SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB
                     ANNUAL REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE FISCAL YEAR ENDED: DECEMBER 31, 2006
                           COMMISSION FILE NO. 0-25658

                       SECURED DIGITAL APPLICATIONS, INC.
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

              DELAWARE                                   84-1357927
       (STATE OR OTHER JURISDICTION                    (IRS EMPLOYER
           OF INCORPORATION)                           IDENTIFICATION NO.)

                             PARK 80 WEST, PLAZA ONE
                             SADDLE BROOK, NJ 07663
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

                                 (201) 843 0222
                (ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)

                                       N/A
          (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)

        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

              SECURITIES REGISTERED UNDER SECTION 12(g) OF THE ACT:
                   COMMON STOCK, $0.00001 PER SHARE PAR VALUE

Indicate by check mark whether the Company (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Company 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 there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form  and no  disclosure  will  be
contained,   to  the  best  of  Company's  knowledge,  in  definitive  proxy  or
information  statements  incorporated  by  reference  in Part  III of this  Form
10-KSB. [ X]

     Issuer's revenues for its most recent fiscal year: $36,946,276

     The  aggregate  market  value of the voting  stock of the  Company  held by
non-affiliates as of December 31, 2006 was $6,088,064


     The number of shares outstanding of the Company's common stock, as of April
16, 2007, was 129,496,814.

     Documents incorporated by reference: None

<PAGE>

                                TABLE OF CONTENTS


PART I
Item 1     Description of Business                                           3
Item 2     Description of Properties                                        12
Item 3     Legal Proceedings                                                12
Item 4     Submission of Matters to a Vote of Security Holders              12

PART II
Item 5     Market for Common Equity and Related Stockholder Matters         13
Item 6     Management's Discussion and Analysis                             13
Item 7     Financial Statements                                             24
Item 8     Changes In and Disagreements with Accountants on Accounting
           and Financial Disclosure                                         24
Item 8A    Controls and procedures                                          24


PART III
Item 9     Directors, Executive Officers, Promoters and Control Persons;
           Compliance with Section 16(a) of the Exchange Act                25
Item 10    Executive Compensation                                           27
Item 11    Security Ownership of Certain Beneficial Owners and Management   30
Item 12    Certain Relationships and Related Transactions                   30
Item 13    Exhibits                                                         31
Item 14    Principal Accountant Fees and Services                           32

SAFE HARBOR STATEMENT

     This Form 10-KSB and other  reports  filed by the Company from time to time
with the  Securities  and Exchange  Commission,  as well as the Company's  press
releases, contain or may contain forward-looking statements,  within the meaning
of Section 27A of the  Securities  Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Information is provided that is based upon beliefs of, and
information  currently  available  to,  the  Company's  management,  as  well as
estimates  and  assumptions  made by the  Company's  management.  The Company is
including this  cautionary  statement in this Form 10-KSB to make applicable and
to take  advantage  of the safe  harbor  provisions  of the  Private  Securities
Litigation Reform Act of 1995 for any  forward-looking  statements made by or on
behalf of us.  Statements  that are not  statements  of  historical  fact may be
deemed  to be  forward-looking  statements.  Forward-looking  statements  can be
identified by the use of forward-looking terminology such as "believes",  "may",
"should", "anticipates",  "estimates",  "expects", "future", "intends", "hopes",
"plans",  "projects" or the negative thereof.  Such  forward-looking  statements
involve  known and unknown  risks,  uncertainties  and other  factors that could
cause actual results of the Company to vary materially  from historical  results
or from  any  future  results  expressed  or  implied  in  such  forward-looking
statements.

     These factors include,  among others,  the following:  the inability of the
Company to  successfully  implement  its business  plans,  the  cancellation  or
postponement  of contracts that the Company has entered into in connection  with
its business,  the inability to obtain  services  provided by other companies or
service  providers,  the  inability of the Company to raise  capital on a timely
basis, the inability of the Company to meet certain covenants contained in trade
financing agreements,  existing and future government  regulations,  changes and
fluctuation in foreign currency  exchange rates, the failure to retain qualified
personnel,  competitive  pressures  and  potentially  adverse  tax and cash flow
consequences resulting from operations in multiple countries with different laws
and regulations,  and the general economic and business  conditions in Malaysia,
the United States and the other countries in which we do business,  primarily in
Asia.  The  Company  does  not  undertake  to  update,  revise  or  correct  any
forward-looking statements.

     The Company will provide  copies of its annual  report,  including  audited
financial statements to its security holders. We also file periodic reports with
the Securities and Exchange  Commission as well as reports on Form 8-K, proxy or
information  statements  and other reports  required of publicly held  reporting
companies. The public may read and copy any materials the Company files with the
SEC at the SEC's Public  Reference Room at 450 Fifth Street,  N.W.,  Washington,
D.C.  20549.  The public may obtain  information  on the operation of the Public
Reference Room by calling the SEC at  1-800-SEC-0330.  The SEC also maintains an
Internet site that contains the reports, proxy and information  statements,  and
other information that the Company files  electronically  with the SEC, which is
available on the Internet at www.sec.gov.  Further information about the Company
and its subsidiaries may be found at www.digitalapps.net and www.eystar.com.




                                       2
<PAGE>
Introductory Note
-----------------

     The information contained in this annual report on Form 10-KSB reflects the
effect of a reorganization of the Company's principal operating subsidiaries and
the disposition of certain other assets and operating subsidiaries. As a result,
certain  results  of  prior  periods  have  been  restated  to  reflect  certain
operations,  previously  reported  as  continuing  operations,  as  having  been
discontinued.  The  restatement of these  operations,  primarily  related to the
Company's  former  operations  as the operator of retail  computer  stores and a
secured  shipping  subsidiary,  are  described  in more detail in the  financial
statements  and  notes  thereto,  as  well  as in  Management's  Discussion  and
Analysis.

ITEM 1.   DESCRIPTION OF BUSINESS.


OVERVIEW

     Secured Digital  Applications,  Inc. ("SDA" or the "Company") is a provider
of outsourced business services and information  technology consulting services.
We generate  revenue through our majority or wholly owned  subsidiary  companies
located in the United States and Malaysia.  We principally  provide  outsourcing
and  consulting  services in the areas of  information  technology and biometric
security, multimedia production and back-office business processes.

     SDA  became a  publicly  held  company as a  broadband  communications  and
internet content provider through a reverse  acquisition in 1999. As a result of
poor economic conditions in the telecommunications industry, the Company pursued
a strategy of  expanding  its  operations  by  acquiring  majority  interests in
companies believed to have superior potential for growth and profitability. As a
result of these  acquisitions and through the internal  development of new lines
of business,  SDA has focused it  activities  as a supplier of  outsourcing  and
consulting services.

     During 2006, we reorganized our business and sold the Company's interest in
a  chain  of  computer  retail  stores  and  a  secured  shipping  company.  The
reorganization  was the  result  of our  strategy  to focus  our  activities  on
outsourcing  and consulting,  particularly  in the areas of biometric  security,
information technology systems, multi-media production and back-office services.

     The  shift in  business  activities  from a  broadband  communications  and
internet content provider to outsourcing services and technology  consulting has
resulted in significant revenue growth for the Company over the last five fiscal
years.  While  management  intends  to focus the  activities  of the  Company on
outsourcing  services and  consulting  in the future,  there can be no assurance
that these levels of growth will continue indefinitely.


BUSINESS DEVELOPMENT

     SDA began  operations  as a business  organized  under the law of Malaysia.
Following a merger with a Colorado  corporation in 1999, we began to do business
as Digital Broadband  Networks,  Inc. On June 5, 2002, we  reincorporated  under
Delaware law by merging the existing Digital Broadband  Networks,  Inc. with and
into a wholly owned  subsidiary  organized  under  Delaware  law. On January 28,
2004,  we changed  our name to Secured  Digital  Applications,  Inc. in order to
reflect the changed focus of the Company.

     SDA's corporate office is located at Park 80 West, Plaza One, Saddle Brook,
NJ 07663. We also maintain an administrative office at 11, Jalan 51A/223,  46100
Petaling Jaya, Selangor, Malaysia.

     As of April 16,  2007,  the  Company had a total of  141,822,594  shares of
common  stock  issued.  The  Company  has not been  subject  to any  bankruptcy,
receivership or similar proceeding. The acquisitions,  reorganizations and sales
of assets are discussed below.

BUSINESS OF ISSUER

Operations of the SDA Group of Companies

     SDA is an outsourcing  and consulting  company that provides  services on a
contract basis to other companies.  Our strategy is to provide business services
to our  customers  in a manner  that is both  superior  in quality and more cost
efficient than the customer can provide themselves. Our outsourcing services are
focused in the areas of information technology,  biometric security, multi-media
production  and  back-office  business  process such as financial  reporting and
accounting,  document  management and accounts  payable and  receivables.  As an
outsourcing  supplier,  we rely  on a  combination  of  current  technology  and
favorable international labor market conditions to provide high-quality services
at competitive prices.

                                       3
<PAGE>

     The Company has provided outsourced  information technology and multi-media
content  and  production  services  since 2000.  We began to provide  outsourced
services in security applications, particularly biometric security applications,
during  2003.  As a result of our  strategy of  acquiring  interests  in smaller
regional  businesses  and  supporting  those  enterprises  through a centralized
management  structure,  we developed  valuable  experience  as an  integrator of
business processes and developed  management systems for back office procedures.
Our  strategy  is to  leverage  our  experience  in  operating  the SDA Group of
Companies to expand our outsourced  services to include core business  processes
that include digital document  management,  financial  reporting and accounting,
accounts  payable and accounts  receivable  management.  In connection with that
effort, we have developed an integrated package of technology that we provide to
customers on a  subscription  basis  together with labor at  competitive  prices
provided  through  our  staff in  Malaysia.  We  strive  to offer  best-in-class
technology to customers and are completing  the final phases of our  integration
efforts.  A complete  rollout of our back office  services  is schedule  for the
Spring of 2007.

     Primarily through our subsidiary,  DigitalApps Sdn Bhd ("DASB"), we provide
managerial,  sales and administrative  services to our operating subsidiaries in
Malaysia and the United States. These services include back-office support, such
as accounting,  sales,  logistics and purchasing.  DASB also provides  strategic
management  for the portfolio of SDA subsidiary  companies by through  long-term
planning,  coordinates  cross-selling efforts, and organizes projects undertaken
in cooperation by multiple subsidiaries.

     SDA  continues to seek to add to its holdings with  acquisitions  that meet
management's  criteria for inclusion in the group of SDA Companies.  In general,
we continue to seek out regional  businesses with strong  management  willing to
remain in considerable  positions of  responsibility as minority equity holders.
We also seek  businesses  that are operating at a profit or near  break-even and
which provide a superior  opportunity for high rates of growth after integration
into the SDA group of companies.  In  considering  potential  acquisitions,  SDA
evaluates such factors as

     o    the  "fit"  of  the  potential   acquisition   among  SDA's   existing
          subsidiaries,  in particular  whether the acquisition is complementary
          to SDA's existing operating subsidiaries;
     o    the  capabilities  of  existing  management  and  the  willingness  of
          existing  management to continue with the  enterprise as employees and
          minority equity holders;
     o    whether the  enterprise  provides,  in  management's  view, a superior
          potential for growth and profitability after acquisition;
     o    whether the enterprise,  in management's view, can be successfully and
          beneficially integrated with SDA's existing business processes;
     o    the terms  under  which  existing  management  is prepared to convey a
          majority  interest to SDA; and
     o    the  demonstrated  ability  of  existing  management  to  operate  the
          enterprise profitably.

     SDA's acquisitions and the growth of its operating subsidiaries have been a
significant  factor in the rapid growth of the  Company's  revenues  since 2000,
from  approximately  $4.2  million  for the  year  ended  December  31,  2000 to
approximately  $36.9 million for the year ended December 31, 2006.

     There can be no assurance,  however,  of SDA's continuing  success with its
strategy of acquiring and integrating regional business enterprises.

     Since 2000, we have succeeded in financing our acquisitions  primarily with
internally  generated  funds and with the  issuance  of our common  stock.  This
strategy has permitted the Company to maintain a low debt to equity ratio. There
can be no  assurance,  however,  that we will  be  able to  continue  to pay for
acquisitions  with  internally  generated  funds and it is  likely  that we will
require  additional  funding,  which may result in the  issuance  of  additional
equity or debt.


                                       4
<PAGE>
Areas of Operation - Overview

     SDA's  principal  operations  are  largely  in the  information  technology
industry,  in  which  its  companies,  either  independently  or  through  joint
projects,  seek to develop and commercialize  practical  applications of digital
technology that are provided to third-party  customers on a contract basis.  Our
largest sources of revenue are in multi-media production,  security applications
and information technology consulting.

     During the third quarter of 2006, the Company determined that it was in the
best  interests  of SDA  and  its  shareholders  to  restructure  the  Company's
operating  subsidiaries.  The  intent  of  the  reorganization  was  to  improve
administrative   efficiency  and  profit  margins,   to  dispose  of  assets  or
subsidiaries that did not meet management's  criteria for continued inclusion in
the SDA  group  of  companies  and to  focus on  those  activities  believed  by
management to constitute the core businesses of the Company.  In particular,  we
determined that our subsidiaries  involved in the developing business of secured
shipping and in the established  business of operating  retail computer  outlets
did not meet the  Company's  criteria  for  profitability  and/or fit within the
Company's organization.  Under the reorganization plan, a substantial portion of
the  assets and  liabilities  of our  principal  operating  subsidiary,  Secured
Digital  Applications (M) Sdn Bhd ("SDAM"),  were transferred to a newly created
subsidiary,  DigitalApps  Sdn Bhd  ("DASB").  DASB  thus  became  our  principal
operating  subsidiary with  substantially the same assets and liabilities as the
former SDAM.

     We  reduced  the  number of  operating  subsidiaries  and  disposed  of the
companies  associated  with our Gallant IT  operations,  which  operated  retail
computer stores in metropolitan  Kuala Lumpur. We also disposed of the companies
through which we had been seeking to develop a secured shipping business.

     In connection  with the  reorganization,  we incorporated a new subsidiary,
DigitalApps  Sdn Bhd ("DASB"),  which will act as the principal  holding company
for the Corporation's four operating subsidiaries:  Perwimas  Telecommunications
Sdn Bhd ("PTSB");  DigitalApps  Technologies Sdn Bhd ("DAT")  (formerly  Secured
Shipping Sdn Bhd  ("SSSB"));  Digital  Image ID Sdn Bhd ("DID") and  DigitalApps
Media Sdn Bhd  ("DAM").  DAT owns 55 percent of Ispec Sdn Bhd ("ISS")  (formerly
Innospective  Sdn Bhd). DID owns 100 percent of Digital Kiosk  Technologies  Sdn
Bhd ("DKT")  (formerly Century Jubilee Sdn Bhd ("CJSB")),  a newly  incorporated
subsidiary.  The  assets  and  liabilities  of  Gallant  Service  Centre Sdn Bhd
("GSC"),  through  which we owned a majority  interest in the  Gallant  group of
companies,  and Armor Multi Systems Sdn Bhd ("AMS") and Armor Multi Services Sdn
Bhd ("AMSSB") were sold to the third party.

Operations During 2006

     The Company's principal operations during 2006 included the development and
production of interactive, multimedia content for the Internet; the development,
licensing  and/or sale of specific  products and  applications  that utilize the
capacities of a broadband  network;  information  technology  consulting and the
operation of a wireless broadband network in Malaysia.  We marketed hardware and
software as well consulting  services to a number of companies in the public and
private sectors.  Our hardware products included the EyStar SmartHome Management
System,  broadband modems,  biometric systems and  Internet-based  cameras.  SDA
sells its products in connection with  consulting  contracts that are awarded to
the Company.  We presently  provide these  services  principally to customers in
Southeast Asia.

     We also devoted  significant  effort to the  development  of our outsourced
business  processes  product,  which is intended to complement  our  outsourcing
offerings in the information  technology,  security and multi-media  fields.  We
licensed or acquired  technology  from various  sources in the United States and
began the process of  integrating  this  technology  into our new  product,  the
EystarStation.  The  EystarStation  provides a single point of entry,  through a
graphical  user  interface  available on the  Internet,  into a customer's  most
significant  business  operations,  including custom tailored financial reports,
work in progress,  inventory,  accounts  payable and receivable,  expenses,  and
source  documents.   The  EystarStation   consists  of  a  complete  thin-client
accounting and financial reporting package that is integrated with a thin-client
document  management system and a thin-client  work-flow  management system. Our
outsourced  business  process  product  will  combine the  technology  available
through the EystarStation  with labor performed at competitive rates at our work
center in Petaling Jaya, Malaysia.


                                       5
<PAGE>
Corporate Reorganization

Reorganization

     In September 2006 the company  concluded a reorganization  of its corporate
structure.  The  reorganization  was  implemented to improve  profitability,  to
improve  administrative  efficiency and to realign the Company so as to focus on
its core business  operations,  more particularly on outsourcing and consulting,
particularly in the areas of biometric security, information technology systems,
multi-media  production  and  back-office  services.  In  conjunction  with  the
reorganization,  the company divested certain operating subsidiaries that in the
view of  management  no longer  were  consistent  with the  Company's  long-term
strategy  and  which  failed  to meet the  Company's  objectives  for  financial
performance.

     The  reorganization  involved the transfer of  substantially  of all of the
assets  and  liabilities  of SDA  Malaysia  Sdn Bhd  (SDAM)  and  its  principal
subsidiaries to a recently  organized entity DigitalApps Sdn Bhd (DASB), and the
substantially  simultaneous assignment of the assets that were to be retained to
the  operating  subsidiaries  of DASB as  described  more fully in Note 1 to our
financial  statements.  We then sold the assets  remaining  in SDAM,  consisting
principally of our retail computer and secured shipping subsidiaries, to a third
party, realizing a gain of 46,472, payable in a note.

     The  results  of  operations  of  SDAM  and  its  subsidiaries   have  been
retroactively  restated  as  discontinued  operations  pursuant to SFAS No. 144,
"Accounting  for the Impairment or Disposal of Long-Lived  Assets." In addition,
the segment disclosures required by SFAS No. 131, "Disclosures about Segments of
an  Enterprise  and Related  Information",  have been  omitted as the Company is
operating  in only  one  segment  subsequent  to the  disposal  of SDAM  and its
subsidiaries.


Subsidiaries

Following the reorganization, the Company has the following subsidiaries:

1)   China Sea Trade Company,  Inc. ("CST") (f/k/a Eystar Media,  Inc.) a wholly
     owned subsidiary of SDA Worldwide,  Inc.,  organized under Delaware law and
     based in Saddle Brook, NJ. CST offers consulting and management services to
     regional  firms in Asia  seeking to develop  markets in the United  States.
     These include  contract sales  representation,  the contract  management of
     joint venture  companies  and advice and  consulting on funding and mergers
     and  acquisitions  within the United States.  CST began operations in early
     2006 and has not as yet generated any revenue.

2)   SDA  Worldwide,  Inc.  ("SDAW")(f/k/a  SDA  America,  Inc.)  an  80%  owned
     subsidiary,  organized under Delaware law and based in Saddle Brook, NJ, is
     in the process of developing and  commercializing  a platform of outsourced
     business  services  that will be  offered  primarily  to small  and  medium
     enterprises  in the United States.  The company was originally  formed as a
     wholly  owned  corporation  used as a special  vehicle  to  secure  funding
     through  the  private  placement  of  securities.  As a result of the early
     retirement of the investment,  management determined to use the corporation
     as  the  vehicle  to  develop  the  company's  consulting  and  outsourcing
     businesses in the United States.  SDAW began operations in 2006 and did not
     generate any revenue in 2005 and 2006.

3)   DigitalApps Sdn Bhd ("DASB"),  is a wholly owned Malaysian  subsidiary that
     designs,  develops and produces  multimedia content and provides consulting
     services  for  website   development,   network   engineering  and  project
     management  in IT related  projects.  In  addition to its  activities  as a
     multimedia   developer  and  IT  consultant,   DASB  provides   centralized
     management and  back-office  support to SDA's other  subsidiaries  from its
     office in Petaling Jaya, Malaysia.

                                       6
<PAGE>
4)   Perwimas  Telecommunications  Sdn  Bhd  ("PTSB"),  a  95%  owned  Malaysian
     subsidiary of DASB,  provides  broadband  and  application  services  under
     licenses granted by the government of Malaysia.

5)   Digital Image ID Sdn Bhd ("DID") (f/k/a Vista Positive Sdn Bhd),  presently
     a  wholly-owned  Malaysian  subsidiary  of  DASB,  will  be used as a joint
     venture  vehicle to undertake a project with the  Company's  partners and a
     leading Malaysian IT company to enable the search and match of DNA data for
     newborns and registered  criminals,  for use primarily by the Government of
     Malaysia.

6)   Digital Kiosk Technologies Sdn Bhd ("DKT") (f/k/a Century Jubilee Sdn Bhd),
     DID's wholly-owned subsidiary, from the date of acquisition on September 4,
     2006.

7)   Ispec Sdn Bhd ("ISS") (f/k/a  Innospective Sdn Bhd), a 55% owned subsidiary
     of DigitalApps Technologies Sdn Bhd ("DAT") (f/k/a Secured Shipping Sdn Bhd
     ("SSSB")),  is a  systems  integration  firm  specializing  in the  design,
     development  and  implementation  of wireless  applications  and electronic
     solutions.

8)   DigitalApps Media Sdn Bhd ("DAM"), DASB's wholly-owed subsidiary,  from the
     date of incorporation on July 7, 2006.

     At December 31, 2006,  the Company and its  subsidiaries  had a total of 20
employees,  all of whom were  employed in  Malaysia.  SDAW and CST are  operated
through  a  consulting  agreement  with  the  minority  equity  holder  in SDAW,
Intellego  LLC, a New Jersey  Limited  Liability  Company,  which supplies three
employees.  In an  effort  to  reduce  its  operating  costs,  the  Company  has
outsourced its  labor-intensive  content  production work to third parties.  The
Company  plans to continue  recruiting  additional  employees in 2007 to further
strengthen its administrative, sales and marketing divisions.

The SDA Group of Companies Business Activities

Interactive Media Development

     The  Company is  involved  in the design,  development  and  production  of
interactive  multimedia  content,  websites,   programs  and  applications.   We
generally act as a production manager on these projects and utilize the services
of a network of Asia development firms, as well as our in-house capabilities. In
connection  with  our  activities,  we may  provide  bridge  funding  for  these
products. Our business includes the following activities:

     o    Designing,   producing,   hosting  and   distribution  of  interactive
          multimedia content, websites, programs and applications.

     o    Developing  and  producing   e-commerce  programs  and  Internet-based
          security applications and solutions.

     o    Providing project consulting  services on broadband  communication and
          networking systems for property development projects.


System Integration, Product Development Services and Design Consulting

                                       7
<PAGE>
     Following the  acquisition of  Innospective  Sdn Bhd ("ISS") in April 2005,
the Company expanded its business into systems integration,  specializing in the
design,  development and implementation of wireless  applications and electronic
solutions.  Our activities during 2006 included  providing turnkey solutions for
wireless  communications,  controls and  security,  home and office  automation,
development of personal digital  assistants,  automatic vehicle locating systems
and vehicle immobilizer systems;  and supply,  installation and commissioning of
testing and measurement equipment. In addition,  Innospective provides technical
design consulting services and technical training services.

     ISS also supplied  research and  development  services during 2006 to SDA's
other  operating  subsidiaries.  During  2007,  SDA  plans  to  incorporate  the
operations  of  Innospective  into the  activities  of its  principal  operating
subsidiary DASB.

     Although SDA divested its supply chain management and logistics  businesses
during  2006,  it  continues  to  pursue   opportunities  to  provide  technical
consulting and technical  services to supply chain and logistics  companies.  We
continue to seek opportunities to combine the Company's experience in its supply
chain  management  systems  with  wireless  technologies  like  Radio  Frequency
Identification  (RFID), Global Positioning System (GPS) tracking Systems,  Short
Message  Systems  (SMS)  and  biometric  security  systems  and  solutions  as a
consultant to supply chain managers and logistics operators.

     We provide  general IT consulting,  hardware and software,  general systems
integration and development and outsourced  network  management  services,  both
independently and in conjunction with our outsourced business process services.


Eystar SmartHome System

     We market and distribute a second generation of the  multi-protocol  EyStar
SmartHome  Management  System.  The Eystar  SmartHome  is a gateway  device that
bridges  external  data  networks such as the Internet to internal home networks
like  Ethernet,  telephone  line,  power  line  and the  802.11b  wireless  LAN,
eliminating the need for any additional  wiring in the home. The Console has the
capacity  to enable  value-added  services to be offered to  subscribers.  These
services  include home  healthcare  in  conjunction  with  hospitals  and health
advisors;  interconnection  and  control of  appliances  produced  by  different
manufacturers;  and security  applications  that allow  subscribers  to check on
their homes remotely. This Console is designed to operate on both the narrow and
broadband  fixed  line/wireless  networks  and can be  linked  to the  SmileCAM,
another product marketed by the Company.

     SDA has entered  into  various  agreements  to expand the  marketing of the
SmartHome System or to provide  enhanced  features to purchasers of the console.
In addition, we market the Smarthome system directly.

Advanced Security Products

     SDA is engaged in the  development,  commercialization  and installation of
advanced security technology incorporating biometric identification technologies
and broadband  communications.  Through licenses obtained from third parties, we
sell security  products  directly and in connection  with consulting and service
contracts.  We  develop  value-added   applications   incorporating   biometrics
technology as part of our IT and wireless technology  consulting  activities.  A
significant   aspect  of  our  business  is  secured  in  connection   with  new
construction of commercial and residential properties.

     As part of our security business,  we sell the Sintec, Inc. SmileCAM remote
video surveillance camera in Malaysia,  Thailand,  Singapore, Vietnam and Brunei
under a renewable license from it manufacturer.  We also distribute Testech Inc.
biometrics  security products under agreement with  manufacturer.  Our biometric
products,  sold directly and in conjunction  with  consulting  and  installation
contracts, include

     o    access control systems,
     o    time and attendance,
     o    door lock and fingerprint authentication module
     o    remote cameras with automatic motion detection and tracking.

                                       8
<PAGE>
     Our   security   products   utilize   Internet   protocols   and   multiple
authentication modes such as fingerprint,  voice or facial recognition,  retinal
scans  and  proximity  readers.  We have  attempted  to  license  products  that
incorporate  innovative  technology  and are  competitively  priced  in for mass
markets  in  order  to  have a wide  range  of  security  products  that  can be
customized to meet individual client needs.

Outsourced Business Process Service

     We are in the process of introducing a business process  outsourcing  (BPO)
product through our Saddle Brook, NJ-based subsidiary,  SDA Worldwide,  Inc. Our
BPO product will be offered  principally  to businesses in the United States and
has been designed to provide a package of superior  technology  and  competitive
prices to small and  medium-sized  enterprises.  We have  begun to offer our BPO
services on a limited basis and full rollout of the product is scheduled for the
Spring of 2007.

