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

                                   FORM 10-KSB

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

                     FOR THE FISCAL YEAR ENDED JUNE 30, 2007

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

                    For the transition period from N/A to N/A
                        Commission File Number:  0-25474

                            MEDCOM USA, INCORPORATED
           (Name of small business issuer as specified in its charter)
             DELAWARE                              65-0287558
      State of Incorporation            IRS Employer Identification No.
I

     7975  NORTH  HAYDEN  ROAD,  SUITE  D-333,  SCOTTSDALE,  AZ  85258
                  (Address  of  principal  executive  offices)

       Registrant's telephone number, including Area Code: (480) 675-8865
        Securities registered pursuant to Section 12(b) of the Act:  None
           Securities registered pursuant to Section 12(g) of the Act:

                         COMMON STOCK, $.0001 PAR VALUE

Check  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 past 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
                               ---                  ---

Check  if  disclosure of delinquent filers in response to Item 405 of Regulation
S-B  is  not contained in this form, and no disclosure will be contained, to the
best  of  the  Registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in  Part III of this Form 10-KSB or any
amendment  to  this  Form  10-KSB.  [X]

Registrant''s  revenues  for  the  most  recent  fiscal  year  were  $ 6,000,258

The aggregate market value of the common stock held by non-affiliates computed
based on the closing price of such stock on September 19, 2007, was
approximately $23,040,000.


<PAGE>
                                     PART I

ITEM  1.  DESCRIPTION  OF  BUSINESS.

Except for historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties.  Such
forward-looking statements include, but are not limited to, statements regarding
future events and the Company''s plans and expectations.  Actual results could
differ materially from those discussed herein.  Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
elsewhere in this Form 10-KSB or incorporated herein by reference, including
those set forth in Management''s Discussion and Analysis or Plan of Operation.

OVERVIEW

MedCom USA, Inc. (the "Company") a Delaware corporation was formed in August
1991 under the name Sims Communications, Inc.  The Company''s primary business
was providing telecommunications services.  In 1996 the Company introduced four
programs to broaden the Company's product and service mix: (a) cellular
telephone activation, (b) sale of prepaid calling cards, (c) sale of long
distance telephone service and (d) rental of cellular telephones using an
overnight courier service.  With the exception of the sale of prepaid calling
cards and cellular telephone activation the other programs were discontinued in
December 1997.  During the fiscal year of 1998, the Company redirected its
operations and moved into the area of medical information processing.

The Company changed its name to MedCom USA, Inc. in October 1999.  During the
fiscal years of 1999 and continuing through 2000, the Company directed its
efforts in medical information processing. From March 31, 2001 through 2005, the
Company operated the Medcom System (""Medcom"") that is deployed through a
point-of-sale terminal or web portal offering electronic transaction processing,
as well as insurance eligibility verification. Since 2005, the Company has
aggressively focused on its primary operations in Electronic Data Interchange
(EDI) and core business in Electronic Medical Transaction Processing.

MEDICAL TRANSACTION PROCESSING
------------------------------

MEDCOM SYSTEM

The Company provides innovative technology-based solutions for the healthcare
industries that enable users to efficiently collect, use, analyze and
disseminate data from payers, health care providers and patients. The MedCom
System currently operates through a point-of-sale terminal or web portal.  The
point-of-sale terminals are purchased from Hypercom Corporation (Hypercom).  The
Company business plan consists of offering a service bundled package that would
have the capability of processing unlimited claims and eligibility verification
for monthly service fees.

The Company''s a ""web portal"" encourages customers to process their medical
claims through an online portal.   Many customers purchase the terminal for the
front office and the portal system for the back office to take advantage of the
ease of both products.

FINANCIAL SERVICES

The Company''s credit card center and check services, provides the healthcare
industry a combination of services designed to improve collection and approvals
of credit/debit card payments along with the added benefit and convenience of
personal check guarantee from financial institutions.


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<PAGE>
Easy-Pay is an accounts receivable management program that allows a provider to
swipe a patient''s credit card and store the patient''s signature in the
terminals, and bill the patient''s card at a later date when it is determined
what services rendered were not covered by the patient''s insurance.  Also,
Easy- Pay allows patient''s the added benefit and convenience of a one-time
payment option or a recurring installment payments that will be processed on a
specified date determined by the provider and patient.  These options insure
providers that payments are timely processed with the features of electronic
accounts receivable management.  These services are all deployed thorough
point-of-sale terminals or web portal.  Using the MedCom system, medical
providers are relieved of many of the problems associated with billings and
account management, and results in lower administrative documentation and costs.

PATIENT ELIGIBILITY

The MedCom System is also an electronic processing system that consolidates
insurance eligibility verification, processes medical claims, and monitors
referrals.  The MedCom System allows a patient''s primary care physician to
request approval from the patient''s insurance carrier or managed care plan for
a referral to a secondary physician or specialist.  The secondary physician or
specialist can use the MedCom system to verify referrals are approved by the
patient''s insurance carrier.  The MedCom system''s referral capabilities reduce
documentation and administrative costs which results in increased productivity
and greater patient information for the specialist, as well as a written record
of the referral authorization.

The MedCom System can record and track encounters between patients and health
care providers for performance evaluation and maintenance of records.  After
examining a patient the physician enters a patient''s name, procedure code and
diagnostic code at a nearby terminal.  This information is then uploaded to
MedCom''s computer network, processed and transmitted back to the provider
formatted in both summary and/or detailed reports, and as a result healthcare
providers'' reimbursements are accelerated and account receivables are reduced.
In managements'' opinion, the average time it takes the healthcare providers to
collect payments from insurance carriers and plans decreases from an average of
89 days to 7-21 days.  Health care providers will benefit from a 100% paperless
claim processing system.

Presently, the MedCom system was able to retrieve on-line eligibility and
authorization information from approximately 450 medical insurance companies and
plans.  Included in this group is the newly activated Medicare Part A & B
eligibility for all 50 states.  This gives us access to over 42 million lives.
The system also electronically processes and submits claims for its healthcare
providers to over 1,700 companies.  These insurance providers include CIGNA,
Prudential, Oxford Health Plan, United Health Plans, Blue Cross, Medicaid,
Aetna, Blue Cross/Blue Shield, and Prudential.

COMPETITION

Competing health insurance claims processing and/or benefit verification systems
include WebMD (HLTH), NDC Health (NDC), and Per-se Technologies (PSTI).  There
are similar companies that compete with the Company with respect to its
financial transaction processing services performed by the MedCom system.  These
companies compete with the Company directly or to some degree.  Many of these
competitors are better capitalized than the Company, and maintain a significant
market share in their respective industries.

TECHNICAL  SUPPORT  ASSISTANCE

The Company offers multiple training options for its products and services and
is easily accessed at


3
<PAGE>
www.MedComUSA.com.  Onsite training and teleconferencing, and technical support
-----------------
assistance are also features offered to health care providers.  Also, a 24-hour
terminal replacement program and system upgrades are offered.

MARKETING STRATEGY

MedCom  has broadened marketing strategy to reduce cost and increase efficiency.
The Company has employed telesales strategy where as there is less dependence on
individual  sales  personnel.  The Company just completed its final phase of its
portal  software  development  which  has  broadened  the  sales model to both a
terminal  and  portal  sale.  The  company has entered into telesales agreements
which have implemented the new marketing strategy.  The completion of the portal
will  increase sales to hospitals which results in multiple sales.  In addition,
the  portal  has  become  popular  for  individual  doctors,  dentist, and other
healthcare  professionals  which  often results in a single or possibly multiple
sales.  The  Company  has  focused  its  sales to hospitals as a growing revenue
source.

In  the  past the Company built its marketing around a strategy of expanding its
sales  capacity  by  using  experienced external Independent Sales Organizations
(ISO)  and  putting less reliance on an internal sales force.  MedCom has set-up
these Independent Sales Organizations (ISOs) to market and distribute the MedCom
System  throughout  the  U.S.  Financial service companies comprise an important
sales  channel  that  views  the  healthcare  industry  as  an  important growth
opportunity.Also6% of all healthcare payments are made with a credit card today,
although  according  to a recent survey 55% of all consumers would prefer to pay
doctor  and  hospital  visits  by  credit/debit  card.

MedCom  has  been expanding its position with Hospitals and working closely with
Hospital  consultants  and  targeted  seminars.  The  Company,  with  its  new
Onlinewebportal  product  and  Medicare  access,  is  becoming  an  increasingly
valuable tool for the outpatient and faculty practice areas of hospitals.  While
the  ISO  groups focus on individual doctors, dentists and clinics, our hospital
team  is focusing on multiple unit sales opportunities with hospitals around the
country.

SERVICE  AGREEMENTS

During June 2005, the Company entered into a service agreement with TESIA-PCI,
Inc.  This agreement to replace and service and support at a minimum of 1,500
POS terminals inclusive of eligibly, claims processing, credit card processing
for TESIA''s dental providers.

PATENT

Card Activation Technologies Inc. (""Card"") is a Delaware corporation
headquartered in Chicago, Illinois that owns proprietary patented payment
transaction technology used for electronic activation of phone, gift and
affinity cards.  Medcom owns 60,000,000 shares of common stock of Card which
represents 41% of the issued and outstanding shares of Card.

The patent was transferred to Card by MedCom on the formation of Card and in
exchange for 146,770,504 shares of Common Stock.

Card is a development stage company that was incorporated in August 2006 in
order to own and license, the assigned patent which covers payment transaction
technology and the process for taking a card with a magnetic strip or other data
capture mechanism and processing transactions or activating the card. This
process is


4
<PAGE>
utilized for prepaid phone cards, gift cards, and debit-styled cards.  As of the
date of this report, Card has entered into a license agreement with McDonald''s
Corporation. Card has one principal asset, the patented payment transaction
technology assigned from MedCom, and one full time and one part-time employee.
Card does not expect to commence full scale operations or generate additional
revenues until late 2007. Since incorporation, Card has not made any significant
purchases or sale of assets, nor has Card been involved in any mergers,
acquisitions or consolidations. Card has filed four lawsuits to enforce its
patented technology and has sent license agreement requests to a number of
companies in order to obtain license agreements with entities that Card believes
are infringing its patent.

Card has the ability to market and sell licensing opportunities for the patented
technology of processing debit-styled transactions, including processing
transactions with debit, phone and gift cards and also activating and adding
value to those debit-styled cards.  New View Technologies, which was acquired by
MedCom USA, developed the patent and all patents were ultimately assigned to
Card.

ADDITIONAL  INFORMATION

MedCom files reports and other materials with the Securities and Exchange
Commission. These documents may be inspected and copied at the Commission''s
Public Reference Room at 100 F Street, N.E., Washington, D.C., 20549. You can
obtain information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. You can also get copies of documents that the
Company files with the Commission through the Commission''s Internet site at
www.sec.gov.
-----------

EMPLOYEES

As of fiscal year end June 30, 2007, the Company had 23 employees of which
approximately 23 are full-time equivalent employees.

ITEM 2.  DESCRIPTION OF PROPERTY.

As of fiscal year end June 30, 2007 and 2006, the Company maintains its
corporate executive offices in Scottsdale, Arizona.  The Company leases 1,317
square feet of office space for approximately $32,000 annually.  The Company
entered into a three-year lease in May 2002 for the Scottsdale facility. The
Company also maintains an office in Irvine, California, for executive office
space for approximately $1,300 a month to month basis.  The Company also leases
5,906 square feet of office space in Islandia, New York, for approximately
$104,389 annually; the lease expires March 31, 2008.
Rental Leases on a Monthly Basis:

<TABLE>
<CAPTION>
      Scottsdale        Irvine   Islandia                 Total
<S>   <C>               <C>      <C>                      <C>
2007  $     2,666       $ 1,300  8,699                    12,665

2008  $     2,666       $ 1,300  8,699.                   12,665
                                 Expires March 31, 2008

2007  $     2,666       $ 1,300
</TABLE>

ITEM 3.  LEGAL PROCEEDINGS

The Company is also involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, except as discussed
above, the ultimate disposition of these matters will not have a material
adverse effect on the Company's financial position, results of operations, or
liquidity.


5
<PAGE>
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

The Company submitted no matters to a vote of its security holders during the
fiscal year ended June 30, 2007 and 2006.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

MedCom common stock is traded in the over-the-counter market, and quoted in the
National Association of Securities Dealers Inter-dealer Quotation System
(""Electronic Bulletin Board) and can be accessed on the Internet at
www.otcbb.com under the symbol "EMED."
-------------

At June 30, 2007, there were 92,772,860 shares of common stock of MedCom
outstanding and there were approximately 681 shareholders of record of the
Company''s common stock.

The following table sets forth for the periods indicated the high and low bid
quotations for MedCom''s common stock.  These quotations represent inter-dealer
quotations, without adjustment for retail markup, markdown or commission and may
not represent actual transactions.

<TABLE>
<CAPTION>
PERIODS                                   HIGH         LOW
<S>                                       <C>          <C>
FISCAL YEAR 2007
First Quarter (July - September 2006)     $  .43       $.37
Second Quarter (October - December 2006)  $  .46       $.45
Third Quarter (January - March 2007)      $  .46       $.45
Fourth Quarter (April - June 2007)        $  .43       $.37

FISCAL YEAR 2006
First Quarter (July - September 2005)     $ 1.26       $.98
Second Quarter (October - December 2005)  $  .78       $.65
Third Quarter (January - March 2006)      $  .55       $.25
Fourth Quarter (April - June 2006)        $  .65       $.25
</TABLE>

MedCom has never paid dividends on any of its common stock shares. MedCom does
not anticipate paying dividends at any time in the foreseeable future and any
profits will be reinvested in MedCom''s business.  MedCom''s Transfer Agent and
Registrar for the common stock is Corporate Stock Transfer located in Denver,
Colorado.

<TABLE>
<CAPTION>
SALE OF UNREGISTERED SECURITIES

QUARTER ENDED
                          STOCK ISSUED                  STOCK ISSUED   STOCK ISSUED FOR
                            FOR CASH    CASH RECEIVED   FOR SERVICES  WARRENTS EXERCISED
<S>                       <C>           <C>             <C>           <C>
September 30, 2005           1,156,999  $      591,750       685,508              12,997
December 31, 2005              950,000  $      380,000       811,500                   -
March 31, 2006               1,584,788  $      590,949     2,665,848                   -
June 30, 2006                2,860,861  $      832,592     1,924,636
                          --------------------------------------------------------------
Year Ended June 30, 2006     6,552,648  $    2,395,291     6,087,492              12,997

September 30, 2006           7,384,373  $    2,178,991     1,837,331                   -
December 31, 2006            2,579,331  $    1,273,333     4,726,870                   -
March 31, 2007               2,659,000  $    1,302,000       866,530                   -
June 30, 2007                2,201,856  $      768,651       200,000
                          --------------------------------------------------------------
Year Ended June 30, 2007    14,824,560  $    5,522,975     7,630,731                   -
</TABLE>


6
<PAGE>
During the year ended June 30, 2006, the Company issued 6,552,648 shares of its
common stock for $2,395,291.  The shares were issued to third parties in a
private placement of the Company''s common stock.  The shares were sold
throughout the year ended June 30, 2006, ranging from $1.00 per share at the
beginning of the year to $.25 per share at the end of the year.  Commissions of
approximately $147,455 are recorded as a charge in additional paid in capital as
direct costs associated with the raising of equity capital. The offer and sale
of such shares of our common stock were effected in reliance on the exemptions
for sales of securities not involving a public offering, as set forth in Rule
506 promulgated under the Securities Act and in Section 4(2) of the Securities
Act, based on the following: (a) the investors confirmed to us that they were
""accredited investors,"" as defined in Rule 501 of Regulation D promulgated
under the Securities Act and had such background, education and experience in
financial and business matters as to be able to evaluate the merits and risks of
an investment in the securities; (b) there was no public offering or general
solicitation with respect to the offering; (c) the investors were provided with
certain disclosure materials and all other information requested with respect to
our company; (d) the investors acknowledged that all securities being purchased
were ""restricted securities"" for purposes of the Securities Act, and agreed to
transfer such securities only in a transaction registered under the Securities
Act or exempt from registration under the Securities Act; and (e) a legend was
placed on the certificates representing each such security stating that it was
restricted and could only be transferred if subsequent registered under the
Securities Act or transferred in a transaction exempt from registration under
the Securities Act.

