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

                                  FORM 10-QSB/A

                                   (MARK ONE)

        [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934


                FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005 OR


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

         FOR THE TRANSITION PERIOD FROM ______________ TO ______________

                         COMMISSION FILE NUMBER: 0-25658

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

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

                     11, JALAN 51A/223, 46100 PETALING JAYA,
                               SELANGOR, MALAYSIA
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                               011 (603) 7956 7026
                (ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)

                                       N/A
              (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
                          IF CHANGED SINCE LAST REPORT)

Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

Yes  X    No

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:



           Class                    Number of shares outstanding at May 12, 2005
-------------------------------   ----------------------------------------------
Common stock, $.00001 par value                      95,909,690

<PAGE>
<TABLE>
<CAPTION>

FORM 10-QSB

1ST QUARTER

                                      INDEX
                                                                                                        Page
<S>                                                                                                     <C>
PART I  -  FINANCIAL INFORMATION

         ITEM 1. FINANCIAL STATEMENTS

         Condensed consolidated balance sheet as at March 31, 2005 (Unaudited)                            3

         Condensed consolidated statements of operations for the three-month periods
         ended March 31, 2005 and March 31, 2004 (Unaudited)                                              5

         Condensed consolidated statements of cash flows for the three-month
         periods ended March 31, 2005 and March 31, 2004 (Unaudited)                                      6

         Notes to condensed consolidated financial statements (Unaudited)                              7 - 19

         ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS                                                 20 - 31

         ITEM 3. CONTROLS AND PROCEDURES                                                                 31

PART II - OTHER INFORMATION

         ITEM 1. LEGAL PROCEEDINGS                                                                       32

         ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                             32

         ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                                         32

         ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                     32

         ITEM 5. OTHER INFORMATION                                                                       32

         ITEM 6. EXHIBITS                                                                                32

         SIGNATURES                                                                                      33

</TABLE>
STATEMENT REGARDING THIS AMENDMENT

The Company is amending its Form 10-QSB for the period ended March 31, 2005,  as
previously filed on May 16, 2005.

Subsequent  to the  issuance  of  the  Company's  March  31,  2005  consolidated
financial  statements,  and  based  upon a  further  evaluation  of the  factors
utilized in determining  the accounting and  presentation of a May 2004 issuance
of  preferred  stock of a  subsidiary,  a  convertible  term  note  and  related
warrants,  the Company  determined that both the preferred stock of a subsidiary
and the  convertible  term  note  contained  embedded  derivatives  that must be
bifurcated from their host instruments. In addition, the Company determined that
the warrants and the  preferred  stock of a subsidiary  should not  initially be
classified as a component of shareholders'  equity. The accounting  treatment of
these  embedded  derivatives  are  discussed  in  detail in notes 8 and 9 to the
Financial Statements.

Our shareholders should refer to the financial statements and accompanying notes
for a detailed  explanation of the  adjustments to the financial  results of the
Company that are contained in this Amended Form 10-QSB.

SAFE HARBOR STATEMENT

This Form 10-QSB and other  reports  filed by the Company from time to time with
the Securities and Exchange Commission, as well as the Company's press releases,
contain or may contain forward-looking statements and information that are based
upon  beliefs  of,  and  information   currently  available  to,  the  Company's
management,  as  well  as  estimates  and  assumptions  made  by  the  Company's
management.  The Company is  including  this  cautionary  statement in this Form
10-QSB to make applicable and to take advantage of the safe harbor provisions of
the Private  Securities  Litigation  Reform Act of 1995 for any  forward-looking
statements  made  by or on  behalf  of  us.  Forward-looking  statements  can be
identified by the use of forward-looking terminology such as "believes",  "may",
"should", "anticipates", "estimates", "expects", "future", "intends", "hopes" or
"plans" or the negative thereof.  Such forward-looking  statements involve known
and unknown  risks,  uncertainties  and other  factors  that could cause  actual
results of the Company to vary materially  from  historical  results or from any
future results  expressed or implied in such  forward-looking  statements.  Such
factors include,  among others,  the following:  the revocation of the Company's
broadband network operator's  license,  the inability to successfully  implement
its business  plans,  the  cancellation  or  postponement  of contracts that the
Company has entered  into in  connection  with its  business,  the  inability to
obtain services provided by other communications companies or service providers,
the inability of the Company to raise  capital on a timely basis,  the inability
of the Company to meet certain covenants contained in its financing  agreements,
existing  and future  government  regulations,  the failure to retain  qualified
personnel,  competitive  pressures  and  potentially  adverse  tax and cash flow
consequences resulting from operations in multiple countries with different laws
and regulations,  and the general economic and business  conditions in Malaysia,
the United States and the other countries in which we do business,  primarily in
Asia.  The  Company  does  not  undertake  to  update,  revise  or  correct  any
forward-looking statements.


                                       2
<PAGE>
PART I -  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 2005
                                   (Unaudited)


<TABLE>
<CAPTION>

                                     ASSETS
                                                                                                  (as restated)
<S>                                                                                                     <C>
Current assets:
     Cash                                                                                      $        66,405
     Cash, restricted                                                                                6,503,143
     Trade receivables,
       less allowance for doubtful accounts of $55,000                                               5,051,196
     Other accounts receivable,
       less allowance for doubtful accounts of $371,000                                                 59,506
     Prepaid expenses                                                                                   95,978
     Inventories                                                                                       535,127
                                                                                               ---------------
              Total current assets                                                                  12,311,355
Property and equipment, net                                                                          1,245,281
Customer list                                                                                          175,500
License                                                                                                 58,500
Goodwill                                                                                               852,525
Long-term receivables, related parties                                                                 295,900

                                                                                               ---------------
                                                                                               $    14,939,061
                                                                                               ===============

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Bank overdraft and borrowings                                                             $       894,787
     Current portion of capital lease obligations                                                       30,858
     Current portion of convertible term note - net of issuance costs
     and derivative liability of $103,486                                                              117,102
     Current portion of term loan                                                                       75,163
     Accounts payable                                                                                1,263,597
     Accrued expenses                                                                                  176,908
     Amount due to an affiliated company                                                               114,070
     Amount due to a director                                                                           69,495
     Income tax payable                                                                                 55,139
     Preferred stock dividend payable                                                                  525,559
                                                                                               ---------------
              Total current liabilities                                                              3,322,678
     Capital lease obligations, net of current portion                                                  31,626
     Convertible term note, net of current portion - net of issuance costs
     and derivative liability of $120,733                                                               85,149
     Term loan, net of current portion                                                                 120,825
     Deferred income tax                                                                               131,316
     Deferred gain                                                                                     295,900
                                                                                               ---------------
              Total liabilities                                                                      3,987,494
                                                                                               ---------------

                                   (continued)

                                        3
<PAGE>



               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                           MARCH 31, 2005 (CONTINUED)
                                   (Unaudited)

                                                                                                (as restated)

Series A convertible preferred stock of subsidiary - net of issuance costs
    and derivative liability of $3,037,023  (Liquidation preference of $6,000,000)                   2,962,977
                                                                                               ---------------

Minority interest                                                                                      553,146
                                                                                               ---------------
Commitments and contingencies

Shareholders' equity:
     Series A convertible preferred stock, $0.10 par value; 1,000,000 shares
       authorized; 100,000 shares issued and outstanding,
       liquidation preference $3,733,000                                                                10,000
     Common stock, $.00001 par value; 350,000,000 shares authorized;
        103,565,678 shares issued                                                                          950
     Additional paid-in capital                                                                      6,580,473
     Common treasury stock, 8,530,000 shares at cost                                                  (30,375)
     Options                                                                                            68,112
     Warrants                                                                                          749,715
     Retained earnings                                                                                       0
     Accumulated other comprehensive income                                                             56,569
                                                                                               ---------------
              Total shareholders' equity                                                             7,435,444
                                                                                               ---------------
                                                                                               $    14,939,061
                                                                                               ===============
 </TABLE>
      See accompanying notes to condensed consolidated financial statements

                                       4

<PAGE>

              SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                 (Unaudited)
<TABLE>
<CAPTION>
                                                                                                     Three months ended

                                                                                                   March 31,        March 31,
                                                                                                     2005             2004
                                                                                                -------------------------------
                                                                                                 (as restated)
<S>                                                                                                  <C>                <C>
Revenues:

     Related parties                                                                            $       45,789    $     414,475
     Others                                                                                          6,474,565        3,948,499
                                                                                                ---------------   --------------
                                                                                                     6,520,354        4,362,974
Cost of revenues                                                                                     5,929,819        3,964,598
                                                                                                ---------------   --------------
Gross profit                                                                                           590,535          398,376
                                                                                                ---------------   --------------
Operating expenses:
     Sales and marketing                                                                                17,288            4,697
     General and administrative:
       Related parties                                                                                  21,316           21,316
       Others                                                                                          406,637          258,025
                                                                                                ---------------   --------------
Total operating expenses                                                                               445,241          284,038
                                                                                                ---------------   --------------
Income from operations                                                                                 145,294          114,338
                                                                                                ---------------   --------------
Other income (expense):

     Interest expense                                                                                  (43,024)          (3,260)
     Amortization of debt issuance costs                                                                (6,777)            --
     Interest income                                                                                    43,051             --
     Gain on disposal of assets, related party                                                          13,684          107,258
     Other income                                                                                       15,737             --
     Share of associate companies' losses                                                                 --             (2,632)
                                                                                                ---------------   --------------
                                                                                                        22,671          101,366
                                                                                                ---------------   --------------

Income from continuing operations before income tax and minority interest                              167,965          215,704
     Income tax                                                                                        (22,368)          (1,842)
                                                                                                ---------------   --------------

Income from continuing operations before minority interest                                             145,597          213,862
     Minority interest                                                                                   2,135          (29,968)
                                                                                                ---------------   --------------

