**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**First
      Amended Form 10-K/A**





x
            ANNUAL
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934





**For
      the fiscal year ended December 31, 2007**





OR





o
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934





For
      the
      transition period from_____________ to _____________.




**Commission
      file number** **000-49933**





**JOYTOTO
      USA, INC.**


(Exact
      name of registrant as specified in its charter)





**Nevada**
            **95-4886472**(State
                or other jurisdiction of
              incorporation
                or organization)
            (I.R.S.
                Employer
              Identification
                No.)





**3000
                Scott Boulevard, Suite 206**
              **Santa
                Clara, CA**
            **95054**(Address
                of principal executive offices)
            (Zip
                Code)





**Registrant’s
      telephone number, including area code (408) 970-8050**





Securities
      registered pursuant to Section 12(b) of the Act:





Title
                of each class
            
            Name
                of each exchange on which registeredNone
            
            None





Securities
      registered pursuant to Section 12(g) of the Act:





Common
      Stock, par value $0.001


(Title
      of
      class)





Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act. Yes  o  No x





Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or 15(d) of the Act. Yes  x No 
      o





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










Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K is not contained herein, and will not be contained, to the best
      of registrant's knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-K or any amendment to
      this
      Form 10-K. o





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




Large
                  accelerated filer o
              Accelerated
                  filer  oNon-accelerated
                  filer  o
              Smaller
                  reporting company x




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




Aggregate
      market value of the voting stock held by non-affiliates: $25,098,132 as
      based
      on last reported sales price of such stock. The voting stock held by
      non-affiliates on that date consisted of 38,612,510 shares of common
      stock.





**Applicable
      Only to Registrants Involved in Bankruptcy Proceedings During the Preceding
      Five
      Years:**





Indicate
      by check mark whether the registrant has filed all documents and reports
      required to be filed by Sections 12, 13 or 15(d) of the Exchange Act of 1934
      subsequent to the distribution of securities under a plan confirmed by a court.
      Yes oNo o





**Applicable
      Only to Corporate Registrants**





Indicate
      the number of shares outstanding of each of the registrant’s classes of common
      stock, as of the latest practicable date. As of March 31, 2008, there were 153,612,510 shares
      of common stock, par value $0.001, issued and outstanding.





**Documents
      Incorporated by Reference**





List
      hereunder the following documents if incorporated by reference and the Part
      of
      the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
      incorporated: (1) Any annual report to security holders; (2) Any proxy or
      information statement; and (3) Any prospectus filed pursuant to rule 424(b)
      or
      (c) of the Securities Act of 1933. The listed documents should be clearly
      described for identification purposes (e.g., annual report to security holders
      for fiscal year ended December 24, 1980). None.







**Joytoto
      USA, Inc** **.**





**TABLE
      OF CONTENTS**





**PART
                I**ITEM
                1 – BUSINESS
            **2**ITEM
                1A – RISK FACTORS
            **5**ITEM
                1B – UNRESOLVED STAFF COMMENTS
            **9**ITEM
                2 - PROPERTIES
            **10**ITEM
                3 - LEGAL PROCEEDINGS
            **10**ITEM
                4 – SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
            **10****PART
                II**ITEM
                5 – MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
                ISSUER PURCHASES OF EQUITY SECURITIES
            **11**ITEM
                6 – SELECTED FINANCIAL DATA
            **12**ITEM
                7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATION
            **12**ITEM
                7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
                RISK
            **16**ITEM
                8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
            **16**ITEM
                9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
                FINANCIAL DISCLOSURE
            **16**ITEM
                9A – CONTROLS AND PROCEDURES
            **17**ITEM
                9A(T) – CONTROLS AND PROCEDURES
            **18**ITEM
                9B – OTHER INFORMATION
            **18****PART
                III**ITEM
                10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNACE
            **18**ITEM
                11 – EXECUTIVE COMPENSATION
            **21**ITEM
                12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
                RELATED STOCKHOLDER MATTERS
            **25**ITEM
                13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
                INDEPENDENCE
            **26**ITEM
                14 – PRINCIPAL ACCOUNTING FEES AND SERVICES
            **27****PART
                IV**ITEM
                15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES
            **29**







**PART
      I**





**Explanatory
      Note**





Joytoto
      USA, Inc., has restated its Annual Report on Form 10-K. This Annual Report
      is
      for the year ended December 31, 2007, and was originally filed with the
      Commission on Form 10-K on April 16, 2008. The purpose of this amended Annual
      Report is to make corrections to the Annual Report, primarily to the Financial
      Statements (Item 8), the Management’s Discussion and Analysis (Item 7), and
      Executive Compensation (Item 11) relating to the shares issued to our three
      executive officers under their employment agreements. Regarding the financial
      statements, in our original Annual Report we recorded the total value of the
      shares granted to our executive officers as selling, general and administrative
      expenses. Upon further review we believe that these shares should be recorded
      over the life of the employment agreements, as each segment of the shares are
      no
      longer subject to our right to repurchase, which is at a rate of
      1/36 th for the
      36 months starting November 1, 2007. As restated, only 2/36ths are now being
      recorded as selling, general and administrative expenses as of December 31,
      2007, the shares for November 2007 and December 2007, which, as of December
      31,
      2007, were the shares that were no longer subject to our right to repurchase.
      As
      a result of this restatement, our selling, general and administrative expenses
      for the year ended December 31, 2007 have decreased from $120,534,078 to
      $49,753,967 and our net loss is now ($50,821,559) for this same period, as
      opposed to the net loss of ($121,601,670) originally reported. We also included
      the fair market of the shares for each employee that are no longer subject
      to
      our right to repurchase in the executive compensation table as a stock grant
      award.





This
      First Amended Annual Report includes forward-looking statements within the
      meaning of the Securities Exchange Act of 1934 (the “Exchange Act”). These
      statements are based on management’s beliefs and assumptions, and on information
      currently available to management. Forward-looking statements include the
      information concerning possible or assumed future results of operations of
      the
      Company set forth under the heading “Management's Discussion and Analysis of
      Financial Condition or Plan of Operation.” Forward-looking statements also
      include statements in which words such as “expect,” “anticipate,” “intend,”
“plan,” “believe,” “estimate,” “consider” or similar expressions are
      used.





Forward-looking
      statements are not guarantees of future performance. They involve risks,
      uncertainties and assumptions. The Company's future results and shareholder
      values may differ materially from those expressed in these forward-looking
      statements. Readers are cautioned not to put undue reliance on any
      forward-looking statements.





**ITEM
      1 – BUSINESS**





**Business
      Overview** ****





**History
      and Development of the Company**





Joytoto
      USA, Inc., formerly BioStem, Inc. (the “Company,” “we,” and “us”) was
      incorporated on November 2, 2001, in the State of Nevada, as Web Views
      Corporation. In June 2003, we acquired 100% of the issued and outstanding shares
      of Cascade Mountain Mining Corp., pursuant to an exchange agreement. As a result
      of the acquisition and the change in focus of our business, on June 17, 2003,
      we
      changed our name from Web Views Corporation to Cascade Mountain Mining Company,
      Inc.





On
      January 7, 2005, we changed our name from Cascade Mountain Mining Company,
      Inc.
      to National Parking Systems, Inc., in anticipation of an exchange agreement
      entered into on January 13, 2005, whereby we acquired 100% of the issued and
      outstanding shares of ABS Holding Company, Inc., a Nevada corporation and BH
      Holding Company, Inc., a Nevada corporation.




2





On
      November 18, 2005, we changed our name from National Parking Systems, Inc.
      to
      BioStem, Inc. in contemplation of the closing of an Agreement and Plan of Merger
      we had entered into with Cryobanks International, Inc., a stem cell company.
      Due
      to the failure of Cryobanks to satisfy certain conditions of the closing of such
      Agreement, we terminated the Agreement in September 2007, and sought a new
      acquisition.





O n
      October
      12, 2007, we entered into a Stock Exchange Agreement with Joytoto Co., Ltd.,
      a
      Korean company (“Joytoto
      Korea”) ,
      and
      Joyon Entertainment Co., Ltd, a Korean company, to purchase 100% of the issued
      and outstanding capital stock of Joyon Entertainment, Inc., a Delaware
      corporation (“JEI”), in exchange for 115,000,000 shares of our common stock
      (after giving effect to a one-for-forty reverse split of our common stock)
      as
      well as the divestment of our two subsidiaries, BH Holding Company, Inc. and
      ABS
      Holding Company, Inc. Effective on October 31, 2007, our name was changed to
      Joytoto USA, Inc. and our common stock commenced trading under the new symbol
      “JYTO”.





We
      are a
      majority owned subsidiary of Joytoto Korea, a Korean public company traded
      on
      the KOSDAQ. We have
      one wholly-owned subsidiary, JEI, and two sub-subsidiaries, Joytoto
      Technologies, Inc., a Nevada corporation (“JTI”) and Joytoto America, Inc., a
      California corporation (“JAI”), both of which are wholly-owned subsidiaries of
      JEI.





**Products
      and Services**





Our
      operations are organized into two business segments: Consumer Electronics and
      Video Games. Neither of our business segments has generated any
      revenues.





Consumer
      Electronics





Through
      our sub-subsidiary,
      JTI, we are
      a
      virtual, original equipment manufacturer (“OEM”) of consumer electronics for
      retailers located throughout the world. Effective on June 11, 2007, JTI entered
      into an Exclusive Distributorship Agreement with Joytoto Korea, whereby JTI
      was
      appointed as the exclusive worldwide distributor of Joytoto Korea’s MP3 products
      and other consumer electronic devices. Joytoto Korea will complete all purchase
      orders existing or pending as of the date of the Exclusive Distributorship
      Agreement. In addition, Joytoto Korea will complete any additional purchase
      orders until such time as JTI is able to fulfill such orders, which is expected
      to be in the first quarter of 2008. It is anticipated that Joytoto Korea will
      transfer to JTI all of its MP3 products business as described in the Exclusive
      Distributorship Agreement at such time as we are able to fulfill all new
      purchase orders for such products. We hope to enter into direct contractual
      relationships with Joytoto Korea’s primary customers at that time.





In
      September 2006, Joytoto Korea entered into an agreement with Best Buy Co.,
      Inc.
      (“Best Buy”) to develop and manufacture an MP3 player to be sold under Best
      Buy’s in-house brand, Insignia. To date, Joytoto Korea has developed three
      models of the Insignia MP3 player for Best Buy. Product features of the top
      of
      the line Insignia Pilot include:





·
            8GB
                internal flash storage;


·
            Built-in
                Bluetooth wireless audio that enables users to listen to music with
                compatible Bluetooth headphones;


·
            2.4"
                high-resolution LCD color display with wide viewing
                angles;






3




·
            Built-in
                digital FM tuner;


·
            Secure
                digital card expansion slot for additional memory
                capacity;


·
            High-speed
                USB 2.0 interface; and


·
            PC
                and Mac compatible.





Retail
      prices for the Insignia Pilot line range from $179 for the 8 GB model to $139
      for the 4 GB model. Prices for the Insignia Sport line range from $119 for
      the 4
      GB model to $89 for the 2 GB model.





In
      February 2007, Joytoto Korea also entered into an OEM agreement to develop
      and
      manufacture 200,000 units of the IRiver X20 multi-media device for South Korean
      consumer electronics firm Reigncom. Product features of the X-20 include:





·
            8GB
                internal flash storage holds MP3 files, photos and
                videos;


·
            QVGA
                Color LCD with dynamic GUI (2.2 inch
                TFT-LCD);


·
            Music:
                22 hours/Video: 6 hours;


·
            Built-in
                SD-Card Slot;


·
            Firmware
                upgradeable; and


·
            USB
                2.0 interface, Ultra Fast Data
                Transfer.





As
      of
      December 31, 2007, Joytoto Korea had timely fulfilled its obligations under
      the
      Reigncom OEM agreement, but did not utilize our services because this agreement
      was already pending at the time we entered into our exclusive distributorship
      agreement with Joytoto Korea. Our parent company may do future business with
      Reigncom and we expect to be contracted by our parent company for any future
      work with Reigncom.





In
      addition to the relationships with Best Buy and Reigncom, we are actively
      seeking partnerships with other leading retailers and consumer electronics
      brands globally. We intend to expand our product offerings to include GPS
      devices, LCD displays, Bluetooth devices, digital picture frames, and other
      digital multimedia peripherals.





As
      a
      virtual OEM, we believe we benefit from a cost structure that does not include
      the overhead costs of manufacturing facilities and related personnel.
      Furthermore, we carry little inventory and are not responsible for returned
      goods. Joytoto Korea’s main contract manufacturing partner has built devices for
      Sandisk, Samsung, and Napster. The manufacturer currently delivers between
      30,000 and 50,000 MP3 players to Joytoto Korea per month, with the ability
      to
      scale production on short notice.





Unlike
      retailers, whose core competency revolves around purchasing and reselling
      finished goods, Joytoto Korea’s value-added services include product development
      and supply chain management. Serving their customers as a supply channel
      partner, Joytoto Korea offers a wide spectrum of products and a broad range
      of
      services and solutions, including materials planning, design services,
      programming and assembly services. We intend to take over Joytoto Korea’s MP3
      manufacturing and distribution business, and in support of these services,
      we
      currently maintain a staff of five employees and make use of Joytoto Korea’s
      staff of over 100 hardware, mechanical, and software engineers in Korea as
      well
      as quality control and quality assurance manufacturing support in China.





As
      of
      December 31, 2007, we did not have any revenues. Our parent company, Joytoto
      Korea, has a direct relationship with Best Buy and Reigncom, which can be
      assigned to us at any time without the need for their consent. We are currently
      developing our business plan and arranging for the necessary working capital
      financing to be able to take over those relationships from Joytoto
      Korea.




4





Video
      Games





Through
      our sub-subsidiary,
      JAI, we plan to operate an online game service in North America.





On
      April
      18, 2007, JAI entered
      into a Master License Agreement with Joytoto Korea, and Joyon Entertainment
      Co.,
      Ltd., a Korean company (collectively, the “Licensors”), whereby JAI
      acquired an exclusive license to operate
      an online game service, using
      four online video games developed by the Licensors, in the
      United States, for
      a
      period of ten years .
      In
      addition, JAI has the option to enter into an exclusive license to provide
      an
      additional twenty online video games through its online
      game service .
      A national
      appraisal firm, valued the online game license at more than
      $36,000,000.





**Customers
      and Suppliers**





Our
      target customers are value-added resellers (“VARs”) that sell consumer
      electronics worldwide. Best Buy and Reigncom, with which our controlling parent
      company, Joytoto Korea, has current agreements, or recently had agreements,
      are
      examples of VAR’s. In addition to our intent to take over Joytoto Korea’s
      relationships with Best Buy and Reigncom, we are actively seeking to develop
      partnerships with other leading retailers and consumer electronics brands
      globally.




The
      contract manufacturer currently delivers between 30,000 and 50,000 MP3 players
      to Joytoto Korea per month, with the ability to scale production on short
      notice. We regard Joytoto Korea’s relationship with its manufacturer, and the
      transfer of that relationship to our subsidiary, JTI, to be essential to our
      consolidated results of operations and do not currently have arrangements with
      other manufacturers to build and deliver our products.





**Competition**





Our
      business is extremely competitive, particularly with respect to prices, and,
      in
      certain instances, product availability. In addition, the market for the
      products we develop is subject to rapid technological change. We intend to
      compete with numerous OEM’s, many of which have significantly greater financial,
      technical, and marketing resources than we do.





**Employees**





We
      have
      five employees, all of which are full time.





**ITEM
      1A – RISK FACTORS**





As
      a
      smaller reporting company we are not required to provide a statement of risk
      factors. However, since our operations are fairly new to us we believe this
      information may be valuable to our shareholders for this filing. We reserve
      the
      right to not provide risk factors in our future filings. Our primary risk
      factors and other considerations include:





***We
      have a limited operating history and limited historical financial information
      upon which you may evaluate our performance.***





We
      are in
      our early stages of development and face risks associated with a new company
      in
      a growth industry. We may not successfully address these risks and uncertainties
      or successfully implement our operating strategies. If we fail to do so, it
      could materially harm our business to the point of having to cease operations
      and could impair the value of our common stock to the point investors may lose
      their entire investment. Even if we accomplish these objectives, we may not
      generate positive cash flows or the profits we anticipate in the
      future.