The Company has issued shares of its common stock as consideration to
consultants for the fair value of the services rendered.  The value of those
shares is determined based on the trading value of the stock at the dates on
which the agreements were into for the services and the value of services
rendered.   During the year ended June 30, 2006, the Company granted to
consultants, 6,087,492 shares of common stock valued in the aggregate at
$2,395,370 with a strike price range of $.50 to $1.50 strike price.  The stock
issued for services includes $247,167 of the royalty buyout provision.  The
value of these shares was expensed during the year.  The Company exercised the
royalty buyout provision to reduce the royalty payments to 20% of all sales in
June 30, 2006. The offer and sale of such shares of our common stock were
effected in reliance on the exemptions for sales of securities not involving a
public offering, as set forth in Rule 506 promulgated under the Securities Act
and in Section 4(2) of the Securities Act. A legend was placed on the
certificates representing each such security stating that it was restricted and
could only be transferred if subsequent registered under the Securities Act or
transferred in a transaction exempt from registration under the Securities Act.

The Company issued 12,997 shares of its common stock under a notice of
conversion of common stock warrants as they were cash less warrants.  There was
not paymen for the exercise of the warrants.

During the year ended June 30, 2007, the Company issued 14,824,560 shares of its
common stock for $5,522,975.  The shares were issued to third parties in a
private placement of the Company''s common stock.  The shares were sold
throughout the year ended June 30, 2007, ranging from $.75 per share at the
beginning of the year to $.25 per share at the end of the year.  Commissions of
approximately $1,350,078 are recorded as a charge in additional paid in capital
as direct costs associated with the raising of equity capital.  The offer and
sale of such shares of our common stock were effected in reliance on the
exemptions for sales of securities not involving a public offering, as set forth
in Rule 506 promulgated under the Securities Act and in Section 4(2) of the
Securities Act, based on the following: (a) the investors confirmed to us that
they were ""accredited investors,"" as defined in Rule 501 of Regulation D
promulgated under the Securities Act and had such background, education and
experience in financial and business matters as to be able to evaluate the
merits and risks of an investment in the securities; (b) there was no public
offering or general solicitation with respect to the offering; (c) the investors
were provided with certain disclosure materials and all other information
requested with respect to our company; (d) the investors acknowledged that all
securities being purchased were ""restricted securities"" for purposes of the
Securities Act, and agreed to transfer such securities only in a transaction
registered under the Securities Act or exempt from registration under the
Securities Act; and (e) a legend was placed on the certificates representing
each such security stating that it was restricted and could only be transferred
if


7
<PAGE>
subsequent registered under the Securities Act or transferred in a transaction
exempt from registration under the Securities Act.

The Company has issued shares of its common stock as consideration to
consultants for the fair value of the services rendered.  The value of those
shares was determined based on the trading value of the stock at the dates on
which the agreements were entered into for the services.   During the year ended
June 30, 2007, the Company granted to consultants and paid out obligations of
7,630,731 shares of common stock valued in the aggregate at $3,900,137 with a
strike price range of $.35 to $.75.  The Company recorded as a charge in
additional paid in capital an obligation buyout for the Royalty arrangement with
Dream Technology in the amount of $4,050,480.  The offer and sale of such shares
of our common stock were effected in reliance on the exemptions for sales of
securities not involving a public offering, as set forth in Rule 506 promulgated
under the Securities Act and in Section 4(2) of the Securities Act. A legend was
placed on the certificates representing each such security stating that it was
restricted and could only be transferred if subsequent registered under the
Securities Act or transferred in a transaction exempt from registration under
the Securities Act.

STOCK SPLITS

Share data in this report have been adjusted to reflect the following stock
splits relating to the Company's common stock: June 1995: 2-for-1 forward split,
February 1996: 1-for-10 reverse split, February 1998: 1-for-4 reverse split, May
2001: 1-for-5 reverse split.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

Management''s discussion and analysis contains statements that are
forward-looking and involve risks and uncertainties.  Several factors could
cause actual results to differ materially from those described in such
forward-looking statements.  This includes the Company''s ability to manage
growth, involvement in litigation, competition in the health electronic
transaction processing, ongoing contractual relationships, dependence upon key
personnel, changes in customer demand for product and services, and the adoption
of new, or changes in, accounting policies, practices and estimates and the
application of such policies, practices, and estimates, and federal and state
governmental regulation, specifically in the areas of electronic transaction
processing in the health care industries.

The following financial data should be read in conjunction with the consolidated
financial statements of MedCom USA and related notes and other financial
information appearing elsewhere in this report.

CRITICAL ACCOUNTING POLICIES

Stock Based Compensation

In December 2004, the FASB issued a revision of SFAS No. 123 ("SFAS No. 123(R)")
that requires compensation costs related to share-based payment transactions to
be recognized in the statement of operations. With limited exceptions, the
amount of compensation cost will be measured based on the grant-date fair value
of the equity or liability instruments issued. In addition, liability awards
will be re-measured each reporting period. Compensation cost will be recognized
over the period that an employee provides service in exchange for the award.
SFAS No. 123(R) replaces SFAS No. 123 and is effective as of the beginning of
January 1, 2006. Based on the number of shares and awards outstanding as of
December 31, 2005 (and without giving effect to any awards which may be granted
in 2006), we do not expect our adoption of SFAS No. 123(R) in January 2006 to
have a material impact on the financial statements.


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<PAGE>
FSP FAS 123(R)-5 was issued on October 10, 2006. The FSP provides that
instruments that were originally issued as employee compensation and then
modified, and that modification is made to the terms of the instrument solely to
reflect an equity restructuring that occurs when the holders are no longer
employees, then no change in the recognition or the measurement (due to a change
in classification) of those instruments will result if both of the following
conditions are met: (a). There is no increase in fair value of the award (or the
ratio of intrinsic value to the exercise price of the award is preserved, that
is, the holder is made whole), or the antidilution provision is not added to the
terms of the award in contemplation of an equity restructuring; and (b). All
holders of the same class of equity instruments (for example, stock options) are
treated in the same manner. The provisions in this FSP shall be applied in the
first reporting period beginning after the date the FSP is posted to the FASB
website. The Company has adopted SP FAS 123(R)-5 but it did not have a material
impact on its consolidated results of operations and financial condition.

Accounting Policies and Estimates

The preparation of our financial statements in conformity with accounting
principles generally accepted in the United States of America requires our
management to make certain estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Our management periodically
evaluates the estimates and judgments made. Management bases its estimates and
judgments on historical experience and on various factors that are believed to
be reasonable under the circumstances. Actual results may differ from these
estimates as a result of different assumptions or conditions. As such, in
accordance with the use of accounting principles generally accepted in the
United States of America, our actual realized results may differ from
management''s initial estimates as reported. A summary of significant accounting
policies are detailed in notes to the financial statements which are an integral
component of this filing.

Vendor-Specific Objective Evidence:

The Company has nonsoftware and software deliverables which have a specific cost
per customer.  The costs of the deliverables are valued at based on historical
cost, usage and delivered charges.  The company delivers the following VSOE:

Provider enrollment, EDI Connectivity, Payer/Provider, Benefit Verification -
Govt Billings, Referral Transfers - Govt billing, Benefit Verification -
Commercial, Referral Transfer - Commercial, Claim Status, Service Authorization,
Maintenance, Training, Support, Program Upgrades, Carrier Editions, and
Customized Reports.  These deliverables are delivered electronically therefore
the average cost is $1.02 per delivery.  The company assessed its prior
electronic costs these costs average between 80 cents to $1.25 per customers.
Management decided to use the average cost of $1.02 to value these deliverables.

The company provides non-software deliverables and has valued these costs based
on the average of purchasing the hardware for outside third parties.  The
non-software deliverables are the terminal which cost $394 per terminal, pin
pads which cost $100, check reader which cost $100, Reader Printers which cost
$100, and Portal Wedge costs $100.  The Company has further cost per terminal to
upgrade and update the software to be in compliance with the health care
industry which the  per terminal and portal costs are $250.

Revenues


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<PAGE>
A sales staff meets with a dental or medical professional.  During that initial
meeting a demo is displayed so the professional has first had knowledge of the
software and is use.  At the time of the meeting a noncancellable licensing
agreement is executed along with a service agreement.  The license agreement
indicates the life of the agreement if the customer wants check readers, pin
pads, portal wedge, etc. with the software.  These units allow the professional
swipe a credit card and medical card for the software to read.

The professional executes the licensing agreement which states the terms for a
period of 24 - 60 month agreements, number of portal/units needed, at which
location the portals will be used, the monthly licensing amount, (which varies
per contract) type of contract whether dental or medical, the amount of the
gateway access fee usually $24.95 per month which includes provider enrollment,
EDI connectivity, a the monthly maintenance charges that are billed when used as
commercial benefit verification, Referral transactions, claims status, service
authorizations, maintenance, training, support, programs upgrades, carrier
additions, and customized reports.  The professional then provides Medcom a
voided check or credit card number to automatically withdraw or charge the
licensing fee and gateway access fees on a monthly basis.  Also those automatic
withdrawals include the maintenance charges based upon usage.  The professional
also agrees to allow Medcom to provide merchant services for Visa/MasterCard.
Medcom further agrees that the monthly fees charged for gateway access and
licensing fees will commence with in 10 day so of the execution of the
noncancellable agreements.

Medcom has substantial upfront expenses such as commission, royalties, software
portal, and the software deliverables and pays those costs at the execution of
the contract.  The company accumulates the entire contract of licensing and
gateway access fees and record as the licenses and gateway access fees
receivables.  The company recognizes revenue in accordance with SOP 97-2 when
the software is delivered to the professional and recognizes the remaining
portion of the contract over the life of the contract.  The company recognizes
the revenue of the contract at the time of the deliverables and execution of the
contract since the company has substantial costs upfront at the time of
delivery.  The remaining portion is recognized monthly in accordance the
agreement.  The company further accrues the prepaid licensing expense, accrued
deliverables

The company continues to recognized transaction fees as they receive them.  The
company collects other fees base upon usage of the software and are not fixed
fees such as gateway access and licensing fees and are part of the deliverables
such as Provider enrollment, EDI Connectivity, Payer/Provider, Benefit
Verification - Govt Billings, Referral Transfers - Govt billing, Benefit
Verification - Commercial, Referral Transfer - Commercial, Claim Status, Service
Authorization, Maintenance, Training, Support, Program Upgrades, Carrier
Editions, and Customized Reports.  The company calls these fees transaction fees
and are not fixed a determinable and therefore are not accrued but are
recognized when used by the customer.

The company enters into a long term debt and long term receivable for the life
of the license agreement which is non cancelable agreement.  The company
collects the monthly licensing and gateway access fees every 30 days over the
life of the contract.  The company does not collect the entire contract within
30 days but over the terms of the agreement therefore records deferred revenue
for the portion of the contract that is recognized over the contract.

The company finances the licensing fees agreement while the gateway access fees
are received over the life of the contract.  The license fees are finance
through Ladco in prior periods and in fiscal 2006 and 2007 through LeeCo.  The
company as a standard finances the agreements through LeeCo through the term of
the contract.

Revenues from the MedCom system are generated through the sale of the portal
software, software terminals,


10
<PAGE>
and processing insurance benefit eligibility/verification, insurance claims, and
financial transaction processing.  The Company receives a fixed amount per
software portal and software terminal, and also receives fees for each
transaction processed through the MedCom System.  Revenue sources include fees
for financial transactions processed through the software portal and software
terminal, fees for collection of receivables if the Company provides billing
services, fees associated with reimbursements made by insurance carriers for
submitting claims that are processed electronically, fees for using the
system''s referral program and, fees for processing uploaded data.  The Company
also markets a complete billing service using the MedCom System for hospitals
and large practice groups.  The Company receives a percentage of the billing
amount collected under these arrangements.

The Company has adopted the Securities and Exchange Commission''s Staff
Accounting Bulletin (SAB) No. 104, which provides guidance on the recognition,
presentation and disclosure of revenue in financial statements.
<TABLE>
<CAPTION>


Statement of Operations Data
----------------------------
                               Years Ended June 30,    Years Ended June 30,
                               ----------------------------------------------


                                        2007                    2006
                               ---------------------   ----------------------
<S>                            <C>                     <C>
Revenues                       $           4,004,899   $           6,000,258
Cost of Deliverables                      (1,461,228)             (3,578,345)
Operating and Other Expenses              (5,097,282)             (9,519,611)

Net Loss                       $          (2,553,611)  $          (7,097,698)

Balance Sheet Data:
                               Years Ended June 30,    Years Ended June 30,
                               ----------------------------------------------

                                        2007                    2006
                               ---------------------   ----------------------

Current Assets                 $           1,013,600   $             896,479
Total Assets                               2,125,107               3,576,140
Current Liabilities                        3,341,144               4,248,854
Non Current Liabilities                    4,909,562               6,921,107
Total Liabilities                          8,250,706              11,170,681
Working Capital (Deficit)                 (2,327,544)             (3,352,375)
Shareholders'Equity (Deficit)  $          (6,125,599)  $          (7,594,541)
--------------------------------------------------------------------------------
</TABLE>

The  Company  has  declared  no  common  stock  dividends  since  its inception.

FISCAL 2006  OPERATIONS
-----------------------

General.  The Company utilizes the MedCom System that is deployed through a
processing terminal, PC software, or online processing, and offers electronic
transaction processing to the health care industries.  During fiscal 2006 and
2007, MedCom USA continues to focus on its primary operations and core business
in medical transaction processing.


11
<PAGE>
RESULTS OF OPERATIONS

     FISCAL YEAR END JUNE 30, 2007, COMPARED TO FISCAL YEAR END JUNE 30, 2006

Revenues for Fiscal 2007 decreased to $4,004,899 from $6,000,257 during Fiscal
2006 as 67% reduction.  This decrease in revenue is directly the result of
changes in the Company's strategic direction in core operations.  This included
discontinuing declining or unprofitable and business sectors.  The Company
continues to aggressively pursue and devote its resources and focus its
direction in electronic medical transaction processing.   The Company''s
agreement with its credit facility in connection with the licensing of terminals
and portal transactions therewith, the Company must defer revenue on licensing
agreement of the terminals and portal software.  The decline in revenues is
directly related in 2006 the Company executed large licensing agreements with
large hospital groups such as Mount Sinai, St. Vincent, Beth Israel, and
Continuum Partners.  The large hospital groups that licensed our portals
licensed at a minimum of 35 portal systems per group.  In the case of St.
Vincent our portal system is used exclusively by all of their hospital
facilities.  However, in 2007 the Company was licensing more individual doctor
and dental groups that were directly related to our decrease in revenues.

The Company further refocused is sales to large practice management groups to
sell multiple web portals and further have expanded its exposure and future
sales with a large dental group.  In year ended 2007 the negotiations and
relationship with the practice management and dental groups were being fostered
and the company will not realize those efforts until fiscal year 2008.

Cost of deliverables for the quarter ended fiscal 2007 decreased to $1,461,229
as compared to fiscal 2006 of $3,578,345 a 41% reduction. The company has
developed the MedComConnect portal package that will decrease the cost of
deliverables as the company focuses on the sale of the portal software which
rendered the medical terminals sales no longer the core revenue model for the
Company. The decrease in cost of deliverables is directly related to the
decrease in revenues from the two fiscal years. Also the decrease is related to
the decrease then elimination of 25% royalty payments to third parities. This
accomplished by the company''s election to buy out the option of paying
royalties to Dream Technologies by issuance of common stock to the parties to
eliminate all future royalty payments. Further the company no longer pays
commission on future revenues from its noncancellable licensing agreements.
Commissions are paid at inception of the licensing agreement at a 10% rate and
there are no future payments on residuals revenues from gateway access fees and
licensing fees. The company paid the future royalty obligation and commitment
and is no longer obligated to pay royalties now and in the future. In the prior
period comparative there was a spike in costs with TESIA a larger vendor
contract.