     Our US-based BPO services  consist,  first,  of expanding  our  multi-media
production  and  information   technology  services  to  include  United  States
customers.   These  services  include  video,  Internet  and  other  multi-media
services, systems integration and development, network administration and secure
data  backup.  The second area in which we offer  outsourced  services is in the
area of back office  functions,  including  financial  reporting and accounting,
document management and accounts payable and receivable.

     Significant  effort has been devoted to the  technical  development  of our
outsourced business processes product,  primarily in the integration of software
and information  systems that we obtain through licenses with third parties.  We
licensed or acquired  technology  from various  sources in the United States and
began the process of integrating  this  technology  into our new product in late
2006, which is known as the Eystar Station. The Eystar Station provides a single
point of entry,  through a graphical user  interface  available on the Internet,
into  a  customer's  most  significant  business  operations,  including  custom
tailored financial reports,  work in progress,  inventory,  accounts payable and
receivable,  expenses,  and source  documents.  The Eystar Station consists of a
complete  thin-client   accounting  and  financial  reporting  package  that  is
integrated  with a  thin-client  document  management  system and a  thin-client
work-flow management system.

     Our outsourced BPO product will combine the  technology  available  through
the Eystar Station with labor performed at competitive  rates at our work center
in Petaling Jaya, Malaysia.

     In connection with our BPO product, we have established  relationships with
data  centers to host  applications  and  customer  data,  which are  located in
Michigan  and  California.  Through a  relationship  with one of our data center
providers, we also offer customers secure off-site backup services.

     Business Process  Outsourcing is expected to grow exponentially  throughout
Asia over the next few years.  In Asia alone,  the BPO market is estimated to be
worth in excess of $100  billion.  According  to a top  executive  at one of the
pioneering  BPO companies in Asia, the demand for  outsourcers  with an advanced
level of technical expertise far exceeds the supply.

     A key  component  of SDA  Worldwide's  BPO  product  is its entry  into the
fast-growing  field of digital  document  management and the  integration of its
document management system with other information technology and office systems,
including  work-flow  management  systems.  SDA  Worldwide  provides  a  digital
document  management  solution that provides a complete audit trail and multiple
layers of security.  By integrating  digital document  management with financial
and work-flow  management  systems,  we believe that our solution  significantly
improves the  efficiency,  reliability,  visibility  and security of back office
operations. By using labor available at significantly reduced prices in Asia and
modern  telecommunications,  SDA  believes  that  it can  offer  these  improved
processes at a cost that is less than domestic  providers or in-house  services.
The Company further believes that Malaysia is an ideal location for work centers
as a result of the generally high levels of education,  high level of technology
and  communications  services  and  widespread  use  of  English.  The  Malaysia
government also has generally supported the industry of outsourcing providers.


Broadband Networks

     The Company, through its subsidiary PTSB, has been granted a license by the
government of Malaysia to develop and operate a countrywide  wireless  broadband
network,  known as  VISIONET,  with the capacity to provide  interactive  voice,
video and data  services.  The Company  established  its first  VISIONET cell in
December 2001. Our broadband  service  presently is offered solely as a backhaul
service for other  telecommunication and broadband service providers. A backhaul
service provides network  infrastructure  to other service providers who provide
the direct link or "last mile" service to consumers.

                                       9
<PAGE>
Licenses/Government Regulation

     The Company  operates its wireless  broadband  network  under a license the
Company has obtained from the Government of Malaysia.  The Company believes that
it has the only such license granted by the Government of Malaysia, however, the
Government may issue additional licenses to the Company's competitors.

     Although  the  Company is unaware  of any reason why its  license  might be
terminated or limited,  the Government of Malaysia has the  unilateral  right to
revoke the Company's license upon thirty days notice. The license granted by the
Government  of Malaysia is  material  to the  operations  of the Company and any
alteration,  limitation  or  revocation  of the  license  would  have a material
adverse effect on the Company.

     The  business  operations  of PTSB  are  regulated  by both  the  Malaysian
Ministry of Energy  Communications  & Multimedia  (MECM)  (formerly known as the
Ministry of Energy  Telecommunications & Post) and the Malaysian  Communications
and  Multimedia  Commission  ("CMC").  PTSB's  WVCN  license is  governed by the
Malaysian  Communications  &  Multimedia  Act  1998  ("Act  588")  which  became
effective   on  April  1,   1999.   This   Act,   which   has   superseded   the
Telecommunications  Act of 1950 and the  Broadcasting Act of 1988, is to provide
for and to regulate the converging  communications and multimedia  industries in
Malaysia.  Under  Malaysian law, PTSB had the option of registering its existing
wireless broadband license under Act 588 or maintaining the terms of the license
under the repealed Act. The Company believed that it would be more  advantageous
to register its license under the new Act, and on March 3, 2000  registered with
the CMC its  intention to migrate to the new Act. The license was granted for an
initial period of 10 years commencing May 28, 1997.

     While  the  Company   believes  that  Act  588  is  the  most   significant
industry-specific governmental regulations that apply to the Company's business,
the Company is subject to a large  number of other laws in  different  countries
and localities.

     In September 2001, PTSB was awarded an Application Service Provider ("ASP")
license by the CMC. The ASP license will complement  PTSB's  wireless  broadband
license.  As an ASP,  PTSB could offer  enterprises  access over the Internet to
applications  and related  services that would  otherwise  have to be located in
their computers.

Competition

     The Company operates in a highly competitive marketplace,  in which many of
its competitors are longer  established and financially  sound.  The markets for
security  products and applications and broadband  network facility services are
particularly competitive.

     The  Company's  broadband  services  encounter  competition  from  domestic
Internet  Service  Providers,  often referred to as ISPs.  Many of the competing
ISPs have,  or can be expected to have greater  financial,  marketing  and other
resources  than the Company.  In addition,  in marketing or reselling  broadband
services  provided by  third-parties,  the Company  competes  with other similar
providers.

     The devices  developed and marketed by the Company that seek to utilize the
capacity  of  broadband  networks  typically  compete  with  similar  well-known
products.  In addition,  for security  products  and  applications,  the Company
expects competition from companies that offer conventional security products and
solutions like card access system.

     Although  the  Company  remains  optimistic  that its  products  will  find
acceptance in a competitive marketplace,  there can be no assurance that it will
be able to compete  successfully  with such  entities.  To date, the Company has
found a limited market for its products and there can be no assurance that sales
will improve or will not weaken.


SIGNIFICANT RISK FACTORS

     The  Company  faces  a  significant   number  of  risks  and  uncertainties
associated  with executing its business plan, only some of which the Company can
currently anticipate.

     These  risks and  uncertainties  may  impair  the  Company's  progress  and
profitability and must be given careful consideration.

     The risks described below are intended to highlight risks that are specific
to the  implementation of its business plan, but are not the only risks that the
Company  faces.  They are not discussed in a particular  order and no assumption
should be made that the most significant or likely risks are discussed first. In
addition, other risks and uncertainties, including those generally affecting the
global economy,  the political and economic  climate in Malaysia and the rest of
Asia, the United States, the relevant  industries in which the Company operates,
the public securities  market, and risks that the Company currently believes are
immaterial may ultimately impair its business and results of operations.

                                       10
<PAGE>
     These risks are  discussed in more detail in  Management's  Discussion  and
Analysis, below.

SUMMARY OF SIGNIFICANT RISKS

     o    The Company's  business  strategy,  to acquire new  businesses  and to
          aggressively  grow its existing  businesses,  requires  investments of
          substantial resources and entails substantial risk.

     o    The Company may acquire  businesses  that it is unable to successfully
          integrate into its centralized management structure.

     o    The  Company may be unable to  continue  to grow its  operations  in a
          manner consistent with its historical performance.  The Company may be
          unable to make additional acquisitions of the same caliber and/or such
          companies, once acquired, may not experience growth or profitability.

     o    The  Company  has  aggressively  pursued  strategic   acquisitions  of
          companies  that it  considers  to have  superior  prospects in related
          lines of business,  and these  acquisitions  may be  unsuccessful  and
          cause financial losses.

     o    The  Company's  ability to introduce  its products to the  anticipated
          markets is unproven.

     o    The  market  for  the  Company's   broadband  products  and  services,
          including  the EyStar  SmartHome  Console,  SmileCAM,  and Testech are
          unproven, and demand may be inadequate.

     o    The Company  obtains  supplies and services from third parties who may
          be unwilling to continue providing these services in the future.


     o    The  Company  licenses  technology  and  intellectual   property  from
          third-party vendors,  including  sophisticated  software applications.
          These applications may be withdrawn, may receive inadequate support or
          may prove unreliable. The Company generally does not have the right to
          alter the source code of the applications  that it licenses and may be
          unable to rectify defects in the software.

     o    The  Company  utilizes  remote  data  storage  and  telecommunications
          services  to obtain  access to its data and to  provide  access to the
          same data for its customers. The telecommunications  services that are
          relied on may not function  properly,  service may be interrupted,  or
          costs  may  increase.  The data  centers  used to host  the  Company's
          applications and data may fail. Although the Company maintains a daily
          backup and  replication  program,  there can be no assurance  that the
          data is secure from catastrophic events.

     o    The Company's business  processing product depends on the availability
          of  a  trained,  educated  and  English-speaking  workforce  available
          overseas at prices that are  significantly  less that comparable labor
          in America. Fluctuations in currency rates could negatively affect the
          relative  costs  of  these  labor  sources.  In  addition,  government
          regulation,  political  conditions  and labor  disputes  could  have a
          negative impact on the cost or availability of foreign labor sources.

     o    The EystarStation,  although substantially  complete, has not been put
          into  widespread  production  use and may function  differently as the
          customer base increases.

     o    The  Company  is  subject  to  license   requirements   and  extensive
          government regulation that can be changed at any time.

     o    The Company is subject to  particular  risks due to its  international
          operations.

     o    The Company  has entered  into  significant  contracts  with a limited
          number  of   businesses,   the  loss  of  which  would  be  materially
          detrimental to the Company's operations.

     o    The Company's  attempt to enter the business of  international  trade,
          either as a consultant or as a proprietary trader, may be unsuccessful
          and lead to  losses.  International  trade is  heavily  regulated,  is
          highly  competitive  and is  subject  to the  detrimental  effects  of
          fluctuations in currency exchange rates.

     o    Substantially  all of the Company's sales presently occur in Malaysian
          Ringgit and the  Company's  sales and earnings will be affected by the
          recent  decision of the  Malaysian  government  to allow the  currency
          exchange rate with the United States dollar to fluctuate. The exchange
          rate had been previously fixed at 3.8 Ringgit to the dollar. Since the
          exchange rate was permitted to float, the exchange rate has dropped to
          3.531  Ringgit  to the US  dollar,  which  has been  favorable  to the
          Company's revenue as reported in US dollars.

     o    We  obtain  contracts  in which we  provide  consulting  and  security
          services  in   connection   with  new   commercial   and   residential
          construction, frequently to design and install security systems. While
          we are often  engaged in the early stages of these  developments,  our
          contracts may be subject to significant  delay or cancellation  due to
          delays or problems in the underlying construction project.


                                       11
<PAGE>
ENVIRONMENTAL LAWS

     To date,  the Company has not incurred any  material  costs for  compliance
with any prevailing environmental laws of Malaysia or the United States.

PATENTS AND TRADEMARKS

     The Company has no patents. The Company's subsidiary,  PTSB, has registered
the name  "VISIONET" as its service  tradename and trademark  with the Malaysian
Registry of Trade Marks and  Patents.  In June 2002,  SDAM  registered  the name
"EyStar" as its service  tradename and trademark with the Malaysian  Registry of
Trade Marks and Patents. No other intellectual property registration is pending.

RESEARCH AND DEVELOPMENT

     The Company  develops new  applications  and new  integrations  of existing
technology.  Generally  these  activities  are  conducted in  connection  with a
specific contract and the Company is compensated for its development efforts. In
connection  with the  development of its BPO product,  the company has engaged a
minority  shareholder of SDA Worldwide,  Intellego,  LLC, to provide  consulting
services and support for the development of United States Operations.  Intellego
was compensated $184,000 for these services in 2006. The  services have included
certain  systems  integration  and  development  work,   primarily  through  the
engagement  of  subcontractors,  for which  the  Company  has not been  directly
compensated.  In addition,  our  technical and  accounting  staff located in our
Malaysian  office have assisted with the  development  of the  EystarStation  in
addition to their customary duties.

ITEM 2. DESCRIPTION OF PROPERTIES.

     The  Company's  principal  executive  offices are located at No. 11,  Jalan
51A/223,  46100 Petaling Jaya, Selangor,  Malaysia.  This office space is leased
from an unaffiliated party. This lease expires on March 14, 2009.

     The Company  maintains  its corporate  office in Saddle Brook,  New Jersey,
pursuant to a  co-occupancy  agreement  with the minority  equity  holder in SDA
Worldwide.  The co-occupancy  agreement expires on September 29, 2007 and is not
subject to  automatic  renewal.  The  Company  anticipates,  however,  that this
co-occupancy  agreement will be continued in new physical facilities in the same
geographic area.

     The Company believes that its existing and planned  facilities are adequate
for  its  current  requirements  and  that  suitable  additional  space  will be
available as needed to accommodate future expansion of its operations.


ITEM 3. LEGAL PROCEEDINGS.

None.


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

     The Company did not submit any matter to a vote of the  Company's  security
holders during the fourth quarter of the fiscal year covered by this report.

                                       12
<PAGE>
                                     PART II

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

     The Company's  common stock trades in the  Over-the-Counter  ("OTC") market
under the symbol  "SDGL"  and  published  quotations  are  available  on the OTC
Bulletin Board. Prior to February 3, 2004 and June 6, 2002, the Company's common
stock traded under the symbol "DBBD" and "DBBN", respectively.

     The table below sets forth the range of high and low bid  quotations of the
Company's common stock as publicly reported by Market guide during the Company's
2006 and 2005 fiscal years. The following bid price market quotations  represent
prices  between  dealers  and  do  not  include  retail  markup,   markdown,  or
commissions; hence, they may not represent actual transactions.

             Year 2006                High          Low
                                     ------        -----

             First Quarter           $0.11         $0.07
             Second Quarter          $0.10         $0.07
             Third Quarter           $0.09         $0.06
             Fourth Quarter          $0.07         $0.05

             Year 2005                High          Low
                                     -----         -----

             First Quarter           $0.23         $0.16
             Second Quarter          $0.18         $0.08
             Third Quarter           $0.15         $0.09
             Fourth Quarter          $0.12         $0.08

     As of April 16, 2007, 129,496,814 shares of the Company's common stock were
outstanding, 12,325,780 shares of the common stock were held in the treasury and
the  number  of  holders  of  record  of the  common  stock  at  that  date  was
approximately  85.  However,  the Company  estimates that it has a significantly
greater  number of  shareholders  because a substantial  number of the Company's
shares are held in "street names" by the Company's  market makers.  On April 13,
2007,  the closing  trade price for the  Company's  common  stock was $0.071 per
share.

     Under the Company's Articles of Incorporation,  holders of common stock are
entitled to receive such dividends as may be declared by the Company's  Board of
Directors.  No dividends on the common stock were paid by the Company during the
periods reported herein.


SALES OF UNREGISTERED SECURITIES


     There were no sales of unregistered securities during the fourth quarter of
2006.  All  securities  that have been issued or sold by the Company  during the
past three years,  but were not registered  under the Securities Act of 1933, as
amended, have been reported in the Company's previous Forms 10-QSB.

PURCHASE OF EQUITY SECURITIES

     There were no repurchases of equity securities during the fourth quarter of
2006.


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS

OVERVIEW

     During 2006, the Company achieved  substantial  growth in its revenues from
continuing  operations,  to  $36,946,276,  compared to  $24,189,876 in 2005, and
achieved positive earnings from continuing  operations for the fifth consecutive
year.  These  revenues  were mainly  derived  from the design,  development  and
production of interactive multimedia websites and content and from the provision
of project consulting services.

     Net income for the year ended  December  31, 2006 and 2005 was $657,384 and
$126,916 respectively.  The Company's net income in 2006 included recognition of
a deferred gain of $85,692 and a gain from discontinued  operations of $140,914.
The  Company's  net income in 2005  included  recognition  of a deferred gain of
$126,282 and a loss from  discontinued  operations of $156,428.  Excluding these
items,  the Company  would have earned a net income of $430,778 and $157,062 for
2006 and 2005, respectively.

                                       13
<PAGE>
Plan of Operations

     During 2006, we generated revenue from the following activities:

1.   Designing,  producing,  hosting and distribution of interactive  multimedia
     content, websites, programs and applications.

2.   Developing and producing  e-commerce  programs and Internet-based  security
     applications and solutions.

3.   Providing  project  consulting  services on  broadband  communications  and
     networking systems for property development projects.

     The Company  anticipates that these activities will continue to provide the
principal sources of the Company's revenue in 2007. During 2007, revenue is also
expected  to  be  generated  from  business  process  outsourcing,   application
development,   network  operation,  delivery  of  value-added  applications  and
services;  sales of biometric  security  products and solutions and sales of the
EyStar SmartHome Management System. The Company expects revenue from the sale of
other information technology hardware and software,  outsourced business process
services and  provision of  information  technology  services.  The Company also
expects  revenue to be generated  from  provision of product  design  consulting
services,  and sale of products and  applications  developed by its  subsidiary,
Ispec Sdn Bhd.

     The Company  presently  conducts  its  principal  operations  in  Malaysia.
According to the Malaysian Institute of Economic Research,  Malaysia's projected
growth in Gross  Domestic  Products (GDP) for 2007 and 2008 is projected at 5.2%
and 5.5%,  respectively.  In view of the expected  growth and positive  economic
outlook,  the Company will  continue to emphasize  its  business  activities  in
Malaysia during 2007 as a core of its business.

     In addition,  the Company's strategy is to develop significant sales in the
United  States  in  the  areas  of  outsourced  business  services,  multi-media
production and consulting.

     The Company intends to aggressively pursue these opportunities during 2007.
We have reorganized two of our existing  subsidiaries  which will be operated as
SDA Worldwide  ("SDAW") and China Sea Trade Company ("CST").  SDA Worldwide will
seek to provide  outsourced  business services to overseas  companies seeking to
develop  markets in both the United  States and  Australia  for their  services.
These services will include accounting functions,  data entries,  administrative
functions,  advice and consulting on compliance with US and Australia Securities
Exchange  Commissions  regulations,  assistance in developing  and  implementing
internal  controls and developing and  maintaining  policies and procedures that
comply  with the  informed  compliance  standards  applicable  to trade with the
United States and Australia.

     SDAW's  wholly-owned  subsidiary,  CST will  provide  management  and sales
consulting  to overseas  producers  of goods and  services  seeking to enter the
United  States  markets.  These  services  include  contract  management  of  US
subsidiaries, contract sales representation and back-office services, consulting
on corporate  transactions  including  mergers,  acquisitions  and  fundraising,
contract market research and product development.

     SDAW and CST are based in Saddle  Brook,  New Jersey,  a suburb of New York
City. SDA also has  established  an office in Saddle Brook,  which will serve as
its United States headquarters.  Although the Company is expected to continue to
conduct  its  principal  operations  in  Malaysia,   it  has  relocated  certain
operations  including  shareholder services and investor relations to the United
States to improve its ability to provide service to its investors.

Significant Business Developments and Plan of Operation

     We plan to  continue  to focus our core  operations  in Asia,  particularly
Malaysia,  as management  believes  that the growth of Asian  economies has been
favorable and is likely to continue.  The Company  continues to review potential
acquisitions in Asia, primarily of regional companies in Malaysia, Thailand, and
the  People's  Republic of China in an effort to add  operations  that will meet
management's  standards  and provide  superior  opportunities  for growth  after
acquisition. We plan to attempt to benefit from the high levels of trade between
the United States and Asia through the  establishment  of consulting  businesses
serving Asian manufacturers seeking to develop markets in the United States.

     The  Company  anticipates  that it will  continue to seek the rights to new
products and services through  contractual  arrangements and potentially through
the acquisition of other business entities that provide  compatible  products or
services.  The Company  expects to continue to market its  products and services
through  a  sales   force  and  through  its   Internet   websites   located  at
www.digitalapps.net and www.eystar.com.

     The Company has secured various contracts to provide hardware, applications
or  consulting  services.  The Company  believes that it will be able to perform
some of these  contracts  during 2006 and that it will  recognize  revenue  from
these activities in 2006. The Company has experienced significant  uncertainties
in scheduling,  however, and we cannot forecast the dates on which we will begin
performance  of these  contracts.  These  contracts are described in more detail
below, along with their current status.

                                       14
<PAGE>
Significant Contracts

     For 2006,  the Company hopes to generate  additional  revenue from existing
contracts  described  below  and from new  contracts  that it may  secure.  This
description  is  intended  to  provide  the  reader  with a  description  of the
principal  activities of the Company that are anticipated in 2006.  Readers must
be aware,  however,  that the  Company is often  engaged to perform  services in
connection  with new  commercial  and  residential  construction  and that  such
projects are from time to time delayed or  cancelled.  Thus  performance  of the
Company's  contracts  may be  delayed  or  terminated  through  no fault of SDA.
Although  the Company  provides  its current  estimates of the time in which the
contracts  will be performed,  revenues that may be generated  and/or sales that
are projected, there can be no assurance that the contracts will be performed as
anticipated  or that the  revenues  or sales  projected  will be realized by the
Company. The contracts may be terminated,  limited,  breached or delayed, may be
subject to force majeure clauses or the obligations to pay for services rendered
or products  received may not be  fulfilled.  The Company does not  undertake to
continually  update its  shareholders  about the status of its  contracts in the
absence of a legal obligation to do so.


a)   In August 2001, the Company was awarded a consulting contract, estimated to
     generate revenue of $2.85 million over a three year period,  through August
     2005,  to carry out the  planning,  design,  project  execution  (including
     contract  and  project  management)  of all  broadband  communications  and
     networking   systems/services  for  Pulau  Indah-Marina  Village,  a  water
     oriented luxury resort, residential hotel and spa project. Through December
     31, 2006, the Company has generated $1,553,254 of revenue on this contract,
     of which $253,000 and $137,000 was generated during the year ended December
     31, 2006 and 2005, respectively.

b)   In April 2003, the Company  contracted  with My Architect  ("MYA") to carry
     out the design,  supply and  installation of all broadband  communications,
     access  control  and  network  security  equipment  for  a  mixed  property
     development  project in Selangor,  Malaysia,  which  features a total of 10
     blocks of residential  and commercial  high-rise  properties.  The 30-month
     contract,  expected to generate  revenue of $3.2 million,  commenced in the
     third quarter of 2003.  Up to December 31, 2006,  the Company has generated
     $791,000 of revenue from this contract,  of which $241,000 and $158,000 was
     generated in 2006 and 2005, respectively.

c)   In April 2003, the Company was awarded a $9 million contract by MBE for the
     supply of biometric  security products and EyStar SmartHome consoles over a
     three-year period with the first delivery  originally  expected to commence
     in the fourth  quarter of 2003. In December  2003, the Company was informed
     by MBE to postpone the delivery until further  notice.  Due to uncertainty,
     revenue  that will be  realized  from this  contract  during 2005 cannot be
     accurately forecast.  MBE has revived the project in first quarter 2006 and
     the Company is negotiating  to outsource the contract  jointly with a third
     party.

d)   In June 2003,  the  Company  signed a contract  to  implement  a  biometric
     security   recognition  and  identification   system  comprising  hardware,
     software and issuance of security  identity  cards over a ten-year  period.
     The contract, which was expected to commence in the fourth quarter of 2003,
     after the finalizing of technical  specifications  with relevant regulatory
     authorities,  was estimated to generate  revenue of $15 million through the
     first quarter of 2005.  Technical  specifications for the project have been
     finalized;  the Company is currently negotiating on a new project time line
     with the relevant regulatory authorities.

e)   In June 2003, the Company was awarded a $2.0 million contract to supply and
     install a biometric  security system for access control and time attendance
     in  Malaysia.  The project  was  estimated  to  commence  during the fourth
     quarter of 2003 and be  completed  within  six  months of the  commencement
     date.  The  Company was also  awarded a  maintenance  contract  for 5 years
     thereafter.  This  maintenance  contract begins following the completion of
     the  project  and is  expected  to  generate  annual  recurring  revenue of
     approximately  $250,000. The commencement of this contract has been delayed
     as the construction work on the project's property has yet to be completed.
     In April 2005,  the Company  and the client  agreed to amend the  Company's
     scope  of  work  to  include   only  design,   installation,   testing  and
     commissioning of the biometric  security  system.  The client will purchase
     the required hardware directly from third-party  vendors.  The contract sum
     has been  revised to $600,000.  Up to December  31,  2006,  the Company has
     generated  $265,000 of revenue of which  $16,000 and $249,000 was generated
     during the year ended December 31, 2006 and 2005 respectively.


f)   In March 2004, the Company's  subsidiary  was awarded three  contracts by a
     related party, with an aggregate value of $3.81 million, for the supply and
     installation  of a  biometric  security  system  in three  developments  in
     Malaysia.  The first is a  multiple-use  real estate  development  project,
     consisting of 312  apartments  and 65 office and retail  units,  located in
     Shah Alam,  Malaysia.  Due to delays in construction work,  installation is
     now  anticipated to begin in the second half of 2007 and to be completed by
     the first half of 2008. The second  development is located in Templar Park,
     Malaysia  consisting of 208 apartments and the third development is located
     in Cheras,  Malaysia  with 240  apartments.  Due to delays in  construction
     work,  installation for the second and third  development is anticipated to
     begin in the  second  quarter  of 2007 and to be  completed  by the  second
     quarter of 2008. In April 2005,  the Company and the client agreed to amend
     the Company's scope of work to include only design,  installation,  testing
     and  commissioning  of the  biometric  security  system.  The  client  will
     purchase the required  hardware  directly from third-party  vendors.  Total
     contract sum has been revised to $1,150,000.

                                       15
<PAGE>
g)   On January 16, 2007,  the Company was awarded a $3.8 million  contract by a
     related party to design and install a security system in a high end housing
     complex  in  Malaysia,  which  comprises  of 120 homes and 360  condominium
     units. The system will feature the EyStar integrated  intelligent  security
     system  designed  for  both  business  and  residential  applications.  The
     contract  is  expected  to  commence  in the first  quarter  of 2007 and is
     expected to be completed by the end of 2007.

h)   In January  2007,  the Company was awarded two new  contracts  by a related
     party totaling $4.5 million.  These 2 contracts are in addition to the $3.8
     million that was awarded on January 16, 2007. The first  contract  requires
     to  supply  and  install  the  EyStar  Smarthome   Management   System  and
     complementary  security  surveillance  hardware  for a housing  complex  in
     Malaysia.  The second  contract  calls for the supply of an  integrated  IT
     solution,  hardware and  security  surveillance  for 2  outpatient  medical
     centers in Malaysia.  Commencement  of both contacts are expected in second
     quarter of 2007 and both contracts are expected to be completed in 2007.