5





***If
      we are unable to maintain relationships with our suppliers, our business could
      be materially adversely affected.***





Substantially
      all of our products are going to be manufactured by Joytoto Korea’s contract
      manufacturing partner. To the extent that manufacturer is unwilling to do
      business with us, or to continue to do business with us once we enter into
      formal agreements with it, our business could be materially adversely affected.
      In addition, to the extent that the manufacturer modifies the terms of any
      contract it may enter into with us (including, without limitation, the terms
      regarding price, rights of return, or other terms that are favorable to us),
      or
      extend lead times, limit supplies due to capacity constraints, or other factors,
      there could be a material adverse effect on our business.





***Our
      controlling parent company, Joytoto Korea, has contractual arrangements with
      only one customer at this time, and we intend to take over this contractual
      arrangement. If we are unable to take over this contractual arrangement, or
      future ones, either due to an inability to perform or unwillingness of the
      customers to accept us as the successor to Joytoto Korea, or if we lose these
      customer accounts before they generate any revenue, our business would
      substantially suffer.***





Our
      controlling parent company, Joytoto Korea, currently has contractual
      relationships with Best Buy and Reigncom, neither of which has generated any
      revenue for us. The Reigncom agreement has been fulfilled by our parent company
      and we have not yet completed any work under the Best Buy arrangement. The
      loss
      of business from Best Buy, or the failure to establish direct contractual
      relationships between Best Buy and/or Reigncom and our JTI subsidiary before
      we
      generate revenues would substantially harm our business.





***We
      operate in a competitive industry and continue to be under the pressure of
      eroding gross profit margins, which could have a material adverse effect on
      our
      business.***





The
      market for the products we intend to develop is very competitive and subject
      to
      rapid technological change. The prices for our intended products tend to
      decrease over their life cycle, which can result in decreased gross profit
      margins for us. There is also substantial and continuing pressure from customers
      to reduce their total cost for products. We expend substantial amounts on the
      value creation services required to remain competitive, retain existing
      business, and gain new customers, and we must evaluate the expense of those
      efforts against the impact of price and margin reductions. Further, our margins
      will be lower in certain geographic markets and certain parts of our business
      than in others. For example, the products we intend to sell in the Asian markets
      tend to have lower profit margins than in the United States. If we are unable
      to
      effectively compete in our industry or are unable to maintain acceptable gross
      profit margins, our business could be materially adversely affected.




6





***Products
      developed by us may be found to be defective and, as a result, warranty and/or
      product liability claims may be asserted against us, which may have a material
      adverse effect on the company.***





We
      may
      face claims for damages as a result of defects or failures in the products
      we
      intend to develop, or which Joytoto Korea has developed for value-added
      resellers. Our ability to avoid liabilities, including consequential damages,
      may be limited as a result of differing factors, such as the inability to
      exclude such damages due to the laws of some of the countries where we do
      business. Our business could be materially adversely affected as a result of
      a
      significant quality or performance issue in the products developed by us, if
      we
      are required to pay for the damages that result.





***Our
      share ownership is concentrated.***





Joytoto
      Co. Ltd., a Korean company, beneficially owns approximately 74.9% of our voting
      shares (including shares owned by its wholly-owned subsidiary, Joyon
      Entertainment Co., Ltd.). As a result, this stockholder can exert significant
      influence over all matters requiring stockholder approval, including the
      election and removal of directors, any merger, consolidation or sale of all
      or
      substantially all of assets, as well as any charter amendment and other matters
      requiring stockholder approval. In addition, this stockholder may dictate the
      day to day management of the business. This concentration of ownership may
      delay
      or prevent a change in control and may have a negative impact on the market
      price of our common stock by discouraging third party investors. In addition,
      the interests of this stockholder may not always coincide with the interests
      of
      our other stockholders.





***Our
      non-U.S. locations may represent a significant portion of our sales, and
      consequently, we may be exposed to risks associated with operating
      internationally.***





As
      a
      result of our intended foreign sales and locations, and our relationships with
      foreign suppliers and potential foreign customers, our operations may be subject
      to a variety of risks that are specific to international operations, including
      the following:





·
            import
                and export regulations that could erode profit margins or restrict
                exports;


·
            the
                burden and cost of compliance with foreign laws, treaties, and technical
                standards and changes in those
                regulations;


·
            potential
                restrictions on transfers of funds;


·
            foreign
                currency fluctuations;


·
            import
                and export duties and value-added
                taxes;


·
            transportation
                delays and interruptions;


·
            uncertainties
                arising from local business practices and cultural considerations;
                and


·
            potential
                military conflicts and political
                risks.





While
      we
      intend to adopt measures to reduce the potential impact of losses resulting
      from
      the risks of doing business abroad, we cannot ensure that such measures will
      be
      adequate.





***When
      we make acquisitions, we may not be able to successfully integrate them or
      attain the anticipated benefits.***





We
      intend
      to acquire other businesses that are synergistic with ours. If we are
      unsuccessful in integrating our acquisitions, or if integration is more
      difficult than anticipated, we may experience disruptions that could have a
      material adverse effect on our business. In addition, we may not realize all
      of
      the anticipated benefits from our acquisitions, which could result in an
      impairment of goodwill or other intangible assets.




7




***If
      we fail to maintain an effective system of internal controls or discover
      material weaknesses in our internal controls over financial reporting, we may
      not be able to report our financial results accurately or timely or detect
      fraud, which could have a material adverse effect on our
      business.***





An
      effective internal control environment is necessary for us to produce reliable
      financial reports and is an important part of our effort to prevent financial
      fraud. We are required to periodically evaluate the effectiveness of the design
      and operation of our internal controls over financial reporting. Based on these
      evaluations, we may conclude that enhancements, modifications or changes to
      internal controls are necessary or desirable. While management evaluates the
      effectiveness of our internal controls on a regular basis, these controls may
      not always be effective. There are inherent limitations on the effectiveness
      of
      internal controls, including collusion, management override, and failure of
      human judgment. In addition, control procedures are designed to reduce rather
      than eliminate business risks. If we fail to maintain an effective system of
      internal controls, or if management or our independent registered public
      accounting firm discovers material weaknesses in our internal controls, we
      may
      be unable to produce reliable financial reports or prevent fraud, which could
      have a material adverse effect on our business. In addition, we may be subject
      to sanctions or investigation by regulatory authorities, such as the SEC. Any
      such actions could result in an adverse reaction in the financial markets due
      to
      a loss of confidence in the reliability of our financial statements, which
      could
      cause the market price of our common stock to decline or limit our access to
      capital.





***We
      will rely on third-party suppliers and manufacturers to provide raw materials
      for and to produce our products, and we will have limited control over these
      suppliers and manufacturers and may not be able to obtain quality products
      on a
      timely basis or in sufficient quantity.***




Substantially
      all of our products will be manufactured by unaffiliated manufacturers. We
      may
      not have any long-term contracts with our suppliers or manufacturing sources,
      and we expect to compete with other companies for raw materials, production
      and
      import quota capacity.





There
      can
      be no assurance that there will not be a significant disruption in the supply
      of
      raw materials from our intended sources or, in the event of a disruption, that
      we would be able to locate alternative suppliers of materials of comparable
      quality at an acceptable price, or at all. In addition, we cannot be certain
      that our unaffiliated manufacturers will be able to fill our orders in a timely
      manner. If we experience significant increased demand, or need to replace an
      existing manufacturer, there can be no assurance that additional supplies of
      raw
      materials or additional manufacturing capacity will be available when required
      on terms that are acceptable to us, or at all, or that any supplier or
      manufacturer would allocate sufficient capacity to us in order to meet our
      requirements. In addition, even if we are able to expand existing or find new
      manufacturing or raw material sources, we may encounter delays in production
      and
      added costs as a result of the time it takes to train our suppliers and
      manufacturers in our methods, products and quality control standards. Any
      delays, interruption or increased costs in the supply of raw materials or
      manufacture of our products could have an adverse effect on our ability to
      meet
      retail customer and consumer demand for our products and result in lower
      revenues and net income both in the short and long-term.





In
      addition, there can be no assurance that our suppliers and manufacturers will
      continue to provide raw materials and to manufacture products that are
      consistent with our standards. We may receive shipments of product that fail
      to
      conform to our quality control standards. In that event, unless we are able
      to
      obtain replacement products in a timely manner, we risk the loss of revenues
      resulting from the inability to sell those products and related increased
      administrative and shipping costs. In addition, because we do not control our
      manufacturers, products that fail to meet our standards or other unauthorized
      products could end up in the marketplace without our knowledge, which could
      harm
      our reputation in the marketplace.




8





***The
      Chinese government could change its policies toward, or even nationalize,
      private enterprise, which could harm our operations.*** **





The
      majority of our manufacturing will be conducted in China. Accordingly, our
      business, financial condition, results of operations and prospects are affected
      significantly by economic, political and legal developments in China. Over
      the
      past several years, the Chinese government has pursued economic reform policies,
      including the encouragement of private economic activities and decentralization
      of economic regulation. The Chinese government may not continue to pursue these
      policies or may significantly alter them to our detriment from time to time
      without notice. Changes in policies by the Chinese government resulting in
      changes in laws or regulations, our interpretation of laws or regulations,
      or
      the imposition of confiscatory taxation, restrictions on currency conversion
      or
      imports and sources of supply could materially and adversely affect our business
      and operating results.





***Our
      common stock may be affected by limited trading volume and may fluctuate
      significantly.***




There
            has
            been a limited public market for our common stock and there can be no
            assurance
            an active trading market for our common stock will develop. This could
            adversely
            affect our shareholders’ ability to sell our common stock in short time periods
            or possibly at all. In
            addition, the number of shares of common stock in the float (shares in
            the hands
            of non-affiliates that is eligible to be readily traded), is limited
            and may be
            concentrated in the hands of a small number of shareholders. This means
            that if
            one or more of those shareholders started to sell large numbers of shares
            it
            could significantly reduce the price of our stock. Similarly, due to
            our limited
            float, our share price could fluctuate higher on limited actual demand
            for our
            shares. Accordingly, the price of our shares should not be relied upon
            as an
            indicator of true market value or the value of our company. Our stock
            price
            should be considered as an arbitrary value at least until such time,
            if at all,
            as a liquid and active trading market develops for our
            shares.
 Our
              common stock has experienced and is likely to experience significant
              price and
              volume fluctuations ,
              which
              is enhanced by our limited and concentrated public float, and which
              could
              adversely affect the market price of our common stock without regard
              to our
              operating performance. Our stock price could fluctuate significantly
              in the
              future based upon any number of factors including, but not limited
              to, the
              following: general stock market trends; announcements of developments
              related to
              our business; fluctuations in our operating results; announcements
              of
              technological innovations, new products or enhancements by us or our
              competitors; general conditions in the markets we serve; general conditions
              in
              the U.S. economy; developments in patents or other intellectual property
              rights;
              developments in our relationships with our customers and suppliers;
              trading
              patterns of one or more of our large shareholders; changes in our public
              float
              or in the concentration of such shares in the float held by a small
              number of
              shareholders; activities related to public and investor relations and
              awareness
              efforts which may be periodically conducted by us, one or more of our
              shareholders or professionals retained by us or such shareholders;
              and a
              decision by any of our larger shareholders to sell their shares, which
              may
              happen at any time, including before, during or after any public relations
              or
              investor awareness efforts conducted by us or such shareholders. All
              of these
              factors could cause substantial fluctuations in our stock price, which
              could
              significantly reduce the price of our
              stock.


9


***Our
      common stock is traded on the "Over-the-Counter Bulletin Board," which may
      make
      it more difficult for investors to resell their shares due to suitability
      requirements.***





Our
      common stock is currently traded on the Over the Counter Bulletin Board (OTCBB)
      where we expect it to remain in the foreseeable future. Broker-dealers often
      decline to trade in OTCBB stocks given the market for such securities are often
      limited, the stocks are more volatile, and the risk to investors is greater.
      These factors may reduce the potential market for our common stock by reducing
      the number of potential investors. This may make it more difficult for investors
      in our common stock to sell shares to third parties or to otherwise dispose
      of
      their shares. This could cause our stock price to decline.





**ITEM
      1B – UNRESOLVED STAFF COMMENTS** ****





This
      Item
      is not applicable to us as we are not an accelerated filer, a large accelerated
      filer, or a well-seasoned issuer; however, we have not received written comments
      from the Commission staff regarding our periodic or current reports under the
      Securities Exchange Act of 1934 within the last 180 days before the end of
      our
      last fiscal year that have not been resolved.





**ITEM
      2 – PROPERTIES** ****





Joytoto
      America, Inc., a wholly-owned subsidiary of Joyon Entertainment, Inc., leases
      approximately 1,800 square feet of office space in Santa Clara, California,
      for
      $3,072 per month pursuant to the terms of a one (1) year lease agreement
      commencing March 1, 2007 and ending March 1, 2008.





**ITEM
      3 - LEGAL PROCEEDINGS** ****





We
      are
      not a party to, or threatened by, any litigation or procedures.





**ITEM
      4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS** ****





There
      have been no events that are required to be reported under this Item .




10





**PART
      II**





**ITEM
      5 - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
      ISSUER PURCHASES OF EQUITY SECURITIES** ****





*Market
      Information*





Our
      common stock is currently quoted on the OTC Bulletin Board.  Our trading
      symbol was changed to JYTO effective October 31, 2007.





The
      following table sets forth the high and low bid information for each quarter
      within the two most recent fiscal years, plus the first quarter of 2008, as
      provided by the Nasdaq Stock Markets, Inc. The information reflects prices
      between dealers, and does not include retail markup, markdown, or commission,
      and may not represent actual transactions.





**Bid
                Prices****Fiscal
                Year**
              **Ended**
              **December
                31,**
            
            **Period**
            
            **High**
            
            **Low**2005
            
            First
              Quarter
            
            $
            4.90
            
            $
            0.001Second
              Quarter
            
            $
            3.00
            
            $
            1.50Third
              Quarter
            
            $
            5.20
            
            $
            1.25Fourth
              Quarter
            
            $
            5.75
            
            $
            0.052006
            
            First
              Quarter
            
            $
            6.95
            
            $
            2.40Second
                Quarter
            
            $
            4.20
            
            $
            1.25Third
              Quarter
            
            $
            2.85
            
            $
            1.50Fourth
              Quarter
            
            $
            3.90
            
            $
            0.872007
            
            First
              Quarter
            
            $
            2.33
            
            $
            0.35Second
              Quarter
            
            $
            2.46
            
            $
            0.21Third
              Quarter
            
            $
            0.22
            
            $
            0.06Fourth
              Quarter
            
            $
            2.00
            
            $
            0.002008
            
            First
              Quarter
            
            $
            0.95
            
            $
            0.30Second
              Quarter (through April 11, 2008)
            
            $
            0.68
            
            $
            0.30





The
      Securities Enforcement and Penny Stock Reform Act of 1990 requires additional
      disclosure relating to the market for penny stocks in connection with trades
      in
      any stock defined as a penny stock. The Commission has adopted regulations
      that
      generally define a penny stock to be any equity security that has a market
      price
      of less than $5.00 per share, subject to a few exceptions which we do not meet.
      Unless an exception is available, the regulations require the delivery, prior
      to
      any transaction involving a penny stock, of a disclosure schedule explaining
      the
      penny stock market and the risks associated therewith.





There
      are
      currently warrants outstanding to acquire an aggregate of 21,000,000 shares
      of
      our common stock at an exercise price of $0.10 per share which were issued
      to
      the holders of our Junior Convertible Debentures as part of the acquisition
      of
      JEI. There are also currently warrants outstanding to acquire an aggregate
      of
      7,400,000 shares of our common stock at an exercise price of $0.35 per share
      which were issued to three consultants as part of the acquisition of
      JEI.




11





The
      number of holders of record of shares of our common stock is one hundred five
      (105).





There
      have been no cash dividends declared on our common stock. Dividends are declared
      at the sole discretion of our Board of Directors.





**ITEM
      6 – SELECTED FINANCIAL DATA**





As
      a
      smaller reporting company we are not required to provide the information
      required by this Item.





