**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**Form
      10-K**





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**
              (State
                or other jurisdiction of
              incorporation
                or organization)
            **95-4886472**
              (I.R.S.
                Employer
              Identification
                No.)**3000
                Scott Boulevard, Suite 206**
              **Santa
                Clara, CA**
              (Address
                of principal executive offices)
            **95054**
              (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 o No 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
              2ITEM
                  1A - RISK FACTORS
              5ITEM
                  1B - UNRESOLVED STAFF COMMENTS
              9ITEM
                  2 - PROPERTIES
              9ITEM
                  3 - LEGAL PROCEEDINGS
              9ITEM
                  4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
              9**PART
                  II**ITEM
                  5 - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
                MATTERS
                  AND ISSUER PURCHASES OF EQUITY SECURITIES
              10ITEM
                  6 - SELECTED FINANCIAL DATA
              11ITEM
                  7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS
                  OF OPERATION
              11ITEM
                  7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
                  RISK
              15ITEM
                  8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
              15ITEM
                  9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                  AND
                FINANCIAL
                  DISCLOSURE
              15ITEM
                  9A - CONTROLS AND PROCEDURES
              16ITEM
                  9A(T) - CONTROLS AND PROCEDURES
              16ITEM
                  9B - OTHER INFORMATION
              17**PART
                  III**ITEM
                  10 - DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNACE
              17ITEM
                  11 - EXECUTIVE COMPENSATION
              19ITEM
                  12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
                AND
                  RELATED STOCKHOLDER MATTERS
              24ITEM
                  13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
                INDEPENDENCE
              25ITEM
                  14 - PRINCIPAL ACCOUNTING FEES AND SERVICES
              26**PART
                  IV**ITEM
                  15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES
              27








**PART
      I**





**Explanatory
      Note**





This
      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.





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.




2




**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;


·
            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.




3




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.





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.




4




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.





***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.***




5




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.





***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.




6




***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.




***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.




7




***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.





***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. Our common stock has experienced and is likely to experience
      significant price and volume fluctuations that 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 such as: 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;
      the performance of our eligible portfolio companies; and developments in our
      relationships with our customers and suppliers. Substantial fluctuations in
      our
      stock price could significantly reduce the price of our stock.




8




***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 .




9




**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.


**Fiscal
                  Year**
                **Ended**
              
              
              
              **Bid
                  Prices****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.




10




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 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.




11





**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
              
              
              120,534,078
              
              
              5,001
              
              
              120,539,079Depreciation
              
              
              5,806
              
              
              -
              
              
              5,806Amortization
              
              
              1,061,786
              
              
              -
              
              
              1,061,786Total
                  costs and expenses
              
              
              121,601,670
              
              
              5,001
              
              
              121,606,671Net
                  Loss
              
              $
              (121,601,670
              )
              $
              (5,001
              )
              $
              (121,606,671
              )
 
 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 $120,534,078 consisted primarily of $75,000,000 in stock based
        compensation due to the shares granted to our executive officers under their
        employment agreements, $45,275,200 in warrant issuances, $48,000 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 F to the enclosed consolidated financial statements).


Net
      Loss




12




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
      ($46,601,670). This was offset by depreciation and amortization of $1,067,592,
      stock based compensation of $45,245,700, a decrease in prepaid expenses of
      $1,710, an increase in accrued expenses of $85,122, 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.




13




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,
              
              
              Estimated2007
              
              
              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




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




14





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.





**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.




15




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.





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.




16




**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)





**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.




17




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.





Audit
      Committee





We
      do not
      currently have an audit committee financial expert.





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




18




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.