Selling expenses for the fiscal 2007 decreased to $209,998 as compared to fiscal
2006 of $602,269 a 34% reduction.  This decrease is primarily the result of
marketing efforts and includes commissions paid to internal sales personnel to
market the Company''s products and services.  The company has introduced the
telesales marketing strategy for less expensive sales force and more effective
in the future.  The company has been focused on the practice management and
large dental groups and should see the results of their efforts in fourth
quarter.

General and administrative expenses for the fiscal 2007 decreased to $3,578,039
as compared to fiscal 2006 of $5,357,144 a 67% reduction.    This decrease is
attributed to the Company's reduction of workforce in their New York operations
as the company has streamlined overall employee use.  That is the company has
implemented and advanced its in-house software to perform many of the services
the prior employees were performing manually.  The decrease is related to
settling outstanding litigation which resulted decrease in legal fees.  The
company does not expect additional expense related to this expense in the
future.


12
<PAGE>
Interest expense for fiscal 2007 decreased to $885,189 as compared to fiscal
2006 of $1,405,015 a 63% reduction.  This decrease is a result of renegotiation
of the Company''s credit facility with Ladco who was charge a higher interest
rate.  Also, expenses were incurred and paid on notes the Company has
outstanding with LeeCo.  Further the Company''s renegotiation has reduced the
accrual of interest below 3% until paid in full in 2009.  We have also have been
paying down the LeeCo obligation which has grown from the increase in financing
through LeeCo Financial Inc.  The payments to Ladco represented a high interest
rate and it has been a Company initiative to reduce the Ladco debt to zero.
Interest income for fiscal 2007 decreased to $395,050 as compared to fiscal 2006
of $485,559. The decrease is due to the reduction in current sales of the portal
software from our license agreements.  The licensing agreements are
noncancellable licensing of our portal software in which we capitalize the
receivable and liability related to the life of the licensing agreement.  The
accrual of these licensing agreements results in interest income.

The loss for fiscal 2007 decreased to ($2,553,611) as compared to fiscal 2006 of
($7,097,698).  The decrease is due to the reduction in revenue, sales force,
royalty expense, commissions, and reduction in operations in our New York
facility.

No  tax  benefit was recorded on the expected operating loss for fiscal 2007 and
2006  as  required  by  Statement  of  Financial  Accounting  Standards No. 109,
Accounting  for Income Taxes.  For the quarter ended we do not expect to realize
a  deferred  tax  asset  and  it is uncertain, therefore we have provided a 100%
valuation  of  the tax benefit and assets until we are certain to experience net
profits  in  the  future  to  fully  realize  the  tax  benefit  and tax assets.


LIQUIDITY AND CAPITAL RESOURCES

The Company''s operating requirements have been funded primarily on its sale of
licensing agreements with hospitals, medical, and dental professionals and sales
of the Company''s common stock.  During the fiscal 2007, the Company''s net
proceeds from the licensing of the Company''s software portals were $1,505,166
as compared to fiscal 2006 of $1,571,068.  The company received $5,522,975 as
compared to fiscal 2006 of $2,395,291 in proceeds from the sale of common stock.
The Company believes that the cash flows from its monthly service and
transaction fees are inadequate to repay the capital obligations and has relied
upon the sale of common stock through a private place to sustain its operations.

Cash (used) operating activities for the fiscal year 2007 was ($3,846,787)
compared to ($2,763,523) for fiscal year 2006.  The Company''s focus on core
operations results in an increase in licenses receivable.  The Company receives
payments from customers automatically through electronic fund transfers.
Collection cycles are generally less than thirty days.  The company has grown
its operations to begin to reduce the deficit cash flow positions.  However the
company is still operating in a deficit.  The company reduced its expenses by
exercising a put option to buyout the royalty payments to third parties in the
amount of $4,050,480 which was paid in common stock of the company.  The company
issued common stock valued at for fiscal 2007 of $3,900,137 as compared to
$2,395,291 in fiscal 2006.  The increase in stock issued for services related to
stock issued for the royalty buyout option.  The company had depreciation
expenses for fiscal 2007 of $2,663,748 as compared to fiscal 2006 of $991,690.
The reduction in deprecation is directly related to the write off of the
terminal asset capitalized in prior fiscal periods.

Cash used in investing activities was ($134,810) for fiscal 2007, compared to
$1,296,695 for fiscal 2006.  Streamlining operations and capital budget
curtailment practices promoted a reduction in equipment purchases for the
Company.  However, the company continues to employ software development teams
that are upgrading


13
<PAGE>
the existing proprietary software in our terminal and portal licensing agreement
sold.  The company developed its portal software during fiscal 2006.  Fiscal
2007 the chairman advanced funds of $489,626 as compared to $487,730 for fiscal
2006.  The company advanced funds for fiscal 2007 of $49,541 as compared to
$13,100 in fiscal 2006 to Card Activation Technologies, Inc.

Cash provided by financing activities was $3,945,439 for fiscal 2007 as compared
to $1,518,959 for fiscal 2006.  Financing activities primarily consisted of
proceeds from the licensing of our software portal transactions through our
licensing agreements with hospitals and medical and dental professionals.  The
company does not have adequate cash flows to satisfy its obligations although
have improved cash flow and anticipates have adequate cash flows in the upcoming
fiscal period.  The company received proceeds from the sale of common stock for
fiscal 2007 of $5,474,375 as compared to fiscal 2006 of $2,395,291.  The company
decreased its licensing debt for fiscal 2007 of $840,742 as compared to
$946,613.  The Company increase the cost of raising capital was $1,350,078 for
fiscal 2007 as compared to $2,395,291 for fiscal 2006 was due to the increase in
the amount of capital raised for fiscal 2007.

The Company has used funds advanced from an affiliated entity that is controlled
by the Company's chairman and chief executive officer.  As of fiscal 2007 the
Company maintained a note payable from this entity for the amount of $305,000 as
compared to fiscal 2006 of $794,626 including accrued interest.  However in the
quarter ended December 31, 2006 the company was able to repay the remaining
obligation in the amount of $826,197 and received advances again as of the end
of fiscal 2007.  The Company owes the chairman $305,000.

The company has funding agreements with LeeCo Financial Service Inc. and Ladco
Financial Group who provide exclusive funding for the License agreement between
the Company and Licensing.  The funding groups accept contracts and adopt the
same terms and conditions that the Company and Licensing have agreed.  In prior
years Ladco required to personally guarantee the licensing agreements which were
a financial burden to the company.  In fiscal 2006, the company no longer sought
funding through Ladco and has consistently sought the funding of LeeCo.  LeeCo
does not require personal guarantees of licensing agreements other then hospital
agreements.  LeeCo requires the company to personally guarantee the hospital
agreements due to the size and volume of transaction with the terminal and web
portals.

The company expects increased cash flow from its existing services fees which
include transaction processing, benefit claims processing, direct terminal
sales, and credit card processing. The decrease in cost of deliverables is
directly related to the sales through our telesales. Further we anticipate
increase income from our TESIA-PC contracts that have a higher volume of credit
card processing in which we receive a fee per month on all transactions with a
15 cent per transaction fee in fiscal 2008.

The company is looking at expanding the market for its services and considering
prospective acquisitions that would complement the existing revenue model.  The
company has investigated two possible acquisitions but until due diligence is
completed and negotiations have been completed we will continue to look for
possible new horizontal business mergers.

On September 14, 2006 the company renegotiated the Ladco debt.  The company
agreed to pay penalties and late fees of $268,585.73 in exchange the
renegotiated balance would only carry an interest rate of 3% reduced from 26% in
the original note.  The Company originally owed $3,015,063 and renegotiated the
balance to $3,880,500 which included the accrued penalties and late fees.
Further the company would be able to pay the remaining balance of the note for
39 months at $99,500 payments per month until paid in full.  Under the
renegotiated note the note matures on October 2009.  The Company has paid
$895,500,000 toward the unpaid


14
<PAGE>
for fiscal 2007 and there is an outstanding balance of $2,985,000 of the Ladco
obligation.

LeeCo agreement adopts the agreement that the Company executes with the
customer.  LeeCo collects all funds through ACH and is paid from those proceeds.
The excess of those proceeds are collected by the company.  LeeCo holds as
collateral all the proceeds from the customer leases, access fees and all cash
collections and is secured from all assets of the company.

The licensing agreement is executed between the professional and the Medcom.
During the course of the agreement the company ACH''s the accounts of the
professionals and LeeCo collects the fees and reduces the liability for the
licensing fees collected and returns any excess transaction fees to the Company.
The professional does not finance their agreement with LeeCo, the company
finances the agreement.  LeeCo is not a related party of the company.  The
financing of the licensing agreement is calculated as part of our revenue
recognition process as the monthly collection of the licensing fee is recorded
against the outstanding balance.  Revenue is not recognized in excess of the
cash received from our financing of the likening agreement in accordance with
SAB 101.  The guarantees that are provided in connection with the hospital
agreements have not changed our revenue recognition process except the accrual
of the interest expense related to the unpaid balances.

In accordance with AICPA TPA 5100.58 - 5100.64

The company has a fixed and determinable licensing fee and gateway access fees.
The company has all customer agreements over a period of 24 -60 months.  This
period the company updates software, and provides various transaction fees
outlined as deliverables.  The company receives payments through out the term of
the agreement.  The company incurs upfront expenses in the initial software
installation that is outlined in the deliverables and continues to service the
customer with the remaining deliverables through out the terms of the contract.
Revenue is recognized when the customer pays the ongoing payment through out the
term of the contract.  Revenue is recognized at the initial installation based
upon the cost of deliverables at the time of installation.

The customer does not arrange any financing of the software.  The company has
recourse in the financing arrangement.  The company recognizes revenue upon
delivery of the software and over the term of the agreement based up on the
deliverables delivered under the terms of the agreement.

The company participates in the financing of the customers'' term contract.  The
company recognizes revenues to the extent of the expenses paid upfront for the
deliverables and then recognizes revenue over the term of the contract.  The
company defers any revenue of the contract and recognizes that deferred revenue
over the remaining term of the contract.

The company has a fixed and determinable licensing arrangement as the company
enforces all licensing agreements as they are noncancellable, the company has
never altered the terms of the agreement with the original licensing agreement,
the company has incremental risk in this arrangement.  The company recognizes
revenue over the terms of the agreement and further recognizes revenue based
upon the costs of deliverable that is required in the initial installation of
the software and continues to provide deliverables in accordance with the terms
of the agreement.

The company has a standard practice to enter into a financing arrangement with
LeeCo and does not provide a concession which makes it fixed and determinable
licensing arrangement.  Medcom has incremental risk in the financing arrangement
with LeeCo and thus has fixed and determinable licensing arrangement.


15
<PAGE>
OTHER CONSIDERATIONS

There are numerous factors that affect the business and the results of its
operations.  Sources of these factors include general economic and business
conditions, federal and state regulation of business activities, the level of
demand for product services, the level and intensity of competition in the
healthcare electronic transaction processing industry, and the ability to
develop new services based on new or evolving technology and the market's
acceptance of those new services, the Company''s ability to timely and
effectively manage periodic product transitions, the services, customer and
geographic sales mix of any particular period, and our ability to continue to
improve our infrastructure including personnel and systems to keep pace with the
Company''s anticipated rapid growth.


16
<PAGE>
ITEM 7.  FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
MEDCOM USA, INC.
TABLE OF CONTENTS                                                                PAGE
-------------------------------------------------------------------------------  ----
<S>                                                                              <C>
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM:                                   F-2
           Jewett Schwartz Wolfe & Associates

CONSOLIDATED FINANCIAL STATEMENTS:
           Consolidated Balance Sheet at June 30, 2007 and 2006                  F-3

           Consolidated Statements of Operations for the years ended
           June 30, 2007 and 2006                                                F-4

           Consolidated Statements of Stockholders'' Equity for the years ended
           June 30, 2007 and 2006                                                F-5

           Consolidated Statements of Cash Flows for the years ended
           June 30, 2007 and 2006                                                F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                       F-7
</TABLE>


17
<PAGE>
                      JEWETT, SCHARTZ, WOLFE & ASSOCIATES
                          CERTIFIED PUBLIC ACCOUNTANTS
================================================================================

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To  the  Board  of  Directors  and  Stockholders  of
MEDCOM  USA  INCORPORATED

We  have  audited  the  accompanying  consolidated  balance  sheet of Medcom USA
Incorporated  and  Subsidiaries  as  of  June 30, 2007 and 2006, and the related
consolidated  statements  of operations, changes in shareholders' deficiency and
cash  flows for the year then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an  opinion  on  these  financial  statements  based  on  our  audits.

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

In  our opinion, the consolidated financial statements referred to above present
fairly,  in  all  material  respects,  the  financial  position  of  MedCom  USA
Incorporated,  Inc  and  Subsidiaries,  as  of  June  30, 2007 and 2006, and the
results  of  their  operations and their cash flows for the period then ended in
conformity with accounting principles generally accepted in the United States of
America.

These  consolidated  financial  statements  have been prepared assuming that the
Company  will  continue  as  a  going  concern.  As  discussed  in Note 2 to the
consolidated  financial  statements,  the  Company  has  operating and liquidity
concerns,  has  incurred  an  accumulated  deficit  of approximately $90,226,356
through the period ended June 30, 2007, and current liabilities exceeded current
assets  by  approximately  $2,327,543  at  June 30, 2007. These conditions raise
substantial  doubt  about  the Company's ability to continue as a going concern.
Management's  plans  as  to  these  matters  are  also  described in Note 2. The
consolidated  financial statements do not include any adjustments to reflect the
possible  future  effects  on the recoverability and classification of assets or
the  amounts  and classification of liabilities that may result from the outcome
of  these  uncertainties.

As  further  discussed  in  Note 14 to the financial statements, the Company had
error  corrections  that  resulted  in  a retroactive restatement impacting this
previously  issued  financial  statements  for  fiscal  2006.  The result of the
retroactive  restatement  had  no  effect  on  the previously issued independent
registered  public  accountants''  report  on  these  financial  statements.