**ITEM
      7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATION** ****





Our
      Management’s Discussion and Analysis contains not only statements that are
      historical facts, but also statements that are forward-looking (within the
      meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
      Securities Exchange Act of 1934). Forward-looking statements are, by their
      very
      nature, uncertain and risky. These risks and uncertainties include
      international, national and local general economic and market conditions;
      demographic changes; our ability to sustain, manage, or forecast growth; our
      ability to successfully make and integrate acquisitions; existing government
      regulations and changes in, or the failure to comply with, government
      regulations; adverse publicity; competition; fluctuations and difficulty in
      forecasting operating results; changes in business strategy or development
      plans; business disruptions; the ability to attract and retain qualified
      personnel; the ability to protect technology; and other risks that might be
      detailed from time to time in our filings with the Securities and Exchange
      Commission.





Although
      the forward-looking statements in this First Amended Annual Report on Form
      10-K
      reflect the good faith judgment of our management, such statements can only
      be
      based on facts and factors currently known by them. Consequently, and because
      forward-looking statements are inherently subject to risks and uncertainties,
      the actual results and outcomes may differ materially from the results and
      outcomes discussed in the forward-looking statements. You are urged to carefully
      review and consider the various disclosures made by us in this report and in
      our
      other reports as we attempt to advise interested parties of the risks and
      factors that may affect our business, financial condition, and results of
      operations and prospects.





*Summary
      Overview*





On
      October 31, 2007, we divested our two subsidiaries and acquired Joyon
      Entertainment, Inc., and its two wholly-owned subsidiaries, Joytoto America,
      Inc. and Joytoto Technologies, Inc. The discussion below concerns the business
      operations of our new subsidiaries, which are engaged in the business of
      providing online gaming services and MP3 and other technical
      products.





*Results
      of Operations*





**Introduction**




Our
      business is conducted through our two wholly-owned subsidiaries, Joytoto America
      and Joytoto Technologies. Both were acquired by Joyon Entertainment, Inc.,
      in
      the second quarter of 2007, and both were formed in the third quarter of 2006,
      and thus we have no operations, other than some simple formation activities,
      for
      comparison purposes in prior periods. We have no revenues for any periods.
      We
      anticipate that we will have revenues beginning in 2008, but that we will
      continue to operate at a loss until at least the fourth quarter of 2008. There
      can be no assurance, however, that we will achieve all or any part of our
      anticipated revenue goals. All of our revenue goals are based on the assumption
      that Joytoto Korea will transfer its MP3 products business to our subsidiary,
      Joytoto Technologies, pursuant to our Exclusive Distributorship Agreement,
      however, this transfer cannot be assured, and if this transfer does take place,
      it cannot be assured that the transfer will be successful, or that the suppliers
      of our products will accept us as their customer, or the purchasers of our
      products will accept us as their supplier.




12





**Year
      ended December 31, 2007 and the Period from December 6, 2006 (Inception) to
      December 31, 2007**





**Revenues,
      Expenses and Loss from Operations**




Our
      revenues, selling, general and administrative expenses, depreciation,
      amortization, total costs and expenses, and net loss for the year ended December
      31, 2007 and for the period from December 6, 2006 (Inception) to December 31,
      2007 are as follows:




Year
                Ended
              December 31,
              2007
            
            For
                the Period
              December
                6,
              2006
              (Inception)
                to
              December 31,
              2006
            
            For
                the Period
              December
                6,
              2006
              (Inception)
                to
              December 31,
              2007Revenue
            
            $
            -
            
            $
            -
            
            $
            -Selling,
                general and administrative
            
            
            49,753,967
            
            
            5,001
            
            
            49,758,968Depreciation
            
            
            5,806
            
            
            -
            
            
            5,806Amortization
            
            
            1,061,786
            
            
            -
            
            
            1,061,786Total
                costs and expenses
            
            
            50,821,559
            
            
            5,001
            
            
            50,836,560Net
                Loss
            
            $
            (50,821,559
            )
            $
            (5,001
            )
            $
            (50,826,560
            )





We
      have
      not had any revenues since our inception, and therefore no cost of sales. For
      the year ended December 31, 2007 our selling, general and administrative
      expenses of $49,753,967 consisted primarily of $4,166,667 in stock based
      compensation due to the shares granted to our executive officers under their
      employment agreements, $39,245,700 in warrant issuances, $6,000,000 in shares
      issued to consultants, $54,000 of payroll expenses, and $18,124 of rent expense.
      For the period from December 6, 2006 (Inception) to December 31, 2006, our
      selling, general and administrative expenses consisted solely of $5,001 in
      professional fees. Depreciation is of computers and other office furniture
      and
      equipment. Amortization is derived from the value assigned to the securities
      and
      other consideration issued for our license and distribution agreements, based
      on
      their estimated useful life (see Note H to the enclosed consolidated financial
      statements).




13





Net
      Loss





Because
      we have had no revenues for the periods discussed, our total costs and expenses
      for each period is equal to our net loss for the same period.





*Liquidity
      and Capital Resources*





**Introduction**




Our
      primary assets are the two online game license agreements and the Exclusive
      Distributorship Agreement. We have not begun to generate revenue from these
      agreements, and as a result we have very few current assets. Our cash
      requirements have been relatively small up to this point, but as a result of
      the
      acquisition of JEI and the fact that we are now a public, reporting company,
      we
      anticipate that our cash needs will increase dramatically. We anticipate
      satisfying these cash needs through the sale of our common stock until we not
      only begin to generate revenue, but until we can generate enough revenue to
      sustain our operations.





Cash
      Requirements





For
      the
      year ended December 31, 2007, we had a net loss from operations of
      ($50,821,559). This was offset by depreciation and amortization of $1,067,592,
      stock based compensation of $49,412,367, an increase in prepaid expenses of
      $1,710, an increase in accrued expenses of $138,344, and an increase in the
      amount due to an affiliate (Joytoto Korea) of $105,061, for total cash used
      in
      our operating activities of $99,905.





As
      stated
      above, we anticipate that our cash requirements will increase substantially
      as a
      result of the fact that we are now a public, reporting company and as we begin
      to increase operations to generate revenue from our license and distributorship
      agreements.





Sources
      and Uses of Cash





*Operations*





We
      had no
      revenues for the year ended December 31, 2007, and thus generated no cash from
      operations.





*Investments*





We
      increased our cash by $48,210 as a result of the acquisition of Joytoto America
      and Joytoto Technologies.





*Financing*





Our
      cash
      flows from financing activities totaled $51,695, from $50,000 in loan proceeds
      and $1,695 from our bank overdraft account.





**Critical
      Accounting Policies**




The
      discussion and analysis of the Company’s financial condition and results of
      operations are based upon its financial statements, which have been prepared
      in
      accordance with accounting principles generally accepted in the United States
      of
      America. The preparation of these financial statements requires the Company
      to
      make estimates and judgments that affect the reported amounts of assets,
      liabilities, revenues and expenses. In consultation with its Board of Directors,
      the Company has identified the following accounting policies that it believes
      are key to an understanding of its financial statements. These are important
      accounting policies that require management’s most difficult, subjective
      judgments.




14





Valuation
      of License Agreements





The
      company accounts for goodwill and license agreements in accordance with
      Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and
      other Intangible Assets.” Under SFAS 142, goodwill and intangibles with
      indefinite lives are not amortized; rather they are tested for impairment at
      least annually.  Intangible assets and license agreements, other than
      goodwill, with definite lives will be amortized over their useful lives ranging
      from 3 to 10 years. The company periodically evaluates the reasonableness of
      the
      useful lives of these intangible assets.  The license agreements were
      valued on our balance sheet as follows:





A.  Upon
      execution of the Master License Agreement the Company issued Joyon Korea thirty
      million (30,000,000) common shares as consideration. Prior to the acquisition
      of
      the Master License Agreement the Company had an independent business valuation
      performed whereby the Company’s enterprise value was calculated to be $0.1799
      per share. Accordingly, the shares issued for the license were valued at $0.1799
      per share.





B.  Prior
      to
      the acquisition of the Exclusive Distributorship Agreement the Company had
      an
      independent business valuation performed whereby the Company’s enterprise value
      was calculated to be $0.3562 per share. Accordingly, the shares issued for
      the
      license agreement were valued at $0.3562 per share.





C. License
      agreements are comprised of the following:





December 31,
              2007
            
            Estimated
              Useful LifePang
                Pang License
            
            $
            400,000
            
            
            3
                yearsNorth
                American Master License
            
            
            5,397,000
            
            
            10
                yearsExclusive
                Distributorship
            
            
            10,686,000
            
            
            10
                years16,483,000Less:
                accumulated amortization
            
            
            1,081,548$
            15,401,452





15




Off-balance
      Sheet Arrangements





We
      have
      no off-balance sheet arrangements that are reasonably likely to have a current
      or future effect on our financial condition, changes in financial condition,
      revenues or expenses, results of operations, liquidity, capital expenditures
      or
      capital resources that is deemed by our management to be material to
      investors.





Contractual
      Obligations





Payments
                due by periodObligations
            
            Total
            
            1
                Year
            
            1-3
                Years
            
            3-5
                Years
            
            5
                YearsLong-Term
                Debt Obligations
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-Capital
                Lease Obligations
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-Operating
                Lease Obligations
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-Related
                Party
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-Third
                Party
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-Purchase
                Obligations
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-Other
                Long-Term Liabilities
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-Total
                Contractual Obligations
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-




**ITEM
      7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**





As
      a
      smaller reporting company we are not required to provide the information
      required by this Item.





**ITEM
      8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA** ****








Report
                of Independent Certified Public Accountants
            F-1Consolidated
                Balance Sheet as of December 31, 2007 and 2006
            F-2Consolidated
                Statement of Income for the twelve months
              ended
                December 31, 2007 and from December 6, 2006 (inception) to December
                31,
                2007
            F-3Consolidated
                Statement of Changes in Stockholders’
              Equity
                for the twelve months ended December 31, 2007 and from December 6,
                2006
                (inception) to December 31, 2007
            F-4Consolidated
                Statement of Cash Flows for the twelve months ended December 31,
                2007 and
                from December 6. 2006 (inception) to December 31, 2007
            F-5Notes
                to Consolidated Financial Statements
            F-6





**ITEM
      9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE** ****





There
      are
      no events required to be disclosed under the Item.




16





**ITEM
      9A – CONTROLS AND PROCEDURES** ****





We
      conducted an evaluation, with the participation of our Chief Executive Officer
      and Chief Financial Officer, of the effectiveness of the design and operation
      of
      our disclosure controls and procedures, as defined in Rules 13a-15(e) and
      15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange
      Act, as of December 31, 2007, to ensure that information required to be
      disclosed by us in the reports filed or submitted by us under the Exchange
      Act
      is recorded, processed, summarized and reported, within the time periods
      specified in the Securities Exchange Commission's rules and forms, including
      to
      ensure that information required to be disclosed by us in the reports filed
      or
      submitted by us under the Exchange Act is accumulated and communicated to our
      management, including our principal executive and principal financial officers,
      or persons performing similar functions, as appropriate to allow timely
      decisions regarding required disclosure. Based on that evaluation, our Chief
      Executive Officer and Chief Financial Officer have concluded that as of December
      31, 2007, our disclosure controls and procedures were not effective at the
      reasonable assurance level due to the material weaknesses described
      below.





In
      light
      of the material weaknesses described below, we performed additional analysis
      and
      other post-closing procedures to ensure our financial statements were prepared
      in accordance with generally accepted accounting principles. Accordingly, we
      believe that the consolidated financial statements included in this report
      fairly present, in all material respects, our financial condition, results
      of
      operations and cash flows for the periods presented.





A
      material weakness is a control deficiency (within the meaning of the Public
      Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2) or
      combination of control deficiencies, such that there is a reasonable possibility
      that a material misstatement of the annual or interim financial statements
      will
      not be prevented or detected. Management has identified the following three
      material weaknesses that have caused management to conclude that, as of December
      31, 2007, our disclosure controls and procedures were not effective at the
      reasonable assurance level:





1.  We
      do not
      have formalized documentation related to our internal control policies and
      procedures; however, there are informal policies and procedures that cover
      the
      recording and reporting of financial transactions. Written documentation of
      key
      internal controls over financial reporting is a requirement of Section 404
      of
      the Sarbanes-Oxley Act and will be applicable to us for the year ending December
      31, 2008. Management evaluated the impact of our failure to have written
      documentation of our internal controls and procedures on our assessment of
      our
      disclosure controls and procedures and has concluded that the control deficiency
      that resulted represented a material weakness.





2.  We
      do not
      have sufficient segregation of duties within accounting functions, which is
      a
      basic internal control. Due to our size and nature, segregation of all
      conflicting duties may not always be possible and may not be economically
      feasible. However, to the extent possible, the initiation of transactions,
      the
      custody of assets and the recording of transactions should be performed by
      separate individuals. Management evaluated the impact of our failure to have
      segregation of duties on our assessment of our disclosure controls and
      procedures and has concluded that the control deficiency that resulted
      represented a material weakness.





3.  We
      do not
      have sufficient personnel working on our accounting functions to ensure we
      can
      timely file our quarterly and annual reports, as indicated by the filing of
      this
      annual report after the original due date (but within the extension period).
      Management evaluated the impact of our lack of internal accounting personnel
      to
      ensure we can timely file our required quarterly and annual reports and has
      concluded that the control deficiency that resulted represented a material
      weakness.




17





To
      address these material weaknesses, management performed additional analyses
      and
      other procedures to ensure that the financial statements included herein fairly
      present, in all material respects, our financial position, results of operations
      and cash flows for the periods presented.





**Remediation
      of Material Weaknesses**




To
      remediate the material weaknesses in our disclosure controls and procedures
      identified above, we have continued to refine our internal procedures to begin
      to implement segregation of duties and to seek additional internal accounting
      personnel.





**Changes
      in Internal Control over Financial Reporting**




Except
      as
      noted above, there were no changes in our internal control over financial
      reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act,
      during our most recently completed fiscal quarter that have materially affected,
      or are reasonably likely to materially affect, our internal control over
      financial reporting .





**ITEM
      9A(T) – CONTROLS AND PROCEDURES**





We
      are
      not required to furnish the information required by this item until we report
      on
      our fiscal year ending December 31, 2008.





**ITEM
      9B – OTHER INFORMATION**





There
      are
      no events required to be disclosed by the Item.





**PART
      III**





**ITEM
      10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
      GOVERNACE** ****





*Directors
      and Executive Officers*





The
      following table sets forth the names and ages of our current directors and
      executive officers, the principal offices and positions held by each person,
      and
      the date such person became a director or executive officer. Our executive
      officers are elected annually by the Board of Directors. The directors serve
      one
      year terms until their successors are elected. The executive officers serve
      terms of one year or until their death, resignation or removal by the Board
      of
      Directors. Unless described below, there are no family relationships among
      any
      of the directors and officers.





**Name**
            
            Age
            
            Position(s)Seong
                Yong Cho
            
            39
            
            Chief
                Executive Officer, President,
              and
                Director (2007)Seong
                Sam Cho
            
            42
            
            Chief
                Financial Officer, Secretary,
              and
                Director (2007)Doo
                Ho Choi
            
            42
            
            Chief
                Operating Officer and Director
                (2007)




18




**Seong
      Yong Cho (Michael Cho)**, 39, has been the Chief Executive Officer and a
      Director since the acquisition of JEI on October 31, 2007. He has served as
      the
      Chief Executive Officer of Joyon Entertainment Co., Ltd. since December 1999
      and
      has been a director of Joytoto Co., Ltd. since December 2005. He served as
      the
      CEO of Joytoto Co., Ltd. from December 2005 to November 2006, and has been
      the
      COO of Joytoto Co., Ltd. since then.





Prior
      to
      joining Joyon, Mr. Cho was a director of Sam Electronics from 1988 to 1996
      and
      the CEO of Korea Licensing from September 1996 to March 2002. He has provided
      consulting services related to game development for EA/Accolade/Inforgrams,
      Samsung, SSangyong, Diamond Ads and other companies since 1988. In recognition
      of his services, he received the prize of the Ministry of Information and
      Communications for the Software Industry Development on December 2000 and the
      prize of the Prime Minister for the Software Industry Development on December
      2001.





Seong
      Yong Cho and Seong Sam Cho are brothers.





