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

                                    FORM 10-Q

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

         For the quarterly period ended June 30, 2009

                                                    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 000-49654

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

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

  4125 South 6000 West, West Valley City, Utah                 84128
  --------------------------------------------               ----------
    (Address of principal executive offices)                 (Zip Code)

                                 (801) 963-5112
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted  electronically  and
posted on its corporate Web site, if any, every  Interactive  Data File required
to be submitted  and posted  pursuant to Rule 405 of  Regulation  S-T during the
preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated filer, a non-accelerated  filer, or a smaller reporting company. See
definitions  of "large  accelerated  filer,"  "accelerated  filer" and  "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

(Check one):
         Large accelerated filer [  ]             Accelerated filer [  ]
         Non-accelerated filer [  ]               Smaller reporting company [X]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

The number of shares of the registrant's  common stock  outstanding at August 7,
2009 was 1,498,972,923 shares.



                                        1
<PAGE>
                               CIRTRAN CORPORATION
                                    FORM 10-Q

                  For the Quarterly Period Ended June 30, 2009

                                      INDEX

                                                                            Page
                                                                           ----

                         PART I - FINANCIAL INFORMATION

Item 1    Financial Statements (unaudited)
             Condensed Consolidated Balance Sheets  ...................      3
             Condensed Consolidated Statements of Operations  .........      4
             Condensed Consolidated Statements of Cash Flows  .........      5
             Notes to Condensed Consolidated Financial Statements  ....      7

Item 2    Management's Discussion and Analysis of Financial
           Condition and Results of Operations  .......................     23

Item 3    Quantitative and Qualitative Disclosures About Market
           Risk  ......................................................     32

Item 4    Controls and Procedures  ....................................     32


                           PART II - OTHER INFORMATION

Item 1    Legal Proceedings  ..........................................     33

Item 2    Unregistered Sales of Equity Securities and Use of
           Proceeds  ..................................................     36

Item 3    Defaults Upon Senior Securities  ............................     36

Item 4    Submission of Matters to a Vote of Security Holders  ........     37

Item 5    Other Information............................................     37

Item 6    Exhibits.....................................................     37

Signatures  ...........................................................     42


                                        2
<PAGE>

                      CIRTRAN CORPORATION AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

                                                     June 30,      December 31,
                                                       2009            2008
--------------------------------------------------------------------------------

ASSETS
Current assets
  Cash and cash equivalents                       $      30,301   $       8,701
  Trade accounts receivable, net of allowance
    for doubtful accounts of $108,162 and
    $108,162, respectively                              822,478         591,441
  Receivable due from related party                   5,905,362       4,718,843
  Inventory, net of reserve of $1,028,958 and
    $1,028,957, respectively                          1,420,595       1,451,275
  Prepaid deposits                                      221,856         164,556
  Other                                                 343,516         305,037
--------------------------------------------------------------------------------
       Total current assets                           8,744,108       7,239,853

Investment in securities, at cost                       752,000         752,000
Investment in related party                             750,000         750,000
Deferred offering costs, net                              3,188          15,662
Long-term receivable                                  1,647,895       1,647,895
Property and equipment, net                             662,730         773,591
Intellectual property, net                            1,648,926       1,871,153
Other assets, net                                        19,025          19,025
--------------------------------------------------------------------------------

       Total assets                               $  14,227,872   $  13,069,179
--------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities
  Checks written in excess of bank balance        $     198,322   $     133,391
  Accounts payable                                    2,447,557       2,215,171
  Short term advances payable                         1,923,918         747,329
  Accrued liabilities                                 3,170,852       2,207,580
  Deferred revenue                                      825,401         587,052
  Derivative liability                                  218,488         705,477
  Convertible debenture                               3,161,355       3,162,650
  Current portion of refundable customer
    deposits                                            927,500               -
  Current maturities of long-term debt                1,305,514       1,494,969
  Note payable to stockholders                          217,239         230,447
--------------------------------------------------------------------------------
       Total current liabilities                     14,396,146      11,484,066
--------------------------------------------------------------------------------

Refundable customer deposits                          1,072,500       1,688,080
Long-term debt, less current maturities                 312,534         269,625
--------------------------------------------------------------------------------

       Total liabilities                             15,781,180      13,441,771

Stockholders' deficit
  CirTran Corporation stockholders' deficit:
  Common stock, par value $0.001; authorized
    1,500,000,000 shares; issued and
    outstanding shares: 1,498,972,923 and
    1,426,262,586, respectively                       1,498,968       1,426,257
  Additional paid-in capital                         29,100,617      28,970,335
  Subscription receivable                               (17,000)        (17,000)
  Accumulated deficit                               (34,709,124)    (33,325,415)
--------------------------------------------------------------------------------
       Total CirTran Corporation
       stockholders' deficit                         (4,126,539)     (2,945,823)
--------------------------------------------------------------------------------
   Noncontrolling interest                            2,573,231       2,573,231
--------------------------------------------------------------------------------
       Total stockholders' deficit                   (1,553,308)       (372,592)
--------------------------------------------------------------------------------

       Total liabilities and stockholders'
       deficit                                    $  14,227,872   $  13,069,179
--------------------------------------------------------------------------------

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

                                        3
<PAGE>
<TABLE>
<CAPTION>
                                       CIRTRAN CORPORATION AND SUBSIDIARIES
                            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

                                                       Three months ended                Six months ended
                                                            June 30,                         June 30,
                                                       2009            2008             2009             2008
                                                  -------------   --------------   --------------   -------------
<S>                                               <C>             <C>              <C>              <C>
Net sales                                         $   3,099,206   $    4,240,121   $    5,021,588   $  7,100,584
Cost of sales                                         2,826,668        3,465,460        4,230,125      5,567,891
Royalties expense                                        82,442          104,640          229,631        110,990
-----------------------------------------------------------------------------------------------------------------

       Gross profit                                     190,096          670,021          561,832      1,421,703

Operating expenses
  Selling, general and administrative expenses        1,032,081        1,660,077        2,182,063      3,116,883
  Non-cash compensation expense                             996              996            1,992         92,343
-----------------------------------------------------------------------------------------------------------------
       Total operating expenses                       1,033,077        1,661,073        2,184,055      3,209,226
-----------------------------------------------------------------------------------------------------------------

       Loss from operations                            (842,981)        (991,052)      (1,622,223)    (1,787,523)
-----------------------------------------------------------------------------------------------------------------

Other income (expense)
  Interest expense                                     (241,242)        (565,369)        (567,808)    (1,044,001)
  Interest income                                       118,325           57,784          242,915         62,306
  Gain on sale/leaseback                                 20,268           20,268           40,536         41,043
  Gain on settlement of lititgation                     117,714                -          117,714        300,000
  Gain on derivative valuation                        1,693,764          822,975          405,157      1,705,162
-----------------------------------------------------------------------------------------------------------------
       Total other income (expense), net              1,708,829          335,658          238,514      1,064,510
-----------------------------------------------------------------------------------------------------------------

       Net income (loss)                          $     865,848   $     (655,394)  $   (1,383,709)  $   (723,013)
-----------------------------------------------------------------------------------------------------------------

Basic and diluted loss per common share           $           -   $            -   $            -   $           -
-----------------------------------------------------------------------------------------------------------------
Basic and diluted weighted-average
  common shares outstanding                       1,497,884,126    1,164,019,688    1,482,049,557   1,138,104,520
-----------------------------------------------------------------------------------------------------------------

         The  accompanying  notes  are  an  integral  part  of  these  condensed
consolidated financial statements.
</TABLE>

                                                        4
<PAGE>
                      CIRTRAN CORPORATION AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the Six Months Ended June 30,                      2009            2008
--------------------------------------------------------------------------------

Cash flows from operating activities
  Net loss                                        $  (1,383,709)  $    (723,013)
  Adjustments to reconcile net loss to net
   cash used in operating activities:
     Depreciation and amortization                      333,089         322,217
     Accretion expense                                  280,170         662,668
     Provision for doubtful accounts                          -          22,379
     Provision for obsolete inventory                         -           9,135
     Gain on sale - leaseback                            40,536         (41,043)
     Non-cash compensation expense                        1,992          92,343
     Loan costs and interest withheld from
       loan proceeds                                     12,474          48,445
     Options issued to attorneys for services             1,546         147,028
     Change in valuation of derivative                 (405,157)     (1,705,162)
     Borrowing fee                                      103,418               -
     Changes in assets and liabilities:
       Trade accounts receivable                       (244,904)     (2,792,242)
       Related party receivable                      (2,186,519)              -
       Inventories                                       30,680        (378,353)
       Prepaid expenses and other current assets        (81,913)        (83,727)
       Accounts payable                                 232,386       1,017,602
       Accrued liabilities                              922,736         360,570
       Deferred revenue                                 238,349         331,187
       Customer deposits                                311,920               -
--------------------------------------------------------------------------------


Net cash used in operating activities                (1,792,906)     (2,709,966)
--------------------------------------------------------------------------------

Cash flows from investing activities
Intangibles purchased with cash                               -         (54,946)
Purchase of property and equipment                            -          (9,333)
--------------------------------------------------------------------------------

Net cash used in investing activities                         -         (64,279)
--------------------------------------------------------------------------------

Cash flows from financing activities
Proceeds from notes payable to related party              4,611       1,100,000
Payments on notes payable to related party              (13,208)        (57,997)
Proceeds from stock issued in private placement               -         441,000
Principal payments on long-term debt                          -         (75,000)
Checks written in excess of long-term debt               64,931               -
Proceeds from short-term advances                     1,884,272       2,060,117
Payments on short-term advances                        (126,100)       (750,724)
--------------------------------------------------------------------------------

Net cash provided by financing activities             1,814,506       2,717,396
--------------------------------------------------------------------------------

Net increase (decrease) in cash and cash
equivalents                                              21,600         (56,849)

Cash and cash equivalents at beginning of perod           8,701          82,761
--------------------------------------------------------------------------------

Cash and cash equivalents at end of period        $      30,301   $      25,912
--------------------------------------------------------------------------------

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

                                        5
<PAGE>

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



For the Six Months Ended June 30,                      2009            2008
--------------------------------------------------------------------------------

Supplemental disclosure of cash flow information:
Cash paid during the period for interest          $           -   $      83,878

Noncash investing and financing activities:
Stock issued in payment of notes payable and
  accrued interest                                $     117,622   $     350,000
Warrants issued with derivative liability
  features                                                    -         700,000
Exchange AfterBev membership interest for
  distribution payable                                        -         863,973
Related party liability settled through
  reduction of related party receivable               1,000,000               -
Debt settled through issuance of short term
  advances                                              315,000               -



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




                                        6
<PAGE>
                      CIRTRAN CORPORATION AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation - CirTran Corporation and its subsidiaries  (collectively,
the "Company" or "CirTran") 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 can exert
significant influence using the cost method.

Condensed   Financial   Statements  -  The  accompanying   unaudited   condensed
consolidated  financial  statements include the accounts of CirTran  Corporation
and  its  subsidiaries.   These  financial  statements  have  been  prepared  in
accordance  with Article 10 of Regulation S-X  promulgated by the Securities and
Exchange  Commission ("SEC" or "Commission").  Certain  information and footnote
disclosures  normally  included in financial  statements  prepared in accordance
with accounting  principles  generally  accepted in the United States of America
have been  condensed or omitted  pursuant to such rules and  regulations.  These
statements  should be read in conjunction  with the Company's  annual  financial
statements  included in the  Company's  Annual  Report on Form 10-K for the year
ended December 31, 2008. 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 six months ended June 30,
2009, are not necessarily indicative of the results that may be expected for the
twelve months ending December 31, 2009.

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 Corp.,  CirTran
Media Corp., CirTran Online Corp., and CirTran Beverage Corp.

The  consolidated  financial  statements  also  include  the  accounts  of After
Beverage Group LLC, a majority-owned  subsidiary.  At June 30, 2009, the Company
had a four percent share of AfterBev's  profits and losses,  but maintained a 52
percent voting control interest. AfterBev has a 51 percent share of the eventual
cash distributions of Play Beverages, LLC ("PlayBev"), and the president and one
of the  directors of the Company own  membership  interests in PlayBev  totaling
28.35  percent.  As of September  30,  2008,  the members of PlayBev had amended
PlayBev's  operating  agreement to require a 95 percent membership vote on major
managerial and  organizational  decisions.  None of the other members of PlayBev
are affiliated with the Company.  Accordingly,  while the Company  president and
one of its directors own  membership  interests and currently hold the executive
management  positions  in PlayBev,  the Company or its  affiliates  nevertheless
cannot exercise unilateral control over significant  decisions,  and the Company
has accounted for its investment in PlayBev under the cost method of accounting.

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.  At each
balance sheet date, the Company evaluates 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
June 30, 2009, the Company did 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 five to seven years. Amortization expense was $111,113
and $105,540  for the three  months ended June 30, 2009 and 2008,  respectively,
and was  $222,227  and $211,297 for the six months ended June 30, 2009 and 2008,
respectively.

Financial  Instruments  with Derivative  Features - The Company does not hold or
issue  derivative  instruments for trading  purposes.  However,  the Company has
financial  instruments  that are  considered  derivatives,  or contain  embedded
features  subject to  derivative  accounting.  Embedded  derivatives  are valued
separate from the host  instrument and are recognized as derivative  liabilities
in the Company's  balance sheet. The Company measures these instruments at their
estimated fair value,  and recognizes  changes in their  estimated fair value in
results of operations during the period of change. The Company has estimated the
fair value of these embedded derivatives using the Black-Scholes model. The fair
value of the derivative instruments are remeasured each quarter.


                                        7
<PAGE>

Income / Loss Per Share - Basic loss per share is  calculated  by  dividing  net
income / 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  1,028,495,468
and 935,587,200 in potentially issuable common shares at June 30, 2009 and 2008,
respectively.  These  potentially  issuable common shares were excluded from the
calculation of diluted loss per share because the effects were anti-dilutive.

Use of Estimates - In preparing the Company's financial statements in accordance
with accounting  principles  generally accepted in the United States of America,
management  is  required  to make  estimates  and  assumptions  that  affect the
reported amounts of assets and liabilities,  the disclosure of contingent assets
and  liabilities  at the  date of the  financial  statements,  and the  reported
amounts of revenues and expenses  during the reported  periods.  Actual  results
could differ from those estimates.

Reclassifications  - Certain  reclassifications  have been made to the financial
statements to conform to the current year presentation.

Recent  Accounting  Pronouncements  -In February 2008, the Financial  Accounting
Standards Board ("FASB")  issued FASB Staff Position (FSP FIN) No. 157-2,  which
extended the effective  date for certain  nonfinancial  assets and  nonfinancial
liabilities  to fiscal years  beginning  after  November  15, 2008,  and interim
periods within those fiscal years.  The Company  adopted SFAS No. 157 on January
1, 2009. It did not have a material effect on the financial statements.

In December 2007, the FASB issued  Statement of Financial  Accounting  Standards
("SFAS") No. 141(R),  Business  Combinations,  and SFAS No. 160,  Noncontrolling
Interests in  Consolidated  Financial  Statements.  SFAS No. 141(R)  requires an
acquirer to measure the identifiable assets acquired,  the liabilities  assumed,
and any  non-controlling  interest  in the  acquiree at their fair values on the
acquisition date, with goodwill being the excess value over the net identifiable
assets  acquired.  SFAS No. 160 clarifies that a  non-controlling  interest in a
subsidiary   should  be  reported  as  equity  in  the  consolidated   financial
statements,  consolidated net income shall be adjusted to include the net income
attributed  to the  non-controlling  interest,  and  consolidated  comprehensive
income shall be adjusted to include the  comprehensive  income attributed to the
non-controlling interest. The calculation of earnings per share will continue to
be based on income amounts  attributable to the parent. SFAS No. 141(R) and SFAS
No. 160 are effective for financial statements issued for fiscal years beginning
after December 15, 2008. On January 1, 2009 the Company adopted SFAS No. 141 and
160. As a result, the non-controlling  interest in AfterBev has been included as
equity in the consolidated financial statements.

In December  2007, the FASB ratified  Emerging  Issues Task Force ("EITF") Issue
No. 07-1,  Accounting for Collaborative  Arrangements  ("EITF 07-1").  EITF 07-1
defines collaborative  arrangements and establishes  reporting  requirements for
transactions  between  participants in a  collaborative  arrangement and between
participants in the arrangement  and third parties.  EITF 07-1 also  establishes
the appropriate  income  statement  presentation  and  classification  for joint
operating  activities  and  payments  between  participants,   as  well  as  the
sufficiency  of the  disclosures  related  to these  arrangements.  EITF 07-1 is
effective  for fiscal years  beginning  after  December  15,  2008.  The Company
adopted EITF 07-1 on January 1, 2009.  It did not have a material  effect on the
financial statements.

