment  of  all
                  debentures  outstanding  and accrued  interest  thereon or may
                  convert the  Debentures  and  accrued  interest  thereon  into
                  shares of the Company's common stock.

Except in the event of default,  Yorkville  may not convert the  Debenture for a
number of shares that would  result in  Yorkville  owning more than 4.99% of the
Company's outstanding common stock.

In connection with the issuance of the Yorkville Debenture,  the Company granted
Yorkville registration rights related to the issuance of the debenture.

The Company  determined that the features of the Debenture fell under derivative
accounting  treatment.  As of  September  30, 2007,  the  carrying  value of the
Debenture was $1,372,301.  The carrying value will be accreted each quarter over
the life of the Debenture until the carrying value equals the  unconverted  face
value of $1,585,000.  The fair value of the derivative liability as of September
30, 2007, was $636,911. The amount remaining as deferred loan fees, of $151,072,
are being amortized over the remaining life of the debenture.

During the nine months ended September 30, 2007,  Yorkville converted $1,265,000
of its convertible  debenture and $100,000 of accrued  interest into 144,662,491
shares of the Company's  common stock at conversion  rates ranging from $0.00513
to  $0.01613  per  share,  which  was the  lower of $0.10 or 100% of the  lowest
closing  bid  price of the  Company's  common  stock  over the 20  trading  days
preceding  each  conversion.  As of September 30, 2007,  Yorkville had converted
$2,165,000 of principal on the convertible debenture which leaves an outstanding
balance of $1,585,000.


                                       13
<PAGE>


Cornell - On December 30,  2005,  the Company  entered  into an  agreement  with
Cornell Capital Partners, L.P. ("Cornell") to issue to Cornell a $1,500,000,  5%
Secured Convertible Debenture (the "Cornell  Debenture").  The Cornell Debenture
is due July 30, 2008,  and is secured by all the Company's  property,  junior to
the Yorkville security interest.

Accrued  interest is payable at the time of maturity or conversion.  The Company
may,  at its  option,  elect to pay  accrued  interest  in cash or shares of the
Company's  common stock.  If paid in stock,  the  conversion  price shall be the
closing bid price of the common stock on either the date the interest payment is
due or the date on which the interest  payment is made. The accrued  interest on
the debenture was $130,890 and $74,795 as of September 30, 2007 and December 31,
2006, respectively.

At any time, Cornell may elect to convert principal amounts owing on the Cornell
Debenture into shares of the Company's  common stock at a conversion price equal
to an amount equal to the lowest closing bid price of the Company's common stock
for the twenty  trading days  immediately  preceding the  conversion  date.  The
Company has the right to redeem a portion or the entire  Cornell  Debenture then
outstanding  by  paying  105% of the  principal  amount  redeemed  plus  accrued
interest thereon.

Cornell's right to convert principal amounts into shares of the Company's common
stock is limited as follows:

         (i)      Cornell  may  convert up to  $250,000  worth of the  principal
                  amount plus accrued  interest of the Cornell  Debenture in any
                  consecutive  30-day  period  when  the  market  price  of  the
                  Company's  stock  is  $0.10  per  share or less at the time of
                  conversion;

         (ii)     Cornell  may  convert up to  $500,000  worth of the  principal
                  amount plus accrued  interest of the Cornell  Debenture in any
                  consecutive  30-day  period  when the  price of the  Company's
                  stock  is  greater  than  $0.10  per  share  at  the  time  of
                  conversion;  provided,  however,  that  Cornell may convert in
                  excess of the  foregoing  amounts if the  Company  and Cornell
                  mutually agree; and

         (iii)    Upon the  occurrence of an event of default,  Cornell  Capital
                  Partners,  LP may,  in its sole  discretion,  accelerate  full
                  repayment of the debenture  outstanding  and accrued  interest
                  thereon or may convert  the  Debenture  and  accrued  interest
                  thereon into shares of the Company's common stock.

Except in the event of default,  Cornell  may not convert the Cornell  Debenture
for a number of shares  that would  result in Cornell  owning more than 4.99% of
the Company's outstanding common stock.

The Cornell Debenture was issued with 10,000,000 warrants with an exercise price
of $0.09 per share that vest immediately and have a three year life.

In connection  with the issuance of the Cornell  Debenture,  the Company granted
Cornell registration rights related to the issuance of the Cornell Debenture and
Warrants.

The  Company  determined  that the  features on the  Cornell  Debenture  and the
associated Warrants fell under derivative accounting treatment.. As of September
30, 2007, the carrying value of the Debenture was $1,014,846. The carrying value
will be accreted each quarter over the life of the Debenture  until the carrying


                                       14
<PAGE>

value equals the  unconverted  face value of  $1,500,000.  The fair value of the
derivative liability related to the Cornell Debenture, as of September 30, 2007,
was  $979,099.  The fair value of the warrants  was $5,476 as of  September  30,
2007.

In connection with the issuance of the Cornell Debenture,  fees of $130,000 were
withheld from the proceeds,  capitalized,  and are being amortized over the life
of the Cornell Debenture.

As of September 30, 2007, Cornell had not converted any of the Cornell Debenture
into shares of the Company's common stock.

Cornell - On August 23,  2006,  the  Company  entered  into  another  securities
purchase  agreement (the  "Purchase  Agreement")  with Cornell,  relating to the
issuance by the  Company of a 5% Secured  Convertible  Debenture,  due April 23,
2009, in the aggregate principal amount of $1,500,000 (the "August Debenture").

Accrued  interest is payable at the time of maturity or conversion.  The Company
may,  at its  option,  elect to pay  accrued  interest  in cash or shares of the
Company's  common stock.  If paid in stock,  the  conversion  price shall be the
closing bid price of the common stock on either the date the interest payment is
due or the date on which the interest  payment is made. The accrued  interest on
the  debenture was $82,603 and $26,507 as of September 30, 2007 and December 31,
2006, respectively.

At any time, Cornell may elect to convert principal amounts owing on the Cornell
Debenture into shares of the Company's  common stock at a conversion price equal
to an amount equal to the lowest closing bid price of the Company's common stock
for the twenty  trading days  immediately  preceding the  conversion  date.  The
Company has the right to redeem a portion or the entire  Cornell  Debenture then
outstanding  by  paying  105% of the  principal  amount  redeemed  plus  accrued
interest thereon.

Cornell's right to convert  principal  amounts owing under the August  Debenture
into shares of the Company's common stock is limited as follows:

         (i)      Cornell  may  convert up to  $500,000  worth of the  principal
                  amount plus  accrued  interest of the August  Debenture in any
                  consecutive  30-day  period  when the  price of the  Company's
                  stock is $0.03 per share or less at the time of conversion;

         (ii)     Cornell may convert  any amount of the  principal  amount plus
                  accrued  interest of the August  Debenture in any  consecutive
                  30-day period when the price of the Company's stock is greater
                  than $0.03 per share at the time of conversion; and

         (iii)    Upon the  occurrence  of an Event of Default,  Cornell may, in
                  its  sole   discretion,   accelerate  full  repayment  of  the
                  debentures  outstanding and accrued  interest  thereon or may,
                  convert  all  debentures   outstanding  and  accrued  interest
                  thereon into shares of the Company's common stock.

Except in the event of default, Cornell may not convert the August Debenture for
a number of shares of common  stock that  would  cause the  aggregate  number of
shares of Common  Stock  beneficially  owned by Cornell  and its  affiliates  to
exceed  4.99% of the  outstanding  shares of the  common  stock  following  such
conversion.

In connection with the Purchase  Agreement,  the Company also agreed to grant to
Cornell  warrants (the  "Warrants")  to purchase up to an additional  15,000,000
shares of the  Company's  common stock.  The Warrants have an exercise  price of


                                       15
<PAGE>

$0.06 per share, and expire three years from the date of issuance.  The Warrants
also  provide for cashless  exercise if at the time of exercise  there is not an
effective registration statement or if an event of default has occurred.

In connection  with the issuance of the August  Debenture,  the Company  granted
Cornell  registration rights related to the issuance of the August Debenture and
Warrants.

The  Company  determined  that the  features  on the  August  Debenture  and the
associated warrants fell under derivative accounting treatment.  As of September
30, 2007, the carrying  value of the Debenture was $727,568.  The carrying value
will be accreted each quarter over the life of the Debenture  until the carrying
value equals the  unconverted  face value of  $1,500,000.  The fair value of the
derivative liability related to the Cornell Debenture, as of September 30, 2007,
was  $1,014,846.  The fair value of the warrants was $10,582 as of September 30,
2007.

In connection with the issuance of the August  Debenture,  fees of $135,000 were
withheld from the proceeds,  capitalized, and will be amortized over the life of
the August Debenture.

As of September 30, 2007,  Cornell had not converted any of the August Debenture
into shares of the Company's common stock.

Lockdown  Agreement - In  connection  with the Cornell  Debenture and the August
Debenture,  Cornell  agreed that it could not convert any amount of principal or
interest,  until the Company  has  effectuated  an  increase  in its  authorized
capital.  The Company and Cornell also agreed that in the event that the Company
had not effectuated such increase in its authorized capital by October 30, 2006,
which was  subsequently  extended to June 1, 2007, such failure would constitute
an event of default on parallel  with those set forth in the Purchase  Agreement
and subject to the same consequences as those listed in the Purchase Agreement.

On April 30, 2007,  the Company  received  shareholder  approval to increase its
authorized capital to include  1,500,000,000  shares of common stock as a result
of the increase in the authorized shares. The increase in the authorized capital
provided  adequate  coverage for the conversion of the Cornell Debenture and the
August  Debenture,  and  therefore  negated  the need for the  Cornell  Lockdown
Agreement.

NOTE 10 - STOCKHOLDERS' EQUITY

Common Stock  Issuances  -During the nine months ended  September 30, 2007,  the
Company issued to Yorkville  144,662,491,  shares of restricted  common stock in
connection with a conversion by Yorkville of $1,165,000  principal amount of the
convertible  debenture and $100,000 of accrued  interest on the debenture.  (See
Note 9.)

May 2006 Private  Offering - On May 24, 2006, the Company entered into a private
placement  agreement  whereby the Company sold  14,285,715  shares of its common
stock to ANAHOP,  Inc.  ("ANAHOP"),  an  unrelated  party,  for  $1,000,000.  In
addition to the shares,  the Company  issued  warrants to designees of Anahop as
follows:

         -        A  warrant  to  purchase  up to  15,000,000  shares,  with  an
                  exercise price of $0.15 per share,  exercisable  upon the date
                  of issuance.

         -        A warrant to purchase up to 5,000,000 shares, with an exercise
                  price  of  $0.25  per  share,  exercisable  upon  the  date of
                  issuance.

         -        A  warrant  to  purchase  up to  10,000,000  shares,  with  an
                  exercise price of $0.50 per share.



                                       16
<PAGE>

The  warrants  are  exercisable  as of the  date of  issuance  and  through  and
including the date which is five years following the date on which the Company's
common  stock is listed for trading on either the Nasdaq  Small Cap Market,  the
Nasdaq  Capital  Market,  the  American  Stock  Exchange,  or the New York Stock
Exchange.

The  Company  determined  that  because it does not have  sufficient  authorized
shares of common  stock to settle the  exercise  of the  30,000,000  warrants in
shares of its common  stock the  warrants  should be  recorded  as a  derivative
liability  at fair  value.  The fair  value of the  derivative  liability  as of
September 30, 2007, was $58,691.

The Company granted piggyback  registration rights for the shares underlying the
warrants, effective only after the warrants have been exercised. The Company did
not grant any  registration  rights  with  respect to the  14,285,715  shares of
common stock.

June 2006 Private Offering - On June 30, 2006, the Company entered into a second
private  placement  agreement  whereby,  the Company  agreed to sell  28,571,428
shares of its common stock to ANAHOP. The total consideration to be paid for the
Shares will be $2,000,000 if all tranches of the sale close.

Pursuant to the Agreement, ANAHOP agreed to pay $300,000 at the time of closing,
and an  additional  $200,000  within 30 days of the  closing.  The  payments  of
$300,000  and  $200,000  are  referred  to  collectively  as the "First  Tranche
Payments." The First Tranche  Payments have been received,  $300,000 on June 30,
2006 and  $200,000 on July 27,  2006.  The Company  issued  7,142,857  shares of
common stock upon receipt of the First Tranche Payment.

The remaining $1,500,000 is to be paid by ANAHOP as follows:

         (i)      No later than thirty calendar days following the date on which
                  any class of the  Company's  capital stock is first listed for
                  trading  on either  the Nasdaq  Small Cap  Market,  the Nasdaq
                  Capital Market,  the American Stock Exchange,  or the New York
                  Stock Exchange,  ANAHOP agreed to pay an additional  $500,000;
                  and

         (ii)     No later than sixty  calendar days following the date on which
                  any class of the  Company's  capital stock is first listed for
                  trading on the above listed  markets,  ANAHOP agreed to pay an
                  additional   $1,000,000.   (The   payments  of  $500,000   and
                  $1,000,000 are referred to collectively as the "Second Tranche
                  Payment.")

Upon receipt of the Second Tranche  Payment,  the Company agreed to issue ANAHOP
21,428,571  shares of common stock and to issue  warrants to designees of ANAHOP
as follows:

         -        A  warrant  to  purchase  up to  30,000,000  shares,  with  an
                  exercise price of $0.15 per share,  exercisable  upon the date
                  of issuance.

         -        A  warrant  to  purchase  up to  10,000,000  shares,  with  an
                  exercise price of $0.25 per share,  exercisable  upon the date
                  of issuance.

         -        A  warrant  to  purchase  up to  23,000,000  shares,  with  an
                  exercise price of $0.50 per share,  exercisable  upon the date
                  of issuance.

The  Warrants  are  exercisable  as of the  date of  issuance  and  through  and
including the later of the fifth  anniversary  of the date of the warrant or the
fifth  anniversary  of the date on which  the  Company's  common  stock is first
listed for  trading on either the Nasdaq  Small Cap Market,  the Nasdaq  Capital
Market, the American Stock Exchange, or the New York Stock Exchange.

The Company granted piggyback  registration rights for the shares underlying the
warrants, effective only after the warrants have been exercised. The Company did
not grant any registration rights with respect to the common shares issued or to
be issued in connection with the June 2006 private offering.



                                       17
<PAGE>

Lockdown  Agreements  - On July 20,  2006,  the Company  entered into a lockdown
agreement with ANAHOP,  (the "ANAHOP  Agreement"),  Albert Hagar, and Fadi Nora,
and related to the May and June private placement  transactions discussed above.
Albert  Hagar and Fadi Nora  were the  designees  to whom  ANAHOP  assigned  the
30,000,000  warrants.  Pursuant to the ANAHOP  Agreement,  Hagar and Nora agreed
that they would not  exercise any of the warrants  they  received in  connection
with the May or June  private  offerings  until the  Company had taken the steps
necessary to increase its authorized capital.  Additionally,  ANAHOP agreed that
it would not make the Second  Tranche  Payment to  purchase  the Second  Tranche
Shares  until  the  Company  had  taken  the steps  necessary  to  increase  its
authorized capital. As such, under the ANAHOP Agreement, the Company was able to
lock down 21,428,571 shares (the "Second Tranche Shares"), and 93,000,000 shares
underlying  the  warrants  issued to Hagar and Nora in the May and June  private
placements.

As noted above, on April 30, 2007, the Company received  shareholder approval to
increase its authorized capital to include 1,500,000,000 shares of common stock.
The  increase in the  authorized  capital  provided  adequate  coverage  for the
conversion  of the  ANAHOP  warrants  and  therefore  negated  the  need for the
lockdown agreement.

Increase in  Authorized  Shares - On April 30, 2007,  the Company held a special
meeting of  shareholders  to vote on increasing  the  authorized  capital of the
Company to include  1,500,000,000 shares of common stock and to effectuate a 1.2
shares for one share forward stock split.  These  proposals were approved by the
shareholders.

Ticker symbol change - In conjunction  with the forward stock split,  on May 25,
2007,  Nasdaq also  notified the Company that the Company's new ticker symbol as
of the opening of business on May 29, 2007, would be CIRC.

NOTE 11 - STOCK OPTIONS AND WARRANTS

A summary of the stock option  activity for the nine months ended  September 30,
2007, is as follows:
                                                                Weighted Average
                                                Shares           Exercise Price
                                              ----------        ----------------
Outstanding at December 31, 2006              10,750,500              $ 0.03
Granted                                       18,000,000              $ 0.02
Exercised                                              -
Forfeited                                      7,500,000              $ 0.03
                                              ----------
Outstanding at September 30, 2007             21,250,500              $ 0.02
                                              ==========

Exercisable at September 30, 2007             21,250,500              $ 0.02
                                              ==========

Pursuant to an employment agreement, dated May 25, 2006, Mr. Nassif, of DMG, was
granted options to purchase 2,500,000 shares of the Company's stock at an option
price of $0.05 per share.  Those  options  were to vest over a five year period.
Since  that  time the  Company  and Mr.  Nassif  have  agreed to  terminate  the
employment  agreement at which point the options granted under the agreement are
forfeited by Mr. Nassif.