Strategic Contractual Relationships

     The Company seeks to enter strategic agreements,  both formal and informal,
with other providers of goods or services that are compatible with the Company's
existing businesses. Such arrangements include license agreements,  requirements
contracts and service agreements.  The Company may also seek to acquire business
enterprises that offer goods and services that are of benefit to the Company and
its shareholders.  The Company's success with these strategic  relationships has
been  uneven,  however,  and with the  exception  of  products  that the company
utilizes  in  performing  its  consulting  contracts,  they  have not  generated
material  amounts  of  revenue.  We  cannot  forecast  whether  these  strategic
relationships will generate significant revenue in 2006.

CASH REQUIREMENTS AND RISK FACTORS

     The  Company  faces  a  significant   number  of  risks  and  uncertainties
associated  with executing its business plan, only some of which the Company can
currently  anticipate.  Chief  among  these  risk  factors  are the needs of the
Company for working capital and the potential need to raise  additional funds to
satisfy the Company's cash requirements during 2007.

     These risks and  uncertainties,  discussed in more detail below, may impair
the Company's progress and profitability. The risks described below are intended
to highlight risks that are specific to the implementation of its business plan,
but are not the  only  risks  that  the  Company  faces.  Additional  risks  and
uncertainties,  including  those  generally  affecting the global  economy,  the
political and economic climate in Malaysia and the rest of Asia, the industry in
which the Company  operates,  the public securities  market,  and risks that the
Company  currently  deems  immaterial  may  ultimately  impair its  business and
results of operations.

IF THE  COMPANY IS UNABLE TO  SUCCESSFULLY  IMPLEMENT  ITS  BUSINESS  PLAN,  THE
COMPANY'S FINANCIAL CONDITION WOULD BE IMPAIRED.

     If the Company is unable to  successfully  implement its business plan, the
Company's financial  condition and performance would be impaired.  The Company's
business plan and strategy  include  numerous  elements that may be difficult or
costly to execute,  and the Company may not be successful in implementing  these
elements and can provide no assurance  that it will do so. The Company  seeks to
exploit  technology  that often does not have  well-established  markets  and in
which  there is great  competition.  The  Company's  ability to develop  its new
businesses,  including its business process outsourcing  services and consulting
services in the United  States is  unproven.  Even if the  Company  successfully
implements  its  business  plans,  there  may be  insufficient  demand  for  the
Company's  products and  services,  in which event the Company will not generate
sufficient revenues to offset the Company's planned expenditures, thereby having
an adverse effect on the Company's business operations and financial condition.

THE FAILURE OF THIRD  PARTIES  WITH WHOM THE COMPANY  DOES  BUSINESS TO MEET THE
COMPANY'S REQUIREMENTS COULD ADVERSELY AFFECT THE COMPANY'S BUSINESS.

     The Company's business plan and operations rely on the Company's ability to
obtain products and services,  as well as the intellectual property incorporated
in those products,  from other third party providers.  For example,  the Company
relies on  software  licensed  from third  parties  and  information  technology
services  that are leased  from third  parties,  on third  party  providers  for
Internet  connections.  The Company also procures  products that are utilized in
its business through agreements with other providers, a number of which are also
actual or potential  competitors.  The  agreements  that the Company has entered
into may not be exclusive and are generally terminable according to their terms.
The third-party  providers also may not be able to provide  products or services
in  sufficient  amounts  or of the  necessary  quality  to meet the needs of the
Company.  The failure of one or more of these  companies  to meet the  Company's
needs could adversely  affect the Company's  business and results of operations.
Some of these companies may also be the Company's  competitors and, accordingly,
in the future, they may be unwilling to provide the Company with the products or
services it requires. The failure of any of these third parties to perform could
prevent or delay the  implementation  of the Company's  business plan, limit the
types of  services  the  Company  can  provide to its  customers  and  potential
customers and adversely  impact the Company's  relationship  with its customers.
Any of these occurrences could have an adverse effect on the Company's business,
results of operations and financial condition.

                                       16
<PAGE>
FAILURE TO RAISE  CAPITAL IN THE FUTURE ON A TIMELY BASIS MAY  ADVERSELY  AFFECT
OUR ABILITY TO FUND OUR OPERATIONS.

     The Company will require  substantial  capital to fund its planned  capital
expenditures and operations.  The Company does not expect to be able to generate
sufficient cash from operations to provide the necessary  capital to execute all
aspects of the  Company's  business  plan.  To the extent that the Company  does
require  addition  funding,  it is likely to issue  additional  shares of common
stock, which would dilute interests of existing shareholders.  If the Company is
unable to  generate  sufficient  cash from its  operations  or raise  capital as
needed,  the  Company  will  likely be unable to pursue or  execute  its  entire
current business plan and may have difficulty fund its operations.

THE COMPANY'S  COMMUNICATIONS  BUSINESS IS SUBJECT TO EXTENSIVE REGULATIONS THAT
COULD CHANGE AT ANY TIME AND RESTRICT THE COMPANY'S  ABILITY TO COMPETE WITH ITS
COMPETITORS.

     The Malaysian  communications  industry  (including spectrum allocation and
usage) is highly regulated by the Malaysian government.  Regulations that govern
the Company's  business in building a wireless network could change at any time,
which could adversely affect the way the Company conducts its VISIONET business.
The Company may incur substantial costs in complying with these regulations, and
failure to comply with  applicable  rules and  regulations  could  result in the
Company having to pay penalties or its license being revoked by the  government.
Except  for the  deployment  of  VISIONET,  this  risk  factor  does  not have a
significant impact on the Company's other businesses.

FAILURE TO HIRE OR RETAIN QUALIFIED PERSONNEL COULD HURT THE COMPANY'S BUSINESS.

     The Company's future success and performance is dependent on its ability to
identify,  hire, train and retain experienced technical and marketing personnel.
The Company faces significant competition for employees with the skills required
for its  business.  There can be no  assurance  that the Company will succeed in
attracting and retaining the services of qualified and experienced technical and
marketing personnel.

THE MARKETS IN WHICH THE COMPANY  OPERATES ARE VOLATILE,  VERY  COMPETITIVE  AND
INCREASED COMPETITION COULD ADVERSELY AFFECT THE COMPANY.

     The markets for the products and services offered by the Company are highly
competitive.   For  broadband   services,   the  Company  expects  to  encounter
competition from other businesses  offering similar products and services,  many
of  which  can be  expected  to have  greater  financial,  marketing  and  other
resources than the Company.

                                       17
<PAGE>
     For security  products and  applications,  the Company expects  competition
from companies that offer conventional security products and solutions like card
access  system.  In addition the developing  market for security  products using
biometric identification technology is highly competitive with larger and better
financed companies offering similar products.  No assurance can be given that we
will be able to compete successfully with these entities.

     The Company faces competition in its information  technology consulting and
multi-media production business processing outsourcing products from both United
States  and  overseas  competitors.  Numerous  competitors  from  India  and the
Philippines,  as well as in Malaysia, offer labor for back-office functions such
as data entry. In addition, there are a significant number of competitors in the
United States seeking to develop businesses as business process outsourcers.

     In the area of international trade, we compete with experienced, larger and
well-established  businesses. The business of international trade also is highly
dependent   on  overall   economic   conditions   including   such   factors  as
transportation costs,  materials costs, labor costs and currency exchange rates.
While the overall  environment for international  trade is presently believed to
be  favorable,  changes in  conditions  would  negatively  impact the  Company's
attempt to establish this line of business.

THE  INTERNATIONAL  NATURE OF THE  COMPANY'S  OPERATIONS  EXPOSED THE COMPANY TO
SPECIAL RISKS.

     The Company  currently intends to operate primarily in Malaysia and perhaps
elsewhere  in Asia.  The  Company  therefore  faces  special  risks  related  to
operating  in  international  markets,  which  the  Company  may  not be able to
overcome.  The  following  are some of the risks  inherent in doing  business in
Malaysia and other non-U.S. markets:

     -    Unanticipated changes in regulatory  requirements,  tariffs,  customs,
          duties and other trade barriers;
     -    Limitations  on  the  Company's  flexibility  in  structuring  foreign
          investments imposed by regulatory authorities;
     -    Longer payment cycles and problems in collecting accounts receivable;
     -    Political and economic risks;
     -    Translation  and  transaction  exposure from  fluctuations in exchange
          rates of other currencies; and
     -    Potentially  adverse  tax and cash flow  consequences  resulting  from
          operating in multiple countries with different laws and regulations.
     -    Labor or  political  disputes  that  adversely  impact  the  Company's
          ability to secure sources of competent foreign labor.

IF THE COMPANY'S  LICENSE IS ALTERED OR REVOKED,  THE COMPANY WOULD BE UNABLE TO
IMPLEMENT ITS BUSINESS PLAN.

     The Company  believes that the wireless  broadband  license the Company has
obtained from the  Government of Malaysia is material to the Company's  business
as a facilities-based  and network service provider.  Any material alteration or
revocation  of the license would have a material  adverse  effect on the Company
and would prevent the Company from  implementing its business plan. As described
earlier,  the  Government  of Malaysia  has the  unilateral  right to revoke the
Company's  license upon thirty  days'  notice.  In  addition,  while the Company
currently  believes  that it has the only license  granted by the  Government of
Malaysia,  the  Government  may  issue  additional  licenses  to  the  Company's
competitors, which could also have a material adverse effect on the Company.

WE RELY ON THE EFFORTS OF A KEY EXECUTIVE

     Our largest  shareholder,  Patrick Lim, is also the Chief Executive Officer
and Chairman of the Board of  Directors.  Mr. Lim has not executed an employment
contract with the Company and his departure  could have an adverse impact on our
business.

REGULATION

     The  business  operations  of PTSB  are  regulated  by both  the  Malaysian
Ministry of Energy  Communications  & Multimedia  (MECM)  (formerly known as the
Ministry of Energy  Telecommunications & Post) and the Malaysian  Communications
and  Multimedia  Commission  ("CMC").  PTSB's  WVCN  license is  governed by the
Malaysian  Communications  &  Multimedia  Act  1998  ("Act  588")  which  became
effective  on  April  1,  1999.   This  new  Act,   which  has   superseded  the
Telecommunications  Act of 1950 and the  Broadcasting Act of 1988, is to provide
for and to regulate the converging  communications and multimedia  industries in
Malaysia.

     Under  Malaysian  law,  PTSB has the  option of  registering  its  existing
wireless broadband license under Act 588 or maintaining the terms of the license
under the repealed Act. The Company believes that it would be more  advantageous
to register its license  under the new Act, and has on March 3, 2000  registered
with the CMC its  intention  to migrate to the new Act.  The license was granted
for an initial period of 10 years commencing May 28, 1997.

     While  the  Company   believes  that  Act  588  is  the  most   significant
industry-specific governmental regulations that apply to the Company's business,
the Company is subject to a large  number of other laws in  different  countries
and localities.

     In September 2001, PTSB was awarded an Application Service Provider ("ASP")
license by the CMC. The ASP license will complement  PTSB's  wireless  broadband
license.  As an ASP,  PTSB could offer  enterprises  access over the Internet to
applications  and related  services that would  otherwise  have to be located in
their computers.

                                       18
<PAGE>
RELATED PARTY TRANSACTIONS

     During the years ended  December 31, 2006 and 2005, the Company had related
party transactions with the following entities:

LSH ASSET HOLDINGS SDN BHD ("LSH"):

     LSH is a company  wholly-owned by the Company's Chief Executive Officer and
his wife.  LSH billed the Company  management  fees  totaling  $120,000  for the
respective  years ended December 31, 2006 and 2005. LSH also billed the DASB and
SDAM  $26,099  and  $25,309  for the years  ended  December  31,  2006 and 2005,
respectively,  for administrative and clerical charges. LSH also made short term
advances to the Company from time to time for working  capital  purposes.  As of
December 31, 2006, the amount due to LSH was $17,927.  This amount is unsecured,
bears no  interest,  has no fixed  terms of  repayment,  and is  recorded in the
financial statements as "Amount due to an affiliated company".

SYNERVEST SDN BHD ("SSB")

     A director of PTSB is a director of SSB and holds a 60% equity  interest in
SSB. As of December 31, 2006, long-term receivables,  related parties, consisted
of an overdue  amount of $108,247 from SSB. This amount  primarily  arose in the
year ended  December 31,  1998,  when the Company sold to SSB assets used in the
operations of a subsidiary. These assets, comprised of analog video hardware and
peripherals and a patent for image display,  were sold to SSB for a total sum of
$1,661,175.  Due to the uncertainty of collection of the related  receivable,  a
related gain on the sale of the assets was deferred and is to be recognized only
after all costs have been  recovered  and as payments are  received.  During the
year ended  December 31,  2002,  payments  received by the Company  exceeded all
remaining  costs.  The Company  received $85,692 and $126,282 of the outstanding
receivable  during the years ended  December  31,  2006 and 2005,  respectively,
resulting in a  realization  of gain on sale of assets,  related  party for both
years.  The  deferred  gain  included  in the  balance  sheet  has been  reduced
accordingly.  The deferred gain on sale of assets  totaled  $108,247 at December
31,  2006,  and  will be  recognized  as a gain  as  payments  on the  long-term
receivable balance are received.

MY ARCHITECT ("MYA")

     A director  of PTSB is a principal  partner of MYA.  During the years ended
December 31, 2006 and 2005, the Company  received fees of $743,414 and $333,342,
respectively, from consulting contracts that it entered into with MYA. The terms
of  repayment  for the amount due from MYA are similar to terms  accorded to the
Company's other existing  customers.  At December 31, 2006, there was no balance
owed by MYA.

CHIEF EXECUTIVE OFFICER

     As of December 31, 2006,  the Company owed the Chief  Executive  Officer of
the Company $10,578 for short-term cash advances made to the Company for working
capital  purposes  from time to time.  The amount  owing to the Chief  Executive
Officer is unsecured,  bears no interest, has no fixed terms of repayment and is
recorded in the financial statements as "Amount due to a director".

RESULTS OF OPERATIONS

     The  following  discussion  and  analysis of our  financial  condition  and
results  of  operations  should  be read in  conjunction  with the  consolidated
financial statements and notes.

     The following  table sets forth certain  operating data for Secured Digital
Applications and subsidiaries for the periods as indicated below.

                                                 Year Ended December 31,
                                           ----------------------------------
                                               2006                   2005

Revenues                               $    36,946,276           $ 24,189,876
Gross profit                                 2,817,076              1,794,011
Sales and marketing                            631,371                 90,212
General and administrative                   2,035,794              1,328,056
Gain on disposal of assets-related
parties                                         85,692                126,282
Income from continuing operations              516,470                283,344
Net income                                     657,384                126,916


Year ended December 31, 2006 compared to year ended December 31, 2005

     Total revenue  increased by $12,756,400 or 53%, to $36,946,276 for the year
ended December 31, 2006, as compared to $24,189,876  for the year ended December
31, 2005.

     The  increase  in total  revenue  for 2006 was mainly due to an increase in
fees earned from the production of multimedia  programs and business  contracts.
The increase in revenue from the production of multimedia  programs was a result
of  increased  sub-contract  work from the  clients of the  Company's  two major
customers . Revenue for project  consulting  services  was  generated  from four
project consulting contracts that the Company secured in 2001, 2002 and 2003. In
the year ended December 31, 2006,  two  customers,  accounted for 48% and 47% of
total  revenue.  In the year ended  December 31, 2005,  the same two  customers,
respectively, accounted for 49% and 48% of total revenue.

                                       19
<PAGE>
Gross Profit

     Gross profit  increased to $2,817,076 for the year ended December 31, 2006,
compared to  $1,794,011  for the year ended  December 31,  2005,  an increase of
$1,023,065 or 57%. Gross profit percentage increased to 7.6% in 2006 versus 7.4%
in 2005.

     The  increase  in  gross  profit  in  2006  was  due  to  higher   revenue,
particularly  consulting revenue, which has a higher margin than production work
and incurring lesser subcontractor costs. As a result of higher revenue, cost of
revenues   increased  by  $11,733,335  or  52%,  to  $34,129,200  in  2006  from
$22,395,865  in 2005.  The increase in cost of revenue was  primarily due to the
Company requiring  additional  external resources in order to fulfill the higher
demand for the Company's  services.  The outsourcing of content  production work
enabled  the  Company  to  develop a team of  contractors  that will  assist the
Company in producing multimedia content and applications that are crucial to its
future business operation.

Sales and marketing expenses

     Sales and marketing  expenses increased by $541,159 or 600% to $631,371 for
the year ended  December 31, 2006 from  $90,212 for the year ended  December 31,
2005.  Higher sales and  marketing  expenses in 2006 was primarily due to higher
marketing and promotion expenses incurred to introduce the Company's products to
customers in Malaysia.  Marketing and promotion expenses totaled $598,771 in the
year  ended  December  31,  2006 and  accounted  for 95% of sales and  marketing
expenses in 2006.

General and administrative expenses

     General and administrative expenses involving non-related parties increased
by  $706,948 or 60% to  $1,889,695  for the year ended  December  31,  2006,  as
compared to $1,182,747 for the year ended December 31, 2005.

     The increase was primarily  attributable  to an increase in depreciation of
tangible assets,  compensation expenses,  maintenance expenses, and professional
fees,  in particular  legal and  accounting  fees incurred in connection  with a
restatement  of  financial  statements  during the first and second  quarters of
2006.  For  the  year  ended  December  31,  2006,  of  the  total  general  and
administrative  expenses of  $1,889,695,  13% was for  depreciation  of tangible
assets, 1% was for consulting fees and 9% was for employee payroll.  Another 34%
was for  fees  for  professional  and  auditing  services,  1% was for  investor
relation  expenses,  33% was for compensation  expenses and approximately 9% was
for rent,  utilities,  general  office  supplies,  communications  and corporate
insurance  expenses.  For the year ended  December  31,  2005,  out of the total
general and administrative  expenses of $1,182,747,  20% was for depreciation of
tangible  assets,  7% was for consulting fees and 15% was for employee  payroll.
Another 24% was for fees for  professional  and  auditing  services,  2% was for
investor relation expenses,  14% was for compensation expenses and approximately
18% was  for  rent,  utilities,  general  office  supplies,  communications  and
corporate insurance expenses.

     General and  administrative  expenses - related  parties for the year ended
December 31, 2006 and 2005 was  $146,099  and  $145,309 per year,  respectively.
General and administrative  expenses - related parties included  management fees
and  administrative  expenses  payable by the  Company to a company in which Mr.
Patrick Lim, the President  and Chief  Executive  Officer of the Company,  has a
financial  interest.  For each of the year ended December 31, 2006 and 2005, the
related  company,  LSH Assets  Holdings  Sdn Bhd ("LSH"),  billed the  Company's
Malaysian  subsidiaries,  DASB and SDAM,  $26,099 and $25,309 for administration
and clerical fees  incurred by LSH on behalf of DASB and SDAM.  The Company also
incurred  management  fees of  $120,000  per year for  each of the  years  ended
December 31, 2006 and 2005.  The management fee was charged on the basis of time
spent for the administration and management services provided to the Company.

Interest expense

     Interest  expense  decreased  by  $248,839,  or 99%, to $1,994 for the year
ended  December 31, 2006 as compared to $250,833 for the year ended December 31,
2005.  Interest expense in 2006 relates to capital lease  obligations.  Interest
expense for the year ended  December  31,  2005  included  $65,125  related to a
convertible  term note issued on June 4, 2004 and paid in full on August 1, 2005
and $179,862 related to the amortization of the derivative  liability associated
with the term note.  These accounted for  approximately  26% and 72% of interest
expense for the year ended December 31, 2005.

Amortization and accretion of debt issuance costs

     Amortization  and accretion  costs for the year ended December 31, 2005 was
$65,511.  The  amortization  and  accretion  cost  relates  to the  issuance  of
preferred  stock of a subsidiary  and a term note on May 28, 2004. See a further
discussion in the Liquidity and Capital Resources section.

Gain on disposal of assets - related parties

     For the years  ended  December  31,  2006 and 2005,  the  Company  included
recognition of a previously deferred gain of $85,692 and $126,282,  respectively
related to a similar amount the Company received from its long-term  receivable,
related  party.  The  receivable  balance and total  deferred gain was $183,098,
respectively,  as of December 31, 2005.  These  amounts  arose in the year ended
December  31, 1998 when the Company  sold  assets  used in the  operations  of a
subsidiary to a related  company.  Due to the  uncertainty  of collection of the
related receivable, a related gain on the sale of the assets was deferred and is
to be recognized  only after all costs have been recovered and to the extent the
receivable  is  collected.  During the year ended  December 31,  2002,  payments
received by the Company  exceeded all remaining costs. As a result the Company's
long-term  receivable,  related party and deferred gain balances were reduced to
$108,247 respectively, as of December 31, 2006.

Reversal of bad debt provision

     In 2006, the Company collected an accounts  receivable of $135,932 that had
been previously written off in a prior year.

Write-off of old vendor payables

     In 2006,  the Company  wrote off vendor  payables  totaling  $152,644.  The
amounts owed were at least four years old and  management  determined  that such
amounts were no longer owed.

                                       20
<PAGE>
Liquidity and Capital Resources

     As of December 31, 2006, the Company had net cash of $8,335.

     For the year ended December 31, 2006, operations were primarily funded from
internally generated funds and working capital advanced from time to time by the
principal shareholder,  director and officer of the Company. These advances bear
no interest and have no fixed terms of repayment.

     As of December  31, 2006,  the Company  owed Mr. Lim,  the Chief  Executive
Officer  ("CEO"),  Chairman and Director of the Company,  $10,578 for short-term
cash advances made to subsidiaries  of the Company for working capital  purposes
from time to time.  Additionally,  at December  31,  2006,  the amount owed to a
company in which Mr. Lim has a financial  interest was $17,927.  This amount was
for  short-term  cash  advances  made to the  Company and its  subsidiaries  for
working capital purposes from time to time and for management and administrative
fees.  These amounts are unsecured,  bear no interest and have no fixed terms of
repayment.

     On October 23, 2006, the Company  executed a share exchange  agreement with
LSH Asset  Holdings Sdn Bhd ("LSH"),  an entity  controlled  by its Chairman and
Chief Executive  Officer,  Mr. Patrick Lim, whereby Mr. Lim exchange  20,000,000
shares of the Company's  common stock held by LSH in exchange for 100,000 shares
of the Company's newly created Series B Voting Convertible  Preferred Stock (the
"Voting Preferred"), which is convertible into shares of common stock at a fixed
ratio of 200 shares of common stock for 1 share of Voting  Preferred  stock. The
20,000,000 shares were returned to treasury and are available for re-issuance at
a future date. The Voting  Preferred  stock is entitled to receive  dividends in
preference to any dividend on the common stock,  as, when and upon such terms as
may be declared by the Company.

     The net cash provided by operating  activities  for the year ended December
31, 2006 was $304,724 was primarily  the result of income and non-cash  expenses
net of increases in trade and other accounts receivable.

     Cash  used  in  investing   activities  of  $276,582  in  2006  was  mainly
attributable to net cash used in purchase of equipment.

     Cash generated from financing  activities of $174,134 in 2006 was primarily
due to proceeds from private placements and the exercise of stock options net of
payments made of amounts owed to a director and an affiliate.

     In addition to  internally  generated  funds and  financial  support from a
director and major  shareholder,  the Company may seek to raise additional funds
from equity or debt financing for its future working capital requirements.

     For 2007, the Company will be expanding  into new  businesses  that include
provision of outsourced  business support and supply chain management  services.
The Company expects to incur further expenses to acquire  technologies  that are
synergistic  to the new  businesses and will help the Company to rollout the new
businesses in the shortest time  possible.  The Company  estimates  that it will
require  $3.5  million to finance  the set-up  cost of its new  businesses.  The
Company  also expects that it will require a further $2.0 million to finance the
set-up cost and working capital of its new businesses.

     The Company will continuously  evaluate its financing  requirements and may
decide to consider alternative modes of financing.

     No  dividends  on common  stock were paid by the  Company for the two years
reported herein.

                                       21
<PAGE>
Critical Accounting Policies

     Financial  Reporting  Release No. 60, which was released by the  Securities
and  Exchange  Commission,  requires all  companies  to include a discussion  of
critical  accounting  policies or methods used in the  preparation  of financial
statements.  Note 2 to the Consolidated  Financial Statements includes a summary
of the  significant  accounting  policies and methods used in the preparation of
the  Company's  Consolidated  Financial  Statements.  The  following  is a brief
discussion of the more significant  accounting  policies and methods used by the
Company.

Revenue Recognition

     Revenue represents the net invoiced value of:

o    goods sold;

o    fees earned from the  production  of  multimedia  programs and Intranet and
     management and consulting services; and

o    fees earned  from rental and  servicing  of  material  handling  equipment,
     provision  of  land  transportation,   engineering  and  industrial  moving
     services.

     The Company  recognizes  revenue from the sales of goods in the period when
significant  risks and rewards of ownership  have  transferred to its customers.
The Company recognizes revenue from the services provided in the period in which
the  services  are  performed  and  when  there  is no  significant  uncertainty
regarding  the  consideration  to be  received  and the  associated  costs to be
incurred.

Accounts Receivable

     The Company grants credit, generally without collateral,  to its customers.
The Company  continuously  monitors  collections and payments from its customers
and  maintains an allowance  for  estimated  uncollectible  accounts  based upon
historical  experience and specific customer  collections  issues that have been
identified.

Stock-Based Compensation

     Effective  January 1, 2006, the Company adopted SFAS No. 123(R) Share Based
Payment utilizing the "modified prospective" method as described in SFAS 123(R).
In the "modified  prospective"  method,  compensation cost is recognized for all
share-based  payments  granted  after the  effective  date and for all  unvested
awards  granted  prior to the effective  date. In accordance  with SFAS 123 (R),
prior  period  amounts  were not  restated.  SFAS 123(R) also  requires  the tax
benefits  associated  with  these  share-based  payments  to  be  classified  as
financing  activities in the Statement of Cash Flows, rather than operating cash
flows as required under previous regulations.

     Prior  to  the  effective  date,  the  Company  accounted  for  stock-based
compensation in accordance with APB Opinion No. 25, "Accounting for Stock Issued
to Employees" and FASB  Interpretation 44, "Accounting for Certain  Transactions
Involving  Stock  Compensation."  Pursuant to these  accounting  standards,  the
Company recorded deferred compensation for share options granted to employees at
the date of grant  based on the  difference  between the  exercise  price of the
options and the market  value of the  underlying  shares at that date.  Deferred
compensation  was amortized to  compensation  expense over the vesting period of
the underlying  options.  No  compensation  expense was recorded for fixed stock
options that were granted to employees and directors at an exercise  price equal
to the fair market value of the common stock at the time of the grant.