In March  2008,  the FASB  issued SFAS No.  161,  Disclosures  about  Derivative
Instruments  and  Hedging  Activities.  SFAS  No.  161 is  intended  to  improve
financial  reporting  about  derivative  instruments  and hedging  activities by
requiring  enhanced  disclosures to enable investors to better  understand their
effects on an  entity's  financial  position,  financial  performance,  and cash
flows.  The Company  adopted SFAS No. 161 on January 1, 2009.  It did not have a
material effect on the financial statements.

In April 2008, the FASB issued FSP FAS 142-3,  Determination  of the Useful Life
of  Intangible  Assets ("FSB FAS 142-3").  FSP FAS 142-3 amends the factors that
should be  considered  in developing  renewal or extension  assumptions  used to
determine the useful life of a recognized  intangible  asset under SFAS No. 142,
Goodwill and Other Intangible  Assets.  The intent of this FSP is to improve the
consistency  between the useful life of a recognized  intangible asset under FAS
142 and the period of expected  cash flows used to measure the fair value of the
asset under SFAS No. 141(R) and other generally accepted accounting  principles.
The  Company  adopted  FAS 142-3 on January 1, 2009.  It did not have a material
effect on the financial statements.


                                        8
<PAGE>

In May 2008,  the FASB  issued FSP APB 14-1,  Accounting  for  Convertible  Debt
Instruments That May Be Settled in Cash upon Conversion  (Including Partial Cash
Settlement).  FSB APB 14-1 clarifies that  convertible debt instruments that may
be settled in cash upon conversion  (including  partial cash settlement) are not
addressed by paragraph 12 of APB Opinion No. 14, Accounting for Convertible Debt
and Debt Issued with Stock Purchase Warrants, and specifies that issuers of such
instruments should separately account for the liability and equity components in
a manner that will reflect the entity's  nonconvertible debt borrowing rate when
interest cost is recognized in subsequent periods.  The Company adopted APB 14-1
on  January  1,  2009.  It did  not  have a  material  effect  on the  financial
statements.

In June 2008,  the FASB  ratified  EITF Issue No. 07-5,  Determining  Whether an
Instrument  (or an Embedded  Feature) Is Indexed to an Entity's Own Stock ("EITF
07-5").  EITF 07-5  provides  that an entity  should use a two step  approach to
evaluate whether an equity-linked  financial instrument (or embedded feature) is
indexed to its own  stock,  including  evaluating  the  instrument's  contingent
exercise and settlement  provisions.  It also clarifies on the impact of foreign
currency  denominated  strike  prices and  market-based  employee  stock  option
valuation instruments on the evaluation. EITF 07-5 is effective for fiscal years
beginning  after December 15, 2008. The Company  adopted EITF 07-5 on January 1,
2009. It did not have a material effect on the financial statements.

In May 2009, the Financial  Accounting  Standards Board ("FASB") issued SFAS No.
165,  "Subsequent  Events"  ("SFAS  165").  This  standard  establishes  general
standards  for  accounting  for and  disclosure  of events  that occur after the
balance sheet date but before  financial  statements are issued or are available
to be issued and shall be applied to  subsequent  events not  addressed in other
applicable  accounting  principles  generally  accepted in the United  States of
America.  SFAS 165, among other things,  sets forth the period after the balance
sheet date during which management  should evaluate events or transactions  that
may occur for potential  recognition or disclosure in the financial  statements,
the circumstances  under which an entity should recognize events or transactions
occurring  after the  balance  sheet date in its  financial  statements  and the
disclosures  an entity  should make about events or  transactions  that occurred
after the balance  sheet date.  SFAS 165 is  effective  for this fiscal  quarter
ending June 30, 2009. The Company's adoption of SFAS 165 did not have a material
impact  on the  interim  or  annual  consolidated  financial  statements  or the
disclosures in those financial statements.

In June 2009,  the FASB  issued  SFAS No. 168,  "The FASB  Accounting  Standards
Codification  and the Hierarchy of Generally  Accepted  Accounting  Principles,"
(SFAS 168). SFAS 168 establishes the FASB Accounting Standards Codification (the
Codification) as the single source of authoritative,  nongovernmental U.S. GAAP.
The  Codification  does not change U.S. GAAP. All existing  accounting  standard
documents will be superseded and all other accounting literature not included in
the Codification will be considered nonauthoritative.  SFAS 168 is effective for
interim and annual periods  ending after  September 15, 2009.  Accordingly,  the
Company will adopt the  provision  of SFAS 168 in the third  quarter  2009.  The
Company does not expect the adoption of the  provisions  of SFAS 168 to have any
effect on the Company's financial condition and results of operations.

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,  which  contemplate  continuation of the Company as a going concern.
However,  the Company  sustained  losses of $1,383,709  and $723,013 for the six
months  ended June 30, 2009 and 2008,  respectively.  As of June 30,  2009,  the
Company had an accumulated deficit of $34,709,124. In addition, the Company used
cash in its operations in the amount of $1,792,906 and $2,709,966 during the six
months  ended  June 30,  2009 and 2008,  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.  The Company has several new programs in development.  These
programs  represent a new direction for the Company into the beverage  industry,
and support ongoing efforts in the consumer products contract  manufacturing and
media  marketing  industries.  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.


                                        9
<PAGE>

NOTE 3 - INVENTORY

Inventory consisted of the following:

                                                    June 30,       December 31,
                                                      2009            2008
         -----------------------------------------------------------------------
         Raw materials                            $   1,546,736   $   1,625,322
         Work in process                                191,999         221,079
         Finished goods                                 710,818         633,831
         Allowance / reserve                         (1,028,958)     (1,028,957)
                                                  ------------------------------
             Totals                               $   1,420,595   $   1,451,275
                                                  ==============================

NOTE 4 - INTELLECTUAL PROPERTY

Intellectual property and estimated service lives consisted of the following:

                                                                       Estimated
                                     June 30,      December 31,   Service Lives
                                       2009            2008         in Years
--------------------------------------------------------------------------------
Infomercial development costs     $     217,786   $     217,786         7
Patents                                  38,056          38,056         7
ABS Infomerical                       1,186,382       1,186,382         5
Trademark                             1,227,673       1,227,673         7
Copyright                               115,193         115,193         7
Website Development Costs               150,000         150,000         5
---------------------------------------------------------------
Total intellectual property       $   2,935,090   $   2,935,090

Less accumulated amortization        (1,286,164)     (1,063,937)
---------------------------------------------------------------

Intellectual property, net        $   1,648,926   $   1,871,153
---------------------------------------------------------------

The estimated amortization expenses for the next five years are as follows:

        Year Ending December 31,
        ---------------------------------------
        2009                      $     229,832
        2010                            465,583
        2011                            388,052
        2012                            285,884
        2013                            173,332
        Thereafter                      106,243
        ---------------------------------------
        Total                     $   1,648,926
        ---------------------------------------

NOTE 5 - RELATED PARTY TRANSACTIONS

Play Beverages, LLC

During 2006, Playboy Enterprises International, Inc. ("Playboy"), entered into a
licensing  agreement with Play  Beverages,  LLC  ("PlayBev"),  then an unrelated
Delaware limited liability  company,  whereby PlayBev agreed to  internationally
market and  distribute a new energy drink  carrying the Playboy name and "Rabbit
Head" logo symbol. In May 2007, PlayBev entered into an exclusive agreement with
the Company to arrange for the  manufacture,  marketing and  distribution of the
energy drinks, other Playboy-licensed beverages, and related merchandise through
various distribution channels throughout the world.


                                       10
<PAGE>

In an effort to finance the initial  development and marketing of the new drink,
the Company  with other  investors  formed After Bev Group LLC  ("AfterBev"),  a
California   limited  liability   company  and  partially  owned,   consolidated
subsidiary of the Company. The Company contributed its expertise in exchange for
an  initial  84 percent  membership  interest  in  AfterBev.  The other  initial
AfterBev members contributed  $500,000 in exchange for the remaining 16 percent.
The Company borrowed an additional $250,000 from an individual,  and contributed
the total $750,000 to PlayBev in exchange for a 51 percent interest in PlayBev's
cash  distributions.  The Company recorded this $750,000 amount as an investment
in PlayBev,  accounted for under the cost method.  PlayBev then  remitted  these
funds to  Playboy as part of a  guaranteed  royalty  prepayment.  Along with the
membership interest granted the Company, PlayBev agreed to appoint the Company's
president and one of the Company's directors to two of PlayBev's three executive
management  positions.  Additionally,  an unrelated executive manager of PlayBev
resigned,  leaving the remaining two executive  management positions occupied by
the Company  president and one of the Company's  directors.  On August 23, 2008,
PlayBev's members agreed to amend its operating agreement to change the required
membership vote on major managerial and organizational decisions from 75 percent
to 95 percent.  Since 2007 the two affiliates  personally  purchased  membership
interests from PlayBev  directly and from other Playbev members  constituting an
additional 23.1 percent,  which aggregated  34.35 percent.  Despite the combined
90.5 percent  interest owned by these  affiliates  and the Company,  the Company
cannot unilaterally  control significant  operating decisions of PlayBev, as the
amended   operating   agreement   requires  that  various  major  operating  and
organizational decisions be agreed to by at least 95 percent of all members. The
other members of PlayBev are not affiliated with the Company. Accordingly, while
PlayBev  is  now a  related  party,  the  Company  cannot  unilaterally  control
significant  operating decisions of PlayBev, and therefore has not accounted for
PlayBev's operations as if it was a consolidated subsidiary.

PlayBev has no operations, so under the terms of the exclusive manufacturing and
distribution  agreement,  the Company was appointed the master  manufacturer and
distributor  of the  beverages  and other  products  that PlayBev  licensed from
Playboy.  In so doing,  the Company  assumed all the risk of collecting  amounts
owed  from  customers,  and  contracting  with  vendors  for  manufacturing  and
marketing  activities.  In addition,  PlayBev is owed a royalty from the Company
equal to the Company's  gross profits from  collected  beverage  sales,  less 20
percent  of the  Company's  related  cost of goods  sold,  and 6 percent  of the
Company's  collected gross sales.  The Company  incurred $82,442 and $104,640 in
royalty  expenses due to PlayBev during the three months ended June 30, 2009 and
2008,  respectively,  and $229,631 and $110,990 during the six months ended June
30, 2009 and 2008, respectively.

The Company also agreed to provide services to PlayBev for initial  development,
marketing, and promotion of the new beverage. These services are to be billed to
PlayBev  and  recorded  as an  account  receivable  from  PlayBev.  The  Company
initially agreed to carry up to a maximum of $1,000,000 as a receivable due from
PlayBev in connection with these billed services.  On March 19, 2008 the Company
agreed to increase the maximum  amount it would carry as a  receivable  due from
PlayBev,   in  connection  with  these  billed  services,   from  $1,000,000  to
$3,000,000. As of March 19, 2008 the Company also began charging interest on the
outstanding  amounts owing at a rate of 7 percent per annum.  PlayBev has agreed
to repay the receivable  and accrued  interest out of the royalties due PlayBev.
The Company has billed PlayBev for marketing and development  services  totaling
$1,801,813  and  $1,826,651  for the three months ending June 30, 2009 and 2008,
respectively,  and  $2,172,946  and $2,529,545 for the six months ended June 30,
2009 and 2008,  respectively,  which  have been  included  in  revenues  for the
Company's marketing and media segment. As of June 30, 2009, the interest accrued
on the  balance  owing from  PlayBev  totaled  $460,346.  The net amount due the
Company from PlayBev for marketing and development  services,  after netting the
royalty owed to PlayBev, totaled $5,905,362 at June 30, 2009.

After Bev Group, LLC

Following  AfterBev's  organization  in  May  2007,  the  Company  entered  into
consulting  agreements with two individuals,  one of whom had loaned the Company
$250,000  when the  Company  invested  in  PlayBev,  and the other one who was a
Company  director.  The  agreements  provided  that the  Company  assign to each
individual  approximately  one-third of the Company's  share in future  AfterBev
cash  distributions,  in exchange for their  assistance in the initial  AfterBev
organization and planning,  along with their continued  assistance in subsequent
beverage development and distribution  activities.  The agreements also provided
that as the Company sold a portion of its membership  interest in AfterBev,  the
individuals would each be owed their proportional  assigned share  distributions
in the proceeds of such a sale. The actual payment of the distributions depended
on how the Company used the sale  proceeds.  If the Company used the proceeds to
help finance  beverage  development  and  marketing  activities,  the payment of
distributions  would  be  deferred,  pending  collections  from  customers  once
beverage  product  sales  eventually  commenced.   Otherwise,  the  proportional
assigned share distributions would be due to the two individuals.


                                       11
<PAGE>

Throughout  the  balance of 2007,  as energy  drink  development  and  marketing
activities  progressed,  the Company raised additional funds by selling portions
of its  membership  interest in AfterBev to other  investors,  some of whom were
Company  stockholders.  In  some  cases,  the  Company  sold  a  portion  of its
membership  interest,  including voting rights. In other cases, the Company sold
merely a portion of its share of future AfterBev profits and losses.  By the end
of 2007,  after  taking into  account the two  interests  it had  assigned,  the
Company had retained a net 14 percent interest in AfterBev's profits and losses,
but had  retained  52 percent  of all voting  rights in  AfterBev.  The  Company
recorded the receipt of these net funds as  increases  to its existing  minority
interest  in  AfterBev,  and the  remainder  as amounts  owing as  distributable
proceeds payable to the two individuals with assigned interests of the Company's
original share of AfterBev.

At the end of 2007, the Company agreed to convert the amount owing to one of the
individuals  into a promissory  note.  In  exchange,  the  individual  agreed to
relinquish his approximately  one-third portion of the Company's remaining share
of AfterBev's profits and losses.  Instead, the individual received a membership
interest in AfterBev.  In January 2008,  the other  assignee,  who is one of the
Company's directors,  similarly agreed to relinquish the distributable  proceeds
owed to him, in  exchange  for an  interest  in  AfterBev's  profits and losses.
Accordingly, he purchased a 24 percent interest in AfterBev's profits and losses
in exchange  for  foregoing  $863,973 in amounts due to him. Of this 24 percent,
through the end of December 31, 2008,  the director had sold or  transferred  23
percent to unrelated  investors and retained the remaining 1 percent interest in
AfterBev's  profits and losses.  In turn,  the director  loaned  $834,393 to the
Company in the form of unsecured advances.  Of the amounts loaned,  $600,000 was
used to purchase  interest in PlayBev  directly which resulted in a reduction of
$600,000  of amounts  owed by PlayBev to the  Company.  During the three  months
ended June 30, 2009, the director advanced an additional $500,000 to the Company
for his purchase of an additional 3 percent  interest in PlayBev which  resulted
in a reduction of $500,000 of amounts owed by PlayBev to the Company. As of June
30, 2009, the Company still owed the director  $534,619 in the form of unsecured
advances.

Global Marketing Alliance

The Company entered into an agreement with Global  Marketing  Alliance  ("GMA"),
and hired GMA's owner as the Vice President of CirTran Online Corp. ("CTO"), one
of the Company's  subsidiaries.  Under the terms of the  agreement,  the Company
outsources to GMA the online marketing and sales activities  associated with the
Company's  CTO  products.  In  return,  the  Company  provides  bookkeeping  and
management  consulting services to GMA, and pays GMA a fee equal to five percent
of CTO's online net sales.  In addition,  GMA assigned to the Company all of its
web-hosting and training  contracts  effective as of January 1, 2007, along with
the revenue earned thereon, and the Company also assumed the related contractual
performance obligations.  The Company recognizes the revenue collected under the
GMA  contracts,  and remits back to GMA a  management  fee  approximating  their
actual costs.

Transactions involving Officers, Directors, and Stockholders

Don L. Buehner was  appointed to the Company's  Board of Directors  during 2007.
Prior to his  appointment  as a  director,  Mr.  Buehner  bought  the  Company's
building in a sale/leaseback transaction. 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  Company  pays Mr.  Buehner a monthly  lease  payment of  $17,083,  which is
subject to annual  adjustments  in relation to the  Consumer  Price  Index.  Mr.
Buehner  retired from the Company's  Board of Directors  following the Company's
Annual Meeting of Shareholders on June 18, 2008.