                                       18
<PAGE>

Pursuant to an amended employment agreement, dated January 25, 2007, Mr. Saliba,
was granted  options to purchase  4,000,000  shares of the Company's stock at an
option  price of $0.016 per share.  Those  options were to vest over a five year
period.  Since that time the Company and Mr. Saliba have agreed to terminate the
employment  agreement at which point the options granted under the agreement are
forfeited by Mr. Saliba.

NOTE 12 - SEGMENT INFORMATION

Segment  information  has  been  prepared  in  accordance  with  SFAS  No.  131,
"Disclosure  About  Segments  of an  Enterprise  and Related  Information."  The
Company  has  three  reportable   segments:   electronics   assembly,   contract
manufacturing,  and  marketing  and  media.  The  electronics  assembly  segment
manufactures and assembles circuit boards and electronic component cables, along
with the contract  manufacturing segment which manufactures,  either directly or
through  foreign  subcontractors,   certain  products  are  under  an  exclusive
manufacturing  agreement.  The marketing and media segment  includes  sales from
infomercials and talent agency fees. The Company  evaluates  performance of each
segment based on earnings or loss from operations.  Selected segment information
is as follows:

                           Electronics   Contract     Marketing
                            Assembly    Manufacturing and Media      Total
--------------------------------------------------------------------------------

      September 30, 2007

Sales to external
  customers                 $ 2,538,464  $ 2,461,879   $ 3,699,660  $ 8,700,004
Intersegment sales                    -            -             -            -
Segment income (loss)        (3,706,882)    (631,371)      874,743   (3,463,510)
Segment assets                8,180,962      206,525     3,790,842   12,178,329
Depreciation and
  amortization                  307,560      186,626           696      494,882

      September 30, 2006

Sales to external
  customers                 $ 1,962,065  $ 4,212,188     $ 832,865  $ 7,007,118
Intersegment sales               12,499            -             -       12,499
Segment loss                 (3,301,127)    (504,695)     (106,785)  (3,912,607)
Segment assets                9,229,841    3,586,199       103,088   12,919,128
Depreciation and
  amortization                  135,309       99,321             -      234,630

                                                       September 30,
                                              --------------------------------
                 Sales                            2007              2006
------------------------------------------------------------------------------

Total sales for reportable segments             $ 8,700,004       $ 7,019,617
Elimination of intersegment sales                         -           (12,499)
------------------------------------------------------------------------------

Consolidated net sales                          $ 8,700,004       $ 7,007,118
------------------------------------------------------------------------------

                                                       September 30,
                                              --------------------------------
             Total Assets                         2007              2006
------------------------------------------------------------------------------

Total assets for reportable segments           $ 12,178,329      $ 12,919,128
Adjustment for intersegment amounts                       -                 -
------------------------------------------------------------------------------

Consolidated total assets                      $ 12,178,329      $ 12,919,128
------------------------------------------------------------------------------


                                       19
<PAGE>

NOTE 13 - SUBSEQUENT EVENTS

Yorkville
---------

In October 2007, Yorkville converted $160,000 of its convertible  debenture into
31,189,084  shares of the Company's  common stock at a conversion rate of $0.005
per share,  which was the lower of $0.10 or 100% of the lowest closing bid price
of the Company's common stock over the 20 trading days preceding the conversion.

In November 2007, Yorkville converted $245,000 of its convertible debenture into
47,758,285  shares of the Company's  common stock at a conversion rate of $0.005
per share,  which was the lower of $0.10 or 100% of the lowest closing bid price
of the Company's common stock over the 20 trading days preceding the conversion.
As of the date of this Report, the remaining principal balance was $1,180,000.

As of the date of this report and  subsequent to September 30, 2007,  additional
investors  contributed  $1,550,000,  for approximately 12% interest in AfterBev,
which  decreased  CirTran  Beverage  Corp's  ownership  interest  in AfterBev to
approximately 42%.


























                                       20
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

This discussion should be read in conjunction with  Management's  Discussion and
Analysis of Financial Condition and Results of Operations included in our Annual
Report on Form 10-KSB for the year ended December 31, 2006.

Overview

We  provide a mixture  of high and  medium  size  volume  turnkey  manufacturing
services   using   surface   mount   technology,   ball-grid   array   assembly,
pin-through-hole  and custom  injection  molded cabling for leading  electronics
OEMs in the communications,  networking,  peripherals,  gaming, law enforcement,
consumer products,  telecommunications,  automotive,  medical, and semiconductor
industries.   Our  services   include   pre-manufacturing,   manufacturing   and
post-manufacturing   services.   Through  our  subsidiary,   Racore   Technology
Corporation, we design and manufacture Ethernet technology products. Our goal is
to offer customers the significant  competitive  advantages that can be obtained
from  manufacture   outsourcing,   such  as  access  to  advanced  manufacturing
technologies, shortened product time-to-market, reduced cost of production, more
effective  asset  utilization,  improved  inventory  management,  and  increased
purchasing power.

We have  several new programs in  development.  These  programs  represent a new
emphasis into consumer products contract manufacturing and marketing. Management
believes  that these new programs  have the  potential  to carry  higher  profit
margins than electronic manufacturing and as a result, through our subsidiaries,
we are investing substantial resources into developing these activities.

We are  organized  into five  principal  divisions:  CirTran USA,  CirTran Asia,
CirTran  Products,  CirTran Beverage Corp., and CirTran Media (fka Diverse Media
Group) which is responsible for marketing new programs.

CirTran Asia

During  2004,  we  established  a new  division,  CirTran-Asia,  Inc,  which has
contributed to a large portion of the revenues since that time. This division is
an Asian-based,  wholly owned  subsidiary of CirTran  Corporation and provides a
myriad of  manufacturing  services to the direct  response  and retail  consumer
markets.  Our experience and expertise in manufacturing  enables CirTran-Asia to
enter a project  at any phase  whether it be  engineering  and  design,  product
development  and  prototyping,   tooling,  and  high-volume  manufacturing.   We
anticipate that  CirTran-Asia  will pursue  manufacturing  relationships  beyond
printed  circuit board  assemblies,  cables,  harnesses  and  injection  molding
systems by establishing complete "box-build" or "turn-key"  relationships in the
electronics,  retail, and direct consumer markets.  This strategic move into the
Asian  market  has  helped  to  elevate  CirTran  to an  international  contract
manufacturer  status for multiple products in a wide variety of industries,  and
has  allowed us to target  large-scale  contracts.  Having  proven the value and
reliability of its core products,  CirTran Corporation has chosen to expand into
previously untapped product lines.

CirTran  Asia has  established  a  satellite  office in Shen  Zhen,  China,  and
retained Mr. Charles Ho to lead this division.


                                       21
<PAGE>

CirTran Products

On December 2, 2005,  we announced  that we had formed a new  division,  CirTran
Products,  which will offer products for sale at retail. Consumer products built
by our CirTran Asia  subsidiary,  as well as other  products,  are available for
retail sale from this subsidiary.

As was recently announced,  Trevor Saliba is no longer with CirTran Corporation;
this, however,  does not change the original intent of CirTran Products which is
temporarily  being  run from the Salt Lake City  headquarters.  The Los  Angeles
office will remain open and is currently being staffed by an office manager, who
will  oversee  operations,  and a support  person,  who will attend to the daily
functions of the Los Angeles office.

CirTran Products also intends to pursue contract manufacturing  relationships in
the  consumer  products  industry  which can include  product  lines  including:
home/garden, kitchen, health/beauty,  toys, and licensed merchandise and apparel
for film,  television,  sports  and  other  entertainment  properties.  Licensed
merchandise  and  apparel  can be  defined  as any item that bears the image of,
likeness,  or logo of a  product  sold or  advertised  to the  public.  Licensed
merchandise  and apparel are sold and  marketed in the  entertainment  (film and
television) and sports (sports franchises) industries.  As of November 11, 2007,
we had concentrated our product  development  efforts into three areas, home and
kitchen appliances, beauty products and licensed merchandise. We anticipate that
these  products will be introduced  into the market under one uniform brand name
or under separate trademarked names owned by CirTran Products. As of the date of
this Report,  we are in the testing phase for some programs and are preparing to
launch  various  programs  where CirTran Media  Corporation  will operate as the
marketer,  campaign  manager  and  distributor  in  various  product  categories
including  beauty  products,  entertainment  products,  software  products,  and
fitness and consumer products.

As of the date of this Report,  we are no longer under  contract with the direct
marketing company that was selling the TCP units  domestically.  However, we are
currently  under  contract with an  international  direct  marketing  company to
supply  them  with the True  Ceramic  Pro flat  irons  ("TCP").  As a result  of
terminating the domestic sales contract,  CirTran Products has begun a direct TV
marketing  program  whereby  all of the  direct  marketing  functions  have been
brought in-house and a direct TV marketing program currently being  implemented.
The direct TV  marketing  program is in the test  phase and a  determination  on
taking the program to the roll-out  phase it currently  being  evaluated.  Since
June 6, 2006, the date of the ABS bankruptcy settlement (see discussion below on
page  28)  and  through  the  date  of  this  report,  CTP  generated  sales  of
approximately $2,299,000. CTP continues to generate sales of TCP units and other
ancillary hair care products to the direct marketing company, and the program is
expected to continue being profitable during 2007. The project has recently seen
great success in a new international territory.

CirTran Media Corp. (fka Diverse Media Group)

On March 21, 2006,  we announced  that we had formed a new  subsidiary,  Diverse
Media Group ("DMG"),  to provide end-to-end  services to the direct response and
entertainment  industries.  The new  division  will provide  product  marketing,
production,  media funding and merchandise manufacturing services.  Forming this
new  division   was  a  necessary   step  to  maximize   product   manufacturing
opportunities  for  CirTran's  proprietary  products  and to  provide  marketing
services  for  individual   entrepreneurs   and  inventors.   This  division  is
headquartered in CirTran's Los Angeles (Century City) offices and was previously
headed  by Mr.  Saliba.  As of the  date of  this  Report,  we  were  developing
proprietary programs to be launched in the product marketing production services
and media funding  divisions and we were  preparing to launch  various  programs


                                       22
<PAGE>

where DMG will operate as the marketer,  campaign manager and/or  distributor in
various product categories  including beauty products,  entertainment  products,
software products,  and fitness and consumer  products.  This division currently
reports to the president of our company.

On May 26, 2006, DMG entered into an assignment and exclusive services agreement
with Diverse Talent Group, Inc., a California corporation,  ("DT"). The Services
Agreement has a 5 year term and was made effective as of April 1, 2006. Pursuant
to the  Services  Agreement,  DMG and DT  entered  into an  exclusive  operating
relationship  whereby DMG agreed to outsource its talent agency operations to DT
and to provide  financing  to DT to assist in DT's  growth.  Under the  Services
Agreement,   DMG  and  DT  created  a  relationship  whereby  DT  would  operate
exclusively under the DMG business  structure.  The project did not generate the
type of synergy that was  anticipated,  and it was concluded that it would be in
the best interest of the Company to terminate the relationship with DT.

On  November  28,  2006,  we  announced  that  Diverse  Media Group had signed a
two-year lease on a 1,150 sq. ft.  facility in Bentonville,  Arkansas,  in close
proximity to Wal-Mart's world headquarter.  The office,  which is managed by Mr.
Oliver Mulcahy,  is  strategically  located to help create and manage an ongoing
relationship.

 On March 29, 2007,  CirTran  entered into a term sheet agreement with DT, which
was followed up with a definitive  Settlement  and Release  Agreement,  Investor
Registration  Agreement,  and an Escrow  Agreement all executed on May 15, 2007.
These documents contain virtually the same terms and conditions as were proposed
in the term sheet. As a result,  we reached the following  settlement with DT as
of March 30, 2007:

         (i)  The parties agreed to terminate the original agreements and the
              Company assigned back to DT all talent contracts and the name
              "Diverse Media Group". DT will cause Diverse Media Group, Inc., to
              issue 9,000,000 shares of its common stock, which are currently
              traded on the pink sheets, to an escrow account.. As of the date
              of this report, we were advised that the 9,000,000 shares had been
              received by the escrow agent. All shares held in escrow will be
              subject to the following instructions issued to the escrow agent:

              a      The Company may sell shares under the terms and conditions
                     of Rule 144;
              b      The Company may sell shares pursuant to an effective
                     registration under the Securities Act of 1933;
              c      The Company and Diverse Media Group, Inc. may jointly
                     instruct the agent to disburse shares from escrow;
              d      In the case of bankruptcy the agent may distribute shares;
                     and
              e      On the aggregate amount of all net proceeds equals or
                     exceeds $2,000,000 the agent shall deliver any unsold
                     shares to Diverse Media Group, Inc.

         (ii) Sale and  registration  of the  shares are limited and are subject
              to Diverse  Media  Group's first  right of refusal on any proposed
              stock sale.

              The sale and registration limitations are as follows:

              (a)    No stock may be sold during the first year.
              (b)    The number of shares subject to registration rights is
                     limited based on the total number of outstanding shares of
                     Diverse Media Group, Inc. stock.


                                       23
<PAGE>

              (c)    Sales of stock in subsequent years are restricted based on
                     trading volume.

DMG will  continue to develop  relationships  with talent  agencies as they have
done since inception. As part of the settlement, CirTran must change the name of
our DMG  subsidiary and  discontinue  the use of the name  "Diverse".  Since the
execution of the  settlement and release  agreement,  CirTran has filed to amend
the name of the subsidiary to CirTran Media Corp. ("CTM").  CTM will continue to
produce infomercials for the direct marketing industry and for product marketing
campaigns.  CTM will also provide product marketing,  production,  media funding
and merchandising  services to the direct response and entertainment  industries
in concert with the original objectives of formation.

RCG Group

On October 3, 2006,  we  announced  that we had engaged the  services of The RCG
Group ("RCG") to assist in certain financial relations/corporate  communications
and other consulting  services.  RCG is being retained to specifically assist us
in  developing   and  executing  an  effective   financial   relations/corporate
communications  strategy.  The  primary  objective  of such  program  will be to
position us to secure and then maintain a listing on the American Stock Exchange
or NASDAQ markets as soon as is reasonably possible.  Additionally, RCG has been
retained  to further  assist us in its  endeavor  to secure  meaningful  public,
trading  market  sponsorship  from  professional  investors  as well as  certain
members of the institutional  investment community.  During the second and third
quarters, RCG was not actively involved in this effort and it was agreed that we
would renew our relationship with RCG sometime in the future.

CirTran Online Corporation

During the first quarter of 2007, the Company formed CirTran Online  Corporation
("CTO"), a new wholly owned marketing-driven subsidiary to sell products via the
internet, to offer training,  software,  marketing tools, web design and support
as well as other e-commerce related services to internet  entrepreneurs,  and to
telemarket directly to buyers of its products and services.

CirTran signed a three-year  Assignment and Exclusive Services Agreement for its
subsidiary, CTO, with Global Marketing Alliance ("GMA"), founded by Mr. Sov Ouk,
and its affiliate  companies,  Online Profit Academy,  LLC, and Online 2 Income,
LLC including  Webprostore.com  and Myitseasy.com.  Based in the Salt Lake area,
the  companies  offer a wide range of services  for  E-commerce  including  eBay
sellers.

CirTran also signed a three-year  Employment  Agreement with Mr. Ouk to serve as
Senior Vice President of the new subsidiary.

GMA and its affiliates offer a range of complementary  capabilities and products
for E-commerce, including seminars on how to buy and sell on the World Wide Web.
GMA is experienced in building  E-commerce websites and currently host sites for
internet entrepreneurs.

CirTran Beverage Corp.

In May 2007, the Company formed CirTran Beverage Corp.  ("CBC"),  a wholly owned
subsidiary to arrange for the  manufacture,  marketing and  distribution  of the
Playboy-licensed   energy  drinks,   flavored  water   beverages,   and  related
merchandise through various distribution channels,  including traditional retail
channels as well as catalogs,  internet,  live shopping and other channels.  Two
versions of the energy drink are currently being  developed;  a sugar-free and a
regular version,  both of which will be the initial products introduced into the
market.  The marketing and  production  phases,  of which,  are currently  being


                                       24
<PAGE>

implemented.  Through  PlayBev's  new executive  director of  marketing,  Andrei
McQuillan,  marketing has developed a program to support and stimulate  sales of
the  energy  drink.  The  marketing  program  has  made  contacts  with  several
celebrities  who have been  photographed  and publicized with the energy drinks.
Additionally,  a college bus tour has been planed to tour the  Southwest  United
States in August 2007, and then tour the Southeast  Football  Conference as part
of a promotional  effort which targets the main age groups in our  demographics.
An ad was  placed in the  October  2007 issue of  Playboy  magazine,  which is a
college-oriented edition of the magazine and will re-enforce our presence in the
college  market.  As a part  of the  marketing  plan,  we  are  also  developing
collateral  materials  used to support the product in the college  market place.
The production phase of the project is under the control of a team,  directed by
Shaher Hawatmeh,  Chief Operating Officer of CirTran Corporation.  This team has
developed, and tested an energy drink formula, and the sample products are being
used in the  preliminary  stages of the  project.  A focus  group taste test was
recently conducted by Alder-Weiner Research, and the results,  although they are
preliminary,  were very  positive  for the  regular  energy  drink and while the
indicators  were not as  strong  for the  sugar-free  energy  drink,  they  were
nevertheless  positive in  comparison to other  sugar-free  energy  drinks.  The
distribution group is conducting  negotiations with several potential production
facilities,  and will be making final determinations pertaining to the selection
of a production  network.  While  distribution is awaiting a final product,  the
main focus is to develop a plan to create a national  distribution  network. The
two energy drinks are being  currently  distributed and tested in New Hampshire,
Maine, and southern California. The initial results have been promising.