     Stock options granted to non-employees are recorded at their fair value, as
determined  in  accordance  with SFAS No.  123 and  Emerging  Issues  Task Force
Consensus No. 96-18,  and recognized over the related  service period.  Deferred
charges for options granted to non-employees are periodically re-measured as the
options vest.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In May 2005, the FASB issued FASB Statement No. 154 Accounting  Changes and
Error  Corrections,  a replacement of APB Opinion No. 20, Accounting Changes and
FASB  Statement  No.  3,  Reporting  Accounting  Changes  in  Interim  Financial
Statements.  SFAS 154 provides  guidance on the  accounting for and reporting of
accounting changes and error corrections. It establishes,  unless impracticable,
retrospective  application  as the  required  method for  reporting  a change in
accounting principle in the absence of explicit transition requirements specific
to the newly adopted accounting  principle.  SFAS 154 also provides guidance for
determining  whether  retrospective   application  of  a  change  in  accounting
principle  is  impracticable  and for  reporting  a  change  when  retrospective
application  is  impracticable.  The  provisions  of SFAS 154 are  effective for
accounting  changes and  corrections of errors made in fiscal periods  beginning
after  December 15,  2005.  The  adoption of the  provisions  of SFAS 154 is not
expected  to have a  material  impact on the  Company's  financial  position  or
results of operations.

                                       22
<PAGE>
     In February  2006,  the FASB issued  SFAS No. 155,  Accounting  for Certain
Hybrid  Financial  Instruments,  which  amends  SFAS No.  133 and  SFAS No.  140
Accounting for Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities.  SFAS 155  amends  SFAS  133 to  narrow  the  scope  exception  for
interest-only and principal-only strips on debt instruments to include only such
strips  representing  rights to receive a specified  portion of the  contractual
interest  or  principle  cash  flows.  SFAS  155 also  amends  SFAS 140 to allow
qualifying  special-purpose  entities  to hold a  passive  derivative  financial
instrument  pertaining  to  beneficial  interests  that  itself is a  derivative
instruments.  The adoption of the provisions of SFAS 155 is not expected to have
a material impact on the Company's financial position or results of operations.

     In June 2006, the Financial  Accounting  Standards Board (FASB) issued FASB
Interpretation  No. 48,  Accounting for  Uncertainty in Income Taxes (FIN 48) an
interpretation  of FASB Statement No. 109,  Accounting  for Income Taxes,  which
clarifies the  accounting for  uncertainty in income taxes.  FIN 48 prescribes a
recognition  threshold and  measurement  attribute  for the financial  statement
recognition and measurement of a tax position taken or expected to be taken in a
tax  return.  The  Interpretation  requires  that the Company  recognize  in the
financial  statements,  the impact of a tax  position,  if that position is more
likely than not of being  sustained on audit,  based on the technical  merits of
the position.  FIN 48 also provides  guidance on  de-recognition of a previously
recognized tax position,  classification,  interest and penalties, accounting in
interim  periods  and  disclosures.  The  provisions  of FIN  48  are  effective
beginning January 1, 2007 with the cumulative effect of the change in accounting
principle recorded as an adjustment to the opening balance of retained earnings.
The  Company  will  assess  the  potential  impact  that  the  adoption  of this
Interpretation may have on its financial position or results of operations.

     In  September  2006,  the  FASB  issued  Statement  No.  157,  "Fair  Value
Measurements".  This Statement  defines fair value,  establishes a framework for
measuring  fair value in generally  accepted  accounting  principles and expands
disclosure about fair value measurement.  The implementation of this guidance is
not  expected  to  have  any  impact  on the  Company's  consolidated  financial
statements.

     In addition,  in September  2006,  the FASB issued SFAS No. 158  Employers'
Accounting for Defined Benefit Pension Plans and Other Postretirement Plans - an
amendment of FASB Statements No. 87, 88, 106 and 132(R).  This standard requires
recognition in the balance sheet of the funded status of pension  plans,  rather
than footnote disclosure,  which is current practice.  Publicly traded companies
are to reflect the new standard in financial  statements  ending after  December
15, 2006 and  non-public  companies are to apply it in  statements  ending after
June 15, 2007. As the Company does not maintain a defined  benefit  pension plan
and has no plans to do so,  this  standard  should  not have any  impact  on the
Company's financial position or results of operations.

     In September  2006, the SEC issued Staff  Accounting  Bulletin  ("SAB") No.
108,  Considering  the  Effects of Prior  Year  Misstatements  when  Quantifying
Misstatements  in  Current  Year  Financial  Statements  (SAB  108),  to provide
guidance  on the  consideration  of the effects of prior year  misstatements  in
quantifying  current  year  misstatements  for  the  purpose  of  a  materiality
assessment. Under SAB 108, companies should evaluate a misstatement based on its
impact on the current year income statement, as well as the cumulative effect of
correcting  such  misstatements  that  existed in prior  years  existing  in the
current  year's  ending  balance  sheet.  SAB 108 will become  effective for the
Company in its fiscal  year  ending  June 30,  2007.  The  Company is  currently
evaluating the impact of the provisions of SAB 108 on its consolidated financial
statements.

     In February  2007,  the FASB issued SFAS No. 159, The Fair Value Option for
Financial  Assets and Financial  Liabilities.  SFAS No. 159 permits  entities to
choose to measure eligible  financial  instruments at fair value. The unrealized
gains and  losses on items for which  the fair  value  option  has been  elected
should be reported in earnings.  The decision to elect the fair value options is
determined  on an instrument  by  instrument  basis,  it should be applied to an
entire  instrument,  and it is irrevocable.  Assets and liabilities  measured at
fair value  pursuant to the fair value option  should be reported  separately in
the balance sheet from those  instruments  measured  using  another  measurement
attributes.  SFAS No. 159 is effective  as of the  beginning of the first fiscal
year that begins after November 15, 2007. The Company is currently analyzing the
potential  impact of  adoption  of SFAS No.  159 to its  consolidated  financial
statements.


                                       23
<PAGE>
ITEM 7. FINANCIAL STATEMENTS

     The audited  financial  statements  of the Company as of December  31, 2006
being furnished in response to this Item are contained in a separate  section of
this Report following the signature page.


ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

     There were no  disagreements  on accounting and financial  disclosures with
the Company's present independent accountants,  Rotenberg Meril Solomon Bertiger
& Guttilla, P.C., during the reporting period.


ITEM 8A. CONTROLS AND PROCEDURES

     Within  the 90  days  prior  to the  date  of this  report,  the  Company's
management  concluded  its  evaluation  of the  effectiveness  of the design and
operation of the Company's  disclosure controls and procedures.  Our evaluation,
under the control of the Chief Executive  Officer and Chief Accounting  Officer,
considered  whether we accurately  record  transactions  in  reasonable  detail,
necessary  to permit  the  preparation  of  financial  statements  according  to
Generally  Accepted  Accounting  Principles.  The evaluation  further considered
whether our system of internal  controls  adequately  insures that  receipts and
expenditures  are made in accordance with the  authorizations  of management and
are  such  as  to  prevent  or  permit  the  timely  detection  of  unauthorized
acquisition,  use or disposition of assets that could have a material  effect on
our financial  statements.  We also evaluated whether our internal controls over
financial  reporting,  specifically  whether our controls and procedures  ensure
that  information  required to be disclosed in our periodic reports is recorded,
processed,  summarized  and reported  within the time  periods  specified in the
Commission's  rules and forms of the  Evaluation  Date,  and  incorporating  the
qualification  noted below, the Company's  Chairman and Chief Executive  Officer
and its Chief Accounting Officer concluded that the Company maintains disclosure
controls and  procedures  that are effective in providing  reasonable  assurance
that  information  required to be disclosed in the  Company's  reports under the
Securities  Act of 1934 (Exchange  Act) is recorded,  processed,  summarized and
reported  within the time periods  specified  in the SEC's rules and forms,  and
that  such   information  is  accumulated  and  communicated  to  the  Company's
management,  including  its Chairman and Chief  Executive  Officer and its Chief
Accounting Officer, as appropriate, to allow timely decisions regarding required
disclosure.

     During  December  2005 and January  2006,  we made  certain  changes to our
internal controls concerning  financial reporting as a result of an inquiry from
the  Securities  and  Exchange  Commission  and  our  subsequent  review  of the
accounting  treatment  applied to a convertible  preferred note and  convertible
preferred  stock and warrants  related to the note and preferred stock that were
issued in May 2004.  Specifically  we  concluded  that the  Company had issued a
note,  preferred stock and warrants,  each of which was convertible  into common
stock, that contained embedded derivatives requiring bifurcation from their host
instruments under Statement of Financial Accounting Standards 133 (SFAS 133) and
Emerging Issues Task Force No. 00-19 (EITF 00-19). We subsequently  restated our
2004 financial statements and our quarterly financial statements for 2005.

     We thereafter  evaluated the circumstances under which the applicability of
SFAS 133 and EITF 00-19  failed to come to the  attention of  management  or its
independent   registered   public  accounting  firm  prior  to  and  during  the
preparation  and audit of the December  31, 2004  financial  statements  and the
preparation and review of the March 31, June 30 and September 30, 2005 financial
statements.   We  concluded  that  additional  steps  should  be  undertaken  in
connection  with the issuance of new  securities  to assure the  application  of
appropriate accounting standards. We have since adopted a policy of retaining as
special  consultant  an outside  public  accountant or public  accounting  firm,
registered  with Public  Company  Accounting  Oversight  Board (PCAOB) or having
specific expertise in the preparation of financial  statements for publicly held
companies to advise and assist us in the preparation of our disclosure documents
generally and in the accounting treatment to be applied to the securities of the
Company .

     In the opinion of management,  the failure to apply SFAS 133 and EITF 00-19
arose  from  particular  circumstances  that have been  addressed  by the policy
changes discussed above in a manner reasonably to avoid a similar  deficiency in
the future.

     The Company's management  necessarily applied its judgment in assessing the
costs and benefits of such controls and procedures,  which, by their nature, can
provide only reasonable  assurance  regarding  management's  control objectives.
Except as  discussed  above,  there  have  been no  significant  changes  in the
Company's internal controls or in other factors that could significantly  affect
these controls subsequent to the Evaluation Date.

                                       24
<PAGE>
                                    PART III

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

     The Directors and Executive  Officers of the Company,  and their respective
ages and positions held in the Company, as of April 16, 2007 are as follows:-

NAME                       AGE    POSITION HELD
-------                    ---    -------------

Patrick Soon-Hock Lim       57    Chairman, Chief Executive Officer and Director

Valerie Hoi-Fah Looi        48    Secretary and Director

Mustaffar Bin Yacob         57    Director


Voon-Fui Yong               38    Chief Accounting Officer


(1) The  directors  of the Company  will serve in such  capacity  until the next
annual meeting of the Company's shareholders or until their successors have been
elected and  qualified.  The officers  serve at the  discretion of the Company's
Directors.  There are no family  relationships  among the Company's officers and
directors,  nor are there any arrangements or understandings  between any of the
directors or officers of the Company or any other  person  pursuant to which any
officer or director was or is to be selected as an officer or director.

     MR. PATRICK SOON-HOCK LIM, 57, has served as the President, Chief Executive
Officer and director of the Company,  positions he has held since April 1999. In
June 2002,  Mr. Lim was  appointed  as  Chairman,  Chief  Executive  Officer and
director of the Company.  Mr. Lim has been the  Managing  Director at SDAM since
1988 and has been involved in the multimedia industry for over 12 years. Mr. Lim
earned his Masters of Science from Reading University, United Kingdom in 1973.

     MR. MUSTAFFAR BIN YACOB,  57, served as a non-director  member and chairman
of the Audit  Committee  since  February  2006. He was appointed an  independent
Director in June 2006 to fill the remainder of the  unexpired  term of a Class I
Director who resigned.  Mr. Mustaffar  earned his Bachelor of Architecture  from
University  of  Queensland,  Australia.  He is a registered  member of the Royal
Australian Institute of Architects. Prior to establishing M.Y. Architect, he was
the Managing  Director of Kumpulan  Arki Reka Sdn Bhd from 1982 to 1997.  He has
served as a Director of Perwimas Telecommunications Sdn Bhd, a subsidiary of the
Company, since 1997.

                                       25
<PAGE>

     MS.  VALERIE  HOI-FAH LOOI,  48, has served as the Corporate  Secretary and
director  of the  Company  since  April  1999  and,  in  such  position,  she is
responsible for corporate  affairs and human resources of the Company.  Ms. Looi
has also  served as the Senior  Vice  President,  Corporate  Affairs at SDAM,  a
position  she has held  since  joining  SDAM in  1990.  She has over 10 years of
experience  in corporate  affairs.  Ms. Looi  received her Diploma in Management
from the Malaysian Institute of Management.

     MR.  VOON-FUI YONG, 38, has served as the Chief  Accounting  Officer of the
Company since  November 2005.  Prior to this position,  he served as the Finance
and Administration  Manager. Mr. Yong is an Associate of the Chartered Institute
of Management Accountant, United Kingdom. Prior to joining SDAM in October 1999,
he served as an  Accounts  Executive  at  SembCorp  Malaysia,  a  subsidiary  of
Sembcorp Industries that is listed on the Singapore Stock Exchange. Mr. Yong has
extensive experience in financial and management accounting.

     The  Company  does not pay fees to  members of the board of  directors  and
presently has no plans to pay directors' fees.  Presently,  Mr. Mustaffar is the
only outside Director of the Company.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  (the "34
Act"),  requires  the  Company's  officers  and  directors  and  persons who own
beneficially more than ten percent of the Company's Common Stock to file initial
reports of ownership and changes in ownership  with the  Securities and Exchange
Commission  ("SEC").  Based  solely on a review of copies of the  Section  16(a)
reports  furnished  to  the  Company  and  written  representations  by  certain
reporting  persons,  the Company believes that all of the Company's officers and
directors,  and all persons owning more than ten percent of the Company's Common
Stock have filed the subject reports, if required,  on a timely basis during and
with respect to the fiscal year ended December 31, 2006.

Audit Committee Composition

     The  Company  has  a  separately   designated   standing  audit   committee
established in accordance  with Section  3(a)(58)(A) of the Securities  Exchange
Act of 1934, as amended (the "Exchange Act").  Patrick Soon-Hock Lim (Chairman),
and  Mustaffar  Bin Yacob are  members  of the  audit  committee.  The Board has
determined that at least one person on the Audit  Committee,  Patrick  Soon-Hock
Lim,  qualifies  as a  "financial  expert" as defined by SEC rules  implementing
Section 406 of the  Sarbanes-Oxley  Act. and  Mustaffar  Bin Yacob meets the SEC
definition of an "independent" director.

Code of Ethics

     The  Company  has  adopted a Code of  Ethics  (as  defined  in Item 406) of
Regulation  S-K that applies to its directors and  executive  officers.  Secured
Digital  Applications,  Inc. will provide a copy of its code of ethics,  without
charge,  to any  investor  that  requests  it.  Requests  should be addressed in
writing to Ms. Valerie Looi, No.11 Jalan 51A/223, 46100 Petaling Jaya, Selangor,
Malaysia.

Code of Conduct for Purchases and Sales of Company Securities

     The  Company  has  adopted a Code of  Conduct  for  Purchases  and Sales of
Company Securities that applies to its directors and executive officers. Secured
Digital  Applications,  Inc.  will  provide  a copy of its Code of  Conduct  for
Purchases and Sales of Company Securities,  without charge, to any investor that
requests it.  Requests  should be addressed in writing to Ms.  Valerie Looi, No.
11, Jalan 51A/223, 46100 Petaling Jaya, Selangor, Malaysia.

                                       26
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION

     The  following  table  sets  forth  certain   information   concerning  the
compensation earned by the Company's Chief Executive Officer and other executive
officers who were serving as executive officers at the end of the last completed
fiscal year and whose salary and bonus aggregated were in excess of $100,000. No
other compensation not covered in the following table was paid or distributed by
the  Company  to such  persons  during the period  covered.  Employee  Directors
receive no additional  compensation for service on the Board of Directors of the
Company.  Outside  Directors  received no compensation  from the Company as such
during this period, except as indicated below.

     On August 3, 2004,  the Company  granted  stock  options to  directors  and
officers of the Company. Mr. Lim, the current Chief Executive Officer,  Chairman
and  Director  was  granted  an  option  for  500,000  common  shares  at  $0.20
exercisable until August 2, 2009. Miss Looi, the current Secretary and Director,
was  granted an option for  500,000  common  shares at $0.20  exercisable  until
August 2, 2009. Mr. Yong, the current Chief Accounting  Officer,  was granted an
option for 300,000 common shares at $0.20  exercisable until August 2, 2009. The
closing price of the common stock on August 3, 2004 was $0.24.

     On August 3, 2004, Mr. Muda was granted an option for 100,000 common shares
at $.20 exercisable until August 2, 2009. Mr. Muda passed away on March 17, 2007
and his vested options will expire on March 16, 2008.

     On December 4, 2006,  the Company  granted  stock  options to directors and
officers of the Company. Mr. Lim, the current Chief Executive Officer,  Chairman
and  Director  was  granted  an option  for  203,000  common  shares at  $0.0638
exercised on date of granted. Miss Looi, the current Secretary and Director, was
granted  an option  for  170,000  common  shares at $0.58  exercised  on date of
granted.  Mr. Yong, the current Chief Accounting Officer,  was granted an option
for 127,000  common shares at $0.058  exercised on date of granted.  The closing
price of the common stock on December 4, 2006 was $0.058.

     On October  21,  2006,  the  Company  approved  the  issuance  to the Chief
Executive  Officer of warrants to  purchase  6,300,000  shares of the Company at
price at 110 percent of the market price at the close of business on October 23,
2006,  such warrants to be issued in three equal annual  installments  and which
may be exercised on or before  October 21, 2011. The closing price of the common
stock on October 23, 2006 was $0.059.

     On  October  21,  2006,  the  Company  approved  stock  awards to the Chief
Executive  Officer,  an equity incentive based on the performance of the Company
in an amount of  500,000  shares of  common  stock per year  conditioned  on the
Company  maintaining a minimum rate of compound  growth of fifteen (15) percent.
The closing price of the common stock on December 29, 2006 was $0.066.

     The Company has no other retirement, pension, profit sharing, stock option,
insurance or other similar programs. There were no long-term compensation plans,
awards, options or any other compensation offered by the Company.

     The following  Summary  Compensation  Table sets forth certain  information
regarding the compensation of the Company named directors and executive officers
for services rendered in all capacities during the year ended December 31, 2006.

                                       27
<PAGE>

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

                                                            Stock        Option        Warrant        Others
Name and Position                    Salary      Bonus     Awards        Awards        Awards          Comp.    Total
                                      US$         US$        US$           US$           US$            US$      US$
------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>        <C>        <C>          <C>             <C>        <C>
Patrick Soon-Hock Lim                       -         -    33,000 (1)     9,703(2)   35,160(3)       429(4)     78,292
Chairman, Chief Executive
Officer and Director

Valerie Hoi-Fah Looi                   71,976         -         -           8,125(2)        -        245(4)     80,346
Secretary and Director

Mustaffar Bin Yacob                         -         -         -               -(2)        -          -(4)          -
Director

Voon-Fui Yong                          30,530         -         -          17,970(2)        -        175(4)     48,675
Chief Accounting Officer

Wan Abdul Razak bin Muda                    -         -         -           3,967(2)        -          -         3,967

- Director
- (Deceased on 3/17/2007)
</TABLE>


(1)  Represents  the total fair market  value of stock  awarded  during the year
     ended December 31, 2006. Stock awards vest one per year on the basis if the
     Corporation  has  achieved  a  minimum  rate of growth  in  revenue  in its
     consolidated  financial  statements,  as  reported  to the  Securities  and
     Exchange  Commission,  of at least 15 percent over the prior year.  Amounts
     listed do not represent the actual current fair value of the share awarded.

(2)  Represents  fair  market  value of  options  granted  during the year ended
     December 31, 2006,  calculated using the Black Scholes option pricing model
     and related  assumptions as disclosed in Note 2, Share Based  Compensation,
     of our consolidated financial statements.

(3)  Represents  fair  market  value of warrants  granted  during the year ended
     December 31, 2006, calculated using the Black Scholes option pricing model.
     One-third  of the  warrants  issued  vest each year for three  years on the
     anniversary  of the grant date.  Amounts listed do not represent the actual
     current fair value of the share granted.

(4)  All other  compensation  for 2006 consists of medical  premiums paid during
     the year ended December 31, 2006.

     The  following  table sets forth  information  concerning  the  outstanding
equity awards granted to the named directors and executive  officers at December
31, 2006.
<TABLE>
<CAPTION>
                                                                 Option Awards
                                      --------------------------------------------------------------------
                                                                       Equity
                                                                      Incentive
                                                                        Plan
                                                                       Awards:
                                                                      Number of
                                                                     Securities
                                          Number of Securities       Underlying    Option
                                        Underlying Unexercisable    Unexercised,  Exercise     Option
Name and Position                              Option (#)             Unearned      Price    Expiration
                                       Exercisable   Unexercisable   Option (#)    ($/Sh)       Date
----------------------------------------------------------------------------------------------------------
<S>                                         <C>                 <C>        <C>     <C>     <C>
Patrick Soon-Hock Lim                       250,000             -             -   0.20     02/03/2009
 - Chairman, Chief
Executive Officer and
Director

Valerie Hoi-Fah Looi                        460,000             -             -   0.20     02/03/2009
- Secretary and Director

Mustaffar Bin Yacob                               -             -             -     -           -
- Director

Voon-Fui Yong                                90,000       180,000       180,000   0.20     02/03/2009
- Chief Accounting
Officer

Wan Abdul Razak bin Muda                     40,000        60,000        60,000   0.20     02/03/2009
- Director
- (Deceased on 3/17/2007)
</TABLE>

                                       28
<PAGE>
<TABLE>
<CAPTION>
                                                      Warrant Awards
                            --------------------------------------------------------------------
                                                           Equity
                                                          Incentive
                                                            Plan
                                                           Awards:
                                                          Number of
                                                         Securities
                               Number of Securities      Underlying     Warrant
                             Underlying Unexercisable   Unexercised,    Exercise     Warrant
Name and Position                   Warrant (#)           Unearned       Price      Expiration
                            Exercisable  Unexercisable   Warrant (#)     ($/Sh)        Date
------------------------------------------------------------------------------------------------
<S>                            <C>            <C>            <C>        <C>           <C>
Patrick Soon-Hock Lim           -          6,300,000      6,300,000      0.0649     10/21/2011

Chairman, Chief
Executive Officer and
Director

Valerie Hoi-Fah Looi            -              -             -             -            -
Secretary and Director

Mustaffar Bin Yacob             -              -             -             -            -
Director

Voon-Fui Yong                   -              -             -             -            -
Chief Accounting
Officer

Wan Abdul Razak bin Muda        -              -             -             -            -
Director
(Deceased on 3/17/2007)
</TABLE>
EMPLOYMENT AGREEMENTS

     The Company has no employment  agreements with its Chief Executive  Officer
and other executive  officers.  However,  its wholly-owned  subsidiary,  Digital
Image ID Sdn Bhd,  and Voon Fui  Yong  entered  into a letter  agreement,  dated
August 1, 2006 with respect to Mr. Yong's employment as Chief Accounting Officer
of Digital Image ID. Under the letter  agreement,  Mr. Yong will receive a basic
salary of $32,634 per year and be entitled to unspecified stock option grants to
be awarded by Secured Digital Applications, Inc. in the future. Either party may
terminate  the letter  agreement  by giving the other  party one  month's  prior
written notice.

     Digital  Image  ID and Ms.  Valerie  Hoi-Fah  Looi  entered  into a  letter
agreement dated August 1, 2006 with respect to Ms. Looi's employment as Director
of Corporate Affairs at Digital Image ID. Under the letter  agreement,  Ms. Looi
will receive a basic salary of $38,636 per year subject to review by the Company
from time to time.

                                       29
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following sets forth the number of shares of the Company's common stock
beneficially  owned by (i) each person who, as of April 16,  2007,  was known by
the Company to own beneficially more than five percent (5%) of its common stock;
(ii) each of the Directors  and Executive  Officers of the Company and (iii) the
Directors and Executive Officers of the Company as a group.

NAME AND ADDRESS                 NUMBER OF SHARES OF             PERCENT OF
OF BENEFICIAL OWNER (1)          BENEFICIAL OWNER (2)(3)            CLASS

Patrick Soon-Hock Lim                51,698,000 (4)                  34.52

Valerie Hoi-Fah Looi                  5,490,000 (5)                   4.22

Wan Abdul Razak bin Muda                 40,000 (6)                      *

Mustaffar Bin Yacob                           0                          *

Voon-Fui Yong                           279,400 (7)                      *
                                  -------------                    -------
All Officers and Directors as
a Group (5 persons)                  57,507,400 (8)                  38.25
                                  =============                    =======

* Less than 1%.

(1)  The address of each  person  listed is c/o  Secured  Digital  Applications,
     Inc., Park 80 West, Plaza One, Saddle Brook, NJ 07663.

(2)  Beneficial  ownership is  determined  in  accordance  with the rules of the
     Securities  and  Exchange  Commission  (the "SEC") and  generally  includes
     voting or investment  power with respect to securities.  In accordance with
     SEC rules,  shares of Common Stock issuable upon the exercise of options or
     warrants which are currently exercisable or which become exercisable within
     60 days following the Record Date are deemed to be  beneficially  owned by,
     and outstanding with respect to, the holder of such option or warrant.

(3)  The inclusion  herein of any shares of common stock as  beneficially  owned
     does not  constitute an admission of beneficial  ownership of those shares.
     Unless  otherwise  indicated,  each person listed above has sole investment
     and voting power with respect to the shares listed.

(4)  Includes  (a)  8,000,000  shares  directly  owned by Mr.  Lim's  wife,  (b)
     8,000,000  shares  directly owned by Mr. Lim's son, (c)  25,245,000  shares
     owned by First Asset  Holdings Ltd, a  corporation  controlled by Mr. Lim's
     son, (d)  5,245,000  shares owned by LSH, (e)  20,000,000  shares of common
     stock  assuming the  conversion  of Series B Voting  Convertible  Preferred
     Stock owned by LSH and (f) 250,000 options.

(5)  Includes 460,000 options.

(6)  Represents 40,000 options.

(7)  Includes 90,000 options.

(8)  Includes 840,000 options and 20,000,000 shares of common stock assuming the
     conversion of Series B Voting Convertible Preferred Stock.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     During  the  year  ended   December  31,  2006,  the  Company  had  related
transactions with the following parties:

LSH ASSET HOLDINGS SDN BHD ("LSH"):

     LSH is a company  wholly-owned by the Company's Chief Executive Officer and
his wife.  LSH billed the Company  management  fees  totaling  $120,000  for the
respective  years ended December 31, 2006 and 2005. LSH also billed the DASB and
SDAM  $26,099  and  $25,309  for the years  ended  December  31,  2006 and 2005,
respectively,  for administrative and clerical charges. LSH also made short term
advances to the Company from time to time for working  capital  purposes.  As of
December 31, 2006, the amount due to LSH was $17,927.  This amount is unsecured,
bears no  interest,  has no fixed  terms of  repayment,  and is  recorded in the
financial statements as "Amount due to an affiliated company".