**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
            
            
            14,000
                (1
            )
            
            -
            
            
            -
                (2
            )
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            14,000
                (1
            )Chief
                Executive Officer, President,and
                Director
            
            
            2006
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Seong
                Sam Cho
            
            
            2007
            
            
            -
            
            
            -
            
            
            -
                (2
            )
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Chief
                Financial Officer, Secretary,and
                Director
            
            
            2006
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Doo
                Ho Choi
            
            
            2007
            
            
            -
            
            
            -
            
            
            -
                (3
            )
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Chief
                Operating Officer and Director
            
            
            2006
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -





19





*
            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. At our closing price of $0.58 on December 31, 2007, those
                shares
                would be valued at $676,666.86. However, because the shares are subject
                to
                a lock-up period we have not assigned this value to the
                shares.





(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. At our closing price of $0.58
                on
                December 31, 2007, those shares would be valued at $257,778.10. However,
                because the shares are subject to a lock-up period we have not assigned
                this value to the shares.





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.




20




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.


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:




21




**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.





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
                Uneared
                Options**
              **(#)**
            **Option
                Exercise Price**
            **Option
                Expiration Date**
            **Number
                of Shares or Unites of Stock That Have Not Vested**
              **(#)**
            **Market
                Value of Shares or Unites 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 sharesof
                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. At our closing price of $0.58 on December 31, 2007,
                the
                19,833,333 shares still subject to the right of repurchase would
                be valued
                at $11,503,333.14.




22




(2)
            Doo
                Ho Choi was granted a total of8,000,000 sharesof
                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. At our closing price
                of $0.58
                on December 31, 2007, the 7,555,555 still subject to the right of
                repurchase would be valued at
                $4,382,221.90.








**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%




23




(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.





(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** ****




24




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.





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.





25





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.





*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.





**PART
      IV**




26


**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 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





**(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




27




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
            
            Employment
                Agreement with Seong Yong Cho dated October 31, 200710.8
            
            Employment
                Agreement with Seong Yong Cho dated October 31, 200710.9
            
            Employment
                Agreement with Doo Ho Choi dated October 31, 2007


31.1
              
              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.




28





**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.








**JoJoytoto
                USA, Inc.**Dated:
                April 15, 2008
            
            /s/Seong
                Yong ChoBy:
            Seong
                Yong ChoPresident,
                Chief ExecutiveOfficer
                and DirectorDated:
                April 15, 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:
                April 15, 2008
            
            /s/Seong
                Yong ChoBy:
            Seong
                Yong ChoPresident,
                Chief ExecutiveOfficer
                and DirectorDated:
                April 15, 2008
            
            /s/Seong
                Sam ChoBy:
            Seong
                Sam ChoChief
                Financial Officer,Secretary
                and DirectorDated:
                April 15, 2008
            
            /s/
                Doo Ho ChoiBy:
            Doo
                Ho Choi,Chief
                Operating Officer andDirector





29




**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 B of the notes to the
      financial statements, the Company has an accumulated deficit of
      $46,691,284  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
      B. The financial statements do not include any adjustments that may result
      from
      the outcome of this uncertainty.





See
      also
      Note G as to exclusive license agreements.





Meyler
      & Company, LLC





Middletown,
      NJ


April
      14,
      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 accumulateddepreciation
                  of $6,924
              
              
              19,904Other
                  assetsLicense
                  Agreements, net of accumulatedamortization
                  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
              
              
              152,081Due
                  to affiliate
              
              
              105,061Loan
                  payable
              
              
              50,000Total
                  Current Liabilities
              
              
              308,837Stockholders'
                  EquityCommon
                  stock, authorized 300,000,000 shares;
              
              
              153,613par
                  value $0.001; 153,612,510 issued andoutstanding
                  at December 31,2007Additional
                  paid-in-capital
              
              
              136,709,701Deficit
                  accumulated during development stage
              
              
              (121,691,284
              )Total
                  Stockholders’ Equity
              
              
              15,172,030Total
                  Liabilities and Stockholders’ Equity
              
              $
              15,480,867
 
 See
                  accompanying notes to consolidated financial
                  statements.