CirTran USA

We have three principal business segments: electronics assembly and manufacture;
contract manufacturing; and marketing and media.

                      Electronics Assembly and Manufacture
                      ------------------------------------

For the nine months ended September 30, 2007,  approximately 30% of our revenues
were generated by our low-volume  electronics assembly activities as compared to
30% of revenues  for the same period in 2006,  which  consist  primarily  of the
placement  and  attachment of electronic  and  mechanical  components on printed
circuit boards and flexible (i.e., bendable) cables. Although the percentages of
sales were identical,  we generated  $576,000 more in sales in the third quarter
of 2007  when  compared  to the same  period  in  2006.  The  percentage  is not
reflective  of the dollar  increase  because of a  $2,867,000  increase in sales
generated by our marketing  and media  segment.  We also  assemble  higher-level
sub-systems  and  systems  incorporating  printed  circuit  boards  and  complex
electromechanical  components  that  convert  electrical  energy  to  mechanical
energy, in some cases manufacturing and packaging products for shipment directly
to our  customers'  distributors.  In addition,  we provide other  manufacturing
services,  including  refurbishment  and  remanufacturing.  We  manufacture on a
turnkey basis, directly procuring any of the components necessary for production
where the OEM customer does not supply all of the  components  that are required
for  assembly.  We also provide  design and new product  introduction  services,
just-in-time  delivery on low to medium volume turnkey and consignment  projects
and projects  that  require  more  value-added  services,  and  price-sensitive,
high-volume  production.  Our goal is to offer customers significant competitive
advantages that can be obtained from manufacturing  outsourcing,  such as access
to  advanced  manufacturing  technologies,   shortened  product  time-to-market,
reduced cost of production, more effective asset utilization, improved inventory
management and increased purchasing power.


                                       25
<PAGE>

                             Contract Manufacturing
                             ----------------------

Through our  subsidiary,  CirTran-Asia,  we design,  engineer,  manufacture  and
supply products in the electronics,  consumer  products and general  merchandise
industries for various marketers,  distributors and national retailers. This new
division is our Asian-based, wholly owned subsidiary, and provides manufacturing
services to the direct response and retail consumer markets.  Our experience and
expertise in manufacturing enables CirTran-Asia to enter a project at any phase:
engineering  and design;  product  development  and  prototyping;  tooling;  and
high-volume manufacturing.  This strategic move into the Asian market has helped
to elevate CirTran to an international contract manufacturer status for multiple
products in a wide variety of industries, and has, in short order, allowed us to
target large-scale contracts.

As noted  above,  CirTran  has  established  a  dedicated  satellite  office for
CirTran-Asia,  and has  retained  Mr.  Charles Ho to lead the  division.  Having
proven the value and reliability of its core products,  CirTran  Corporation has
chosen to expand into previously untapped product lines. CirTran-Asia intends to
pursue  manufacturing  relationships  beyond printed  circuit board  assemblies,
cables,  harnesses  and  injection  molding  systems  by  establishing  complete
"box-build" or "turn-key"  relationships in the electronics,  retail, and direct
consumer markets.

In 2006 and during the second quarter of 2007, we developed  several  items,  in
the fitness and  exercise  products  category and in the  household  and kitchen
appliance,  and  in  the  health  and  beauty  aids  markets,  which  are  being
manufactured  in China  through our  subsidiary  CirTran  Asia.  Sales of theses
products contributed  approximately 60% of revenues reported in 2006 compared to
28% in the third quarter 2007.  The decrease is the result of test marketing the
TCP units which are currently being sold in-house.  The TCP units had previously
been sold at wholesale,  but we are now selling the TCP products in-house to the
direct-to-TV market. The offshore contract  manufacturing will continue to be an
area of emphasis.

                               Marketing and Media
                               -------------------

We are also developing a new relationship  with Global Marketing  Alliance,  LLC
("GMA")  an  internet  sales and  telemarketing  company.  In 2007,  we signed a
three-year Assignment and Exclusive Services Agreement with GMA and a three-year
Employment  Agreement  with GMA  founder  Mr. Sov Ouk,  to serve as Senior  Vice
President of the new venture.  We  anticipate  that by expanding our exposure to
the market place through internet and telemarketing capabilities we will enhance
our marketing mix with a low cost  alternative to our other  marketing  channels
and develop market share.

Main Business Areas

We have three main  business  areas of focus.  They are:  fitness  and  exercise
products;  household  and kitchen  appliances  and health and beauty  aids;  and
electronics products and manufacturing.

Fitness and Exercise Products
-----------------------------

We  began  manufacturing  fitness  products  in  May  2004.  To  date,  we  have
manufactured and sold over 12 different fitness products.  We manufacture all of
our fitness products through our CirTran Asia operation.

In early June 2004, we entered into an exclusive  manufacturing  agreement  with
certain Developers,  including Charles Ho, the President of CirTran-Asia.  Under
the  terms  of  the   agreement,   we,  through  our   wholly-owned   subsidiary
CirTran-Asia, have the exclusive right to manufacture certain products developed
by the  Developers or any of their  affiliates.  Pursuant to the  agreement,  we
could  enter  into  addendum  agreements  with the  developers  with  respect to
particular products to be produced and manufactured. The agreement was to be for
an  initial  term  of  36  months,   and  may  be  continued  after  that  on  a
month-to-month  basis unless  terminated  by either  party by providing  written
notice.


                                       26
<PAGE>

On September  10,  2004,  we announced  that  CirTran-Asia  had been awarded the
rights  to  manufacture  the  AbRoller,  another  type of an  abdominal  fitness
machine, for Tristar Products, under an exclusive manufacturing agreement. Since
this  announcement,  and  through  the  date of this  Report,  CirTran-Asia  had
manufactured  and  shipped  units,   and  received   payments  of  approximately
$2,800,000.

On April 28, 2005,  CirTran-Asia  announced  that it has been awarded a contract
(the "April 2005 Agreement") from Guthy - Renker  Corporation  ("GRC") to be the
exclusive  manufacturer of a new fitness machine (the "Fitness Product") for the
sold-on-TV direct response industry.  Pursuant to the April 2005 Agreement,  GRC
agreed to purchase all of its  requirements  of the Fitness  Product  during the
term of the April 2005  Agreement,  which is defined as running from the signing
of the agreement  through the time when the Fitness Product is not being sold in
quantity.  Since these announcements,  CirTran-Asia has manufactured and shipped
orders and has  received  $1,400,000  as payment for such  shipments.  A dispute
arose concerning the terms of the contract,  which is now the subject of a legal
proceeding.  The product was not  manufactured  during this  quarter,  and it is
unlikely that it will be until the resolution of the legal  proceeding with GRC,
described in the section "Legal Proceedings."

New Fitness Products
--------------------

On November 30, 2006,  we  announced  that we signed an exclusive  manufacturing
agreement to produce a new fitness product, the CorEvolution(TM),  in China. The
three-year agreement involves the custom manufacturing using the capabilities of
our wholly owned  subsidiary,  CirTran  Asia.  The new customer has committed to
minimum  orders,  amounting to $1.2 million in revenues for the first year, $1.8
million for the second year and $2.4 million for the third year of the five-year
contract.  The new  fitness  product is  uniquely  designed  to  strengthen  and
rehabilitate  the  lower  back and  adjacent  areas of human  body.  Since  this
announcement, and through the date of this Report, CirTran-Asia had manufactured
and shipped units, and received payments of approximately $1,037,000.

On June 8, 2007, we announced that CTM, signed an exclusive  agreement with Full
Moon Enterprises of Nevada to license a new product for the sold-on-TV market. A
patent  application  for "The Ball  Blaster(TM)"  has been filed by the inventor
with the U.S.  Patent Office,  and CTM has the right to make  modifications  and
improvements  in the  product,  now and in the  future.  CTM  has the  worldwide
marketing and  distribution  rights via all marketing  channels.  CTM will pay a
royalty to the licensor for each unit sold. The agreement  shall  terminate five
years  after  the  date  of  the   agreement,   although  the  agreement   shall
automatically  renew for up to two  renewal  terms of five  years  each,  unless
either party gives 12 months' written notice of termination.

We have started the marketing  process of identifying and meeting with potential
celebrity   spokespersons   who  would   demonstrate  the  Ball  Blaster  in  TV
infomercials.

Household and Kitchen Appliances and Health and Beauty Aids
-----------------------------------------------------------

We began manufacturing household and kitchen appliance products in January 2005.
To date,  we have  manufactured  and sold five  different  household and kitchen
appliance  products.  We  manufacture  a majority of our  household  and kitchen
appliance products through our CirTran Asia operation.



                                       27
<PAGE>

The household and kitchen  appliance and health and beauty aids products include
the following:

On January 24, 2005, we announced a contract  with a New York customer  where we
became an exclusive  manufacturer  of the Hot Dog  Express,  which would be sold
nationwide  on TV,  primarily  through  infomercials.  The contract runs through
2007, with minimum revenues to CirTran of $1.8 million per year, or $5.4 million
over three  years.  Since  these  announcements,  and  through  the date of this
Report,  CirTran Asia had manufactured and shipped units, and received  payments
of  approximately  $1,850,000.  As of the  date of this  Report,  we were in the
process of exercising our rights under the contract  which includes  terminating
the  relationship  due to  customer's  failure  to  meet  the  minimum  purchase
requirements  during 2006. As a result, we are planning on marketing the product
through our retail channels.

ABS Products and ABS Bankruptcy  Proceedings - On January 19, 2005, we signed an
Exclusive Manufacturing Agreement with Advanced Beauty Solutions L.L.C. ("ABS"),
a company that manufactured a hair product in California. In early October 2005,
we were  notified  that ABS had  defaulted on its  obligation  to its  financing
company.  We stopped shipping under credit and exercised our rights permitted by
the agreements.

On July 7, 2005, we signed another Exclusive  Manufacturing  Agreement with ABS,
relating  to the  manufacture  of a hair  dryer  product in  California.  We had
already begun shipment on previous  contracts and were projecting to begin early
in 2006.

In October  2005,  following  the notice of ABS's  default,  we  terminated  the
agreement for both  products  based on the default.  In January 2006,  following
efforts  to resolve  the  disputes  with ABS,  we filed a lawsuit  against  ABS,
claiming breach of contract, interference with contractual relationships, unjust
enrichment, and fraud, and seeking damages from ABS.

With respect to the TCP,  through  October 2005, we had shipped  directly to ABS
approximately  $4,746,000 worth of the product,  and we had received from ABS or
its finance company a total amount of approximately  $788,000. In November 2005,
we repossessed  from ABS  approximately  $2,341,000 worth of the products in the
United States, as we were permitted to do pursuant to the agreement.

Since  November  2005,  we have been pursuing our rights under the agreement and
have been offering the TCP for sale directly to ABS's customers. In doing so, we
sold to ABS's international  customers directly  approximately $430,000 worth of
the TCP. The shipments have all been paid in full.  These products  shipped were
not part of the repossessed inventory.

On January 24, 2006, ABS filed a voluntary  petition for relief under Chapter 11
of the United States  Bankruptcy Code in the United States  Bankruptcy Court for
the  Central   District  of  California,   San  Fernando  Valley  Division  (the
"Bankruptcy  Court"),  Case No. SV 06-10076  GM. On January 30,  2006, a hearing
("Hearing")  was held to consider the Emergency  Motion for Order  Approving the
Settlement  and Compromise of the Disputed  Secured Claims of Inventory  Capital
Group,  Inc.  ("ICG"),  and Media Funding  Corporation  ("MFC") (the "Settlement
Motion") filed by ABS. The continued  Hearing on the Settlement  Motion was held
on February 16, 2006,  at which time the  settlement  was  modified.  Prior to a
separate  hearing  held on March  24,  2006,  on ABS's  Motion  for  Order:  (1)
Approving Sale and Assignment of Substantially All Assets of the Estate Free and
Clear of Liens; (2) Approving  Assumption and Assignment of Leases and Executory
Contracts  Included in the Sale and Rejection of Leases and Executory  Contracts
Not Included in the Sale; and (3) Granting  Related Relief (the "Sale  Motion"),
the  settlement  was  further  modified.   The  modifications  to  the  proposed


                                       28
<PAGE>

settlement  were read into the  Bankruptcy  Court's record at the Hearing on the
Settlement  Motion and the March 24, 2006 hearing on the Sale Motion  ("Proposed
Modifications").  Written notice of the Proposed  Modifications  was provided to
creditors  and parties in interests on March 27, 2006,  and the  Declaration  of
James  C.  Bastian,   Jr.,   attesting   that  no  objections  to  the  Proposed
Modifications have been received by ABS, was filed with the Bankruptcy Court.

On June 6,  2006,  we entered  into an Asset  Purchase  Agreement  with ABS (the
"Asset Purchase Agreement"),  subject to the ABS Bankruptcy Court's approval. On
June 7, 2006,  the ABS  Bankruptcy  Court  entered  orders  approving  the Asset
Purchase  Agreement and granting the Sale Motion,  and approving the  settlement
and  compromise  of  certain  disputed  claims  against  ABS.  Pursuant  to  the
settlement of ABS's bankruptcy proceedings and the Asset Purchase Agreement,  we
have an allowed claim against the ABS's estate in the amount of  $2,350,000,  of
which  $750,000  was  credited  to the  purchase of  substantially  all of ABS's
assets.  Under the  settlement,  we shall be allowed to participate as a general
unsecured  creditor of ABS's estate in the amount of  $1,600,000 on a pari passu
basis with the $2,100,000 general unsecured claim of certain insiders of ABS and
subject to the prior  payment  of certain  secured,  priority,  and  non-insider
claims in the amount of approximately $1,507,011.

Under the Asset Purchase Agreement,  we agreed to purchase  substantially all of
ABS's assets ("the Assets") in exchange for:

         (i)      a cash payment in the amount of $1,125,000;
         (ii)     a reduction of CirTran's  allowed claim in the Bankruptcy Case
                  by $750,000;
         (iii)    the  assumption  of  any  assumed  liabilities;  and
         (iv)     the  obligation  to pay ABS a royalty  equal to $3.00 per True
                  Ceramic  Pro  flat  iron  unit  sold  by  ABS  (the   "Royalty
                  Obligation").

The Assets include: personal property;  intellectual property; certain executory
contracts and unexpired leases; inventory;  ABS's rights under certain insurance
policies;  deposits and prepaid expenses; books and records;  goodwill;  certain
causes of action;  permits;  customer and supplier lists; and telephone  numbers
and listings.  Under the Asset  Purchase  Agreement,  the Royalty  Obligation is
capped at  $4,135,000.  To the extent the amounts  paid to ABS on account of the
Royalty  Obligation  equal less than $435,000 on the 2 year  anniversary  of the
Closing,  then,  within  30 days of such  anniversary,  we  agreed to pay ABS an
amount equal to $435,000 less the royalty  payments made to date. As part of the
settlement,  we agreed to exchange  general  releases with,  among others,  ABS,
Jason Dodo (the manager of ABS),  Inventory  Capital  Group  ("ICG"),  and Media
Funding Corporation ("MFC"). The settlement also resolved a related dispute with
ICG in which ICG assigned $65,000 of its secured claim against ABS to us.

Pursuant to the court-approved settlement, payments under the Royalty Obligation
will be made in the following order:

         (a)      The Royalty  Obligation  payments will be made  exclusively to
                  ICG and MFC  (collectively,  the "Secured  Parties") until (i)
                  the Secured Parties have been paid in full on account of their
                  $1,243,208  secured  claim,  or (ii) the Secured  Parties have
                  been paid $100,000 in payments  under the Royalty  Obligation,
                  whichever comes first.
         (b)      The next $70,000 Royalty Obligation payments will be made to a
                  service  provider to ABS (in the amount of $50,000)  and to an
                  individual with an allowed claim (in the amount of $20,000).
         (c)      Following  the  payments to the Secured  Parties and others as
                  set forth immediately  above, the remaining Royalty Obligation
                  payments  will be used for  distribution  to  allowed  general
                  unsecured  claims  not  including  those  of the  Company  and
                  certain    insiders    with   unpaid   notes   (the   "Insider
                  Noteholders").