SYNERVEST SDN BHD ("SSB")

     A director of PTSB is a director of SSB and holds a 60% equity  interest in
SSB. As of December 31, 2006, long-term receivables,  related parties, consisted
of an overdue  amount of $108,247 from SSB. This amount  primarily  arose in the
year ended  December 31,  1998,  when the Company sold to SSB assets used in the
operations of a subsidiary. These assets, comprised of analog video hardware and
peripherals and a patent for image display,  were sold to SSB for a total sum of
$1,661,175.  Due to the uncertainty of collection of the related  receivable,  a
related gain on the sale of the assets was deferred and is to be recognized only
after all costs have been  recovered  and as payments are  received.  During the
year ended  December 31,  2002,  payments  received by the Company  exceeded all
remaining  costs.  The Company  received $85,692 and $126,282 of the outstanding
receivable  during the years ended  December  31,  2006 and 2005,  respectively,
resulting in a  realization  of gain on sale of assets,  related  party for both
years.  The  deferred  gain  included  in the  balance  sheet  has been  reduced
accordingly.  The deferred gain on sale of assets  totaled  $108,247 at December
31,  2006,  and  will be  recognized  as a gain  as  payments  on the  long-term
receivable balance are received.

                                       30
<PAGE>
MY ARCHITECT ("MYA")

     A director  of PTSB is a principal  partner of MYA.  During the years ended
December 31, 2006 and 2005, the Company  received fees of $743,414 and $333,342,
respectively, from consulting contracts that it entered into with MYA. The terms
of  repayment  for the amount due from MYA are similar to terms  accorded to the
Company's other existing  customers.  At December 31, 2006, there was no balance
owed by MYA.

CHIEF EXECUTIVE OFFICER

     As of December 31, 2006,  the Company owed the Chief  Executive  Officer of
the Company $10,578 for short-term cash advances made to the Company for working
capital  purposes  from time to time.  The amount  owing to the Chief  Executive
Officer is unsecured,  bears no interest, has no fixed terms of repayment and is
recorded in the financial statements as "Amount due to a director".

ITEM 13. EXHIBITS.

3.1  Certificate  of  Incorporation  of  Secured  Digital   Applications,   Inc.
     (incorporated  by  reference  to Exhibit 3.1 to the  Company's  Form 10-KSB
     filed with the SEC on April 15, 2005)

3.2  Amended  and  Restated  Certificate  of  Incorporation  of Secured  Digital
     Applications,  Inc.  (incorporated  by  reference  to  Exhibit  3.2  to the
     Company's Form 10-KSB filed with the SEC on April 15, 2005.)

3.3  Certificate of Ownership of Digital  Broadband  Networks,  Inc. (a Delaware
     Corporation) and Secured Digital Applications Inc. (a Delaware Corporation)
     (incorporated  by  reference  to Exhibit 3.3 to the  Company's  Form 10-KSB
     filed with the SEC on April 15, 2005)

3.4  Certificate  of Amendment to the  Certificate of  Incorporation  of Secured
     Digital Applications, Inc. (incorporated by reference to Exhibit 3.3 to the
     Company's Form 10-KSB filed with the SEC on April 15, 2005)

3.5  Bylaws of Digital  Broadband  Networks,  Inc.,  presently  known as Secured
     Digital Applications, Inc. (incorporated by reference to Exhibit 3.3 to the
     Company's Form 10-KSB filed with the SEC on April 15, 2005)

3.6  Certificate of Designation Series B Preferred Stock

10.1 Amended  Settlement  Memorandum,  dated  December 14, 1999, as confirmed by
     Judge  Jim  R.   Carrigan  of  the  Judicial   Arbiter   Group  in  Denver.
     (Incorporated  by reference to Exhibit  10.1 to the  Company's  Form 10-KSB
     filed with the SEC on April 14, 2000.)

10.2 Agreement and Plan of  Reorganization,  dated April 20, 1999, between Kalan
     Gold Corporation and Animated Electronic Industries Sdn. Bhd. (Incorporated
     by reference to Exhibit 2.1 to the Company's  Current  Report on Form 8-K/A
     dated April 20, 1999, as filed with the SEC on July 2, 1999.)

10.3 Employment  Agreement dated August 1, 2006 between Digital Image ID Sdn Bhd
     and Yong Voon Fui

10.4 Employment  Agreement dated August 1, 2006 between Digital Image ID Sdn Bhd
     and Valerie Looi

10.5 Stock  Award  Agreement  dated  October 21, 2006  between  Secured  Digital
     Applications Inc. and Patrick Soon-Hock Lim

21.1 List of Subsidiaries

31.1 Certification by Chief Executive  Officer pursuant to Rule 13A-14 or 15D-14
     of the Securities Exchange Act of 1934

31.2 Certification by Chief Accounting Officer pursuant to Rule 13A-14 or 15D-14
     of the Securities Exchange Act of 1934

32.1 Certification by Chief Executive Officer pursuant to 18 U.S.C. 1350

32.2 Certification by Chief Accounting Officer pursuant to 18 U.S.C. 1350


                                       31
<PAGE>
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     Our  principal  auditor  during  fiscal  2006 is  Rotenberg  Meril  Solomon
Bertiger & Guttilla,  P. C. and 2005 is GHP Horwath,  P. C.  Aggregate fees were
billed or expected to be billed in the following categories and amounts:

                                         Years Ended December 31,
                                    ---------------------------------
                                         2006                 2005
                                        ------               ------
      Audit Fees                    $  125,000            $  90,300
      Audit Related                         --                   --
      Tax Related                           --                   --
      Other Fees                            --                   --

     Audit fees include fees billed for  professional  services  rendered by our
principal  auditor  for the audit of annual  financial  statements,  reviews  of
quarterly  financial  statements  and  services  that are  normally  provided in
connection with statutory and regulatory filings.

     Audit related fees included due diligence assistance provided in connection
with potential  acquisitions.  All of the services described above were approved
by the Company's audit  committee and prior to performance.  The audit committee
has determined that the payments made to its  independent  accountants for these
services are compatible with maintaining such auditors' independence.


                                       32
<PAGE>
                                   SIGNATURES

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


                                     Secured Digital Applications, Inc.

Dated:  April 16, 2007               By:   /s/ Patrick Soon-Hock Lim
                                           -------------------------
                                           Patrick Soon-Hock Lim
                                           Chairman and Chief Executive Officer


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report has been signed below by the  following  persons on behalf of the Company
and in the capacities and on the dates indicated.

     SIGNATURE                            TITLE                       DATE
     ---------                            -----                       ----


/s/ Patrick Soon-Hock Lim           Chairman, Chief Executive     April 16, 2007
-------------------------           Officer and Director
Patrick Soon-Hock Lim               (Principal Executive Officer)



/s/ Voon-Fui Yong                   Chief Accounting Officer      April 16, 2007
-----------------                  (Financial Officer and
Voon Fui Yong                       Principal Accounting Officer)



/s/ Valerie Hoi-Fah Looi            Secretary and Director        April 16, 2007
------------------------
Valerie Hoi-Fah Looi



/s/ Mustaffar Bin Yacob             Director                      April 16, 2007
------------------------
Mustaffar Bin Yacob


                                       33
<PAGE>

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                     YEARS ENDED DECEMBER 31, 2006 AND 2005
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



Reports of independent registered public accounting firms                F-1
Consolidated financial statements:
         Balance sheet                                                   F-3
         Statements of operations                                        F-5
         Statements of changes in shareholders'
          equity and comprehensive income                                F-7
         Statements of cash flows                                        F-11
         Notes to consolidated financial statements                      F-15



                                       34
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors
Secured Digital Applications, Inc.

We have audited the accompanying  consolidated  balance sheet of Secured Digital
Applications, Inc. and subsidiaries (the "Company") as of December 31, 2006, and
the related  consolidated  statements of  operations,  changes in  shareholders'
equity and  comprehensive  income and cash flows for the year then ended.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit. The consolidated  statements of operations,  changes in stockholders'
equity and comprehensive income and cash flows of the Company for the year ended
December  31, 2005 were  audited by other  auditors  whose report dated April 7,
2006 indicated that the Company expressed an unqualified opinion, except for the
effects of discontinued  operations discussed in Note 1, as to which the date is
April 16, 2007.

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 financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the 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  audit  provides  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 the Company as of
December 31, 2006, and the results of their  operations and their cash flows for
the year then ended in conformity with accounting  principles generally accepted
in the United States of America.




/s/ ROTENBERG, MERIL, SOLOMON, BERTIGER & GUTTILLA, P.C.
ROTENBERG, MERIL, SOLOMON, BERTIGER & GUTTILLA, P.C.

Saddle Brook, New Jersey
April 16, 2007


                                      F-1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors
Secured Digital Applications, Inc.

We have audited the accompanying consolidated statements of operations,  changes
in  shareholders'  equity  and  comprehensive  income  and cash flows of Secured
Digital  Applications,  Inc. and  subsidiaries  for the year ended  December 31,
2005. These  financial  statements  are  the  responsibility  of  the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

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 financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the 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  audit  provides  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the results of operations and cash flows of
Secured Digital Applications,  Inc. and subsidiaries for the year ended December
31, 2005, in conformity with  accounting  principles  generally  accepted in the
United States of America.

As discussed in Note 1 to the consolidated  financial statements,  subsequent to
December 31, 2005, the Company corrected its accounting for preferred stock of a
subsidiary,  a convertible term note and related  warrants in the first,  second
and third quarters of 2005.



/s/GHP HORWATH, P.C.

GHP HORWATH, P.C.

Denver, Colorado
April 7, 2006, except for  the  effects of the discontinued operations discussed
in Note 1, as to which the date is April 16, 2007


                                       F-2
<PAGE>


                        SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                                      CONSOLIDATED BALANCE SHEET
                                           DECEMBER 31, 2006


                                                  ASSETS
<TABLE>
<CAPTION>
Current assets:
<S>                                                                                          <C>
     Cash                                                                                    $           8,335
     Trade and other accounts receivable,
       less allowance for doubtful accounts of $26,006                                               8,547,364
     Prepaid expenses                                                                                   14,142
                                                                                             -----------------
              Total current assets                                                                   8,569,841
Property and equipment, net                                                                            992,538
Customer list and customer relationships                                                                26,403
Goodwill                                                                                               471,260
Long-term receivables, related parties                                                                 108,247
                                                                                             -----------------
                                                                                             $      10,168,289
                                                                                             =================


                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Capital lease obligations                                                               $          33,455
     Accounts payable (includes related parties of $100,396)                                         1,028,771
     Accrued expenses                                                                                   69,881
     Amount due to an affiliated company                                                                17,927
     Amount due to a director                                                                           10,578
     Income tax payable                                                                                 11,045
                                                                                             -----------------
              Total current liabilities                                                              1,171,657

     Deferred income tax                                                                               208,723
     Deferred gain                                                                                     108,247
                                                                                             -----------------
              Total liabilities                                                                      1,488,627
                                                                                             -----------------


                                                        (continued)

                                       F-3
<PAGE>

                            SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                                     CONSOLIDATED BALANCE SHEET (CONTINUED)
                                               DECEMBER 31, 2006




Minority interest                                                                                      180,866
                                                                                             -----------------
Commitments

Shareholders' equity:
     Series B convertible preferred stock, $0.10 par value;
       1,000,000 shares authorized; 100,000 shares issued and outstanding,
       liquidation preference $2,500,000                                                                10,000
     Common stock, $.00001 par value;
       350,000,000 shares authorized; 141,572,594 shares issued,
           128,721,391 shares outstanding                                                                1,287
     Additional paid-in capital                                                                      6,746,129
     Common treasury stock, 12,851,203 shares at cost                                                       --
     Options                                                                                           101,904
     Warrants                                                                                          784,875
     Deferred compensation                                                                             (48,175)
     Retained earnings                                                                                 657,384
     Accumulated other comprehensive income                                                            245,392
                                                                                             -----------------
              Total shareholders' equity                                                             8,498,796
                                                                                             -----------------
                                                                                             $      10,168,289
                                                                                             =================
                 See notes to consolidated financial statements

</TABLE>

                                       F-4
<PAGE>

                            SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                   YEARS ENDED DECEMBER 31, 2006 AND 2005
<TABLE>
<CAPTION>
                                                                                2006                  2005
                                                                              --------              ---------
<S>                                                                              <C>                   <C>
Revenues:
Services:
  Related parties                                                         $        743,414      $        333,342
  Others                                                                        36,202,862            23,856,534
                                                                          ----------------      ----------------
                                                                                36,946,276            24,189,876
                                                                          ----------------      ----------------
Cost of revenues:
Services:
  Related parties                                                                  223,372                95,964
  Others                                                                        33,905,828            22,299,901
                                                                          ----------------      ----------------

                                                                                34,129,200            22,395,865
                                                                          ----------------      ----------------

Gross profit                                                                     2,817,076             1,794,011
                                                                          ----------------      ----------------

Operating expenses:
     Sales and marketing                                                           631,371                90,212
     General and administrative:
       Related parties                                                             146,099               145,309
       Others                                                                    1,889,695             1,182,747
                                                                          ----------------      ----------------

Total operating expenses                                                         2,667,165             1,418,268
                                                                          ----------------      ----------------

Income from operations                                                             149,911               375,743
                                                                          ----------------      ----------------

Other income (expense):
     Interest expense                                                               (1,994)             (250,833)
     Amortization of debt issuance costs                                                --               (65,511)
     Interest income                                                                    97               108,849
     Previously deferred gain on sale of technology, related parties                85,692               126,282
     Reversal of bad debt provision                                                135,932                    --
     Write-off of old vendor payables                                              152,644                    --
     Other                                                                          54,549                50,204
                                                                          ----------------      ----------------

                                                                                   426,920               (31,009)
                                                                          ----------------      ----------------

Income before items listed below                                                   576,831               344,734
Income tax expense                                                                 (81,831)              (65,974)
Minority interest                                                                    1,186                 4,584
Purchased pre-acquisition income                                                   (30,531)                   --
Gain on foreign currency transactions                                               50,815                   --
                                                                          ----------------      ----------------
Income from continuing operations                                                  516,470               283,344

Discontinued operations:
     Income (loss) from discontinued
     operations - net of minority interest and
     income taxes                                                                   94,442              (156,428)

     Gain on disposal of discontinued subsidiaries                                  46,472                    --
                                                                          ----------------      ----------------

Net income                                                                $        657,384      $        126,916
                                                                          ================      ================
                                   (continued)

                                       F-5
<PAGE>
                           SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
                                 YEARS ENDED DECEMBER 31, 2006 AND 2005

                                                                                2006                  2005
                                                                              --------              ---------


Net income                                                                $        657,384       $       126,916

Preferred stock dividend                                                                --              (391,870)
Early redemption penalty on preferred stock                                             --              (302,994)
Accretion to preferred stock redemption value                                           --            (3,312,689)
                                                                          ----------------       ---------------
Net income (loss) applicable to common shareholders                       $        657,384       $    (3,880,637)
                                                                          ================       ===============

Basic income (loss) per common share:

     Continuing operations                                                $           0.01       $         (0.04)
     Discontinued operations                                                             *                     *
                                                                          ================       ===============

     Net income (loss) per common share                                   $           0.01                 (0.04)
                                                                          ================       ===============

Diluted  income (loss) per common share:

     Continuing operations                                                $              *       $         (0.04)
     Discontinued operations                                                             *                     *
                                                                          ================       ===============
     Net income (loss) per common share                                   $              *       $         (0.04)
                                                                          ================       ===============

Weighted average shares outstanding

     Basic                                                                     132,021,168           109,447,305
                                                                          ================       ===============
     Diluted                                                                   156,550,307           110,255,798
                                                                          ================       ===============

* Less than $0.01 per share
</TABLE>

                 See notes to consolidated financial statements

                                       F-6
<PAGE>

                         SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                       AND COMPREHENSIVE INCOME
                                 YEARS ENDED DECEMBER 31, 2006 AND 2005

<TABLE>
<CAPTION>

                                         Preferred stock        Common Stock
                                                                                      Additional
                                                      Par                   Par        paid-in      Treasury
                                          Shares     Value     Shares       Value      capital       stock
                                         ---------  -------- -----------   ---------  ------------  ---------
<S>                                        <C>         <C>       <C>       <C>          <C>          <C>       <C>
Balances, January 1, 2005                 100,000   $10,000   94,621,152   $     955    $6,776,000  $ (30,375)

Conversion of term note                        --       --     1,259,319          14       155,974         --
Settlement of convertible securities           --       --     9,756,098          86       799,914         --
Conversion of preferred shares           (100,000) (10,000)    8,000,000          80         9,920         --
Common stock issued for
 private placement                             --       --    11,349,565         113       945,717      7,270
Cost of raising capital                        --       --            --          --       (46,379)        --
Issuance of common shares as
 compensation for professional fees            --       --     3,298,296          34       344,178     16,355
Issuance of common share for
  business acquisition                         --       --       250,000           3        25,747      6,750
Employee stock options exercised               --       --       350,000           4        83,996         --
Issuance of stock options                      --       --            --          --            --         --
Cancellation of stock option                   --       --            --          --        39,412         --
Early redemption penalty on
   preferred stock                             --       --            --          --      (302,994)        --
Accretion to preferred stock
   redemption value                            --       --            --          --    (3,312,689)        --
Amortization of deferred
 compensation for the year
  ended December 31, 2005                      --       --            --          --            --         --
Comprehensive income:
 Net income for the year
  ended December 31, 2005                      --       --            --          --            --         --
Foreign currency translation adjustment        --       --            --          --            --         --
 Comprehensive income
Dividend declared for the year
  ended December 31, 2005                      --       --            --          --      (264,954)        --

                                         ---------  -------- -----------   ---------  ------------  ---------
Balances, December 31, 2005                    --   $   --   128,884,430   $   1,289  $  5,253,842  $      --
                                         =========  ======== ===========   =========  ============  =========


                                   (continued)

                                       F-7
<PAGE>

                           SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                         AND COMPREHENSIVE INCOME
                                YEARS ENDED DECEMBER 31, 2006 AND 2005


                                         Preferred stock        Common Stock
                                                                                       Additional
                                                      Par                   Par         paid-in      Treasury
                                          Shares     Value     Shares       Value       capital       stock
                                          ---------  -------  -----------   --------   ------------  ---------
Balances, December 31, 2005                    --   $   --    128,884,430   $  1,289   $  5,253,842  $      --

Common stock issued for
 private placement                             --       --      5,800,000         58        375,142         --
Issuance of common shares as
 compensation for professional fees            --       --     12,367,595        123        892,395         --
Issuance of warrants to employee               --       --             --         --             --         --
Issuance of common stock for
  vendor payable                               --       --        983,607         10         59,990         --
Employee stock options exercised               --       --        500,000          5         54,070         --
Stock compensation expenses                    --       --             --         --             --         --
Issuance of stock options                      --       --             --         --             --         --
Working capital call in subsidiary             --       --        185,759          2         14,998         --
Conversion of common stock                100,000   10,000    (20,000,000)      (200)        (9,800)        --
Effect of sale of accounting parent            --       --             --         --        105,492         --
Comprehensive income:
 Net income for the year
  ended December 31, 2006                      --       --             --         --             --         --
Foreign currency translation adjustment        --       --             --         --             --         --
 Comprehensive income
                                         ---------  -------   -----------   --------   ------------  ---------
Balances, December 31, 2006               100,000   $10,000   128,721,391   $  1,287   $  6,746,129  $      --
                                         =========  =======   ===========   ========   ============  =========

</TABLE>
                                                     (continued)


                                       F-8
<PAGE>
<TABLE>
<CAPTION>
                                        SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                                     CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                                AND COMPREHENSIVE INCOME (CONTINUED)
                                                YEARS ENDED DECEMBER 31, 2006 AND 2005

                                                                                          Accumulated
                                                    Deferred                                Other
                                                  Compensation                  Retained  Comprehensive
                                       Options        Cost         Warrants     earnings    Income          Total
                                     ------------ -------------  -----------  ----------- ------------  -------------
<S>                                       <C>           <C>          <C>          <C>         <C>          <C>
Balances, January 1, 2005            $     78,835 $     (11,447) $   749,715 $         -- $     56,569  $   7,630,252

Conversion of term note                        --            --           --           --           --        155,988
Settlement of convertible securities           --            --           --           --           --        800,000
Conversion of preferred shares                 --            --           --           --           --             --
Common stock issued for
 private placement                             --            --           --           --           --        953,100
Cost of raising capital                        --            --           --           --           --        (46,379)
Issuance of common shares as
 compensation for professional fees            --            --           --           --           --        360,567
Issuance of common share for
  business acquisition                         --            --           --           --           --         32,500
Employee stock options exercised          (14,000)           --           --           --           --         70,000
Issuance of stock options                  47,329            --           --           --           --         47,329
Cancellation of stock option              (49,792)       10,380           --           --           --             --
Early redemption penalty on
   preferred stock                             --            --           --           --           --       (302,994)
Accretion to preferred stock
   redemption value                            --            --           --           --           --     (3,312,689)
Amortization of deferred
 compensation for the year
  ended December 31, 2005                      --         1,067           --           --           --          1,067
Comprehensive income:
 Net income for the year
    ended December 31, 2005                    --            --           --      126,916           --        126,916
Foreign currency translation adjustment        --            --           --           --      (24,066)       (24,066)
Comprehensive income                                                                                          102,850
Dividend declared for the year
  ended December 31, 2005                      --            --           --     (126,916)          --       (391,870)
                                     ------------ -------------  -----------  ----------- ------------  -------------
Balances, December 31, 2005          $     62,372 $          --  $   749,715  $        --    $  32,503  $   6,099,721
                                     ============ =============  ===========  =========== ============  =============


                                   (continued)

                                       F-9
<PAGE>

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                      AND COMPREHENSIVE INCOME (CONTINUED)
                     YEARS ENDED DECEMBER 31, 2006 AND 2005


                                                                                          Accumulated
                                                    Deferred                                Other
                                                  Compensation                  Retained  Comprehensive
                                       Options        Cost         Warrants     earnings    Income          Total
                                     -----------  -------------  ----------   ----------- ------------  -------------

Balances, December 31, 2005          $    62,372  $          --  $  749,715   $        --  $    32,503  $   6,099,721

Common stock issued for
 private placement                            --                         --            --           --        375,200
Issuance of common shares as
 compensation for professional fees           --        (48,175)         --            --           --        844,343
Issuance of warrants to employee              --             --      35,160            --           --         35,160
Issuance of common stock for
  vendor payable                              --             --          --            --           --         60,000
Employee stock options exercised         (23,898)            --          --            --           --         30,177
Stock compensation expenses               15,867             --          --            --           --         15,867
 Issuance of stock options                47,563             --          --            --           --         47,563
 Working capital call in subsidiary           --             --          --            --           --         15,000
Conversion of common stock                    --             --          --            --           --             --
Effect of sale of accounting parent           --             --          --            --           --        105,492
Comprehensive income
Net income for the year
  ended December 31, 2006                     --             --          --       657,384           --        657,384
Foreign currency translation
  adjustment                                  --             --          --            --      212,889        212,889
 Comprehensive income                                                                                         870,273
                                     -----------  -------------  ----------   ----------- ------------  -------------
Balances, December 31, 2006          $   101,904  $     (48,175) $  784,875   $   657,384 $    245,392  $   8,498,796
                                     ===========  =============  ==========   =========== ============  =============
</TABLE>

                                  See notes to consolidated financial statements

                                      F-10
<PAGE>
                             SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     YEARS ENDED DECEMBER 31, 2006 AND 2005
<TABLE>
<CAPTION>
                                                                                2006                  2005
                                                                              --------              --------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                      <C>                   <C>
     Net income                                                          $         657,384     $         126,916
     Adjustments to reconcile net income to net cash
      provided by (used in) operating activities:
     Minority interest                                                              (1,186)               (4,584)
        Purchased pre-acquisition income                                            30,531                    --
           Depreciation and amortization                                           271,063               248,588
     Deferred income taxes                                                          40,215                    --
     Amortization of debt issuance costs                                                --                65,511
     Amortization of embedded liability of term note                                    --               179,862
     Allowance for slow moving inventories                                          39,310                    --
     Stock compensation expenses                                                   957,933               408,963
     Disposal of subsidiaries                                                      (46,472)                   --
        Reversal of bad debts provision                                           (141,603)                   --
     Previously deferred gain on sale of technology, related party                 (89,266)             (126,282)
     Loss on disposal of property and equipment                                     54,092                    93
     Changes in operating assets and liabilities, net of effects
      from purchase of ISS in 2005:
       Increase in trade and other accounts receivable                          (1,907,037)           (1,658,283)
       Increase in prepaid expenses                                                  9,132                 3,191
       (Increase) decrease in inventories                                           (3,412)                6,064
       Increase  in accounts payable and accrued expenses                          505,672               189,510
       Decrease in income tax liability                                            (12,242)               (4,386)
                                                                         -----------------     -----------------
       Change in operating assets and liabilities of
         continuing operations                                                     364,114              (564,837)
       Change in operating assets and liabilities of
         discontinued operations                                                   (59,390)              160,634
                                                                         -----------------     -----------------
              Net cash provided by (used in) operating activities                  304,724              (404,203)
                                                                         -----------------     -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of equipment                                                        (304,707)             (165,474)
     Purchase of equipment of discontinued operations                               (1,056)              (54,770)
     Proceeds from sale of of discontinued operations                                   --               156,576
     Proceeds from sale of equipment of discontinued operations                     29,181                    --
     Payment for purchase of businesses, net of cash acquired                           --                 1,381
                                                                         -----------------     -----------------
           Net cash used in investing activities                                  (276,582)              (62,287)
                                                                         -----------------     -----------------
</TABLE>
                                   (continued)

                                      F-11
<PAGE>
               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2006 AND 2005
<TABLE>
<CAPTION>
                                                                                   2006                  2005
                                                                                 --------              --------
<S>                                                                                                      <C>
CASH FLOWS FROM FINANCING ACTIVITIES
     Decrease in restricted cash                                                        --               (90,632)
     Payment of expenses in connection with subsidiary preferred
      stock issuance                                                                    --               (46,379)
     Proceeds from issuance of shares of common stock                              375,200               953,100
     Proceeds from affiliated company                                                   --                15,968
     Repayments to affiliated company                                              (93,787)                   --
     Proceeds from a director                                                           --                 2,057
     Repayments to a director                                                      (62,619)                   --
     Proceeds from exercise of stock options                                        30,177                70,000
     Payment for early redemption of subsidiary's preferred stock                       --              (222,226)
     Payment of obligations under capital leases                                   (11,185)              (29,738)
     Payment of preferred dividend                                                      --              (256,666)
        Financing activities of discontinued operations                            (63,652)               91,368
                                                                         -----------------     -----------------

           Net cash provided by financing activities                               174,134               486,852
                                                                         -----------------     -----------------


FOREIGN CURRENCY TRANSLATION ADJUSTMENT  - continuing activities                  (336,685)              (16,226)
                                         - discontinued activities                 106,185                 1,684
                                                                         -----------------     -----------------
Net (decrease) increase in cash                                                    (28,224)                5,820

Cash, beginning of year                                                             36,559                30,739
                                                                         -----------------     -----------------
Cash, end of year                                                        $           8,335     $          36,559
                                                                         =================     =================

                                   (continued)

                                      F-12
<PAGE>
               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2006 AND 2005


                                                                                2006                  2005
                                                                              --------              --------


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

     Cash paid for interest during the year                              $           1,994     $         134,230
                                                                            ==============        ==============
     Cash paid for income taxes during the year                          $           6,854     $          72,562
                                                                            ==============        ==============

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
        FINANCING ACTIVITIES:

Conversion of common stock to preferred stock                            $          10,000     $              --
                                                                            ==============        ==============
Issuance of common stock for vendor payable                              $          60,000     $              --
                                                                            ==============        ==============

Restricted cash paid in exchange for preferred stock of subsidiary       $              --     $      (6,000,000)
                                                                            ==============        ==============
Restricted cash paid for accrued dividends                               $              --     $        (105,138)
                                                                            ==============        ==============

Accretion to preferred stock redemption value                            $              --     $       3,312,689
                                                                            ==============        ==============

Preferred stock dividends declared                                       $              --     $         391,870
                                                                            ==============        ==============

Conversion of convertible term note and related accrued interest         $              --     $         155,988
                                                                            ==============        ==============

Issuance of common stock for services rendered by consultant
  with regard to equity transaction                                      $              --     $          32,500
                                                                            ==============        ==============
Issuance of common stock for term note , accrued interest
  and accrued dividends of preferred stock of subsidiary                 $              --     $         800,000
                                                                            ==============        ==============

                                   (continued)

                                      F-13
<PAGE>

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                     YEARS ENDED DECEMBER 31, 2006 AND 2005


                                                           2006                  2005
                                                         --------              ---------

BUSINESS ACQUISITIONS :



Acquisition of subsidiary in April 2005

Net assets acquired:
   Cash                                                                      $      54,033
   Accounts receivable                                                              10,365
   Property, furniture and equipment                                                 2,119
   Customer relationships                                                           59,423
   Accounts payable                                                                (19,689)
                                                                              ------------
                                                                                   106,251
Less: Minority interests                                                           (21,099)
         Common stock issued                                                       (32,500)
         Cash acquired                                                             (54,033)
                                                                             -------------
Net cash received in acquisition of subsidiaries                             $      (1,381)
                                                                             =============
</TABLE>
                 See notes to consolidated financial statements

                                      F-14
<PAGE>
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION

Secured Digital Applications, Inc. and subsidiaries (the "Company" or "SDA") are
involved in application  development,  broadband network operation,  delivery of
value added  applications and services;  sale of devices that utilize  broadband
networks and the sale of biometric  security  devices.  During 2003, the Company
expanded its business to include the  development,  integration and provision of
secured  shipping  and supply  chain  management  services.  In April 2005,  the
Company  expanded into the business of specializing  in the design,  development
and  implementation  of wireless  applications  and  electronic  solutions.  The
Company's  revenues  for 2006 and 2005 were  primarily  derived from the design,
development  and production of interactive  multimedia  websites and content and
sale of information technology products and services.