**Seong
      Sam Cho (Sam Cho)** ,
      42, has
      been the Chief Financial Officer, Secretary, and a Director since the
      acquisition of JEI on October 31, 2007. He has been the CEO of Joytoto Co.,
      Ltd.
      since December 2006, and has been a director of Joytoto Co. Ltd. since December
      2005. He served as the COO of Joytoto Co., Ltd. from December 2005 to November
      2006. He has been the Chairman of the Board of Joyon Entertainment Co. Ltd.,
      which is a subsidiary of Joytoto Co., since December 1999. Mr. Cho lectures
      on
      digital content and culture at the faculty of Sookmyung Women's University
      as a
      professor. He also participates actively as a member of the committee for
      Ministry of Information & Communication and Ministry of Culture &
Tourism of the Korean government. Mr. Cho is a subcommittee member of the
      Federation of Korean Industries and Mirae Forum division of the game department.
      He has been engaged in the IT industry for approximately 20 years. He founded
      Sam Electronics Co., Ltd. in 1988. He received the prize of the Ministry of
      Information and Communication for the Software Industry Development on December
      2001.





**Doo
      Ho Choi (David Choi)** ,
      42, has
      been the Chief Operating Officer and a Director since the acquisition of JEI
      on
      October 31, 2007. He has been the internal auditor of Joytoto Co., Ltd. since
      December 2005. Prior to joining Joytoto Co., Ltd., Mr. Choi was a director
      of
      Imine Co., Ltd. and was responsible for their global business division. He
      was
      involved with an electronic government business in Vietnam. He took office
      as
      the CEO and CTO until April 2002 after he established Webtrol Interactive Co.,
      Ltd. in March 2000, and he developed a remote control system through the
      Internet for industrial boilers. He served as the CEO and CTO of Nextware
      Corporation until June 1999 after he established Nextware Corporation in August
      1997, and he developed a three-dimensional graphic system and ran a distribution
      business for computer systems. Since June 1985, he served in the Korean army
      as
      an officer and an official in the field of communication and security until
      August 1994. He has worked in the information and communication field for 22
      years.





Other
      Directorships





None
      of
      our officers and directors are directors of any company with a class of
      securities registered pursuant to section 12 of the Exchange Act or subject
      to
      the requirements of section 15(d) of such Act or any company registered as
      an
      investment company under the Investment Company Act of 1940.




19





Audit
      Committee





We
      do not
      currently have an audit committee financial expert.





Compliance
      with Section 16(a) of the Securities Exchange Act of 1934





Section
      16(a) of the Securities Exchange Act of 1934 requires the Company’s directors
      and executive officers and persons who own more than ten percent of a registered
      class of the Company’s equity securities to file with the SEC initial reports of
      ownership and reports of changes in ownership of Common Stock and other equity
      securities of the Company. Officers, directors and greater than ten percent
      shareholders are required by SEC regulations to furnish the Company with copies
      of all Section 16(a) forms they file.





During
      the most recent fiscal year, to the Company’s knowledge, the following
      delinquencies occurred:





**Name**
            
            **No.
                of Late**
              **Reports**
            
            **No.
                of**
              **Transactions**
              **Reported
                Late**
            
            **No.
                of**
              **Failures
                to**
              **File**Seong
                Yong Cho
            
            1
            
            1
            
            0Seong
                Sam Cho
            
            1
            
            1
            
            0Doo
                Ho Choi
            
            1
            
            1
            
            0





Board
      Meetings and Committees





During
      the fiscal year ended December 31, 2007, the Board of Directors met on a regular
      basis and took written action on numerous other occasions. All the members
      of
      the Board attended the meetings. The written actions were by unanimous
      consent





Code
      of Ethics





We
      have
      not adopted a written code of ethics, primarily because we believe and
      understand that our officers and directors adhere to and follow ethical
      standards without the necessity of a written policy.




20


**ITEM
      11 - EXECUTIVE COMPENSATION**





**Executive
      Officers and Directors**





The
      following tables set forth certain information about compensation paid, earned
      or accrued for services by (i) our Chief Executive Officer and (ii) all other
      executive officers who earned in excess of $100,000 in the fiscal year ended
      December 31, 2007 (“Named Executive Officers”):




**Name
                and**
              **Principal**
              **Position**
            
            **Year**
            
            **Salary**
              **($)**
            
            **Bonus**
              **($)**
            
            **Stock**
              **Awards**
              **($)
                ***
            
            **Option
                Awards**
              **($)
                ***
            
            **Non-Equity
                Incentive Plan Compensation ($)**
            
            **Nonqualified
                Deferred Compensation ($)**
            
            **All
                Other**
              **Compensation**
              **($)**
            
            **Total**
              **($)**Seong
                Yong Cho
            
            
            2007
            
            
            16,000
            (1)
            
            -
            
            
            1,750,000
            (2)
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            1,766,000Chief
                Executive Officer, President,and
                Director
            
            
            2006
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Seong
                Sam Cho
            
            
            2007
            
            
            2,000
            
            
            -
            
            
            1,750,000
            (2)
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            1,752,000Chief
                Financial Officer, Secretary,and
                Director
            
            
            2006
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Doo
                Ho Choi
            
            
            2007
            
            
            2,000
            
            
            -
            
            
            666,667
            (3)
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            668,667Chief
                Operating Officer and Director
            
            
            2006
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -





*
            Based
                upon the aggregate grant date fair value calculated in accordance
                with the
                Financial Accounting Standards Board (“FASB”) Statement of Financial
                Accounting Standard (“FAS”) No. 123R, Share Based Payment. Our policy and
                assumptions made in valuation of share based payments are contained
                in
                Note C to our December 31, 2007 financial statements. The monies
                shown in
                the “option awards” column is the total calculated value for each
                individual.





(1)
            This
                amount was not paid and has been accrued on our financial
                statements.





(2)
            Seong
                Yong ChoandSeong
                Sam Chowere each granted a total of 21,000,000 shares of our common stock
                from
                Joytoto Co., Ltd. and Joyon Entertainment Co., Ltd., under their
                employment agreements. However, those shares are subject to a repurchase
                right by the Company over the next thirty six (36) months beginning
                November 1, 2007, at a purchase price of $0.001 per share. Such repurchase
                right expires as to 1/36thof
                the shares for every month the employee is employed by the Company
                in
                their current capacity. Therefore, if the employee remains employed
                with
                us over the next thirty six (36) months, they will each own the shares
                free and clear of our repurchase right. These shares are also subject
                to a
                one year lock-up period during which they cannot be sold or otherwise
                transferred without restrictive legend. As of December 31, 2007,
                the
                repurchase right of the Company expired as to 1,166,667 shares for
                each
                employee. Based on our closing price of $1.50 at the date of grant
                on
                October 31, 2007, these shares are valued at $1,750,000 for each
                employee.
                We have included this value in the table even though these shares
                are
                subject to a one year lock-up
                period..




21




(3)
            Doo
                Ho Choi wasgranted
                a total of 8,000,000 shares of our common stock from Joytoto Co.,
                Ltd. and
                Joyon Entertainment Co., Ltd., under his employment agreement. However,
                those shares are subject to a repurchase right by the Company over
                the
                next thirty six (36) months beginning November 1, 2007, at a purchase
                price of $0.001 per share. Such repurchase right expires as to
                1/36thof
                the shares for every month the employee is employed by the Company
                in his
                current capacity. Therefore, if the employee remains employed with
                us over
                the next thirty six (36) months, he will own the shares free and
                clear of
                our repurchase right. These shares are also subject to a one year
                lock-up
                period during which they cannot be sold or otherwise transferred
                without
                restrictive legend. As of December 31, 2007, the repurchase right
                of the
                Company expired as to 444,445 shares. Based on our closing price
                of $1.50
                at the date of grant on October 31, 2007, these shares are valued
                at
                $666,667. We have included this value in the table even though these
                shares are subject to a one year lock-up
                period..





Employment
      Contracts





Through
      our subsidiary, Joyon Entertainment, Inc., we have employment agreements with
      all three of our executives. These employment agreements are all dated October
      31, 2007.





Under
      the
      employment agreement with Seong Yong Cho he will serve as our President and
      Chief Executive Officer. His employment agreement runs through October 31,
      2010,
      unless terminated earlier. In exchange for his services Seong Yong Cho will
      receive $12,000 per annum, which will increase to $60,000 per annum starting
      April 1, 2009. He will be eligible for a bonus, not to exceed one half the
      annual compensation, if approved by JEI’s Board of Directors. Seong Yong Cho was
      granted a total of 21,000,000 shares of our common stock from Joytoto Co.,
      Ltd.
      and Joyon Entertainment Co., Ltd., under his employment agreement. However,
      those shares are subject to a repurchase right by the Company over the next
      thirty six (36) months beginning November 1, 2007, at a purchase price of $0.001
      per share. The repurchase right expires as to 1/36 th of the
      shares for every month the employee is employed by us as President and Chief
      Executive Officer. Therefore, if Seong Yong Cho remains employed with us over
      the next thirty six (36) months, he will each own the shares free and clear
      of
      our repurchase right. These shares are also subject to a one year lock-up period
      during which they cannot be sold or otherwise transferred without restrictive
      legend.





Under
      the
      employment agreement with Seong Sam Cho he will serve as our Chief Financial
      Officer. His employment agreement runs through October 31, 2010, unless
      terminated earlier. In exchange for his services Seong Sam Cho will receive
      $12,000 per annum, which will increase to $60,000 per annum starting April
      1,
      2009. He will be eligible for a bonus, not to exceed one half the annual
      compensation, if approved by JEI’s Board of Directors. Seong Sam Cho was granted
      a total of 21,000,000 shares of our common stock from Joytoto Co., Ltd. and
      Joyon Entertainment Co., Ltd., under his employment agreement. However, those
      shares are subject to a repurchase right by the Company over the next thirty
      six
      (36) months beginning November 1, 2007, at a purchase price of $0.001 per share.
      The repurchase right expires as to 1/36 th of the
      shares for every month the employee is employed by us as Chief Financial
      Officer. Therefore, if Seong Sam Cho remains employed with us over the next
      thirty six (36) months, he will each own the shares free and clear of our
      repurchase right. These shares are also subject to a one year lock-up period
      during which they cannot be sold or otherwise transferred without restrictive
      legend.





Under
      the
      employment agreement with Doo Ho Choi he will serve as our Chief Operating
      Officer. His employment agreement runs through October 31, 2010, unless
      terminated earlier. In exchange for his services Doo Ho Choi will receive
      $12,000 per annum, which will increase to $60,000 per annum starting April
      1,
      2009. He will be eligible for a bonus, not to exceed one half the annual
      compensation, if approved by JEI’s Board of Directors. Seong Sam Cho was granted
      a total of 8,000,000 shares of our common stock from Joytoto Co., Ltd. and
      Joyon
      Entertainment Co., Ltd., under his employment agreement. However, those shares
      are subject to a repurchase right by the Company over the next thirty six (36)
      months beginning November 1, 2007, at a purchase price of $0.001 per share.
      The
      repurchase right expires as to 1/36 th of the
      shares for every month the employee is employed by us as Chief Operating
      Officer. Therefore, if Doo Ho Choi remains employed with us over the next thirty
      six (36) months, he will each own the shares free and clear of our repurchase
      right. These shares are also subject to a one year lock-up period during which
      they cannot be sold or otherwise transferred without restrictive legend.




22





Other
      Compensation





We
      do not
      have employment agreements with any of our other employees.





Director
      Compensation





The
      following table sets forth director compensation as of December 31,
      2007:





**Name**
            
            
            **Fees Earned
                or Paid in Cash**
              **($**)****
            
            
            **Stock Awards**
              **($)
                ***
            
            
            **Option****Awards**
              **($)
                ***
            
            
            **Non-Equity
                Incentive Plan Compensation**
              **($**)****
            
            
            **Nonqualified
                Deferred Compensation Earnings**
              **($**)****
            
            
            **All
                Other Compensation**
              **($**)****
            
            
            **Total**
              **($**)****Seong Yong Cho
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Seong
                Sam Cho
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Doo
                Ho Choi
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -





*
            Based
                upon the aggregate grant date fair value calculated in accordance
                with the
                Financial Accounting Standards Board (“FASB”) Statement of Financial
                Accounting Standard (“FAS”) No. 123R, Share Based Payment. Our policy and
                assumptions made in valuation of share based payments are contained
                in
                Note 2 to our December 31, 2006 financial statements. The monies
                shown in
                the “option awards” column is the total calculated value for each
                individual.





We
      do not
      provide any compensation to our directors for serving as directors.




23





Outstanding
      Equity Awards at Fiscal Year-End





The
      following table sets forth certain information concerning outstanding stock
      awards held by the Named Executive Officers as of December 31,
      2007:





**Option
                Awards**
            
            **Stock
                Awards****Name**
            
            **Number
                of Securities Underlying Unexercised Options**
              **(#)**
              **Exercisable**
            
            **Number
                of Securities Underlying Unexercised Options**
              **(#)**
              **Unexercisable**
            
            **Equity
                Incentive Plan Awards: Number of Securities Underlying Unexercised
                Unearned Options**
              **(#)**
            
            **Option
                Exercise Price**
              **($)**
            
            **Option
                Expiration Date**
            
            **Number**
              **of
                Shares**
              **or
                Units**
              **of
                Stock That**
              **Have
                Not**
              **Vested**
              **(#)**
            
            **Market**
              **Value
                of**
              **Shares
                or**
              **Units
                of**
              **Stock
                That**
              **Have
                Not**
              **Vested**
              **($)**
            
            **Equity
                Incentive Plan**
              **Awards:
                Number**
              **of**
              **Unearned
                Shares, Units or Other**
              **Rights**
              **That**
              **Have
                Not**
              **Vested**
              **(#)**
            
            **Equity
                Incentive Plan Awards: Market**
              **or
                Payout Value of Unearned Shares, Units or Other Rights**
              **That**
              **Have
                Not**
              **Vested**
              **($)**Seong
                Yong Cho
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            19,833,333
            (1)
            
            11,503,333.14
            (1)
            
            -
            
            
            -Seong
                Sam Cho
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            19,833,333
            (1)
            
            11,503,333.14
            (1)
            
            -
            
            
            -Doo
                Ho Choi
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            7,555,555
            (2)
            
            4,382,221.90
            (2)
            
            -
            
            
            -





(1)
            Seong
                Yong ChoandSeong
                Sam Chowere each granted a total of 21,000,000 shares of our common stock
                from
                Joytoto Co., Ltd. and Joyon Entertainment Co., Ltd., under their
                employment agreements. However, those shares are subject to a repurchase
                right by the Company over the next thirty six (36) months beginning
                November 1, 2007, at a purchase price of $0.001 per share. Such repurchase
                right expires as to 1/36thof
                the shares for every month the employee is employed by the Company
                in
                their current capacity. Therefore, if the employee remains employed
                with
                us over the next thirty six (36) months, they will each own the shares
                free and clear of our repurchase right. We have categorized the shares
                subject to this right of repurchase as unvested. These shares are
                also
                subject to a one year lock-up period during which they cannot be
                sold or
                otherwise transferred without restrictive legend. As of December
                31, 2007,
                the repurchase right of the Company expired as to 1,166,667 shares
                for
                each employee. Based on our closing price of $1.50 on the date of
                grant,
                October 31, 2007, the 19,833,333 shares still subject to the right
                of
                repurchase would be valued at $29,749,999.





(2)
            Doo
                Ho Choi was granted a total of 8,000,000 shares of our common stock
                from
                Joytoto Co., Ltd. and Joyon Entertainment Co., Ltd., under his employment
                agreement. However, those shares are subject to a repurchase right
                by the
                Company over the next thirty six (36) months beginning November 1,
                2007,
                at a purchase price of $0.001 per share. Such repurchase right expires
                as
                to 1/36thof
                the shares for every month the employee is employed by the Company
                in his
                current capacity. Therefore, if the employee remains employed with
                us over
                the next thirty six (36) months, he will own the shares free and
                clear of
                our repurchase right. We have categorized the shares subject to this
                right
                of repurchase as unvested. These shares are also subject to a one
                year
                lock-up period during which they cannot be sold or otherwise transferred
                without restrictive legend. As of December 31, 2007, the repurchase
                right
                of the Company expired as to 444,445 shares. Based on our closing
                price of
                $1.50 on the date of grant, October 31, 2007, the 7,555,555 still
                subject
                to the right of repurchase would be valued at
                $11,333,332.





24





**ITEM
      12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS** ****





The
      following table sets forth, as of March 31, 2008, certain information with
      respect to the Company’s equity securities owned of record or beneficially by
      (i) each Officer and Director of the Company; (ii) each person who owns
      beneficially more than 10% of each class of the Company’s outstanding equity
      securities; and (iii) all Directors and Executive Officers as a
      group.