                                       29
<PAGE>

         (d)      Following  payments as set forth in (a),  (b),  and (c) above,
                  the Royalty Obligation  payments will be shared pro rata among
                  the Insider  Noteholders (with a total allowed aggregate claim
                  of  $2,100,000),  and the  Company  (with a general  unsecured
                  claim in the amount of $1,600,000), until paid in full.

The total  claims  against  ABS's  estate  that must be paid  before the Company
begins to share in the  Royalty  Obligation  payments is  $435,000.  We had paid
$222,906 of the $435,000 obligation through September 30, 2007.

In March 2007, ABS commenced litigation against us alleging claims for breach of
contract,  unjust  enrichment  and seeking an accounting  and  appointment  of a
receiver  in  connection  with the above  described  settlement  agreement.  ABS
generally  alleged  that we had  defaulted  on certain  payments  due under such
settlement  agreement.  We have been in  negotiations  with ABS to settle  these
claims.  This case was subsequently  dismissed pursuant to a stipulation between
the parties.  Additional  information  can be found in the section titled "Legal
Proceedings."

As of the date of this Report,  we were no longer under contract with the direct
marketing company that was selling the TCP units  domestically.  However, we are
currently  under  contract with an  international  direct  marketing  company to
supply  them  with the True  Ceramic  Pro flat  irons  ("TCP").  As a result  of
terminating  the domestic sales  contract,  CirTran  Products has begun a direct
sold-on TV marketing program whereby all of the direct marketing  functions have
been  brought  in-house and a direct TV  marketing  program is  currently  being
implemented.  The  direct  TV  marketing  program  is in the  test  phase  and a
determination  on taking the program to the roll-out  phase is  currently  being
evaluated.  Since June 6, 2006, the date of the ABS bankruptcy  settlement  (see
discussion  below on pages 49 and 50) and through the date of this  report,  CTP
generated  sales of  approximately  $2,905,000.  Sales of TCP  units  and  other
ancillary hair care products are expected to become profitable during 2007.

With respect to the hair dryers,  as of the date of this report, we had included
the hair dryers as a sales incentive to the direct marketing sold-on TV offer of
the TCP units.

Hinge Helper

On January 9, 2006, we issued a press release which  referred,  in the title, to
the Agreement as a "$22 Million Exclusive  Manufacturing  Agreement." The dollar
amount referenced  relates to the potential amount of income or revenue which we
may receive over the anticipated life of the Agreement.

We announced on January 9, 2006, that Arrowhead Industries, Inc., of Windermere,
Florida,  had awarded us an exclusive contract to manufacture its patented Hinge
Helper (TM)  do-it-yourself  utility tool for the home. The Hinge Helper will be
manufactured  by  CirTran  Asia,  the  Company's  China-based  subsidiary.   The
exclusive manufacturing contract for the product is for three years.

The  Hinge  Helper is a unique  hand  tool  designed  and  developed  for use by
household  customers as well as tradesmen.  Recognized by the U.S. Patent Office
(#6,308,390  B1),  its  trademark  and  patent  are owned by and  registered  to
Arrowhead.  The specific  advantage of the Hinge Helper is its  ease-of-use  and
simplistic  design. It can be applied to any residential hinge on wood, metal or
composite  doors,  and is  being  manufactured  with  highly-durable  materials,
enabling it to carry a lifetime guarantee.

The contract  (the  "Arrowhead  Agreement")  is for three years,  and  Arrowhead
agreed to purchase a minimum of ten million  units of the Product (the  "Minimum
Quantity"),  subject to the terms and conditions of the Agreement. Arrowhead and
CirTran have agreed on the Minimum Quantity in good faith,  although the parties


                                       30
<PAGE>

acknowledged  that in certain  circumstances  described  in the  agreement,  the
Arrowhead  Agreement may be terminated  prior to the sale of the entire  Minimum
Quantity.  Arrowhead  agreed to submit purchase orders for the Hinge Helper (TM)
from  time to time in  accordance  with the  terms of the  Arrowhead  Agreement.
Arrowhead  agreed to pay CirTran  for the Hinge  Helper  (TM)  purchased  at the
prices ranging from $2.95 to $1.90 per unit,  depending on the cumulative number
of units of the Hinge  Helper  (TM)  which  have been  purchased  by  Arrowhead.
Arrowhead  will also be entitled to a rebate equal to 10% of the purchase  price
paid for the Hinge Helper (TM) in the previous tier. The tiers are as follows:

         Tier 1: 1,500,000 units or less, priced at $2.95 per unit
         Tier 2: 1,500,001 to 3,000,000 units, priced at $2.35 per unit
         Tier 3: 3,000,001 to 5,000,000 units, priced at $2.10 per unit
         Tier 4: 5,000,001 to 10,000,000 units, priced at $1.90 per unit
         Tier 5: More than 10,000,000 units, price to be determined

(For example,  if the price is not  adjusted,  once  Arrowhead  enters Tier 3 it
would be entitled to a rebate of $325,000 (10% of 1,500,000 x $2.35) for product
purchased  in tier 2.) Rebates will be payable only in the form of a credit memo
against future  purchases.  Rebate credit memos will not be paid in cash and may
not be applied against outstanding  balances.  We will calculate eligibility for
the Rebate as soon as practicable  following the end of the month in which a new
tier is entered.

We have produced hand made samples, which were sent to Arrowhead. As of the date
of this report, the product samples were approved.  Arrowhead had released,  and
we have shipped,  1,500 units to test media. Arrowhead has filmed a Hinge Helper
infomercial  for TV and tested the show in mid 2006, but results did not justify
the media spending and the roll out.

In February 2007, Arrowhead signed a licensing agreement with CirTran and DMG to
manufacture  and market the product via internet,  direct  marketing and through
retailers.  DMG will pay a royalty of 11% to Arrowhead  based on a percentage of
sales in 2007.  The  percentage of unit sales  increases by 1% per year until it
reaches 15% in the year 2011. The new contract was executed in February 2007 and
expires in 2011. As of the date of this Report, the Hinge Helper project had not
generated significant revenues. The item has been presented to buyers at several
major retailers, such as; Lowe's, Wal-Mart, Sams Club, True Value and Home Depot
and is an item of interest. The sales representative, in our Bentonville office,
will  continue to promote and develop  the item for  inclusion  in future  sales
modules to the  retailers.  We expect to have the product at retailers some time
during the fourth quarter of 2007.

On October 11, 2006, CirTran announced that DMG had signed a retail distribution
and marketing agreement with Wines and Wines, a Miami-based  distributor of fine
wines and spirits from around the world.  Under the terms of the agreement,  DMG
would use its best efforts to market and distribute all Wines and Wines products
exclusively  into various  distributors  and retailers such as Southern Wine and
Spirits, Trader Joe's, Beverages and More, Wal-Mart, Sam's Club, Costco, Young's
Markets  and  Vendome  nationally,  as well as  restaurants,  liquor  stores and
entertainment venues exclusively throughout  California.  As of the date of this
Report,  the  product  had been  presented  to  retailers  and  resulted in high
interest.  It was decided  that the  labeling  needed to be changed by Wines and
Wines. Once the new labeling is completed and accepted by retailers,  we will be
able to place the product on  retailer's  shelves.  It is  anticipated  that the
project will be to market in sometime in early 2008.

On November 7, 2006,  CirTran announced that DMG signed an exclusive contract to
market and distribute the Solar Style line of solar chargers to major  retailers
in the U.S.  and abroad.  Solar  Style  offers a diverse  line of products  with


                                       31
<PAGE>

multiple  connectors,  all based on the latest advancements in PV Solar charging
to convert sunlight into usable energy for personal  electronic  devices.  Solar
Style also includes,  or offers as options, AC car battery chargers with many of
its  products.  As of the date of this report we were working with the client on
developing the product and placing the product in retail  channels which include
Wal-Mart and Radio Shack stores.

On November 15, 2006, CirTran announced that DMG signed an exclusive  licensing,
manufacturing and marketing  agreement with Beautiful Eyes(R),  Inc., of Malibu,
California, for a new "hot lashes" product which it will bring to the sold-on-TV
and retail marketplaces.  Under the terms of the agreement, DMG will have access
to the patented technology  developed by Beautiful Eyes and its founder,  former
model Alexandra  Roberts,  and the designs,  technical  drawings,  manufacturing
specifications and know-how, trade secrets and other proprietary information and
technology.  DMG will develop a new product for sale through TV infomercials and
at mass  retail,  which it will  market  through  its  personal  and  healthcare
products  division.  As of the date of this  Report,  we were  working  with the
client on developing the product and had submitted samples for their approval.

New Household and Kitchen Appliances and Health and Beauty Aids
---------------------------------------------------------------

On  February  5,  2007,  CirTran  announced  that we had  completed  taping a TV
infomercial  with Evander  Holyfield  for the "The Real Deal  Grill(TM),"  a new
electric  indoor/outdoor  cooking  appliance  it  will  manufacture  and  market
carrying  the  name  and  endorsement  of  the  former  four-time  former  world
heavyweight  champion.  The Real Deal Grill includes a deluxe stand and multiple
interchangeable  cooking surfaces,  with numerous never before seen add-on items
making it the most versatile "must-have" cooking appliance for any occasion from
camping in the  mountains,  tailgating  at a game,  or  grilling  at home.  Full
national  testing of the video has been  rescheduled for early September 2007 As
of the date of this Report the final edited version of the  infomercial  and the
web site have been completed. A national airing as a test run of the infomercial
took place in early October and the company decided that additional  changes are
needed  to  make  the  marketing  more  profitable.  The  company  is  currently
manufacturing  additional  inventory in China and  anticipate  to be back on air
early December 2007.

On February  13,  2007,  CirTran  announced  that we had signed an  agreement to
manufacture  and market a new patent pending  portable  luggage handle and scale
ideal for  travelers  weighing a  suitcase  or  package.  As of the date of this
Report,  we were  working with the client on  developing a final  version of the
product and are expecting to submit  samples for final  approval in May 2007. As
of the date of this Report,  final samples had been  submitted to the client and
we were awaiting approvals.  Upon approval,  we anticipate that the product will
be marketed to large retailers such as Wal-Mart, Sams Club, and Office Depot.

On March 12, 2007,  CirTran  announced  that we had signed a contract  with Easy
Life Products Corporation (ELP) of Venice, California, to manufacture and market
a new beauty  product.  The  yet-to-be  named new  product  is a pencil  compact
combined with a sharpener  and pencil  holder.  Planned  add-ons for the product
include pencil caps,  blotting  tissue  dispenser,  eyelash  curler,  pencil cap
organizer, an eyebrow brush and two-in-one tweezers, patents are now pending for
the pencil  sharpener,  eyelash  curler and the  tweezers  with the U.S.  Patent
Office.  As of the date of this  Report,  we were  working  with the  client  on
developing the product and building final samples for approval.



                                       32
<PAGE>
                   Electronics Business and Lines of Products

On August  9,  2005,  we  announced  that we  completed  the first  phase of the
redevelopment of the next-generation SafetyNet(TM)  RadioBridge(TM).  Since this
announcement,  we have completed working on the second phase of the contract. On
March 14, 2006, we announced  that we had received a $250,000 order to build and
deliver  the  first   production  run  of  the  next  generation   SafetyNet(TM)
RadioBridge(TM),  which we  redesigned  at the  request  and on  behalf of Aegis
Assessments, Inc., a Scottsdale,  Arizona-based homeland security contractor. We
delivered the new,  redesigned  units and received payment in full from Aegis in
April  2006.  Since  these  announcements,  we  have  manufactured  and  shipped
additional orders and have received $100,000 as payment for such shipments.

During the second quarter of 2007, Racore Technology Corporation entered into an
agreement with Aegis Assessments,  Inc., to perform additional  engineering work
to add features for trunked radio systems used in larger metropolitan police and
fire departments. This program is currently in the early development stage

On  November  14, 2006 we  announced  that Racore has  received,  processed  and
shipped its first order from Lear Siegler  Services,  Inc., of San Antonio,  and
that Lear Siegler has opened an account to  facilitate  ordering and  processing
add-on  business.  A major  provider of operations,  maintenance,  modification,
overhaul,  systems  integration,  logistics  support  and  training  services to
government  agencies  and  commercial  customers  in the U.S.  and abroad,  Lear
Siegler's  first  order was for 100 Racore  8192 100FX 100 Mbps Fiber  Optic PCI
Fast Ethernet Network Adapters with ST Fiber Connectors.

During the first nine months of 2007, Racore Technology Corporation continued to
receive add on business for its fiber optic  networking  products from customers
such as Dresser-Rand, Navetechgps, and PCI.

                               Marketing and Media

On October 11, 2005, we announced that we were opening a satellite office in Los
Angeles in accordance with our internal expansion program. The 2,500 square foot
office is  located on the 17th floor at 1875  Century  Park East in the  Century
City  Entertainment and Business  District of Los Angeles.  The office serves as
headquarters  for  CirTran's   business   development  and  strategic   planning
activities for our multiple business divisions including  electronics,  consumer
products,  direct  response/retail  and "as sold-on-TV"  products.  We opened an
additional  satellite  office in New York in 2006  when we  leased an  executive
office  suite  which  serves as a  location  in which to  conduct  meetings  and
transact business on the east coast. Plans to open an office in London have been
temporarily  put on hold until the markets in Europe  develop.  As was  recently
announced,  Trevor  Saliba is no longer with CirTran  Corporation.  Although Mr.
Saliba was in charge of the Los Angeles  office,  his departure  does not change
the original  intent of our Los Angeles  office which is  temporarily  being run
from the Salt Lake City  headquarters.  The Los Angeles  office will remain open
and  is  currently  being  staffed  by  an  office  manager,  who  will  oversee
operations,  and a support person, who will attend to the daily functions of the
Los  Angeles  office.  Our Los  Angeles  office  lease has expired at the end of
October and we are currently  negotiating another lease to another office in the
same area. We anticipate  moving into our new office in early  December 2007. In
July 2007 we relinquished the New York executive office space.

                      Effective Date of Forward Stock Split
                      -------------------------------------

On May 25,  2007,  we  issued a press  release  in which we  announced  that the
Company had been  informed by Nasdaq that Company  shareholders  of record as of


                                       33
<PAGE>

the close of business at 4 p.m. E.D.T. on May 10, 2007,  would receive shares in
a  previously-announced  1.2 shares for 1 share  forward  split on Tuesday,  May
29th.

Nasdaq also  notified the Company that the Company's new ticker symbol as of the
opening of business on May 29, 2007, would be CIRC.

                           Sale and Lease of Property
                           --------------------------

On May 4, 2007, PFE Properties LLC ("PFE"), a Utah limited liability company and
subsidiary of the Company,  sold and leased back the land and building where the
Company presently has its headquarters and manufacturing facility.

The land and building were sold for $2,500,000.  Of that amount, an aggregate of
$1,233,288  went to repay PFE's mortgage loan,  taxes,  fees,  commissions,  and
other expenses. The net amount to PFE was $1,266,712, which was paid at closing.

In connection  with the sale,  the Company  entered into a Triple Net Lease (the
"Lease")  whereby the Company  agreed to lease the property from the buyer.  The
term of the lease is for 10 years,  with an option to extend the lease for up to
three additional five-year terms. The monthly lease payment will be $17,083.

The Company  recorded a gain on the sale of the  property  of $810,736  which is
being  deferred  over the life of the lease,  in  accordance  with  Statement of
Financial Accounting Standards No. 13.

                                PlayBev Agreement
                                -----------------

On May 25, 2007,  CirTran  Beverage Corp., a Utah corporation  ("CBC"),  entered
into an Exclusive  Manufacturing,  Marketing,  and  Distribution  Agreement (the
"Agreement")  with Play Beverages,  LLC, a Delaware  limited  liability  company
("PlayBev").

By way of  background,  Play  Beverages,  LLC,  is  engaged in the  business  of
marketing and distributing beverages, including energy drinks and flavored water
beverages,  and related  merchandise  with the Playboy and rabbit head logo (the
"Products")  pursuant to a license agreement ("License Agreement ") with Playboy
Enterprises, Inc. ("Playboy").

After Bev Group LLC ("AfterBev"),  was created to acquire an interest and invest
in Play  Beverages  LLC. In doing so,  CirTran  Beverage  Corp.  received an 84%
membership  interest  in After  Bev for the time  involved  in  negotiating  the
investment  in PlayBev and for its  influence  and  expertise in  marketing  and
manufacturing. PlayBev then signed a Membership Interest Purchase Agreement with
AfterBev  whereby  AfterBev  purchased a 50% membership  interest in PlayBev for
$750,000  and  acquired  a proxy of 1% of the  voting  rights of the  Members in
AfterBev for providing a $2,000,000 credit facility to PlayBev. During the third
quarter,  AfterBev  received the additional 1% since they met their  commitments
under the contract.