The Company, formerly known as Digital Broadband Networks, Inc, changed its name
to Secured Digital Applications,  Inc., after its board of directors unanimously
approved the change on January 28, 2004.

During the third quarter of 2006, the Company determined that it was in the best
interests of SDA and its  shareholders  to restructure  the Company's  operating
subsidiaries.  The intent of the  reorganization  was to improve  administrative
efficiency  and profit  margins,  as well as to  dispose  of  certain  assets or
subsidiaries that did not meet management's  criteria for continued inclusion in
the SDA group of companies.  In particular,  we determined that our subsidiaries
involved in the developing  business of secured  shipping and in the established
business  of  operating  retail  computer  outlets  did not meet  the  Company's
criteria for profitability and/or fit within the Company's  organization.  Under
the reorganization plan,  substantially all of the assets and liabilities of our
principal  operating  subsidiary,  Secured  Digital  Applications  (M)  Sdn  Bhd
("SDAM"),  were transferred to a newly created  subsidiary,  DigitalApps Sdn Bhd
("DASB"). DASB thus became our principal operating subsidiary with substantially
the same assets and liabilities as the former SDAM.

Through  reorganization,  we reduced the number of  operating  subsidiaries  and
disposed  of the  companies  associated  with our Gallant IT  operations,  which
operated retail computer stores in metropolitan  Kuala Lumpur.  We also disposed
of the companies through which we had been seeking to develop a secured shipping
business.

In  connection  with  the  reorganization,  we  incorporated  a new  subsidiary,
DigitalApps  Sdn Bhd ("DASB"),  which will act as the principal  holding company
for the Corporation's four operating subsidiaries:  Perwimas  Telecommunications
Sdn Bhd ("PTSB");  DigitalApps  Technologies Sdn Bhd ("DAT")  (formerly  Secured
Shipping Sdn Bhd  ("SSSB"));  Digital  Image ID Sdn Bhd ("DID") and  DigitalApps
Media Sdn Bhd  ("DAM").  DAT owns 55 percent of Ispec Sdn Bhd ("ISS")  (formerly
Innospective  Sdn Bhd).  DID will own 100 percent of Digital Kiosk  Technologies
Sdn Bhd ("DKT") (formerly Century Jubilee Sdn Bhd ("CJSB"), a newly incorporated
subsidiary.  The  assets  and  liabilities  of  Gallant  Service  Centre Sdn Bhd
("GSC"),  through  which we owned a majority  interest in the  Gallant  group of
companies,  and Armor Multi Systems Sdn Bhd ("AMS") and Armor Multi Services Sdn
Bhd ("AMSSB") were sold to the third party.  As a result of the  reorganization,
the Company is now operating in only one business segment.

SDA's core line of business  is  outsourced  media  production  and  information
technology  applications,  which  account for the majority of our  revenue.  Our
operating subsidiaries offer products in diverse lines of business including the
development of Internet  content,  digital security and biometric  products.  We
conduct our principal  operations in Malaysia.  Our  subsidiaries as of December
31, 2006 are the following companies:

                                      F-15
<PAGE>

NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)


-    China Sea Trade Company,  Inc. ("CST") (f/k/a Eystar Media, Inc.), a wholly
     owned subsidiary of SDA Worldwide,  Inc.,  organized under Delaware law and
     based in Saddle Brook, NJ. CST offers consulting and management services to
     regional  firms in Asia  seeking to develop  markets in the United  States.
     These include  contract sales  representation,  the contract  management of
     joint venture  companies  and advice and  consulting on funding and mergers
     and  acquisitions  within the United States.  CST began operations in early
     2006 and did not generate any revenue.


-    SDA  Worldwide,  Inc.  ("SDAW")  (f/k/a  SDA  America,  Inc.) an 80%  owned
     subsidiary,  organized under Delaware law and based in Saddle Brook, NJ, is
     in the process of developing and  commercializing  a platform of outsourced
     business  services  that will be  offered  primarily  to small  and  medium
     enterprises  in the United States.  The company was originally  formed as a
     wholly-owned corporation used as a special vehicle to secure a $6.5 million
     funding from Laurus Master Fund Ltd. (the "Master  Fund")  through  private
     placement of securities  consisting of convertible  preferred  stock of SDA
     America.  As a result of the early  retirement  of the  Laurus  investment,
     management  determined to use the corporation as the vehicle to develop the
     company's  international  trade  consulting  business in the United States.
     SDAW began  operations in 2005 and did not generate any revenue in 2006 and
     2005.

-    DigitalApps Sdn Bhd ("DASB"),  is a wholly- owned Malaysian subsidiary that
     designs,  develops and produces  multimedia content and provides consulting
     services  for  website   development,   network   engineering  and  project
     management  in IT related  projects.  In  addition to its  activities  as a
     multimedia   developer  and  IT  consultant,   DASB  provides   centralized
     management and  back-office  support to SDA's other  subsidiaries  from its
     office in Petaling Jaya, Malaysia.

-    Perwimas  Telecommunications  Sdn  Bhd  ("PTSB"),  a  95%  owned  Malaysian
     subsidiary of DASB,  provides  broadband  and  application  services  under
     licenses granted by the government of Malaysia.

-    Digital  Image ID Sdn Bhd ("DID")  (f/k/a Vista  Positive Sdn Bhd),  DASB's
     wholly-owned subsidiary, from the date of acquisition on July 5, 2006;

-    Digital Kiosk Technologies Sdn Bhd ("DKT") (f/k/a Century Jubilee Sdn Bhd),
     DID's wholly-owned subsidiary, from the date of acquisition on September 4,
     2006

-    Ispec Sdn Bhd ("ISS") (f/k/a  Innospective Sdn Bhd), a 55% owned subsidiary
     of DigitalApps Technologies Sdn Bhd ("DAT") (f/k/a Secured Shipping Sdn Bhd
     ("SSSB")),  is a  systems  integration  firm  specializing  in the  design,
     development  and  implementation  of wireless  applications  and electronic
     solutions.

-    DigitalApps Media Sdn Bhd ("DAM"), DASB's wholly-owed subsidiary,  from the
     date of incorporation on July 7, 2006.


                                      F-16
<PAGE>
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)


On September 18, 2006, the Company sold the following Malaysian subsidiary
companies to an unrelated party:

1.   Secured  Digital  Applications  Sdn Bhd  ("SDAM"),  wholly-owned  Malaysian
     subsidiary from the date of acquisition on April 20, 1999.

2.   Armor  Multi  Systems  Sdn  Bhd  ("AMS"),   SDAM's  wholly-owned  Malaysian
     subsidiary from the date of incorporation on November 10, 2003;

3.   Armor Multi  Services Sdn Bhd ("AMSSB")  (f/k/a  Asiaco  Services Sdn Bhd),
     AMS's 60%  owned  Malaysian  subsidiary;  from the date of  acquisition  on
     December 9, 2003;

4.   Gallant Service Centre (M) Sdn Bhd ("GSC"), SDAM's wholly-owned subsidiary,
     from the date of acquisition on September 29, 2004;

5.   Gallant IT Holdings Sdn Bhd ("GIH"),  GSC's 55% owned subsidiary,  from the
     date of acquisition on September 29, 2004; and

6.   Gallant Zone (M) Sdn Bhd ("GZ"),  Eystar Distribution Sdn Bhd ("ED") (f/k/a
     Gallant IT Distribution  (M) Sdn Bhd) and Gallant Focus (M) Sdn Bhd ("GF"),
     all  wholly-owned  subsidiaries  of GIH  from the  date of  acquisition  on
     September  29,  2004 and,  including  GSC and GIH,  such  subsidiaries  may
     sometimes collectively be referred to as the "Gallant group of companies."

The accompanying consolidated financial statements include:

1.   SDA, CST, SDAW, PTSB, DID and DAT for 2006 and 2005;

2.   DASB, DKT, DAM and ISS from the inception dates in 2006 and 2005;

3.   SDAM, GSC, GIH, GZ, ED, GF, AMS, AMSSB,  as discontinued  operations,  from
     the effective date of acquisition up to the effective date of disposal.

All  significant  inter-company  account  balances  and  transactions  have been
eliminated in consolidation.


RESTATEMENT OF 2005 OPENING BALANCES

Subsequent  to the  issuance of the  Company's  December  31, 2004  consolidated
financial  statements,  and  based  upon a  further  evaluation  of the  factors
utilized in determining  the accounting and  presentation of a May 2004 issuance
of  preferred  stock of a  subsidiary,  a  convertible  term  note  and  related
warrants,  the Company  determined that both the preferred stock of a subsidiary
and the  convertible  term  note  contained  embedded  derivatives  that must be
bifurcated from their host instruments. In addition, the Company determined that
the warrants and the  preferred  stock of a subsidiary  should not  initially be
classified  as a  component  of  shareholders'  equity  (See  Notes  8  and  9).
Accordingly,  the Company's 2004 consolidated financial statements were restated
and were filed in an  amended  form  10-KSB on April 10,  2006,  resulting  in a
decrease of shareholders' equity of $2,506,702 as of January 1, 2005.

                                      F-17
<PAGE>

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2006 AND 2005

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

Revenue represents the net invoiced value of:

o    goods sold;
o    fees earned from the  production  of  multimedia  programs and Intranet and
     management and consulting services; and
o    fees earned  from rental and  servicing  of  material  handling  equipment,
     provision  of  land  transportation,   engineering  and  industrial  moving
     services.

The  Company  recognizes  revenue  from the  sales of goods in the  period  when
significant  risks and rewards of ownership  have  transferred to its customers.
The Company recognizes revenue from the services provided in the period in which
the  services  are  performed  and  when  there  is no  significant  uncertainty
regarding  the  consideration  to be  received  and the  associated  costs to be
incurred.

ACCOUNTS RECEIVABLE AND CREDIT POLICIES

The Company grants credit,  generally without collateral,  to its customers. The
Company  continuously  monitors  collections and payments from its customers and
maintains  an  allowance  for  estimated   uncollectible   accounts  based  upon
historical  experience and specific  customer  collection  issues that have been
identified.

INVENTORIES

Inventories,  which are comprised of peripherals for  surveillance  and wireless
communication,  information technology hardware,  software and accessories,  are
stated at the lower of cost or net  realizable  value.  Cost is  determined on a
first-in-first-out basis. The value of the inventories was written down to $0 as
it was deemed to be unsaleable.

PROPERTY AND EQUIPMENT AND DEPRECIATION

Property and equipment  are stated at cost less  depreciation.  Depreciation  is
calculated  on the  straight-line  method over the expected  useful lives of the
assets. The principal annual rates of depreciation are:
<TABLE>
<CAPTION>

                                                                   Business Segments

                                                Broadband, Multimedia and       Material Handling
                                                   Biometric Security/         Equipment and Apple
Asset Classification                            Computer Sales and Services     Computer division
                                                                                  (Discontinued)
---------------------------                  ---------------------------------- --------------------------
<S>                                                          <C>                         <C>   <C>
Office equipment, furniture and fixtures,
  computer software                                          20%                         10% - 25%
Video communication hardware
  and peripherals, office renovation                         10%                             -
Tools and equipment                                          10%                         10% - 12%
Material handling equipment                                   -                             10%
Motor vehicles                                                -                          10% - 20%
</TABLE>

                                      F-18
<PAGE>
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

PROPERTY AND EQUIPMENT AND DEPRECIATION (CONTINUED)

Routine   expenses  for   maintenance  and  repair  are  expensed  as  incurred.
Expenditures  that result in  enhancement  of the value or in  extension  of the
useful life of fixed assets are capitalized.

Management  assesses the carrying values of its long-lived assets for impairment
when  circumstances  warrant  such a review.  Generally,  long-lived  assets are
considered  impaired  if the  estimated  fair  value is less  than  the  assets'
carrying  values.  If an impairment is indicated,  the loss is measured based on
the amounts by which the carrying values of the assets exceed their fair values.
At December 31, 2006, management believes that no impairment has occurred.

GOODWILL AND INTANGIBLE ASSETS

Goodwill  consists  of the  excess of cost  over net  assets  acquired  of PTSB.
Management of the Company  evaluates the carrying value of goodwill  annually or
whenever a possible impairment is indicated. The Company performs its impairment
test annually  during the fourth quarter of the fiscal year and determined  that
there was no impairment during the years ended December 31, 2006 and 2005.

Intangible  asset include a customer  relationships  with a cost of $59,423 were
acquired on April 30, 2005,  and are being  amortized  using the  straight  line
method over its  estimated  life of 3 years.  Amortization  expense for 2006 and
2005 amounted to $19,812 and $13,208, respectively.  Accumulated amortization at
December 31, 2006 was $33,020. Amortization expense for next year is expected to
be $19,812 and $6,591 for fiscal 2008.

INCOME TAXES

Income taxes are provided  for the tax effects of  transactions  reported in the
financial  statements  and consist of taxes  currently due plus  deferred  taxes
related  primarily to differences  between the recorded book basis and tax basis
of assets and liabilities  for financial and income tax reporting.  The deferred
tax assets and liabilities represent the future tax return consequences of those
differences,  which will  either be taxable  or  deductible  when the assets and
liabilities  are recovered or settled.  Deferred  taxes are also  recognized for
operating  losses that are  available to offset  future  taxable  income and tax
credits that are available to offset future federal income taxes.

COMPREHENSIVE INCOME

The Company has adopted Statement of Financial  Accounting Standards (SFAS) 130,
Reporting Comprehensive Income, which establishes requirements for disclosure of
comprehensive  income  including  certain items  previously  not included in the
statements of operations,  including minimum pension  liability  adjustments and
foreign  currency  translation  adjustments,  among others.  The Company's  only
components of comprehensive income are foreign currency translation adjustments.

The functional currency of the Company's  subsidiaries is the Malaysian Ringgit.
The financial statements of these subsidiaries are translated into United States
dollars ("USD") using year-end rates of exchange for assets and liabilities, and
average  rates of  exchange  for the year for  revenues,  costs,  and  expenses.
Translation gains and losses are treated as a component of shareholders' equity.
The reporting currency used in the financial  statements is USD unless otherwise
stated.

                                      F-19
<PAGE>
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

DERIVATIVE INSTRUMENTS

In connection with the issuances of equity  instruments or debt, the Company may
issue options or warrants to purchase  common stock.  In certain  circumstances,
these  options or warrants  may be  classified  as  liabilities,  rather than as
equity.  In  addition,  the  equity  instrument  or debt  may  contain  embedded
derivative  instruments,  such as  conversion  options or listing  requirements,
which  in  certain  circumstances  may be  required  to be  bifurcated  from the
associated  host  instrument  and  accounted  for  separately  as  a  derivative
liability instrument.  The Company accounts for derivative instruments under the
provisions of SFAS No. 133,  Accounting for Derivative  Instruments  and Hedging
Activities.

TREASURY STOCK

The Company  records  treasury stock  purchases at cost. The excess of cost over
par value is allocated to additional paid-in capital. The Company reissues stock
from the treasury on a first-in, first-out basis.

NET INCOME (LOSS) PER COMMON SHARE

Income  (loss) per common share  requires the  presentation  of two EPS amounts,
basic and diluted.  Basic net income  (loss) per common share is  calculated  by
dividing  net income  (loss) by the  weighted  average  number of common  shares
outstanding  for the years  ended  December  31, 2006 and 2005.  Diluted  income
(loss) per common share is computed using the weighted  average number of shares
determined for the basic  computations plus the number of shares of common stock
that would be issued assuming all contingently  issuable common stock equivalent
shares having a dilutive  effect on earnings per share were  outstanding for the
year. However,  there is no dilution from common stock equivalents in years with
net losses  attributable  to common share holders  because their effect would be
anti-dilutive.  The  calculation of basic and diluted income (loss) per share is
as follows (in thousands, except per-share amounts):

                                      F-20
<PAGE>
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


NET INCOME (LOSS) PER COMMON SHARE (CONTINUED)
<TABLE>
<CAPTION>
                                                                              Year ended December 31,
                                                                          ---------------------------------
                                                                              2006                 2005
                                                                            ---------            ---------
<S>                                                                                                    <C>
Net income                                                             $          657     $             127
Preferred stock dividend                                                           --                  (392)
Early redemption penalty on preferred stock                                        --                  (303)
Accretion to preferred stock redemption value                                      --                (3,313)
                                                                       --------------     -----------------
Net income (loss) available to common shareholders                     $          657     $          (3,881)
                                                                       ==============     =================
Weighted average shares outstanding - basic                                   132,021               109,447
                                                                       ==============     =================
Net income (loss) per share - basic                                    $         0.01     $           (0.04)
                                                                       ==============     =================

Weighted average shares outstanding - basic                                   132,021               109,447
Common stock issuable to consultant                                             3,532                   809
Convertible preferred stock                                                    20,000                    --
Dilutive stock options and warrants                                               997                    --
                                                                       --------------     -----------------
Weighted average shares outstanding - diluted                                 156,550               110,256
                                                                       ==============     =================
Net income (loss) per share - diluted                                  $            *     $           (0.04)
                                                                       ==============     =================
</TABLE>
*    less than $.01


FAIR VALUE OF FINANCIAL INSTRUMENTS

The  Company's  financial  instruments  consist  of cash,  accounts  receivable,
accounts  payable  and  accrued  expenses.  The  carrying  amounts of all other,
non-related  party  financial  instruments  approximate  fair value due to their
short maturities. The fair values of amounts due to and from related parties are
not  practicable to estimate,  due to the related party nature of the underlying
transactions.   The  Company  has  no  material   off-balance   sheet  financial
instruments.

                                      F-21
<PAGE>
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

STOCK-BASED COMPENSATION

Effective  January 1, 2006,  the Company  adopted  SFAS No.  123(R)  Share Based
Payment utilizing the "modified prospective" method as described in SFAS 123(R).
In the "modified  prospective"  method,  compensation cost is recognized for all
share-based  payments  granted  after the  effective  date and for all  unvested
awards  granted  prior to the effective  date. In accordance  with SFAS 123 (R),
prior  period  amounts  were not  restated.  SFAS 123(R) also  requires  the tax
benefits  associated  with  these  share-based  payments  to  be  classified  as
financing  activities in the Statement of Cash Flows, rather than operating cash
flows as required  under  previous  regulations.  The Company  recognized  stock
compensation  expense of $15,867 for the year ended  December  31,  2006.  Total
unvested stock based  compensation  expense totaled $15,867 at December 31, 2006
and had a total weighted average remaining term of 2.67 years. See Note 9.

Prior to the effective date, the Company accounted for stock-based  compensation
in  accordance  with APB  Opinion  No.  25,  "Accounting  for  Stock  Issued  to
Employees" and FASB  Interpretation  44,  "Accounting  for Certain  Transactions
Involving  Stock  Compensation."  Pursuant to these  accounting  standards,  the
Company recorded deferred compensation for share options granted to employees at
the date of grant  based on the  difference  between the  exercise  price of the
options and the market  value of the  underlying  shares at that date.  Deferred
compensation  was amortized to  compensation  expense over the vesting period of
the underlying  options.  No  compensation  expense was recorded for fixed stock
options that were granted to employees and directors at an exercise  price equal
to the fair market value of the common  stock at the time of the grant.  For the
year ended December 31, 2005,  the Company  recognized  compensation  expense of
$24,137.

Stock  options  granted to  non-employees  are recorded at their fair value,  as
determined  in  accordance  with SFAS No.  123 and  Emerging  Issues  Task Force
Consensus No. 96-18,  and recognized over the related  service period.  Deferred
charges for options granted to non-employees are periodically re-measured as the
options vest.

The following  table  illustrates  the effect on net loss and earnings per share
for the year ended  December  31, 2005 if the fair value  based  method had been
applied to all awards:

Loss applicable to common shareholders                             $(3,880,637)
Add: Stock-based employee compensation expense
     included in reported net income, net of related tax                24,137
Add/(Less): Total stock-based employee compensation expense
         determined under fair value based method for all
         awards, net of related tax effects                            (57,665)
                                                                 -------------
Pro forma net loss applicable to common shareholders             $  (3,914,165)
                                                                 =============
Net loss per share:
 Basic and diluted - as reported                                 $       (0.04)
                                                                 =============
 Basic and diluted - pro forma                                   $       (0.04)
                                                                 =============


                                      F-22
<PAGE>
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

STOCK-BASED COMPENSATION (CONTINUED)

The fair value in 2004 was estimated at the date of grant using the following
weighted average assumptions:


Risk free interest rate                                    2.3%
Dividend yield                                               0%
Expected life of option in years                            4.7 years
Expected volatility                                         129%


Option  valuation  models  require  the input of highly  subjective  assumptions
including  the  expected  life of the  options  and their  expected  volatility.
Because the Company's employee stock options have characteristics  significantly
different from those of traded  options,  and because  changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion,  the  existing  models do not  necessarily  provide a  reliable  single
measure of the fair value of its employee stock options.

The pro forma net income (loss) per share above is calculated using the weighted
average number of shares of common stock outstanding as described in Note 2.

ESTIMATES

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 balance sheet and the reported  amounts of revenues and expenses  during the
reporting periods. Actual results could differ from those estimates.


                                      F-23
<PAGE>
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In February  2006,  the FASB issued SFAS No. 155,  Accounting for Certain Hybrid
Financial Instruments, which amends SFAS No. 133 and SFAS No. 140 Accounting for
Transfers and Servicing of Financial Assets and  Extinguishment  of Liabilities.
SFAS 155 amends SFAS 133 to narrow the scope  exception  for  interest-only  and
principal-only   strips  on  debt   instruments  to  include  only  such  strips
representing  rights to receive a specified portion of the contractual  interest
or  principle  cash flows.  SFAS 155 also  amends  SFAS 140 to allow  qualifying
special-purpose  entities  to hold a  passive  derivative  financial  instrument
pertaining to beneficial interests that itself is a derivative instruments. This
statement is effective  for all financial  instruments  acquired or issued after
the beginning of the Company's first fiscal year that begins after September 15,
2006.  The  adoption  of the  provisions  of SFAS 155 is not  expected to have a
material impact on the Company's financial position or results of operations.

In June 2006,  the  Financial  Accounting  Standards  Board  (FASB)  issued FASB
Interpretation  No. 48,  Accounting for  Uncertainty in Income Taxes (FIN 48) an
interpretation  of FASB Statement No. 109,  Accounting  for Income Taxes,  which
clarifies the  accounting for  uncertainty in income taxes.  FIN 48 prescribes a
recognition  threshold and  measurement  attribute  for the financial  statement
recognition and measurement of a tax position taken or expected to be taken in a
tax  return.  The  Interpretation  requires  that the Company  recognize  in the
financial  statements,  the impact of a tax  position,  if that position is more
likely than not of being  sustained on audit,  based on the technical  merits of
the position.  FIN 48 also provides  guidance on  de-recognition of a previously
recognized tax position,  classification,  interest and penalties, accounting in
interim  periods  and  disclosures.  The  provisions  of FIN  48  are  effective
beginning January 1, 2007 with the cumulative effect of the change in accounting
principle recorded as an adjustment to the opening balance of retained earnings.
The Company does not expect this  pronouncement to have a material effect on the
financial position or results of operations of the Company.

In September 2006, the FASB issued Statement No. 157, "Fair Value Measurements".
This  Statement  defines fair value,  establishes a framework for measuring fair
value in generally accepted  accounting  principles and expands disclosure about
fair value  measurement.  The implementation of this guidance is not expected to
have any impact on the Company's consolidated financial statements.

In  addition,  in  September  2006,  the FASB  issued  SFAS No.  158  Employers'
Accounting for Defined Benefit Pension Plans and Other Postretirement Plans - an
amendment of FASB Statements No. 87, 88, 106 and 132(R).  This standard requires
recognition in the balance sheet of the funded status of pension  plans,  rather
than footnote disclosure,  which is current practice.  Publicly traded companies
are to reflect the new standard in financial  statements  ending after  December
15, 2006 and  non-public  companies are to apply it in  statements  ending after
June 15, 2007. As the Company does not maintain a defined  benefit  pension plan
and has no plans to do so,  this  standard  should  not have any  impact  on the
Company's financial position or results of operations.