F-2


**JOYTOTO
                  USA, INC.**(A
                  Development Stage Company)CONSOLIDATED
                  STATEMENTS OF OPERATIONS
 
 For
                  the Period
              
              For
                  the PeriodFor
                  the year
              
              December
                  6, 2006
              
              December
                  6, 2006Ended
              
              (Inception)
                  to
              
              (Inception)
                  toDecember
                  31,
              
              December
                  31,
              
              December
                  31,2007
              
              2006
              
              2007REVENUES
              
              $
              -
              
              $
              -
              
              $
              -COSTS
                  AND EXPENSESSelling,
                  general and administrative
              
              
              120,534,078
              
              
              5,001
              
              
              120,539,079Depreciation
              
              
              5,806
              
              
              -
              
              
              5,806Amortization
              
              
              1,061,786
              
              
              -
              
              
              1,061,786Total
                  Costs and Expenses
              
              
              121,601,670
              
              
              5,001
              
              
              121,606,671NET
                  LOSS
              
              $
              (121,601,670
              )
              $
              (5,001
              )
              $
              (121,606,671
              )NET
                  LOSS PER COMMONSHARE
                  (Basic and Diluted)
              
              $
              (1.81
              )
              $
              (5.00
              )
              $
              (2.24
              )WEIGHTED
                  AVERAGE SHARESOUTSTANDING
              
              
              67,186,064
              
              
              1,000
              
              
              54,225,616
 
 See
                  accompanying notes to consolidated financial
                  statements.


F-3




**JOYTOTO
                  USA, INC.**(A
                  Development Stage Company)CONSOLIDATED
                  STATEMENT OF STOCKHOLDERS’ EQUITYFor
                  the Period January 1, 2006 to December 31,
                  2007
 
 DeficitAccumulatedAdditional
              
              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
              
              
              25,855,108
              
              
              (25,871,278
              )
              
              -Balance
                  prior to reverse merger
              
              
              34,612,510
              
              
              34,613
              
              
              39,781,805
              
              
              (39,866,418
              )
              
              (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
              
              
              -
              
              
              -
              
              
              (39,781,805
              )
              
              39,781,805
              
              
              -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
              
              
              -
              
              
              39,245,700Shares
                  transferred to management
              
              
              -
              
              
              -
              
              
              75,000,000
              
              
              -
              
              
              75,000,000Net
                  loss for the year ended December 31, 2007
              
              
              -
              
              
              -
              
              
              -
              
              
              (121,601,670
              )
              
              (121,601,670
              )Balance,
                  December 31, 2007
              
              $
              153,612,510
              
              $
              153,613
              
              $
              136,709,701
              
              $
              (121,691,284
              )
              $
              15,172,030
 
 See
                  accompanying notes to consolidated financial
                  statements.
   F-4
  **JOYTOTO
                    USA, INC.**(A
                    Development Stage Company)CONSOLIDATED
                    STATEMENTS OF CASH FLOWS
 
 For
                    the Period
                
                For
                    the PeriodFor
                    the year
                
                December
                    6, 2006
                
                December
                    6, 2006Ended
                
                (Inception)
                    to
                
                (Inception)
                    toDecember
                    31,
                
                December
                    31,
                
                December
                    31,2007
                
                2006
                
                2007CASH
                    FLOWS FROM OPERATING ACTIVITIESNet
                    loss
                
                $
                (121,601,670
                )
                $
                (5,001
                )
                $
                (121,606,671
                )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
                
                
                120,245,700
                
                
                1
                
                
                120,245,701Changes
                    in assets and liabilities:(Increase)
                    decrease in prepaid expenses
                
                
                (1,710
                )
                
                -
                
                
                (1,710
                )Increase
                    (decrease) in accrued expenses
                
                
                85,122
                
                
                5,000
                
                
                90,122Increase
                    (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
 
 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 -
          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.
 
 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”.
  F-6
 **JOYTOTO
            USA, INC.**
 (A
            Development Stage Company)
 
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 December
            31, 2007
 NOTE
          B -
          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
          Technolgies, 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.
 
 Going
          Concern
 
 As
          indicated in the accompanying financial statements, the Company has incurred
          net
          losses of $46,601,670 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 $46,691,284 and negative working capital of $305,310 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 G as to exclusive license agreements.
 