CirTran Beverage Corp. was formed by the Company to arrange for the manufacture,
marketing  and  distribution  of  the  Products  through  various   distribution
channels,  including traditional retail channels as well as catalogs,  internet,
live shopping and other channels.

Pursuant to the Agreement,  PlayBev  granted to CBC the exclusive  rights during
the  term of the  Agreement  to  manufacture,  market,  distribute  and sell the
Products through all distribution channels in the United States. CBC will be the
exclusive  manufacturer of all the Products for PlayBev to be sold in the United
States. The initial Products under the Agreement will consist of an energy drink
and flavored or unflavored water beverage (the "Initial Products"). Additionally
under the Agreement,  CBC shall be the exclusive master  distributor for PlayBev
for all Products to be sold in the United States.



                                       34
<PAGE>

For its manufacturing  services rendered under the Agreement,  CBC shall receive
from  PlayBev  an amount  equal to 20% of the cost of goods  sold  ("COGS"),  as
defined in the Agreement,  for the Products sold. For its distribution  services
rendered  under the  Agreement,  CBC will  receive  from PlayBev 6% of the gross
sales  ("Gross  Sales"),  as defined in the  Agreement,  of all  Products in the
United States.

The initial  term of the  Agreement  runs through  December  31,  2010,  and the
Agreement  provides for  automatic  renewal for up to two renewal terms of three
years each unless PlayBev notifies CBC or CBC notifies PlayBev in writing of its
intent not to renew at least  three,  but not more than 12,  months prior to the
termination of the initial term or the then-current renewal term.

During the term of the Agreement, both parties agreed that they will not sell or
distribute in the United States the Product or any products that are confusingly
or  substantially  similar or directly  competitive to the Product other than as
set forth in the Agreement.

Recent Developments

Ball Blaster Product
--------------------

On June 8, 2007, we announced  that CTM signed an exclusive  agreement with Full
Moon Enterprises of Nevada to license a new product for the sold-on-TV market. A
patent  application for "The Ball  Blaster(TM)" has been filed, by the inventor,
with the U.S.  Patent Office,  and CTM has the right to make  modifications  and
improvements  in the  product,  now and in the  future.  CTM  has the  worldwide
marketing and  distribution  rights via all marketing  channels.  CTM will pay a
royalty to the licensor for each unit sold. The agreement  shall  terminate five
years  after  the  date  of  the   agreement,   although  the  agreement   shall
automatically  renew for up to two  renewal  terms of five  years  each,  unless
either party gives 12 months' written notice of termination.

We have started the marketing  process of identifying and meeting with potential
celebrity   spokespersons   who  would   demonstrate  the  Ball  Blaster  in  TV
infomercials.

Extension of Registration Deadlines
-----------------------------------

The  Company  subsequently  entered  into an  Amendment  Number 3 to Amended and
Restated  Investor  Registration  Rights  Agreement  ("Amendment  No.  2")  with
Cornell,  which  amended an Amended and Restated  Investor  Registration  Rights
Agreement  dated as of August 23, 2006, as amended October 30, 2006, and January
12, 2007. The purpose of Amendment No. 3 was to extend the filing deadline for a
registration  statement  to be filed by the  Company to  register  the resale by
Cornell  of shares of the  Company's  common  stock  issuable  to  Cornell  upon
conversion  of a  convertible  debenture in the  aggregate  principal  amount of
$1,500,000  (the "August  Debenture")  issued to Cornell in August 2006. The new
filing deadline for the registration statement is December 15, 2007.

The Company also entered  into an  Amendment  Number 5 to Investor  Registration
Rights  Agreement  ("Amendment  No. 5") with Cornell,  which amended an Investor
Registration  Rights  Agreement  dated as of December 30, 2005, as most recently
amended  January  12,  2007.  The purpose of  Amendment  No. 5 was to extend the
filing  deadline  for a  registration  statement  to be filed by the  Company to
register the resale by Cornell of shares of the Company's  common stock issuable
to Cornell upon conversion of a convertible debenture in the aggregate principal
amount of $1,500,000  (the "December  Debenture")  issued to Cornell in December
2005.  The new filing  deadline for the  registration  statement is December 15,
2007.


                                       35
<PAGE>

         Significant Accounting Policies

Financial  Reporting  Release  No.  60,  which  was  recently  released  by  the
Securities  and  Exchange  Commission,  requires  all  companies  to  include  a
discussion of critical accounting policies or methods used in the preparation of
financial statements.  Note 1 of the Notes to the Financial Statements contained
in our  Annual  Report on Form  10-KSB  includes  a summary  of the  significant
accounting  policies  and  methods  used  in the  preparation  of our  Financial
Statements.  The  following  is a  brief  discussion  of  the  more  significant
accounting policies and methods used by us.

Our discussion and analysis of our financial condition and results of operations
is based upon our consolidated financial statements, which have been prepared in
accordance with accounting  principles  generally accepted in the United States.
These  principles  require us to make  estimates and  judgments  that affect the
reported  amounts of assets,  liabilities,  revenues and  expenses,  and related
disclosure  of  contingent  assets and  liabilities.  We base our  estimates  on
historical  experience and on various other  assumptions that are believed to be
reasonable under the circumstances. Estimated amounts may differ under different
assumptions or conditions, and actual results could differ from the estimates.

Revenue Recognition

Revenue is recognized when products are shipped. Title passes to the customer or
independent  sales  representative  at the time of shipment.  We also  recognize
revenue  using  the Bill and Hold  method  prescribed  by SEC  Staff  Accounting
Bulletin 104. The "Bill and Hold" method provides for revenue recognition when a
customer order has been completed but has not shipped as an accommodation to the
customer.  This method was adopted during the quarter ended  September 30, 2006,
in response to orders  placed by  customers  in the direct  sales  market  only,
whereby the customer  order is confirmed but delivery is delayed  according to a
prescribed delivery schedule.  Returns for defective items are repaired and sent
back to the customer. Historically,  expenses experienced with such returns have
not been significant and have been recognized as incurred.

We signed an  Assignment  and  Exclusive  Services  Agreement  with GMA  whereby
revenues and all concomitant performance obligations, have been assigned to CTO.
As such, revenues,  expenses,  assets and liabilities for all periods covered by
the effective date of the Agreement (as of January 1, 2007) have been recognized
at gross amounts by the company.

Pursuant to Statement of Financial  Accounting  Standard No. 13,  Accounting for
Leases,  we have  reported  the gain on the  sale of the  building  as  deferred
revenue to be recognized  over the term of the lease.  (See Footnote 8 - Sale of
Building, to the financials statements for details.)

We have also signed a Manufacturing,  Marketing and Distribution  Agreement with
Play Beverages  LLC,  whereby CBC is acting as  subcontractor  to Play Beverages
LLC, as the vendor of record, in providing marketing and distribution  services.
As such, revenues,  expenses,  assets and liabilities for all periods covered by
the effective date of the Agreement (May 25, 2007) have been recognized at gross
amounts by the company.

Inventories

Inventories  are  stated at the lower of  average  cost or market  value.  Costs
include  labor,  material,  and  overhead  costs.  Overhead  costs  are based on
indirect costs allocated  among cost of sales,  work-in-process  inventory,  and


                                       36
<PAGE>

finished goods inventory.  Indirect  overhead costs have been charged to cost of
sales or capitalized as inventory based on management's  estimate of the benefit
of indirect manufacturing costs to the manufacturing process.

When there is evidence that the  inventory's  value is less than original  cost,
the inventory is reduced to market value.  We determine  market value on current
resale amounts and whether technological obsolescence exists. We have agreements
with most of its customers that require the customer to purchase inventory items
related to their  contracts in the event that the contracts are  cancelled.  The
market value of related inventory is based upon those agreements.

We typically  order  inventory on a  customer-by-customer  basis. In doing so we
enter  into  binding  agreements  that the  customer  will  purchase  any excess
inventory after all orders are complete.

Results of Operations - Comparison of the Nine Months ended September 30, 2007
and 2006

         Sales and Cost of Sales

Net sales increased to $8,700,004 for the nine months period ended September 30,
2007, as compared to $7,007,118  during the same period in 2006, for an increase
of 24.2%.  Net sales  increased to $3,533,555  for the three months period ended
September 30, 2007,  as compared to  $3,044,853  during the same period in 2006,
for an increase of 16.1%.  This increase is  attributed to the income  generated
from the  marketing  segments.  Cost of sales  decreased by 8.7%,  to $4,135,494
during the nine months ended September 30, 2007, from $4,529,641 during the same
period in 2006. Cost of sales decreased by 25.3%, to $1,723,568 during the three
months period ended September 30, 2007,  from $2,307,237  during the same period
in 2006. The decrease in cost of sales is due in part to the increase in revenue
of the  marketing  segments.  Our gross profit margin for the nine months period
ended  September 30, 2007, was 52.5%, up from 35.4% for the same period in 2006.
Our gross profit  margin for the three months  period ended  September 30, 2007,
was  51.2%,  up from  24.2% for the same  period in 2006.  The  majority  of the
increase is due to the increase in revenue generated by the marketing  revenues,
which have more  favorable  margins  compared to our  electronics  manufacturing
operations.

         Inventory

We use  just-in-time  manufacturing  in our USA  factory,  which is a production
technique that minimizes work-in-process inventory and manufacturing cycle time,
while  enabling us to deliver  products to customers in the  quantities and time
frame  required.  This  manufacturing  technique  requires  us  to  maintain  an
inventory of component parts to meet customer orders. Inventory at September 30,
2007,  was  $2,048,984,  as compared to  $1,960,013  at December 31,  2006.  The
increase in  inventory  is  considered  to be minimal and is within a reasonable
range.

         Selling, General and Administrative Expenses

During  the  nine  months,  ended  September  30,  2007,  selling,  general  and
administrative expenses were $7,077,802 versus $3,826,899 for the same period in
2006, a 84.9%  increase.  During the three  months,  ended  September  30, 2007,
selling,  general and administrative  expenses were $2,529,784 versus $1,062,570
for the same period in 2006,  a 138.1%  increase.  The increase is the result of
the additional  expense of start up and staffing the CirTran  Beverage Corp. and
CirTran Online Corp. It is anticipated that selling,  general and administrative
expenses  will continue to increase due to shift from  manufacturing  to service
and marketing oriented operations, which is the focus of our marketing and media
services.  As mentioned above the marketing projects do not require  inventories
to support  operations,  but they do require  additional  manpower and resources
that  we  anticipate  will be  reflected  as  additional  selling,  general  and
administrative expenses.



                                       37
<PAGE>

         Other Income and Expenses

Interest expense for the nine months ended September 30, 2007, was $2,044,116 as
compared  to  $2,330,309  for the same  period  in 2006,  a  decrease  of 12.3%.
Interest  expense for the three months ended September 30, 2007, was $584,328 as
compared to  $693,494  for the same  period in 2006,  a decrease  of 15.7%.  The
changes in interest  expense were primarily due to the  derivative  treatment of
the convertible debenture.

As a result of the above factors,  we have a net gain of $82,898 for the quarter
ended  September  30,  2007,  as  compared to a net loss of  $2,980,288  for the
quarter  ended  September  30, 2006 and  $3,463,510  for the nine  months  ended
September 30, 2007, and $3,912,604 for the same period in 2006. This net loss is
attributed to  substantially  higher  operating costs associated with developing
the new  projects,  and  company  segments  pertaining  to direct TV and  retail
marketing programs.

Liquidity and Capital Resources

Our expenses are currently  greater than our revenues.  We have had a history of
losses  preceding  this quarter,  and our  accumulated  deficit has increased to
$25,645,189 at September 30, 2007, compared to $22,181,679 at December 31, 2006.
Our net loss for the nine  months  ended  September  30,  2007,  was  $3,463,510
compared to $3,912,604 for the nine months ended September 30, 2006. Our current
liabilities  exceeded our current  assets by  $4,981,533  and  $4,863,641  as of
September  30, 2007 and  December 31,  2006,  respectively.  For the nine months
ended  September  30,  2007,  we had  negative  cash  flows from  operations  of
$2,920,923  compared to negative cash flows from  operations for the nine months
ended September 30, 2006 of $1,631,660.

         Cash

We had cash on hand of $99,442 at September  30, 2007,  and $146,050 at December
31, 2006.

Net cash used in operating  activities  was $2,920,923 for the nine months ended
September30,   2007.  Cash  received  from  customers  of  $$7,792,780  was  not
sufficient  to  offset  cash  paid  to  vendors,  suppliers,  and  employees  of
$9,959,140.  The non-cash  charges were for  depreciation  and  amortization  of
$639,914 and accretion  expense of $1,633,667.  Because we have historically had
negative cash flows from operations,  we must rely on sources of cash other than
customers to support our operations.  It is anticipated  that various methods of
equity  financing will be required to support  operations  until cash flows from
operations are consistently positive.

Net cash provided by investing activities during the nine months ended September
30, 2007, was $2,135,767,  which was primarily related to the sale of the office
building for $2,500,000.

Net cash provided in financing  activities  was $738,548  during the nine months
ended  September 30, 2007, and was primarily  related to paying off the mortgage
on the  office  building,  in  the  amount  of  $1,233,000  which  was  done  in
conjunction with the sale of property.  The use of funds to pay off the mortgage
was offset by the cash  received  from the sale of a minority  interest in After
Bev of $1,848,000.



                                       38
<PAGE>

         Accounts Receivable

At September 30, 2007, we had  receivables of  $1,889,320,  net of a reserve for
doubtful accounts of $14,181,  as compared to $982,096 at December 31, 2006, net
of a reserve of $14,181.

The  increase  of  $907,224  in  accounts  receivable  is due to addition of the
marketing segments We have implemented an aggressive process to collect past due
accounts over the past two years.  Individual accounts are continually monitored
for  collectibles.  As part  of  monitoring  individual  customer  accounts,  we
evaluate  the  adequacy  of its  allowance  for  doubtful  accounts.  Since  the
implementation  of the  collection  process,  very few accounts have been deemed
uncollectible.

         Accounts Payable

Accounts  payable  were  $1,390,695  at  September  30,  2007,  as  compared  to
$1,135,527  at December  31,  2006.  The  increase is due to the addition of the
marketing segments.

         Liquidity and Financing Arrangements

We have a history of  substantial  losses from  operations and using rather than
providing cash in operations.  We had an accumulated deficit of 25,645,189 and a
total  stockholders'  deficit of $306,566 at September 30, 2007. As of September
30,  2007,  our  monthly   operating  costs  and  interest   expenses   averaged
approximately $1,014,000 per month.

In conjunction with our efforts to improve our results of operations,  discussed
above, we are also actively seeking  infusions of capital from investors.  It is
unlikely that we will be able,  in our current  financial  condition,  to obtain
additional  debt  financing;  and if we did acquire more debt,  we would have to
devote  additional  cash  flow to  paying  the debt and  securing  the debt with
assets.  We may  therefore  have  to  rely  on  equity  financing  to  meet  our
anticipated capital needs. There can be no assurances that we will be successful
in obtaining such capital. If we issue additional shares for debt and/or equity,
this will  dilute  the value of our  common  stock  and  existing  shareholders'
positions.

Convertible Debentures

Highgate - On May 26, 2005, we entered into an agreement  with  Highgate  Funds,
Ltd.  ("Highgate")  to issue to Highgate a  $3,750,000,  5% Secured  Convertible
Debenture (the "Debenture"). Highgate subsequently changed its name to Yorkville
Advisors, LLC ("Yorkville"), which will be used in this report. The Debenture is
due December 2007 and is secured by all of our property.

Accrued interest is payable at the time of maturity or conversion. We may elect,
at our option to pay accrued  interest in cash or shares of the Company's common
stock. If paid in stock,  the conversion price shall be the closing bid price of
the common stock on either the date the  interest  payment is due or the date on
which the  interest  payment is made.  The balance of accrued  interest  owed at
September  30,  2007,   and  December  31,  2006,  was  $148,335  and  $163,884,
respectively.

At any time,  Yorkville  may elect to  convert  principal  amounts  owing on the
Debenture into shares of the Company's  common stock at a conversion price equal
to the lesser of $0.10 per share,  or an amount equal to the lowest  closing bid
price of our common stock for the twenty trading days immediately  preceding the
conversion  date. We have the right to redeem a portion or the entire  Debenture
then  outstanding by paying 105% of the principal  amount  redeemed plus accrued
interest thereon.