Income from continuing operations                                                                      147,732          183,894
                                                                                                ---------------   --------------
Discontinued operations (material handling subsidiaries):
     Loss before income tax                                                                              --             (20,594)
     Income tax                                                                                          --                --
                                                                                                ---------------   --------------
     Loss from discontinued operations                                                                   --             (20,594)
                                                                                                ---------------   -------------
Net income                                                                                             147,732          163,300

Preferred stock dividend                                                                              (158,663)            --

Accretion to preferred stock redemption value                                                         (275,666)
                                                                                                ---------------   --------------
Net income (loss) applicable to common shareholders                                             $     (286,597)   $     163,300
                                                                                                ===============   ==============
Net income per common share from continuing operations:
     Basic and diluted                                                                          $            *    $           *
                                                                                                ===============   ==============
Net income per common share from discontinued operations:
     Basic and diluted                                                                          $            *    $           *
                                                                                                ===============   ==============
Weighted average shares outstanding:
     Basic                                                                                          94,924,649       97,928,899
                                                                                                ===============   ==============
     Diluted                                                                                        95,421,117       98,228,899
                                                                                                ===============   ==============
</TABLE>
* Less than $.01 per share

      See accompanying notes to condensed consolidated financial statements

                                       5

<PAGE>
               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                                       Three Months Ended
                                                                                                            March 31
                                                                                                     2005                 2004
                                                                                                 ---------------   --------------
                                                                                                  (as restated)
<S>                                                                                                   <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net cash (used in) provided by operating activities                                        $     (172,118)   $      69,952
                                                                                                ---------------   --------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Proceeds from disposal of equipment                                                                10,526             --
     Purchase of equipment                                                                             (72,537)          (1,690)
     Proceeds from sale of investment in associate companies                                            13,158             --
                                                                                                ---------------   --------------
         Net cash used in investing activities                                                         (48,853)          (1,690)
                                                                                                ---------------   --------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Increase in restricted cash                                                                       (46,735)            --
     Net increase in bank borrowings                                                                   131,363             --
     Net repayment of advances to affiliated company                                                    (2,141)        (126,484)
     Net payment (repayment) of advances from/to a director                                                593          (29,298)
     Payment of term loan                                                                              (19,720)            --
     Payment of obligation under capital leases                                                        (11,894)          (2,811)
                                                                                                ---------------   --------------
           Net cash provided by (used in) financing activities                                          51,466         (158,593)
                                                                                                ---------------   --------------

Net decrease in cash                                                                                  (169,505)         (90,331)
Net cash provided by discontinued operations                                                           143,417              366
Cash, beginning of period                                                                               92,493          244,919
                                                                                                ---------------   --------------
Cash, end of period                                                                             $       66,405    $     154,954
                                                                                                ===============   ==============

Supplemental disclosure of non-cash financing activities:

Accretion to preferred stock redemption value                                                   $      275,666    $       --

                                                                                                ===============   ==============
Preferred stock dividend declared                                                               $      158,663    $       --
                                                                                                ===============   ==============
Conversion of convertible term note and related accrued interest                                $       32,087    $       --
                                                                                                ===============   ==============


BUSINESS ACQUISITION (Note 3):

Net assets acquired:
   Property, furniture and equipment                                                                              $      10,728
   Inventories                                                                                                           85,885
   Accounts receivable                                                                                                   87,345
   Cash                                                                                                                   3,583
   Accounts payable                                                                                                     (59,076)
   Capital lease obligation                                                                                              (8,138)
                                                                                                                  --------------
                                                                                                                        120,327
Less: Minority interests                                                                                                (46,192)
         Cash acquired                                                                                                   (3,583)
                                                                                                                  --------------
Net amount payable for acquisition of subsidiary                                                                  $      70,552
                                                                                                                  ==============
</TABLE>


      See accompanying notes to condensed consolidated financial statements



                                       6
<PAGE>
                       SECURED DIGITAL APPLICATIONS, INC.
          NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                               MARCH 31, 2005

                                   (UNAUDITED)

1.   BASIS OF PRESENTATION

The accompanying  unaudited interim consolidated financial statements of Secured
Digital  Applications,  Inc.  (the  "Company")  include the  accounts of Secured
Digital Applications, Inc. and its following subsidiaries:

1.   EyStar  Media Inc.  ("EMI"),  a Delaware  corporation  wholly-owned  by the
     Company;
2.   SDA America,  Inc.  ("SDAA"),  a Delaware  corporation  wholly-owned by the
     Company;
3.   Secured  Digital   Applications   (M)  Sdn  Bhd  ("SDAM")  (f/k/a  Animated
     Electronic  Industries Sdn Bhd), Armor Multi Systems Sdn Bhd ("AMS") (f/k/a
     Asiaco Multi Corporation Sdn Bhd) and Secured Shipping Sdn Bhd ("SS"),  all
     Malaysian corporations wholly-owned by the Company;
4.   Perwimas  Telecommunications  Sdn Bhd ("PTSB"),  SDAM's 86% owned Malaysian
     subsidiary;
5.   Asiaco Services Sdn Bhd ("ASS"), AMS's 60% owned Malaysian subsidiary;
6.   Digital  Image ID Sdn Bhd ("DID")  (f/k/a Vista  Positive Sdn Bhd),  SDAM's
     wholly-owned  subsidiary,  from the date of  incorporation  on February 17,
     2004;
7.   Gallant Service Centre (M) Sdn Bhd ("GSC"), SDAM's wholly-owned subsidiary,
     from the date of acquisition on September 29, 2004;
8.   Gallant IT Holdings Sdn Bhd ("GIH"),  GSC's 55% owned subsidiary,  from the
     date of  acquisition on September 29, 2004; and
9.   Gallant  Zone  (M) Sdn Bhd  ("GZ"),  Gallant  IT  Distribution  (M) Sdn Bhd
     ("GID") and Gallant Focus (M) Sdn Bhd ("GF"), all wholly-owned subsidiaries
     of GIH from the date of  acquisition  on September 29, 2004 and,  including
     GIH, such  subsidiaries  may sometimes  collectively  be referred to as the
     "Gallant group" of companies.

For the three-month period ended March 31, 2004, the Company's unaudited interim
consolidated financial statements included the accounts of the following
companies, which were sold on December 27, 2004 to an unrelated party, and which
are presented as discontinued operations:

1.   Temasya Wira Sdn Bhd ("TW"), AEI's 60% owned Malaysian subsidiary
2.   Asiaco  Material  Handling  (East Coast) Sdn Bhd  ("AEC"),  AMS's 80% owned
     Malaysian subsidiary;
3.   Asiaco Logistic Sdn Bhd ("ALG"), AMS's 67% owned Malaysian subsidiary; and
4.   Asiaco Taiping Sdn Bhd ("ATG"), AMS's 62% owned Malaysian subsidiary,  from
     the date of acquisition on February 9, 2004.

All significant  intercompany  accounts and transactions have been eliminated in
consolidation.

The unaudited condensed  consolidated financial statements presented herein have
been  prepared in  accordance  with the  instructions  to Form 10-QSB and do not
include all the  information  and note  disclosures  required  by United  States
generally accepted accounting principles for complete financial  statements.  In
the opinion of management,  all adjustments (consisting only of normal recurring
adjustments)  which are  necessary to provide a fair  presentation  of financial
position,  operating  results and cash flows for the interim  periods  presented
have been made. It is the Company's  opinion  that,  when the interim  financial
statements are read in  conjunction  with the December 31, 2004 Annual Report on
Form 10-KSB,  the  Company's  disclosures  are adequate to make the  information
presented  not  misleading.  The results of operations  for the interim  periods
presented are not  necessarily  indicative of the results to be expected for the
entire year.

RESTATEMENT OF 2005 CONSOLIDATED FINANCIAL STATEMENTS

Subsequent  to the  issuance  of  the  Company's  March  31,  2005  consolidated
financial  statements,  and  based  upon a  further  evaluation  of the  factors
utilized in determining  the accounting and  presentation of a May 2004 issuance
of  preferred  stock of a  subsidiary,  a  convertible  term  note  and  related
warrants,  the Company  determined that both the preferred stock of a subsidiary
and the  convertible  term  note  contained  embedded  derivatives  that must be
bifurcated from their host  instruments  (See notes 8 and 9).  Accordingly,  the
Company's  March 31, 2005 interim  consolidated  financial  statements have been
restated,  resulting in a  decrease in net income of $18,682(less  than $.01 per
share)  and a  decrease  in net  income  applicable  to common  shareholders  of
$294,348 (less than $.01 per share). In addition, shareholders' equity decreased
by $2,801,050.


                                       7
<PAGE>
2.   SIGNIFICANT ACCOUNTING POLICIES

TRANSLATION OF CURRENCIES

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

REVENUE RECOGNITION

Revenue represents the net invoiced value of:

     o    goods sold;
     o    fees earned from the  production of  multimedia  programs and Intranet
          and management and consulting services;
     o    fees earned from provision of information  technology related services
          and
     o    fees earned from rental and servicing of material handling equipment.