In 2007, the Company appointed Fadi Nora to its Board of Directors.  In addition
to compensation the Company normally pays to non-employee  members of the Board,
Mr.  Nora is  entitled  to a  quarterly  bonus equal to 0.5 percent of any gross
sales earned by the Company directly through Mr. Nora's efforts.  As of June 30,
2009, the Company owed $8,503 under this arrangement.  Mr. Nora also is entitled
to a bonus  equal to five  percent  of the  amount  of any  investment  proceeds
received by 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  proceeds is the  introduction  of the Company to the
potential  investor,  but that he does not  participate  in the  recommendation,
structuring,  negotiation,  documentation,  or selling of the  investment,  (ii)
neither  the  Company  nor  the  investor  are  otherwise  obligated  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. During 2008, Mr. Nora
has received no compensation  under this arrangement,  and at December 31, 2008,
the Company owed him $49,850  stemming from investment  proceeds  received under
various financing arrangements during 2008.


                                       12
<PAGE>

In 2007,  the Company also entered  into a consulting  agreement  with Mr. Nora,
whereby the Company  assigned to him  approximately  one-third of the  Company's
share in future AfterBev cash distributions. In return, Mr. Nora assisted in the
initial  AfterBev  organization  and  planning,   and  continued  to  assist  in
subsequent beverage development and distribution activities.  The agreement also
provided  that as the  Company  sold a portion  of its  membership  interest  in
AfterBev, Mr. Nora would be owed his proportional assigned share distribution in
the proceeds of such a sale.  Distributable  proceeds due to Mr. Nora at the end
of 2007 were  $747,290.  In January 2008,  he agreed to relinquish  this amount,
plus an additional $116,683, in exchange for a 24 percent interest in AfterBev's
profits and losses. Including the $1,675,000 obtained from his sales of AfterBev
membership  interests,  and after offsetting advance amounts subsequently repaid
to him by the Company,  Mr. Nora had loaned the Company a net  $1,136,404 in the
form of unsecured  advances  during the year ended December 31, 2008. As of June
30, 2009, the Company owed Mr. Nora $534,619.

Prior to his  appointment  with the Company,  Mr. Nora was also  involved in the
ANAHOP private  placement of the Company's  common stock. On April 11, 2008, Mr.
Nora  disassociated  himself from the other principals of ANAHOP, and as part of
the  asset  settlement   relinquished  ownership  to  the  other  principals  of
12,857,144  shares of CirTran  Corporation  common stock,  along with all of the
warrants previously assigned to him.

In 2007, the Company issued a 10 percent  promissory  note to a family member of
the  Company's  president in exchange for  $300,000.  The note was due on demand
after May 2008. The Company repaid  principal and interest  totaling  $8,444 and
$61,109  during the years ended  December 31, 2008 and 2007,  respectively.  The
principal  amount owing on the notes was $230,447 at December 31, 2008. On March
31, 2008, the Company  issued to this same family member,  along with four other
Company  shareholders,  promissory notes totaling $315,000.  The family member's
note was for $105,000.  Under the terms of all the notes,  the Company  received
total proceeds of $300,000,  and agreed to repay the amount received plus a five
percent  borrowing fee. The notes were due April 30, 2008, after which they were
due on demand,  with interest accruing at 12 percent per annum.  During the year
ended December 31, 2008 the Company paid two of the notes in full for a total of
$105,000.  In addition,  the Company  repaid  $58,196 in principal to the family
member during the year ended December 31, 2008.  The principal  balance owing on
the promissory notes as of June 30, 2009, totaled $156,415.

During the year ended  December 31,  2008,  the Company  president  advanced the
Company  $778,600.  Of the  amounts  advanced,  $600,000  was  used to  purchase
interest  in PlayBev  directly  which  resulted  in a  reduction  of $600,000 of
amounts owed by PlayBev to the  Company.  During the three months ended June 30,
2009 the Company  president  advanced an additional  $500,000 to the company for
his purchase of an additional 3 percent  interest in PlayBev which resulted in a
reduction of $500,000 of amounts owed by PlayBev to the Company.  As of June 30,
2009,  the Company  still owed the Company's  president  $128,600 in the form of
unsecured advances.

NOTE 6 - COMMITMENTS AND CONTINGENCIES

Registration  rights  agreements  - In December  2005,  in  connection  with the
Company's issuance of a convertible  debenture to YA Global  Investments,  L.P.,
formerly known as Cornell Capital Partners, L.P. ("YA Global") (see Note 8), the
Company granted to YA Global 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.  The Company agreed to
register the resale of up to 32,608,696 shares and 10,000,000  warrants,  and to
keep the 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  a  second
convertible  debenture to YA Global (see Note 8), the Company  granted YA Global
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.  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 10,000,000 warrants expired on December 31, 2005.



                                       13
<PAGE>

Previously,  YA Global has agreed to extensions of the filing deadlines inherent
in the terms of the two convertible  debentures mentioned above, and in February
2008 agreed to extend the filing  deadlines  to December  31,  2008.  No further
extension has been granted.

The Company currently has issued and outstanding options, warrants,  convertible
notes and other instruments for the acquisition of the Company's common stock in
excess of the available  authorized but unissued shares of common stock provided
for under the Company's Articles of Incorporation, as amended. As a consequence,
in the event that the holders of such instruments requiring the issuance, in the
aggregate,  of a number of shares of common stock that would, when combined with
the  previously  issued and  outstanding  common stock of the Company exceed the
authorized  capital of the  Company,  seek to exercise  their  rights to acquire
shares  under those  instruments,  the Company  will be required to increase the
number of authorized shares or effect a reverse split of the outstanding  shares
in order to provide sufficient shares for issuance under those instruments.

NOTE 7 - NOTES PAYABLE

On June 6, 2006,  the Company and ABS signed an agreement  (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 (see Legal  Proceedings).  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 two-year anniversary of the closing of the purchase,  then,
within 30 days of such anniversary,  the Company has agreed to pay ABS an amount
equal to $435,000  less the royalty  payments  made to date. As of June 30, 2009
the balance on the note is $119,904.

Throughout   2007,  as  energy  drink   development  and  marketing   activities
progressed, After Bev Group, LLC, raised additional funds by selling portions of
the membership in AfterBev to other investors.  By December 31, 2007, a total of
$3,663,000  was  raised,  of which  $2,572,290  was  recorded  as  distributable
proceeds to two individuals  with original  interests in AfterBev.  During 2007,
distributable  proceeds owed to one of these individuals was a net $950,000. The
same  individual was also owed $50,000 of the $250,000 that had been advanced as
part of the membership interest in PlayBev. In December 2007, the Company agreed
to convert the $50,000 still owing,  plus the remaining  distributable  proceeds
payable,  into  a  two-year,  $1,000,000,  unsecured,   non-interesting  bearing
promissory note. The Company  recorded the note in its financial  statements net
of $193,548 in imputed interest at the Company's  incremental  borrowing rate of
12 percent,  calculated  over the life of the note. As of June 30, 2009, a total
of $147,743 had been accreted against the loan.  Interest expense of $24,094 and
$47,923  was  accreted  during  the three and six months  ended  June 30,  2009,
respectively,  as compared to  accretion  expense of $24,094 and $48,118 for the
three and six months ended June 30, 2008,  respectively.  The carrying  value of
the note  will  continue  to be  accreted  over the life of the note  until  the
carrying  value equals the face value of  $1,000,000.  As of June 30, 2009,  the
balance on the note was $954,194.

In  February  2008,  the  Company  issued  a 10  percent,  three-year,  $700,000
promissory note to an investor. No interim principal payments are required,  but
accrued interest is due quarterly. The investor also received five-year warrants
to purchase up to 75,000,000  shares of common stock at exercise  prices ranging
from $0.02 to $0.50 per share.  The Company  determined  that the warrants  fell
under derivative accounting  treatment,  and recorded the initial carrying value
of a derivative liability equal to the fair value of the warrants at the time of
issuance.  At the same time, a discount equal to the face amount of the note was
recorded,  to be recognized  ratably to interest  expense.  Interest  expense of
$58,280 and $115,920 was accreted during the three and six months ended June 30,
2009, respectively,  as compared to accretion expense of $58,280 and $78,774 for
the three and six  months  ended June 30,  2008.  A total of  $312,534  has been
accreted  against the note as of June 30, 2009.  The carrying  value of the note
will continue to be accreted over the life of the note until the carrying  value
equals the face value of $700,000.  As of June 30, 2009, the balance of the note
was  $312,534.  The fair value of the  derivative  liability  stemming  from the
associated warrants as of June 30, 2009, was $158,207.

In March 2008,  the Company  converted  $75,000 owed to an  unrelated  member of
AfterBev into a one-year,  10 percent  promissory  note,  with interest  payable
quarterly. The balance as of June 30, 2009 was $75,000. The note renews monthly.

In April 2008, the Company issued a 12 percent  promissory note to an individual
for $315,000. The Company received proceeds of $300,000, and agreed to repay the
amount  received  plus a five percent  borrowing  fee.  This note was due in May
2008, after which it became due on demand,  with interest accruing at 12 percent
per annum. The Company president also agreed to personally guarantee the payment
of this note. On April 2, 2009 payment was made in full.


                                       14
<PAGE>

On April 2, 2009 the Company  President and a Director of the Company borrowed a
total of $890,000 in the form of four short term promissory  notes.  The Company
President and a Director of the Company signed  personally for the notes.  Since
the loans were used to pay  obligations of the Company,  the Company has assumed
full  responsibility for the notes. Two of the notes were for a term of 60 days,
with a 60 day grace period, a third note was for a term of 90 days, and a fourth
note was for 24  days.  Loan  fees  totaling  $103,418  were  incurred  with the
issuance of the notes and are payable upon maturity of the notes. The promissory
notes  and loan fees have not been  paid.  As of June 30,  2009 two of the notes
were in the 60 day grace  period and one was in default.  Play  Beverages,  LLC.
guaranteed the original notes.

NOTE 8 - CONVERTIBLE DEBENTURES

Highgate House Funds,  Ltd. - In May 2005, the Company entered into an agreement
with  Highgate to issue a  $3,750,000,  5% Secured  Convertible  Debenture  (the
"Debenture"). The Debenture was originally due December 31, 2007, and is secured
by all of the  Company's  assets.  Highgate  extended the  maturity  date of the
Debenture  to  December  31,  2008.  As of  January  1, 2008 the  interest  rate
increased to 12 percent.

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 its
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 June 30, 2009 was $287,825.

At any  time,  Highgate  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 of
the entire  Debenture  outstanding by paying 105 percent of the principal amount
redeemed plus accrued interest thereon.

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

         (i)      Highgate  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)     Highgate  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 Highgate may convert in
                  excess of the  foregoing  amounts if the Company and  Highgate
                  mutually agree; and

         (iii)    Upon the  occurrence of an event of default,  Highgate 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,  Highgate  may not convert the  Debenture  for a
number of shares that would result in Highgate  owning more than 4.99 percent of
the Company's outstanding common stock.

The Company also granted Highgate  registration  rights related to the shares of
the Company's common stock issuable upon the conversion of the Debenture.

The Company  determined that certain  conversion  features of the Debenture fell
under derivative  accounting  treatment.  Since May 2005, the carrying value has
been  accreted  over the life of the  debenture  until  December 31,  2007,  the
original maturity date. As of that date, the carrying value of the Debenture was
$970,136,  which was the  remaining  face value of the  debenture.  The carrying
value of the Debenture as of June 30, 2009, was $620,136.  The fair value of the
derivative  liability  stemming  from the  debenture's  conversion  feature  was
determined to be $0 as of June 30, 2009.


                                       15
<PAGE>

In connection with the issuance of the Debenture, $2,265,000 of the proceeds was
used to repay  earlier  promissory  notes.  Fees of $256,433,  withheld from the
proceeds, were capitalized and were amortized over the life of the note.

During 2006,  Highgate converted  $1,000,000 of Debenture  principal and accrued
interest  into a total of  37,373,283  shares  of  common  stock.  During  2007,
Highgate converted $1,979,864 of Debenture principal and accrued interest into a
total of 264,518,952 shares of common stock.  During the year ended December 31,
2008,  Highgate  converted  $350,000  of  debenture  principal  into a total  of
36,085,960  shares of common stock.  There was no activity  associated  with the
debenture  during the six  months  ended June 30,  2009,  other than  $36,902 of
interest expense accrued on the debenture.

YA Global  December  Debenture - In December 2005,  the Company  entered into an
agreement with YA Global to issue a $1,500,000,  5 percent  Secured  Convertible
Debenture (the "December Debenture").  The December Debenture was originally due
July  30,  2008,  and  has a  security  interest  in all the  Company's  assets,
subordinate to the Highgate security  interest.  YA Global also agreed to extend
the maturity date of the December  Debenture to December 31, 2008. As of January
1, 2008 the interest rate was increased to 12 percent.

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.

At any time,  YA Global  may elect to  convert  principal  amounts  owing on the
December  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  December
Debenture  then  outstanding  by paying  105  percent  of the  principal  amount
redeemed plus accrued interest thereon.  Interest expense accrued during the six
months  ending June 30, 2009 totaled  $89,200.  The balance of accrued  interest
owed at June 30, 2009, was $420,164.

YA Global's right to convert  principal  amounts of the December  Debenture into
shares of the Company's common stock is limited as follows:

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

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

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

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

The YA Global  Debenture was issued with 10,000,000  warrants,  with an exercise
price of $0.09 per share.  The warrants vested  immediately and had a three-year
life.  As a result of the May 2007 1.2-for1  forward stock split,  the effective
number of vested  warrants  increased to  12,000,000.  On December 31, 2008, all
12,000,000 warrants expired.


                                       16
<PAGE>

The Company also granted YA Global  registration rights related to the shares of
the  Company's  common  stock  issuable  upon  the  conversion  of the  December
Debenture  and the exercise of the warrants.  As of the date of this Report,  no
registration statement had been filed.

The Company  determined that the conversion  features on the December  Debenture
and the associated  warrants fell under  derivative  accounting  treatment.  The
carrying value was accreted over the life of the December Debenture until August
31, 2008,  a former  maturity  date,  at which time the  principal  value of the
December  Debenture  reached  $1,500,000.  The  fair  value  of  the  derivative
liability  stemming  from  the  December  Debenture's   conversion  feature  was
determined to be $0 as of June 30, 2009.

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

As of June 30, 2009, YA Global had not  converted any of the December  Debenture
into shares of the Company's common stock. There was no activity associated with
the  debenture  during the six months  ended June 30, 2009 other than $89,260 of
accrued interest expense on the debenture.

YA Global August  Debenture - In August 2006,  the Company  entered into another
agreement  with YA Global  relating to the  issuance by the Company of another 5
percent  Secured  Convertible  Debenture,  due in April 2009,  in the  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 balance of accrued
interest owed at June 30, 2009, was $338,239.

YA Global is entitled to convert,  at its option,  all or part of the  principal
amount  owing under the August  Debenture  into shares of the  Company's  common
stock at a conversion price equal 100 percent of the lowest closing bid price of
the Company's common stock for the twenty trading days immediately preceding the
conversion date.

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

         (i)      YA Global 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
                  common  stock  is  $0.03  per  share  or less  at the  time of
                  conversion;

         (ii)     YA Global 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  common 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
                  August  Debenture),  YA Global  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 the Company's common
                  stock pursuant to the August Debenture.

Except in the event of default,  YA Global 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 percent of the outstanding shares of the common stock following such
conversion.

In connection with the issuance of the August Debenture,  the Company granted YA
Global  registration rights related to the common stock issuable upon conversion
of the August Debenture and the exercise of the Warrants. As of the date of this
report, no registration statement had been filed.

With the issuance of the August Debenture,  fees of $135,000,  withheld from the
proceeds,  were  capitalized  and were  amortized  over  the life of the  August
Debenture.


                                       17
<PAGE>

In connection  with the August  Purchase  Agreement,  the Company also agreed to
grant to YA Global  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 $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.
As a result of the May 2007 1.2-for 1 forward stock split,  the effective number
of outstanding warrants increased to 18,000,000.

The Company determined that the conversion  features on the August Debenture and
the associated warrants fell under derivative accounting treatment. 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.  YA Global  chose to
convert $117,622 of the convertible  debenture into 72,710,337  shares of common
stock  during  the six months  ended June 30,  2009 (see note 9). As of June 30,
2009, the carrying value of the August Debenture was $1,041,218.  The fair value
of the  derivative  liability  arising  from the August  Debenture's  conversion
feature and warrants was $0 as of June 30, 2009.