Yorkville's  right to convert  principal amounts into shares of our common stock
is limited as follows:



                                       39
<PAGE>

         (i)      Yorkville  may convert up to $250,000  worth of the  principal
                  amount  plus  accrued   interest  of  the   Debenture  in  any
                  consecutive  30-day  period when the market price of our stock
                  is $0.10 per share or less at the time of conversion;
         (ii)     Yorkville  may convert up to $500,000  worth of the  principal
                  amount  plus  accrued   interest  of  the   Debenture  in  any
                  consecutive  30-day  period  when the  price  of our  stock is
                  greater  than  $0.10  per  share  at the  time of  conversion;
                  provided, however, that Yorkville may convert in excess of the
                  foregoing amounts if we and Yorkville mutually agree; and
         (iii)    Upon the occurrence of an event of default,  Yorkville may, in
                  its  sole   discretion,   accelerate  full  repayment  of  all
                  debentures  outstanding  and accrued  interest  thereon or may
                  convert the  Debentures  and  accrued  interest  thereon  into
                  shares of our common stock.

Except in the event of default,  Yorkville  may not convert the  Debenture for a
number of shares that would  result in  Yorkville  owning more than 4.99% of our
outstanding common stock.

In connection with the issuance of the Yorkville Debenture, we granted Yorkville
registration rights related to the issuance of the debenture.

We  determined  that  the  features  of  the  Debenture  fell  under  derivative
accounting  treatment.  As of  September  30, 2007,  the  carrying  value of the
Debenture was $1,372,301.  The carrying value will be accreted each quarter over
the life of the Debenture until the carrying value equals the  unconverted  face
value of $1,585,000.  The fair value of the derivative liability as of September
30, 2007 was $636,911.

In  connection  with the issuance of the  Debenture,  $2,265,000 of the proceeds
were paid to Cornell to repay promissory  notes.  Fees of $256,433 were withheld
from the proceeds,  were  capitalized,  and are being amortized over the life of
the note. As such,  of the total  Debenture of  $3,750,000,  the net proceeds to
CirTran  were  $1,228,567.  The  proceeds  were used for general  corporate  and
working capital purposes, at our discretion.

Between  the  months of  January  2007 and  October  2007,  Yorkville  converted
$1,425,000 of principal on its convertible  debenture into 92,220,089  shares of
our common stock, at conversion  rates of $0.008 to $0.01513 per share,  per the
terms of the debenture  agreement.  As of the date of this Report, the remaining
principal balance was $1,425,000.

Cornell - On December  30, 2005,  we entered  into an agreement  with Cornell to
issue to Cornell a $1,500,000,  5% Secured  Convertible  Debenture (the "Cornell
Debenture").  The Cornell  Debenture is due July 30, 2008, and is secured by all
our property, junior to the Yorkville security interest.

Accrued  interest is payable at the time of maturity or  conversion.  We may, at
our option, elect to pay accrued interest in cash or shares of our common stock.
If paid in stock,  the  conversion  price  shall be the closing bid price of the
common stock on either the date the interest payment is due or the date on which
the interest  payment is made. The balance of accrued interest owed at September
30, 2007 and December 31, 2006, was $130,890 and $74,795 respectively.

At any time, Cornell may elect to convert principal amounts owing on the Cornell
Debenture  into shares of our common  stock at a  conversion  price equal to the
lowest  closing  bid price of our  common  stock  for the  twenty  trading  days
immediately preceding the conversion date. We have the right to redeem a portion
or the entire Cornell Debenture then outstanding by paying 105% of the principal
amount redeemed plus accrued interest thereon.



                                       40
<PAGE>

Cornell's right to convert  principal amounts into shares of our common stock is
limited as follows:

         (i)       Cornell may convert up to $250,000 worth of the principal
                   amount plus accrued interest of the Cornell Debenture in any
                   consecutive 30-day period when the market price of our stock
                   is $0.10 per share or less at the time of conversion;

         (ii)      Cornell may convert up to $500,000 worth of the principal
                   amount plus accrued interest of the Cornell Debenture in any
                   consecutive 30-day period when the price of the Company's
                   stock is greater than $0.10 per share at the time of
                   conversion; provided, however, that Cornell may convert in
                   excess of the foregoing amounts if we and Cornell mutually
                   agree; and

         (iii)     Upon the occurrence of an event of default, Cornell may, in
                   its sole discretion, accelerate full repayment of the
                   debenture outstanding and accrued interest thereon or may
                   convert the Cornell Debenture and accrued interest thereon
                   into shares of our common stock.

Except in the event of default,  Cornell  may not convert the Cornell  Debenture
for a number of shares  that would  result in Cornell  owning more than 4.99% of
our outstanding common stock.

The Cornell Debenture was issued with 10,000,000 warrants with an exercise price
of $0.09 per share that vest immediately and have a three-year life.

In connection  with the issuance of the Cornell  Debenture,  we granted  Cornell
registration  rights  related  to the  issuance  of the  Cornell  Debenture  and
warrants.

We  determined  that the features on the Cornell  Debenture  and the  associated
warrants fell under derivative accounting  treatment.  As of September 30, 2007,
the carrying value of the Cornell  Debenture was $1,014,846.  The carrying value
will be accreted each quarter over the life of the Cornell  Debenture  until the
carrying  value  equals  the face  value of  $1,500,000.  The fair  value of the
derivative liability relating to the Cornell debenture,  excluding the warrants,
as of September 30, 2007 was $979,099. The fair value of the warrants was $5,476
as of September 30, 2007.

In connection with the issuance of the Cornell Debenture,  fees of $130,000 were
withheld from the proceeds,  capitalized, and will be amortized over the life of
the Cornell  Debenture.  As such, of the total Cornell  Debenture of $1,500,000,
the net  proceeds to CirTran  were  $1,370,000.  The  proceeds  will be used for
general corporate and working capital purposes, at our discretion.

Additionally,  we entered  into an amended and  restated  investor  registration
rights  agreement  with Cornell (the  "Registration  Rights  Agreement"),  which
superseded the Cornell registration rights agreement between CirTran and Cornell
entered into in December 2005. Pursuant to the Registration Rights Agreement, we
agreed to file,  no later than  October 15, 2006,  a  registration  statement to
register  the  resale of shares of our common  stock  issuable  to Cornell  upon
conversion of the Cornell  Debenture and exercise of the Warrants.  We agreed to
register the resale of up to 42,608,696 shares,  consisting of 32,608,000 shares
underlying  the Debenture and  10,000,000  shares  underlying  the Warrants.  We
agreed to keep such  registration  statement  effective  until all of the shares
issuable upon  conversion of the Debenture  have been sold. In the event that we
issue  more than  42,608,696  shares  of common  stock  upon  conversion  of the
December  Debenture,   we  will  file  additional   registration  statements  as
necessary.  The agreement was subsequently  amended to extend the filing date of
the registration to December 15, 2007.


                                       41
<PAGE>

In  connection  with the  Cornell  Debenture,  Cornell  agreed that it could not
convert  any  amount of  principal  or  interest  of the  Cornell  Debenture  in
accordance  with the terms  and  conditions  of the  Lockdown  Agreement  by and
between CirTran and Cornell July 20, 2006, until we have effectuated an increase
in its  authorized  capital.  CirTran and Cornell  also agreed that in the event
that we have not effectuated such increase in its authorized  capital by October
30, 2006,  which was  subsequently  extended to June 1, 2007, such failure would
constitute  an event of default on parallel with those set forth in the Purchase
Agreement and subject to the same  consequences  as those listed in the Purchase
Agreement.  On April 30,  2007,  the Company  received  shareholder  approval to
increase its authorized capital to include 1,500,000,000 shares of common stock.
As a result of the increase,  the authorized  shares provided  adequate coverage
for the conversion of the Cornell  Debenture and therefore  negated the need for
the Cornell Lockdown Agreement.

As of the date of this  Report,  Cornell  had not  converted  any of the Cornell
Debenture into shares of the Company's common stock.

Cornell - On August  23,  2006,  we entered  into  another  securities  purchase
agreement (the "Purchase  Agreement") with Cornell,  relating to the issuance by
CirTran  of a 5%  Secured  Convertible  Debenture,  due April 23,  2009,  in the
aggregate principal amount of $1,500,000 (the "August Debenture").

Accrued  interest is payable at the time of maturity or  conversion.  We may, at
our option, elect to pay accrued interest in cash or shares of our common stock.
If paid in stock,  the  conversion  price  shall be the closing bid price of the
common stock on either the date the interest payment is due or the date on which
the interest  payment is made. The balance of accrued interest owed at September
30, 2007 and December 31, 2006 was $82,603 and $26,507 respectively.

At any time, Cornell may elect to convert principal amounts owing on the Cornell
Debenture  into  shares of our common  stock at a  conversion  price equal to an
amount equal to the lowest  closing bid price of our common stock for the twenty
trading days  immediately  preceding the  conversion  date. We have the right to
redeem a portion or the entire Cornell Debenture then outstanding by paying 105%
of the principal amount redeemed plus accrued interest thereon.

We also paid a commitment  fee of $120,000 and a  structuring  fee of $15,000 to
Cornell.  As such, of the total purchase amount of $1,500,000,  the net proceeds
to CirTran were  $1,365,000.  We used these  proceeds for general  corporate and
working capital purposes, at our discretion.

Cornell's right to convert  principal  amounts owing under the August  Debenture
into shares of our common stock is limited as follows:

         (i)      Cornell  may  convert up to  $500,000  worth of the  principal
                  amount plus  accrued  interest of the August  Debenture in any
                  consecutive 30-day period when the price of our stock is $0.03
                  per share or less at the time of conversion;
         (ii)     Cornell may convert  any amount of the  principal  amount plus
                  accrued  interest of the August  Debenture in any  consecutive
                  30-day  period  when the  price of our stock is  greater  than
                  $0.03 per share at the time of conversion; and
         (iii)    Upon the  occurrence of an Event of Default (as defined in the
                  Debenture),  Cornell may, in its sole  discretion,  accelerate
                  full  repayment  of all  debentures  outstanding  and  accrued
                  interest  thereon  or  may,  notwithstanding  any  limitations
                  contained  in  the  August   Debenture   and/or  the  Purchase
                  Agreement,  convert  all  debentures  outstanding  and accrued
                  interest  thereon in to shares of our Common Stock pursuant to
                  the August Debenture.


                                       42
<PAGE>

Except in the event of default, Cornell may not convert the August Debenture for
a number of shares of common  stock in excess of that number of shares of common
stock that would  result in Cornell  owning  more than 4.99% of our  outstanding
common stock.

In connection  with the Purchase  Agreement,  we also agreed to grant to Cornell
warrants (the "Warrants") to purchase up to an additional  15,000,000  shares of
our common stock.  The Warrants have an exercise  price of $0.06 per share,  and
expire  three years from the date of  issuance.  The  Warrants  also provide for
cashless  exercise  if at the  time  of  exercise  there  is  not  an  effective
registration statement or if an event of default has occurred.

We  determined  that the features on the August  Debenture and the Warrants fell
under derivative  accounting  treatment.  As of September 30, 2007, the carrying
value of the August Debenture was $727,568.  The carrying value will be accreted
each quarter  over the life of the August  Debenture  until the  carrying  value
equals the face value of $1,500,000.  The fair value of the derivative liability
relating to the August  Debenture,  excluding the warrants,  as of September 30,
2007, was $1,014,846. The fair value of the warrants was $10,582 as of September
30, 2007.

As of the date of this  Report,  Cornell  had not  converted  any of the  August
Debenture into shares of our common stock.

Additionally,  we entered  into an amended and  restated  investor  registration
rights  agreement  with Cornell (the  "Registration  Rights  Agreement"),  which
superseded the Cornell registration rights agreement between CirTran and Cornell
entered into in August 2006. Pursuant to the Registration  Rights Agreement,  we
agreed to file,  no later than  October 15, 2006,  a  registration  statement to
register  the  resale of shares of our common  stock  issuable  to Cornell  upon
conversion of the Cornell  Debenture and exercise of the Warrants.  We agreed to
register the resale of up to 89,291,304 shares,  consisting of 74,291,304 shares
underlying  the Debenture and  15,000,000  shares  underlying  the Warrants.  We
agreed to keep such  registration  statement  effective  until all of the shares
issuable upon  conversion of the Debenture  have been sold. In the event that we
issue more than 89,291,304  shares of common stock upon conversion of the August
Debenture,  we will file additional  registration  statements as necessary.  The
agreement was subsequently amended to extend the filing date of the registration
to December 15, 2007.

As of September 30, 2007, no amount of the August  Debenture had been  converted
and no shares of our common stock had been issued to Cornell.

Lockdown Agreements

On July 20, 2006, we entered into two lockdown agreements with existing security
holders.

The first  agreement (the "Cornell  Agreement")  was with Cornell and related to
the Cornell Debenture. Pursuant to the Cornell Agreement, Cornell agreed that it
would not convert any of the  principal or interest on the Cornell  Debenture or
exercise  any of the  Warrants  granted to Cornell  until we had taken the steps
necessary to increase our authorized capital. As such, we were able to lock down
106,900,000  shares  underlying  the Cornell  Debenture  and  25,000,000  shares
underlying the Cornell Warrants.

The second agreement (the "ANAHOP Agreement") was with ANAHOP, Albert Hagar, and
Fadi  Nora,  and  related  to the May and June  private  placement  transactions
discussed above.  Pursuant to the ANAHOP  Agreement,  Hagar and Nora agreed that
they would not exercise any of the warrants they received in connection with the
May or June  private  offerings  until we have  taken  the  steps  necessary  to
increase our authorized capital.  Additionally,  ANAHOP agreed that it would not


                                       43
<PAGE>

make the Second  Tranche  Payment to purchase the Second Tranche Shares until we
have taken the steps  necessary to increase  our  authorized  capital.  As such,
under the ANAHOP  Agreement,  we were able to lock down 21,428,571  shares,  and
93,000,000  shares  underlying the warrants  issued to Hagar and Nora in the May
and June private placements.

At a Special Meeting of Shareholders  held April 30, 2007, we received  approval
from our  shareholders  to amend our Articles of  Incorporation  to increase our
authorized capital to include 1,500,000,000 shares of common stock. The increase
in the number of authorized shares provided adequate coverage for the conversion
of the ANAHOP  warrants and therefore  negated the need for the ANAHOP  Lockdown
Agreement.

Forward-looking statements

Certain of the  statements  contained in this Report (other than the  historical
financial  data and other  statements  of historical  fact) are  forward-looking
statements.  These statements  include,  but are not limited to our expectations
with respect to the  development of a new offices or divisions;  the achievement
of certain  revenue goals;  the receipt of new business and  contracts;  and our
intentions  with respect to financing our  operations in the future.  Additional
forward-looking  statements  may be found in the "Risk  Factors"  Section of our
Annual Report on Form 10-KSB,  together with  accompanying  explanations  of the
potential risks  associated with such  statements.  You are encouraged to review
the "Risk Factors" Section of our Annual Report.

Forward-looking  statements made in this Quarterly  Report,  are made based upon
management's good faith expectations and beliefs concerning future  developments
and their  potential  effect upon the Company.  There can be no  assurance  that
future  developments will be in accordance with such  expectations,  or that the
effect  of  future   developments  on  CirTran  will  be  those  anticipated  by
management.  Forward-looking  statements  may be  identified by the use of words
such as  "believe,"  "expect,"  "plans,"  "strategy,"  "prospects,"  "estimate,"
"project,"  "anticipate,"  "intends"  and  other  words of  similar  meaning  in
connection with a discussion of future operating or financial performance.

You  are  cautioned  not  to  place  undue  reliance  on  these  forward-looking
statements,  which are current only as of the date of this  Report.  We disclaim
any intention or obligation to update or revise any forward-looking  statements,
whether  as a result of new  information,  future  events,  or  otherwise.  Many
important   factors  could  cause  actual  results  to  differ  materially  from
management's expectations,  including those listed in the "Risk Factors" Section
of our Annual  Report  for the year  ended  December  31,  2006,  as well as the
following:

         *        unpredictable difficulties or delays in the development of new
                  products and technologies;

         *        changes in U.S. or international economic conditions,  such as
                  inflation,  interest rate fluctuations,  foreign exchange rate
                  fluctuations or recessions in CirTran's markets;

         *        pricing  changes to our  supplies  or products or those of our
                  competitors,  and other  competitive  pressures on pricing and
                  sales;

         *        difficulties   in  obtaining  or  retaining  the   management,
                  engineering,  and other human  resource  competencies  that we
                  need to achieve our business objectives;

         *        collection of customer balances due on account;



                                       44
<PAGE>

         *        the  impact  on  CirTran  or a  subsidiary  from the loss of a
                  significant customer or a few customers;

         *        risks  generally  relating  to our  international  operations,
                  including governmental, regulatory or political changes;

         *        transactions  or other events  affecting the need for,  timing
                  and extent of our capital expenditures; and

         *        the extent to which we reduce outstanding debt.

Item 3.  Controls and Procedures

We  maintain   disclosure  controls  and  procedures  designed  to  ensure  that
information  required to be disclosed in our reports filed under the  Securities
Exchange Act of 1934,  as amended (the Exchange  Act),  is recorded,  processed,
summarized,  and  reported  within  the  required  time  periods,  and that such
information is accumulated and  communicated  to our  management,  including our
Chief Executive  Officer,  who was also acting as our Chief Financial Officer as
of the date of this  report,  as  appropriate,  to allow  for  timely  decisions
regarding disclosure.