JEWETT, SCHWARTZ, WOLFE & ASSOCIATES
Hollywood, Florida
September 14, 2007 and September 14, 2007 with respect to note 14


  2514 HOLLYWOOD BOULEVARD, SUITE 508  HOLLYWOOD, FLORIDA 33020  TELEPHONE (954)
                          922-5885  FAX (954) 922-5957
  MEMBER - AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS  FLORIDA INSTITUTE
                         OF CERTIFIED PUBLIC ACCOUNTANTS
    PRIVATE COMPANIES PRACTICE SECTION OF THE AICPA  REGISTERED WITH THE PUBLIC
                  COMPANY ACCOUNTING OVERSIGHT BOARD OF THE SEC


18
<PAGE>
<TABLE>
<CAPTION>
MEDCOM USA, INC.
CONSOLIDATED BALANCES SHEETS
FOR YEARS ENDED JUNE 30, 2007 AND 2006
---------------------------------------------------------------------------------------

ASSETS:
<S>                                                                                      <C>            <C>
                                                                                             2007           2006
                                                                                         -------------  -------------
CURRENT ASSETS
  Cash                                                                                   $     26,210   $     62,338
  Licensing contracts - current portion, net                                                  790,250        626,550
  Prepaid expenses and other current assets                                                   197,140        207,591
                                                                                         -------------  -------------
      Total current assets                                                                  1,013,600        896,479

PROCESSING TERMINALS, net                                                                           -        776,942
PROPERTY AND EQUIPMENT, net                                                                   483,986        530,335

  Licensing contracts - long-term portion. net                                                547,223      1,341,627
  Note receivable affiliates                                                                   62,641         13,100
  Other assets                                                                                 17,657         17,657
                                                                                         -------------  -------------
    TOTAL ASSETS                                                                         $  2,125,107   $  3,576,140
                                                                                         =============  =============

LIABILITIES AND STOCKHOLDERS' DEFICIENCY:

CURRENT LIABILITIES:
  Accounts payable                                                                       $    123,156   $    252,214
  Accrued expenses and other liabilities                                                       54,442        697,094
  Dividend payable                                                                             23,750         23,750
  Notes from afiliates                                                                        305,000        794,626
  Deferred revenue - current portion                                                          498,972        758,629
  Licensing obligations - current portion                                                   2,335,824      1,722,541
                                                                                         -------------  -------------
      Total current liabilities                                                             3,341,144      4,248,854

Licensing obligations - long-term portion                                                   3,357,175      4,197,917
   Deferred Revenue                                                                         1,552,387      2,723,910
                                                                                         -------------  -------------
      Total liabilities                                                                     8,250,706     11,170,681
                                                                                         -------------  -------------

STOCKHOLDERS' DEFICIENCY:
    Convertible preferred stock, series A $.001par value, 52,900 shares
      designated, 4,250 issued and outstanding                                                      4              4
    Convertible preferred stock, series D $.01par value, 50,000 shares
      designated, 2,850 issued and outstanding                                                     29             29
   Common stock, $.0001 par value, 175,000,000 shares authorized,
     92,772,860 and 70,317,569 issued and outstanding as of                                     9,278          7,032
     June 30, 2007 and 2006, respectively
   Treasury stock                                                                             (37,397)       (37,397)
   Paid-in capital                                                                         84,128,843     80,108,536
   Accumulated deficit                                                                    (90,226,356)   (87,672,745)
                                                                                         -------------  -------------
      Total stockholders' deficiency                                                       (6,125,599)    (7,594,541)
                                                                                         -------------  -------------

    TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                       $  2,125,107   $  3,576,140
                                                                                         =============  =============

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


19
<PAGE>
<TABLE>
<CAPTION>
MEDCOM USA, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 2007 AND JUNE 30, 2006
-------------------------------------------------------------------------------------------------------------------

                                                                                             2007          2006
                                                                                         ------------  ------------
<S>                                                                                      <C>           <C>
 REVENUES:
  Terminal sales                                                                         $    41,681   $   275,351
  Service                                                                                  2,458,052     4,153,839
  Licensing fees                                                                           1,505,166     1,571,068
                                                                                         ------------  ------------
                                                                                           4,004,899     6,000,258
COST OF DELIVERABLES:                                                                      1,461,229     3,578,345
                                                                                         ------------  ------------
GROSS PROFIT                                                                               2,543,670     2,421,913
                                                                                         ------------  ------------

OPERATING EXPENSES:
  General and administrative expenses                                                      3,578,039     5,357,144
  Sales and marketing expenses                                                               209,998       602,269
  Depreciation and amortization                                                              770,505     2,663,748
                                                                                         ------------  ------------
    Total operating expenses                                                               4,558,542     8,623,161
                                                                                         ------------  ------------
OPERATING LOSS                                                                            (2,014,872)   (6,201,248)
                                                                                         ------------  ------------

OTHER (INCOME) AND EXPENSES
  Interest expense                                                                           885,189     1,405,015
  Interest Income                                                                           (395,050)     (485,559)
  Legal settlement                                                                            48,600             -
  Gain on extinguishment of debt                                                                   -       (76,208)
  Impairment of assets                                                                             -        53,202
                                                                                         ------------  ------------
    Total other expense                                                                      538,739       896,450
                                                                                         ------------  ------------

LOSS BEFORE INCOME TAXES                                                                  (2,553,611)   (7,097,698)

INCOME TAX BENEFIT                                                                                 -             -
                                                                                         ------------  ------------

NET LOSS                                                                                 $(2,553,611)  $(7,097,698)
                                                                                         ============  ============

NET LOSS PER SHARE:
  Basic and diluted:                                                                     $     (0.03)  $     (0.11)
                                                                                         ============  ============

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
  Basic and diluted:                                                                      84,729,836    62,821,854
                                                                                         ============  ============

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


20
<PAGE>
<TABLE>
<CAPTION>
MEDCOM USA, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
FOR THE YEARS ENDED JUNE 30, 2007 AND 2006
--------------------------------------------------------------------------------

                                     \----------- PREFERED STOCK -----------\
                    COMMON     STOCK    PREFERRED A & B      PREFERRED D      PAID-IN      TREASURY    ACCUMULATED
                    SHARES    AMOUNT    SHARES    AMOUNT   SHARES  AMOUNT     CAPITAL       STOCK        DEFICIT        TOTAL
                  ----------  -------  ---------  -------  ------  -------  ------------  ----------  -------------  ------------
<S>               <C>         <C>      <C>        <C>      <C>     <C>      <C>           <C>         <C>            <C>
  JUNE 30,
    2005          57,664,432  $ 5,767      4,250  $     4   2,850  $    29  $75,700,765   $ (37,397)  $(80,575,047)  $(4,905,879)

Common stock
  issued for cash  6,552,648      655          -        -       -        -    2,394,636           -              -     2,395,291

Common stock
  for
  compensation     6,087,492      609          -        -       -        -    2,394,761           -              -     2,395,370

Exercise of
  cashless
  warrents            12,997        1          -        -       -        -       12,996           -              -        12,997

Cost of royalty
  obligation
  buy out                  -        -          -        -       -        -     (247,167)          -              -      (247,167)

Cost of raising
  capital                  -        -          -        -       -        -     (147,455)          -              -      (147,455)

  Net loss                 -        -          -        -       -        -            -           -     (7,097,698)   (7,097,698)
                  ----------  -------  ---------  -------  ------  -------  ------------  ----------  -------------  ------------

  JUNE 30,
    2006          70,317,569  $ 7,032      4,250  $     4   2,850  $    29  $80,108,536   $ (37,397)  $(87,672,745)  $(7,594,541)
                  ==========  =======  =========  =======  ======  =======  ============  ==========  =============  ============

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


21
<PAGE>
<TABLE>
<CAPTION>
MEDCOM USA, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
FOR THE YEARS ENDED JUNE 30, 2007 AND 2006 - CONTINUED
-------------------------------------------------------------

                                     \ ----------- PREFERED STOCK -----------\
                        COMMON STOCK     PREFERRED A & B    PREFERRED D      PAID-IN      TREASURY   ACCUMULATED
                      SHARES    AMOUNT   SHARES  AMOUNT   SHARES  AMOUNT     CAPITAL       STOCK       DEFICIT        TOTAL
                    ----------  -------  ------  -------  ------  -------  ------------  ---------  -------------  ------------

  JUNE 30,
    2006            70,317,569  $7,032   4,250     $4     2,850     $29    $80,108,536   $(37,397)  $(87,672,745)  $(7,594,542)
<S>                 <C>         <C>      <C>     <C>      <C>     <C>      <C>           <C>        <C>            <C>
  Common stock
 issued for cash    14,824,560    1,483       -        -       -        -    5,521,491          -              -     5,522,975

Common stock
  issued for
  services           7,630,731      763       -        -       -        -    3,899,374          -              -     3,900,137

Cost of raising
  capital                    -        -       -        -       -        -   (1,350,078)         -              -    (1,350,078)

Cost of royalty
  obligation
  buyout                     -        -       -        -       -        -   (2,723,546)         -              -    (2,723,546)

Cost of put
  royalty obligation
  buyout                     -        -       -        -       -        -   (1,326,934)         -              -    (1,326,934)

  Net loss                   -        -       -        -       -        -            -          -     (2,553,611)   (2,553,611)
                    ----------  -------  ------  -------  ------  -------  ------------  ---------  -------------  ------------

    JUNE 30,
      2007          92,772,860  $ 9,278   4,250  $     4   2,850  $    29  $84,128,843   $(37,397)  $(90,226,356)  $(6,125,599)
                    ==========  =======  ======  =======  ======  =======  ============  =========  -------------  ------------

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


22
<PAGE>
<TABLE>
<CAPTION>
MEDCOM USA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2007 AND 2006
-------------------------------------------------------------------------------------------------------------------
                                                                                             2007          2006
                                                                                         ------------  ------------
<S>                                                                                      <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

  Net loss                                                                               $(2,553,611)  $(7,097,698)
  Adjustments to reconcile net loss to net cash
    used in operating activities:
  Depreciation and amortization                                                              991,690     2,663,748
  Issuance of stock as consideration for services                                          3,900,137     2,395,291
  Costs of royalty options obligation buyout                                              (2,723,546)     (247,167)
  Cost of put royalty option obligation buyout                                            (1,326,934)            -
  Allowance for doubtful accounts                                                             57,948       166,189
  Exercise of warrants                                                                             -        12,997
  Gain on extinguishment of debt                                                                   -        76,208
  Impariment of assets                                                                             -        53,202
  Allowance for sales returns                                                                      -       (82,424)
  Changes in operating assets and liablities:
    Prepaid and other current assets                                                          10,451       (58,503)
    Accounts payable                                                                        (129,058)     (244,528)
    Accrued expenses and other liabilities                                                  (642,652)    1,088,678
    Deferred revenue                                                                      (1,431,182)   (1,489,516)
                                                                                         ------------  ------------
      Net cash used in operating activities                                               (3,846,757)   (2,763,523)
                                                                                         ------------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchasing of equipment                                                                   (168,399)            -
  Licensing contracts - current portion                                                     (221,648)     (782,649)
  Licensing contracts - long-term portion                                                    794,404     1,604,714
  Note receivable affiliates                                                                 (49,541)      (13,100)
  Notes from affiliates                                                                     (489,626)      487,730
                                                                                         ------------  ------------
    Nett cash (used in) provided by investing activities                                    (134,810)    1,296,695
                                                                                         ------------  ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Licensing obligation - current portion                                                      613,284      (176,886)
 Licensing obligation - long-term portion                                                   (840,742)     (551,991)
 Cost of raising capital                                                                  (1,350,078)     (147,455)
 Proceeds from sale of common stock                                                        5,522,975     2,395,291
                                                                                         --------------------------
      Net cash provided by financing activities                                            3,945,439     1,518,959
                                                                                         ------------  ------------

(DECREASE) INCREASE IN CASH                                                                  (36,128)       52,131
CASH, BEGINNING OF YEAR                                                                       62,338        10,207
                                                                                         ------------  ------------
CASH, END OF YEAR                                                                        $    26,210   $    62,338
                                                                                         ============  ============

SUPPLEMENTAL CASH FLOW INFORMATION:
                                                                                             2007          2006
                                                                                         ------------  ------------

   Interest paid                                                                         $   533,493   $   889,790
                                                                                         ============  ============

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


23
<PAGE>
MEDCOM USA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2007AND 2006
--------------------------------------------------------------------------------

NOTE  1  -  BACKGROUND

MedCom  USA,  Inc.  (the  "Company") a Delaware corporation was formed in August
1991  under  the name Sims Communications, Inc.  The Company''s primary business
was  providing telecommunications services.  In 1996 the Company introduced four
programs  to  broaden  the  Company's  product  and  service  mix:  (a) cellular
telephone  activation,  (b)  sales  of  prepaid calling cards, (c) sales of long
distance  telephone  service  and  (d)  rental  of  cellular telephones using an
overnight  courier  service.  With  the exception of the sale of prepaid calling
cards,  these  four  programs  were  discontinued  in December 1997.  During the
fiscal  year  of  1998, the Company redirected its operations and moved into the
area  of  medical  information  processing.

The Company changed its name to MedCom USA, Inc. in October 1999.  During fiscal
year  1999  and  continuing  through  2000,  the Company directed its efforts in
medical  information  processing.  From March 31, 2001 through 2005, the Company
operated  the  MedCom  System  (MedCom)  that  deploys  through  a point-of-sale
terminal  or  personal  computer  offering electronic transaction processing, as
well  as  insurance  eligibility  verification.  At  the  end of fiscal 2005 the
Company  deployed  web  portal software that functioned in a similar capacity of
the  terminal  point-of-sale  system.  Since  2005  the Company has continued to
focus  on the continual maintenance and upgrade of the web portal software.  The
Company  has  aggressively  focused on its primary operations in Electronic Data
Interchange  (EDI)  and  core  business  in  Electronic  Medical  Transaction
Processing.

NOTE  2  -  GOING  CONCERN

The  accompanying  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  has  year  end  losses  from  operations  and had minimal revenues from
operations  in  2007 and 2006.  During the year ended June 30, 2007 and 2006 the
Company  incurred net loss of $2,553,611 and $7,097,698, respectively.  Further,
the  Company  has  inadequate  working  capital  to  maintain  or  develop  its
operations,  and  is dependent upon funds from private investors and the support
of  certain  stockholders.

These  factors  raise  substantial  doubt  about  the  ability of the Company to
continue  as  a  going  concern.  The  financial  statements  do not include any
adjustments  that might result from the outcome of these uncertainties.  In this
regard,  Management  is planning to raise any necessary additional funds through
loans  and  additional sales of its common stock. There is no assurance that the
Company  will  be  successful  in  raising  additional  capital.

NOTE  3  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

The  Company  prepares  its  financial  statements in accordance with accounting
principles  generally  accepted  in  the  United States of America.  Significant
accounting  policies  are  as  follows:

Principles  of  Consolidation
-----------------------------

The  accompanying  financial  statements  represent  the  consolidated financial
position  and  results of operations of the Company and include the accounts and
results  of  operations  of  the Company and its wholly owned subsidiaries.  The
accompanying  financial statements include only the active entity of MedCom USA,
Inc.  The  Company  has  several  inactive  subsidiaries.

Use of Estimates
----------------


24
<PAGE>
The preparation of financial statements in conformity with accounting principles
generally  accepted  in the United States of America requires management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and  disclosure of contingent assets and liabilities at the date of
the  financial  statements.  These  estimates  and  assumptions  also affect the
reported  amounts  of  revenues, costs and expenses during the reporting period.
Management evaluates these estimates and assumptions on a regular basis.  Actual
results  could  differ  from  those  estimates.

The  primary management estimates included in these financial statements are the
impairment reserves applied to various long-lived assets, allowance for doubtful
accounts  for  gateway access fees and licensing fees, and the fair value of its
stock  tendered  in  various  non-monetary  transactions.

Reclassification
----------------

Certain  prior  period amounts have been reclassified to conform to current year
presentations.

Advertising  Cost
-----------------

All  advertising  costs are to expensed as incurred. Advertising expense for the
year  ended  June  30,  2007  and  2006  were  approximately $7,400 and $15,000,
respectively.

Cash and Cash Equivalents
-------------------------

The Company considers all highly liquid investments with an original maturity of
three  months  or  less to be cash equivalents.  At June 30, 2007 and 2006, cash
and  cash  equivalents  include  cash  on  hand  and  cash  in  the  bank.

Property and Equipment
----------------------

Property  and  equipment  is recorded at cost and depreciated over the estimated
useful  lives  of  the  assets  using principally the straight-line method. When
items  are  retired  or otherwise disposed of, income is charged or credited for
the  difference  between net book value and proceeds realized thereon.  Ordinary
maintenance and repairs are charged to expense as incurred, and replacements and
betterments  are  capitalized.  The  range  of  estimated  useful  lives used to
calculated  depreciation  for  principal  items of property and equipment are as
follow:

<TABLE>
<CAPTION>
                    Depreciation/
                    Amortization
Asset Category         Period
------------------  -------------
<S>                 <C>

Computer Equipment        3 Years
Terminal Software         3 Years
Network Platform          3 Years
Office equipment          5 Years
</TABLE>

Income  Taxes
-------------

Deferred  income  taxes  are  provided  based  on the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No.
109"),  to  reflect the tax effect of differences in the recognition of revenues
and  expenses  between  financial reporting and income tax purposes based on the
enacted  tax  laws  in  effect  at  June  30,  2007  and  2006,  respectively.