Forbearance  Agreement - On August 11, 2009,  the Company and YA Global  entered
into a forbearance  agreement and related agreements.  The Forbearance Agreement
related  specifically to the three debentures issued by the Company to YA or its
predecessor  entities:  a May 26,  2005,  debenture in the  principal  amount of
$3,750,000  (the  "May  Debenture"),  a  December  30,  2005,  debenture  in the
principal  amount of $1,500,000  (the "December  Debenture"),  and an August 23,
2006,  debenture in the principal amount of $1,500,000 (the "August  Debenture,"
and  collectively  with  the May  Debenture  and the  December  Debentures,  the
"Debentures"), together with certain other agreements entered into in connection
with the issuance of the Debentures (collectively, the "Financing Documents").

The  Forbearance  Agreement notes that the Company had requested that YA forbear
from enforcing its rights and remedies under the Financing  Documents,  and sets
forth the agreement between the Company and YA with respect to such forbearance.

Specifically,  the Company  agreed to waive any claims  against YA, and released
any such  claims  the  Company  may have had.  The  Company  also  ratified  its
obligations under the Financing Documents; agreed to the satisfaction of certain
conditions  precedent,  including  the entry  into a Global  Security  Agreement
(discussed  below),  a  Global  Guaranty  Agreement  (discussed  below),  and an
amendment  of a warrant  granted to YA in  connection  with the  issuance of the
August Debenture;  agreed to seek to obtain waivers from the Company's landlords
at its properties in Utah,  California,  and Arkansas;  agreed to seek to obtain
deposit  account  control  agreements  from the Company's  banks and  depository
institutions; and to repay the Company's obligations under the Debentures on the
following schedule:

         i.       $125,000  on August  11,  2009 (at the time of signing of this
                  Agreement);
         ii.      $150,000 on September 1, 2009;
         iii.     $150,000 on October 1, 2009;
         iv.      $200,000 on November 1, 2009;
         v.       $200,000 on December 1, 2009;
         vi.      $250,000 on January 1, 2010;
         vii.     $250,000 on February 1, 2010;
         viii.    $300,000 on March 1, 2010;
         ix.      $300,000 on April 1, 2010;
         x.       $300,000 on May 1, 2010;
         xi.      $300,000 on June 1, 2010;
         xii.     $300,000 on July 1, 2010; and
         xiii.    the remaining balance of the Obligations shall be paid in full
                  in good and collected  funds by federal funds wire transfer on
                  or before the earlier of (i) the  occurrence  of a Termination
                  Event (as defined below), or (ii) 3:00 P.M. (New York Time) on
                  July 1, 2010 (hereinafter, the "Termination Date").

Pursuant to the  Forbearance  Agreement,  the parties  agreed that the  Company,
subject  to the  consent  of YA,  may  choose to pay all or any  portion  of the
payments listed above in common stock,  with the conversion  price to be used to
determine  the number of shares of common stock being equal to 85% of the lowest
closing bid price of the  Company's  common  stock  during the ten trading  days
prior to the payment date.

In exchange for the  satisfaction  of such  conditions and  agreements  from the
Company, YA agreed to forbear from enforcing its rights and remedies as a result
of the existing  defaults  and/or  converting the Debentures  into shares of the
Company's common stock, until the earlier of (i) the occurrence of a Termination
Event (as defined in the Forbearance  Agreement),  or (ii) the Termination Date,
which is given as July 1, 2010. Notwithstanding the foregoing, nothing contained
in the Forbearance  Agreement or the other Forbearance  Documents will be deemed
to  constitute  a waiver by YA of any default or event of  default,  whether now
existing or  hereafter  arising  (including,  without  limitation,  the existing
defaults listed in the Forbearance  Agreement),  and/or its right to convert the
Debentures into shares of the Company's common stock.


                                       18
<PAGE>

The Company,  YA, and certain of the Company's  subsidiaries also entered into a
Global  Security  Agreement  (the  "GSA")  in  connection  with the  Forbearance
Agreement. Under the GSA, the Company and the participating subsidiaries pledged
and granted to YA, its successors and assigns, a security interest in and to all
assets and  personal  property of each  Grantor,  as security for the payment or
performance in full of the obligations set forth in the Forbearance Agreement.

Additionally,  the Company,  YA, and certain of the Company's  subsidiaries also
entered into a Global  Guaranty  Agreement  (the "GGA") in  connection  with the
Forbearance  Agreement.  Under  the  GGA,  the  Company  and  the  participating
subsidiaries  guaranteed to YA the full payment and prompt performance of all of
the obligations set forth in the Forbearance Agreement.

The Forbearance Agreement, the GSA, and the GGA are all described in more detail
in, and copies of the agreements are included as exhibits to, a Current  Report,
filed with the Commission on August 17, 2009.

NOTE 9 - STOCKHOLDERS' EQUITY

During the six months  ended June 30,  2009,  the Company  issued the  following
shares of restricted common stock:

o        65,088,757  shares for payment of $110,000 of  principal  on the August
         debenture  to YA Global  (see Note 8).  Associated  with the  debenture
         conversion  payment was a related decrease in the derivative  liability
         of $62,741.

o        7,621,580  shares  for  payment  of $7,622 of  principal  on the August
         Debenture to YA Global (see Note 8).

NOTE 10 - STOCK OPTIONS AND WARRANTS

Stock Option Plans - As of June 30, 2009, there were no options outstanding from
the three Stock Option Plans adopted during 2003 and 2004. Options to purchase a
total of  59,200,000  shares of common stock had been issued from the 2006 Stock
Option Plan as of June 30,  2009,  out of which a maximum of  60,000,000  can be
issued.  As of June 30,  2009,  options and share  purchase  rights to acquire a
total of  22,960,000  shares of common stock had been issued from the 2008 Stock
Option  Plan,  also out of which a maximum  of  60,000,000  can be  issued.  The
Company's  Board of  Directors  administers  the plans,  and has  discretion  in
determining the employees, directors,  independent contractors, and advisors who
receive   awards,   the  type  of  awards  (stock,   incentive   stock  options,
non-qualified  stock options,  or share purchase rights) granted,  and the term,
vesting, and exercise prices.

Employee Options - The Company did not grant any employee options during the six
months  ended June 30,  2009.  During the six months  ended June 30,  2008,  the
Company  granted  options  to  purchase  12,960,000  shares of  common  stock to
employees, with an associated aggregated fair market value of $105,296.

Option  awards to  employees  are granted  with an  exercise  price equal to the
market price of the  Company's  stock at the date of grant.  Most of the options
granted  previously  have  vested  immediately,  and  most  have  had  four-year
contractual terms.

The fair value of each option  award is estimated on the date of grant using the
Black-Scholes  option  valuation  model,  using  the  assumptions  noted  in the
following table. Expected volatilities are based on the historical volatility of
the  Company's  common stock over the most recent period  commensurate  with the
expected term of the option. Prior to 2007, at times the Company granted options
to employees in lieu of salary payments,  and the pattern of exercise experience
was  known.   Beginning  in  2007,   options  were   granted   under   different
circumstances,  and the Company has  insufficient  historical  exercise  data to
provide  a  reasonable   basis  upon  which  to  estimate  the  expected  terms.
Accordingly,  in such  circumstances,  the  Company  in  2007  began  using  the
simplified  method for  determining  the expected  term of options  granted with
exercise  prices equal to the stock's  fair market value on the grant date.  The
risk-free rate for periods within the contractual life of the option is based on
the U.S. Treasury yield curve in effect at the time of grant. As the Company did
not grant any employee  options  during the six months  ended June 30, 2009,  no
actual  assumptions  were applicable for the six months ended June 30, 2009 (see
table below):


                                       19
<PAGE>

                   Three months ended June 30,       Six months ended June 30,
                       2009            2008            2009              2008
                  -------------   -------------   -------------   --------------
Expected dividend
  yield                       -               -               -               -
Risk free interest
  rate                      n/a             n/a             n/a     1.4% - 2.7%
Expected
  volatility                n/a             n/a             n/a     118% - 120%
Weighted average
  volatility                n/a             n/a             n/a            119%
Expected term (in
  years)                    n/a             n/a             n/a           2.50
Weighted average
  fair value per
  share                     n/a             n/a             n/a         $0.008

A summary of the stock option  activity under the Plans as of June 30, 2009, and
changes during the six months then ended is presented below:



                                                    Weighted-
                                    Weighted-        Average
                                     Average        Remaining       Aggregate
                                     Exercise       Conractual      Intrinisic
                      Shares           Price          Life            Value
                  -------------   -------------   -------------   --------------
Outstanding at
December 31, 2008    56,160,000          $0.014
Granted                       -   $           -
Exercised                     -   $           -
Forfeited            (3,000,000)  $       0.014
                  -------------   -------------
Outstanding at
June 30, 2009        53,160,000   $       0.014            2.98   $          -
                  =============   =============   =============   ==============

Excercisable at
June 30, 2009        51,360,000   $       0.013            3.01   $          -
                  =============   =============   =============   ==============

There were no options  exercised  during the six months  ended June 30, 2009 and
2008. As of June 30, 2009,  there was $8,967 in unrecognized  compensation  cost
related to nonvested  options  outstanding that is expected be recognized over a
weighted average period of 2.5 years.

Share  Purchase  Rights - In January 2008,  the Company  granted share  purchase
rights to attorneys to acquire  10,000,000  shares of common stock at a price of
$0.0001 per share.  The purchase rights were granted in order that the attorneys
could sell the underlying shares and thus satisfy amounts due for legal services
rendered. Additional legal expense of $130,000 was recognized as the fair market
value at the time the stock purchase rights were awarded.  Fair market value was
estimated using the  Black-Scholes  valuation model,  and using  assumptions for
volatility  and estimated  term as being close to zero since it was assumed that
the rights would be exercised almost immediately.  As a result, the valuation of
the stock  purchase  rights was  calculated to be virtually the same as the fair
value of the underlying common stock on the date of issuance.

Warrants - In  connection  with the YA Global  convertible  debenture  issued in
December  2005, the Company issued  three-year  warrants to purchase  10,000,000
shares of the  Company's  common  stock.  The warrants had an exercise  price of
$0.09 per share, and vested immediately,  and had a three-year contractual life.
These warrants expired on December 31, 2008.

In May 2006,  the  Company  closed a private  placement  of shares of its common
stock and warrants in which it issued  14,285,715 shares of the Company's common
stock to ANAHOP, Inc., a California corporation, and issued warrants to purchase
up to 30,000,000  additional shares of common stock to designees of ANAHOP for a
price of $1,000,000. The term of these warrants was for five years. With respect
to  the  shares   underlying  the  warrants,   the  Company  granted   piggyback
registration  rights as follows:  (A) once all of the warrants  with an exercise
price of $0.15 per share have been  exercised,  the Company agreed to include in
its next registration  statement the resale of those underlying shares; (B) once
all of the  warrants  with an  exercise  price  of $0.25  per  share  have  been
exercised,  the Company agreed to include in its next registration statement the
resale of those  underlying  shares;  and (C) once all of the  warrants  with an
exercise  price of $0.50 per share have been  exercised,  the Company  agreed to
include  in its next  registration  statement  the  resale  of those  underlying
shares.  The Company did not grant any  registration  rights with respect to the
original 14,285,715 shares of common stock.


                                       20
<PAGE>

In connection with the YA Global  convertible  debenture  issued in August 2006,
the Company  issued  three-year  warrants to purchase  15,000,000  shares of the
Company's  common stock.  The warrants had an exercise price of $0.06 per share,
and vested  immediately.  In connection with the private  placement with ANAHOP,
the Company issued five-year  warrants to purchase  30,000,000  shares of common
stock at prices ranging from $0.15 to $0.50.  All of these warrants were subject
to adjustment in the event of a stock split. Accordingly, as a result of the 1.2
for 1 forward stock split that occurred in 2007, there are warrants  outstanding
at June 30, 2009,  to purchase a total of  54,000,000  shares of common stock in
connection with these transactions.  The exercise price per share of each of the
aforementioned  warrants was likewise  affected by the stock split, in that each
price was reduced by 20 percent.

During 2008,  in  connection  with issuing a promissory  note,  the Company also
issued five-year warrants to purchase up to 75,000,000 shares of common stock at
exercise  prices  ranging from $0.02 to $0.50 per share.  Also during  2008,  in
connection  with  entering  into an agreement  with an outside  consultant,  the
Company also issued  four-year  warrants to purchase up to  6,000,000  shares of
common stock at an exercise price of $0.0125 per share. The Company accounts for
these consultant warrants under the provisions of EITF No. 96-18, Accounting for
Equity  Instruments  That Are Issued to Other Than Employees for Acquiring or in
Conjunction with Selling Goods or Services.

The  Corporation  currently has an insufficient  number of authorized  shares to
enable warrant holders to fully exercise their  warrants,  assuming all warrants
holders  desired to do so.  Accordingly,  the warrants are subject to derivative
accounting  treatment,  and are included in the derivative  liability related to
the convertible debentures (see Note 8).

NOTE 11 - 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 four reportable  segments:  Electronics  Assembly,  Contract  Manufacturing,
Marketing and Media, and Beverage Distribution. The Electronics Assembly segment
manufactures and assembles circuit boards and electronic  component cables.  The
Contract Manufacturing segment manufactures,  either directly or through foreign
subcontractors,   various   products  under   manufacturing   and   distribution
agreements.  The  Marketing  and Media segment  provides  marketing  services to
online retailers,  along with beverage  development and promotional  services to
Play Beverages,  LLC. The Beverage Distribution segment  manufactures,  markets,
and distributes Playboy-licensed energy drinks domestically and internationally.
The  Beverage  Distribution  segment  continues  to grow,  and the  distribution
channels, across the country and internationally, continue to gain traction. The
company  anticipates  this  segment to become  more  significant  in relation to
overall Company operations.

The accounting  policies of the segments are consistent  with those described in
the  summary  of  significant   accounting   policies.   The  Company  evaluates
performance of each segment based on earnings or loss from operations.  Selected
segment information is as follows:


                                       21
<PAGE>
<TABLE>
<CAPTION>
                                   Electronics      Contract        Marketing         Beverage
                                     Assembly     Manufacturing     and Media       Distribution         Total
-----------------------------------------------------------------------------------------------------------------
<S>                               <C>             <C>             <C>              <C>               <C>
Three months ended June 30,
  2009
Sales to external customers       $     369,562   $     103,810   $    2,503,041   $      122,793   $  3,099,206
Segment income (loss)                 1,282,159         (82,474)        (278,885)         (54,952)       865,848
Segment assets                        4,090,248       2,032,251        7,819,175          286,198     14,227,872
Depreciation and amortization            96,153          64,551            5,841                -        166,545

Three months ended June 30,
  2008
Sales to external customers       $     365,763   $     685,634   $    2,944,865   $      243,859   $  4,240,121
Segment income (loss)                  (853,441)        (30,703)         184,606           44,144       (655,394)
Segment assets                        5,002,913       2,184,829        7,016,426          434,739     14,638,907
Depreciation and amortization            96,383          64,695              267                -        161,345

Six months ended June 30, 2009
Sales to external customers       $     857,734   $     278,958   $    3,490,261   $      394,635   $  5,021,588
Segment income (loss)                  (633,493)       (165,558)        (556,166)         (28,492)    (1,383,709)
Segment assets                        4,090,248       2,032,251        7,819,175          286,198     14,227,872
Depreciation and amortization           192,305         129,102           11,682                -        333,089

Six months ended June 30, 2008
Sales to external customers       $   1,036,695   $   1,521,712   $    4,217,350   $      324,827   $  7,100,584
Segment income (loss)                (1,072,622)        228,932           20,354          100,323       (723,013)
Segment assets                        5,002,913       2,184,829        7,016,426          434,739     14,638,907
Depreciation and amortization           192,075         129,391              751                -        322,217
</TABLE>

NOTE 12 - GEOGRAPHIC INFORMATION

The Company currently  maintains  approximately  $493,241 of capitalized tooling
costs in China. All other revenue-producing assets are located in the U.S. While
the Company ships products overseas on behalf of its customers,  those customers
are located almost exclusively in the United States.

NOTE 13 - SUBSEQUENT EVENTS

On July 14, 2009 the Company entered into a Stock Purchase Agreement with one of
the  directors of the Company to purchase  75,000,000  shares of common stock of
the  Company at a purchase  price of $.003 per share,  for a total of  $225,000,
payable through the conversion of outstanding  loans made by the director to the
Company.  Mr. Nora and the Company  acknowledged in the purchase  agreement that
the Company did not have sufficient shares to satisfy the issuances,  and agreed
that the shares would be issued once the Company has sufficient shares to do so.