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

NET INCOME PER COMMON SHARE

Basic net income per share is  calculated  by dividing net income  applicable to
common  shareholders by the weighted average number of common shares outstanding
for the  three-month  periods ended March 31, 2005 and 2004.  Diluted income per
share is computed using the weighted average number of shares determined for the
basic  computations  plus the  number of shares of common  stock  that  would be
issued  assuming all  contingently  issuable  shares having a dilutive effect on
earnings per share were outstanding for the period. The calculation of basic and
diluted income per share is as follows (in thousands, except per-share amounts):

<TABLE>
<CAPTION>

                                                                                    Three Months Ended

                                                                            March 31, 2005      March 31, 2004
                                                                           -----------------    ----------------
                                                                             (as restated)
<S>                                                                              <C>                  <C>
Net income                                                                 $            148     $           163

Preferred stock dividends                                                              (159)                 --

Accretion to preferred stock redemption value                                          (276)                 --

                                                                           -----------------    ----------------
Net (loss) income available to common shareholders                         $           (287)    $           163
                                                                           =================    ================

Weighted average shares outstanding - basic                                          94,925              97,929
                                                                           =================    ================

Net (loss) income per share - basic                                        $              *     $             *
                                                                           =================    ================


*  less than $.01 per share
</TABLE>



                                       8
<PAGE>

2.   SIGNIFICANT ACCOUNTING POLICIES (continued)

NET INCOME PER COMMON SHARE (continued)
<TABLE>
<CAPTION>


                                                                                     Three Months Ended

                                                                             March 31, 2005     March 31, 2004
                                                                           -----------------    ----------------
                                                                             (as restated)
<S>                                                                               <C>                 <C>
Weighted average shares outstanding - basic                                          94,925              97,929
Common stock issuable to consultant                                                     461                 300
Dilutive stock options and warrants                                                      35                  --

                                                                           -----------------    ----------------
Weighted average shares outstanding - diluted                                        95,421              98,229
                                                                           =================    ================

Net (loss) income per share - diluted                                                    **     $             *
                                                                           =================    ================

* Less than $.01 per share
** Would be antidilutive
</TABLE>

GOODWILL AND INTANGIBLE ASSETS

Goodwill,  arising from the purchase of PTSB and the Gallant group of companies,
represents  the  purchase  price paid and  liabilities  assumed in excess of the
estimated fair value of tangible assets acquired.

Intangible  assets  consist  of a  customer  list  and  a  Malaysian  government
registered  contractor license acquired in September 2004. The customer list has
a gross  carrying  value of $189,000  and is amortized  using the straight  line
method over its  expected  life of 7 years.  Amortization  expense for the three
months ended March 31, 2005 was $6,750 and accumulated amortization at March 31,
2005 was $13,500.  The  registered  contractor  license has a carrying  value of
$65,000 and is amortized  using the straight  line method over its expected life
of 5 years.  Amortization  expense for the three months ended March 31, 2005 was
$3,250 and accumulated amortization at March 31, 2005 was $6,500.

INVENTORIES

Inventories,  which are comprised of peripherals for  surveillance  and wireless
communication,   material  handling   equipment  and  related  spare  parts  and
accessories,  Apple computer products, information technology hardware, software
and accessories,  are stated at the lower of cost or net realizable  value. Cost
is determined on a first-in-first-out basis.

TREASURY STOCK

The Company records treasury stock purchases at cost. The Company reissues stock
from the treasury on a first-in, first-out basis.


                                       9

<PAGE>
2.   SIGNIFICANT ACCOUNTING POLICIES (continued)

INCOME TAXES

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

For the  three-month  periods ended March 31, 2005 and 2004,  the Company made a
provision  of  $22,368  and  $1,842,  respectively,  net of the  benefit  of any
available  net  operating  losses,  for income tax payable on its  operations in
Malaysia.

ASSOCIATE COMPANIES - EQUITY ACCOUNTING METHOD

The Company accounts for its investment in common stock of companies in which it
has a  long-term  equity  interest  and  where it has the  ability  to  exercise
significant  influence,  but not control,  over operating and financial policies
based on the equity  method.  The equity method is a method of accounting  under
which the Company  initially  records an investment in the stock of an associate
company at cost and adjusts the carrying  amount of the  investment to recognize
the  Company's  share of the earnings and losses after the date of  acquisition.
The amount of the adjustment is included in the  determination  of the Company's
net  income  and such  amount  reflects  adjustments  similar  to those  made in
preparing  consolidated  financial statements including adjustments to eliminate
intercompany gains and losses, and to amortize,  if appropriate,  any difference
between  the cost and the  underlying  equity  in net  assets  of the  associate
companies at the date of investment.  The carrying amount of the investment will
also be reduced by dividends received from the associate companies.

STOCK-BASED COMPENSATION

The Company has adopted SFAS No. 123,  Accounting for Stock-Based  Compensation.
As  permitted  by SFAS  No.  123,  the  Company  measures  compensation  cost in
accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees and related interpretations.

On September 16, 2002, the Company granted options to purchase 300,000 shares of
the Company's common stock at $0.12 per share to a consultant for services to be
provided to the Company.  These options are exercisable  through September 2007,
contingent upon continuous  service by the consultant  through  specified dates.
100,000 of the options  were  exercised  on July 2, 2004 for cash of $12,000 and
200,000 of the options were exercised on December 24, 2004 for cash of $24,000.

On August 1, 2004,  the Company  granted  options to purchase  an  aggregate  of
300,000 shares of the Company's  common stock at $0.30 per share to a consultant
for  services to be  provided  to the  Company.  These  options are  exercisable
through July 2009,  contingent upon continuous service by the consultant through
specified dates. The option agreement between the Company and the consultant was
terminated in April 2005.  100,000  options vested on January 31, 2005 resulting
in recognition of compensation  expense of $1,067 during the three-month  period
ended March 31, 2005.  100,000  options  scheduled to vest on April 30, 2005 and
the remaining  100,000 options scheduled to vest on July 31, 2005 were cancelled
following termination of the agreement.

                                       10

<PAGE>
2.   SIGNIFICANT ACCOUNTING POLICIES (continued)

STOCK-BASED COMPENSATION (continued)

On August 3, 2004, the Company granted certain officers, directors and employees
of the Company options to purchase up to an aggregate of 2,000,000 shares of the
Company's common stock at $0.20 per share.  The options are exercisable  through
August     2009,     contingent     upon     continuous     service    by    the
officers/directors/employees  through  specified  dates.  500,000  options  were
exercisable on October 3, 2004,  200,000 options were exercisable on February 3,
2005,  500,000  options are  exercisable  on August 3, 2005,  and the  remaining
800,000  options are  exercisable  in equal numbers on each of February 3, 2006,
2007, 2008 and 2009,  respectively.  In addition,  on August 3, 2004 the Company
granted  options to purchase  100,000  shares of the  Company's  common stock at
$0.12 per share to an independent  director as  compensation  for serving on the
Company's  Board of Directors.  These  options are  exercisable  with  immediate
effect  through  August 2009.  For the three  months  ended March 31, 2005,  the
Company,  based  on  the  intrinsic  value  method  as  permitted  under  APB25,
recognized  compensation  expense of $9,477.  On May 3, 2005,  two  officers and
directors  exercised 290,000 options, an officer exercised 30,000 options and an
employee  exercised  30,000  options  for an  aggregate  cash  consideration  of
$70,000.

Had compensation cost for options been determined based on the fair value at the
grant  date  consistent  with the method  prescribed  under  SFAS No.  123,  the
Company's  pro forma net  income  and net  income  per share  would have been as
follows:
<TABLE>
<CAPTION>

                                                                                                    THREE MONTHS ENDED

                                                                                                  March 31            March 31
                                                                                                    2005                 2004
                                                                                              -----------------    ----------------
                                                                                                (as restated)
<S>                                                                                                 <C>                  <C>
Net (loss) income applicable to common stockholders                                           $       (286,597)    $       163,300
Add: Stock-based employee compensation expense
        included in reported net income, net of related tax                                              9,477                  --
Less: Total stock-based employee compensation expense
         determined under fair value based method for all
         awards, net of related tax effects                                                            (35,000)                 --
                                                                                              -----------------    ----------------
Pro forma net income (loss)                                                                   $       (312,120)    $       163,300
                                                                                              =================    ================
Income (loss) per share:
 Basic and diluted - as reported                                                              $              *     $             *
                                                                                              =================    ================
 Basic and diluted - pro forma                                                                $              *     $             *
                                                                                              =================    ================

* Less than $.01 per share
</TABLE>

The value of the options  issued during the three months ended March 31, 2005 is
calculated  using the  Black-Scholes  methodology as prescribed by SFAS No. 148.
The Company  utilized  an expected  dividend  yield of 0,  expected  stock price
volatility ranging from 115% to 163%, risk free interest rate ranging from 2% to
4%, and expected life of the option ranging from 3 months to 4.5 years.

The Company did not issue any options to employees and officers during the three
months ended March 31, 2004.

ESTIMATES

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

BUSINESS RISK

The  Company is subject to risks and  uncertainties  common to  technology-based
companies,   including  rapid  technological  change,  dependence  on  principal
products  and  third-party  technology,  new  product  introductions  and  other
activities of competitors,  dependence on key personnel,  and limited  operating
history.

                                       11
<PAGE>
2.   SIGNIFICANT ACCOUNTING POLICIES (continued)

RECLASSIFICATIONS

Certain  2004  balances  have  been  reclassified  to  conform  to  the  current
presentation.


3.   BUSINESS ACQUISITION AND DISPOSAL

On November  17,  2003,  SDAM  signed an asset  purchase  agreement  with Asiaco
Material Handling Sdn Bhd ("AMH"),  a Malaysian  company,  to purchase,  through
AMS, the business assets and selected  liabilities of AMH and seven companies in
the Asiaco group.  The definitive  agreement also provided for AMS to purchase a
majority equity interest in the remaining  sixteen companies in the Asiaco group
from  AMH's  majority  shareholder.  Pursuant  to this  agreement,  the  Company
acquired a majority equity interest in three Malaysian  companies on December 9,
2003:  80% in Asiaco  Material  Handling  (East  Coast)  ("AEC"),  67% in Asiaco
Logistic ("ALG") and 60% in Asiaco Services ("ASS") for a total consideration of
$193,911.  On February 9, 2004,  the Company  acquired a 62% equity  interest in
Asiaco  Taiping  ("ATG")  for a  provisional  consideration  of  $74,135.  These
acquisitions were accounted for as purchases.  The total consideration was to be
satisfied  by the  issuance  of  AMS's  common  stock  to the  owner  upon  full
completion of the asset purchase agreements between the Company and AMH. Through
December 31,  2004,  the Company had paid a total of $263,158 to AMH as advances
for the incorporation of AMS and for the purchase of equity in four subsidiaries
as well as two associate  companies:  46% in Asiaco  Transport and 33% in Asiaco
Engineering.  These  advances  would have been deducted from the final  purchase
price to be determined by SDAM when it has completed its verification of the net
asset value of AMH and its subsidiaries.  As a result of these  acquisitions the
Company entered into the equipment material handling business.