Net  Loss  Per  Share
---------------------

Basic  earnings  per  share is computed in accordance with FASB No. 128 Earnings
Per Share, by dividing net income (loss) available to common shareholders by the
weighted  average  number  of  common  shares  outstanding  during  the


25
<PAGE>
reporting  period.  Diluted  earnings  per share reflects the potential dilution
that  could  occur  if stock options and other commitments to issue common stock
were  exercised  or equity awards vest resulting in the issuance of common stock
that  could share in the earnings of the Company.  As of June 30, 2007 and 2006,
there  were  no  potential  dilutive  instruments  that  could  result  in share
dilution.

Fair  Value  of  Financial  Instruments
---------------------------------------

The  fair  value of a financial instrument is the amount at which the instrument
could  be  exchanged in a current transaction between willing parties other than
in  a  forced  sale  or  liquidation.

The  following  methods  and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:

Cash and cash equivalents, licensing receivable, prepaid expenses, other assets,
and accounts payable, income tax payable, and other current liabilities carrying
amounts  approximate  fair  value  due  to  their  most  maturities.

Stock-Based  Compensation
-------------------------

Statements  of  Financial  Accounting Standards ("SFAS No.") No. 123, Accounting
for  Stock-Based  Compensation,  ("SFAS  No.  123")  established  accounting and
disclosure  requirements  using  a  fair-value  based  method  of accounting for
stock-based  employee compensation. In accordance with SFAS No. 123, the Company
has  elected  to  continue  accounting  for  stock  based compensation using the
intrinsic value method prescribed by Accounting Principles Board Opinion No. 25,
"Accounting  for  Stock  Issued  to  Employees."

The  Company accounts for stock awards issued to nonemployees in accordance with
the  provisions  of SFAS No. 123 and Emerging Issues Task Force ("EITF") Issue
No.  96-18  Accounting  for  Equity  Instruments  that  are Issued to Other Than
Employees  for  Acquiring,  or  in  Conjunction  with Selling Goods or Services.
Under  SFAS  No.  123 and EITF 96-18, stock awards to nonemployees are accounted
for  at their fair value as determined under Black-Scholes option pricing model.

In December 2004, the FASB issued a revision of SFAS No. 123 ("SFAS No. 123(R)")
that  requires compensation costs related to share-based payment transactions to
be  recognized  in  the  statement  of  operations. With limited exceptions, the
amount  of compensation cost will be measured based on the grant-date fair value
of  the  equity  or  liability instruments issued. In addition, liability awards
will  be re-measured each reporting period. Compensation cost will be recognized
over  the  period  that  an employee provides service in exchange for the award.
SFAS  No.  123(R)  replaces SFAS No. 123 and is effective as of the beginning of
January  1,  2006.  Based  on  the number of shares and awards outstanding as of
December  31, 2005 (and without giving effect to any awards which may be granted
in  2006),  we  do not expect our adoption of SFAS No. 123(R) in January 2006 to
have  a  material  impact  on  the  financial  statements.

Financial  Statement Position ("FSP") FAS No. 123(R)-5 was issued on October 10,
2006.  The FSP provides that instruments that were originally issued as employee
compensation  and  then  modified, and that modification is made to the terms of
the  instrument  solely  to reflect an equity restructuring that occurs when the
holders  are  no  longer  employees,  then  no  change in the recognition or the
measurement (due to a change in classification) of those instruments will result
if  both  of the following conditions are met: (a). There is no increase in fair
value of the award (or the ratio of intrinsic value to the exercise price of the
award  is  preserved,  that  is,  the holder is made whole), or the antidilution
provision  is  not added to the terms of the award in contemplation of an equity
restructuring; and (b). All holders of the same class of equity instruments (for
example,  stock  options) are treated in the same manner. The provisions in this
FSP  shall be applied in the first reporting period beginning after the date the
FSP  is  posted to the FASB website. The Company has adopted SP FAS No. 123(R)-5
but  it did not have a material impact on its consolidated results of operations
and  financial


26
<PAGE>
condition.

Goodwill  and  Other  Intangible  Assets
----------------------------------------

The  Company  adopted  Statement of Financial Accounting Standard (""SFAS No."")
No.  142,  Goodwill  and  Other Intangible Assets, effective July 1, 2002.  As a
result,  the Company discontinued amortization of goodwill, and instead annually
evaluates  the  carrying  value  of  goodwill  and  other  intangible assets for
impairment,  in  accordance  with the provisions of SFAS No. 142.   There was no
impairment  of  goodwill  or  other  intangible  assets in fiscal 2006 and 2007.

Impairment  of  Long-Lived  Assets
----------------------------------

In accordance with SFAS No. 144, long-lived assets, such as property, plant, and
equipment,  and  purchased  intangibles,  are  reviewed  for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may  not  be  recoverable.  Goodwill  and other intangible assets are tested for
impairment annually. Recoverability of assets to be held and used is measured by
a comparison of the carrying amount of an asset to estimated undiscounted future
cash  flows  expected to be generated by the asset. If the carrying amount of an
asset  exceeds  its  estimated  future  cash  flows,  an  impairment  charge  is
recognized  by  the amount by which the carrying amount of the asset exceeds the
fair  value of the asset.  There were no events or changes in circumstances that
necessitated  a  review  of  impairment  of  long  lived  assets.

Concentration  of  Credit  Risk
-------------------------------

The  Company  maintains  its  operating  cash balances in banks in Islandia, New
York,  and in Scottsdale, Arizona.  The Federal Depository Insurance Corporation
(FDIC)  insures  accounts  at  each  institution  up  to  $100,000.

Financial  instruments that potentially subject the Company to concentrations of
credit  risk  are  primarily  trade  accounts  receivable.  The  trade  accounts
receivable  are  due  primarily  from  small  business  customers  in  numerous
geographical  locations  throughout  the  United  States.

The  Company  estimates  and  provides  an  allowance for uncollectible accounts
receivable.

For  the  years  ended  June  30,  2007 and 2006, the Company had a major vendor
TESIA-PCI  for  which  a contract was executed specifying that the Company would
deliver  1500  unit over the period of 2007 and 2006.  The agreement allowed the
minimum  billing  of  $28.50  per  month  per  unit in a pool based on a 15 cent
transaction  fee.  The average billing per unit experienced was greater than the
minimum  during  fiscal  2007  and  2006.

The  Company has entered into agreements with TESIA-PCI.  The agreements entered
into by and between the Company and TESIA-PCI represents a major licensor of the
Company.  The  Company realized $614,794 in year ended June 30, 2007 as compared
to  $1,156,000  from  TESIA-PCI  during the year ended June 30, 2006 in deferred
revenue.

Revenue  Recognition
--------------------

Statement of Position ("SOP") 97-2 applies to all entities that license, sell,
lease,  or market computer software. It also applies to ""hosting"" arrangements
in which the customer has the option to take possession of the software. Hosting
arrangements  occur  when  end  users do not take possession of the software but
rather  the


27
<PAGE>
software resides on the vendor''s or a third party''s hardware, and the customer
accesses  and  uses the software on an as-needed basis over the Internet or some
other  connection.  It  does  not,  however, apply to revenue earned on products
containing  software  incidental  to  the  product  as  a  whole  or  to hosting
arrangements  that  do  not give the customer the option of taking possession of
the  software.

SOP  97-2  allows  for  revenue  to  be  recognized  in accordance with contract
accounting  when  the arrangement requires significant production, modification,
or  customization  of  the  software.  When the arrangement does not entail such
requirements,  revenue  should  be  recognized  when  persuasive  evidence of an
agreement  exists,  delivery  has  occurred,  the  vendor's  price  is fixed or
determinable,  and  collectibility  is  probable.

The  largest  part of revenues stems from vendors' license fees associated with
software.  The Company recognizes revenue from license fees when the software is
shipped  to  the customer. The amount and timing of revenue recognition is based
on  the  multiple-element  arrangements  that  provide  for  multiple  software
deliverables  [e.g.,  software products, upgrades or enhancements, post contract
customer  support  (PCS),  or  other services]. In hosting arrangements that are
within  the  scope  of  SOP  97-2,  multiple elements might include specified or
unspecified  upgrade rights, in addition to the software product and the hosting
service. The software provider often charges a single fee that must be allocated
to  the  products  delivered.

In  an  arrangement  with  multiple  deliverables,  EITF 00-21 requires that the
delivered  items  be  considered  a separate unit of accounting if the delivered
items  have  value to the customer on a stand-alone basis, if there is objective
and  reliable  evidence  of  the fair value of the undelivered items, and if the
arrangement  includes  a  general  right of return for the delivered item, or if
delivery  or  performance  of  the  undelivered items is considered probable and
substantially  in  the  control of the vendor. EITF 00-21 requires allocation of
the  vendor''s  fee to the various elements based on relative fair value of each
element''s  stand-alone  value.

In  general,  both  SOP 97-2 and EITF 00-21 require allocating revenue to all of
the elements of a multiple-deliverable arrangement using the relative fair value
method,  where  objective and reliable evidence of fair value is present for all
the  products  contained  in  the  group.

Management  has  established  Vendor-Specific  Objective  Evidence  ("VSOE") for
access  fee,  equipment,  provider  enrollment  fees,  EDI  connectivity  fees,
Payer/Provider  fees, benefit verification fees, referral transfer fees, service
authorization  fees,  claim status, training, support, program upgrades, carrier
editions,  and  customized  reports.  Revenue  is  accordingly  allocated  and
recognized  based  on  the  value  of  deliverables.

The  Company  has  substantial  upfront  expenses such as commission, royalties,
software  portal,  and  the  software  deliverables  and pays those costs at the
execution  of  the  contract.  The  company  accumulates  the entire contract of
licensing  and gateway access fees and record as the licenses and gateway access
fees  receivables.  The  company  recognizes revenue in accordance with SOP 97-2
when  the software is delivered to the professional and recognizes the remaining
portion  of  the  contract over the life of the contract. The company recognizes
the revenue of the contract at the time of the deliverables and execution of the
contract  since  the  company  has  substantial  costs  upfront  at  the time of
delivery.  The  remaining  portion  is  recognized  monthly  in  accordance  the
agreement.  The  company  further accrues the prepaid licensing expense, accrued
deliverables

The  Company  has  adopted  the  Securities  and  Exchange  Commission''s  Staff
Accounting  Bulletin  (SAB) No. 104, which provides guidance on the recognition,
presentation  and  disclosure  of  revenue  in  financial  statements.

Recent  Accounting  Pronouncements
----------------------------------

Recent  accounting  pronouncements  that  the  Company  has  adopted  or will be
required  to  adopt  in  the  future  are  summarized  below.


28
<PAGE>
In May 2005, the Financial Accounting Standards Board (FASB) issued SFAS No. No.
154,  "Accounting  Changes and Error Corrections" (SFAS No. 154), which replaces
Accounting Principles Board (APB) Opinion No. 20, "Accounting Changes," and SFAS
No.  3,  "Reporting  Accounting  Changes  in  Interim  Financial Statements - An
Amendment  of  APB  Opinion  No.  28."  SFAS  No.  154  provides guidance on the
accounting for and reporting of accounting changes and error corrections, and it
establishes  retrospective  application,  or the latest practicable date, as the
required method for reporting a change in accounting principle and the reporting
of  a  correction  of an error. SFAS No. 154 is effective for accounting changes
and  corrections  of  errors  made  in fiscal years beginning after December 15,
2005.  Early  adoption  was permissible for fiscal year beginning after June 30,
2005.  The  Company has elected to early adopt SFAS No. 154.  The implementation
of  SFAS  No.  154 resulted in a retroactive restatement impacting the financial
statements  for  fiscal  2005  as  noted  in  Note  14.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS
No.  157). SFAS No. 157 provides guidance for using fair value to measure assets
and liabilities. SFAS No. 157 addresses the requests from investors for expanded
disclosure about the extent to which companies measure assets and liabilities at
fair  value,  the  information used to measure fair value and the effect of fair
value  measurements  on  earnings. SFAS No. 157 applies whenever other standards
require (or permit) assets or liabilities to be measured at fair value, and does
not  expand  the  use  of  fair  value in any new circumstances. SFAS No. 157 is
effective  for  financial  statements  issued  for  fiscal years beginning after
November  15,  2007  and  will be adopted by the Company in the first quarter of
fiscal  year  2009.  The  Company is unable at this time to determine the effect
that  its  adoption  of  SFAS  No.  157 will have on its consolidated results of
operations  and  financial  condition.

In  July  2006,  the  FASB  issued  FASB  Interpretation No. 48, "Accounting for
Uncertainty  in  Income Taxes, an interpretation of FASB Statement No. 109" (FIN
48).  FIN  48  clarifies  the  accounting  for  uncertainty  in  income taxes by
prescribing  the recognition threshold a tax position is required to meet before
being  recognized  in  the  financial  statements.  It also provides guidance on
derecognition,  classification,  interest  and  penalties, accounting in interim
periods,  disclosure and transition. The cumulative effects, if any, of applying
FIN  48  will  be  recorded  as  an  adjustment  to  retained earnings as of the
beginning  of  the  period  of  adoption.  FIN  48 is effective for fiscal years
beginning  after  December  15, 2006, and the Company is required to adopt it in
the  first  quarter of fiscal year 2008. The Company is currently evaluating the
effect  that  the  adoption  of  FIN 48 will have on its consolidated results of
operations  and  financial  condition  and  is  not  currently  in a position to
determine  such  effects,  if  any.

In  June 2006, the FASB ratified Emerging Issues Task Force (EITF) Issue No. 063
(EITF  06-3),  "How Taxes Collected from Customers and Remitted to Governmental
Authorities  Should  Be Presented in the Income Statement (That Is, Gross versus
Net  Presentation).  EITF  063  applies  to any tax assessed by a governmental
authority  that is directly imposed on a revenue producing transaction between a
seller  and  a customer. EITF 063 allows companies to present taxes either gross
within  revenue  and  expense  or  net.  If  taxes  subject  to  this  issue are
significant,  a  company  is  required  to  disclose  its  accounting policy for
presenting  taxes  and  the  amount of such taxes that are recognized on a gross
basis. The Company currently presents such taxes net. EITF 063 is required to be
adopted  during the first quarter of fiscal year 2008. These taxes are currently
not  material  to  the  Company''s  consolidated  financial  statements.

In  September  2006,  the  SEC  issued  Staff  Accounting  Bulletin  No.  108,
"Considering  the  Effects  of  Prior  Year  Misstatements  when  Quantifying
Misstatements  in Current Year Financial Statements" (SAB 108). SAB 108 provides
guidance  on  the  consideration  of  the effects of prior year misstatements in
quantifying  current  year  misstatements  for  the  purpose  of  a  materiality
assessment.  SAB  108  establishes  an  approach that requires quantification of
financial  statement  errors based on the effects of each on a company's balance
sheet  and  statement  of  operations  and  the  related  financial  statement
disclosures.  Early  application of the guidance in SAB 108 is encouraged in any
report  for an interim period of the first fiscal year ending after November 15,
2006,  and  will  be  adopted by the Company in the first quarter of fiscal year
2007.  The  Company  does  not  expect  the  adoption  of  SAB


29
<PAGE>
108  to  have  a  material  impact on its consolidated results of operations and
financial  condition.

Financial  Statement  Position FAS 123(R)-5 was issued on October 10, 2006.  The
FSP  provides  that  instruments  that  were  originally  issued  as  employee
compensation  and  then  modified, and if that modification is made to the terms
of the instrument solely to reflect an equity  restructuring  that  occurs  when
the  holders  are  no longer employees, then no change in the recognition or the
measurement  (due  to  a change in  classification)  of those  instruments  will
result if both of the following conditions are met: (a). There is no increase in
fair  value of the award (or the ratio of intrinsic  value to the exercise price
of  the  award  is  preserved,  that  is,  the  holder  is  made  whole), or the
antidilution  provision is not added to the terms of the award in  contemplation
of  an  equity  restructuring;  and (b). All holders of the same class of equity
instruments  (for  example,  stock options) are treated in the same manner.  The
provisions  in this FSP shall be applied in the first reporting period beginning
after  the  date  the  FSP  is posted to the FASB website.  The Company does not
expect  the  adoption  of  FSPs  FAS  123(R)-5  to have a material impact on its
consolidated  results of operations and financial condition.  The statements was
adopted  July  1,  2006.