On July 14, 2009 the Company  entered into a Stock  Purchase  Agreement with the
president  of the Company to purchase  50,000,000  shares of common stock of the
Company at a purchase price of $.003 per share,  for a total amount of $150,000,
payable through the conversion of outstanding loans made by the president of the
Company  to the  Company.  Mr.  Hawatmeh  and the  Company  acknowledged  in the
purchase  agreement that the Company did not have  sufficient  shares to satisfy
the  issuances,  and agreed that the shares would be issued once the Company has
sufficient shares to do so.

As  discussed  above in Note 9, on August 11,  2009,  the  Company and YA Global
entered  into a  Forbearance  Agreement,  pursuant to which YA Global  agreed to
forbear  from  enforcing  its rights  under the three  Debentures  issued by the
Company to YA and its predecessor entities. See Note 9.


                                       22
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
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-K for the year ended December 31, 2008.

Overview

In our U.S. operations,  we provide a mix of high and medium size volume turnkey
manufacturing  services and products using various  high-tech  applications  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. Our goal is to offer customers the significant
competitive  advantages that can be obtained from  manufacture  outsourcing.  We
also  market an energy  drink  under the  Playboy  brand  pursuant  to a license
agreement with Playboy Enterprises, Inc.

We conduct business through our subsidiaries and divisions: CirTran USA, CirTran
Asia,  CirTran  Products,  CirTran  Media  Group,  CirTran  Online,  and CirTran
Beverage.

CirTran USA accounted for 12 percent and 9 percent of our total revenues  during
the three months ended June 30, 2009 and 2008 respectively, and accounted for 17
percent and 15 percent, respectively, of total revenues for the six months ended
June 30,  2009 and 2008.  Revenues  were  generated  by  low-volume  electronics
assembly  activities  consisting  primarily of the placement  and  attachment of
electronic  and  mechanical  components on printed  circuit  boards and flexible
(i.e., bendable) cables.

Through  CirTran  Asia  we  manufacture  and  distribute  electronics,  consumer
products and general merchandise to companies selling in international  markets.
Sales were 0 and 16 percent of our total revenues  during the three months ended
June 30, 2009 and 2008, respectively.  Sales during the six-month periods ending
June 30, 2009 and 2008 were 3 and 20 percent of total revenues, respectively.

CirTran  Products  pursues  contract  manufacturing  relationships  in the  U.S.
consumer products markets, including licensed merchandise sold in the sports and
entertainment  markets.  Sales  comprised 3 and 1 percent of total sales for the
quarters  ended June 30,  2009 and 2008,  respectively,  and  comprised  3 and 1
percent  of  total  sales  for the six  months  ended  June 30,  2009 and  2008,
respectively.

CirTran  Media  provides   end-to-end   services  to  the  direct  response  and
entertainment  industries.  Revenues  for  CirTran  Media  were 0 percent  and 3
percent  of  total  sales  for the  quarters  ended  June  30,  2009  and  2008,
respectively.  During the six months ended June 30, 2009 and 2008, revenues were
0 and 4 percent, respectively.

CirTran  Online sells  products  via the  internet,  and  provides  services and
support to internet  retailers.  In conjunction with partner GMA,  revenues from
this division were 23 and 23 percent of total  revenues  during the three months
ending June 30, 2009 and 2008, respectively, and were 26 and 20 percent of total
revenues during the six months ended June 30, 2009 and 2008, respectively.

CirTran Beverage manufactures,  markets, and distributes Playboy-licensed energy
drinks, which in the future are anticipated to include flavored water beverages,
and related merchandise.  We have also entered into an agreement with PlayBev, a
related  party  who  holds the  Playboy  license.  We  provide  development  and
promotional  services to PlayBev,  and pay a royalty  based on our product sales
and  manufacturing  costs.  Services  billed to PlayBev  during the three months
ended  June 30,  2009 and 2008 under this  arrangement  accounted  for 58 and 43
percent of total sales,  respectively,  while services  billed to PlayBev during
the six  months  ended  June  30,  2009 and  2008,  totaled  43 and 35  percent,
respectively. Sales of energy drink beverages during the three months ended June
30,  2009  and  2008  amounted  to 4  percent  and 6  percent  of  total  sales,
respectively. During the six months ended June 30, 2009 and 2008 sales of energy
drink beverages accounted for 8 and 5 percent of total sales, respectively.



                                       23
<PAGE>

Forward-Looking Statements and Certain Risks

The  statements  contained  in this  report that are not purely  historical  are
considered to be "forward-looking  statements" within the meaning of the Private
Securities  Litigation  Reform  Act of 1995 and  Section  21E of the  Securities
Exchange Act.  These  statements  represent our  expectations,  hopes,  beliefs,
anticipations,  commitments,  intentions,  and strategies  regarding the future.
They  may be  identified  by the use of  words or  phrases  such as  "believes,"
"expects," "anticipates," "should," "plans," "estimates," and "potential," among
others.  Forward-looking  statements include, but are not limited to, statements
contained in  Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations regarding our financial performance,  revenue, and expense
levels in the future and the  sufficiency of our existing  assets to fund future
operations and capital spending needs. Readers are cautioned that actual results
could differ materially from the anticipated  results or other expectations that
are expressed in these  forward-looking  statements for the reasons  detailed in
our most recent Annual Report on Form 10-K at pages 14 through 23. The fact that
some of these risk factors may be the same or similar to our past reports  filed
with the SEC means  only that the risks are  present  in  multiple  periods.  We
believe  that many of the risks  detailed  here and in our other SEC filings are
part of doing  business in the industry in which we operate and compete and will
likely be present  in all  periods  reported.  The fact that  certain  risks are
common in the industry does not lessen their  significance.  The forward-looking
statements  contained in this report, are made as of the date of this report and
we assume no  obligation  to update them or to update the reasons why our actual
results could differ from those that we have  projected in such  forward-looking
statements.  We  expressly  disclaim any  obligation  or intention to update any
forward-looking statement.

Results of Operations

Comparison of the Three and Six Months Ended June 30, 2009 and 2008

Sales and Cost of Sales

Net sales  decreased  to  $3,099,206  for the quarter  ended June 30,  2009,  as
compared to $4,240,121 for the quarter ended June 30, 2008,  while net sales for
the first half of 2009 fell  $2,078,987  as compared to the same period in 2008.
The net sales decreases in 2009 as compared to 2008 are  attributable  primarily
to  the  effects  of  the  national   economic   slowdown  in  our   traditional
manufacturing  segments and a strategic shift into promising  segments that will
produce  immediate sales results and improved  profit  margins.  In our Beverage
Distribution  segment,  we continue to gain momentum as we have experienced a 21
percent  increase in our net sales during the six months ended June 30, 2009, as
compared to the six months ended June 30, 2008, driven by our continued domestic
and international expansion of the Playboy Energy Drink beverages.

Cost of sales, as a percentage of sales, increased to 91 percent from 82 percent
for the three months ended June 30, 2009,  as compared to the prior year,  while
cost of sales for the six months ended June 30, 2009  increased to 84 percent as
compared to 78 percent for the six months ended June 30, 2008. Consequently, the
gross profit margin  decreased to 6 percent from 16 percent,  respectively,  for
the three  months  ended June 30, 2009 and 2008,  respectively,  while the gross
profit  margin for the six months  ended June 30, 2009 and 2009  decreased to 11
percent from 20 percent.  The decreases in gross profit margin were attributable
to the significant  shift in the sales mix of products and services  experienced
during 2009 as compared to 2008.  One of the primary  reasons for the difference
was the  arrangement we have with GMA.  Pursuant to our Assignment and Exclusive
Services Agreement,  we recognize the revenue collected under the GMA contracts,
and remit back to GMA a management fee  approximating  their actual costs.  This
management  fee is  included in our cost of  revenue.  Another  reason the gross
margin  decreased was due to the nature of our  manufacturing  and  distribution
agreement  with  PlayBev.   CirTran  Beverage   invoices  PlayBev  for  beverage
development and marketing services, which are very low margin projects. However,
we  anticipate  that gross profit  margins for CirTran  Beverage  will  increase
during the balance of 2009,  as the  distribution  of the Playboy  Energy  Drink
beverages continues to expand both domestically and internationally.

The  following  charts  present  comparisons  of sales,  cost of sales and gross
profits generated by our four operating segments,  i.e., Contract Manufacturing,
Electronics  Assembly,  Marketing and Media and Beverage Distribution during the
three and six months ended June 30, 2009 and 2008.

<TABLE>
<CAPTION>
Three Months Ended:
                                                                                       Royalty          Gross
      Segment                          Year           Sales       Cost of Sales        Expense          Margin
-----------------------------------------------------------------------------------------------------------------
<S>                               <C>             <C>             <C>              <C>              <C>
Electronics Assembly                   2009       $     369,562   $      259,214   $            -   $    110,348
                                       2008             365,763          278,194                -         87,569
-----------------------------------------------------------------------------------------------------------------
Contract Manufacturing                 2009       $     103,810   $       52,682   $            -   $     51,128
                                       2008             685,634          421,374                -        264,260
-----------------------------------------------------------------------------------------------------------------
Marketing / Media                      2009       $   2,503,041   $    2,382,271   $            -   $    120,770
                                       2008           2,944,865        2,682,287                -        262,578
-----------------------------------------------------------------------------------------------------------------
Beverage Distribution                  2009       $     122,793   $      132,501   $       82,442   $    (92,150)
                                       2008             243,859           83,605          104,640         55,614
</TABLE>

                                       24
<PAGE>

<TABLE>
<CAPTION>
Six Months Ended:
                                                                                       Royalty          Gross
      Segment                          Year           Sales       Cost of Sales        Expense          Margin
-----------------------------------------------------------------------------------------------------------------
<S>                               <C>             <C>             <C>              <C>              <C>
Electronics Assembly                   2009       $     857,734   $      551,155   $            -   $    306,579
                                       2008           1,036,695          693,464                -        343,231
-----------------------------------------------------------------------------------------------------------------
Contract Manufacturing                 2009       $     278,958   $      128,623   $            -   $    150,335
                                       2008           1,521,712          969,366                -        552,346
-----------------------------------------------------------------------------------------------------------------
Marketing / Media                      2009       $   3,490,261   $    3,322,992   $            -   $    167,269
                                       2008           4,217,350        3,797,024                -        420,326
-----------------------------------------------------------------------------------------------------------------
Beverage Distribution                  2009       $     394,635   $      227,355   $      229,631   $    (62,351)
                                       2008             324,827          108,037          110,990        105,800
</TABLE>

Selling, General and Administrative Expenses

During the three months ended June 30, 2009, selling, general and administrative
expenses  decreased  $627,996 as compared to the same period during 2008,  while
selling,  general and administrative  expenses decreased $934,822 during the six
months  ended June 30,  2009 as compared to the same  period  during  2008.  The
primary  reason  for the  decrease  was the  slowing  of  advertising  and media
promotion spending during the six months ended June 30, 2009,  together with the
reduction of travel and legal expenses.  As mentioned  previously,  not only has
the effects of the  national  economic  decline  resulted in a decrease in cable
assembly  and  electronic  orders from our  traditional  customers,  but we have
experienced  a softening  of sales in all  segments,  with the  exception of our
Beverage  Distribution  segment,  driving the decrease in advertising  and media
promotion  spending  and travel  expenditures.  These cost  savings  were offset
somewhat by increases in insurance, amortization and freight out expenses.

Non-cash compensation expense

Compensation  expense  in  connection  with  granting  options to  employees  to
purchase  common  stock has  decreased  significantly  during  the three and six
months  ended June 30,  2009,  as compared to the prior year as no options  were
granted during the three and six months ended June 30, 2009.

Other income and expense

Major components of other income and expense were as follows:

         o    Interest  expense for the three and six months ended June 30, 2009
              was $241,242 and  $567,808,  respectively  as compared to $565,369
              and $1,044,001 for the  comparative  period in 2008, a decrease of
              nearly 57 percent and 46 percent,  respectively.  The  decrease is
              related  primarily to  elimination of the mortgage on our building
              through a sale and leaseback arrangement.

         o    During  the first  quarter of 2008,  we  arrived  at a  settlement
              agreement in connection with litigation, and were paid $300,000 to
              resolve all claims.

         o    We also recorded a gain of $1,693,764 on our derivative  valuation
              for the  quarter  ended June 30,  2009,  as  compared to a gain of
              $822,975  derived  during the quarter ended June 30, 2008. For the
              six months  ended June 30,  2009 we recorded a gain of $405,156 on
              our derivative valuation,  as compared to a $1,705,162 gain during
              the six months ended June 30, 2008. The  difference  resulted from
              the varying valuations  calculated during the respective  periods,
              taking  into  account  differing  debt  levels  of the  underlying
              convertible  debentures,  along with the varying  market values of
              our common stock.

As a result of the above  mentioned  factors,  we  experienced  a $865,847  gain
during the three months  ended June 30, 2009,  reducing our net loss for the six
months ended June 30, 2009 to $1,383,709.  During the three and six months ended
June 30, 2009, we recorded net losses of $655,394 and $723,013, respectively.

Liquidity and Capital Resources

Our operating  expenses are currently  greater than our revenues.  We have had a
history of losses, and our accumulated deficit was $34,709,124 at June 30, 2009,
and  $33,325,415  at December 31, 2008. Our net loss for the first six months of
2009 was $1,383,709,  compared to $723,013 for the first six months of 2008. Our
current  liabilities  exceeded our current  assets by  $5,652,038 as of June 30,
2009,  and  $4,244,213  as of December  31,  2008.  The driving  factors for the
difference  were a combination of increases in short-term  accounts  payable and
other  accrued  liabilities.  For  the  six  months  ended  June  30,  2009,  we
experienced  negative cash flows from  operating  activities of  $1,792,906,  as
compared to negative cash flows from  operations  of  $2,709,966  during the six
months ended June 30, 2008


                                       25
<PAGE>

Cash

For the six months ended June 30, 2009, we experienced  negative cash flows from
operating  activities  of  $1,792,906  primarily  to  support  modest  inventory
increases  and both trade and  related  party  receivables.  The  balance of the
difference in cash used, as compared to cash provided,  by operations during the
first six months of 2009 and 2008 was the result of the  differences  in various
non-cash  elements  of  gain  and  loss  such  as  depreciation,  accretion  and
amortization   expenses,  and  the  changes  in  derivative  valuations  on  the
convertible debentures and related warrants.

Accounts Receivable

The increase in accounts receivable as of June 30, 2009, as compared to December
31, 2008,  resulted from a  combination  of increases for both trade and related
party  receivables  during the six months of 2009. We agreed to provide services
to PlayBev for  initial  development,  marketing,  and  promotion  of the energy
drink.  We bill these  services  to  PlayBev  and record the amount as a related
party account receivable.

Accounts payable and accrued liabilities

Accounts  payable  and  other  accrued  liabilities  owing as of June 30,  2009,
increased a combined $2,372,247 when compared to corresponding  year-end amounts
at December 31, 2008.  Accounts  payable  increased by $232,386 during the first
six  months of 2009,  while  short  term  advances  payable  and  other  accrued
liabilities  increased by a combined  $2,139,861 as compared to the December 31,
2008,  year-end  amounts,  driven by an  increase  in bridge  loans and  related
accrued interest.

Liquidity and financing arrangements

We have a history of  substantial  losses from  operations,  and of using rather
than providing cash in operations.  We had an accumulated deficit of $34,709,124
along with a total  stockholders'  deficit of  $1,553,308  at June 30, 2009.  In
addition,  during the six months ended June 30, 2009, we have used,  rather than
provided,  cash in our  operations.  Our monthly  operating  costs plus interest
expense payable in cash averaged  approximately  $1,000,000 per month during the
six months ended June 30, 2009.

In  conjunction  with our efforts to improve our results of  operations,  we are
also  actively  seeking  infusions  of capital from  investors,  and are seeking
sources to repay our existing convertible  debentures.  In our current financial
condition,  it is  unlikely  that we will be  able  to  obtain  additional  debt
financing at a reasonable cost. Even if we did acquire additional debt, we would
be required to devote  additional  cash flow to servicing  the debt,  and either
securing the debt with assets,  or paying a premium  cost.  Accordingly,  we are
looking to obtain 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 equity or in connection with debt, this will dilute
the value of our common stock and existing shareholders' positions.