In December  2004,  the Company  decided not to proceed with the asset  purchase
agreement with AMH. On December 27, 2004 the Company sold its equity interest in
AEC,  ALG and ATG together  with its 60% equity  interest in TW for an aggregate
consideration of $143,417 to an unrelated party.

Revenues from  discontinued  operations were $114,148 for the three months ended
March 31, 2004. Losses from  discontinued  operations were $20,594 for the three
months ended March 31, 2004.  Discontinued  operations  relate to the  Company's
material handling segment.

                                       12
<PAGE>
4.   RESTRICTED CASH

As of March 31, 2005, the Company has the following restricted cash balances:



Cash deposited with a financial institution in US             $      6,057,557
Cash deposited with financial institutions in Malaysia                 445,586
                                                              ----------------
                                                              $      6,503,143
                                                              ================

Restricted  cash  of  $6,057,557  deposited  in a US  financial  institution  is
security for the performance of the Company and its subsidiaries' obligations to
the Master Fund (see note 9 below).

Restricted cash of $445,586 (RM1,693,227)  deposited with financial institutions
in Malaysia is time deposit  accounts used as collateral for trade financing and
bank overdraft  facilities granted to GIH and GZ. The time deposit accounts have
a maturity period of one year and are automatically  renewed on an annual basis.
The time deposit  accounts earn interest at an aggregate rate of 3.7% per annum.
Interest  earned on the time deposits is to be added on and rolled over with the
principal sum.


5.   BANK OVERDRAFT AND BORROWINGS

As of March  31,  2005,  the  Company's  subsidiaries  have the  following  bank
facilities:
<TABLE>
<CAPTION>

                                                                    GIH              GZ               Total
                                                              -------------     -------------    -------------
<S>                                                                <C>               <C>              <C>
Bank overdraft                                                $     132,000     $      79,000    $     211,000
Trade financing facilities                                          211,000           631,000          842,000
                                                              -------------     -------------    -------------
Total bank facilities available                               $     343,000     $     710,000    $   1,053,000
                                                              =============     =============    =============
Balance utilized as of March 31, 2005                         $     224,247     $     670,540    $     894,787
                                                              =============     =============    =============
</TABLE>

The above bank  facilities  are  repayable on demand and bear  interest at rates
ranging from 1.5% to 8.40% per annum and are secured by:

     a)   a pledge on the time deposit accounts;
     b)   sinking fund accounts included in restricted cash;
     c)   a corporate guarantee provided by GIH; and
     d)   personal  guarantees  provided by third  parties and two  directors of
          GIH.


6. RELATED PARTY ACTIVITY

During the  three-month  periods  ended  March 31,  2005 and 2004,  the  Company
recognized revenue of $45,789 and $414,475, respectively, for project consulting
fees from a related party,  pursuant to four consulting  contracts.  As of March
31, 2005, $25,263 of the $45,789 was in accounts receivable.

At December 31,  2004,  long-term  receivables,  related  parties,  consisted of
$309,584 due from Synervest Sdn Bhd ("SSB").  This amount primarily arose in the
year ended  December  31, 1998 when the  Company  sold to SSB assets used in the
operations of a subsidiary.  Due to the uncertainty of collection of the related
receivable,  a related  gain on the sale of the assets was deferred and is to be
recognized  only  after  all costs  have  been  recovered  and as  payments  are
received.  During the year ended  December  31, 2002,  payments  received by the
Company  exceeded all remaining costs. The Company received $13,684 and $107,258
of the outstanding  receivable  during the  three-month  periods ended March 31,
2005 and  2004,  respectively,  resulting  in a  realization  of gain on sale of
assets,  related  party for those  periods.  The deferred  gain  included in the
balance sheet has been reduced accordingly.

                                       13
<PAGE>

7.   TERM LOAN

As of March  31,  2005,  the  Company  has term  loan  liabilities  of  $195,988
(RM744,753).  These term loans, which were granted by financial  institutions in
Malaysia,  are secured by personal  guarantees provided by third parties and two
directors of GIH and bear interest at 8% - 8.4% per annum.


8.   CONVERTIBLE TERM NOTES

On May 28,  2004,  the Company  entered  into a  Securities  Purchase  Agreement
("SPA") with an unrelated  investors  group (the "Master  Fund") under which the
Company  obtained  $500,000  funding through the sale of a Convertible Term Note
(the "Note") in the principal amount of $500,000.  Some of the significant terms
of the Note include the following:

1.   The Note has a three-year term with a maturity date of May 28, 2007.
2.   Interest  rate of 2% above the "prime rate" as published by the Wall Street
     Journal  from time to time  subject to a floor of 6%. The monthly  interest
     will be adjusted  downward based on a minimum increase of 25 percent of the
     price of the common stock above the conversion price.
3.   Monthly principal  payments of $14,706 commencing on September 1, 2004 with
     the unpaid principal balance and any unpaid and/or accrued interest due and
     payable on May 28, 2007.
4.   The  principal and the interest can be paid in cash or in common stock at a
     fixed  conversion  price of $0.35 per share,  at the Master Fund's  option,
     provided that the volume weighted  average price (VWAP) of the common stock
     for the ten trading days  immediately  preceding the due date is 110% above
     the exercise price.
5.   The Note is  convertible  into shares of the  Company's  common  stock at a
     fixed  conversion   price  of  $0.35  per  share,   subject  to  conversion
     limitations as defined in the Note. The fixed conversion price was reset to
     $0.20 per share  pursuant to an  agreement  entered into by the Master Fund
     and the  Company  on August  11,  2004  (see  Note 9).  On April 25,  2005,
     pursuant to an  agreement  entered into by the Master Fund and the Company,
     the conversion price was subsequently  reset to a price equal to 85 percent
     of the average of the five lowest closing prices during the 22 trading days
     prior to the date of conversion,  subject to a minimum  conversion price of
     $0.07 per share.
6.   The  Company  issued  warrants  to  purchase  up to  300,000  shares of the
     Company's common stock, subject to the conversion limitations as defined in
     the Note.  The  warrants  have a seven-year  term and an exercise  price of
     $0.40  per  share for the  first  100,000  shares,  $0.43 per share for the
     second 100,000 shares and $0.47 per share for the third 100,000 shares.
7.   The Company  has  granted a security  interest in all of its net assets and
     the net  assets of one of its  wholly-owned  subsidiaries,  until such time
     that the Note is satisfied.
8.   The SPA also  included a condition  that  required the Company to cause its
     common stock to be listed on the NASDAQ  Smallcap  Market,  NASDAQ National
     Market  System,  the American Stock Exchange or the New York Stock Exchange
     on or prior to November 15, 2004 ("the Listing Condition").

The Company used  $326,000 of the  proceeds for payment of expenses  relating to
the issuance of the Note and convertible preferred stock to secure an additional
$6.5  million  financing  from the Master Fund (see Note 9). The balance of the
Note proceeds was used as working capital.


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

                                       14
<PAGE>
8.   CONVERTIBLE TERM NOTES (CONTINUED)


In 2004, the Company recorded an initial  liability  of  $246,681  for the value
of  the embedded  liability.   The initial  value of the embedded  liability  is
amortized  over the term  of the Note. For the three months ended March 31, 2005
and 2004, the Company recognized amortization expense of $14,377 and $0,
respectively, and is included in interest expense.

In 2004, the Company recorded debt discount and  amortization  costs of $95,346,
which  included the  initial value  of the warrants  of $62,525. These costs are
amortized over the term of the Note. Amortization in the amount of $6,777 and $0
for the three months ended March 31, 2005 and 2004, respectively, is included in
amortization of debt issuance costs in the statement of operations.


As of March 31, 2005,  outstanding principal of the convertible term note net of
issuance costs and the derivative liability was $202,251.

In  December  2004,  the Master Fund  submitted  a notice to convert  $29,412 of
principal  and $5,493 of accrued  interest  to 174,526  shares of the  Company's
common stock. The common stock was issued to the Master Fund on January 6, 2005.
On April 25, 2005, the Master Fund converted $20,922 discounted principal of the
note and $8,653 of accrued  interest to 383,701  shares of the Company's  common
stock. On May 5, 2005, the Master Fund converted $7,224 discounted  principal of
the note and  $2,707 of accrued  interest  to  140,311  shares of the  Company's
common stock.


9.   PREFERRED STOCK

On May 25,  2004,  the  Company  executed a share  exchange  agreement  with its
Chairman  and  Chief  Executive  Officer,  Mr.  Patrick  Lim,  whereby  Mr.  Lim
surrendered  8,000,000  shares of the  Company's  common  stock in exchange  for
100,000  shares  of the  Company's  newly  created  Series A Voting  Convertible
Preferred Stock (the "Voting  Preferred"),  which is convertible  into shares of
common stock at a fixed ratio of 80 shares of common stock for 1 share of Voting
Preferred  stock.  The  8,000,000  shares  were  returned  to  treasury  and are
available  for  re-issuance  at a future  date.  The Voting  Preferred  stock is
entitled to cumulative  dividends at $2.20 per annum, payable in common stock at
$.28 per share. On May 3, 2005, Mr. Lim and the Company executed an amendment to
the  Certificate of Designation of Series A Voting  Convertible  Preferred Stock
governing  payment of dividend on the Voting  Preferred.  Under the terms of the
amendment, Mr. Lim would have the option of receiving the dividend on the Voting
Preferred either in cash or shares of the Company's common stock.  Each share of
the Voting  Preferred is entitled to voting  rights  equivalent  to 80 shares of
common stock. The Series A preferred is subject to mandatory conversion 10 years
after its issuance.