**Title
                of Class**
            
            **Name
                and Address**
              **of
                Beneficial Owner (3)**
            
            **Amount
                and Nature of**
              **Beneficial
                Ownership**
            
            **Percent**
              **of
                Class (1)**Common
                Stock
            
            Joytoto
                Co. Ltd. (4)(5)
              3
                FL Sungwoo Bldg
              717-3
                Sooseo-Dong
              Kangnam
                Gu, Seoul, Korea
              135-220
            
            35,000,000
            
            22.8%Common
                Stock
            
            Joyon
                Entertainment Co., Ltd.(4)(5)
              3
                FL Sungwoo Bldg
              717-3
                Sooseo-Dong
              Kangnam
                Gu, Seoul, Korea
              135-220
            
            30,000,000
                (6)
            
            19.5%Common
                Stock
            
            Doo
                Ho Choi (2)(5)
            
            8,000,000
            
            5.2%Common
                Stock
            
            Seong
                Yong Cho (2)(5)
            
            21,000,000
            
            13.7%Common
                Stock
            
            Seong
                Sam Cho (2)(5)
            
            21,000,000
            
            13.7%Common
                Stock
            
            All
                Directors and Officers
              As
                a Group (3 persons)
            
            50,000,000
            
            32.6%





(1)
            Unless
                otherwise indicated, based on 153,612,510 shares of common stock
                issued
                and outstanding following the acquisition of JEI. Shares of common
                stock
                subject to options or warrants currently exercisable, or exercisable
                within 60 days, are deemed outstanding for purposes of computing
                the
                percentage of the person holding such options or warrants, but are
                not
                deemed outstanding for the purposes of computing the percentage of
                any
                other person.





(2)
            Indicates
                one of our officers or directors. Beneficial ownership by these officers
                does not include shares owned by Joytoto Co., Ltd. or Joyon Entertainment
                Co., Ltd.





(3)
            Unless
                indicated otherwise, the address of the shareholder is c/o Joytoto
                USA,
                Inc., 3000 Scott Boulevard, Suite 206, Santa Clara, CA
                95054.





25





(4)
            Joyon
                Entertainment Co., Ltd. is a wholly-owned subsidiary of Joytoto Co.
                Ltd.,
                and as such, the shares of common stock held by both are attributed
                to the
                other. Combined, they own 42.3% of our outstanding common
                stock.





(5)
            On
                November 29, 2007, Joytoto Co., Ltd. and Joyon Entertainment Co.,
                Ltd.
                transferred (i) 21,000,000 shares to Seong Yong Cho (our President
                and a
                member of our Board of Directors), (ii) 21,000,000 shares to Seong
                Sam Cho
                (our CFO and a member of our Board of Directors), and (iii) 8,000,000
                shares to Doo Ho Choi (our COO and a member of our Board of Directors),
                bringing the share ownership to 35,000,000 shares owned by Joytoto
                Co.,
                Ltd., and 30,000,000 shares owned by Joyon Entertainment Co., Ltd.
                The
                shares issued to Seong Yong Cho, Seong Sam Cho and Doo Ho Choi are
                subject
                to a repurchase right by the Company over the next thirty six (36)
                months
                beginning November 1, 2007, at a purchase price of $0.001 per share.
                Such
                repurchase right expires as to 1/36thof
                the shares for every month the employee is employed by the Company
                in
                their current capacity. Therefore, if the employee remains employed
                with
                us over the next thirty six (36) months, they will each own the shares
                free and clear of our repurchase
                right.





(6)
            This
                share total was incorrectly reported as 50,000,000 shares in our
                Current
                Report on Form 8-K filed with the Commission on December 14,
                2007.





The
      issuer is not aware of any person who owns of record, or is known to own
      beneficially, ten percent or more of the outstanding securities of any class
      of
      the issuer, other than as set forth above. There are no classes of stock other
      than common stock issued or outstanding.





There
      are
      currently warrants outstanding to acquire an aggregate of 21,000,000 shares
      of
      our common stock at an exercise price of $0.10 per share which were issued
      to
      the holders of our Junior Convertible Debentures as part of the acquisition
      of
      JEI. There are also currently warrants outstanding to acquire an aggregate
      of
      7,400,000 shares of our common stock at an exercise price of $0.35 per share
      which were issued to three consultants as part of the acquisition of JEI. Other
      than as set forth above, none of these parties owns, in the aggregate and
      including shares of our common stock that may be acquired upon exercise of
      their
      warrants, more than five percent (5%) of our common stock.





There
      are
      no current arrangements which will result in a change in control.





**ITEM
      13 – CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE** ****





Effective
      on February 23, 2007, our wholly-owned subsidiary, Joytoto America, Inc., a
      California corporation, entered into a license agreement with Joytoto Co.,
      Ltd.
      At the time the agreement was entered into, Joytoto America was a wholly-owned
      subsidiary of Joytoto Co., Ltd., prior to becoming our subsidiary as part of
      the
      acquisition of JEI. Following the acquisition of JEI, Joytoto Co., Ltd. became
      our majority and controlling shareholder. The license gives Joytoto America
      an
      exclusive license for one game for the United States of American for three
      (3)
      years. As consideration for the license, Joytoto America paid $400,000 to
      Joytoto Co., Ltd. The license also provides for a thirty percent (30%) of net
      sales royalty fee to be paid to Joytoto Co., Ltd.





26





Effective
      on April 18, 2007, JEI acquired 100% of the issued and outstanding common stock
      of Joytoto America from Joytoto Co, Ltd. in exchange for 5,000,000 shares of
      JEI
      common stock (which later was exchanged for 8,846,154 shares of our common
      stock
      as part of our acquisition of JEI). Joytoto America thus became our wholly-owned
      subsidiary. Concurrently, on April 18, 2007, Joytoto America, Inc. entered
      into
      a Master License Agreement with Joytoto Co., Ltd. and Joyon Entertainment Co.,
      Ltd., both Korean corporations (the “Licensors”). At the time the agreement was
      entered into, JEI was a wholly-owned subsidiary of the Licensors, prior to
      becoming our subsidiary as part of the acquisition of JEI. Following the
      acquisition of JEI, Joytoto Co., Ltd. became our majority and controlling
      shareholder. The Master License gives Joytoto America an exclusive license
      for
      operating an online game service in North America for ten (10) years. As
      consideration for the license, JEI issued 30 million shares of its common stock
      to Joyon Entertainment Co., Ltd. (which later was exchanged for 53,076,923
      shares of our common stock as part of our acquisition of JEI). The license
      also
      provides for a twenty five percent (25%) of net sales royalty to be paid to
      the
      Licensors.





Effective
      on June 11, 2007, our wholly-owned subsidiary, Joytoto Technologies, Inc.,
      a
      Nevada corporation, entered into an Exclusive Distributorship Agreement with
      Joytoto Co., Ltd., a Korean corporation (the “Granting Company”). At the time
      the agreement was entered into, JEI was a wholly-owned subsidiary of the
      Granting Company, prior to becoming our subsidiary as part of the acquisition
      of
      JEI. Following the acquisition of JEI, Joytoto Co., Ltd. became our majority
      and
      controlling shareholder. The Exclusive Distributorship Agreement appoints
      Joytoto Technologies as the exclusive worldwide distributor of an MP3 player
      owned by the Granting Company. As consideration under the agreement, JEI issued
      30 million shares of its common stock to Joytoto Co., Ltd. (which later was
      exchanged for 53,076,923 shares of our common stock as part of our acquisition
      of JEI).





In
      connection with our acquisition of JEI, we issued an aggregate of 115,000,000
      shares of our common stock, restricted in accordance with Rule 144 and
      representing over 74% of our outstanding common stock after the transaction,
      to
      Joytoto Co., Ltd. Subsequent to the closing of the acquisition, Joytoto Co.,
      Ltd. and Joyon Entertainment Co., Ltd. transferred the following: (i) 21,000,000
      shares to Seong Yong Cho (our President and a member of our Board of Directors),
      (ii) 21,000,000 shares to Seong Sam Cho (our CFO and a member of our Board
      of
      Directors), and (iii) 8,000,000 shares to Doo Ho Choi (our COO and a member
      of
      our Board of Directors), bringing their share ownership to 35,000,000 shares
      owned by Joytoto Co., Ltd., and 30,000,000 shares owned by Joyon Entertainment
      Co., Ltd. The shares issued to Seong Yong Cho, Seong Sam Cho and Doo Ho Choi
      are
      subject to a repurchase right by the Company over the next thirty six (36)
      months beginning November 1, 2007, at a purchase price of $0.001 per share.
      Such
      repurchase right expires as to 1/36 th of the
      shares for every month the employee is employed by the Company in their current
      capacity. Therefore, if the employee remains employed with us over the next
      thirty six (36) months, they will each own the shares free and clear of our
      repurchase right.





We
      do not
      have a written policy concerning the review, approval, or ratification of
      transactions with related persons.





We
      do not
      have an audit, compensation, or nominating committee, and none of our Directors
      are considered independent.





We
      have
      not had a promoter during the last five fiscal years.





**ITEM
      14 –
      PRINCIPAL ACCOUNTING FEES AND SERVICES** ****





*Audit
      Fees*





During
      the year ended December 31, 2007, Meyler & Co. billed us $75,000 in fees for
      professional services for the audit of our financial statements and review
      of
      financial statements included in our Form 10-Q’s, as applicable. During the
      period from December 6, 2006 (inception) to December 31, 2007, Meyler & Co.
      billed us $20,000 in fees for professional services for the audit of our
      financial statements and review of our financial statements included in our
      Form
      10-Q’s, as applicable.





27





*Audit
      - Related Fees*





During
      the year ended December 31, 2007, Meyler & Co. billed us $12,350 relating to
      procedures performed in connection with proxy and registration information
      filed
      with the SEC. There were no amounts billed related to any assurance and related
      services related to the performance of the audit or review of our financial
      statements.





*Tax
      Fees*





During
      the year ended December 31, 2007, Meyler & Co. billed us $0 for professional
      services for tax preparation. During the period from December 6, 2006
      (inception) to December 31, 2007, Meyler & Co. billed us $0 for professional
      services for tax preparation.





*All
      Other Fees*





During
      the year ended December 31, 2007, Meyler & Co. did not bill us for any other
      fees. During the period from December 6, 2006 (inception) to December 31, 2007,
      did not bill us for any other fees.





Of
      the
      fees described above for the year ended December 31, 2007, 100% were approved
      by
      either the entire Board of Directors or the Audit Committee. Of the fees
      described above for the period from December 6, 2006 (inception) to December
      31,
      2007, 100% were approved by either the entire Board of Directors or the Audit
      Committee. The Audit Committee’s pre-approval policies and procedures were
      detailed as to the particular service and the audit committee was informed
      of
      each service and such policies and procedures did not include the delegation
      of
      the audit committee’s responsibilities.





28





**PART
      IV**





**ITEM
      15 – EXHIBITS, FINANCIAL STATEMENT SCHEDULES** ****





**(a)(1)**  **Financial
      Statements**





The
      following financial statements are filed as part of this report:




Report
                of Independent Certified Public Accountants
            F-1Consolidated
                Balance Sheet as of December 31, 2007 and 2006
            F-2Consolidated
                Statement of Income for the twelve monthsended
                December 31, 2007 and from December 6, 2006 (inception) to December
                31,
                2007
            F-3Consolidated
                Statement of Changes in Stockholders’Equity
                for the twelve months ended December 31, 2007 and from December 6,
                2006
                (inception) to December 31, 2007
            F-4Consolidated
                Statement of Cash Flows for the twelve months ended December 31,
                2007 and
                from December 6. 2006 (inception) to December 31, 2007
            F-5Notes
                to Consolidated Financial Statements
            F-6





**(a)(2)**  **Financial
      Statement Schedules**





We
      do not
      have any financial statement schedules required to be supplied under this
      Item.





**(a)(3)**  **Exhibits**





Refer
      to
      (b) below.




**(b)**  **Exhibits**





3.1
                (1)
            
            Articles
                of Incorporation dated September 20, 20013.2
                (2)
            
            Articles
                of Amendment to Articles of Incorporation dated June 17,
                20033.3
                (3)
            
            Certificate
                of Amendment to Articles of Incorporation dated January 7, 20053.4
                (6)
            
            Certificate
                of Amendment to Articles of Incorporation dated November 18,
                20053.5
                (4)
            
            Certificate
                of Amendment to Articles of Incorporation dated Effective October
                31,
                20073.6
                (1)
            
            Bylaws
                of Web Views Corporation dated November 10,
                2001





29





10.1
                (5)
            
            Stock
                Exchange Agreement, dated October 12, 200710.2
                (5)
            
            Agreement
                to Purchase Subsidiaries and Cancel Shares, dated October 12,
                200710.3
                (7)
            
            License
                Agreement dated February 23, 200710.4
                (7)
            
            Lease
                Agreement dated February 26, 200710.5
                (7)
            
            Master
                License Agreement dated April 18, 200710.6
                (7)
            
            Exclusive
                Distributorship Agreement dated June 11, 200710.7
                (8)
            
            Employment
                Agreement with Seong Yong Cho dated October 31, 200710.8
                (8)
            
            Employment
                Agreement with Seong Yong Cho dated October 31, 200710.9
                (8)
            
            Employment
                Agreement with Doo Ho Choi dated October 31, 200731.1
            
            Rule
                13a-14(a)/15d-14(a) Certification of Chief Executive
                Officer31.2
            
            Rule
                13a-14(a)/15d-14(a) Certification of Chief Financial
                Officer32.1
            
            Chief
                Executive Officer Certification Pursuant to 18 USC, Section 1350,
                as
                Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.32.2
            
            Chief
                Financial Officer Certification Pursuant to 18 USC, Section 1350,
                as
                Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.





(1)
            Incorporated
                by reference from our Registration Statement on Form 10SB12G filed
                with
                the Commission on July 23, 2002.


(2)
            Incorporated
                by reference from our Current Report on Form 8-K filed with the Commission
                on June 25, 2003.


(3)
            Incorporated
                by reference from our Current Report on Form 8-K filed with the Commission
                on January 7, 2005.


(4)
            Incorporated
                by reference from our Current Report on Form 8-K filed with the Commission
                on November 6, 2007.


(5)
            Incorporated
                by reference from our Current Report on Form 8-K filed with the Commission
                on October 31, 2007.


(6)
            Incorporated
                by reference from our Quarterly Report on Form 10-Q filed with the
                Commission on November 14, 2007.


(7)
            Incorporated
                by reference from our Current Report on Form 8-K filed with the Commission
                on December 14, 2007. (8)
            Incorporated
                by reference from our Annual Report on Form 10-K filed with the Commission
                on April 16, 2008.





30





**SIGNATURES**





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





**Joytoto
                USA, Inc.**Dated:
                May 8, 2008
            
            /s/
                Seong Yong ChoBy:
            Seong
                Yong ChoPresident,
                Chief ExecutiveOfficer
                and DirectorDated:
                May 8, 2008
            
            /s/
                Seong Sam ChoBy:
            Seong
                Sam ChoChief
                Financial Officer,Secretary
                and Director





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





Dated:
                May 8, 2008
            
            /s/
                Seong Yong ChoBy:
            Seong
                Yong ChoPresident,
                Chief ExecutiveOfficer
                and DirectorDated:
                May 8, 2008
            
            /s/
                Seong Sam ChoBy:
            Seong
                Sam ChoChief
                Financial Officer,Secretary
                and DirectorDated:
                May 8, 2008
            
            /s/
                Doo Ho ChoiBy:
            Doo
                Ho Choi,Chief
                Operating Officer andDirector





31





**JOYTOTO
      USA, INC.**


(A
      Development Stage Company)





AUDITED
      FINANCIAL STATEMENTS





FOR
      THE
      PERIOD DECEMBER 6, 2006 (INCEPTION) TO DECEMBER 31, 2006


AND


FOR
      THE
      YEAR ENDED DECEMBER 31, 2007










Table
              of ContentsReport
                of Independent Registered Public Accounting Firm
            F
                1Consolidated
                Balance Sheets
            F
                2Consolidated
                Statements of Operations
            F
                3Consolidated
                Statement of Stockholders’ Equity
            F
                4Consolidated
                Statements of Cash Flows
            F
                5Notes
                to Consolidated Financial Statements
            F
                6











MEYLER
      & COMPANY, LLC


CERTIFIED
      PUBLIC ACCOUNTANTS


ONE
      ARIN
      PARK


1715
      HIGHWAY 35


MIDDLETOWN,
      NJ 07748





Report
      of
      Independent Registered Public Accounting Firm





To
      the
      Board of Directors


and
      Stockholders


Joytoto
      USA, Inc.