NOTE  4  -  LICENSING  RECEIVABLE

The Company''s license receivable current portion, net at June 30, 2007 and 2006
consisted of the following:

<TABLE>
<CAPTION>
                                            2007        2006
                                         ----------  ----------
<S>                                      <C>         <C>
Licensing Contracts                      $ 929,406   $ 792,739
  Less: Allowance for Doubtful Accounts   (139,156)   (166,189)
                                         ----------  ----------
Licensing Contracts - Net                $ 790,250   $ 626,550
                                         ==========  ==========
</TABLE>


The  Company estimated uncollectible accounts balances and provides an allowance
for  such  estimates.  The  allowance for doubtful accounts at June 30, 2007 and
2006 consist of an estimate for potentially uncollectible accounts in the MedCom
division.

Monthly  the Company ACH''s these payments directly from the customers'' account
to ensure timely payment.  The current customer agreement requires customer sign
up  of  ACH  authorization  of these fees and other deliverables.  All licensing
agreements  are  noncancellable  and  range  from  a  24  -  60  month licensing
arrangement.

NOTE  5  -  ALLOWANCE  FOR  DOUBTFUL  ACCOUNTS

Changes  in  the  allowance for possible licensing receivables losses as of June
30:

<TABLE>
<CAPTION>
                                2007      2006
                              --------  --------
<S>                           <C>       <C>
Balance at beginning of year  $166,189  $113,093
Additions                       57,948   109,642
Write-off                       84,981    56,546
                              --------  --------

Balance at end of year        $139,156  $166,189
                              ========  ========
</TABLE>


NOTE  6  -  PROPERTY  AND  EQUIPMENT

Property and equipment, net at June 30, consist of the following:

<TABLE>
<CAPTION>
                                Years     2007        2006
                                -----  ----------  -----------
<S>                             <C>    <C>         <C>
Computer Equipment                  3  $       -   $  176,484
Terminal Software                   3          -      402,371
Network Platform                    3    807,833      639,437
                                       ----------  -----------

Total property and equipment             807,833    1,218,292
                                       ----------  -----------

Less: accumulated depreciation          (323,847)    (687,957)
                                       ----------  -----------
                                       $ 483,986   $  530,335
                                       ==========  ===========
</TABLE>


30
<PAGE>
The depreciation expense for the years ended June 30, 2007 and 2006 was $770,505
and  $2,663,748,  respectively.

In  June  30,  2005  the  Company  capitalizes  the  value  of the point of sale
terminals  that  are  sold  under  capital  sale-leaseback  transactions.  The
terminals  are  purchased from third party vendors and are recorded as inventory
at  that  time.  The  Company  enters  into sale and service agreements with its
customers  at  which  time  the  terminal  is  programmed  with  the  Company''s
proprietary  software  and installed with the customer.  Many of those terminals
were  the  basis  for  the  sale-leaseback  transactions.  The  terminals  are
capitalized  at the value determined by the lessor on the basis of the cash flow
under  the  terms  of the sale and service agreements with the customers.  As of
June  30,  2006  there  were  remaining  terminal  assets  as  follows:

<TABLE>
<CAPTION>
                             2007         2006
                          ----------  ------------
<S>                       <C>         <C>
Terminal Assets           $        -  $ 6,197,320
Accumulated Depreciation           -   (5,420,378)
                          ----------  ------------
Net Terminal Assets       $        -  $   776,942
                          ==========  ============
</TABLE>


The Company occupies premises under a non-cancelable operating lease expiring on
2008.  At June 30, 2007, the approximate future minimum rental commitments under
this  lease  are  as  follows:

<TABLE>
<CAPTION>
<S>         <C>
2008:       $  170,000
2009:           63,192
2010:            7,148
            ----------
     Total  $  240,340
            ==========
</TABLE>

Total  rental  payments  under the lease agreement totaled $200,881 and $227,160
for  the  years  ended  in  June  30,  2007  and  2006,  respectively.

NOTE  7  -  NOTE  PAYABLE

Notes payable comprise the following:

<TABLE>
<CAPTION>
                                                          2007        2006
                                                       ----------------------
<S>                                                    <C>         <C>
LeeCo agreement adopts the agreement that the
Company executes with the customer.  LeeCo
collects all funds through ACH and is paid from
those proceeds.  The excess of those proceeds are
collected by the company.  LeeCo holds as
collateral all the proceeds from the customer leases,
access fees and all cash collections and is secured
from all assets of the company.                        $2,419,784  $2,606,558


31
<PAGE>
Ladco agreement adopts the agreement that the
Company executes with the customer.  Ladco
collects all funds through ACH and is paid from
those proceeds.  The excess of those proceeds are
collected by the company.  Ladco holds as collateral
all the proceeds from the customer leases, access
fees and all cash collections and is secured from all
assets of the company.                                  2,985,000   3,305,935
  Total LeeCo and Ladco debt                            5,404,784   5,912,493
  Plus long-term portion of accrued deliverable           847,052   1,148,614
  Less interest                                           558,837   1,140,649
                                                       ----------------------
  Total long-term note payable                          5,692,999   5,920,458
  Less current portion                                  2,335,824   1,722,541
                                                       ----------------------
     Long-term portion of note payable                 $3,357,175  $4,197,917
                                                       ======================
</TABLE>

On  September  14,  2006  the Company renegotiates the Ladco debt in order to be
able  to pay the remaining balance of the note for 39 months at $99,500 payments
per  month  until  paid  in  full.  Under  the  renegotiated note now matures on
October  2009.

NOTE  8  -  STOCKHOLDER''S  DEFICIT

DURING  THE  YEAR  ENDED  JUNE  30,  2007  AND  2006:

During  the year ended June 30, 2006, the Company issued 6,552,648 shares of its
common  stock  for  $2,395,291.  The  shares  were  issued to third parties in a
private  placement  of  the  Company''s  common  stock.  The  shares  were  sold
throughout  the  year  ended  June 30, 2006, ranging from $1.00 per share at the
beginning  of the year to $.25 per share at the end of the year.  Commissions of
approximately $147,455 are recorded as a charge in additional paid in capital as
direct  costs  associated  with  the  raising  of  equity  capital.

The  Company  has  issued  shares  of  its  common  stock  as  consideration  to
consultants for the fair value of the services rendered. The value of the shares
was determined based on the trading value of the stock at the dates on which the
agreements  were  entered  into  for  the  services  and  value  of the services
rendered.  During  the  year  ended  June  30,  2006,  the  Company  granted  to
consultants,  6,087,492  shares  of  common  stock  valued  in  the aggregate at
$2,395,370 with a strike price range of $.50 to $1.50. The value of these shares
was expensed during the year. The stock issued for services includes $247,167 of
the royalty buyout provision. The Company exercised the royalty buyout provision
to  reduce  the  royalty  payments  to  20%  of  all  sales  in  June  30, 2006.

During  the  year  ended  June 30, 2006, the Company issued 12,997 shares of its
common  stock  under a notice of conversion of common stock warrants.  There was
no  payment  for the exercise of the warrants as they were cashless warrants and
the  net  amount  issued  was  12,997.

During the year ended June 30, 2007, the Company issued 14,824,560 shares of its
common  stock  for  $5,522,975.  The  shares  were  issued to third parties in a
private  placement  of  the  Company''s  common  stock.  The  shares  were  sold
throughout  the  year  ended  June  30, 2007, ranging from $.75 per share at the
beginning  of the year to $.25 per share at the end of the year.  Commissions of
approximately  $1,350,078 are recorded as a charge in additional paid in capital
as  direct  costs  associated  with  the  raising  of  equity  capital.

The  Company  has  issued  shares  of  its  common  stock  as  consideration  to
consultants  for  the  fair  value of the services rendered.  The value of those
shares  was  determined  based on the trading value of the stock at the dates on
which the agreements were entered into for the services.   During the year ended
June  30,  2007,  the Company granted to consultants and paid out obligations of
7,630,731  shares  of  common stock valued in the aggregate at $3,900,137 with a
strike  price  range  of  $.35  to  $.75.  The  Company  recorded as a charge in
additional  paid  in  capital  an  obligation  buyout


32
<PAGE>
for  the  Royalty arrangement with Dream Technology in the amount of $4,050,480.
In  connection with the original licensing and subsequent acquisition of MedCom,
the  Company  entered  into  a royalty agreement with the original Licensor. The
royalty  provisions  of  the  license  agreement  remained  in  effect after the
purchase.  This  agreement  was  amended  in  the year ended June 30, 2002.  The
Company  will  pay the Licensor 20% of the first $1,000,000 of qualified monthly
revenues,  less  direct costs, generated by the licensed software and 10% of net
monthly  revenue in excess of $1,000,000.  The buyout of this agreement included
all past, present, and future royalty arrangements to the original licensor.  As
of  December  31,  2006  no  further  royalty  obligations  have been charged to
additional  paid  in capital or charged to expense as the royalty obligation was
fully  satisfied.

<TABLE>
<CAPTION>
                          STOCK ISSUED                  STOCK ISSUED   STOCK ISSUED FOR
QUARTER ENDED               FOR CASH    CASH RECEIVED   FOR SERVICES  WARRENTS EXERCISED
<S>                       <C>           <C>             <C>           <C>
September 30, 2005           1,156,999  $      591,750       685,508              12,997
December 31, 2005              950,000  $      380,000       811,500                   -
March 31, 2006               1,584,788  $      590,949     2,665,848                   -
June 30, 2006                2,860,861  $      832,592     1,924,636
                          --------------------------------------------------------------
Year Ended June 30, 2006     6,552,648  $    2,395,291     6,087,492              12,997

September 30, 2006           7,384,373  $    2,178,991     1,837,331                   -
December 31, 2006            2,579,331  $    1,273,333     4,726,870                   -
March 31, 2007               2,659,000  $    1,302,000       866,530                   -
June 30, 2007                2,201,856  $      768,651       200,000
                          --------------------------------------------------------------
Year Ended June 30, 2007    14,824,560  $    5,522,975     7,630,731                   -
</TABLE>


Preferred  Stock
The  Company  is  authorized  to  issue  up to 300,000 shares of $.001 par value
Preferred  Stock.  The  Board  of  Directors  has  the  authority  to divide the
Preferred  Stock  into  series  and,  within the certain limitations, to set the
relevant  terms  of  such  series  created.

In  April  1995,  the  Company  established  the  Series  A  Preferred Stock and
authorized the issuance of up to 50,000 shares. Each share of series A Preferred
Stock  is  entitled  to  a  dividend at the rate of $1.60 per share when, and if
declared  by  the Board of Directors. Dividends not declared are not cumulative.
Additionally,  each  share  of  Series A Preferred Stock is convertible into .20
shares  of the Company's Common Stock at any time after July 1, 1999. A total of
850  shares  of  common stock may be issued upon the conversion of the shares of
Series  A  preferred stock outstanding as of June 30, 2000. Upon any liquidation
or  dissolution  of  the  Company,  each outstanding share of Series A Preferred
Stock  is entitled to distribution of $20 per share prior to any distribution to
the  holders of the Company's common stock. As of June 30, 2000, the Company has
4,250  shares  of  Series  A  Preferred  Stock  issued  and  outstanding.

In  April  2000,  the  Company  established  the  Series  D  Preferred stock and
authorized  the  issuance  of  up to 2,900 shares. The Company issued 494 shares
related  to  a  business  acquisition of and 2,356 shares for the acquisition of
related  intellectual  property.

Each  share of Series D preferred stock is entitled to a dividend at the rate of
$0.04  per  share  and  has a stated value of $1,000 per share. Dividends on all
Series  D  preferred  stock  begin  to  accrue  and  accumulate from the date of
issuance.  Additionally,  each  share of Series D preferred stock is convertible
into 40.49 shares of common stock for a total of 576,923 shares at the option of
the  stockholders.  Upon  liquidation  or  dissolution  of  the  Company,  each
outstanding  share  of Series D preferred stock is entitled to a distribution of
the stated amount per share prior to any distribution to the shareholders of the
Company's  common  stock.  The  Company  can  convert  the  Series  D  preferred


33
<PAGE>
stock  into  shares  of common stock using the same conversion ratio at any time
after  April  15,  2001  so  long as the bid price of the Company's common stock
exceeds  $4.94  per  share  and  the  shares  of  common stock issuable upon the
conversion  of  the  Series D preferred stock are either covered by an effective
registration  statement  or  are  eligible  for sale pursuant to rule 144 of the
Securities  and  Exchange  Commission. Each share of Series D preferred stock is
entitled  to  vote  in all matters submitted to the Company's shareholders on an
"as  converted"  basis.

The  Company  has  not  declared  dividends on the preferred stock for the years
ended  June  30,  2007  and  2006.  At  June  30, 2007, there was an accumulated
undeclared  and  unpaid  dividend  on  the Series D preferred stock of $342,000.
Total  accrued, but unpaid dividends related to the Series D preferred stock was
$23,750  at  June  30,  2007.

NOTE  9  -  INCOME  TAXES

The provision (benefit) for income taxes from continued operations for the years
ended  June  30,  2007  and  2006  consist  of  the  following:
<TABLE>
<CAPTION>
                                           --------------------------
                                               2007          2006
                                           --------------------------
<S>                                        <C>           <C>
Current:
    Federal                                $  (817,100)  $(2,271,200)
    State                                     (204,300)     (567,800)
                                           ------------  ------------
                                            (1,021,400)   (2,839,000)

Deferred:
    Federal                                    817,100     2,271,200
    State                                      204,300       567,800
                                           ------------  ------------
                                             1,021,400     2,839,000

Benefit from the operating
  loss carryforward                                  -             -
                                           ------------  ------------

(Benefit) provision for income taxes, net  $         -   $         -
                                           ============  ============
</TABLE>


The  difference  between  income  tax  expense  computed by applying the federal
statutory  corporate  tax  rate  and  actual  income  tax expense is as follows:

<TABLE>
<CAPTION>
                                     June 30,
                                   ------------
                                   2007   2006
                                   -----  -----
<S>                                <C>    <C>
Statutory federal income tax rate  34.0%  34.0%
State income taxes and other        8.9%   8.9%
                                   -----  -----

Effective tax rate                 42.9%  42.9%
                                   =====  =====
</TABLE>

Deferred  income  taxes  result from temporary differences in the recognition of
income  and  expenses for the financial reporting purposes and for tax purposes.
The  tax  effect  of these temporary differences representing deferred tax asset
and  liabilities  result  principally  from  the  following:

<TABLE>
<CAPTION>
                                         June 30,
                                 ----------------------------
                                     2007           2006
                                 -------------  -------------
<S>                              <C>            <C>
Allowance for contract losses    $    139,157   $    166,188
Net operating loss carryforward    94,300,000     91,800,000
Valuation allowance               (94,439,157)   (91,966,188)
                                 -------------  -------------

  Deferred income tax asset      $          -   $          -
                                 =============  =============
</TABLE>


34
<PAGE>
The  Company  has a net operating loss carryforward of approximately $94,300,000
available  to  offset  future  taxable  income  through  2028.

During  the  year  ended June 30, 2007, the Company reduced the state portion of
the  deferred  income  tax  asset  related to net operating loss carryforward by
$3,884,000  resulting  from  the  expiration  of  the  net  operating loss carry
forward.  The valuation allowance on the deferred income tax asset was decreased
by  $2,853,000  in  the  year  ended June 30, 2006, resulting primarily from the
expiration  of  state  net  operating  loss  carryforwards.