There can be no assurance  that we will be  successful  in  obtaining  more debt
and/or  equity  financing in the future or that our results of  operations  will
materially  improve in either  the short or the long term.  If we fail to obtain
such financing and improve our results of operations,  we will be unable to meet
our obligations as they become due. That would raise substantial doubt about our
ability to continue as a going concern.

Convertible Debentures

Highgate  House Funds,  Ltd. - In May 2005,  we entered  into an agreement  with
Highgate to issue a $3,750,000,  five percent Secured Convertible Debenture (the
"Debenture").  The Debenture was originally due December 2007, and is secured by
all of our assets.  Highgate agreed to extend the maturity date of the Debenture
to December 31, 2008.

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 June 30,
2009, was $287,825.

                                       26
<PAGE>

At any  time,  Highgate  may elect to  convert  principal  amounts  owing on the
Debenture  into shares of our 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 of the entire  Debenture
outstanding by paying 105 percent of the principal  amount redeemed plus accrued
interest thereon.

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

         (i)      Highgate  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)     Highgate  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 Highgate may convert in excess of the
                  foregoing amounts if we and Highgate mutually agree; and

         (iii)    Upon the  occurrence of an event of default,  Highgate 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,  Highgate  may not convert the  Debenture  for a
number of shares that would result in Highgate  owning more than 4.99 percent of
our outstanding common stock.

We also granted Highgate registration rights related to the shares of our common
stock  issuable  upon the  conversion of the  Debenture.  As of the date of this
Report, no registration statement had been filed.

We  determined  that certain  conversion  features of the  Debenture  fell under
derivative  accounting  treatment.  Since May 2005,  the carrying value has been
accreted over the life of the debenture  until  December 31, 2007,  the original
maturity  date.  As of that  date,  the  carrying  value  of the  Debenture  was
$970,136,  which was the  remaining  face value of the  debenture.  The carrying
value of the Debenture as of June 30, 2009, was $620,136.  The fair value of the
derivative liability stemming from the debenture's conversion feature as of June
301, 2009 was $0.

In connection with the issuance of the Debenture, $2,265,000 of the proceeds was
used to repay  earlier  promissory  notes.  Fees of $256,433,  withheld from the
proceeds, were capitalized and are being amortized over the life of the note.

During 2006,  Highgate converted  $1,000,000 of Debenture  principal and accrued
interest  into a total of  37,373,283  shares  of  common  stock.  During  2007,
Highgate converted $1,979,864 of Debenture principal and accrued interest into a
total of 264,518,952 shares of common stock.  During the year ended December 31,
2008,  Highgate  converted  $350,000  of  debenture  principle  into a total  of
36,085,960  shares of common stock. No Debenture  principal or accrued  interest
was converted during the six months ending June 30, 2009.

YA Global  December  Debenture - In December  2005, we entered into an agreement
with YA Global to issue a $1,500,000,  5 percent Secured  Convertible  Debenture
(the "December  Debenture").  The December Debenture was originally due July 30,
2008, and has a security interest in all our assets, subordinate to the Highgate
security  interest.  YA Global  also agreed to extend the  maturity  date of the
December Debenture to December 31, 2008.

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.

At any time,  YA Global  may elect to  convert  principal  amounts  owing on the
December  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 December  Debenture then outstanding by paying
105 percent of the principal amount redeemed plus accrued interest thereon.  The
balance of accrued interest owed at June 30, 2009, was $420,342.


                                       27
<PAGE>

YA Global's right to convert  principal  amounts of the December  Debenture into
shares of our common stock is limited as follows:

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

         (ii)     YA Global may  convert up to $500,000  worth of the  principal
                  amount plus accrued interest of the December  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 YA Global may convert in excess of the
                  foregoing amounts if we and YA Global mutually agree; and

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

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

The YA Global  Debenture was issued with 10,000,000  warrants,  with an exercise
price of $0.09 per share.  The warrants vest  immediately  and have a three-year
life. As a result of the May 2007 1.2-for-1  forward stock split,  the effective
number of vested warrants increased to 12,000,000.  As of December 31, 2008, all
12,000,000 warrants had expired.

We also  granted  YA Global  registration  rights  related  to the shares of our
common stock  issuable  upon the  conversion  of the December  Debenture and the
exercise  of the  warrants.  As of the  dates of this  Report,  no  registration
statement had been filed.

We determined  that the  conversion  features on the December  Debenture and the
associated  warrants fell under derivative  accounting  treatment.  The carrying
value was  accreted  over the life of the  December  Debenture  until August 31,
2008, a former  maturity date, at which time the principal value of the December
Debenture  reached  $1,500,000.  The  fair  value  of the  derivative  liability
stemming from the December  Debenture's  conversion feature as of June 30, 2009,
was $0.

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

As of June 30, 2009, YA Global had not  converted any of the December  Debenture
into shares of our common stock.

YA Global August  Debenture - In August 2006, we entered into another  agreement
with YA Global  relating  to the  issuance  by the  Company of another 5 percent
Secured  Convertible  Debenture,  due in April 2009, in the 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 June 30,
2009, was $338,239.

YA Global is entitled to convert,  at its option,  all or part of the  principal
amount  owing under the August  Debenture  into shares of our common  stock at a
conversion price equal 100 percent of the lowest closing bid price of our common
stock for the twenty trading days immediately preceding the conversion date.

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


                                       28
<PAGE>

         (i)      YA Global 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)     YA Global 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
                  August  Debenture),  YA Global  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.

Except in the event of default,  YA Global 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 percent of the outstanding shares of the common stock following such
conversion.

In connection with the August Purchase Agreement,  we also agreed to grant to YA
Global  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.  As a
result of the May 2007  1.2-for1  forward stock split,  the effective  number of
outstanding warrants increased to 18,000,000.

In  connection  with the  issuance of the August  Debenture,  we also granted YA
Global  registration rights related to the common stock issuable upon conversion
of the August Debenture and the exercise of the Warrants. As of the date of this
Report, no registration statement had been filed.

We  determined  that the  conversion  features on the August  Debenture  and the
associated  warrants fell under derivative  accounting  treatment.  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.  During the year ended
December  31,  2008 YA  Global  chose to  convert  $341,160  of the  convertible
debenture into 139,136,360  shares of common stock.  During the six months ended
June 30, 2009 YA Global chose to convert  $117,622 of the convertible  debenture
into  72,710,337  shares of common stock. As of June 30, 2009 the carrying value
of the  August  Debenture  was  $1,041,218.  The fair  value  of the  derivative
liability stemming from the August Debenture's conversion feature as of June 30,
2009, was $0.

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

We currently have issued and outstanding  options,  warrants,  convertible notes
and other  instruments  for the acquisition of our common stock in excess of the
available  authorized but unissued shares of common stock provided for under our
Articles of Incorporation,  as amended. As a consequence,  in the event that the
holders of such  instruments  requiring the  issuance,  in the  aggregate,  of a
number of shares of common stock that would,  when combined with the  previously
issued and outstanding common stock of the Company exceed the authorized capital
of the  Company,  seek to exercise  their  rights to acquire  shares under those
instruments,  we will be required to increase the number of authorized shares or
effect a reverse split of the outstanding  shares in order to provide sufficient
shares for issuance under those instruments.

Forbearance Agreement

On August  11,  2009,  the  Company  and YA Global  entered  into a  forbearance
agreement and related agreements. The Forbearance Agreement related specifically
to the three debentures issued by the Company to YA or its predecessor entities:
a May 26,  2005,  debenture  in the  principal  amount of  $3,750,000  (the "May
Debenture"),  a  December  30,  2005,  debenture  in  the  principal  amount  of
$1,500,000 (the "December Debenture"),  and an August 23, 2006, debenture in the
principal amount of $1,500,000 (the "August  Debenture," and  collectively  with
the May Debenture and the December Debentures, the "Debentures"),  together with
certain other  agreements  entered into in  connection  with the issuance of the
Debentures (collectively, the "Financing Documents").


                                       29
<PAGE>

The  Forbearance  Agreement notes that the Company had requested that YA forbear
from enforcing its rights and remedies under the Financing  Documents,  and sets
forth the agreement between the Company and YA with respect to such forbearance.

Specifically,  the Company  agreed to waive any claims  against YA, and released
any such  claims  the  Company  may have had.  The  Company  also  ratified  its
obligations under the Financing Documents; agreed to the satisfaction of certain
conditions  precedent,  including  the entry  into a Global  Security  Agreement
(discussed  below),  a  Global  Guaranty  Agreement  (discussed  below),  and an
amendment  of a warrant  granted to YA in  connection  with the  issuance of the
August Debenture;  agreed to seek to obtain waivers from the Company's landlords
at its properties in Utah,  California,  and Arkansas;  agreed to seek to obtain
deposit  account  control  agreements  from the Company's  banks and  depository
institutions; and to repay the Company's obligations under the Debentures on the
following schedule:

         i.       $125,000 on August 11, 2009 (at the time of signing of this
                  Agreement);
         ii.      $150,000 on September 1, 2009;
         iii.     $150,000 on October 1, 2009;
         iv.      $200,000 on November 1, 2009;
         v.       $200,000 on December 1, 2009;
         vi.      $250,000 on January 1, 2010;
         vii.     $250,000 on February 1, 2010;
         viii.    $300,000 on March 1, 2010;
         ix.      $300,000 on April 1, 2010;
         x.       $300,000 on May 1, 2010;
         xi.      $300,000 on June 1, 2010;
         xii.     $300,000 on July 1, 2010; and
         xiii.    the remaining balance of the Obligations shall be paid in full
                  in good and collected  funds by federal funds wire transfer on
                  or before the earlier of (i) the  occurrence  of a Termination
                  Event (as defined below), or (ii) 3:00 P.M. (New York Time) on
                  July 1, 2010 (hereinafter, the "Termination Date").

Pursuant to the  Forbearance  Agreement,  the parties  agreed that the  Company,
subject  to the  consent  of YA,  may  choose to pay all or any  portion  of the
payments listed above in common stock,  with the conversion  price to be used to
determine  the number of shares of common stock being equal to 85% of the lowest
closing bid price of the  Company's  common  stock  during the ten trading  days
prior to the payment date.

In exchange for the  satisfaction  of such  conditions and  agreements  from the
Company, YA agreed to forbear from enforcing its rights and remedies as a result
of the existing  defaults  and/or  converting the Debentures  into shares of the
Company's common stock, until the earlier of (i) the occurrence of a Termination
Event (as defined in the Forbearance  Agreement),  or (ii) the Termination Date,
which is given as July 1, 2010. Notwithstanding the foregoing, nothing contained
in the Forbearance  Agreement or the other Forbearance  Documents will be deemed
to  constitute  a waiver by YA of any default or event of  default,  whether now
existing or  hereafter  arising  (including,  without  limitation,  the existing
defaults listed in the Forbearance  Agreement),  and/or its right to convert the
Debentures into shares of the Company's common stock.

The Company,  YA, and certain of the Company's  subsidiaries also entered into a
Global  Security  Agreement  (the  "GSA")  in  connection  with the  Forbearance
Agreement. Under the GSA, the Company and the participating subsidiaries pledged
and granted to YA, its successors and assigns, a security interest in and to all
assets and  personal  property of each  Grantor,  as security for the payment or
performance in full of the obligations set forth in the Forbearance Agreement.

Additionally,  the Company,  YA, and certain of the Company's  subsidiaries also
entered into a Global  Guaranty  Agreement  (the "GGA") in  connection  with the
Forbearance  Agreement.  Under  the  GGA,  the  Company  and  the  participating
subsidiaries  guaranteed to YA the full payment and prompt performance of all of
the obligations set forth in the Forbearance Agreement.

The Forbearance Agreement, the GSA, and the GGA are all described in more detail
in, and copies of the agreements are included as exhibits to, a Current  Report,
filed with the Commission on August 17, 2009.



                                       30
<PAGE>

Critical accounting estimates

Revenue  Recognition  - Revenue is recognized  when products are shipped.  Title
passes  to the  customer  or  independent  sales  representative  at the time of
shipment.  Returns  for  defective  items  are  repaired  and  sent  back to the
customer.   Historically,   expenses  associated  with  returns  have  not  been
significant and have been recognized as incurred.

Shipping  and  handling  fees are  included  as part of net sales.  The  related
freight  costs and  supplies  directly  associated  with  shipping  products  to
customers are included as a component of cost of goods sold.

We have  also  recorded  revenue  using a "Bill  and  Hold"  method  of  revenue
recognition.  The SEC, in Staff  Accounting  Bulletin No. 104,  imposes  several
requirements  to be met in order to  recognize  revenue  prior  to  shipment  of
product.

The SEC's criteria are the following:

         i.       The risks of ownership must have passed to the buyer;

         ii.      The customer must have made a fixed commitment to purchase the
                  goods, preferably in written documentation;

         iii.     The buyer,  not the seller,  must request that the transaction
                  be on a bill and hold basis. The buyer must have a substantial
                  business  purpose  for  ordering  the goods on a bill and hold
                  basis;

         iv.      There must be a fixed schedule for delivery of the goods.  The
                  date for delivery  must be  reasonable  and must be consistent
                  with the buyer's business  purpose (e.g.,  storage periods are
                  customary in the industry);

         v.       The seller must not have  retained  any  specific  performance
                  obligations such that the earning process is not complete;

         vi.      The ordered goods must have been  segregated from the seller's
                  inventory  and not be  subject  to  being  used to fill  other
                  orders; and

         vii.     The  equipment  (product)  must  be  complete  and  ready  for
                  shipment.

In effect,  we secure a  contractual  agreement  from the customer to purchase a
specific  quantity of goods,  and the goods are produced and segregated from our
inventory.  Shipment of the product is  scheduled  for release  over a specified
period of time.  The result is that we maintain  the  customer's  inventory,  on
site, until all releases have been issued.

Agency fees were recognized when they were earned.  This occurred only after the
talent, represented by us, received payment for the services from the buyer. The
buyer  remitted  funds  to a  trust  checking  account  after  all  payroll  tax
liabilities  had been deducted from the gross amount due the talent.  The talent
was paid the net amount,  less our commission (which is approximately 10 percent
of the gross amount due the talent),  from the trust  account.  The remainder of
funds in the trust account,  typically 10 percent,  was then  distributed us and
recognized as revenue.

We signed an Assignment  and Exclusive  Services  Agreement  with GMA, a related
party, whereby revenues and all associated  performance  obligations under GMA's
web-hosting  and  training  contracts  were  assigned to us.  Accordingly,  this
revenue is recognized in our financial  statements  when it is collected,  along
with our revenue of CirTran Online Corporation.

We have entered into a Manufacturing,  Marketing and Distribution Agreement with
PlayBev,  a related  party,  whereby  we are the  vendor of record in  providing
initial development, promotional, marketing, and distribution services marketing
and  distribution  services.  Accordingly,  all  amounts  billed to  PlayBev  in
connection  with the development and marketing of its new energy drink have been
included in revenue.

Impairment of Long-Lived  Assets - We review our  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.  At each  balance
sheet date,  we evaluate  whether  events and  circumstances  have occurred that
indicate possible impairment. We use 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 December 31, 2008, it was
determined  that the Company's  investment in Diverse Talent Group was impaired,
and the  company  recorded a loss on  investment  in the  amount of  $1,068,000.
Long-lived  asset  costs are  amortized  over the  estimated  useful life of the
asset, which is typically 5 to 7 years.  Amortization  expense for the three and
six  months  ended  June  30,  2009 was  $113,780  and  $224,894,  respectively.
Amortization  expense was  $105,540  and  $211,297  for the three and six months
ended June 30, 2008, respectively.


                                       31
<PAGE>

Financial  Instruments  with  Derivative  Features  - We do not  hold  or  issue
derivative  instruments  for  trading  purposes.   However,  we  have  financial
instruments  that are  considered  derivatives,  or  contain  embedded  features
subject to derivative accounting.  Embedded derivatives are valued separate from
the host instrument and are recognized as derivative  liabilities in our balance
sheet. We measure these instruments at their estimated fair value, and recognize
changes in their estimated fair value in results of operations during the period
of change. We have estimated the fair value of these embedded  derivatives using
the  Black-Scholes  model.  The fair  value of the  derivative  instruments  are
measured each quarter.