In September  2006, the SEC issued Staff  Accounting  Bulletin  ("SAB") No. 108,
Considering   the  Effects  of  Prior  Year   Misstatements   when   Quantifying
Misstatements  in  Current  Year  Financial  Statements  (SAB  108),  to provide
guidance  on the  consideration  of the effects of prior year  misstatements  in
quantifying  current  year  misstatements  for  the  purpose  of  a  materiality
assessment. Under SAB 108, companies should evaluate a misstatement based on its
impact on the current year income statement, as well as the cumulative effect of
correcting  such  misstatements  that  existed in prior  years  existing  in the
current  year's  ending  balance  sheet.  SAB 108 will become  effective for the
Company in its fiscal year ending June 30,


                                      F-24
<PAGE>
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


2007.  The Company is currently  evaluating  the impact of the provisions of SAB
108 on its consolidated financial statements.  In February 2007, the FASB issued
SFAS No.  159,  The  Fair  Value  Option  for  Financial  Assets  and  Financial
Liabilities.  SFAS No.  159  permits  entities  to  choose to  measure  eligible
financial  instruments at fair value.  The unrealized  gains and losses on items
for which the fair value option has been elected should be reported in earnings.
The decision to elect the fair value  options is  determined on an instrument by
instrument  basis,  it should be  applied  to an  entire  instrument,  and it is
irrevocable.  Assets and liabilities measured at fair value pursuant to the fair
value  option  should be reported  separately  in the  balance  sheet from those
instruments  measured  using  another  measurement  attributes.  SFAS No. 159 is
effective  as of the  beginning  of the  first  fiscal  year that  begins  after
November 15, 2007.  The Company is currently  analyzing the potential  impact of
adoption of SFAS No. 159 to its consolidated financial statements.


NOTE 3: ACQUISITION AND DISPOSAL OF SUBSIDIARIES

On April 30,  2005,  the  Company  completed  the  acquisition  of a 55%  equity
interest in Innospective  Sdn Bhd ("ISS"),  for total  consideration of $85,152.
The Company paid $52,652  (RM200,080) in cash to acquire  122,000 shares of ISS'
common stock and issued 250,000 shares of the Company's common stock,  valued at
$32,500  (the  market  price  of the  Company's  common  stock  at the  date  of
issuance),  to a  consultant  as payment for  professional  fees on advising the
Company in this acquisition.  ISS is a systems  integration firm specializing in
the  design,   development  and  implementation  of  wireless  applications  and
electronic  solutions,  and  its  acquisition  is  believed  to  complement  the
Company's existing revenue sources.

The  following  table  summarizes  the estimated  aggregated  fair values of the
assets acquired and the liabilities assumed from ISS at April 30, 2005, the date
of the acquisition.

Property, furniture and equipment                     $         2,119
Accounts receivable                                            10,365
Cash                                                           54,033
Customer relationships                                         59,423
Accounts payable                                              (19,689)
Minority interest                                             (21,099)
                                                      ---------------
                                                      $        85,152
                                                      ===============

The following  unaudited  proforma  financial  information  presents  results of
operations  as if the  acquisition  of ISS had occurred at the  beginning of the
year ended December 31, 2005:

                                                      2006          2005

Revenue                                             $36,946,276    $24,189,876
                                                    ===========    ===========
Net income                                          $   657,384    $   283,334
                                                    ===========    ===========
Basic and diluted net income per common share       $      0.01    $         *
                                                    ===========    ===========

* Less than $0.01 per share

On  September  18,  2006,  DASB  acquired  1,050,000  shares  of PTSB  from  its
directors,  Mr.  Mustaffar  Bin Yacob  and  Dato'  Wan  Abdul  Razak for a total
consideration of RM567,500 (approx. $154,000). The balance is due in one year or
less from the date of  purchase  unless  extended  by the  parties and such debt
bears no interest. At December 31, 2006, the Company owes the directors $100,396
and such amount is included in accounts payable. See Note 9.

On September 29, 2004, the Company's  wholly-owned  subsidiary,  SDAM, completed
the acquisition of the entire  outstanding  voting securities of Gallant Service
Centre (M) Sdn Bhd ("GSC") and  securities  representing  an aggregate of 55% of
the total outstanding  voting securities of Gallant IT Holdings Sdn Bhd ("GIH"),
a leading Malaysian provider of information technology products and services.

GIH is involved in the  implementation  of information  technology (IT) projects
for businesses and educational institutions. GIH is also a registered government
contractor  licensed by Malaysia's  Ministry of Finance to provide or supply the
following products and services to government departments and agencies: computer
and related IT  services,  networking  products  and  services,  teaching  aids,
software products and services,  personal computers and related  peripherals and
services,  digital  cameras and related  equipment,  and multi-user  systems and
services.

GIH has the following wholly-owned subsidiaries:

i)   Gallant Zone (M) Sdn Bhd ("GZ"),  is a retailer of Apple computer  products
     and a Tier 1 Apple reseller.

ii)  Gallant Focus (M) Sdn Bhd ("GF"), is currently dormant.

iii) Eystar  Distribution  Sdn Bhd ("ED") (f/k/a Gallant IT Distribution (M) Sdn
     Bhd), is currently dormant.

                                      F-25
<PAGE>
NOTE 3: ACQUISITION AND DISPOSAL OF SUBSIDIARIES (CONTINUED)

During the third quarter of 2006, the Company determined that it was in the best
interests of SDA and its  shareholders  to reorganize  the  Company's  operating
subsidiaries.  Under  the  reorganization  plan,  the  assets  of our  principal
operating subsidiary Secured Digital Applications (M) Sdn Bhd ("SDAM") were sold
to an unrelated third party in September 18, 2006.

Through   reorganization,   the  Company   disposed   the  number  of  operating
subsidiaries of the companies associated.  The assets and liabilities of Gallant
Service  Centre Sdn Bhd  ("GSC"),  through  which the  Company  owned a majority
interest  in the Gallant  group of  companies,  and Armor Multi  Systems Sdn Bhd
("AMS") and Armor Multi  Services Sdn Bhd ("AMSSB") were sold to the third party
in September 18, 2006.

On  September  18,  2006,  DASB sold all the shares of SDAM which  included  its
subsidiary companies, AMS, AMSSB, a 60% owned subsidiary of AMS, GSC, GIT, a 55%
owned subsidiary of GSC and GIT's wholly-owned  subsidiaries GZ, GF and GID to a
third party and recognized a gain on disposal of $46,472.  The  receivable  from
the sale is due in one year or less from the date of sale unless extended by the
parties and the receivable bears no interest.  At December 31, 2006, the Company
was owed  $46,472  and such  amount is  included  in trade  and  other  accounts
receivables.

Results of discontinued operations are as follows:
<TABLE>
<CAPTION>
                                                      2006                  2005
                                                    --------              ---------
<S>                                            <C>                   <C>
Revenue                                        $       1,655,417     $       4,117,486

Cost of revenues                                         970,286             3,649,215
                                               -----------------     -----------------

Gross profit                                             685,131               468,271

Operating expenses                                       508,627               752,033
                                               -----------------     -----------------
Income (loss) from operations                            176,504              (283,762)

Other income (expense)                                    93,132                53,051
                                               -----------------     -----------------
Income (loss) before tax                                 269,636              (230,711)

Income tax                                              (219,604)              (11,510)
                                               -----------------     -----------------
Income (loss) before minority interest                    50,032              (242,221)

Minority interest                                         44,410                85,793
                                               -----------------     -----------------
Income (loss) from discontinued operations     $          94,442     $        (156,428)
                                               =================     =================
</TABLE>

NOTE 4: PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 2006:

     Office equipment                                      $           69,005
     Furniture and fixtures                                            45,645
     Tools and equipment                                              163,462
     Video communication hardware and peripherals                   2,206,431
     Computer software                                                613,838
     Office renovation                                                  8,615

                                                           ------------------
                                                                    3,106,996
      Less accumulated depreciation                                (2,114,458)
                                                           ------------------
                                                           $          992,538
                                                           ==================

Depreciation expense for the years ended December 31, 2006 and 2005 was $251,251
and $235,380, respectively.

                                      F-26
<PAGE>
NOTE 5: RELATED PARTY TRANSACTIONS

During the years ended December 31, 2006 and 2005, the Company had related party
transactions with the following entities:

LSH ASSET HOLDINGS SDN BHD ("LSH")

LSH is a company  wholly-owned by the Company's Chief Executive  Officer and his
wife.  LSH  billed  the  Company  management  fees  totaling  $120,000  for  the
respective years ended December 31, 2006 and 2005. LSH also billed DASB and SDAM
$26,099  and  $25,309  for  the  years  ended   December   31,  2006  and  2005,
respectively,  for administrative and clerical charges. LSH also made short term
advances to the Company from time to time for working  capital  purposes.  As of
December 31, 2006, the amount due to LSH was $17,927.  This amount is unsecured,
bears no  interest,  has no fixed  terms of  repayment,  and is  recorded in the
financial statements as "Amount due to an affiliated company".

SYNERVEST SDN BHD ("SSB")

A director of PTSB is a director of SSB and holds a 60% equity  interest in SSB.
As of December 31, 2006, long-term receivables, related parties, consisted of an
overdue  amount of $108,247  from SSB. This amount  primarily  arose in the year
ended  December  31,  1998,  when the  Company  sold to SSB  assets  used in the
operations of a subsidiary. These assets, comprised of analog video hardware and
peripherals and a patent for image display,  were sold to SSB for a total sum of
$1,661,175.  Due to the uncertainty of collection of the related  receivable,  a
related gain on the sale of the assets was deferred and is to be recognized only
after all costs have been  recovered  and as payments are  received.  During the
year ended  December 31,  2002,  payments  received by the Company  exceeded all
remaining  costs.  The Company  received $85,692 and $126,282 of the outstanding
receivable  during the years ended  December  31,  2006 and 2005,  respectively,
resulting in a  realization  of gain on sale of assets,  related  party for both
years.  The  deferred  gain  included  in the  balance  sheet  has been  reduced
accordingly.  The deferred gain on sale of assets  totaled  $108,247 at December
31,  2006,  and  will be  recognized  as a gain  as  payments  on the  long-term
receivable balance are received.

MY ARCHITECT ("MYA")

A  director  of PTSB is a  principal  partner  of MYA.  During  the years  ended
December 31, 2006 and 2005, the Company  received fees of $743,414 and $333,342,
respectively, from consulting contracts that it entered into with MYA. The terms
of  repayment  for the amount due from MYA are similar to terms  accorded to the
Company's other existing  customers.  At December 31, 2006, there was no balance
owed by MYA.

CHIEF EXECUTIVE OFFICER

As of December 31, 2006,  the Company  owed the Chief  Executive  Officer of the
Company  $10,578 for  short-term  cash  advances made to the Company for working
capital  purposes  from time to time.  The amount  owing to the Chief  Executive
Officer is unsecured,  bears no interest, has no fixed terms of repayment and is
recorded in the financial statements as "Amount due to a director".


NOTE 6: CAPITAL LEASE OBLIGATIONS

Certain  telecommunications  and other  assets  are leased  from a lessor  under
various  equipment lease financing  facilities.  Such leases have been accounted
for as capital leases. At the Company's request, a lessor agreed to an extension
on the  repayment  period in 1998 to enable  the  Company  to secure  additional
working capital  financing.  The rescheduled  lease terms for all capital leases
commenced  on December  1998 and are  payable on a monthly  basis with the final
payment due November  2006.  The Company will acquire  title to all assets under
capital leases, upon payment of the final lease payment.

Assets under these capital leases, which are included in property and equipment
at December 31, 2006, are as follows:
<TABLE>
<CAPTION>
                                    Original      Accumulated         Net
                                      Cost       Depreciation        Value
                               ---------------------------------------------
<S>                                  <C>            <C>            <C>
 Video communication
 hardware and peripherals      $     437,696  $    (427,261) $      10,435
                                   =========      =========      =========
</TABLE>
The Company has not made regular principal and interest payments due under three
capital lease  agreements  since July 2000.  During the year ended  December 31,
2006,  the Company  made  payments  to the lessor  totaling  $19,824.  The total
overdue  amount as of  December  31,  2006 is  $71,405,  which  includes  unpaid
principal  of $33,455  and unpaid  interest  of  $37,950.  Unpaid  principal  is
included in current  portion of capital lease  obligations on the balance sheet.
Unpaid  interest  is included in accrued  expenses  on the  balance  sheet.  The
Company's  Chief  Executive  Officer  (CEO),  who  is  also a  shareholder,  has
personally guaranteed payment under these capital lease agreements.  Pursuant to
the  terms of the  guarantee  agreement  dated  December  3,  1998,  the CEO has
guaranteed  to pay all amounts  which  become due under the terms of the capital
lease  agreements.  Subsequent to December 31, 2006 and through the date of this
report, the Company has not made any payments to the lessor.


                                      F-27
<PAGE>
NOTE 7: INCOME TAXES

For 2006 and 2005,  all income of the Company was derived from its activities in
Malaysia  and the United  States.  SDA and its American  subsidiaries  file as a
consolidated group. The Malaysian  companies file on an entity-by-entity  basis.
SDA and its American  subsidiaries  have not filed its federal and state returns
since 2002.

Provision  for income tax  liability  for the year ended  December  31, 2006 and
2005, respectively, is as follows:

                                                       Year ended December 31,

                                                         2006          2005
                                                       ---------     ---------

Current tax expense                                  $     43,226 $     41,081
Deferred tax expense                                       38,605       24,893
                                                     ------------ ------------
Provision for Malaysian income tax expense
     on the Company and its subsidiaries' income     $     81,831 $     65,974
                                                     ============ ============

The  difference  between  current  income tax  expense and  expected  income tax
expense  computed  applying the United States  Federal income tax rate of 34% to
income from  continuing  operations  before income tax and minority  interest is
explained as follows:

                                                       Year ended December 31,
                                                        2006            2005
                                                      ---------    -----------

     Expected income tax expense                     $  266,658    $  117,210
     Effect of lower Malaysian tax rate of 28%          (32,359)      (20,684)
     Benefit of operating loss carry forwards           (83,291)           --
     Other                                              (69,177)      (30,552)
                                                     ----------    -----------
     Income tax expense                              $   81,831    $   65,974
                                                     ==========    ===========

Temporary  differences  and carry forwards that give rise to deferred tax assets
and liabilities as of December 31, 2006 are as follows:

Deferred tax assets
       Net operating loss carry forward                     $          474,703
       Less:  valuation allowance                                     (451,197)
                                                            ------------------
       Deferred tax asset net of allowance                              23,506

Deferred tax liability
       Depreciation                                                   (232,229)
                                                            ------------------
Total net deferred tax liability                            $         (208,723)
                                                            ==================

                                      F-28
<PAGE>
NOTE 7: INCOME TAXES (CONTINUED)

The valuation  allowance  offsets the net deferred tax assets for which recovery
is not  considered  more likely than not. The  valuation  allowance is evaluated
considering positive and negative evidence about whether the deferred tax assets
will be realized. At that time of evaluation,  the allowance is either increased
or reduced;  reduction could result in the complete elimination of the allowance
if positive  evidence  indicates that the value of the deferred tax assets is no
longer  impaired and the  allowance is no longer  required.  The decrease in the
valuation  allowance  of  approximately  $122,000 was due to the decrease in net
operating loss of SDA and its American subsidiaries.

The  Company's  total net  operating  loss carry forward at December 31, 2006 is
$1,248,000, of which $84,000 relates to the Company's activities in Malaysia and
$1,164,000  relates to the Company's  activities in the United  States.  The net
operating  loss carry  forward  that  relates to  activities  in Malaysia can be
carried forward  indefinitely,  on an entity basis, while the net operating loss
carry  forward that relates to the  Company's  activities  in the United  States
expires  through  the year 2024.  The United  States  net  operating  loss carry
forward may be subject to annual  limitations  based on ownership changes in the
Company's  common  stock as provided by in section 382 of the  Internal  Revenue
Code.


NOTE 8: CONVERTIBLE TERM NOTES

On May 28,  2004,  the Company  entered  into a  Securities  Purchase  Agreement
("SPA") with an unrelated  investors  group (the "Master  Fund") under which the
Company  obtained  $500,000  funding through the sale of a Convertible Term Note
(the "Note") in the principal amount of $500,000. On August 1, 2005, the Company
repaid the term note in full.

Some of the significant terms of the Note included the following:

1.   The Note had a three-year term with a maturity date of May 28, 2007.
2.   Interest  rate of 2% above the "prime rate" as published by the Wall Street
     Journal from time to time subject to a floor of 6%. The monthly interest to
     be adjusted downward based on a minimum increase of 25 percent of the price
     of the common stock above the conversion price.
3.   Monthly principal payments of $14,706 commencing on September 1, 2004 with
     the unpaid principal balance and any unpaid and/or accrued interest due and
     payable on May 28, 2007.
4.   The principal and the interest  could be paid in cash or in common stock at
     the Master Fund's option, as defined.
5.   The Note was convertible into shares of the Company's common stock.
6.   The  Company  issued  warrants  to  purchase  up to  300,000  shares of the
     Company's common stock, subject to the conversion limitations as defined in
     the Note.  The  warrants  have a seven-year  term and an exercise  price of
     $0.40  per  share for the  first  100,000  shares,  $0.43 per share for the
     second 100,000 shares and $0.47 per share for the third 100,000 shares.
7.   The Company  had  granted a security  interest in all of its net assets and
     the net  assets of one of its  wholly-owned  subsidiaries,  until such time
     that the Note was satisfied.
8.   The SPA also  included a condition  that  required the Company to cause its
     common stock to be listed on the NASDAQ  Smallcap  Market,  NASDAQ National
     Market  System,  the American Stock Exchange or the New York Stock Exchange
     on or prior to November 15, 2004 ("the Listing Condition").

                                      F-29
<PAGE>
NOTE 8: CONVERTIBLE TERM NOTES (CONTINUED)

The Company  evaluated the Note's  conversion terms to determine if it gave rise
to an embedded  derivative that would need to be accounted for separately  under
SFAS No.  133 and  Emerging  Issues  Task Force  (EITF)  00-19  "Accounting  for
Derivative  Financial  Instruments  Indexed  to, and  Potentially  Settled in, a
Company's Own Stock." The Company determined that certain provisions,  including
a conversion price that was not fixed and the Listing Condition, resulted in the
conversion feature being an embedded derivative that must be bifurcated from the
Note and recorded as a derivative  liability.  On November 15, 2004, the Listing
Condition was removed. This resulted in the elimination of the need to bifurcate
the embedded derivative associated with the Note's conversion feature.

In 2004, the Company recorded an initial  liability of $246,681 for the value of
the  embedded  liability.  The  initial  value  of the  embedded  liability  was
amortized  over the term of the Note.  For the year ended December 31, 2005, the
Company  recognized  amortization  expense of  $179,862,  which is  included  in
interest expense.

In 2004, the Company recorded debt discount and  amortization  costs of $95,346,
which  included the initial  value of the warrants of $62,525.  These costs were
amortized over the term of the Note.  Amortization  in the amount of $65,511 for
the year ended  December 31, 2005 is included in  amortization  of debt issuance
costs in the statement of operations.

On August 1, 2005, the Company entered into an agreement for the early repayment
of the Note (see note 13) and recognized an early redemption penalty of $16,164.

A summary of the status of the  discounted  principal  and  interest  derivative
liability and issue costs of the Note is presented below:
<TABLE>
<CAPTION>
                                                                       Derivative   Issue
                                   Total     Interest  Principal       Liability    Costs               Net
                                ----------- --------- ------------ ------------ ----------------   -------------
<S>                   <C>       <C>         <C>       <C>          <C>          <C>                <C>
Balance as of January 1, 2005   $   426,470 $      -- $    426,470 $    179,862 $         65,511   $     181,097
Interest through July 31, 2005       18,381    18,381           --           --               --              --
Amortization through July 31, 2005       --        --           --     (140,098)         (51,536)        191,634
Conversion in April 2005 (a)        (52,770)   (8,653)     (44,117)     (17,119)          (6,076)        (20,922)
Conversion in May 2005 (b)          (17,412)   (2,707)     (14,705)      (5,534)          (1,947)         (7,224)
Conversion June 1, 2005 (c)         (17,249)   (2,544)     (14,705)      (5,359)          (1,869)         (7,477)
Conversion June 16, 2005 (d)        (14,705)       --      (14,705)      (5,360)          (1,869)         (7,476)
Conversion July 12, 2005 (e)        (20,445)   (2,304)     (18,141)      (6,392)          (2,214)         (9,535)
Early payment penalty                16,164    16,164           --           --               --              --
Repaid on August 1, 2005           (338,434)  (18,337)    (320,097)          --               --        (320,097)
                                ----------- --------- ------------ ------------ ----------------   -------------
Balance as of December 31,
2005                            $        -- $      -- $         -- $         -- $             --   $          --
                                =========== ========= ============ ============ ================   =============
</TABLE>
a)   On April 25, 2005, the Master Fund converted $20,922  discounted  principal
     of the note and  $8,653  of  accrued  interest  to  383,701  shares  of the
     Company's common stock.

b)   On May 5, 2005, the Master Fund converted  $7,224  discounted  principal of
     the note and $2,707 of accrued  interest to 140,311 shares of the Company's
     common stock.

                                      F-30
<PAGE>
NOTE 8: CONVERTIBLE TERM NOTES (CONTINUED)

c)   On June 1, 2005, the Master Fund converted $7,477  discounted  principal of
     the note and $2,544 of accrued  interest to 163,132 shares of the Company's
     common stock.

d)   On June 16, 2005, the Master Fund converted $7,476 discounted  principal of
     the note to 147,649 shares of the Company's common stock.

e)   On July 12, 2005, the Master Fund converted $9,535 discounted  principal of
     the note and $2,304 of accrued  interest to 250,000 shares of the Company's
     common stock.

f)   On August 1, 2005, the Company repaid the entire outstanding balance of the
     Note and redeemed the convertible preferred stock of a subsidiary (see Note
     9).


NOTE 9: SHAREHOLDERS' EQUITY

PREFERRED STOCK

On May 25,  2004,  the  Company  executed a share  exchange  agreement  with its
Chairman  and  Chief  Executive  Officer,  Mr.  Patrick  Lim,  whereby  Mr.  Lim
surrendered  8,000,000  shares of the  Company's  common  stock in exchange  for
100,000  shares  of the  Company's  newly  created  Series A Voting  Convertible
Preferred Stock (the "Voting  Preferred"),  which is convertible  into shares of
common stock at a fixed ratio of 80 shares of common stock for 1 share of Voting
Preferred  stock.  The  8,000,000  shares  were  returned  to  treasury  and are
available  for  re-issuance  at a future  date.  The Voting  Preferred  stock is
entitled to cumulative  dividends at $2.20 per annum, payable in common stock at
$0.28 per share.  On May 3, 2005, Mr. Lim and the Company  executed an amendment
to the Certificate of Designation of Series A Voting Convertible Preferred Stock
governing  payment of dividend on the Voting  Preferred.  Under the terms of the
amendment, Mr. Lim would have the option of receiving the dividend on the Voting
Preferred either in cash or shares of the Company's common stock.  Each share of
the Voting  Preferred is entitled to voting  rights  equivalent  to 80 shares of
common stock. The Series A preferred is subject to mandatory conversion 10 years
after its issuance.

On August 3, 2005, the Company's  Chairman and Chief Executive Officer converted
the entire 100,000 shares of the Company's Series A Voting Convertible Preferred
Stock  into   8,000,000   shares  of  common  stock,   which   resulted  in  the
reclassification  of $10,000 from the stated amount to $80 of common stock (par)
and $9,920  additional  paid-in  capital.  In  addition,  the  Company  paid the
$256,666 dividend due to Mr. Lim in cash in August 2005.

A summary of the status of the  Voting  Preferred  and  dividend  accrued  since
January 1, 2005 and changes through December 31, 2005 is presented below:
<TABLE>
<CAPTION>
                                                                                                  Stated
                                                                 Total          Dividend           Amount
                                                              -----------       ----------       -----------
<S>                   <C>                                     <C>               <C>              <C>
Balance as of January 1, 2005                                 $   138,333       $  128,333       $    10,000
Dividend through September 30, 2005                               128,333          128,333                --
Conversion to common stock in August 2005                         (10,000)              --           (10,000)
Payment in August 2005                                           (256,666)        (256,666)               --
                                                              -----------       ----------       -----------
Balance December 31, 2005                                     $        --       $       --       $        --
                                                              ===========       ==========       ===========
</TABLE>

                                      F-31
<PAGE>
NOTE 9: SHAREHOLDERS' EQUITY (CONTINUED)

On October 23, 2006, the Company  executed a share  exchange  agreement with LSH
whereby LSH exchanged  20,000,000  shares of the Company's  common stock held by
LSH in exchange  for 100,000  shares of the  Company's  newly  created  Series B
Voting  Convertible   Preferred  Stock  (the  "Voting   Preferred"),   which  is
convertible into shares of common stock at a fixed ratio of 200 shares of common
stock for 1 share of Voting Preferred stock. The 20,000,000 shares were returned
to treasury and are  available  for  re-issuance  at a future  date.  The Voting
Preferred  stock is entitled to receive  dividends in preference to any dividend
on the common  stock,  as,  when and upon such terms as may be  declared  by the
Company.

A summary of the status of the  Voting  Preferred  and  dividend  accrued  since
October 23, 2006 and changes through December 31, 2006 is presented below:

                                                                        Stated
                                                 Total     Dividend    Amount
                                              ----------- ----------- ---------
Balance as of January 1, 2006                 $        -- $        -- $      --
Series B Convertible preferred stock,
October 23, 2006                                   10,000          --    10,000
Dividend through December 31, 2006                     --          --        --
                                              ----------- ----------- ---------
Balance December 31, 2006                     $    10,000 $        -- $  10,000
                                              =========== =========== =========

PREFERRED STOCK OF A SUBSIDIARY

On May 28, 2004, the Company and one of the Company's wholly owned subsidiaries,
SDA  America,  Inc.  ("SDAA")  entered into the "SPA" with the Master Fund under
which SDAA issued 6,500,000 shares of Series A Convertible  Preferred Stock (the
"Series A Preferred") at a price of $1.00 per share,  which was convertible into
shares of the Company's  common stock,  and warrants to purchase up to 3,000,000
shares of the Company's common stock.

On August 1, 2005,  the Company  redeemed the  outstanding  Series A Convertible
Preferred Stock in full.

The  Series  A  Preferred  was  convertible,   subject  to  certain   conversion
limitations,  into common  stock of the Company at the option of the Master Fund
and is  entitled  to  cumulative  preferential  dividends  at a rate  per  annum
equivalent to the "prime rate" published in The Wall Street Journal from time to
time plus 2%, subject to a floor of 6% per annum. The warrants have a seven-year
term and an exercise  price of $0.40 per share for the first  1,000,000  shares,
$0.43 per  share for the  second  1,000,000  shares  and $0.47 per share for the
third 1,000,000 shares.  The Series A Preferred had a liquidation value of $1.00
per share.