NOTE  10  -  COMMITMENTS  AND  CONTINGENCIES

Licensing  Agreements

In  prior periods customers could arrange to have the purchase of the Company''s
terminals  financed  through  the  financial  institution.  The  Company  had an
agreement  with  financial  institution  Ladco  to  guarantee  varying  amounts
associated  with  the  financial institution''s arrangements with the customers.
Subsequent to June 30, 2005, the Company entered into a new master contract with
the  financial  institution that limits the recourse to the Company to the first
payment  under  the  customer''s contract.  The amount of such payment would not
exceed  $100.

In year ended June 30, 2005 the Company renegotiated the customer contracts that
included  the  language  that  the  leases  entered  into  by the customers were
non-cancelable  under  the  term  of  the  agreement.  The  Company further gave
incentive  to  existing  customers  to  enter  into  the  new  contract and many
customers  renewed.  The  company  has refinanced their financing agreement with
Ladco  to  reduce  the  unpaid  balance  to  zero  by  October  2009.

NOTE 11 - NET LOSS PER SHARE

Net  loss per share is calculated using the weighted average number of shares of
common  stock  outstanding  during  the  year.  Preferred  stock  dividends  are
subtracted  from  the  net  income  to  determine the amount available to common
shareholders.  Preferred  stock convertible to 115,396 common shares and options
and warrants exercisable into 517,991 shares of common stock were not considered
in  the  calculation  for diluted earnings per share for the year ended June 30,
2007  and  2006  respectively  because  the  effect  of their inclusion would be
anti-dilutive.

NOTE 12 - RELATED PARTY TRANSACTIONS

The  Company''s  president  and chairman is a significant shareholder and is its
sole officer and director of the Company.  The chairman controls American Nortel
Communications,  Inc.  which  is  also a significant shareholder of the Company.
During  the  year  ended  June  30,  2002,  the Company moved its administrative
offices  into  space occupied by this related entity.  The Company shares office
space  and  management  and  administrative  personnel with this related entity.
Certain of the Company''s personnel perform functions for the related entity but
there  was  no allocation of personnel related expenses to the related entity in
the  years  ended  June  30,  2007  and  2006.

The  Company  frequently  receives  advances  and  advances  funds  to an entity
controlled by the Company''s president and which is a significant shareholder of
the  Company  to cover short-term cash flow deficiencies.  During the year ended
June  30,  2006,  the  chairman  advanced  $758,629  to the Company and received
repayments  of  that  advance  in  December 2006.  In June 30, 2007 the chairman
advanced  $305,000.  The  balance  due  to  this  affiliate at June 30, 2007 was
$305,000  and $758,629 for year ended June 30, 2007 and 2006 respectively.   The
advances  are  generally  short term in nature with an interest rate of 9%.  The
advances  of  $305,000  still  remain  outstanding  as  of  September


35
<PAGE>
2007.

The Company paid management fees of $450,000 to Wilcom, Inc., an entity owned by
the  Company''s  president.

NOTE 13 - STOCK BASED COMPENSATION

The  Company issues stock options from time to time to executives, key employees
and  members  of  the  Board  of  Directors.  The  Company  has  adopted  the
disclosure-only  provisions  of  Statement of Financial Accounting Standards No.
123,  "Accounting  for  Stock-Based  Compensation," and continues to account for
stock  based  compensation  using  the  intrinsic  value  method  prescribed  by
Accounting  Principles  Board  Opinion  No.  25, "Accounting for Stock Issued to
Employees".  Accordingly, no compensation cost has been recognized for the stock
options  granted  to  employees.

In December 2004, the FASB issued a revision of SFAS No. 123 ("SFAS No. 123(R)")
that  requires compensation costs related to share-based payment transactions to
be  recognized  in  the  statement  of  operations. With limited exceptions, the
amount  of compensation cost will be measured based on the grant-date fair value
of  the  equity  or  liability instruments issued. In addition, liability awards
will  be re-measured each reporting period. Compensation cost will be recognized
over  the  period  that  an employee provides service in exchange for the award.
SFAS  No.  123(R)  replaces SFAS No. 123 and is effective as of the beginning of
January  1,  2006.  Based  on  the number of shares and awards outstanding as of
December  31, 2005 (and without giving effect to any awards which may be granted
in  2006),  we  do not expect our adoption of SFAS No. 123(R) in January 2006 to
have  a  material  impact  on  the  financial  statements.

Financial  Statement  Position  (""FSP"") FAS No. 123(R)-5 was issued on October
10,  2006.  The  FSP  provides  that  instruments that were originally issued as
employee  compensation  and  then modified, and that modification is made to the
terms  of  the  instrument solely to reflect an equity restructuring that occurs
when  the  holders are no longer employees, then no change in the recognition or
the  measurement  (due  to a change in classification) of those instruments will
result if both of the following conditions are met: (a). There is no increase in
fair  value  of the award (or the ratio of intrinsic value to the exercise price
of  the  award  is  preserved,  that  is,  the  holder  is  made  whole), or the
antidilution  provision  is not added to the terms of the award in contemplation
of  an  equity  restructuring;  and (b). All holders of the same class of equity
instruments  (for  example,  stock  options) are treated in the same manner. The
provisions  in this FSP shall be applied in the first reporting period beginning
after the date the FSP is posted to the FASB website. The Company has adopted SP
FAS  No.  123(R)-5  but  it  did  not have a material impact on its consolidated
results of operations and financial condition.

There  were  no options granted in the year ended June 30, 2007 and 2006 and all
options  previously granted have been fully vested and therefore there is no pro
forma  effect  for  the year then ended.  The fair value of each option grant is
estimated  on  the  date  of grant using the Black-Scholes option-pricing model.

The  Company  grants  options  under  several stock option plans.  The Company's
Incentive  Stock  Option Plans, Non-Qualified Stock Option Plans and Stock Bonus
Plans  are  collectively  referred  to  as the "Plans". The following sets forth
certain  information  as  of June 30, 2007 and 2006 concerning the stock options
and  stock  bonuses  granted  by  the Company pursuant to the Plans. Each option
represents  the  right  to  purchase  one  share  of the Company's Common Stock.

All options awarded are fully vested, no options were exercised, and all options
have  expired.


36
<PAGE>
<TABLE>
<CAPTION>
                                      Total shares
                                        reserved      Remaining
                                       under the    options under
                                          plan        the plan
                                      ---------------------------
<S>                                   <C>           <C>
1998 Incentive Stock Option Plan         1,500,000        400,167
2000 Incentive Stock Option Plan         1,000,000        925,150
2000 Non-Qualified Stock Option Plan     2,000,000      1,820,575
1999 Stock Bonus Plan                      900,000        833,250
2000 Stock Bonus Plan                      500,000        500,000
</TABLE>


Common stock warrants outstanding at year ended June 30, 2007 consist of the
following:

<TABLE>
<CAPTION>
                 Number of  Exercise   Expiration of
                 Warrants     Price       Warrants
                 <C>        <C>        <S>

                   517,991  $    1.25  January 7, 2008
</TABLE>

All remaining warrants of 517,991 expire January 7, 2008.

The  Company accounts for stock awards issued to nonemployees in accordance with
the provisions of SFAS No. 123 and Emerging Issues Task Force ("EITF") Issue No.
96-18  Accounting for Equity Instruments that are Issued to Other Than Employees
for  Acquiring, or in Conjunction with Selling Goods or Services. Under SFAS No.
123 and EITF 96-18, stock awards to nonemployees are accounted for at their fair
value  as  determined  under  Black-Scholes  option  pricing  model.

NOTE 14 - CORRECTION OF AN ERROR

In  2006,  the  Company  had  effort  corrections  of  $759,144  composed of the
adjustment  to  the refinancing of the Ladco long term debt and penalty totaling
$592,955  and  to  the  allowance  for doubtful account of $166,189. The Company
voided  $61,190  of  expired  checks  and duplicated expenses that are no longer
valid.

The effects of these error corrections on the financial statements resulted in a
retroactive  restatement  impacting  the financial statements for fiscal 2006 as
follows:

<TABLE>
<CAPTION>
                             2006            2006          2006
                         As Originally        As         Effect of
Assets                     Reported        Adjusted       Change
----------------------  -------------------------------------------
<S>                     <C>              <C>            <C>
  Total Assets          $    3,681,139   $  3,576,140   $ (104,999)
----------------------  ===========================================
Liabilities
----------------------
  Total Liabilitites    $   10,516,537   $ 11,170,681   $ (654,144)
----------------------  ===========================================
Stockholders' Equity
----------------------
  Accumulated deficit   $  (86,913,601)  $(87,672,745)  $  759,144
                        ===========================================
Operating expenses      $   (7,831,816)  $ (8,623,161)  $  791,345
                        ===========================================
Other expenses          $      928,654   $    896,450   $  (32,201)
                        ===========================================
Net loss                $   (6,338,554)  $ (7,097,698)  $  759,144
                        ===========================================
Net loss per share      $        (0.10)  $      (0.11)        0.01
                        -------------------------------------------
</TABLE>


                                *  *  *  *  *  *


37
<PAGE>
ITEM  8.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING AND
FINANCIAL  DISCLOSURE.

In February 7, 2007 our prior auditor resigned and the Company engaged the firm
of Jewett, Schwartz, Wolfe & Associates.

We have had no disagreements on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures with
any of our accountants for the year ended June 30, 2007 and 2006.

We have not had any other changes in nor have we had any disagreements, whether
or not resolved, with our accountants on accounting and financial disclosures
during our two recent interim periods December 31, 2006, March 31, 2007, and
through September 25, 2007.


ITEM  4.01  CHANGES  IN  REGISTRANT'S  CERTIFYING  ACCOUNTANT.

On February 7, 2007, Jewett, Schwartz, Wolfe & Associates ("JSW") was appointed
as the independent auditor for the Medcom USA Inc. (the "Company") commencing
with the year ending June 30, 2007, and SE Clark & Company P.C. ("Clark") were
dismissed as the independent auditors for the Company as of February 7, 2007.
The decision to change auditors was approved by the audit committee of the
Company''s Board of Directors on February 7, 2007.

The report of Clark on the financial statements for either of the one most
recent completed fiscal years did not contain any adverse opinion or disclaimer
of opinion or was qualified or modified as to uncertainty, audit scope or
accounting principles, except for the following:

"The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the accumulation of losses and shortage of capital raise
substantial doubt about its ability to continue as a going concern. Management's
plans concerning these matters are also described in Note1. The financial
statements do not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and classification of
liabilities that might result should the Company be unable to continue as a
going concern.

During the Company's one most recent interim quarter September 30, 2006, annual
report June 30, 2006, and three prior interim quarters September 30, 2005,
December 31, 2005, and March 31, 2006, there were no disagreements with Clark on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreement, if not resolved
to the satisfaction of Clark, would have caused it to make reference to the
subject matter of the disagreements in connection with its report with respect
to the financial statements of the Company.

During the Company's one most recent interim quarter September 30, 2006, annual
report June 30, 2006, and three prior interim quarters September 30, 2005,
December 31, 2005, and March 31, 2006,, there were no "reportable events" as
such term is described in Item 304(a)(1)(v) of Regulation S-B under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), with respect
to the Company.

During the Company's one most recent interim quarter September 30, 2006, annual
report June 30, 2006, and three prior interim quarters September 30, 2005,
December 31, 2005, and March 31, 2006,, the Company did not consult with JSW
with respect to the Company regarding (i) the application of accounting
principles to a specified transaction, either completed or proposed, or the type
of audit opinion that might be rendered on the Company's


38
<PAGE>
financial statements, (ii) any matter that was either the subject of a
disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-B under the
Exchange Act and the related instructions to Item 304 of Regulation S-B) or a
"reportable event" (as such term is described in Item 304(a)(1)(v) of Regulation
S-B), or (iii) any of the matters or events set forth in Item 304(a)(2)(i) and
(ii) of Regulation S-B.

The Company has furnished a copy of this Report to Clark and requested them to
furnish the Company with a letter addressed to the Securities and Exchange
Commission stating whether it agrees with the statements made by the Company
herein in response to Item 304(a) of Regulation S-K and, if not, stating the
respects in which it does not agree. Clark''s response is filed as an exhibit to
this Current Report on Form 8-K. The response includes a comment on the December
31, 2006 filing reviewed by JSW of which Clark disagrees with JSW, management,
and prior counsel, regarding the disclosures made as a result of a change in
estimate.

ITEM  8A.  CONTROLS  AND  PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Disclosure controls and procedures are designed with an objective of ensuring
that information required to be disclosed in our periodic reports filed with the
Securities and Exchange Commission, such as this Annual Report on Form 10-KSB,
is recorded, processed, summarized and reported within the time periods
specified by the Securities and Exchange Commission. Disclosure controls are
also designed with an objective of ensuring that such information is accumulated
and communicated to our management, including our chief executive officer, in
order to allow timely consideration regarding required disclosures.

The evaluation of our disclosure controls by our principal executive officer
included a review of the controls'' objectives and design, the operation of the
controls, and the effect of the controls on the information presented in this
Annual Report. Our management, including our chief executive officer, does not
expect that disclosure controls can or will prevent or detect all errors and all
fraud, if any. A control system, no matter how well designed and operated, can
provide only reasonable, not absolute, assurance that the objectives of the
control system are met. Also, projections of any evaluation of the disclosure
controls and procedures to future periods are subject to the risk that the
disclosure controls and procedures may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may
deteriorate.

As of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and Principle Financial Officer, of the
effectiveness of our disclosure controls and procedures, as defined in Rules
13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 as of the end of
the period covered by this report. Based on that evaluation, our Chief Executive
Officer and Principle Financial Officer have concluded that our disclosure
controls and procedures as of June 30, 2006 and 2007 were effective to ensure
that information required to be disclosed by us in reports that we file or
submit under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission''s rules and forms. There have been no material changes in
our internal controls over financial reporting or in other factors that could
materially affect, or are reasonably likely to affect, our internal controls
over financial reporting during the years ended June 30, 2006 and 2007. There
have not been any significant changes in the Company''s critical accounting
policies identified since the Company filed its Form 10-KSB as of June 30, 2006
and 2007.

ITEM 8B. OTHER INFORMATION

None


39
<PAGE>
                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

DIRECTOR AND EXECUTIVE OFFICER

Mr. William P. Williams as of August 2001 accepted the position of Chief
Executive Officer and sole Director of the Company.  Information representing
Mr. Williams is set forth below:

<TABLE>
<CAPTION>
<S>                       <C>       <C>
William P. Williams        54       Chairman, President, Chief Executive Officer, and
                                    Chief Financial Officer
</TABLE>

The chief executive officer and sole director and officer of the Company will
hold office until additional members or officers are duly elected and qualified.
The background and principal occupations of the sole officer and director of the
Company is as follows:

William P. Williams has been the Chairman, Chief Executive Officer, of Medcom
USA since August 2001. He is also currently Chief Executive Officer and Chairman
of the Board for American Nortel Communications, Inc., a publicly traded company
located in Scottsdale, Arizona, which is in the business of long-distance
telephone service domestically, as well as internationally.  From 1983 to 1995,
he was President and Chairman of the Board of Shelton Financial, Inc., a
financial factoring firm headquartered in San Antonio, Texas.  Mr. Williams has
a Bachelor of Arts and a Master of Business Administration in Finance from
Baylor University.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT 9.A. DIRECTORS AND EXECUTIVE
OFFICERS, PROMOTERS, AND CONTROL PERSONS:

The Company is aware that all filings of Form 4 and 5 required of Section 16(a)
of the Exchange Act of Directors, Officers or holders of 10% of the Company's
shares have not been timely and the Company has instituted procedures to ensure
compliance in the future.

ITEM  10.  EXECUTIVE  COMPENSATION

General.  Mr. William P. Williams serves as the Company''s sole-director and
chief executive officer.  Pursuant to a Management Services Agreement executed
and approved by the Company Mr. Williams was compensated approximately $450,000
for management fees, and other sources or forms of compensation was not paid or
collected for Fiscal year ended 2007 and 2006.