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

The  Series  A  Preferred  is   convertible,   subject  to  certain   conversion
limitations,  into common  stock of the Company at the option of the Master Fund
and is  entitled  to  cumulative  preferential  dividends  at a rate  per  annum
equivalent to the "prime rate" published in The Wall Street Journal from time to
time plus 2%, subject to a floor of 6% per annum.  The preferred stock dividends
can be paid in  cash or in  shares  of the  Company's  common  stock  at a fixed
conversion price of $0.35 per share, at the Master Fund's option,  provided that
the volume weighted  average price (VWAP) of the Company's  common stock for the
ten trading days  immediately  preceding the due date is 110% above the exercise
price.  The warrants have a seven-year  term and an exercise  price of $0.40 per
share for the first 1,000,000  shares,  $0.43 per share for the second 1,000,000
shares  and  $0.47  per  share for the  third  1,000,000  shares.  The  Series A
Preferred has a liquidation value of $1.00 per share.

On August 11,  2004,  the Company and the Master Fund  executed an  amendment to
certain  agreements  governing  the  terms  under  which  the Note and  Series A
Preferred  issued to the Master Fund may be  converted  into the common stock of
the  Company.  Under the terms of the  amendment,  the Master Fund may convert a
portion of the Note and Series A Preferred as follows:  the first  $2,000,000 of
conversions  have been reset to a price of $0.20 per share (whether as principal
repayments or accrued and unpaid interest or dividends);  the next $1,000,000 of
conversions  have  been  reset to a price  of $0.25  per  share.  The  remaining
conversions  permitted under the terms of the original  securities issuance will
remain unchanged at $0.35 per share.

In addition to resetting the conversion prices for a portion of the transaction,
the amendment provides that all dividend and interest payments payable under the
investment  would  accrue,  rather  than be  payable  in  cash,  until  the next
conversion into common stock occurs. The amendment provides for a waiver of cash
payments of interest or dividends due prior to the  execution of the  amendment,
with any such  amounts to be accrued to the amounts  payable  under the terms of
the  Note or  Series  A  preferred.  The  amendment  stipulates  that  upon  the
registration of the shares required for the conversion features, the Master Fund
will convert  $500,000 of principal  and/or accrued and unpaid  dividends of the
Series A Preferred into the common stock of the Company  provided that the price
of the Company's stock is at least $0.20 per share at the time. Accordingly, the
Master Fund  converted  $500,000 of the Series A Preferred  in  September  2004,
resulting in the issuance of 2,500,000 shares of common stock.

                                      15
<PAGE>

9.   PREFERRED STOCK (continued)

On April 25,  2005,  the Company and the Master Fund  executed an  amendment  to
certain  agreements  governing  the  terms  under  which  the Note and  Series A
Preferred  issued to the Master Fund may be  converted  into the common stock of
the Company.  Under the terms of the amendment,  the Master Fund may convert the
remaining Note and the first  $2,000,000  Series A Preferred at a price equal to
85  percent of the  average  of the five  lowest  closing  prices  during the 22
trading days prior to the date of conversion  (whether as principal repayment or
accrued and unpaid interest or dividends), subject to a minimum conversion price
of $0.07 per share.

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

On November 15, 2004,  the Listing  Condition was removed.  This resulted in the
elimination of the need to bifurcate the embedded derivative associated with the
Series A  Preferred's  conversion   feature.  As  consideration  for the removal
of the  Listing  Condition, the  Company  issued warrants  to the Master Fund to
purchase  1,300,000  shares of the  Company's common stock.  The warrants have a
seven-year term and an exercise price of $0.35 per share.

In 2004, the Company recorded an initial derivative liability of $3,206,857. The
initial  value of the  derivative  liability is being  accreted over three years
based on management's  estimate of the expected term. For the three months ended
March 31, 2005 and 2004,  accretion  amounted to $194,749 and $0,  respectively,
and is included in accretion to preferred stock redemption value.

In 2004, the Company recorded  issuance costs of $1,051,927,  which included the
initial value of the warrants of $625,248.  These costs are amortized over three
years.  Amortization  of  issuance  costs  totaled  $80,917 and $0 for the three
months ended March 31, 2005 and 2004, respectively, and is included in accretion
to preferred stock redemption value.

Pursuant to the Securities  Purchase  Agreement  between the Master Fund and the
Company and a restricted  account  agreement  entered  into by the Company,  the
Master  Fund and a US bank,  the  $6,500,000  investment  was  deposited  into a
restricted  account as  security  for the  performance  of the  Company  and its
subsidiaries'  obligations to the Master Fund. The proceeds are restricted until
the preferred stock is converted into common stock of the Company. Additionally,
at that date,  the Company  and the Master Fund can agree to use the  restricted
cash to make acquisitions of companies that meet agreed-upon criteria for sales,
profitability and accounting standards.

                                       16

<PAGE>
10.   COMMON STOCK

On  December 4, 2002,  the Company  announced  that its Board of  Directors  had
approved a stock  repurchase  program for up to 10 million  shares from the then
public float of approximately  42.7 million shares which may be repurchased from
time to time until  December  2003.  The shares  repurchased by the Company were
returned to treasury and are available for re-issuance at a future date.

On May 25, 2004,  the Company  reacquired  8,000,000  shares of its common stock
pursuant to a share  exchange  agreement  with its Chairman and Chief  Executive
Officer,  Mr. Patrick Lim,  whereby Mr. Lim surrendered  8,000,000 shares of the
Company's  common stock in exchange for 100,000  shares of the  Company's  newly
created Series A Voting Convertible  Preferred Stock. These shares were returned
to treasury and are  available  for  re-issuance  at a future date. On August 9,
2004, the Company reissued 25,000 shares of common stock from its treasury stock
to a consultant as payment for services rendered to the Company in July 2004 and
recognized $5,750 as compensation expense based on the market value of $0.23 per
share on the date of  issuance.  On December  24,  2004,  the  Company  reissued
500,000  shares of common stock from its treasury stock to a consultant at $0.20
per share as  payment  for  services  rendered  to the  Company  and  recognized
$100,000  as  compensation  expenses.  As of March 31,  2005,  the Company had a
balance of 8,530,000  repurchased  shares in its treasury  stock with a carrying
amount of $30,375.

On February 8, 2005, the Company issued 240,000 shares of common stock at $0.175
per share for a total  consideration  of $42,000 to a  consultant  pursuant to a
compensation  agreement dated July 15, 2004, under which the Company is to issue
an aggregate of 960,000  shares of its common stock to the consultant as payment
for services to be rendered to the Company for the  twelve-month  period  ending
July 14, 2005. The 240,000 shares were valued,  based on the market price on the
date of issuance, and the Company recognized compensation expense of $45,800 for
the three months ended March 31, 2005.

In August 2004,  pursuant to a compensation  agreement between the Company and a
consultant,  the Company authorized the issuance of 120,000 shares of its common
stock to the  consultant  as payment for  services to be rendered to the Company
for the  twelve-month  period  ending in July 2005.  As of March 31,  2005,  the
Company  has not  issued  any of the  120,000  shares  of  common  stock  to the
consultant,  and has accrued $12,750 of compensation  expenses,  of which $3,750
was recorded during the three months ended March 31, 2005.


11.   SIGNIFICANT CONCENTRATIONS OF CREDIT RISK

The Company grants credit,  generally without collateral,  to its customers. Two
customers in the Company's  applications segment accounted for approximately 82%
and 87% of  revenues  earned  during the three  months  ended March 31, 2005 and
2004, respectively. In the three months ended March 31, 2005, the two customers,
respectively,  accounted for 41% and 41% of total  revenue.  In the three months
ended March 31, 2004, the two customers, respectively, accounted for 44% and 43%
of total  revenue.  Allowance for doubtful  accounts  receivable was $425,869 at
March 31, 2005. The Company will continue to pursue vigorously the collection of
all its outstanding accounts receivable.

Three suppliers accounted for 85% cost of revenues during the three months ended
March  31,  2005,  and one  supplier  accounted  for  substantially  all cost of
revenues  during the three  months  ended  March 31,  2004.  The  Company is not
dependent  upon one supplier to provide the services that it requires but made a
strategic  decision to engage the  services of only a small  number of suppliers
after taking into  consideration the quality of service and competitive  pricing
being  offered.  Should the need arise,  the Company could  utilize  alternative
suppliers for the services that it requires.

                                       17
<PAGE>
12.   SEGMENT INFORMATION

The Company has three reportable  segments as a result of the  establishment and
acquisition of new subsidiaries.  The Company classifies its business into three
operating  segments,  which are defined by the products and services  offered as
follows:

1.   Broadband, multimedia and biometric security division (Applications)

     Activities under this segment include  application  development,  broadband
     network operation,  delivery of value added applications and services; sale
     of  devices  that  utilize  broadband  networks  and the sale of  biometric
     security devices.

2.   Material handling  equipment  division beginning in December 2003 (Material
     Handling)

     Activities  under this  segment  include  industrial  moving,  packing  and
     unpacking industrial equipment,  land transportation and secured logistics,
     as well as the sale, rental and servicing of material handling equipment.

3.   Apple  computer  division  beginning  in  October  2004  (Gallant  group of
     companies)

     Activities under this segment include  operating an authorized Apple Centre
     and the  supply  and  provision  of  information  technology  products  and
     services.