 NOTE
          C -
          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.
 
 F-7
  **JOYTOTO
            USA, INC.**
 (A
            Development Stage Company)
 
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 December
            31, 2007
 NOTE
          C -
          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 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.
 
 Intangible
          Assets, Goodwill and License Agreements
 
 The
          company accounts for goodwill and license agreements in accordance with
          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
  F-8
  **JOYTOTO
            USA, INC.**
 (A
            Development Stage Company)
 
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 December
            31, 2007
  NOTE
          C -
          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 Intangible
          Assets, Goodwill and License Agreements (Continued)
 
 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.
 
 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.
 
 F-9
 
 
 **JOYTOTO
            USA, INC.**
 (A
            Development Stage Company)
 
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 December
            31, 2007
 NOTE
          D -
          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.
 
 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.
  F-10
  **JOYTOTO
            USA, INC.**
 (A
            Development Stage Company)
 
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 December
            31, 2007
 NOTE
          D -
          RECENT ACCOUNTING PRONOUNCEMENTS (Continued)
 
 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
          E -
          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:
  Cash
                  
                  $
                  48,210Prepaid
                      expenses
                  
                  
                  1,817Fixed
                      assets
                  
                  
                  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
          F -
          FIXED ASSETS
  Fixed
          Assets are comprised of the following:
  December
                      31,
                  
                  Estimated2007
                  
                  Useful
                      LifeComputers
                  
                  $
                  23,500
                  
                  
                  3
                      yearsOffice
                      furniture and equipment
                  
                  
                  3,328
                  
                  
                  7
                      years26,828Less:
                      accumulated depreciation
                  
                  
                  6,924$
                  19,904
  F-11
  **JOYTOTO
            USA, INC.**
 (A
            Development Stage Company)
 
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 December
            31, 2007
 NOTE
          G -
          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.
 
 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.
 
 F-12
 
 
 **JOYTOTO
          USA, INC.**
 (A
            Development Stage Company)
 
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 December
            31, 2007
 NOTE
          G -
          LICENSE AGREEMENTS (Continued)
 
 The
          license agreements are comprised of the following:
  December
                      31,
                  
                  Estimated2007
                  
                  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
                  
                  
                  1,608,300$
                  8,328,441
 NOTE
          H -
          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
          I -
          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
          J -
          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,
  F-13
  **JOYTOTO
            USA, INC.**
 (A
              Development Stage Company)
 
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 December
              31, 2007
  NOTE
          J -
          STOCKHOLDERS’ EQUITY (Continued)
 
 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.
 
 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
          K -
          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 $1,361,000 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 $408,000; 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.
 
 Significant
          components of the Company’s deferred tax liabilities and assets as of December
          31, 2007 and 2006 are as follows:
  For
                      the periodDecember
                      2006For
                      the year ended
                  
                  (Inception)
                      toDecember
                      31, 2007
                  
                  December
                      31, 2006Deferred
                      tax liabilities
                  
                  $
                  -
                  
                  $
                  -Net
                      operating loss carryforwards
                  
                  $
                  408,000
                  
                  $
                  5,001Valuation
                      allowance for deferred taxes
                  
                  
                  (408,000
                  )
                  
                  (5,001
                  )Deferred
                      tax asset
                  
                  $
                  -
                  
                  $
                  -
  F-14
  **JOYTOTO
            USA, INC.**
 (A
              Development Stage Company)
 
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 December
              31, 2007
 NOTE
          L -
          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
                %
 
 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.
 
 F-15
 
 
 **JOYTOTO
            USA, INC.**
 (A
              Development Stage Company)
 
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 December
              31, 2007
 NOTE
          M -
          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
          N -
          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.
 
 NOTE
          O -
          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
          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 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.
  F-16
 **JOYTOTO
            USA, INC.**
 (A
              Development Stage Company)
 
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 December
              31, 2007
 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 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 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 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 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.
 
 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.
 
 (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.




F-17