Registration  Payment  Arrangements  - On January 1, 2007, we adopted  Financial
Accounting  Standards  Board ("FASB")  Emerging Issues Task Force ("EITF") Issue
No. 00-19-2,  Accounting for Registration Payment Arrangements ("EITF 00-19-2").
Under EITF 00-19-2, and SFAS No. 5, Accounting for Contingencies, a registration
payment  arrangement  is an  arrangement  where  (a) we  have  agreed  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) we will endeavor to keep a registration  statement effective for a specified
period of time; and (c) transfer of consideration is required if we fail to meet
those requirements.  When we issue an instrument coupled with these registration
payment requirements,  we estimate the amount of consideration likely to be paid
under the  agreement,  and  offset  such  amount  against  the  proceeds  of the
instrument issued. The estimate is then reevaluated at the end of each reporting
period, and any changes  recognized as a registration  penalty in the results of
operations.  We have instruments that contain registration payment arrangements.
The  effect  of  implementing  this  EITF has not had a  material  effect on the
financial  statements  because we consider the  probability of payment under the
terms of the agreements to be remote.

Accounting for Sale / Leaseback Transactions - We sold our Salt Lake City, Utah,
building in a sale/leaseback  transaction,  and reported the gain on the sale as
deferred  revenue to be recognized  over the term of lease pursuant to Statement
of Financial Accounting Standards ("SFAS") No. 13, Accounting for Leases.

ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk

Our exposure to market risk is limited to interest  rate  sensitivity,  which is
affected  by changes  in the  general  level of U.S.  interest  rates.  Our cash
equivalents  are  invested  with high  quality  issuers  and limit the amount of
credit  exposure to any one  issuer.  Due to the  short-term  nature of the cash
equivalents,  we believe that we are not subject to any material  interest  rate
risk as it relates to interest income.  All outstanding debt instruments at June
30, 2009,  had fixed  interest  rates and were therefore not subject to interest
rate risk.

We did not have any  foreign  currency  hedges  or  other  derivative  financial
instruments as of June 30, 2009. We do not enter into financial  instruments for
trading  or  speculative  purposes  and  do  not  utilize  derivative  financial
instruments.  Our  operations are conducted in the United States and as such are
not subject to foreign currency exchange rate risk.

ITEM 4.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain  disclosure controls and procedures that are designed to ensure that
information  required to be  disclosed  in our Exchange Act reports is recorded,
processed,  summarized,  and reported  within the time periods  specified in the
SEC's rules and forms, and that such information is accumulated and communicated
to management,  including our Chief Executive Officer / Chief Financial Officer,
as appropriate,  to allow timely decisions regarding any required disclosure. In
designing and evaluating  these disclosure  controls and procedures,  management
recognized  that any controls and  procedures,  no matter how well  designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives,  and  management  necessarily  was required to apply its judgment in
evaluating the  cost-benefit  relationship of possible  disclosure  controls and
procedures.



                                       32
<PAGE>

As of the end of the period covered by this report,  our Chief Executive Officer
/  Chief  Financial  Officer  evaluated  the  effectiveness  of the  design  and
operation  of our  disclosure  controls  and  procedures  (as  defined  in  Rule
13a-15(e) under the Exchange Act). Based on this evaluation, the Chief Executive
Officer / Chief  Financial  Officer  concluded that the disclosure  controls and
procedures were effective to provide reasonable assurance as of June 30, 2009.

Changes in Internal Control Over Financial Reporting

During  the three and six  months  June 30,  2009,  there were no changes in our
internal control over financial reporting that have materially affected,  or are
reasonably  likely to materially  affect,  our internal  control over  financial
reporting.

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

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.  ("UKing") and Charles Ho ("Ho") filed suit against
International  Edge,  Inc.  ("IE"),  Michael Casey  Enterprises,  Inc.  ("MCE"),
Michael Casey ("Casey"),  David Hayek ("Hayek"),  and HIPMG, Inc. ("HIPMG"), for
breach  of  contract,  breach of the  implied  covenant  of good  faith and fair
dealing,  interference  with  economic  relationships,   fraud,  and  breach  of
provisions  of Utah and New Jersey  statutes in  relation  to certain  licensing
issues relating to the Ab King Pro. IE, MCE and Casey  counterclaimed,  alleging
breach of contract, fraud, defamation and related claims.

As of the date of this filing,  all remaining claims and  counterclaims had been
resolved.  A stipulated motion to dismiss was filed by the parties and signed by
the Court on May 15, 2009, dismissing the matter.

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 related to exclusive  manufacturing  agreements
with ABS,  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
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,  the Company and ABS signed an agreement  (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.


                                       33
<PAGE>

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 is to be credited to the  purchase of
substantially all of ABS's assets. Under the settlement, we may 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 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   bligation 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 two-year  anniversary of the closing
of the  purchase,  then,  within 30 days of such  anniversary,  the  Company has
agreed to pay ABS an amount equal to $435,000 less the royalty  payments made to
date.  As part of the  settlement,  the Company also agreed to exchange  general
releases with, among others, ABS, Jason Dodo (the manager of ABS), ICG, and MFC.
The settlement also resolved a related dispute with ICG in which ICG assigned to
the Company $65,000 of its secured claim against ABS.

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).

         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").

         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 us (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 recognized before we begin to
share in the Royalty Obligation payments is $435,000.

In a  subsequent  pleading,  Mr. Dodo and ABS alleged  that we had  breached the
settlement  agreement.  That  claim  has  been  settled.  As of the date of this
report,  $124,000 remains unpaid to ABS as part of the payment which the Company
has agreed to pay ABS equal to $435,000 less the royalty  payments made to date.
Management  subsequently  learned that ABS sought and obtained  default judgment
against the Company in California.  Management believes the default judgment was
wrongfully  entered,  and we intend to vigorously defend against the default. We
have  retained  California  counsel  to assist in our  efforts  to set aside the
default judgment.


                                       34
<PAGE>

A&A Smart Shopping v. CirTran  Beverage Corp.,  California  Superior Court,  Los
Angeles County, KC054487. Plaintiff A&A Smart Shopping ("A&A") filed a complaint
against CirTran Beverage  Corporation  ("CirTran Beverage") and John Does 1-100,
claiming  breach  of  contract  and  intentional   interference   with  economic
relations,  based on a distribution  agreement between A&A and CirTran Beverage.
On February 9, 2009,  CirTran  Beverage filed its answer,  claiming that A&A had
materially  breached the Distribution  Agreement,  and that CirTran Beverage had
terminated the Distribution Agreement. The case is proceeding through discovery.
CirTran  Beverage intends to defend  vigorously  against all allegations in this
matter.

Apex Maritime Co. (LAX),  Inc. v. CirTran  Corporation,  CirTran Asia,  Inc., et
al.,  California  Superior Court, Los Angeles County,  SC098148.  Plaintiff Apex
Maritime Co. (LAX), Inc. ("Apex") filed a complaint on May 8, 2008,  against the
Company and CirTran Asia, the Company's subsidiary, claiming breach of contract,
nonpayment  on  open  book  account,  non-payment  of  an  account  stated,  and
non-payment for services,  seeking approximately $62,000 against the Company and
$121,000  against CirTran Asia. The Company and CirTran Asia answered on June 9,
2008. The parties  subsequently  entered into a Release and Settlement Agreement
pursuant to which the Company and  CirTran  Asia agreed to pay an  aggregate  of
$195,000  in monthly  payments.  In the event of default  under the  Release and
Settlement  Agreement,  the  Plaintiffs  could file a  Stipulation  for Entry of
Judgment in the amount of $195,000, minus any amounts paid under the Release and
Settlement  Agreement.  On February 26, 2009,  the  Stipulation  of Judgment was
filed,  granting the California  court  jurisdiction  to enforce the Release and
Settlement Agreement.  On March 3, 2009, the court entered its judgment pursuant
to the Release and Settlement Agreement. On April 23, 2009, a Judgment Enforcing
Settlement  was entered  against  CirTran  Corporation  and CirTran Asia,  Inc.,
jointly and severally in the principal  amount of $173,000,  plus fees of $1,800
and costs of $40.

Jimmy Esebag v. CirTran Beverage Corp., Fadi Nora, et al.,  California  Superior
Court, Los Angeles County,  BC396162.  On August 12, 2008, the plaintiff filed a
complaint  against  CirTran  Beverage and Mr. Nora bringing  claims of breach of
contract,  fraud, and defamation (solely against Mr. Nora) alleging  non-payment
of a fee of $1,000,000.  The  defendants  filed their answer on October 2, 2008.
The case is currently in the discovery  phase.  The defendants  intend to defend
vigorously against the allegations in this case.

Fortune  Resources LLC v. CirTran  Beverage  Corp,  Civil No.  090401259,  Third
Judicial District Court,  Salt Lake County,  State of Utah. On February 5, 2009,
the plaintiff filed a complaint against CirTran Beverage,  claiming  non-payment
for goods in the amount of $121,135.  CirTran Beverage filed its answer on March
10, 2009, denying the allegations in the Complaint. The case is presently in the
discovery  phase.  CirTran  Beverage  intends to defend  vigorously  against the
allegations in the Complaint.

Global Freight  Forwarders v. CirTran Asia, Civil No. 080925731,  Third Judicial
District  Court,  Salt Lake County,  State of Utah.  On December  18, 2008,  the
plaintiff filed a complaint  against CirTran Asia,  claiming breach of contract,
breach  of the duty of good  faith  and fair  dealing,  and  unjust  enrichment,
seeking  approximately  $260,000.  The  Complaint  was served on CirTran Asia on
January  5,  2009.  On  February  12,  2009,  CirTran  Asia  filed  its  answer.
Thereafter,  CirTran Asia filed an amended answer and counterclaim.  The case is
presently in the  discovery  phase.  CirTran Asia intends to defend  against the
plaintiff's claims, and pursue its counterclaim.

Dr. Najib Bouz v. CirTran Beverage Corp, Iehab Hawatmeh and Does 1-20,  Superior
Court for the State of California, County of Los Angeles, Civil No. KC053818. On
September  12, 2008,  the  plaintiff  filed a complaint,  seeking a judgment for
$52,500 plus attorneys' fees and certain costs, against CirTran Beverage,  Iehab
Hawatmeh and unnamed others, claiming breach of contract and fraud in connection
with a certain  promissory  note.  CirTran  Beverage and Mr. Hawatmeh  answered,
denying  liability.  The case is presently in the discovery  phase.  The parties
have engaged in settlement negotiations, and on August 11, 2009, participated in
a mediation conference that resulted in the settlement of all outstanding claims
and issues.

Dr. Paul Bouz v. CirTran Beverage Corp,  Iehab Hawatmeh and Does 1-20,  Superior
Court for the State of California, County of Los Angeles, Civil No. KC053819. On
September  12, 2008,  the  plaintiff  filed a complaint,  seeking a judgment for
$52,500 plus attorneys' fees and certain costs, against CirTran Beverage,  Iehab
Hawatmeh and unnamed others, claiming breach of contract and fraud in connection
with a certain  promissory  note.  CirTran  Beverage and Mr. Hawatmeh  answered,
denying  liability.  The case is presently in the discovery  phase.  The parties
have engaged in settlement negotiations, and on August 11, 2009, participated in
a mediation conference that resulted in the settlement of all outstanding claims
and issues.


                                       35
<PAGE>

Pac Tech a Division of LaFrance  Corporation v. CirTran  Corporation,  Civil No.
080422470,  Third Judicial District Court,  Salt Lake County,  State of Utah. On
December 3, 2008, the plaintiff served a complaint against CirTran  Corporation,
claiming  non-payment  for goods or  services.  Judgment was entered on March 4,
2009,  in the amount of $6,383,  with accruing  interest and costs.  The parties
settled this matter on June 1, 2009.

Talon  Printing,  Inc.,  v. CirTran  Corporation,  Civ No.  080422537  DC, Third
Judicial  District  Court,  West Jordan  Dept.,  State of Utah.  In this matter,
judgment was entered against  CirTran  Corporation on or about January 15, 2009,
in the amount of $7,586.43. An order in Supplementary Proceedings was entered on
April 14, 2009, ordering the president of CirTran to appear on May 22, 2009, for
further proceedings. The parties settled this matter on June 18, 2009.

Schleuniger Inc., v. CirTran Corp., Civ. No. 090408568,  Third Judicial District
Court, West Jordan Dept.,  State of Utah. A summons and complaint were served on
CirTran  Corporation  on or about April 28, 2009.  The complaint  alleges claims
sounding  in  contract  and  requests  damages in the amount of  $5,329.00  plus
interest and attorneys' fees and costs.  The parties settled this matter on July
20, 2009.

CL&D Graphics v. CirTran Beverage Corp., Case No. 09V01154, Circuit Ct, Waukesha
County, Wisconsin. On or about March 23, 2009, CL&D filed an action in the above
court,  alleging claims for breach of contract,  unjust  enrichment,  promissory
estoppel,  and seeking damages of at least $25,488.66 along with attorneys' fees
and costs.  CirTran  Beverage Corp is reviewing the matter and intends to defend
vigorously against the allegations in the complaint.

Integrated  Ideas  &  Technologies,   Inc.,  v.  CirTran  Corporation,  Civ  No.
090407847,  Third Judicial District Court, West Jordan Dept.,  State of Utah. On
or about April 13, 2009,  Integrated  served CirTran  Corporation with a summons
and complaint,  alleging  claims sounding in contract and seeking damages in the
amount of $2,684 plus  interest  and costs.  The parties  settled this matter on
June 18, 2009.

Jamie Jackson v. CirTran Corporation, Civ No. 090909208, Third Judicial District
Court,  State of Utah.  The complaint  alleges  claims  sounding in contract and
seeking  damages.  On July 10,  2009,  the Third  District  Court Clerk signed a
Default Certificate. The plaintiff seeks default judgment in the total amount of
$14,941.80. The parties are engaged in settlement discussions.

Anixter Inc., /Wire & Cable v. CirTran  Corporation,  Civ No.  090409843,  Third
Judicial District Court, State of Utah. The complaint alleges claims sounding in
contract for goods and or services supplied and seeking damages of approximately
$32,000.00.  The parties have agreed to settle the case for $16,000.00,  subject
to receipt of payment from the Company.

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

During the periods covered by this report,  we issued shares of our common stock
without  registering  those  securities  under the  Securities  Act of 1933,  as
amended ("Securities Act") as follows:

o        65,088,757 shares for payment of $110,000 of principal on the debenture
         to YA Global (see Note 8).  Associated  with the  debenture  conversion
         payment was a related decrease in the derivative liability of $62,741.
o        7,621,580  of  common  shares to YA  Global for  payment  of  $7,622 of
         principal on the August Debenture.

The shares of common stock were issued without  registration  under the 1933 Act
in  reliance  on  Section  4(2) of the 1933 Act and the  rules  and  regulations
promulgated thereunder.

Item 3.  DEFAULTS UPON SENIOR SECURITIES

None


                                       36
<PAGE>

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

Item 5.  Other Information

None.

Item 6.  Exhibits

Exhibit No.      Document
-----------      --------

3.1              Articles of Incorporation (previously filed as Exhibit No. 2 to
                 our Current  Report on Form 8-K,  filed with the  Commission on
                 July 17, 2000, and incorporated herein by reference).

3.2              Bylaws (previously filed as Exhibit No. 3 to our Current Report
                 on Form 8-K,  filed with the  Commission on July 17, 2000,  and
                 incorporated herein by reference).

10.1             Securities  Purchase Agreement between CirTran  Corporation and
                 Highgate  House  Funds,   Ltd.,   dated  as  of  May  26,  2005
                 (previously filed as an exhibit to the Company's Current Report
                 on Form 8-K,  filed with the  Commission  on June 3, 2005,  and
                 incorporated herein by reference).

10.2             Form of 5 percent Convertible Debenture, due December 31, 2007,
                 issued by CirTran  Corporation  (previously filed as an exhibit
                 to the  Company's  Current  Report on Form 8-K,  filed with the
                 Commission  on  June  3,  2005,  and  incorporated   herein  by
                 reference).

10.3             Investor   Registration   Rights   Agreement   between  CirTran
                 Corporation and Highgate House Funds, Ltd., dated as of May 26,
                 2005 (previously  filed as an exhibit to the Company's  Current
                 Report on Form 8-K,  filed with the Commission on June 3, 2005,
                 and incorporated herein by reference).

10.4             Security  Agreement  between  CirTran  Corporation and Highgate
                 House Funds,  Ltd., dated as of May 26, 2005 (previously  filed
                 as an  exhibit  to the  Company's  Current  Report on Form 8-K,
                 filed with the  Commission  on June 3, 2005,  and  incorporated
                 herein by reference).

10.5             Escrow Agreement  between CirTran  Corporation,  Highgate House
                 Funds,  Ltd.,  and  David  Gonzalez  dated  as of May 26,  2005
                 (previously filed as an exhibit to the Company's Current Report
                 on Form 8-K,  filed with the  Commission  on June 3, 2005,  and
                 incorporated herein by reference).