The accounting  policies of the segments are the same as those  described  under
Note 2: Significant  Accounting Policies.  The Company's reportable segments are
strategic  business units that offer different  products and services.  They are
managed  separately  because each division requires  different product knowledge
and marketing  strategies.  The new  businesses  were acquired as a unit and the
management  at the time of  acquisition  was retained.  Inter-segment  sales and
transfers between reportable  segments are not material to the period presented.
The  Company's  revenue is derived  primarily  from  operations  in Malaysia and
substantially all of the Company's assets are located in Malaysia.
<TABLE>
<CAPTION>


                                                                  Material
                                                Applications      Handling        Gallant       Corporate     Total
                                              --------------- --------------- -------------- ---------------  ---------------
<S>                                                <C>              <C>            <C>             <C>         <C>
Three-month period ended March 31, 2005 (as restated):

Revenue:
   Related parties                            $       45,789  $           --  $          --  $            --   $       45,789
   Others                                          5,371,579          91,182      1,011,804               --        6,474,565
                                              --------------- --------------- -------------- ---------------   --------------
                                              $    5,417,368  $       91,182  $   1,011,804  $            --   $    6,520,354
                                              =============== =============== ============== ===============   ==============
Net income (loss) from operating segments     $      161,866  $       (6,919) $      11,467  $       (18,682)  $      147,732
                                              =============== =============== ============== ===============   ==============
Depreciation expense                          $       60,862  $        4,318  $       7,534
                                              =============== =============== ==============
Interest expense                              $       10,174  $           --  $      18,473  $        14,377
                                              =============== =============== ============== ===============
Interest income                               $       43,051  $           --  $          --
                                              =============== =============== ==============
Income tax expense                            $       22,368  $           --  $          --
                                              =============== =============== ==============
Expenditures for additions to
    long lived assets                         $           --  $           --  $      72,537
                                              =============== =============== ==============
</TABLE>

                                       18
<PAGE>
12.   SEGMENT INFORMATION (continued)
<TABLE>
<CAPTION>
                                                                     Material
                                                     Applications    Handling        Gallant            Total
                                                   --------------- --------------- -------------- ---------------
<S>                                                        <C>           <C>            <C>        <C>
Three-month period ended March 31, 2004:

Revenue:
   Related parties                                 $      414,475  $           --  $          --  $      414,475
   Others                                               3,791,841         156,658             --       3,948,499
                                                   --------------- --------------- -------------- ---------------
                                                   $    4,206,316  $      156,658  $          --  $    4,362,974
                                                   =============== =============== ============== ===============
Net income (loss):
   from operating segments                         $      209,589  $      (25,695) $          --  $      183,894
   from discontinued operations                            (4,029)        (16,565)            --         (20,594)
                                                   --------------- --------------- -------------- ---------------
                                                   $      205,560  $      (42,260) $          --  $      163,300
                                                   =============== =============== ============== ===============
Depreciation expense                               $       58,716  $        3,788  $          --
                                                   =============== =============== ==============
Interest expense                                   $        3,260  $           --  $          --
                                                   =============== =============== ==============
Share of associate companies lossess               $           --  $       (2,632) $          --
                                                   =============== =============== ==============
Income tax expense                                 $        1,842  $           --  $          --
                                                   =============== =============== ==============
Expenditures for additions to long lived assets    $           --  $        1,690  $          --
                                                   =============== =============== ==============
</TABLE>

Segment  information  for the  three-month  period ended March 31, 2004 does not
include the operating  results of the Apple division as the Company acquired the
Gallant group of companies on September 29, 2004.



Consolidated total assets as of March 31, 2005 (as restated) are as follows:


   Applications                                             $      13,082,218
   Apple                                                            1,583,900
   Material handling                                                  272,943
                                                            -----------------
   Total consolidated assets                                $      14,939,061
                                                            =================

13.   SUBSEQUENT EVENTS

On April 30,  2005,  the  Company  completed  the  acquisition  of a 55%  equity
interest  in  Innospective   Sdn  Bhd  ("ISS"),   a  systems   integration  firm
specializing  in  the  design,   development  and   implementation  of  wireless
applications  and  electronic  solutions.  In addition to the payment of $52,632
(RM200,000) to acquire  122,000  shares of ISS's common stock,  the Company will
issue 250,000  shares of the  Company's  common stock to a consultant as payment
for professional fees on advising the Company in this acquisition.


                                       19
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

THE FOLLOWING ANALYSIS OF THE OPERATIONS AND FINANCIAL  CONDITION OF THE COMPANY
SHOULD  BE  READ  IN  CONJUNCTION  WITH  THE  CONDENSED  CONSOLIDATED  FINANCIAL
STATEMENTS,  INCLUDING THE NOTES THERETO,  OF THE COMPANY CONTAINED ELSEWHERE IN
THIS FORM 10-QSB.


OVERVIEW


Secured Digital Applications,  Inc. and subsidiaries (the "Company") is a system
solution provider,  seeking to develop and commercialize  practical applications
of digital technology.  We are involved in value-added application  development,
broadband network operation, the sale of devices that utilize broadband networks
and the sale of biometric  security devices.  Beginning in 2003, the Company has
also sought to develop secured shipping and supply chain management services. In
October 2004, we expanded into the business of selling Apple  computer  products
and other information  technology  products and services through the acquisition
of the Gallant group of companies.  The Company's  principal  operations  during
2004 included the development and operation of a wireless  broadband  network in
Malaysia,  the development of interactive,  multimedia  content for the Internet
and the development, licensing and/or sale of specific products and applications
that utilize the capacities of a broadband  network.  These products include the
EyStar SmartHome  Management  System,  broadband  modems,  biometric systems and
Internet-based  cameras.  We also  generate  revenue  from the sale,  rental and
servicing of material  handling  equipment  through our subsidiary,  Armor Multi
Systems  ("AMS")  (f/k/a Asiaco Multi  Corporation).  In addition,  beginning in
October 2004, the Company  generated  additional  revenue from the sale of Apple
computer  products in Malaysia and from the supply and provision of  information
technology products and services through the Gallant group of companies.

The Company conducts its principal operations in Malaysia, and has the following
subsidiaries as of March 31, 2005:

1.   EyStar Media Inc.  ("EMI"),  a wholly  owned  corporation  organized  under
     Delaware law and  presently  based in New York,  through  which the Company
     intends to expand its presently  limited  operations in the United  States.
     EMI seeks to acquire United States  technology  companies and to expand the
     Company's operations into the United States.

2.   SDA America,  Inc.  ("SDAA"),  a wholly owned  corporation  organized under
     Delaware  law that is used as a special  vehicle  to secure a $6.5  million
     funding from Laurus Master Fund Ltd. (the "Master  Fund")  through  private
     placement of securities consisting of convertible preferred stock of SDAA.

3.   Secured  Digital   Applications   (M)  Sdn  Bhd  ("SDAM")  (f/k/a  Animated
     Electronic  Industries  Sdn  Bhd),  a wholly  owned  Malaysian  subsidiary,
     designs,  develops and produces  multimedia content and provides consulting
     services  for  website   development,   network   engineering  and  project
     management in IT related projects.

4.   Perwimas  Telecommunications  Sdn  Bhd  ("PTSB"),  an  86%-owned  Malaysian
     subsidiary of SDAM,  provides  broadband  and  application  services  under
     licenses granted by the government of Malaysia.

5.   Armor Multi  Systems Sdn Bhd ("AMS")  (f/k/a Asiaco Multi  Corporation  Sdn
     Bhd),   presently  a  wholly  owned  Malaysian   subsidiary  of  SDAM,  was
     incorporated  as a special  vehicle to acquire the  businesses and selected
     net assets of Asiaco Material  Handling Sdn Bhd ("AMH") and its subsidiary,
     associate and related companies ("the Asiaco Group"), based in Malaysia.

6.   Secured  Shipping Sdn Bhd ("SS"),  a wholly owned  Malaysian  subsidiary of
     SDAM,  presently  provides  consulting  services on the  implementation  of
     secured shipping services and supply chain management.

7.   Asiaco Services Sdn Bhd ("ASS"), a 60%-owned  Malaysian  subsidiary of AMS,
     is primarily  involved in  providing  maintenance,  repair and  restoration
     services for all material handling equipment.


                                       20
<PAGE>
8.   Digital Image ID Sdn Bhd ("DID") (f/k/a Vista Positive Sdn Bhd),  presently
     a  wholly-owned  Malaysian  subsidiary  of  SDAM,  will  be used as a joint
     venture  vehicle to undertake a project with the  Company's  partners and a
     leading Malaysian IT company to enable the search and match of DNA data for
     newborns and registered  criminals,  for use primarily by the Government of
     Malaysia.

9.   Gallant Service Centre (M) Sdn Bhd ("GSC"),  SDAM's wholly-owned subsidiary
     from the date of acquisition on September 29, 2004 is primarily involved in
     the provision of scheduled  maintenance and repair services for information
     technology  products.  The Company is using GSC as the special  vehicle for
     its investment in the Gallant group of companies.

10.  Gallant IT Holdings Sdn Bhd ("GIH"),  GSC's 55% owned subsidiary,  from the
     date of  acquisition  on September  29, 2004 is  primarily  involved in the
     supply and provision of information technology products and services.

11.  Gallant Zone (M) Sdn Bhd ("GZ"), a wholly-owned subsidiary of GIH, operates
     2 retail  outlets in Malaysia for the sale of Apple  computer  products and
     accessories.

12.  Gallant IT Distribution (M) Sdn Bhd ("GID"),  a wholly-owned  subsidiary of
     GIH, is currently dormant.

13.  Gallant  Focus (M) Sdn Bhd ("GF"),  a  wholly-owned  subsidiary  of GIH, is
     currently dormant.

The  accompanying   condensed  consolidated  financial  statements  include  the
accounts of Secured Digital Applications, Inc. and its subsidiaries.