                                      F-32
<PAGE>
NOTE 9: SHAREHOLDERS' EQUITY (CONTINUED)

PREFERRED STOCK OF A SUBSIDIARY (CONTINUED)

The Company determined that the nature of the cumulative  preferred dividends on
and the economic characteristics of the Series A Preferred,  required the Series
A Preferred to be classified  outside of permanent equity.  Similar to the Note,
the  Company  also  evaluated  the Series A  Preferred's  conversion  feature to
determine  if it gave  rise to an  embedded  derivative  that  would  need to be
accounted  for  separately  under  SFAS No.  133 and  EITF  00-19.  The  Company
concluded that certain  provisions  common to both it and the Note also resulted
in the Series A Preferred  conversion feature being an embedded  derivative that
must be bifurcated and recorded as a derivative liability.

Black-Scholes  valuations were performed on the derivative  liability associated
with the Series A  Preferred  and the  related  warrants.  In 2004,  the Company
recorded an initial derivative liability of $3,206,857. The initial value of the
derivative  liability was being accreted over three years based on  management's
estimate of the expected term.  For the year ended December 31, 2005,  accretion
amounted  to  $2,530,487  and  is  included  in  accretion  to  preferred  stock
redemption value.

In 2004, the Company recorded  issuance costs of $1,051,927,  which included the
initial value of the warrants of $625,248. These costs were amortized over three
years.  Amortization  of  issuance  costs  totaled  $782,202  for the year ended
December 31, 2005 and is included in accretion  to  preferred  stock  redemption
value.

On August 1, 2005,  the Company  entered into an  agreement  whereby it waived a
limitation  on the  number of shares  that  could be  converted  and held by the
Master Fund in order to permit conversions by the Master Fund under the Note and
Series A Preferred  into  9,756,098  shares of common stock.  The conversion was
made in  connection  with an agreement,  also dated August 1, 2005,  whereby the
Master Fund agreed to accept  $800,000,  payable in shares of common stock,  and
$6,343,000  in cash  (of  which  $6,105,000  represented  restricted  cash),  in
consideration for the early repayment of the Note and redemption of the Series A
Preferred.  Following the  repayment of the Note and  redemption of the Series A
Preferred  on August 1,  2005,  the  Company  refunded  the  entire  balance  of
approximately  $6.1  million in the  restricted  account to the Master  Fund and
recognized an early redemption penalty of $302,994.


                                      F-33
<PAGE>
NOTE 9: SHAREHOLDERS' EQUITY (CONTINUED)

PREFERRED STOCK OF A SUBSIDIARY (CONTINUED)

A summary  of the  status of the  Series A  Preferred  and  dividend  thereon is
presented below:
<TABLE>
<CAPTION>

                                                     Dividend/     Series A                              Net
                                                     Redemption    Stated       Embedded     Issue       Carrying
                                          Total      Penalty       Amount       Liability    Costs       Value
                                       -----------   -----------   -----------  -----------  ----------  ----------
<S>                   <C>            <C>            <C>           <C>           <C> <C>      <C>         <C>
Balance as of January 1, 2005        $   6,238,563  $    238,563  $  6,000,000   $2,530,487  $  782,202  $2,687,311
Dividend through
 September 30, 2005                        263,537       263,537            --           --          --          --
Amortization                                    --            --            --   (2,530,487)   (782,202)  3,312,689
Early redemption penalty                   302,994       302,994            --           --          --          --

Redeemed on August 1, 2005              (6,805,094)     (805,094)   (6,000,000)          --          --  (6,000,000)
                                     -------------   -----------   ------------ -----------  ----------  ----------
Balance December 31, 2005            $          --   $        --   $        --  $        --  $       --  $       --
                                     ==============  ===========   ============ ===========  ==========  ==========

The following table  summarizes the August 1, 2005  transaction  with the Master Fund:


                                                                                         Discounted
                                                                                         Principal/
                                                                                          Series A
                                                                    Interest/             Carrying
                                                  Total             Dividend               Amount
                                               -----------         -----------           -----------
Balance as of August 1, 2005
Term note                                   $        322,270    $          2,173    $          320,097
Series A Preferred                                 6,502,100             502,100             6,000,000
                                            ----------------    ----------------    ------------------
Total                                              6,824,370    $        504,273    $        6,320,097
Paid from restricted cash                         (6,105,138)   ================    ==================
Cash payment                                        (238,390)
Common stock issued (a)                             (800,000)
                                            ----------------
Early payment/redemption penalty (b)        $       (319,158)
                                            ================
</TABLE>
a)   9,756,098 shares of common stock issued at a price of $0.082 per share.

b)   The  August 1, 2005  transaction  resulted  in an early  payment/redemption
     penalty of $319,158,  of which $16,164 is attributable to interest  expense
     and  $302,994  represents  a reduction  to net income  available  to common
     shareholders.


                                      F-34
<PAGE>
NOTE 9: SHAREHOLDERS' EQUITY (CONTINUED)

COMMON STOCK

On June 2, 2005,  the Company  reissued  250,000 shares of common stock from its
treasury  stock to a consultant as payment for services  rendered to the Company
in connection with the acquisition of ISS.

The Company  reissued from its treasury  stock 199,218 shares of common stock on
June 2, 2005 at $0.103 per share for total  consideration  of  $20,466,  843,446
shares  of  common  stock on  August  9,  2005 at  $0.108  per  share  for total
consideration  of $91,092 and 295,632  shares of common stock on  September  23,
2005 at $0.085 per share for total  consideration of $25,129, to a consultant as
payment for services rendered to the Company during fiscal 2005. In August 2005,
the Company  reissued  609,756  shares of its common  stock from  treasury to an
investor for cash of $50,000, in private placement exercises.  These shares were
issued at a price equal to 85% of the average of the five lowest  closing prices
of the common  stock  during the  twenty-two  trading  days prior to the date of
issuance, as reported by Bloomberg News Services.

The Company signed a  compensation  agreement with a consultant on July 15, 2005
under which the Company is to issue an aggregate of 960,000 shares of its common
stocks to the consultant for services to be rendered for the twelve-month period
ending July 14,  2006.  The Company  reissued  from its treasury  stock  240,000
shares of common stock on each of the following dates; August 9, 2005, September
27, 2005, February 6, 2006 and May 3, 2006. The Company recognized  compensation
expense of $47,120 and $56,680 for the years ended  December  31, 2006 and 2005,
respectively.

On February 8, 2005, the Company issued 240,000 shares of common stock at $0.175
per share for a total  consideration of $42,000 and on May 18, 2005, the Company
issued  240,000  shares  of  common  stock  at  $0.125  per  share  for a  total
consideration of $30,000, to a consultant  pursuant to a compensation  agreement
dated July 15, 2004, under which the Company is to issue an aggregate of 960,000
shares of its common  stock to the  consultant  as payment  for  services  to be
rendered to the Company for the  twelve-month  period ended July 14,  2005.  The
480,000 shares were valued,  based on the respective market price on the date of
issuance,  and the Company  recognized  compensation  expense of $72,000 for the
year ended December 31, 2005.

On May 3, 2005,  the Company  issued  290,000 shares of its common stocks to two
officers  and  directors,  30,000  shares to an officer and 30,000  shares to an
employee,  respectively,  for exercising their stock options, at $0.20 per share
for an aggregate cash consideration of $70,000.

In private placement exercises in July 2005, the Company issued 5,791,463 shares
of its common stock to ten  investors at an aggregate  purchase  price of $0.082
per share  for a total  consideration  of  $474,900.  The  Company  also  issued
4,948,346 shares of its common stock to five investors at an aggregate  purchase
price of $0.087 per share for a total  consideration of $428,200.  The stock was
sold at 85% of the average of the five lowest closing prices of the common stock
during the  twenty-two  trading days prior to the closing  date,  as reported by
Bloomberg News Services.

                                      F-35
<PAGE>

In August 2004,  pursuant to a compensation  agreement between the Company and a
consultant,  the Company authorized the issuance of 120,000 shares of its common
stock to the  consultant  as payment for  services to be rendered to the Company
for the  twelve-month  period ending in July 2005. As of December 31, 2004,  the
Company  has not  issued  any of the  120,000  shares  of  common  stock  to the
consultant,  and has accrued $9,000 of compensation expenses. In September 2005,
the  consultant  agreed  with the  Company  to waive his  entitlement  under the
compensation agreement and the Company was relieved from the obligation to issue
120,000  shares of its  common  stock to the  consultant.  During the year ended
December 31, 2005, the Company reversed compensation expense of $16,800.

In November 2005, the Company issued 500,000 shares of common stock at $0.09 per
share for total consideration of $45,000 to a consultant as payment for services
to be rendered to the Company. For the year ended December 31, 2005, the Company
recognized compensation expense of $45,000.

On October 4, 2005 the Company  reissued from its treasury  stock 500,000 shares
of common  stock to a  consultant  pursuant to a  compensation  agreement  dated
September  12,  2005,  under  which  the  Company  is to issue an  aggregate  of
2,000,000  shares of its  common  stock to the  consultant  for  services  to be
rendered to the Company for the  twelve-month  period ending September 12, 2006.
On February 21, 2006,  June 12, 2006 and August 10, 2006, the Company issued the
remaining 1,500,000 shares of common stock. The Company recognized  compensation
expense of $143,000 and $61,111 for the years ended  December 31, 2006 and 2005,
respectively.

On January 4, 2006, the Company  reissued from its treasury stock 800,000 shares
of common stock to an investor at $0.10 per share for a total  consideration  of
$80,000 in a private placement exercise.

On February 8, 2006, the Company reissued  2,000,000 shares of common stock from
its treasury stock to a consultant  pursuant to a compensation  agreement  dated
January 30, 2006 as payment  for  services  rendered to the Company to develop a
shopping  portal for a duration  of  twelve-months  with effect from the date of
agreement. For the year ended December 31, 2006, the Company recognized $168,667
as compensation expense and $15,333 as deferred compensation based on the market
value of $0.092 per share on the date of agreement.

On February 22, 2006, the Company  reissued  200,000 shares of common stock from
its treasury stock to a consultant pursuant to a compensation  agreement with an
effective  date of November  19, 2005 as payment  for  services  rendered to the
Company over a two year period with effect from the date of  agreement.  For the
year ended  December 31, 2006,  the Company  recognized  $9,225 as  compensation
expense and $7,175 as deferred  compensation based on the market value of $0.082
per share on the date of the agreement.

                                      F-36
<PAGE>
NOTE 9: SHAREHOLDERS' EQUITY (CONTINUED)

COMMON STOCK (CONTINUED)

On March 8, 2006, the Company  reissued  447,058 shares of common stock from its
treasury  stock to a consultant as payment for services  rendered to the Company
for total  consideration of $40,235 based on the market value of $0.09 per share
on the date of issuance.  On June 12, 2006, the Company issued  1,345,495 shares
of common stock to a consultant as payment for services  rendered to the Company
for total  consideration  of  $116,308  based on the market  value of $0.086 per
share.

On June 12,  2006,  the Company  issued  1,000,000  shares of common  stock to a
consultant pursuant to a compensation  agreement dated April 23, 2006 as payment
for services rendered to the Company over a one-year period with effect from the
date of agreement.  For the year ended December 31, 2006, the Company recognized
$51,333  as   compensation   expense  and   $25,667  as  deferred   compensation
respectively  based on the  market  value of $0.077 per share on the date of the
agreement.

On June 12,  2006,  the  Company  issued  185,759  shares of  common  stock to a
consultant  as payment for  advance of working  capital to a  subsidiary  of the
Company for total consideration of $15,000 based on the market value of $0.08075
per share on the date of issuance.

On July 27, 2006, the Company issued 650,457  restricted  shares of common stock
and 650,457  shares of common  stock to a  consultant  as payment  for  services
rendered to the Company for a total consideration of $96,268 based on the market
value of $0.074 per share on the date of issuance.

On August 23, 2006, the Company  reissued from its treasury stock 350,000 shares
of common stock to a consultant as payment for services rendered to the Company.
The Company recognized $24,150 as compensation expense based on the market value
of $0.069 per share on the date of issuance.

On October 23,  2006,  the Company  reacquired  20,000,000  shares of its common
stock  pursuant to a share  exchange  agreement  with LSH Asset Holdings Sdn Bhd
("LSH"),  an entity controlled by its Chairman and Chief Executive Officer,  Mr.
Patrick Lim, whereby Mr. Lim exchange  20,000,000 shares of the Company's common
stock held by LSH in exchange for 100,000 shares of the Company's  newly created
Series B Voting Convertible  Preferred Stock (the "Voting Preferred"),  which is
convertible into shares of common stock at a fixed ratio of 200 shares of common
stock for 1 share of Voting  Preferred  stock.  These  shares  were  returned to
treasury and are available for re-issuance at a future date.

The Company signed a compensation  agreement with a consultant on April 15, 2006
under  which the Company is to issue an  aggregate  of  1,000,000  shares of its
common stocks to the consultant for services to be rendered for the twelve-month
period ending April 15, 2007.  The Company issued 250,000 shares of common stock
on each of the following dates;  October 16, 2006, November 22, 2006 and January
15, 2007. The Company  recognized  compensation  expense of $31,396 for the year
ended  December  31, 2006.  The Company is scheduled to issue the final  250,000
shares on or about April 17, 2007.

On November 28, 2006, the Company issued  1,500,000  shares of common stock to a
consultant  pursuant to a compensation  agreement dated November 1, 2006,  under
which the Company is to issue an  aggregate  of  2,000,000  shares of its common
stock for  services to be rendered  for the  six-month  period  ending April 30,
2007. For the year ended December 31, 2006, the Company recognized  compensation
expense of $41,000.

                                      F-37
<PAGE>
NOTE 9: SHAREHOLDERS' EQUITY (CONTINUED)

COMMON STOCK (CONTINUED)

On November 29 2006,  the Company  reissued  from its treasury  stock  2,000,000
shares  of  common  stock  to an  investor  at  $0.0558  per  share  for a total
consideration of $111,600 in a private placement exercise. On December 29, 2006,
the Company also issued  3,000,000  shares of its common stock to an investor at
$0.0612 per share for a total consideration of $183,600 in a private placement.

On December 4, 2006,  the Company  issued  504,048  shares of common  stock to a
consultant   as  payment  for  services   rendered  to  the  Company  for  total
consideration  of $29,235  based on the market  value of $0.058 per share on the
date of issuance.  On December 22, 2006, the Company  reissued from its treasury
stock  1,040,080  shares of common stock to a consultant as payment for services
rendered to the Company for total  consideration  of $64,485 based on the market
value of $0.062 per share on the date of issuance.

On December 5, 2006, the Company reissued from its treasury stock 200,000 shares
of common  stock to a  consultant  pursuant to a  compensation  agreement  dated
December 4, 2006,  under which the Company is to issue an  aggregate  of 600,000
shares of its common  stock to the  consultant  as payment  for  services  to be
rendered to the Company for the six-month  period  ending June 4, 2007.  For the
year ended December 31, 2006,  the Company  recognized  compensation  expense of
$6,333.  On  February 9, 2007,  the Company  reissued  from its  treasury  stock
100,000 shares of common stock. This agreement was terminated on March 30, 2007.

On December 22, 2006,  the Company  reissued  from its  treasury  stock  983,607
shares of common stock at $0.061 per share for a total  consideration of $60,000
to one of the directors of PTSB as a partial  settlement for the  acquisition of
PTSB shares from such director. See Note 3.

On February 6, 2007, the Company reissued from its treasury stock 425,423 shares
of common stock to a consultant as payment for services  rendered to the Company
for total consideration of $26,376 based on the market value of $0.062 per share
on the date of issuance.

As of December 31,  2006,  the Company had a balance of  12,851,203  repurchased
shares in its treasury stock

STOCK AWARDS

On October 21, 2006, the Company approved an award of incentive  compensation to
the Chief Executive Officer and Chairman Patrick Lim of 500,000 shares of common
stock per year if the Company in that year  achieves a  compounded  growth of at
least fifteen (15) percent.  In 2006,  the Company  achieved the growth rate and
accrued  compensation  expense of $33,000 for the year ended  December 31, 2006.
The shares will be issued in 2007.


                                      F-38
<PAGE>
NOTE 9: SHAREHOLDERS' EQUITY (CONTINUED)

STOCK OPTIONS

On August 3, 2004, the Company granted certain officers, directors and employees
of the Company options to purchase up to an aggregate of 2,000,000 shares of the
Company's common stock at $0.20 per share.  The options are exercisable  through
August     2009,     contingent     upon     continuous     service    by    the
officers/directors/employees  through  specified  dates.  500,000  options  were
exercisable on October 3, 2004,  200,000 options were exercisable on February 3,
2005,  500,000  options were  exercisable  on August 3, 2005,  and the remaining
800,000  options are  exercisable  in equal numbers on each of February 3, 2006,
2007, 2008 and 2009, respectively.

In addition,  on August 3, 2004 the Company granted options to purchase  100,000
shares  of the  Company's  common  stock at $0.12  per  share to an  independent
director as compensation for serving on the Company's Board of Directors.  These
options are exercisable  with immediate  effect through August 2009.  250,000 of
the  options  were  exercised  on April  28,  2005 for a cash  consideration  of
$50,000,  40,000 of the  options  were  exercised  on April 29,  2005 for a cash
consideration of $8,000, 60,000 of the options were exercised on May 3, 2005 for
a cash  consideration of $12,000.  Compensation  expense amounted to $24,137 for
the year ended December 31, 2005.

On January  31,  2006,  100,000 and 300,000  options,  which were  granted to an
independent  director with an option to purchase the  Company's  common stock at
$0.12 and $0.20 per share,  respectively,  were  forfeited when he resigned from
the Company.

On  December  4, 2006,  203,000  and  297,000  options  were  granted to certain
officer,  director  and  employee of the Company  with an option to purchase the
Company's   common  stock  at  $0.0638  and  $0.058  per  share,   respectively.
Black-Scholes  valuations  were  performed on the options based on the following
assumptions;  term - five years; risk-free rate - 4.76%; volatility - 117.6% and
a dividend yield of 0%. The Company recognized  compensation  expense of $23,898
for the year ended December 31, 2006. The options were exercised immediately for
cash consideration of $30,177.

                                      F-39
<PAGE>
NOTE 9: SHAREHOLDERS' EQUITY (CONTINUED)

STOCK OPTIONS (CONTINUED)

A summary of the status of the Company's stock options as of December 31, 2006
and 2005, and changes during 2006 and 2005, is presented below:
<TABLE>
<CAPTION>
   Options Outstanding                             2006                                2005
  ------------------------                     --------------------------------    --------------------------------
                                                   Shares        Exercise Price          Shares       Exercise Price
                                               ---------------  ----------------    ---------------   --------------
<S>                                                  <C>                <C>               <C>                 <C>
   For officers and employees:
    Beginning of the year                            1,080,000          $ 0.200           2,100,000           $0.196
    Granted
     In December 2006                                  500,000          $0.0603                   -
    Exercised                                         (203,000)         $0.0638            (350,000)          $0.200
    Exercised                                         (297,000)         $ 0.058                   -
    Forfeited                                                -                             (100,000)          $0.120
    Forfeited                                                -                             (570,000)          $0.200
                                               ---------------                      ---------------
    End of the year                                  1,080,000          $ 0.200           1,080,000           $0.200
                                               ===============                      ===============
    Options exercisable at year end                    840,000          $ 0.200             760,000           $0.200
   For consultants:
    Beginning of the year                                    -                              300,000           $0.300
    Granted
    Exercised
    Forfeited                                                -                             (300,000)          $0.300
                                               ---------------                      ---------------
    End of the year                                          -                -                   -                -
                                               ===============                      ===============
    Options exercisable at year end                          -                -                   -                -
                                               ===============                      ===============
</TABLE>

                                      F-40
<PAGE>
NOTE 9: SHAREHOLDERS' EQUITY (CONTINUED)

STOCK OPTIONS (CONTINUED)

The following table summarizes information about options outstanding at December
31, 2006 and 2005.
<TABLE>
<CAPTION>
                                                                    Options Outstanding
                                                 ---------------------------------------------------------
                                             Number         Weighted Average Remaining     Weighted Average
                                           Outstanding           Contractual Life           Exercise Price
                                         ---------------  ----------------------------------------------------
<S>                                            <C>                     <C>                      <C>
   As of December 31, 2006:
    For officers and employees                 1,080,000               2.67                     $0.200
    For consultants                                    -                 -                        -
                                           -------------                                   -----------
   Total                                       1,080,000               2.67                     $0.200
                                           =============                                   ===========
   As of December 31, 2005:
    For officers and employees                 1,080,000               3.67                     $0.200
    For consultants                                    -                 -                        -
                                           -------------                                   -----------
   Total                                       1,080,000               3.67                     $0.200
                                           =============                                   ===========

</TABLE>
WARRANTS

On October 21, 2006,  the Company  approved the issuance to the Chief  Executive
Officer  warrants  to purchase  6,300,000  shares of the Company at price at 110
percent of the market price at the close of business on October 23,  2006,  such
warrants  to be  issued  in three  equal  annual  installments  and which may be
exercised on or before October 21, 2011. Black-Scholes valuations were performed
on the  warrants.  The initial  value of the warrants was $257,518  based on the
following  assumptions;  term - three to five years;  risk-free  rate - 4.76% to
4.8%;  volatility - 84.1% to 118.5% and a dividend  yield of 0%. These costs are
being amortized over three years based on the estimate of the expected term. The
Company recognized  compensation  expense of $35,160 for the year ended December
31, 2006.

                                      F-41
<PAGE>
NOTE 9: SHAREHOLDERS' EQUITY (CONTINUED)

WARRANTS (CONTINUED)

A summary of the status of the Company's  stock warrants as of December 31, 2006
and 2005, and changes during 2006 and 2005, is presented below:
<TABLE>
<CAPTION>
              Warrants Outstanding                            2006                                2005
            ------------------------            --------------------------------    --------------------------------
                                                   Shares        Exercise Price          Shares       Exercise Price
                                                  ------------   --------------     ---------------   --------------
<S>                                                  <C>             <C>              <C>               <C>
   For officers and employees:
    Beginning of the year                                    -                -                   -                -
    Granted
     In October 2006                                 6,300,000         $ 0.0649                   -                -
    Exercised                                                -                -                   -                -
    Forfeited                                                -                -                   -                -
                                               ---------------                      ---------------
    End of the year                                  6,300,000         $ 0.0649                   -                -
                                               ===============                      ===============
    Warrants exercisable at year end                         -                -                   -                -


The following table summarizes information about warrants outstanding at
December 31, 2006 and 2005.

                                                                    Warrants Outstanding
                                                 ---------------------------------------------------------
                                             Number         Weighted Average Remaining         Weighted Average
                                           Outstanding           Contractual Life               Exercise Price
                                         ---------------  --------------------------------------------------------
   As of December 31, 2006:
    For officers and employees                 6,300,000               4.77                        $   0.0649
    For consultants                                    -                 -                                  -
                                           -------------                                        -------------
   Total                                       6,300,000               4.77                        $   0.0649
                                           =============                                        =============
   As of December 31, 2005:
    For officers and employees                         -                  -                                 -
    For consultants                                    -                  -                                 -
                                          --------------                                        -------------
   Total                                               -                  -                                 -
                                          ==============                                        =============

</TABLE>
NOTE 10: SIGNIFICANT CONCENTRATIONS

Two customers accounted for the following revenue for the years ended December
31, 2006 and 2005:

                                               December 31,
                          .                 2006              2005
                                      ----------------     ---------------

Customer 1                                 48%                  49%
Customer 2                                 47%                  48%
                                      ----------------     ---------------
Total                                      95%                  97%
                                      ================     ===============

                                      F-42
<PAGE>
At December 31, 2006, two customers accounted for substantially all of the trade
accounts receivable.

Three  suppliers  accounted for  substantially  all cost of revenues  during the
years ended  December 31, 2006 and 2005.  The Company is not dependent  upon one
supplier to provide the services that it requires but made a strategic  decision
to engage the  services of only a small  number of  suppliers  after taking into
consideration  the quality of service and  competitive  pricing  being  offered.
Should the need arise, the Company could utilize  alternative  suppliers for the
services that it requires.


NOTE 11: COMMITMENTS

Operating Leases

The Company  maintains it corporate  office in Saddle Brook, New Jersey pursuant
to a written  co-occupancy  agreement  with the  minority  equity  holder in SDA
Worldwide,  Intellego,  LLC. The co-occupancy agreement expires on September 29,
2007 and is not subject to automatic renewal.

The  Company  leased  its  principal  executive  offices  in  Malaysia  under  a
three-year  operating  lease from an  unaffiliated  party at a monthly rental of
RM12,000  (approximately  $3,240).  The lease,  which expires on March 14, 2007,
provided for a two-year  renewal option  thereafter.  The Company has reached an
agreement  to renew the lease for two years,  commencing  March 15,  2007,  at a
monthly rent of RM14,000.00 (approximately $3,780).

Rent  expense  under  these  leases was  $40,616 and $42,360 for the years ended
December 31, 2006 and 2005, respectively.


No. Location of Property           Leased by  Lease Commence On  Lease Expire On
--- --------------------           ---------  -----------------  ---------------
1.  Petaling Jaya, Selangor,
    Malaysia                         DASB        03/15/2007       03/14/2009
2.  Saddle Brook, New Jersey*        SDAW        11/01/2005       09/29/2007


* Property occupied under co-occupancy agreement with Intellego, LLC.

Future minimum lease payments under the  non-cancelable  lease agreements are as
follows:

           Year ending December 31:
           ----------------------------------
           2007                                    $           44,600
           2008                                                45,700
           2009                                                 7,600
                                                   ------------------
                                                   $           97,900
                                                   ==================

                                      F-43
<PAGE>
                                  Exhibit 21.1

LIST OF SUBSIDIARIES

The following is a list of all  subsidiaries  of Secured  Digital  Applications,
Inc. as of December 31, 2006.

                                                         Jurisdiction of
Name of Subsidiary                                Incorporation or Organization
--------------------------------------------------------------------------------

SDA Worldwide, Inc.(SDAW),                                    Delaware
a 80% owned subsidiary of the Company

China Sea Trade Company, Inc.(CST),                           Delaware
a wholly owned subsidiary of  SDAW

DigitalApps Sdn Bhd (DASB),                                   Malaysia
a wholly owned subsidiary of the Company

Perwimas Telecommunications Sdn Bhd (PTSB),                   Malaysia
a 95% owned subsidiary of DASB

DigitalApps Technologies Sdn Bhd (DAT)                        Malaysia
a wholly owned subsidiary of DASB

Digital Image ID Sdn Bhd (DID)                                Malaysia
a wholly owned subsidiary of DASB

DigitalApps Media Sdn Bhd (DAM)                               Malaysia
a wholly owned subsidiary of DASB

Digital Kiosk Technologies Sdn Bhd (DKT)                      Malaysia
a wholly owned subsidiary of DID

Ispec Sdn Bhd                                                 Malaysia
A 55% owned subsidiary of DAT

                                      F-44