Santa
      Clara, CA





We
      have
      audited the accompanying balance sheets of Joytoto USA, Inc. (a
      Development Stage Company) as of
      December 31, 2007 and the related statements of operations, stockholders’
equity, and cash flows for the year ended December 31, 2007 and the cumulative
      period December 6, 2006 (Inception) to December 31, 2007. 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 audits.





We
      conducted our audits 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. The Company is not required to
      have, nor were we engaged to perform, an audit of its internal control over
      financial reporting. Our audit included consideration of internal control over
      financial reporting as a basis for designing audit procedures that are
      appropriate in the circumstances, but not for the purpose of expressing an
      opinion on the effectiveness of the Company’s internal control over financial
      reporting. Accordingly, we express no such opinion. An audit also includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements, assessing the accounting principles used and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audits provide a
      reasonable basis for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Joytoto USA, Inc. (a Development
      Stage Company) as of December 31, 2007 and the results of its operations and
      its
      cash flows for the years ended December 31, 2007 and the period December 6,
      2006
      (Inception) to December 31, 2006 and the cumulative period December 6, 2006
      (Inception) to December 31, 2007, in conformity with accounting principles
      generally accepted in the United States of America.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note C of the notes to the
      financial statements, the Company has an accumulated deficit of
      $50,911,173  and
      has
      not generated any revenues as of the date of this report. These conditions
      raise
      substantial doubt about its ability to continue as a going concern. Management’s
      plans, in regard to subsequent operating activities, are also described in
      Note
      C. The financial statements do not include any adjustments that may result
      from
      the outcome of this uncertainty.





See
      also
      Note A as to restatement and Note H as to exclusive license
      agreements.





Meyler
      & Company, LLC





Middletown,
      NJ


April
      14,
      2008 (except as to Note A which is April 22, 2008)




F-1


**JOYTOTO
        USA, INC.**
 (A
        Development Stage Company)
 
 CONSOLIDATED
        BALANCE SHEET
 December
                    31,
                  2007ASSETSCURRENT
                    ASSETPrepaid
                    expenses
                
                $
                3,527Total
                    current asset
                
                
                3,527Property
                    and equipment, net of accumulated depreciation of $6,924
                
                
                19,904Other
                    assetsLicense
                    Agreements, net of accumulated amortization of $1,081,548
                
                
                15,401,452Goodwill
                
                
                52,912Deposits
                
                
                3,072Total
                    other assets
                
                
                15,457,436Total
                    Assets
                
                $
                15,480,867LIABILITIES
                    AND STOCKHOLDERS' EQUITYCURRENT
                    LIABILITIESBank
                    overdraft
                
                $
                1,695Accrued
                    expenses
                
                
                205,303Due
                    to affiliate
                
                
                105,061Loan
                    payable
                
                
                50,000Total
                    Current Liabilities
                
                
                362,059Stockholders'
                    EquityCommon
                    stock, authorized 300,000,000 shares; par value $0.001; 153,612,510
                    issued
                    and outstanding at December 31,2007
                
                
                153,613Additional
                    paid-in-capital
                
                
                65,876,368Deficit
                    accumulated during development stage
                
                
                (50,911,173
                )Total
                    Stockholders’ Equity
                
                
                15,118,808Total
                    Liabilities and Stockholders’ Equity
                
                $
                15,480,867
 
 See
          accompanying notes to consolidated financial
          statements.


F-2





(A
      Development Stage Company)





CONSOLIDATED
      STATEMENTS OF OPERATIONS


;


For
                the year
              Ended
              December
                31,
              2007
            
            For
                the Period December 6, 2006 (Inception) to
              December
                31,
              2006
            
            For
                the Period December 6, 2006 (Inception) to
              December
                31,
              2007REVENUES
            
            $
            -
            
            $
            -
            
            $
            -COSTS
                AND EXPENSESSelling,
                general and administrative
            
            
            49,753,967
            
            
            5,001
            
            
            49,758,968Depreciation
            
            
            5,806
            
            
            -
            
            
            5,806Amortization
            
            
            1,061,786
            
            
            -
            
            
            1,061,786Total
                Costs and Expenses
            
            
            50,821,559
            
            
            5,001
            
            
            50,826,560NET
                LOSS
            
            $
            (50,821,559
            )
            $
            (5,001
            )
            $
            (50,826,560
            )NET
                LOSS PER COMMON SHARE (Basic and Diluted)
            
            $
            (0.76
            )
            $
            (5.00
            )
            $
            (0.94
            )WEIGHTED
                AVERAGE SHARES OUTSTANDING
            
            
            67,186,064
            
            
            1,000
            
            
            54,225,616


60;


See
      accompanying notes to consolidated financial statements.


F-3





**JOYTOTO
      USA, INC.**


(A
      Development Stage Company)





CONSOLIDATED
      STATEMENT OF STOCKHOLDERS’ EQUITY


For
      the
      Period January 1, 2006 to December 31, 2007





Additional
            
            Deficit
              Accumulated
              During
            
            TotalCommon
                Stock
            
            Paid
                in
            
            Development
            
            Stockholders'Shares
            
            Amount
            
            Capital
            
            Stage
            
            EquityBalance,
                December 31, 2005
            
            
            4,380,461
            
            $
            4,380
            
            $
            12,604,222
            
            $
            (13,139,391
            )
            $
            (530,789
            )Beneficial
                conversion feature
            
            
            -
            
            
            -
            
            
            1,339,788
            
            
            -
            
            
            1,339,788Net
                loss for the year ended December 31, 2006
            
            
            -
            
            
            -
            
            
            -
            
            
            (2,051,539
            )
            
            (2,051,539
            )Balance,
                December 31, 2006
            
            
            4,380,461
            
            
            4,380
            
            
            13,944,010
            
            
            (15,190,930
            )
            
            (1,242,540
            )Transactions
                relating to Biostem, Inc.:Cancellation
                of consultant shares
            
            
            (37,500
            )
            
            (37
            )
            
            (89,963
            )
            
            90,000
            
            
            -Cancellation
                of management shares
            
            
            (3,250,000
            )
            
            (3,250
            )
            
            3,250
            
            
            -
            
            
            -Spinout
                of parking assets
            
            
            -
            
            
            -
            
            
            -
            
            
            1,105,790
            
            
            1,105,790Junior
                debenture conversion
            
            
            17,350,000
            
            
            17,350
            
            
            69,400
            
            
            -
            
            
            86,750Share
                issuances to induce conversion
            
            
            16,169,549
            
            
            16,170
            
            
            24,238,154
            
            
            (24,254,324
            )
            
            -Balance
                prior to reverse merger
            
            
            34,612,510
            
            
            34,613
            
            
            38,164,851
            
            
            (38,249,464
            )
            
            (50,000
            )Joyon
                Entertainment, Inc. equity
            
            
            -
            
            
            65,001
            
            
            16,518,000
            
            
            (5,001
            )
            
            16,578,000Reverse
                merger
            
            
            -
            
            
            (65,001
            )
            
            65,001
            
            
            -
            
            
            -Shares
                issued to Joytoto Co. Ltd.
            
            
            115,000,000
            
            
            115,000
            
            
            (115,000
            )
            
            -
            
            
            -Capitalization
                of prior losses
            
            
            -
            
            
            -
            
            
            (38,164,851
            )
            
            38,164,851
            
            
            -Balance
                subsequent to reverse merger
            
            
            149,612,510
            
            
            149,613
            
            
            16,468,001
            
            
            (89,614
            )
            
            16,528,000Shares
                issued to consultants
            
            
            4,000,000
            
            
            4,000
            
            
            5,996,000
            
            
            -
            
            
            6,000,000Warrants
                issued
            
            
            -
            
            
            -
            
            
            39,245,700
            
            
            -
            
            
            39,245,700Stock
                based compensation
            
            
            -
            
            
            -
            
            
            4,166,667
            
            
            -
            
            
            4,166,667Net
                loss for the year ended December 31, 2007
            
            
            -
            
            
            -
            
            
            -
            
            
            (50,821,559
            )
            
            (50,821,559
            )Balance,
                December 31, 2007
            
            
            153,612,510
            
            $
            153,613
            
            $
            65,876,368
            
            $
            (50,911,173
            )
            $
            15,118,808





See
      accompanying notes to consolidated financial statements.


F-4





**JOYTOTO
      USA, INC.**


(A
      Development Stage Company)





CONSOLIDATED
      STATEMENTS OF CASH FLOWS





For the year
              Ended
              December
                31,
              2007
            
            For
                the Period December 6,
              2006
              (Inception)
                to December 31,
              2006
            
            For
                the Period December 6,
              2006
              (Inception)
                to December 31,
              2007CASH
                FLOWS FROM OPERATING ACTIVITIESNet
                loss
            
            $
            (50,821,559
            )
            $
            (5,001
            )
            $
            (50,826,560
            )Adjustments
                to reconcile net loss to net cash (used in) provided by operating
                activities:Depreciation
                and amortization
            
            
            1,067,592
            
            
            -
            
            
            1,067,592Stock
                based compensation
            
            
            49,412,367
            
            
            1
            
            
            49,412,368Changes
                in assets and liabilities:(Increase)
                decrease in prepaid expenses
            
            
            (1,710
            )
            
            -
            
            
            (1,710
            )Increase
                (decrease) in accrued expenses
            
            
            138,344
            
            
            5,000
            
            
            143,344Increase
                (decrease) in due to affiliate
            
            
            105,061
            
            
            -
            
            
            105,061Net
                cash used in operating activities
            
            
            (99,905
            )
            
            -
            
            
            (99,905
            )CASH
                FLOWS FROM INVESTING ACTIVITIESCash
                acquired in acquisition
            
            
            48,210
            
            
            -
            
            
            48,210Net
                cash provided by investing activities
            
            
            48,210
            
            
            -
            
            
            48,210CASH
                FLOWS FROM FINANCING ACTIVITIESLoan
                proceeds
            
            
            50,000
            
            
            -
            
            
            50,000Bank
                overdraft
            
            
            1,695
            
            
            -
            
            
            1,695Net
                cash provided by financing activities
            
            
            51,695
            
            
            -
            
            
            51,695Net
                increase in cash
            
            
            -
            
            
            -
            
            
            -CASH
                AT BEGINNING OF PERIOD
            
            
            -
            
            
            -
            
            
            -CASH
                AT END OF PERIOD
            
            $
            -
            
            $
            -
            
            $
            -SUPPLEMENTAL
                CASH FLOW DISCLOSURESNon-Cash
                Items:Acquisition
                of Joytoto America, Inc.Cash
            
            
            (48,210
            )
            
            -
            
            
            (48,210
            )Prepaid
                expenses
            
            
            (1,817
            )
            
            -
            
            
            (1,817
            )Property
                and equipment
            
            
            (26,828
            )
            
            -
            
            
            (26,828
            )Accumulated
                depreciation
            
            
            1,118
            
            
            -
            
            
            1,118License
                agreement
            
            
            (400,000
            )
            
            -
            
            
            (400,000
            )Accumulated
                amortization
            
            
            19,762
            
            
            
            
            
            19,762Goodwill
            
            
            (52,912
            )
            
            -
            
            
            (52,912
            )Deposits
            
            
            (3,072
            )
            
            -
            
            
            (3,072
            )Accrued
                expenses
            
            
            11,959
            
            
            -
            
            
            11,959Common
                stock
            
            
            1
            
            
            -
            
            
            1Additional
                paid-in-capital
            
            
            499,999
            
            
            -
            
            
            499,999Issuance
                of stock to acquire license agreements
            
            
            16,083,000
            
            
            -
            
            
            16,083,000


<


/font>


See
      accompanying notes to consolidated financial statements.


F-5




**JOYTOTO
      USA, INC.**


(A
      Development Stage Company)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


December
      31, 2007





NOTE
      A – RESTATEMENT





The
      liabilities, additional paid-in capital and deficit accumulated during
      development stage on the consolidated balance sheet and the selling, general
      and
      administrative expenses on the consolidated statement of operations have been
      restated to adjust the accounting for the employment contracts with the
      Company’s three executives. Previously, the total value of the shares issued was
      recorded as selling, general and administrative expenses rather than being
      recorded over the life of the agreements as the services are being performed.
      Per the terms of their employment contracts, each employee has earned 2/36ths
      of
      the shares as of December 31, 2007, which totals 2,777,778 shares for
      $4,166,667. Also included in the restated amounts are the value of the Company’s
      repurchase rights and the other amounts due under the employment contracts
      totaling $53,222. The following summarizes the restatement:





As
                Reported
            
            Adjustments
            
            As
                RestatedAccrued
                Expenses
            
            
            152,081
            
            
            53,222
            
            
            205,303Additional
                Paid-in Capital
            
            
            136,709,701
            
            
            (70,833,333
            )
            
            65,876,368Deficit
                Accumulated DuringDevelopment
                Stage
            
            
            (121,691,284
            )
            
            70,780,111
            
            
            (50,911,173
            )Selling,
                General and AdministrativeExpenses
            
            
            120,534,078
            
            
            (70,780,111
            )
            
            49,753,967Net
                Loss
            
            
            (121,601,670
            )
            
            70,780,111
            
            
            (50,821,559
            )





NOTE
      B – STOCK EXCHANGE AGREEMENT





On
      October 12, 2007 Joytoto USA, Inc. (formerly Biostem, Inc.) (the “Company”)
      entered into a Stock Exchange Agreement with Joytoto Co., Ltd., a Korean company
      (“Joytoto Korea”), and Joyon Entertainment Co., Ltd., a Korean company (“Joyon
      Korea”), to purchase 100% of the issued and outstanding capital stock of Joyon
      Entertainment, Inc., a Delaware corporation (“JEI”), in exchange for 115,000,000
      shares of common stock (after giving effect to a one-for-forty reverse split)
      as
      well as the divestment of the Company’s two subsidiaries, BH Holding Company,
      Inc. and ABS Holding Company, Inc.





In
      order
      to complete the acquisition of JEI, we were also required to secure a release
      of
      the Company from the holders of our Senior Secured Convertible Debentures,
      and
      effect the conversion of our Junior Convertible Secured Debentures. Accordingly,
      we entered into an Agreement to Purchase Subsidiaries and Cancel Shares held
      by
      Marc Ebersole (then our CEO and Director), Christine Ebersole (then a Director
      and employee), and Scott Schweber (then a Director), as well as the holders
      of
      our Senior Secured Convertible Debentures and our Junior Convertible Debentures
      (the “Subsidiary Purchase Agreement”). Under the terms of the Subsidiary
      Purchase Agreement, Marc Ebersole, Christine Ebersole and Scott Schweber (the
      “Management Shareholders”) released the Company from all claims they may have
      had against the Company and its lenders, and tendered to the Company a total
      of
      130,000,000 shares of common stock for cancellation. Our Senior Secured
      Debenture Holder released the Company from its obligations under the Senior
      Debenture, and such obligations will remain obligations of the two former
      subsidiaries, BH Holding Company, Inc. and ABS Holding Company, Inc. The holders
      of the Junior Convertible Debentures, which were convertible into 17,350,000
      shares of common stock (after giving effect to the one-for-forty reverse split),
      converted their debentures into (i) 17,350,000 shares of common stock, (ii)
      were
      issued an additional 16,169,549 shares of common stock, and (iii) were issued
      warrants to purchase 21,000,000 shares of common stock at an exercise price
      of
      $0.10 per share (all amounts reflect issuances after giving effect to the above
      mentioned reverse stock split). Finally, we transferred 100% of the outstanding
      capital stock of the two operating subsidiaries, BH Holding Company, Inc. and
      ABS Holding Company, Inc. to the Management Shareholders and the holders of
      the
      Junior Convertible Debentures.