For the three months ended March 31, 2005,  the Company's  revenue was generated
primarily from the following activities:


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

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


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

4.   Sale, rental and servicing of material handling equipment.

5.   Sale of Apple  products,  computer  hardware,  software  and  provision  of
     installation,  repair and maintenance  services for information  technology
     products.


Significant Business Developments and Plan of Operation

During  2005,  the  Company  anticipates  that it will  continue  to provide its
existing multimedia development,  consulting and broadband services,  market the
EyStar SmartHome Management System,  introduce and actively market a new line of
biometric  security  products  capable of integration  with the EyStar SmartHome
Management  System and utilizing the Company's  ability to provide  applications
support.  These  products are the  SmileCAM,  FaceKey and Testech  devices.  The
Company believes that these devices,  when linked with the broadband  technology
that the Company seeks to exploit,  will provide  customers  with  comprehensive
security  and  identification  systems for which it is believed  there will be a
significant  market. The Company will also continue its presence in the material
handling  business through AMS and its subsidiary.  The Company will also expand
its business in ICT trading through the Gallant Group of companies. On March 28,
2005,  the Company  announced the opening of a second Apple retail center in the
Hartamas  Shopping Centre in Sri Hartamas,  a suburb of Kuala Lumpur,  Malaysia.
The new outlet will expand on the "digital  lifestyle"  concept developed by the
Company and offers a one-stop  showroom for retailing of Apple  products as well
as  products  developed  by  the  Company  and  its  newly  acquired  subsidiary
Innospective Sdn Bhd ("ISS"). The center will also have a training facility. The
Company  also  expects  revenue to be  generated  from the  provision of product
design consulting services,  and the sale of products and applications developed
by ISS.

                                       21
<PAGE>
The Company  will also seek to expand its  business to include the  provision of
biometric security  identification  systems; supply chain management and secured
shipping  services.  In line with this strategy,  the Company has signed several
agreements since the third quarter of 2003 to acquire the equity or business and
assets  of  companies  that it  believes  will  assist  its  expansion  into the
development,  integration  and  provision  of secured  shipping and supply chain
management services. These agreements are described in more detail below.

On July 7, 2004 the Company announced  teaming  agreements with two unaffiliated
entities to  collectively  pursue projects to enable the search and match of DNA
data for newborns and  registered  criminals for use primarily by the Government
of Malaysia.  The project may be developed by a joint venture company led by the
Company. The project may be financed by internally  generated funds.  Additional
financing in the form of a grant may be sought from the  Multimedia  Development
Corporation,   a  Malaysian  Corporation  charged  with  the  responsibility  of
implementing the Multimedia Super Corridor (MSC), a Malaysian initiative for the
global  information and  communication  technology (ICT) industry.  The targeted
completion of the beta version is expected to be 9 months from the  commencement
date.  The  commencement  of field trials is expected to be the beginning of the
10th month, with full commercial implementation targeted for the 21st month.

For its existing  operation,  the Company  anticipates  that it will continue to
seek the rights to new products and services  through  contractual  arrangements
and potentially  through the acquisition of other business entities that provide
compatible  products or services.  The Company expects to continue to market its
products  and services  through a sales force and through its Internet  websites
located at www.digitalapps.net  and www.eystar.com.  As described in more detail
below,  the Company  anticipates that its primary markets will continue to be in
Malaysia  and other Asian  countries.  However,  the Company  continues  to seek
additional  markets in North and South  America  and has  entered  into  various
strategic agreements to improve the acceptance of its products there.

The Company has secured several new contracts to provide hardware,  applications
or  consulting  services.  The  Company  believes  that it will be able to begin
performance  of some of these  contracts  during 2005 and that it will recognize
revenue from these  activities  in 2005.  Due to  uncertainties  in  scheduling,
however,  the Company cannot  forecast the specific dates on which it will begin
performance  of these  contracts.  These  contracts are described in more detail
below.

As a result of the Company's  experience in rolling out the first  VISIONET cell
in  December  2001,  management  decided  that it would be  advantageous  to the
Company to revise its strategy for exploiting its broadband  license  granted by
the Government of Malaysia. The Company determined that it would principally use
the VISIONET  infrastructure  as a  point-to-point  backhaul service provider to
other  broadband  and  telecommunications  providers.  During 2005,  the Company
intends to continue actively  marketing VISIONET as a backhaul service provider,
rather  than as a  telecommunications  company  that  provides  the "last  mile"
service.  In particular,  the Company decided to use VISIONET as a backhaul link
for local mobile networks that it plans to attempt to deploy in partnership with
Aptilo Networks, Sweden. With this change in business strategy, VISIONET will no
longer  provide the last mile link between a cell based radio station and retail
users. The Company will instead construct a wireless highway or backhaul linking
the  cell  based  radio  stations  established  by  existing   telecommunication
companies and ISPs. The Company is hopeful that it will conclude  contracts with
a number of telcos and ISPs on the use of  VISIONET  as a backhaul  link  during
2005.

In  addition,  the  Company  plans  to  continue  its  efforts  to  exploit  the
Application  Service  Provider (ASP) license  granted to its subsidiary  PTSB in
September 2001, by the Malaysian  Communications and Multimedia Commission.  The
ASP license  will  complement  the  wireless  broadband  license  granted to the
Company in June 1997.  As an ASP, PTSB is permitted to offer  enterprise  access
over the Internet to applications and related services that would otherwise have
to be located in their computers.  The Company  anticipates that the ASP service
may become an  attractive  alternative  to locally based  applications  both for
small and medium enterprises with lower budgets for information technology,  and
also for larger companies as a form of outsourcing.

                                       22
<PAGE>
Significant Contracts

For the year 2005, the Company hopes to generate additional revenue arising from
the  contracts  described  below.  This  description  is intended to provide the
reader with a description  of the  principal  activities of the Company that are
anticipated in 2005.  Although the Company provides its current estimates of the
time in which the contracts  will be  performed,  revenues that may be generated
and/or sales that are  projected,  there can be no assurance  that the contracts
will be performed as anticipated or that the revenues or sales projected will be
realized by the Company. The contracts may be terminated,  limited,  breached or
delayed,  may be subject to force majeure  clauses or the obligations to pay for
services  rendered or products  received may not be fulfilled.  The Company does
not undertake to  continually  update its  shareholders  about the status of its
contracts in the absence of a legal obligation to do so.

a)   In August 2001, the Company was awarded a consulting contract, estimated to
     generate revenue of $2.85 million over a three year period,  through August
     2005,  to carry out the  planning,  design,  project  execution  (including
     contract  and  project  management)  of all  broadband  communications  and
     networking   systems/services  for  Pulau  Indah-Marina  Village,  a  water
     oriented luxury resort, residential hotel and spa project. Through December
     31, 2004,  the Company  generated  $1,028,000 of revenue on this  contract.
     During the three  months  ended  March 31,  2005,  the  Company  recognized
     additional  revenue of $13,000 on this  contract.  The  Company  recognized
     revenue of $111,000 during the three months ended March 31, 2004.

b)   In January 2002, the Company's subsidiary,  PTSB, was awarded a contract to
     carry out the  planning,  design,  and project  execution of all  broadband
     communications  and networking  systems/services  for a  commercial/housing
     project in  Selangor,  Malaysia.  Under the  contract,  PTSB will receive a
     total contract sum of $550,000 over 36 months  beginning  January 2003. The
     project,   featuring   312   serviced   apartments,   62  units  of  retail
     shops/offices  and  120  units  of  housing  for a  government  agency  was
     completed in March 2005. The Company generated  $527,000 of revenue on this
     contract  through  December 31, 2004.  The Company  completed  the contract
     during the three  months  ended  March 31, 2005 and  recognized  revenue of
     $23,000. The Company recognized $61,000 of revenue, during the three months
     ended March 31, 2004.

c)   In November  2002, the Company was  contracted by MY Architect  ("MYA"),  a
     related party, to provide consulting  services relating to home automation,
     home networking,  energy cost saving,  security surveillance and monitoring
     for MYA's  current  projects  involving  two major  commercial  and housing
     developments  in  Malaysia.  The Company  expected  to receive  $550,000 in
     consulting fees over the 18 months beginning December 1, 2002. The contract
     was  completed in 2004 and the Company had received the  contracted  sum in
     full.  The Company  recognized  $178,000 of revenue during the three months
     ended March 31, 2004. The Company is presently negotiating with the project
     developer to secure additional  contracts,  estimated at $4.0 million,  for
     the  supply  and  installation  of the  EyStar  SmartHome  Console  and its
     security  system  sometime  in the  fourth  quarter  of  2005  in  the  two
     commercial and housing developments.

d)   In April  2003,  the Company  contracted  with MYA to carry out the design,
     supply and installation of all broadband communications, access control and
     network  security  equipment for a mixed  property  development  project in
     Selangor,  Malaysia, which features a total of 10 blocks of residential and
     commercial  high-rise  properties.  The  30-month  contract,   expected  to
     generate  revenue of $3.2 million,  commenced in the third quarter of 2003.
     Through December 31, 2004, the Company  generated  $409,000 of revenue from
     this  contract and  recognized  additional  revenue of $10,000 and $66,000,
     respectively  during  the  three  months  ended  March  31,  2005 and 2004,
     respectively.

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


                                       23
<PAGE>
f)   In June 2003,  the  Company  signed a contract  to  implement  a  biometric
     security   recognition  and  identification   system  comprising  hardware,
     software and issuance of security  identity  cards over a ten-year  period.
     The contract, which was expected to commence in the fourth quarter of 2003,
     after the finalizing of technical  specifications  with relevant regulatory
     authorities,  was estimated to generate  revenue of $15 million through the
     first  quarter  of 2005.  To date,  the  technical  specifications  for the
     project have yet to be finalized by the relevant regulatory authorities and
     the  Company has not  received  any  indication  on when the  contract  may
     commence.  Due to the uncertainty,  revenue that will be realized from this
     contract during 2005 may not be accurately forecast.