As disclosed in our Annual Report on Form 10-KSB for the year ended December 31,
2006,  as required by Rule  13a-15(b)  under the  Exchange  Act, we conducted an
evaluation,  under the  supervision  of our Chief  Executive  Officer and former
Chief Financial  Officer,  of the  effectiveness of our disclosure  controls and
procedures  as  of  December  31,  2006.  In  our   evaluation,   we  identified
deficiencies  that existed in the design or  operation  of our internal  control
over financial reporting that our independent  registered public accounting firm
and we considered a "material  weaknesses." A material weakness is a significant
deficiency or combination of significant  deficiencies that results in more than
a remote  likelihood  that a  material  misstatement  of the  annual or  interim
financial information will not be prevented or detected.

Based on the matters  identified  above, our Chief Executive  Officer and former
Chief Financial  Officer  concluded that our disclosure  controls and procedures
were not  effective.  These  deficiencies  have been  disclosed  to our Board of
Directors.

The  deficiencies  in our internal  control  over  financial  reporting  related
primarily  to the  failure to  properly  measure  and  disclose  equity and debt
transactions.  The deficiencies were detected in the evaluation  process and the
transactions  have been  appropriately  recorded and disclosed in this Quarterly
Report on Form 10-QSB.  We are in the process of improving our internal  control
over  financial  reporting in an effort to resolve  these  deficiencies  through
improved supervision and training of our accounting staff, but additional effort
is needed to fully remedy these deficiencies.

In an effort to resolve the deficiencies in internal  control,  mentioned above,
we, in concurrence with the recommendation of our registered  independent public
accounting firm,  embarked upon an executive search for a qualified candidate to
fill the position of chief  financial  officer.  We  successfully  concluded the
executive  search on May 15,  2006,  when we signed a three-year  contract  with
Richard T. Ferrone, CPA, as the CFO of the Company. On October 22, 2007, Richard
T.  Ferrone  resigned  as the CFO and  Iehab  Hawatmeh,  President  resumed  the
responsibilities of CFO. The addition of an experienced  financial executive was
a  major  achievement  in  addressing  and  resolving  the  deficiencies  in our
financial controls and also provided us with the capacity to develop and advance
our overall financial  capabilities of the Company. We are currently involved in
an executive search to find a new CFO.



                                       45
<PAGE>

Currently,  our financial  policies and  procedures  are being  evaluated.  As a
result,  several  new  internal  control  procedures  have  been  developed  and
documented and are being  implemented  accordingly.  The financial  policies and
procedures  evaluation  program will be an ongoing process,  and one of the main
responsibilities  of the new CFO, to insure  continued  adequacy and  compliance
with prescribed internal control procedures, with the initial development of the
program primarily focused on the development of internal control  procedures and
supporting documentation.

Quarterly Evaluation of Disclosure Controls and Procedures.  Our Chief Executive
Officer/Chief  Financial  Officer,  after  evaluating the  effectiveness  of the
Company's  "disclosure  controls and  procedures"  (as defined in the Securities
Exchange Act of 1934 (Exchange Act) Rules  13a-15(e) or 15d-15(e)) as of the end
of the  period  covered  by  this  quarterly  report,  has  concluded  that  our
disclosure  controls and  procedures  were not  effective to provide  reasonable
assurance  that  information  required to be disclosed  in our reports  filed or
submitted  under  the  Exchange  Act is  recorded,  processed,  summarized,  and
reported within the applicable  time periods.  As noted above, we are working to
remediate  the  weakness  described  above,  including  the  hiring a new  chief
financial officer.

Changes in Internal Control over Financial Reporting.  As noted above, we are in
the process of improving  our internal  control over  financial  reporting in an
effort to resolve these deficiencies  through improved  supervision and training
of our accounting staff.  Additionally,  we hired a Chief Financial Officer, who
has recently  resigned.  We are currently  searching for a new CFO. However,  in
addition to finding a new CFO, additional effort is needed to fully remedy these
deficiencies.  Our management and directors will work with our CFO, our auditors
and outside advisors to ensure that our controls and procedures are adequate and
effective.

While our disclosure  controls and procedures provide reasonable  assurance that
the appropriate  information will be available on a timely basis, this assurance
is subject to  limitations  inherent in any control  system,  no matter how well
designed and administered.

Section 404 Assessment.  Section 404 of the  Sarbanes-Oxley Act of 2002 requires
management's  annual review and evaluation of our internal  controls,  beginning
with our Form 10-KSB for the fiscal year ending on  December  31,  2007,  and an
attestation of the effectiveness of these controls by our independent registered
public accountants  beginning with our Form 10-KSB for the fiscal year ending on
December  31,  2008.  We  plan  to  dedicate  significant  resources,  including
management time and effort,  and to incur  substantial  costs in connection with
our Section 404  assessment.  The  evaluation  of our internal  controls will be
conducted under the direction of our senior management. We will continue to work
to improve our controls and  procedures,  and to educate and train our employees
on our  existing  controls  and  procedures  in  connection  with our efforts to
maintain an effective controls infrastructure.



                                       46
<PAGE>

                           Part II. OTHER INFORMATION

Item 1. Legal Proceedings

We assumed certain  liabilities of Circuit  Technology,  Inc.,  ("Circuit"),  in
connection  with our  transactions  in the year 2000,  and as a result,  we were
defendant in a number of legal actions involving nonpayment of vendors for goods
and services  rendered.  We negotiated  settlements with respect to all of these
liabilities, and as of May 2007, none of the assumed liabilities remain.

CirTran Asia v. Mindstorm,  Civil No. 050902290,  Third Judicial District Court,
Salt Lake County,  State of Utah.  In February  2005,  CirTran Asia brought suit
against Mindstorm Technologies, LLC, for nonpayment for goods provided. On April
22, 2005,  the  defendant  filed its answer and  counterclaim,  following  which
defendant's  counsel  withdrew  from   representation.   CirTran  Asia  notified
defendant  that under  governing  rules it was  required  to  appoint  successor
counsel.  The  defendant  failed to do so,  and failed to  prosecute  its claim.
CirTran  Asia  moved for  default  judgment,  which was  granted.  CirTran  Asia
submitted an order of default judgment in the amount of $288,529 to the court in
September 2005, which was signed by the Court. The Company continues to evaluate
its settlement options.

CirTran Asia, et al. v.  International  Edge, et al.,  Civil No. 2:05 CV 413BSJ,
U.S.  District  Court,  District of Utah. On May 11, 2005,  CirTran Asia,  UKING
System Industry Co., Ltd., and Charles Ho filed suit against International Edge,
Inc.,  Michael Casey  Enterprises,  Inc., Michael Casey, David Hayek, and HIPMG,
Inc., for breach of contract,  breach of the implied  covenant of good faith and
fair dealing, interference with economic relationships, and fraud in relation to
certain   licensing   issues  relating  to  the  Ab  King  Pro.  The  defendants
counterclaimed,  alleging  breach of  contract,  fraud,  defamation  and related
claims,  all  related  to the Ab King  Pro,  seeking  damages  in the  amount of
$10,000,000.  CirTran  Asia and the other  plaintiffs  filed  their reply to the
counterclaim,  disputing all of the allegations and claims.  International  Edge
filed a motion to dismiss for lack of jurisdiction,  which was denied. As of the
date of this Report,  the case was proceeding in the discovery stage. Sales from
this product in the year ended December 31, 2005, were  approximately  $960,000,
and in the year ended  December 31, 2006,  were  approximately  $0. CirTran Asia
intends to vigorously pursue this action.

CirTran  Corporation vs. Advanced Beauty  Solutions,  LLC, and Jason Dodo, Civil
No. 060900332,  Third Judicial District Court, Salt Lake County,  State of Utah.
On January 9, 2006, we brought suit against  Advanced Beauty  Solutions  ("ABS")
and Jason Dodo,  asserting claims  including  breach of contract,  breach of the
implied  covenant of good faith and fair  dealing,  interference  with  economic
relations, fraud and unjust enrichment.

On January 24, 2006, ABS filed a voluntary  petition for relief under chapter 11
of the United States  Bankruptcy Code in the United States  Bankruptcy Court for
the Central  District of  California,  San Fernando  Valley  Division  (the "ABS
Bankruptcy  Court"),  Case No. SV 06-10076  GM. On January 30,  2006,  a hearing
("Hearing")  was held to consider the Emergency  Motion for Order  Approving the
Settlement  and Compromise of the Disputed  Secured Claims of Inventory  Capital
Group,  Inc.  ("ICG"),  and Media Funding  Corporation  ("MFC") (the "Settlement
Motion") filed by ABS. The continued  Hearing on the Settlement  Motion was held
on February 16, 2006,  at which time the  settlement  was  modified.  Prior to a
separate  hearing  held on March  24,  2006,  on ABS's  Motion  for  Order:  (1)
Approving Sale and Assignment of Substantially All Assets of the Estate Free and
Clear of Liens; (2) Approving  Assumption and Assignment of Leases and Executory
Contracts  Included in the Sale and Rejection of Leases and Executory  Contracts
Not Included in the Sale; and (3) Granting  Related Relief (the "Sale  Motion"),
the  settlement  was  further  modified.   The  modifications  to  the  proposed
settlement  were read into the ABS  Bankruptcy  Court's record at the Hearing on

                                       47
<PAGE>

the  Settlement  Motion  and the  March  24,  2006  hearing  on the Sale  Motion
("Proposed  Modifications").  Written notice of the Proposed  Modifications  was
provided  to  creditors  and parties in  interests  on March 27,  2006,  and the
Declaration  of James C.  Bastian,  Jr.,  attesting  that no  objections  to the
Proposed  Modifications  have  been  received  by ABS,  was  filed  with the ABS
Bankruptcy Court.

On  June 6,  2006,  we  signed  an  agreement  with  ABS  (the  "Asset  Purchase
Agreement"),  subject to the ABS Bankruptcy  Court's approval.  On June 7, 2006,
the ABS Bankruptcy Court entered orders  approving the Asset Purchase  Agreement
and granting the Sale Motion,  and approving the  settlement  and  compromise of
certain disputed claims against ABS.

Pursuant  to the  settlement  of  ABS's  bankruptcy  proceedings  and the  Asset
Purchase Agreement, the Company has an allowed claim against the ABS's estate in
the amount of $2,350,000, of which $750,000 is to be credited to the purchase of
substantially all of ABS's assets. Under the settlement,  we shall be allowed to
participate  as a general  unsecured  creditor of ABS's  estate in the amount of
$1,600,000 on a pari passu basis with the $2,100,000  general unsecured claim of
certain  insiders  of ABS and subject to the prior  payment of certain  secured,
priority, and non-insider claims in the amount of approximately $1,507,011.

Under the Asset Purchase Agreement,  we agreed to purchase  substantially all of
ABS's assets (the "Assets") in exchange for:

         i)       a cash payment in the amount of $1,125,000;
         ii)      a reduction of CirTran's  allowed claim in the Bankruptcy Case
                  by $750,000;
         iii)     the assumption of any assumed liabilities; and
         iv)      the  obligation  to pay ABS a royalty  equal to $3.00 per True
                  Ceramic  Pro  flat  iron  unit  sold  by  ABS  (the   "Royalty
                  Obligation").

The Assets include personal property;  intellectual property;  certain executory
contracts and unexpired leases; inventory;  ABS's rights under certain insurance
policies;  deposits and prepaid expenses; books and records;  goodwill;  certain
causes of action;  permits;  customer and supplier lists; and telephone  numbers
and listings.

Under  the  Asset  Purchase  Agreement,  the  Royalty  Obligation  is  capped at
$4,135,000.  To the extent  the  amounts  paid to ABS on account of the  Royalty
Obligation  equal less than $435,000 on the 2-year  anniversary  of the Closing,
then, within 30 days of such  anniversary,  we agreed to pay ABS an amount equal
to $435,000 less the royalty  payments made to date. As part of the  settlement,
we agreed to exchange general releases with, among others,  ABS, Jason Dodo (the
manager of ABS),  Inventory Capital Group ("ICG"), and Media Funding Corporation
("MFC").  The settlement  also resolved a related  dispute with ICG in which ICG
assigned $65,000 of its secured claim against ABS to CirTran.

Pursuant to the court-approved settlement, payments under the Royalty Obligation
will be made in the following order:

         a)       The Royalty  Obligation  payments will be made  exclusively to
         ICG and MFC (collectively, the "Secured Parties") until (i) the Secured
         Parties  have  been  paid in full on  account  of  their  $1,243,208.44
         secured claim,  or (ii) the Secured  Parties have been paid $100,000 in
         payments under the Royalty Obligation, whichever comes first.

         b)       The next $70,000 Royalty Obligation payments will be made to a
         service provider to ABS (in the amount of $50,000) and to an individual
         with an allowed claim (in the amount of $20,000).



                                       48
<PAGE>

         c)       Following  the  payments to the Secured  Parties and others as
         set forth immediately above, the remaining Royalty Obligation  payments
         will be used for  distribution to allowed general  unsecured claims not
         including those of CirTran and certain  insiders with unpaid notes (the
         "Insider Noteholders").

         d)       Following  payments as set forth in (a),  (b),  and (c) above,
         the  Royalty  Obligation  payments  will be shared  pro rata  among the
         Insider   Noteholders   (with  a  total  allowed   aggregate  claim  of
         $2,100,000),  and CirTran (with a general unsecured claim in the amount
         of $1,600,000), until paid in full.

The total claim against ABS's estate that must be paid before  CirTran begins to
share in the Royalty  Obligation  payments is $435,000.  We had paid $222,906 of
the $435,000 obligation through September 30, 2007.

CirTran v. Guthy-Renker  Corporation and Ben Van De Bunt, Civil No. 20060980298,
Third Judicial District Court, Salt Lake County,  State of Utah. In May 2006, we
filed suit against  Guthy-Renker  Corporation and one of its officers,  claiming
breach  of  contract,  breach of the  implied  covenant  of good  faith and fair
dealing,  interference  with  economic  relationships,   misrepresentation,  and
punitive damages. The suit seeks damages in an amount to be proven at trial. The
defendants  filed a motion to stay  litigation  and  compel  arbitration  in the
matter. We filed our response to the motion. On November 7, 2006, the motion was
granted. As of the date of this report, we were preparing for arbitration.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

In January 2007,  Yorkville  converted  $100,000 of interest on its  convertible
debenture into 6,199,628  shares of our restricted  common stock at a conversion
rate of $0.01613  per share,  which was the lower of $0.10 or 100% of the lowest
closing bid price of our common  stock over the 20 trading  days  preceding  the
conversion.

On February 12, 2007, Yorkville converted $100,000 of its convertible  debenture
into  6,807,352  shares of our restricted  common stock at a conversion  rate of
$0.01469 per share,  which was the lower of $0.10 or 100% of the lowest  closing
bid price of our common stock over the 20 trading days preceding the conversion.

On February 23, 2007,  Yorkville converted $50,000 of its convertible  debenture
into 3,403,676 of our restricted  common stock at a conversion  rate of $0.01469
per share,  which was the lower of $0.10 or 100% of the lowest closing bid price
of our common stock over the 20 trading days preceding the conversion.

In March 2007,  Yorkville  converted $100,000 of its convertible  debenture into
7,077,141 shares of our restricted common stock at a conversion rate of $0.01413
per share,  which was the lower of $0.10 or 100% of the lowest closing bid price
of our common stock over the 20 trading days preceding the conversion.

On April 12, 2007,  Yorkville  converted  $100,000 of its convertible  debenture
into  7,692,308  shares of our restricted  common stock at a conversion  rate of
$0.01413 per share,  which was the lower of $0.10 or 100% of the lowest  closing
bid price of our common stock over the 20 trading days preceding the conversion

On April 26, 2007,  Yorkville  converted  $200,000 of its convertible  debenture
into  14,482,259  shares of our restricted  common stock at a conversion rate of
$0.01381 per share,  which was the lower of $0.10 or 100% of the lowest  closing
bid price of our common stock over the 20 trading days preceding the conversion.



                                       49
<PAGE>

On June 7, 2007, Yorkville converted $200,000 of its convertible  debenture into
18,382,353  shares  of our  restricted  common  stock  at a  conversion  rate of
$0.01088 per share,  which was the lower of $0.10 or 100% of the lowest  closing
bid price of our common stock over the 20 trading days preceding the conversion.

On July 13, 2007, Yorkville converted $275,000 of its convertible debenture into
34,375,000  of our  restricted  common stock at a conversion  rate of $0.008 per
share,  which was the lower of $0.10 or 100% of the lowest  closing bid price of
our common stock over the 20 trading days preceding the conversion.