F-6


**JOYTOTO
      USA, INC.**


(A
      Development Stage Company)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


December
      31, 2007





NOTE
      B – STOCK EXCHANGE AGREEMENT (Continued)





The
      following summarizes the assets and liabilities of the spun out
      subsidiaries:





Assets
            
            $
            106,540Liabilities
            
            
            1,212,330





The
      following summarizes the operations of the spun out subsidiaries prior to the
      spin out on October 31, 2007:





Revenues
            
            $
            1,720,826Costs
                and expenses
            
            
            2,397,394$
            (676,568
            )





As
      a
      result of the above transactions, Joytoto Co. Ltd., a Korean company,
      beneficially owns approximately 75% of the Company’s voting shares (including
      shares owned by its wholly-owned subsidiary, JEI). As a result, this stockholder
      can exert significant influence over all matters requiring stockholder approval,
      including the election and removal of directors, any merger, consolidation
      or
      sale of all or substantially all of assets, as well as any charter amendment
      and
      other matters requiring stockholder approval.





Effective
      on October 31, 2007, the Company’s name was changed to Joytoto USA, Inc. and its
      common stock commenced trading under the new symbol “JYTO”.





NOTE
      C – NATURE OF BUSINESS AND GOING CONCERN





Organization
      and Description of Business





Joytoto
      USA, Inc. presently provides online gaming services and MP3 and other technical
      products through its wholly-owned subsidiaries.





Joyon
      Entertainment, Inc. was incorporated on December 6, 2006 under the laws of
      the
      State of Delaware. JEI manages the business of its two wholly-owned
      subsidiaries, Joytoto America, Inc (“JAI”), and Joytoto Technologies, Inc
      (“JTI”).





Joytoto
      America, Inc., a 100%-owned subsidiary of Joyon Entertainment, Inc., was formed
      on July 7, 2006 under the laws of the State of California. Joytoto America,
      Inc.
      is engaged in the business of providing online games via the internet. It was
      acquired by JEI on April 18, 2007 for 5,000,000 shares of JEI’s common
      stock.





Joytoto
      Technologies, Inc., a 100%-owned subsidiary of Joyon Entertainment, Inc., was
      formed on September 1, 2006 under the laws of the State of Nevada. Joytoto
      Technologies, Inc.’s business is to engage in the sales and distribution of MP3
      and other technical devices. It was acquired by JEI on June 11, 2007 for $1.00
      prior to acquiring a license agreement. Joytoto Technologies, Inc. had no assets
      or liabilities prior to its acquisition by JEI and to date, has had no operating
      activity.


F-7


**JOYTOTO
      USA, INC.**


(A
      Development Stage Company)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


December
      31, 2007





NOTE
      C -
      NATURE OF BUSINESS AND GOING CONCERN (Continued)





Going
      Concern





As
      indicated in the accompanying financial statements, the Company has incurred
      net
      losses of $50,821,559 for the year ended December 31, 2007 and $5,001 for the
      period December 6, 2006 (Inception)
      to December 31, 2006 and has an accumulated deficit of $50,911,173 and negative
      working capital of $358,532 at December 31, 2007. Management’s plans include
      raising capital through the equity markets to fund future operations and
      generating revenue through its license agreements. Failure to raise adequate
      capital and generate adequate sales revenues could result in the Company having
      to curtail or cease operations. Additionally, even if the Company does raise
      sufficient capital to support its operating expenses and generate adequate
      revenues, there can be no assurances that the revenue will be sufficient to
      enable it to develop business to a level where it will generate profits and
      cash
      flows from operations. These matters raise substantial doubt about the Company’s
      ability to continue as a going concern. However, the accompanying financial
      statements have been prepared on a going concern basis, which contemplates
      the
      realization of assets and satisfaction of liabilities in the normal course
      of
      business. These financial statements do not include any adjustments relating
      to
      the recovery of the recorded assets or the classification of the liabilities
      that might be necessary should the Company be unable to continue as a going
      concern.





See
      also
      Note H as to exclusive license agreements.





NOTE
      D –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Consolidated
                Financial Statements





The
                consolidated financial statements include the accounts of Joytoto
                USA,
                Inc. and its wholly owned subsidiaries. All significant intercompany
                balances and transactions have been eliminated in
                consolidation.





Use
                of Estimates





The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the amounts of assets and liabilities and disclosure of contingent assets
      and liabilities at the date of the financial statements and reported amounts
      of
      revenues and expenses during the reporting period. Actual results could differ
      from those estimates.





Cash
      Equivalents





The
      Company considers all highly-liquid investments with an original maturity of
      three months or less to be cash equivalents. There were no cash equivalents
      at
      December 31, 2007.





Equipment
      and Depreciation





Equipment
      is stated at cost and is depreciated using the straight line method over the
      estimated useful lives of the respective assets. Routine maintenance, repairs
      and replacement costs are expensed as incurred and improvements that extend
      the
      useful life of the assets are capitalized. When equipment is sold or otherwise
      disposed of, the cost and related accumulated depreciation are eliminated from
      the accounts and any resulting gain or loss is recognized in
      operations.





Revenue
      Recognition





The
      Company plans to recognize revenue from the sale of products and services in
      accordance with Securities and Exchange Commission Staff Accounting Bulletin
      No.
      104 “Revenue Recognition in Financial Statements” (“SAB No. 104”). Revenues will
      be recognized when all of the following criteria have been met: persuasive
      evidence for an arrangement exists; delivery has occurred or services have
      been
      rendered; the fee is fixed or determinable; and collectibility is reasonably
      assured.


F-8


**JOYTOTO
      USA, INC.**


(A
      Development Stage Company)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


December
      31, 2007





NOTE
      D – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





Intangible
      Assets, Goodwill and License Agreements





The
      company accounts for goodwill and license agreements in accordance with
      Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and
      other Intangible Assets.” Under SFAS 142, goodwill and intangibles with
      indefinite lives are not amortized; rather they are tested for impairment at
      least annually.





Intangible
      assets and license agreements, other than goodwill, with definite lives will
      be
      amortized over their useful lives ranging from 3 to 10 years. The company
      periodically evaluates the reasonableness of the useful lives of these
      intangible assets.





In
      order
      to test goodwill and other intangible assets with indefinite lives for
      impairment under SFAS 142, a determination of the fair value of the Company’s
      reporting units for its goodwill valuation and its other intangible assets
      with
      indefinite lives is required and is based upon, among other things, estimates
      of
      future operating performance of the reporting unit being valued. Changes in
      market conditions, among other factors may have an impact on these
      estimates.





The
      Company reviews long-lived assets, including intangibles with definite useful
      lives, for impairment whenever events or changes in circumstances indicate
      the
      carrying amount of an asset may not be recoverable. Recoverability of assets
      to
      be held and used is measured by a comparison of the carrying amount of an asset
      to future undiscounted net cash flows expected to be generated by the asset.
      If
      such assets are considered to be impaired, the impairment to be recognized
      is
      measured by the amount by which the carrying amount of the assets exceeded
      the
      fair value of the assets.





Fair
      Values of Financial Instruments





The
      Company uses financial instruments in the normal course of business. The
      carrying values of cash equivalents, accounts receivable, accounts payable,
      accrued expenses and other current liabilities approximate their fair value
      due
      to the short-term maturities of these assets and liabilities.





Income
      Taxes





The
      Company accounts for income taxes in accordance with Statement of Financial
      Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes.” Under the
      assets and liability method of SFAS 109, deferred tax assets and liabilities
      are
      recognized for the estimated future tax consequences attributable to differences
      between the financial statement carrying amounts of existing assets and
      liabilities and their respective tax bases. Deferred tax assets and liabilities
      are measured using enacted tax rates in effect for the year in which those
      temporary differences are expected to be recovered or settled.





Net
      Loss Per Common Share





The
      Company computes per share amounts in accordance with Statement of Financial
      Accounting Standards (“SFAS”) No. 128, “Earnings per Share.” SFAS per share
      (“EPS”) requires presentation of basic and diluted EPS. Basic EPS is computed by
      dividing the income (loss) available to Common Stockholders by the
      weighted-average number of common shares outstanding for the period. Diluted
      EPS
      is based on the weighted-average number of shares of common stock and common
      stock equivalents outstanding during the periods. There are no potential
      dilutive common shares at December 31, 2007.


F-9





**JOYTOTO
      USA, INC.**


(A
      Development Stage Company)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


December
      31, 2007





NOTE
      D –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





Stock-Based
      Compensation





The
      Company accounts for employee stock based compensation and stock issued for
      services using the fair value method.





The
      Company accounts for stock issued for services using the fair value method.
      In
      accordance with Emerging Issues Task Force (“EITF”) 76-18, the measurement date
      of shares issued for services is the date at which the counterparty’s
      performance is complete.





Development
      Stage Company





The
      Company is a development stage company as defined by Financial Accounting
      Standards No. 7. The Company is dedicating substantially all of its present
      efforts to establish a new business. All losses accumulated since its’ inception
      have been considered as part of the Company’s development stage
      activities.





NOTE
      E – RECENT ACCOUNTING PRONOUNCEMENTS





In
      June 2006, the Financial Accounting Standards Board (“FASB”) issued
      Interpretation 48, “Accounting for Income Tax Uncertainties” (“FIN 48”). FIN 48
      defines the threshold for recognizing the benefits of tax return positions
      in
      the financial statements as “more-likely-than-not” to be sustained by the taxing
      authority. The recently issued literature also provides guidance on the
      derecognition, measurement and classification of income tax uncertainties,
      along
      with any related interest and penalties. FIN 48 also includes guidance
      concerning accounting for income tax uncertainties in interim periods and
      increases the level of disclosures associated with any recorded income tax
      uncertainties. FIN 48 is effective for fiscal years beginning after
      December 15, 2006. The Company expects to adopt the provisions of FIN 48
      beginning in the first quarter of 2008. The Company is currently in the process
      of determining the impact, if any, of adopting the provisions of FIN 48 on
      its
      financial position, results of operations and liquidity. In September 2006,
      the
      FASB issued SFAS No. 157, “Fair Value Measurements,” which defines fair value,
      establishes a framework for measuring fair value under other accounting
      pronouncements that permit or require fair value measurements, changes the
      methods used to measure fair value and expands disclosures about fair value
      measurements. In particular, disclosures are required to provide information
      on
      the extent to which fair value is used to measure assets and liabilities; the
      inputs used to develop measurements; and the effect of certain of the
      measurements on earnings (or changes in net assets). SFAS No. 157 is effective
      for fiscal years beginning after November 15, 2007 and interim periods within
      those fiscal years. Early adoption, as of the beginning of an entity’s fiscal
      year, is also permitted, provided interim financial statements have not yet
      been
      issued. The Company expects to adopt the provisions of SFAS No. 157 and is
      currently evaluating the potential impact, if any, that the adoption of SFAS
      No.
      157 will have on its consolidated financial statements.


F-10





**JOYTOTO
      USA, INC.**


(A
      Development Stage Company)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


December
      31, 2007





NOTE
      E – RECENT ACCOUNTING PRONOUNCEMENTS (Continued)





In
      September 2006, the Securities and Exchange Commission issued Staff Accounting
      Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when
      Quantifying Misstatements in Current Year Financial
      Statements” (“SAB No. 108”). SAB No. 108 provides guidance on how prior year
      misstatements should be considered when quantifying misstatements in the current
      year financial statements. SAB No. 108 requires registrants to quantify
      misstatements using both a balance sheet and an income statement approach and
      evaluate whether either approach results in quantifying a misstatement that,
      when all relevant quantitative and qualitative factors are considered, is
      material. SAB No. 108 does not change the guidance in SAB No. 99, “Materiality,”
when evaluating the materiality of misstatements. SAB No. 108 is effective
      for
      fiscal years ending after November 15, 2006. Upon initial application, SAB
      No.
      108 permits a one-time cumulative effect adjustment to beginning retained
      earnings. The Company adopted SAB No. 108 for the fiscal year ended December
      31,
      2006. Adoption of SAB No. 108 did not have a material impact on the consolidated
      financial statements.





In
      February 2007, the FASB issued SFAS No. 159, *The
      Fair Value Option for Financial Assets and Financial Liabilities* (“SFAS 159”).
      SFAS 159 allows entities to measure at fair value many financial
      instruments and certain other assets and liabilities that are not otherwise
      required to be measured at fair value. SFAS 159 is effective for fiscal
      years beginning after November 15, 2007. We have not determined what
      impact, if any, that adoption will have on our results of operations, cash
      flows
      or financial position.





In
      December 2007, the FASB issued SFAS No. 141R, *Business
      Combinations* .
      This
      standard establishes principles and requirements for how an acquirer recognizes
      and measures in its financial statements the identifiable assets acquired,
      the
      liabilities assumed, any non-controlling interest in the acquiree and the
      goodwill acquired. This statement also establishes disclosure requirements
      which
      will enable users to evaluate the nature and financial effects of the business
      combination. SFAS No.141R is effective for us for acquisitions made after
      November 30, 2009. The Company is currently evaluating the potential
      impact, if any, that the adoption of SFAS No. 141R will have on its consolidated
      financial statements.





In
      December 2007, the FASB issued SFAS No. 160, *Noncontrolling
      Interests in Consolidated Financial Statements* .
      This
      standard outlines the accounting and reporting for ownership interest in a
      subsidiary held by parties other than the parent. SFAS No. 160 is effective
      for our first quarter of 2010. The Company is currently evaluating the potential
      impact, if any, that the adoption of SFAS No. 160 will have on its consolidated
      financial statements.





NOTE
      F –
ACQUISITION OF JOYTOTO AMERICA, INC.





On
      April
      18, 2007, Joyon Entertainment, Inc. entered into a Share Exchange Agreement
      (the
“Share Exchange Agreement”) with Joytoto Co., Ltd., a Korean corporation,
      pursuant to which the Company agreed to acquire the outstanding capital stock
      of
      Joytoto America, Inc. (“JAI Shares”) from Joytoto Co., Ltd., in exchange for
      five million (5,000,000) shares of JEI’s common stock. The JAI Shares constitute
      one hundred percent (100%) of Joytoto America, Inc.’s issued and outstanding
      shares.





In
      connection with the share exchange agreement, the Company valued the 5,000,000
      shares issued at $0.10 per share.





The
      fair
      value of the net assets acquired at April 18, 2007 is as
      follows:


F-11





**JOYTOTO
      USA, INC.**


(A
      Development Stage Company)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


December
      31, 2007





NOTE
      F –
ACQUISITION OF JOYTOTO AMERICA, INC. (Continued)





Cash
            
            $
            48,210Prepaid
                expenses
            
            
            1,817Fixed
                asset
            
            
            25,710License
                agreement
            
            
            380,238Deposits
            
            
            3,072Liabilities
                assumed
            
            
            (11,959
            )447,088Purchase
                price
            
            
            500,000Goodwill
            
            $
            52,912





No
      Pro-forma Statement of Operations is presented since the company has had no
      operating history.





NOTE
      G – FIXED ASSETS





Fixed
      Assets are comprised of the following:





December 31
            
            Estimated2007
            
            Useful LifeComputers
            
            $
            23,500
            
            
            3 yearsOfficer
                furniture and equipment
            
            
            3,328
            
            
            7 years26,828Less:
                accumulated depreciation
            
            
            6,924$
            19,904





NOTE
      H – LICENSE AGREEMENTS





On
      February 23, 2007 Joytoto America, Inc. entered into a license agreement with
      Joytoto Korea, for one game, Pang Pang Terrible, for consideration of $400,000.
      The license is for the United States of America territory and is for a term
      of
      three (3) years. The agreement provides for a thirty percent (30%) of net sales
      royalty fee payable to the licensor. Net sales are defined as gross sales less
      fifteen percent (15%).





On
      April
      18, 2007 Joytoto America, Inc. entered into an exclusive North American Master
      License Agreement with Joytoto Korea and Joyon Korea. The license gives JAI
      the
      exclusive right to the use and commercialization of four (4) game titles
      immediately, and the right to acquire no less than twenty (20) additional game
      title licenses for no additional consideration. Each game license provides
      for a
      twenty-five percent (25%) of net sales royalty fee payable to the licensor.
      Net
      sales are defined as gross sales less fifteen percent (15%). The term of the
      agreement is ten (10) years and allows for two five (5) year extensions for
      additional consideration of ten thousand dollars ($10,000). Upon execution
      of
      the Master License Agreement, JEI issued Joyon Korea thirty million (30,000,000)
      common shares as consideration. Prior to the acquisition of the Master License
      Agreement, JEI had an independent business valuation performed whereby the
      Company’s enterprise value was calculated to be $0.1799 per share. Accordingly,
      the shares issued for the license were valued at this amount.