10.6             Settlement   Agreement  and  Mutual  Release   between  CirTran
                 Corporation and Howard Salamon d/b/a/ Salamon  Brothers,  dated
                 as of February 10, 2006

10.7             Settlement  Agreement by and among  Sunborne XII, LLC,  CirTran
                 Corporation, and others named therein,
                  dated as of January 26, 2006

10.8             Employment  Agreement with Richard Ferrone (previously filed as
                 an  exhibit  to a Current  Report  on Form 8-K  filed  with the
                 Commission  on  May  15,  2006,  and  incorporated  here  in by
                 reference).

10.9             Marketing and  Distribution  Agree between CirTran  Corporation
                 and Harrington Business Development,  Inc., dated as of October
                 24,  2005  (previously  filed as an  exhibit  to the  Company's
                 Quarterly  Report on Form 10-QSB filed with the  Commission  on
                 May 19, 2006, and incorporated here in by reference).

10.10            Amendment to Marketing and  Distribution  Agree between CirTran
                 Corporation and Harrington Business Development, Inc., dated as
                 of  March  31,  2006  (previously  filed as an  exhibit  to the
                 Company's  Quarterly  Report  on Form  10-QSB  filed  with  the
                 Commission  on  May  19,  2006,  and  incorporated  here  in by
                 reference).


                                       37
<PAGE>


10.11            Amendment  No. 1 to  Investor  Registration  Rights  Agreement,
                 between  CirTran  Corporation  and Highgate House Funds,  Ltd.,
                 dated as of June 15, 2006.

10.12            Amendment  No. 1 to  Investor  Registration  Rights  Agreement,
                 between CirTran  Corporation and Cornell Capital Partners,  LP,
                 dated as of June 15, 2006.

10.13            Assignment and Exclusive Services Agreement,  dated as of April
                 1, 2006, by and among Diverse Talent Group,  Inc.,  Christopher
                 Nassif,   and  Diverse   Media  Group  Corp.  (a  wholly  owned
                 subsidiary of Cirtran Corporation).

10.14            Employment  Agreement  between  Christopher  Nassif and Diverse
                 Media Group Corp.,  dated as of April 1, 2006 (previously filed
                 as an exhibit to the Company's Current Report on Form 8-K filed
                 with the Commission on June 2, 2006, and  incorporated  here in
                 by reference).

10.15            Loan  Agreement  dated as of May 24, 2006, by and among Diverse
                 Talent Group, Inc., Christopher Nassif, and Diverse Media Group
                 Corp (previously  filed as an exhibit to the Company's  Current
                 Report on Form 8-K filed with the  Commission  on June 2, 2006,
                 and incorporated here in by reference).

10.16            Promissory  Note,  dated May 24, 2006  (previously  filed as an
                 exhibit to the Company's  Current Report on Form 8-K filed with
                 the  Commission on June 2, 2006,  and  incorporated  here in by
                 reference).

10.17            Security  Agreement,  dated as of May 24, 2006,  by and between
                 Diverse  Talent  Group,  Inc.,  and  Diverse  Media Group Corp.
                 (previously filed as an exhibit to the Company's Current Report
                 on Form 8-K filed  with the  Commission  on June 2,  2006,  and
                 incorporated here in by reference).

10.18            Fraudulent  Transaction  Guarantee,  dated  as of May 24,  2006
                 (previously filed as an exhibit to the Company's Current Report
                 on Form 8-K filed  with the  Commission  on June 2,  2006,  and
                 incorporated here in by reference).

10.19            Securities  Purchase Agreement between CirTran  Corporation and
                 ANAHOP,  Inc., dated as of May 24, 2006 (previously filed as an
                 exhibit to the Company's  Current Report on Form 8-K filed with
                 the  Commission on May 30, 2006,  and  incorporated  here in by
                 reference).

10.20            Warrant  for   10,000,000   shares  of  CirTran  Common  Stock,
                 exercisable at $0.15,  issued to Albert Hagar (previously filed
                 as an exhibit to the Company's Current Report on Form 8-K filed
                 with the Commission on May 30, 2006, and  incorporated  here in
                 by reference).

10.21            Warrant  for   5,000,000   shares  of  CirTran   Common  Stock,
                 exercisable at $0.15,  issued to Fadi Nora (previously filed as
                 an exhibit to the  Company's  Current  Report on Form 8-K filed
                 with the Commission on May 30, 2006, and  incorporated  here in
                 by reference).

10.22            Warrant  for   5,000,000   shares  of  CirTran   Common  Stock,
                 exercisable at $0.25,  issued to Fadi Nora (previously filed as
                 an exhibit to the  Company's  Current  Report on Form 8-K filed
                 with the Commission on May 30, 2006, and  incorporated  here in
                 by reference).

10.23            Warrant  for   10,000,000   shares  of  CirTran  Common  Stock,
                 exercisable at $0.50,  issued to Albert Hagar (previously filed
                 as an exhibit to the Company's Current Report on Form 8-K filed
                 with the Commission on May 30, 2006, and  incorporated  here in
                 by reference).

10.24            Asset  Purchase  Agreement,  dated as of June 6,  2006,  by and
                 between Advanced Beauty Solutions, LLC, and CirTran Corporation
                 (previously filed as an exhibit to the Company's Current Report
                 on Form 8-K filed with the  Commission  on June 13,  2006,  and
                 incorporated here in by reference).

10.25            Securities  Purchase Agreement between CirTran  Corporation and
                 ANAHOP, Inc., dated as of June 30, 2006 (previously filed as an
                 exhibit to the Company's  Current Report on Form 8-K filed with
                 the  Commission on July 6, 2006,  and  incorporated  here in by
                 reference).

                                       38
<PAGE>

10.26            Warrant  for   20,000,000   shares  of  CirTran  Common  Stock,
                 exercisable at $0.15,  issued to Albert Hagar (previously filed
                 as an exhibit to the Company's Current Report on Form 8-K filed
                 with the Commission on July 6, 2006, and  incorporated  here in
                 by reference).

10.27            Warrant  for   10,000,000   shares  of  CirTran  Common  Stock,
                 exercisable at $0.15,  issued to Fadi Nora (previously filed as
                 an exhibit to the  Company's  Current  Report on Form 8-K filed
                 with the Commission on July 6, 2006, and  incorporated  here in
                 by reference).

10.28            Warrant  for   10,000,000   shares  of  CirTran  Common  Stock,
                 exercisable at $0.25,  issued to Fadi Nora (previously filed as
                 an exhibit to the  Company's  Current  Report on Form 8-K filed
                 with the Commission on July 6, 2006, and  incorporated  here in
                 by reference).

10.29            Warrant  for   23,000,000   shares  of  CirTran  Common  Stock,
                 exercisable at $0.50,  issued to Albert Hagar (previously filed
                 as an exhibit to the Company's Current Report on Form 8-K filed
                 with the Commission on July 6, 2006, and  incorporated  here in
                 by reference).

10.30            Marketing  and  Distribution  Agreement,  dated as of April 24,
                 2006, by and between Media Syndication Global, LLC, and CirTran
                 Corporation  (previously  filed as an exhibit to the  Company's
                 Current  Report on Form 8-K filed with the  Commission  on July
                 10, 2006, and incorporated here in by reference).

10.31            Lockdown  Agreement  by and  between  CirTran  Corporation  and
                 Cornell  Capital  Partners,  LP,  dated  as of  July  20,  2006
                 (previously  filed as an exhibit to the Company's  Registration
                 Statement on Form SB-2/A (File No.  333-128549)  filed with the
                 Commission  on  July  27,  2006,  and  incorporated  herein  by
                 reference).

10.32            Lockdown Agreement by and among CirTran Corporation and ANAHOP,
                 Inc.,  Albert Hagar,  and Fadi Nora,  dated as of July 20, 2006
                 (previously  filed as an exhibit to the Company's  Registration
                 Statement on Form SB-2/A (File No.  333-128549)  filed with the
                 Commission  on  July  27,  2006,  and  incorporated  herein  by
                 reference).

10.33            Talent  Agreement  between  CirTran  Corporation  and Holyfield
                 Management,  Inc., dated as of March 8, 2006 (previously  filed
                 as an exhibit to the Company's  Registration  Statement on Form
                 SB-2/A (File No.  333-128549) filed with the Commission on July
                 27, 2006, and incorporated herein by reference).

10.34            Amendment  No. 2 to  Investor  Registration  Rights  Agreement,
                 between  CirTran  Corporation  and Highgate House Funds,  Ltd.,
                 dated  as  of  August  10,   2006   (filed  as  an  exhibit  to
                 Registration  Statement on Form SB-2 (File No.  333-128549) and
                 incorporated herein by reference).

10.35            Amendment  No. 2 to  Investor  Registration  Rights  Agreement,
                 between CirTran  Corporation and Cornell Capital Partners,  LP,
                 dated  as  of  August  10,   2006   (filed  as  an  exhibit  to
                 Registration  Statement on Form SB-2 (File No.  333-128549) and
                 incorporated herein by reference).

10.36            Amended  Lock  Down  Agreement  by and among  the  Company  and
                 ANAHOP, Inc., Albert Hagar, and Fadi Nora, dated as of November
                 15, 2006 (filed as an exhibit to the Company's Quarterly Report
                 for the  quarter  ended  September  30,  2006,  filed  with the
                 Commission  on November 20, 2006,  and  incorporated  herein by
                 reference).

10.37            Amended  Lock Down  Agreement  by and  between  the Company and
                 Cornell Capital  Partners,  L.P.,  dated as of October 30, 2006
                 (filed as an exhibit to the Company's  Quarterly Report for the
                 quarter ended September 30, 2006,  filed with the Commission on
                 November 20, 2006, and incorporated herein by reference).

10.38            Amendment  to  Debenture  and  Registration   Rights  Agreement
                 between the Company and Cornell Capital  Partners,  L.P., dated
                 as of October 30,  2006  (filed as an exhibit to the  Company's
                 Quarterly  Report for the quarter  ended  September  30,  2006,
                 filed  with  the   Commission   on  November  20,   2006,   and
                 incorporated herein by reference).


                                       39
<PAGE>

10.39            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).

10.40            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).

10.41            Licensing and Marketing  Agreement with  Arrowhead  Industries,
                 Inc. dated February 13, 2007 (previously filed as an exhibit to
                 the  Company's  Annual  Report for the year ended  December 31,
                 2006,  filed  with  the  Commission  on  April  17,  2007,  and
                 incorporated herein by reference).

10.42            Amendment to  Employment  Agreement for Iehab  Hawatmeh,  dated
                 January  1,  2007  (previously  filed  as  an  exhibit  to  the
                 Company's  Annual Report for the year ended  December 31, 2006,
                 filed with the Commission on April 17, 2007,  and  incorporated
                 herein by reference)

10.43            Amendment to Employment  Agreement for Shaher  Hawatmeh,  dated
                 January  1,  2007  (previously  filed  as  an  exhibit  to  the
                 Company's  Annual Report for the year ended  December 31, 2006,
                 filed with the Commission on April 17, 2007,  and  incorporated
                 herein by reference)

10.44            Amendment to  Employment  Agreement  for Trevor  Siliba,  dated
                 January  1,  2007  (previously  filed  as  an  exhibit  to  the
                 Company's  Annual Report for the year ended  December 31, 2006,
                 filed with the Commission on April 17, 2007,  and  incorporated
                 herein by reference)

10.45            Amendment to  Employment  Agreement  for Richard  Ferrone dated
                 February  7,  2007  (previously  filed  as an  exhibit  to  the
                 Company's  Annual Report for the year ended  December 31, 2006,
                 filed with the Commission on April 17, 2007,  and  incorporated
                 herein by reference).

10.46            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).

10.47            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).

10.48            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).

10.49            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).

10.50            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, 2007, and incorporated herein by reference).

10.51            Exclusive Manufacturing, Marketing, and Distribution Agreement,
                 with  Full Moon  Enterprises,  Inc.  dated as of June 8,  2007,
                 pertaining  to the  Ball  Blaster(TM)  (previously  filed as an
                 exhibit to the Company's' Quarterly Report on Form 10-QSB filed
                 with the Commission on August 20, 2007, and incorporated herein
                 by reference).

10.52            Amended and Restated Exclusive  Manufacturing,  Marketing,  and
                 Distribution Agreement, dated as of August 21, 2007 (previously
                 filed as an exhibit to the Company's Current Report on Form 8-K
                 filed  with  the   Commission  on  September   24,  2007,   and
                 incorporated herein by reference).


                                       40
<PAGE>

10.53            Exclusive Sales Distribution/Representative Agreement, dated as
                 of August  23,  2007  (previously  filed as an  exhibit  to the
                 Company's  Current Report on Form 8-K filed with the Commission
                 on September 24, 2007, and incorporated herein by reference).

10.54            Settlement  Agreement between CirTran Corporation and Trevor M.
                 Saliba,  dated as of August 15,  2007  (previously  filed as an
                 exhibit to the Company's  Current Report on Form 8-K filed with
                 the Commission on September 24, 2007, and  incorporated  herein
                 by reference).

10.55            Exclusive  Manufacturing,  Marketing and Distribution Agreement
                 between  CirTran  Corporation  and Shaka Shoes,  Inc., a Hawaii
                 corporation  (previously  filed as an exhibit to the  Company's
                 Current  Report  on Form  8-K,  filed  with the  Commission  on
                 February 11, 2008, and incorporated herein by reference).

10.56            Amendment   Number  3  to   Amended   and   Restated   Investor
                 Registration Rights Agreement,  between CirTran Corporation and
                 YA Global Investments,  L.P. (previously filed as an exhibit to
                 the  Company's  Current  Report  on Form  8-K,  filed  with the
                 Commission  on February 12, 2008,  and  incorporated  herein by
                 reference).

10.57            Amendment Number 6 to Investor  Registration  Rights Agreement,
                 between  CirTran  Corporation and YA Global  Investments,  L.P.
                 (previously filed as an exhibit to the Company's Current Report
                 on Form 8-K,  filed with the  Commission  on February 12, 2008,
                 and incorporated herein by reference).

10.58            Agreement  between  and among  CirTran  Corporation,  YA Global
                 Investments,  L.P., and Highgate House Funds,  LTD  (previously
                 filed as an exhibit  to the  Company's  Current  Report on Form
                 8-K,  filed with the  Commission  on  February  12,  2008,  and
                 incorporated herein by reference).

10.59            Promissory Note (previously  filed as an exhibit to the Current
                 Report on Form 8-K, filed with the Commission on March 5, 2008,
                 and incorporated herein by reference).

10.60            Form of Warrant  (previously filed as an exhibit to the Current
                 Report on Form 8-K, filed with the Commission on March 5, 2008,
                 and incorporated herein by reference).

10.61            Subscription   Agreement   between   the   Company   and   Haya
                 Enterprises, LLC (previously filed as an exhibit to the Current
                 Report on Form 8-K, filed with the Commission on March 5, 2008,
                 and incorporated herein by reference).

10.62            Forbearance Agreement between CirTran Corporation and YA Global
                 Investments (previously filed as an exhibit to a Current Report
                 on Form 8-K,  filed with the Commission on August 17, 2009, and
                 incorporated herein by reference).

10.63            Stock Purchase Agreement  between CirTran Corporation and Iehab
                 Hawatmeh.

10.64            Stock Purchase  Agreement between CirTran  Corporation and Fadi
                 Nora.

31               Certification of President / Chief Financial Officer

32               Certification  pursuant to 18 U.S.C. Section 1350 - President /
                 Chief Financial Officer


                                       41
<PAGE>


                                   SIGNATURES

In  accordance  with  Section 13 or 15 (d) of the Exchange  Act, the  registrant
caused this report to be signed on its behalf by the  understood  thereunto duly
authorized.

                                        CIRTRAN CORPORATION

                                         /s/ Iehab Hawatmeh
                                         ---------------------------------------
Dated: August 19, 2009                   By: Iehab Hawatmeh
                                         President, Chief Financial Officer
                                         (Principal Executive Officer, Principal
                                         Financial Officer)

In  accordance  with the  Exchange  Act,  this  report  has been  signed  by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.


                                          /s/ Iehab Hawatmeh
                                          --------------------------------------
Dated: August 19, 2009                    By: Iehab Hawatmeh
                                          President, Chief Financial Officer,
                                          Principal Executive Officer, Principal
                                          Financial Officer and Director









                                       42


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