SUMMARY COMPENSATION TABLE

The following table sets forth the cash compensation paid by the Company to its
Chief Executive Officer and to all other executive officers for services
rendered from July 1, 2005 through June 30, 2007. Currently, William P. Williams
is the Chairman, Chief Executive Officer, President and Principle Financial
Officer.


40
<PAGE>
<TABLE>
<CAPTION>
2007 AND 2006 SUMMARY COMPENSATION TABLE

                                                                                       CHANGE
                                                                                         IN
                                                                                       PENSION
                                                                                        VALUE
                                                                                         AND
                                                                         NON-       NONQUALIFIED
                                                        SECURITIES      EQUITY        DEFERRED
                                           RESTRICTED   UNDERLYING     INCENTIVE       COMPENS     ALL OTHER
NAME AND                                      STOCK       OPTION         PLAN           ATION       COMPENS
PRINCIPAL                                    AWARDS       AWARDS     COMPENSATION     EARNINGS       ATION      TOTAL
POSITION      YEAR  SALARY ($)  BONUS ($)      ($)          ($)           ($)            ($)          ($)        ($)
------------  ----  ----------  ---------  -----------  -----------  -------------  -------------  ----------  --------
<S>           <C>   <C>         <C>        <C>          <C>          <C>            <C>            <C>         <C>
William P
Williams (1)  2007     450000.          0            0            0              0              0           0   450,000
              2006     450,000          0            0            0              0              0           0   450,000

     (1) Compensation for Mr. Williams included consulting fees.
</TABLE>

<TABLE>
<CAPTION>
OPTION EXERCISES AND STOCK VESTED TABLE

                              OPTION AWARDS                          STOCK AWARDS
                     -------------------------------  -------------------------------------
                       NUMBER OF
                         SHARES                            NUMBER OF
                      ACQUIRED ON    VALUE REALIZED          SHARES         VALUE REALIZED
                        EXERCISE       ON EXERCISE    ACQUIRED ON VESTING     ON VESTING
NAME                      (#)              ($)                (#)                 ($)
<S>                  <C>             <C>              <C>                   <C>
William P. Williams               0                0                     0                0

</TABLE>

<TABLE>
<CAPTION>
PENSION BENEFITS TABLE

                     PLAN NAME   NUMBER OF YEARS    PRESENT VALUE   PAYMENTS DURING
                                     CREDITED      OF ACCUMULATED         LAST
                                     SERVICE           BENEFIT        FISCAL YEAR
NAME                                   (#)               ($)              ($)
-------------------  ----------  ----------------  ---------------  ----------------
<S>                  <C>         <C>               <C>              <C>

William P. Williams         (1)                 0                0                 0
</TABLE>

<TABLE>
<CAPTION>
                       EXECUTIVE       REGISTRANT    AGGREGATE                    AGGREGATE
                     CONTRIBUTIONS   CONTRIBUTIONS    EARNINGS                   BALANCE AT
                        IN LAST         IN LAST       IN LAST      AGGREGATE        LAST
                         FISCAL          FISCAL        FISCAL    WITHDRAWALS /     FISCAL
                          YEAR            YEAR          YEAR     DISTRIBUTIONS    YEAR-END
NAME                      ($)             ($)           ($)           ($)            ($)
<S>                  <C>             <C>             <C>         <C>             <C>
William P. Williams               0               0           0               0            0
</TABLE>


41
<PAGE>
<TABLE>
<CAPTION>
NAME                   FEES      STOCK    OPTION      NON-       CHANGE    ALL OTHER    TOTAL
                      EARNED    AWARDS    AWARDS     EQUITY        IN       COMPENS      ($)
                        OR        ($)      ($)     INCENTIVE    PENSION      ATION
                      PAID IN                         PLAN       VALUE        ($)
                       CASH                         COMPENS       AND
                        ($)                          ATION     NONQUALIF
                                                      ($)         IED
                                                                DEFERRED
                                                                COMPENS
                                                                 ATION
                                                                EARNINGS
                                                                  ($)
<S>                  <C>        <C>      <C>       <C>         <C>         <C>         <C>
William P. Williams  $      0-        0  $     0-           0           0           0  $    0-
</TABLE>

<TABLE>
<CAPTION>
NAME                    YEAR      PERQUISITES         TAX        INSURANCE      COMPANY       SEVERANCE    CHANGE IN   TOTAL
                                   AND OTHER    REIMBURSEMENTS    PREMIUMS   CONTRIBUTIONS    PAYMENTS      CONTROL     ($)
                                    PERSONAL          ($)           ($)            TO        / ACCRUALS    PAYMENTS
                                    BENEFITS                                   RETIREMENT        ($)      / ACCRUALS
                                      ($)                                      AND 401(K)                     ($)
                                                                                 PLANS
                                                                                  ($)
<S>                  <C>          <C>           <C>              <C>         <C>             <C>          <C>          <C>
William P. Williams  2007 & 2006             0                0           0               0            0            0       0
</TABLE>

<TABLE>
<CAPTION>
NAME                    YEAR       PERSONAL    FINANCIAL   CLUB DUES  EXECUTIVE      TOTAL
                                    USE OF     PLANNING/              RELOCATION  PERQUISITES
                                    COMPANY    LEGAL FEES                             AND
                                  CAR/PARKING                                        OTHER
                                                                                   PERSONAL
                                                                                   BENEFITS
<S>                  <C>          <C>          <C>         <C>        <C>         <C>
William P. Williams  2007 & 2006            0           0          0           0            0
</TABLE>

<TABLE>
<CAPTION>
NAME                  BENEFIT        BEFORE            AFTER        VOLUNTARY   DEATH  DISABILITY  CHANGE
                                   CHARGE IN          CHANGE       TERMINATION                       IN
                                    CONTROL             IN                                         CONTROL
                                TERMINATION W/O       CONTROL
                                    CAUSE OR      TERMINATION W/O
                                    FOR GOOD         CAUSE OR
                                     REASON          FOR GOOD
                                                      REASON
<S>                  <C>        <C>               <C>              <C>          <C>    <C>         <C>
William P. Williams  Severance               (1)                0            0      0           0        0
</TABLE>

     (1) Mr. Williams's employment agreement provides payment of salary for all
months of unemployment which might remain under his employment contract which
was signed on July 2002.


42
<PAGE>
COMPENSATION OF DIRECTORS

Mr. Williams is the sole directors of the Company and is not compensated for
those services.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The
following table sets forth certain information regarding beneficial ownership of
the common stock as of June 30, 2007 and September 25, 2007, by (i) each person
who is known by the Company to own beneficially more than 5% of the any classes
of outstanding Stock, (ii) each director of the Company, (iii) each of the Chief
Executive Officers and the two (2) most highly compensated executive officers
who earned in excess of $100,000 for all services in all capacities
(collectively, the ""Named Executive Officers"") and (iv) all directors and
executive officers of the Company as a group.

The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 and 13d-5 of the Exchange Act, and the information is
not necessarily indicative of beneficial ownership for any other purpose and is
based on 27,810,446 shares beneficially owned as of June 30, 2007. We believe
that each individual or entity named has sole investment and voting power with
respect to the securities indicated as beneficially owned by them, subject to
community property laws, where applicable, except where otherwise noted. Unless
otherwise stated, the address of each person; 7975 North Hayden Rd, Suite D333,
Scottsdale, AZ 85253.

<TABLE>
<CAPTION>
      Name and Address          Shares Owned (1)  Common Stock
------------------------------  ----------------  -------------
<S>                             <C>               <C>
American Nortel Communications        20,582,562            22%
7975 North Hayden Road #D-333
Scottsdale, Arizona 85258

William P. Williams                    7,227,884             8%
7975 North Hayden Road #D-333
Scottsdale, Arizona 85258
</TABLE>

(1)     Wilcom Inc., Williams Family Trust, and Bill Williams have beneficial
ownership of the above stock.

CHANGES IN CONTROL

We are not aware of any arrangements that may result in a change in control of
the Company.

DESCRIPTION OF SECURITIES

GENERAL

Our authorized capital stock consists of 175,000,000 shares of common stock, par
value $ .0001.


43
<PAGE>
COMMON STOCK

The shares of our common stock presently outstanding, and any shares of our
common stock issues upon exercise of stock options and/or warrants, will be
fully paid and non-assessable. Each holder of common stock is entitled to one
vote for each share owned on all matters voted upon by shareholders, and a
majority vote is required for all actions to be taken by shareholders. In the
event we liquidate, dissolve or wind-up our operations, the holders of the
common stock are entitled to share equally and ratably in our assets, if any,
remaining after the payment of all our debts and liabilities and the liquidation
preference of any shares of preferred stock that may then be outstanding. The
common stock has no preemptive rights, no cumulative voting rights, and no
redemption, sinking fund, or conversion provisions. Since the holders of common
stock do not have cumulative voting rights, holders of more than 50% of the
outstanding shares can elect all of our Directors, and the holders of the
remaining shares by themselves cannot elect any Directors. Holders of common
stock are entitled to receive dividends, if and when declared by the Board of
Directors, out of funds legally available for such purpose, subject to the
dividend and liquidation rights of any preferred stock that may then be
outstanding.

PREFERRED  STOCK

The Company is authorized to issue up to 300,000 shares of $.001 par value
Preferred Stock. The Board of Directors has the authority to divide the
Preferred Stock into series and, within the certain limitations, to set the
relevant terms of such series created.

In April 1995, the Company established the Series A Preferred Stock and
authorized the issuance of up to 50,000 shares. Each share of series A Preferred
Stock is entitled to a dividend at the rate of $1.60 per share when, and if
declared by the Board of Directors. Dividends not declared are not cumulative.
Additionally, each share of Series A Preferred Stock is convertible into .20
shares of the Company's Common Stock at any time after July 1, 1999. A total of
850 shares of common stock may be issued upon the conversion of the shares of
Series A preferred stock outstanding as of June 30, 2000. Upon any liquidation
or dissolution of the Company, each outstanding share of Series A Preferred
Stock is entitled to distribution of $20 per share prior to any distribution to
the holders of the Company's common stock. As of June 30, 2000, the Company has
4,250 shares of Series A Preferred Stock issued and outstanding.

In April 2000, the Company established the Series D Preferred stock and
authorized the issuance of up to 2,900 shares. The Company issued 494 shares
related to a business acquisition of and 2,356 shares for the acquisition of
related intellectual property.

Each share of Series D preferred stock is entitled to a dividend at the rate of
$0.04 per share and has a stated value of $1,000 per share. Dividends on all
Series D preferred stock begin to accrue and accumulate from the date of
issuance. Additionally, each share of Series D preferred stock is convertible
into 40.49 shares of common stock for a total of 576,923 shares at the option of
the stockholders. Upon liquidation or dissolution of the Company, each
outstanding share of Series D preferred stock is entitled to a distribution of
the stated amount per share prior to any distribution to the shareholders of the
Company's common stock. The Company can convert the Series D preferred stock
into shares of common stock using the same conversion ratio at any time after
April 15, 2001 so long as the bid price of the Company's common stock exceeds
$4.94 per share and the shares of common stock issuable upon the conversion of
the Series D preferred stock are either covered by an effective registration
statement or are eligible for sale pursuant to rule 144 of the Securities and
Exchange Commission. Each share of Series D preferred stock is entitled to vote
in all matters submitted to the Company's shareholders on an "as converted"
basis.


44
<PAGE>
DIVIDEND  POLICY

We have never declared any cash dividends on our common stock. We currently
intend to retain future earnings, if any, to finance the expansion of our
business. As a result, we do not anticipate paying any cash dividends in the
foreseeable future.

OPTIONS  AND  WARRANTS:

As of June 30, 2007 there were no options and 517,991 warrants outstanding to
acquire shares of the Company''s common stock outstanding. The Company will not
be issuing warrants in any future offering.

CONVERTIBLE  SECURITIES

At  June  30,  2007  we  have  no  convertible  securities.

AMENDMENT  OF  OUR  BYLAWS

Our bylaws may be adopted, amended or repealed by the affirmative vote of a
majority of our outstanding shares. Subject to applicable law, our bylaws also
may be adopted, amended or repealed by our board of directors.

TRANSFER AGENT

On June 30, 2007, the Company engaged Corporate Stock Transfer to serve in the
capacity of transfer agent. Their mailing address and telephone number Corporate
Stock Transfer, 3200 Cherry Creek Drive South, Suite 430. Denver, CO  80209 -
Phone is (303) 282-4800.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDPENDENCE.

 During the year ended June 30, 2006, our chairman advanced $758,629 to the
Company and received repayments of that advance in December 2006.  In June 30,
2007 our chairman advanced $305,000.  The balance due to this affiliate at June
30, 2007 was $305,000 and $758,629 for year ended June 30, 2007 and 2006
respectively.   The advances are generally short term in nature with an interest
rate of 9%.  The advances of $305,000 still remain outstanding.

The affiliated entity frequently advances funds to the Company, which is also a
significant shareholder of the Company.

ITEM  13.  EXHIBITS  AND  REPORTS.

EXHIBITS
--------
3.1       Articles of Incorporation (2)

3.2       Amendments to Articles of Incorporation - Fourth Article (2)

3.3       Amendment to Articles of Incorporation - Name Change (2)


45
<PAGE>
10.18     Amendment to License Agreement - Dream Technologies, LLC (1)

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

(1). Incorporated by reference to the same exhibit filed with Amendment No. 5 to
the Company''s Registration Statement on Form S-3 (Commission File No.
333-71179)
(2). Incorporated by reference to the same exhibit filed with the Company''s
Annual Report on Form 10-KSB for the year ending June 30, 2001.

REPORTS ON FORM 8-K
-------------------

8-K filed for change in principle auditor in February 7, 2007

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES
------------------------------------------------

AUDIT FEES. The aggregate fees billed by S.E. Clark & Company, PC. for
professional services rendered for the audit of the Company''s annual financial
statements for the fiscal years ended June 30, 2006 approximated $41,000. The
aggregate fees billed by S.E.Clark & Company, PC for the review of the financial
statements included in the Company''s Forms 10-QSB for fiscal years 2006
approximated $11,000 and for 2007 $ 5,000. The aggregate fees billed by Jewett,
Schwartz, Wolfe & Associates for professional services rendered for the audit of
the Company''s annual financial statements for fiscal years ended June 30, 2006
and 2007 approximated $55,000. The aggregate fees billed by Jewett, Schwartz,
Wolfe & Associates for the review of the financial statements included in the
Company''s Forms 10-QSB for fiscal year 2007 approximated $9,000.

AUDIT-RELATED FEES. The aggregate fees billed by S. E. Clark & Company, PC and
Jewett, Schwartz, Wolfe & Associates for assurance and related services that are
reasonably related to the performance of the audit or review of the Company''s
financial statements for the fiscal years ended June 30, 2007 and 2006, and that
are not disclosed in the paragraph captioned ""Audit Fees"" above, were $0 and
$0, respectively.

TAX FEES. The aggregate fees billed by S.E. Clark & Company and Jewett Schwartz
Wolfe & Associates for professional services rendered for tax compliance, tax
advice and tax planning for the fiscal year ended June 30, 2007 and 2006 were
$0.

ALL OTHER FEES. The aggregate fees billed by S.E. Clark & Company and Jewett
Schwartz Wolfe & Associates for products and services, other than the services
described in the paragraphs ""Audit Fees,"" ""Audit-Related Fees,"" and ""Tax
Fees"" above for the fiscal years ended June 30, 2007 and 2006 approximated
$6,000.


46
<PAGE>

ITEM 15: SIGNATURES

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, there unto duly authorized.

Registrant
Date: September 28, 2007                Medcom USA Incorporated
                                        By: /s/ William P. Williams

                                        ----------------------------------------
                                        William P. Williams
                                        Chairman, President Chief Executive
                                        Officer (Principle Executive Officer)


Date: September 28, 2007                By: /s/ William P. Williams

                                        ----------------------------------------
                                        William P. Williams
                                        Principle Financial Officer


47