On August 6, 2007,  the  company  authorized  the  issuance  of  10,000,000  new
unrestricted  shares  pursuant  to its 2006 S-8 stock  option  plan dated May 4,
2007, to counsel for the Company,  who provided bona fide legal  services to the
Company.  The services provided were not in connection with the offer of sale of
securities in a capital-raising  transaction and does not directly or indirectly
promote or maintain a market for the registrant's securities.  No one at the law
firm is an officer, director, affiliate, or a control person of the Company.

On September 7, 2007,  Yorkville converted $10,000 of its convertible  debenture
into  1,926,782  shares of our restricted  common stock at a conversion  rate of
$0.005 per share, which was the lower of $0.10 or 100% of the lowest closing bid
price of our common stock over the 20 trading days preceding the conversion.

On September 17, 2007, Yorkville converted $230,000 of its convertible debenture
into  44,315,992  shares of our restricted  common stock at a conversion rate of
$0.005 per share, which was the lower of $0.10 or 100% of the lowest closing bid
price of our common stock over the 20 trading days preceding the conversion.

On October 16, 2007,  Yorkville converted $160,000 of its convertible  debenture
into  31,189,084  shares of our restricted  common stock at a conversion rate of
$0.005 per share, which was the lower of $0.10 or 100% of the lowest closing bid
price of our common stock over the 20 trading days preceding the conversion.

On November 7, 2007,  Yorkville converted $245,000 of its convertible  debenture
into  47,758,285  shares of our restricted  common stock at a conversion rate of
$0.005 per share, which was the lower of $0.10 or 100% of the lowest closing bid
price of our common stock over the 20 trading days preceding the conversion.

In each case, the securities were issued in connection with private transactions
with  accredited  investors  pursuant to Section 4(2) of the  Securities Act and
regulations promulgated thereunder.

Item 4.  Submission of Matters to a Vote of Security Holders

Special Meeting of Shareholders
-------------------------------

On April 30,  2007,  the Company  held a special  meeting of  shareholders  (the
"Special  Meeting") to vote on a proposed amendment to the Company's Articles of
Incorporation,  as amended to date,  to increase the  authorized  capital of the
Company to include 1,500,000,000 shares of common stock, and to effectuate a 1.2
shares for one share forward stock split.



                                       50
<PAGE>

At the Special Meeting,  the voting on the proposal was as follows:  542,960,370
shares  voted  in  favor;  14,724,706  shares  voted  against;   187,715  shares
abstaining; and there were no broker non-votes.

Item 5.  Other Information

Abacas Ventures

An explanation of the relationship between CirTran and Abacas Ventures,  Inc. is
as follows:

Two  trusts,  the Saliba  Living  Trust and the  Saliba  Private  Annuity  Trust
(collectively,  the "Saliba Trusts"),  were investors in Circuit and predecessor
entity of CirTran.  The trustees of the trusts are Tom and Betty Saliba, and Tom
Saliba,  respectively.  (Tom Saliba is the nephew of the  grandfather  of Trevor
Saliba,  a former  director  of  CirTran.)  In July 2000,  CirTran  merged  with
Circuit.  Through that merger, the Saliba Trusts became shareholders of CirTran.
The Saliba  Trusts are also two of the  shareholders  of an entity  named Abacas
Ventures, Inc. ("Abacas").  At the time of the merger, CirTran was in default on
several of its obligations, including an obligation to Imperial Bank. The Saliba
Trusts,  through  Abacas,  purchased the bank's claim against CirTran to protect
their  investment  in CirTran.  Since that time,  Abacas has continued to settle
debts of CirTran to improve  Abacas's  position and to take advantage of certain
discounts  that  creditors  of CirTran  offered to settle their  claims.  On two
occasions,  the Abacas shareholders have agreed to convert outstanding debt owed
by CirTran to Abacas  into shares of CirTran  common  stock  (discussed  below).
Abacas continues to work with the company to settle claims by creditors  against
CirTran,  and, on occasion,  to provide funding.  There can be no assurance that
Abacus will agree to convert its existing  debt,  or any debt it acquires in the
future, into shares of CirTran, or that conversions will occur at a price and on
terms that are  favorable  to  CirTran.  If Abacus and CirTran  cannot  agree on
acceptable  conversion  terms,  Abacus may demand  payment of some or all of the
debt. If CirTran does not have sufficient  cash or credit  facilities to pay the
amount then due and owing by CirTran to Abacus,  Abacus may  exercise its rights
as a senior secured lender and commence foreclosure or other proceedings against
the assets of  CirTran.  Such  actions by Abacus  could have a material  adverse
effect upon CirTran and its ability to continue in business.

In January 2002, we entered into an agreement  with Abacas under which we issued
an  aggregate  of  19,987,853  shares  of  common  stock  to  four  of  Abacas's
shareholders in exchange for  cancellation  by Abacas of an aggregate  amount of
$1,499,090  in senior debt owed to the  creditors  by  CirTran.  The shares were
issued with an exchange price of $0.075 per share,  for the aggregate  amount of
$1,500,000.

In December 2002, we entered into an agreement with Abacas under which we issued
an  aggregate  of  30,000,000  shares  of  common  stock  to  four  of  Abacas's
shareholders in exchange for  cancellation  by Abacas of an aggregate  amount of
$1,500,000  in senior debt owed to the  creditors  by  CirTran.  The shares were
issued with an exchange  price of $0.05 per share,  for the aggregate  amount of
$1,500,000.

During 2002, we entered into a verbal bridge loan  agreement  with Abacas.  This
agreement allows CirTran to request funds from Abacas to finance the build-up of
inventory  relating to  specific  sales.  The loan bears  interest at 24% and is
payable on demand.  There are no  required  monthly  payments.  During the years
ended  December 31, 2004 and 2003,  we were  advanced  $3,128,281  and $350,000,
respectively, and made cash payments of $3,025,149 and $875,000, respectively.

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<PAGE>

During the year ended  December 31, 2004,  Abacas  completed  negotiations  with
several vendors of CirTran,  whereby Abacas  purchased  various past due amounts
for goods and services provided by vendors, as well as notes payable.  The total
of these  obligations  was  $1,263,713.  We have recorded this  transaction as a
$1,263,713 non-cash increase to the note payable owed to Abacas, pursuant to the
terms of the Abacas agreement.

The total  principal  amount  owed to Abacas  between  the note  payable and the
bridge  loan was  $1,530,587  and  $163,742  as of  December  31, 2004 and 2003,
respectively. The total accrued interest owed to Abacas between the note payable
and the bridge loan was  $430,828 and $230,484 as of December 31, 2004 and 2003,
respectively, and is included in accrued liabilities.

In March  2005,  the  shareholders  of Abacas  agreed to  cancel  $2,050,000  of
principal and accrued interest in return for CirTran issuing  51,250,000  shares
of  our  restricted   common  stock  to  certain   shareholders  of  Abacas.  No
registration rights were granted.

As of the date of this  Report,  no further  loans had been made to CirTran from
Abacas.

As of  December  31,  2001,  Iehab  Hawatmeh  had  loaned  CirTran  a  total  of
$1,390,125. The loans were demand loans, bore interest at 10% per annum and were
unsecured.  Effective  January  14,  2002,  we entered  into four  substantially
identical agreements with existing  shareholders  pursuant to which we issued an
aggregate of 43,321,186  shares of restricted  common stock at a price of $0.075
per share for  $500,000 in cash and the  cancellation  of  $2,749,090  principal
amount of our debt. Two of these agreements were with the Saliba Private Annuity
Trust,  one of our  principal  shareholders,  and a related  entity,  the Saliba
Living Trust.  The Saliba trusts are also principals of Abacas  Ventures,  Inc.,
which entity  purchased  our line of credit in May 2000.  Pursuant to the Saliba
agreements,  the trusts were issued a total of 26,654,520 shares of common stock
in exchange for $500,000  cash and the  cancellation  of  $1,499,090 of debt. We
used the  $500,000  cash from the sale of the shares for working  capital.  As a
result of this  transaction,  the  percentage  of our common  stock owned by the
Saliba  Private  Annuity  Trust  and the  Saliba  Living  Trust  increased  from
approximately  6.73% to  approximately  17.76%.  Mr. Trevor  Saliba,  one of our
directors and officers,  is a passive  beneficiary of the Saliba Private Annuity
Trust.  Pursuant to the other two agreements  made in January 2002, we issued an
aggregate of 16,666,666  shares of restricted  common stock at a price of $0.075
per share in exchange for the cancellation of $1,250,000 of notes payable by two
shareholders,  Mr. Iehab Hawatmeh (our  president,  a director and our principal
shareholder) and Mr. Rajai Hawatmeh. Of these shares,  15,333,333 were issued to
Iehab Hawatmeh in exchange for the cancellation of $1,150,000 in debt.

In February  2000,  prior to its  acquisition  of Vermillion  Ventures,  Inc., a
public company,  Circuit, while still a private entity,  redeemed 680,145 shares
(as  presently  constituted)  of common stock held by Raed  Hawatmeh,  who was a
director of Circuit at that time,  in exchange  for $80,000 of expenses  paid on
behalf of the  director.  No other  stated or unstated  rights,  privileges,  or
agreements  existed in conjunction  with this  redemption.  This transaction was
consistent with other transactions where shares were offered for cash.

In 1999,  Circuit  entered into an  agreement  with Cogent  Capital  Corporation
("Cogent") a financial  consulting  firm,  whereby  Cogent  agreed to assist and
provide  consulting  services to Circuit in connection with a possible merger or
acquisition.  Pursuant  to the  terms  of  this  agreement,  we  issued  800,000
(pre-forward split) restricted shares (12,000,000  post-forward split shares) of
our common stock to Cogent in July 2000 in connection  with our  acquisition  of
the assets and certain  liabilities  of  Circuit.  The  principal  of Cogent was
appointed a director of Circuit after  entering  into the  financial  consulting
agreement  and  resigned as a director  prior to the  acquisition  of Circuit by
Vermillion Ventures, Inc. on July 1, 2000.


                                       52
<PAGE>

Also,  as of December 31, 2004 CirTran  owed I&R  Properties,  LLC, the previous
owner of our principal office and manufacturing facility for unpaid accrued rent
and accrued interest. We settled with owed I&R Properties, LLC., on accrued rent
and interest of $400,000 by issuing  10,000,000  shares of  unregistered  common
stock in March 2005.

Management  believed at the time of each of these  transactions and continues to
believe  that each of these  transactions  were as fair to CirTran as could have
been made with unaffiliated third parties.

No Change in Nominating Procedures

No  changes  have been made to the  procedures  by which  security  holders  may
recommend nominees to the Company's Board of Directors.

On October 22, 2007,  Richard Ferrone  resigned as the Chief Financial  Officer.
Iehab Hawatmeh,  President of the Company,  accepted Mr. Ferrone's  resignation.
The Company has begun its search for a new Chief Financial  Officer.  Until such
time as a new Chief Financial  Officer has been hired,  Mr. Hawatmeh will act in
the dual roles of President and Chief Financial Officer.




















                                       53
<PAGE>

Item 6.      Exhibits

         Exhibits:

         10.01    Amendment   Number  2  to  Amended   and   Restated   Investor
                  Registration Rights Agreement, between CirTran Corporation and
                  Cornell   Capital   Partners,   LP,  dated  January  12,  2007
                  (previously  filed  as an  exhibit  to the  Company's  Current
                  Report on Form 8-K filed with the  Commission  on January  19,
                  2007,  and  incorporated  here in by  reference).  (previously
                  filed as an exhibit to the  Company's  Current  Report on Form
                  10-KSB  filed  with the  Commission  on April  16,  2007,  and
                  incorporated here in by reference).
         10.02    Amendment Number 4 to Investor  Registration Rights Agreement,
                  between CirTran Corporation and Cornell Capital Partners,  LP,
                  dated January 12,  2007(previously  filed as an exhibit to the
                  Company's Current Report on Form 8-K filed with the Commission
                  on January 19, 2007, and  incorporated  here in by reference).
                  (previously  filed  as an  exhibit  to the  Company's  Current
                  Report on Form 10-KSB filed with the  Commission  on April 16,
                  2007, and incorporated here in by reference).
         10.03    Appointment  of Mr.  Fadi  Nora to the Board of  Directors  of
                  CirTran  Corporation.  (previously  filed as an exhibit to the
                  Company's  Current  Report  on  Form  10-KSB  filed  with  the
                  Commission  on April 16,  2007,  and  incorporated  here in by
                  reference).
         10.03    Licensing and Marketing  Agreement with Arrowhead  Industries,
                  Inc. dated February 13, 2007.  (previously filed as an exhibit
                  to the Company's  Current Report on Form 10-KSB filed with the
                  Commission  on April 16,  2007,  and  incorporated  here in by
                  reference).
         10.04    Amendment to Employment  Agreement for Iehab  Hawatmeh,  dated
                  January  1,  2007.  (previously  filed  as an  exhibit  to the
                  Company's  Current  Report  on  Form  10-KSB  filed  with  the
                  Commission  on April 16,  2007,  and  incorporated  here in by
                  reference).
         10.05    Amendment to Employment  Agreement for Shaher Hawatmeh,  dated
                  January  1,  2007.  (previously  filed  as an  exhibit  to the
                  Company's  Current  Report  on  Form  10-KSB  filed  with  the
                  Commission  on April 16,  2007,  and  incorporated  here in by
                  reference).
         10.06    Amendment to  Employment  Agreement for Trevor  Saliba,  dated
                  January  1,  2007.  (previously  filed  as an  exhibit  to the
                  Company's  Current  Report  on  Form  10-KSB  filed  with  the
                  Commission  on April 16,  2007,  and  incorporated  here in by
                  reference).
         10.07    Amendment to Employment  Agreement  for Richard  Ferrone dated
                  February  7,  2007.  (previously  filed as an  exhibit  to the
                  Company's  Current  Report  on  Form  10-KSB  filed  with  the
                  Commission  on April 16,  2007,  and  incorporated  here in by
                  reference).
         10.10    Assignment  and  Exclusive   Services  Agreement  with  Global
                  Marketing  Alliance,  LLC,  dated April 16,  2007  (previously
                  filed as an exhibit to the  Company's'  Current Report on Form
                  8-K  filed  with  the   Commission  on  April  20,  2007,  and
                  incorporated herein by reference).
         10.11    Employment  Agreement for Mr.  Sovatphone  Ouk dated April 16,
                  2007 (previously filed as an exhibit to the Company's' Current
                  Report  on Form 8-K  filed  with the  Commission  on April 20,
                  2007, and incorporated herein by reference).


                                       54
<PAGE>

         10.12    Triple  Net  Lease  between  CirTran  Corporation  and  Don L.
                  Buehner,  dated  as of May 4,  2007  (previously  filed  as an
                  exhibit  to the  Company's'  Current  Report on Form 8-K filed
                  with the Commission on May 10, 2007, and  incorporated  herein
                  by reference).
         10.13    Commercial  Real  Estate  Purchase  Contract  between  Don  L.
                  Buehner and PFE  Properties,  L.L.C.,  dated as of May 4, 2007
                  (previously  filed as an  exhibit  to the  Company's'  Current
                  Report on Form 8-K filed with the  Commission on May 10, 2007,
                  and incorporated herein by reference).
         10.14    Exclusive    Manufacturing,    Marketing,   and   Distribution
                  Agreement,  dated as of May 25, 2007  (previously  filed as an
                  exhibit  to the  Company's'  Current  Report on Form 8-K filed
                  with the  Commission  on June 1, and  incorporated  herein  by
                  reference).
         10.15    Exclusive    Manufacturing,    Marketing,   and   Distribution
                  Agreement,  with Full Moon Enterprises,  Inc. dated as of June
                  8, 2007, pertaining to the Ball Blaster(TM)..
         10.16    Case No.  1:06-10076  GM,  Court  order  from;  United  States
                  Bankruptcy Court, Central District of California, San Fernando
                  Valley Division,  for dismissal of adversary  proceeding under
                  Rule 7041 of the Federal  Rules of  Bankruptcy  Procedure  and
                  Rule 419a)(1) of Federal Rules of Civil Procedure, dated as of
                  July 27,  2007,  pertaining  to the  complaint  of  Breach  of
                  Contract by Advanced Beauty Solutions.
         10.17    Waiver of  registration  filing  requirement  on first Cornell
                  Debenture and warrants.
         10.18    Waiver of  registration  filing  requirement on second Cornell
                  Debenture and warrants.

         31       Certification
         32       Certification  Pursuant  to 18 U.S.C. Section 1350, as Adopted
                  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002












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<PAGE>

                                   SIGNATURES

In accordance  with the Securities  Exchange Act of 1934, the registrant  caused
this  report to be  signed  on its  behalf  by the  undersigned  thereunto  duly
authorized.


                                        CIRTRAN CORPORATION

Date:   November 14, 2007               By: /s/ Iehab J. Hawatmeh
                                        --------------------------------------
                                        Iehab J. Hawatmeh
                                        President, Chief Financial Officer
                                        (Principal Executive Officer,
                                        Principal Financial Officer)
























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