On
      June
      11, 2007 Joytoto Technologies, Inc. entered into an Exclusive Distributorship
      Agreement with Joytoto Korea. The agreement provides that JTI has the worldwide,
      exclusive right to distribute, market, promote and sell Joytoto Korea’s current
      and future model MP3 player devices. As consideration for the Exclusive
      Distributorship Agreement JEI issued Joytoto Korea thirty million (30,000,000)
      common shares. Prior to the acquisition of the Exclusive Distributorship
      Agreement the Company had an independent business valuation performed whereby
      the Company’s enterprise value was calculated to be $0.3562 per share.
      Accordingly, the shares issued for the license agreement were valued at this
      amount.


F-12





**JOYTOTO
      USA, INC.**


(A
      Development Stage Company)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


December
      31, 2007





NOTE
      H – LICENSE AGREEMENTS (Continued)





The
      above
      valuations contemplate that the agreements with significant worldwide customers,
      i.e. Best Buy Co., Inc. and Reigncom, a Korean company, will be transferred
      by
      Joytoto Korea to the U.S. companies. The valuations also contemplate the Company
      raising significant funds for operations. To date, no funds have been raised.





At
      December 31, 2007, the Company tested these assets for impairment due to the
      lack of sales and lack of funds raised. As part of this test, management
      computed the future net cash flows expected to be generated by these assets
      and
      compared these amounts to the carrying value of the assets. As the expected
      future net cash flows exceeded the carrying values of the assets, Management
      concluded that there was no impairment of the assets. The net cash flows were
      computed based upon Management’s best assessment of the future cash flows of the
      license agreements. Management’s conclusion also contemplates the ability to
      raise sufficient funds for operations. Management believes that these funds
      will
      be raised in the near future.





The
      license agreements are comprised of the following:





December 31,
            
            Estimated Life2007
            
            Useful LifePang
                Pang License
            
            $
            400,000
            
            
            3 yearsNorth
                American Master License
            
            
            5,397,000
            
            
            10 yearsExclusive
                Distributorship
            
            
            10,686,000
            
            
            10 years16,483,000Less:
                accumulated amortization
            
            
            1,081,548$
            15,401,452





Estimated
      amortization for the five succeeding years is as follows:





2008
            
            
            1,741,6332009
            
            
            1,741,6332010
            
            
            1,628,5742011
            
            
            1,608,3002012
            
            
            1,608,3008,328,440


F-13





**JOYTOTO
      USA, INC.**


(A
      Development Stage Company)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


December
      31, 2007





NOTE
      I – DUE TO AFFILIATE





Certain
      expenses have been paid on behalf of the Company by Joytoto Korea. The Company
      has recognized the expenses and corresponding payable to Joytoto Korea as due
      to
      affiliate. The advances are non-interest
      bearing and have no specific repayment date.





NOTE
      J – LOAN PAYABLE





On
      September 26, 2007 the Company signed a promissory note with a principal amount
      of fifty thousand dollars ($50,000). The term of the promissory note is one
      year
      and bears interest at an annual rate of six percent (6%). The note may be repaid
      at any time prior to its due date without a prepayment penalty, however if
      any
      amount of the principal plus accrued interest remains unpaid after the note’s
      due date then the annual rate of interest increases to ten percent (10%) per
      annum.





NOTE
      K –
STOCKHOLDERS’ EQUITY





The
      Company’s certificate of incorporation was amended October 31, 2007 to change
      the name of the company from Biostem, Inc. to Joytoto USA, Inc. Additionally,
      a
      1 to 40 reverse stock split was effected. The financial statements give effect
      to these transactions.





In
      connection with the JEI acquisition, the Company’s consulting agreement with
      Vijay Alimchandami, dba Financial Systems International (“Financial”) was
      rescinded and 37,500 shares of the Company’s common stock were
      canceled.





Pursuant
      to the Subsidiary Purchase Agreement, 3,250,000 shares of the Company’s common
      stock were canceled by the Company’s management and net liabilities of
      $1,105,790 were spun out to the former Management Shareholders and the holders
      of the Junior Convertible Debentures.





In
      connection with the Subsidiary Purchase Agreement, the Company’s Junior
      Convertible Debenture holders converted their debentures into 17,350,000 shares
      of the Company’s common stock.





As
      an
      inducement to convert the Junior Convertible Debentures, 16,169,549 shares
      of
      the Company’s common stock were issued to the debenture holders at $1.50 per
      share.





On
      October 31, 2007 the Company acquired Joyon Entertainment, Inc. in exchange
      for
      115,000,000 shares of common stock.





In
      connection with the acquisition of JEI, the company issued 4,000,000 shares
      of
      its common stock to consultants on October 31, 2007. The shares were valued
      at
      $1.50 per share, the closing price of the Company’s common stock on that day.
      Accordingly, stock for services in the amount of $6,000,000 was recorded in
      selling, general and administrative expense.





NOTE
      L - INCOME TAXES





The
      Company will file a consolidated income tax return on a calendar year basis.
      At
      December 31, 2007, the Company had an unused net operating loss carryforward
      of
      approximately $1,414,000 for income tax purposes, which expires at various
      dates
      imposed by the rules and regulations of the Internal Revenue Service. This
      net
      operating loss carryforward may result in future income tax benefits of
      approximately $424,000; however because realization is uncertain at this time,
      a
      valuation reserve in the same amount has been established. Deferred income
      taxes
      reflect the net effects of temporary differences between the carrying amounts
      of
      assets and liabilities for financial reporting purposes and the amounts used
      for
      income tax purposes.


F-14





**JOYTOTO
      USA, INC.**


(A
      Development Stage Company)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


December
      31, 2007





NOTE
      L - INCOME TAXES (Continued)




Significant
        components of the Company’s deferred tax liabilities and assets as of December
        31, 2007 and 2006 are as follows:





For the year ended
              December 31, 2007
            
            For the period
              December 2006
              (Inception) to
              December 31, 2006Deferred
                tax liabilities
            
            $
            -
            
            $
            -Net
                Operating loss carryforwards
            
            $
            424,000
            
            $
            5,001Valuation
                allowance for deferred taxes
            
            
            (424,000
            )
            
            (5,001
            )Deferred
                tax asset
            
            $
            -
            
            $
            -





NOTE
      M – WARRANTS





In
      connection with the acquisition of Joyon Entertainment, Inc., 21,000,000
      warrants with an exercise of $0.10 were issued to the debenture holders. The
      warrants were valued at $1.4259 per warrant or $29,943,900. The warrants vested
      immediately and expire October 31, 2014. The warrants were valued using a Black
      Scholes valuation model and were recorded as such in selling, general and
      administrative expense.





In
      connection with the acquisition of Joyon Entertainment, Inc., the company issued
      4,000,000 warrants with an exercise price of $0.35 to consultants on October
      31,
      2007. The warrants were valued at $1.257 per warrant or $5,028,000. The warrants
      vested immediately and expire October 31, 2014. The warrants were valued using
      a
      Black Scholes valuation model and were recorded as such in selling, general
      and
      administrative expense.





The
      Company entered into a consulting agreement with London Finance Group, Ltd.
      (“LFG”) on





October
      12, 2007 with an effective date of October 1, 2007 and is for a period of two
      years. In connection with this agreement, the Company gave LFG warrants to
      purchase 3,400,000 shares of common stock at an exercise price of $0.35 per
      share. The warrants vested immediately and expire October 31, 2014. The value
      of
      the warrants was determined to be $1.257 per warrant or $4,273,800 using a
      Black
      Scholes valuation model. Accordingly, this amount was recorded in selling,
      general and administrative expense.





The
      following are the assumptions used in determining the above fair values using
      the Black-Scholes option pricing model:





Expected
                life
            
            
            7
                yearsRisk
                free rate
            
            
            4.20
            %Volatility
            
            
            43.50
            %Dividend
                yield
            
            
            0
            %


F-15





**JOYTOTO
      USA, INC.**


(A
      Development Stage Company)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


December
      31, 2007





NOTE
      M – WARRANTS (Continued)





The
      following summarizes warrant activity during 2007:





Shares
            
            Weighted
              Average Grant
              Date Fair
              ValueOutstanding,
                January 1, 2007
            
            
            -
            
            
            -Granted
            
            
            28,400,000
            
            $
            1.382Forfeited
            
            
            -
            
            
            -Expired
            
            
            -
            
            
            -Exercised
            
            
            -
            
            
            -Outstanding,
                December 31, 2007
            
            
            28,400,000
            
            $
            1.382





The
      weighted average remaining contractual life and exercise price of the warrants
      outstanding and exercisable at December 31, 2007 was 6.84 years and $0.17,
      respectively. The intrinsic value of the warrants outstanding and exercisable
      at
      December 31, 2007 was $11,782,000.





NOTE
      N – RENT EXPENSE





The
      Company currently is leasing office facilities in Santa Clara, California.
      The
      lease commenced on March 1, 2007 and is for a term of one year. In August 2007
      the Company agreed to share its office space with Sein USA, Inc. (“Sein”), a US
      division of a Korean company, and split the monthly rent. Since August however,
      Sein has paid 100% of the monthly rent due under the lease. Accordingly, one
      half of the monthly rent due by the Company but paid by Sein has been recorded
      as an accrued expense payable to Sein. The amount accrued as due to Sein is
      $7,680. Rent expense for the year ended December 31, 2007 was
      $18,124.





NOTE
      O –
CONSULTING AGREEMENT





The
      Company, on January 5, 2005, entered into a 2 year consulting agreement with
      London for services relating to mergers, acquisitions, and the establishment
      of
      investment banking relationships. Under the terms of the consulting arrangement,
      the Company is to a) pay a non-refundable retainer of $5,000 per month, b)
      issue
      3,000,000 shares of the Company’s common stock to be registered as promptly as
      possible but no later than the date the Company files its first registration
      statement, c) pay a fee of 10% of the consideration paid for any acquisition
      or
      sale by the Company and d) reimburse London for reasonable travel expenses.
      Additionally, the Company would issue to London a warrant to purchase up to
      1,000,000 shares of the Company’s common stock at an exercise price of $0.10 per
      share (pre-split). The common stock issuable upon exercise will be registered
      at
      the Company’s expense. The warrants vest immediately.





On
      November 23, 2005, the Company amended the London agreement to reduce the number
      of warrants to be issued from 4,000,000 post 4:1 forward split shares to
      1,500,000 post 4:1 forward split shares, and increased the exercise price of
      those warrants from $0.025 to $1.00 per share. As part of the JEI acquisition,
      these warrants were cancelled. Additionally, the fee was increased to $20,000
      per month and the expiration date extended to January 31, 2009. As of December
      31, 2007, the Company has accrued $40,000 as consulting expense related to
      this
      agreement. $20,000 in consulting fees were waived as part of the JEI
      acquisition.


F-16





**JOYTOTO
      USA, INC.**


(A
      Development Stage Company)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


December
      31, 2007





NOTE
      P –
EMPLOYMENT CONTRACTS





Through
      our subsidiary, Joyon Entertainment, Inc., we have employment agreements with
      all three of the Company’s executives. These employment agreements are all dated
      October 31, 2007.





Under
      the
      employment agreement with Seong Yong Cho he will serve as President and Chief
      Executive Officer. His employment agreement runs through October 31, 2010,
      unless terminated earlier. In exchange for his services Seong Yong Cho will
      receive $12,000 per annum, which will increase to $60,000 per annum starting
      April 1, 2009. He will be eligible for a bonus, not to exceed one half the
      annual compensation, if approved by JEI’s Board of Directors. Seong Yong Cho was
      issued 21,000,000 shares under his employment agreement. However, those shares
      are subject to a repurchase right by the Company over the next thirty six (36)
      months beginning November 1, 2007, at a purchase price of $0.001 per share.
      The
      repurchase right expires as to 1/36th of the shares for every month the employee
      is employed as President and Chief Executive Officer. Therefore, if Seong Yong
      Cho remains employed over the next thirty six (36) months, he will each own
      the
      shares free and clear of our repurchase right. These shares are also subject
      to
      a one year lock-up period during which they cannot be sold or otherwise
      transferred without restrictive legend.





Under
      the
      employment agreement with Seong Sam Cho he will serve as Chief Financial
      Officer. His employment agreement runs through October 31, 2010, unless
      terminated earlier. In exchange for his services Seong Sam Cho will receive
      $12,000 per annum, which will increase to $60,000 per annum starting April
      1,
      2009. He will be eligible for a bonus, not to exceed one half the annual
      compensation, if approved by JEI’s Board of Directors. Seong Sam Cho was issued
      21,000,000 shares under his employment agreement. However, those shares are
      subject to a repurchase right by the Company over the next thirty six (36)
      months beginning November 1, 2007, at a purchase price of $0.001 per share.
      The
      repurchase right expires as to 1/36th of the shares for every month the employee
      is employed by us as Chief Financial Officer. Therefore, if Seong Sam Cho
      remains employed over the next thirty six (36) months, he will each own the
      shares free and clear of our repurchase right. These shares are also subject
      to
      a one year lock-up period during which they cannot be sold or otherwise
      transferred without restrictive legend.





Under
      the
      employment agreement with Doo Ho Choi he will serve as Chief Operating Officer.
      His employment agreement runs through October 31, 2010, unless terminated
      earlier. In exchange for his services Doo Ho Choi will receive $12,000 per
      annum, which will increase to $60,000 per annum starting April 1, 2009. He
      will
      be eligible for a bonus, not to exceed one half the annual compensation, if
      approved by JEI’s Board of Directors. Seong Sam Cho was issued 8,000,000 shares
      under his employment agreement. However, those shares are subject to a
      repurchase right by the Company over the next thirty six (36) months beginning
      November 1, 2007, at a purchase price of $0.001 per share. The repurchase right
      expires as to 1/36th of the shares for every month the employee is employed
      as
      Chief Operating Officer. Therefore, if Doo Ho Choi remains employed over the
      next thirty six (36) months, he will each own the shares free and clear of
      our
      repurchase right. These shares are also subject to a one year lock-up period
      during which they cannot be sold or otherwise transferred without restrictive
      legend.





Based
      upon the aggregate grant date fair value calculated in accordance with SFAS
      No.
      123R, Share Based Payment. Our policy and assumptions made in valuation of
      share
      based payments are contained in Note C to our December 31, 2007 financial
      statements.


F-17





**JOYTOTO
      USA, INC.**


(A
      Development Stage Company)





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


December
      31, 2007





NOTE
      P –
EMPLOYMENT CONTRACTS (Continued)





(1)
            Seong
                Yong Cho and Seong Sam Cho were each issued 21,000,000 shares under
                their
                employment agreements. However, those shares are subject to a repurchase
                right by the Company over the next thirty six (36) months beginning
                November 1, 2007, at a purchase price of $0.001 per share. Such repurchase
                right expires as to 1/36thof
                the shares for every month the employee is employed by the Company
                in
                their current capacity. Therefore, if the employee remains employed
                with
                us over the next thirty six (36) months, they will each own the shares
                free and clear of our repurchase right. We have categorized the shares
                subject to this right of repurchase as unvested. These shares are
                also
                subject to a one year lock-up period during which they cannot be
                sold or
                otherwise transferred without restrictive legend. As of December
                31, 2007,
                the repurchase right of the Company expired as to 583,334 shares
                for each
                employee.





(2)
            Doo
                Ho Choi was issued 8,000,000 shares under his employment agreement.
                However, those shares are subject to a repurchase right by the Company
                over the next thirty six (36) months beginning November 1, 2007,
                at a
                purchase price of $0.001 per share. Such repurchase right expires
                as to
                1/36thof
                the shares for every month the employee is employed by the Company
                in his
                current capacity. Therefore, if the employee remains employed with
                us over
                the next thirty six (36) months, he will own the shares free and
                clear of
                our repurchase right. We have categorized the shares subject to this
                right
                of repurchase as unvested. These shares are also subject to a one
                year
                lock-up period during which they cannot be sold or otherwise transferred
                without restrictive legend. As of December 31, 2007, the repurchase
                right
                of the Company expired as to 222,223 shares.





The
      total
      future commitments under these employment contracts, net of the repurchase
      provisions, are as follows:





2008
            
            $
            20,869,3332009
            
            
            29,310,6672010
            
            
            20,983,333$
            71,163,333


F-18