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

h)   In August  2003,  the Company  was awarded an $850,000  contract to supply,
     install and  commission a biometric  based Building  Access  Management and
     Monitoring System for a 40-story office complex in Kuala Lumpur,  Malaysia.
     The system is  designed to enhance  security  through  the  management  and
     monitoring of visitors  within a building  complex or restricted  area. The
     office  complex  is  currently  tenanted  by  government   departments  and
     agencies,  embassies,  corporations and trade missions.  Implementation  of
     this  contract was expected to commence in the first quarter of 2004 and be
     completed by the second  quarter of 2004.  This project has been delayed as
     the Company was informed by the client to postpone  installation work until
     further notice.

i)   In March 2004, the Company's subsidiary,  SDAM, was awarded three contracts
     by a related  party,  with an  aggregate  value of $3.81  million,  for the
     supply  and   installation   of  a  biometric   security  system  in  three
     developments  in  Malaysia.   The  first  is  a  multiple-use  real  estate
     development project,  consisting of 312 apartments and 65 office and retail
     units, located in Shah Alam, Malaysia.  Due to delays in construction work,
     installation  is now anticipated to begin in the second half of 2005 and to
     be completed by the first half of 2006.  The second  development is located
     in  Templar  Park,  Malaysia  consisting  of 208  apartments  and the third
     development  is located in Cheras,  Malaysia  with 240  apartments.  Due to
     delays  in  construction  work,  installation  for  the  second  and  third
     development is anticipated to begin in the fourth quarter of 2005 and to be
     completed by the fourth quarter of 2006. In April 2005, the Company and the
     client agreed to amend the Company's  scope of work to include only design,
     installation,  testing and commissioning of the biometric  security system.
     The client will purchase the required  hardware  directly from  third-party
     vendors. Total contract sum has been revised to $1,150,000.

j)   In April  2004,  the  Company's  subsidiary,  SDAM,  was awarded a contract
     valued  at  $1.9  million  to  deliver  a  biometric   identification   and
     verification  system by the end of the fourth quarter of 2004. The contract
     calls for SDAM to provide a comprehensive  biometric  security system using
     face and fingerprint  recognition  technology for an office complex located
     in Brunei that has 1,200 staff employees.  The system will include controls
     for building access control and employee time  attendance.  Commencement of
     delivery has now been postponed to the second half of 2005.

k)   In May 2004, the Company's subsidiary, Secured Digital Applications (M) Sdn
     Bhd ("SDAM"), was awarded a contract valued at $2.2 million by Master Index
     Sdn  Bhd   ("MISB")   to  deliver,   install   and   maintain  a  biometric
     identification  and  verification  system  for an office  complex  in Kuala
     Lumpur,  Malaysia.  The system was to be  delivered  and  installed  in the
     fourth quarter of 2004. A three-year  maintenance contract will begin after
     installation.  Commencement  of delivery  has been  postponed to the second
     half of 2005.


                                       24
<PAGE>
l)   In June 2004, the Company announced that it was awarded a contract,  valued
     at   $921,000,    to   develop,    implement    and   maintain   a   secure
     business-to-consumer   e-commerce  portal  using  the  Company's  biometric
     security  technology.  Completion  and  implementation  of the  portal  was
     scheduled for December 2004 but has been postponed  until further notice as
     the client  informed the Company that it needed more time to negotiate with
     its intended  business  partners on the features  and  requirements  of the
     portal.  Revenue  to be  generated  from this  contract  in 2005  cannot be
     accurately  forecasted.  The e-commerce  portal will allow only  registered
     members to use the portal for online  purchases and payments.  Members will
     register by providing details of the identity,  credit card information and
     biometric information.  After registration when a member desires to make an
     online   purchase,   their  identity  will  be  verified  and  credit  card
     information  validated.  This system will significantly  reduce the risk of
     fraud and identity theft in online e-commerce transactions.  In addition to
     the contract fee of $921,000,  the Company also expects to generate  annual
     recurring  revenue by receiving a transaction fee for each completed online
     transaction and from a five-year  contract to provide software and hardware
     upgrades plus system maintenance.

m)   In July 2004, the Company  announced it was awarded a $6.7 million contract
     to develop face and fingerprint  authentication for credit card payments to
     be  implemented  in  four  countries  in  Asia.  The  contract  is for  the
     development   and  operation  of  a  Biometrics   (Face  and   Fingerprint)
     Authentication  Center  for  credit  card  payments  in  Thailand,  Brunei,
     Indonesia and Hong Kong.  The objective is to achieve  Zero-Fraud in credit
     card  transactions.  Customers targeted for the project include credit card
     issuers  such as banks and other  financial  institutions,  plus  merchants
     accepting  credit card  payments.  Revenues  will be  generated  from sales
     and/or rental of  Point-of-Sales  terminals  equipped with a USB camera and
     fingerprint reader and from transaction  charges.  The Company is currently
     developing a pilot system for evaluation by the customer.  The trial of the
     pilot system is now expected to commence in the second half of 2005.


Strategic Contractual Relationships

In its  efforts to exploit  broadband  technology,  the  Company  seeks to enter
strategic agreements, both formal and informal, with other providers of goods or
services  that are  compatible  with the  Company's  existing  businesses.  Such
arrangements  include  license  agreements,  requirements  contracts and service
agreements. The Company may also seek to acquire business enterprises that offer
goods and services that are of benefit to the Company and its shareholders.

Beginning in September 2001, the Company entered into a strategic  collaboration
with Aptilo  Networks,  Sweden,  to deploy  local  mobile  networks  ("LMNs") in
Malaysia  and the Asian  regional  markets.  The  Company  anticipates  that the
successful  integration  of LMNs with VISIONET will enable  consumers to receive
live video streams from their  handheld  devices and laptops,  and to access the
Internet and their  corporate  intranets at near T1 speeds  remotely from public
locations  in  the  "travel  ribbon"  such  as  hotels,  airports,  restaurants,
conference  centers,  shopping  malls and  coffeehouses.  The  first  integrated
VISIONET-LMN  cell was deployed  during the fourth  quarter of 2001 to connect a
number of access points to Bluetooth and wireless LAN 802.11b standard  devices.
This mobile network  features  Aptilo's latest billing solution that enables the
Company to offer value-added applications and services to users without the need
for any prior  registration  as a  subscriber.  Any user can now pay for instant
network access to surf the Internet or purchase value-added  applications on the
spot by using their credit card.  The Company is optimistic  that this method of
payment  from Aptilo will  attract  more users to  VISIONET  and reduce  capital
expenditures and monthly operating costs.  Furthermore,  the integrated  network
provides the Company with the ability to expand its broadband network from fixed
wireless  into the mobile  broadband  market.  The Company has  committed  to an
initial  purchase of software and hardware  from Aptilo  valued at $50,000.  The
Company  believes  that this  strategic  relationship  with  Aptilo may  broaden
VISIONET's user base and generate additional revenue in 2005 that is expected to
contribute positively to the Company's cash flow.

                                       25

<PAGE>
In July  2002,  the  Company  entered  into a  letter  agreement  with  PointRed
Technologies Inc. ("PointRed") whereby the Company has agreed to market and sell
PointRed's products worldwide. In return, PointRed has agreed to market and sell
the Company's EyStar SmartHome  Consoles,  value added applications and services
to its  existing  and  future  clients.  On August 16,  2002,  the  Company  and
PointRed,  pursuant to the original letter agreement dated July 2002,  signed an
agreement whereby the Company will utilize existing  personnel and facilities to
promote  PointRed's  products  and to service  existing  PointRed  customers  in
Malaysia.  Also pursuant to the original letter agreement,  the Company signed a
channel partner  agreement with PointRed,  whereby  PointRed will distribute the
EyStar SmartHome Console.  Under the agreement,  PointRed will sell, install and
service the EyStar SmartHome Console in North and South America.

In December  2002,  the Company's  subsidiary,  SDAM executed an Agreement  with
Sintec Corp,  South Korea  ("Sintec"),  to sell,  distribute  and promote  their
SmileCAM remote video  surveillance  cameras in Malaysia,  Thailand,  Singapore,
Vietnam and Brunei. The agreement is for an initial period of two years and will
thereafter be  automatically  renewable for one-year terms on each  anniversary.
Under the terms of the  agreement,  Sintec  will  grant  the  Company  exclusive
distribution  rights for its  products in Malaysia if the Company  purchases  an
agreed minimum value of products from Sintec during 2003 and 2004. The agreement
with Sintec expired in December 2004 and was automatically renewed for a further
one  year.   SmileCAM   cameras  are  used  for  Internet   based  security  and
entertainment  applications  and can be  integrated  with the  EyStar  SmartHome
Console to provide a value added security solution for corporate and residential
users.  SmileCAM cameras include features such as automatic motion detection and
tracking, and sending live streaming video to an Internet browser. Combined with
applications and solutions  developed by the Company,  the Company believes that
SmileCAM  cameras  offer to  purchasers  useful  features such as the ability to
record intrusion,  owner notification by ordinary telephone,  live video, remote
security options and forwarding of images by use of the Internet.

In December  2002,  the Company's  subsidiary,  SDAM executed an Agreement  with
Telekom  Sales and Services Sdn Bhd ("TM"),  a  subsidiary  of Telekom  Malaysia
Berhad,  to sell,  distribute and promote  broadband access over standard copper
telephone lines using Digital  Subscriber Line  technology.  The service,  brand
named TMnet  Streamyx,  was first  launched in August 2002.  TMnet Streamyx is a
high speed access service providing "always-on" connection to the Internet. This
service currently covers 100 urban locations in Malaysia.  The agreement with TM
was for an initial period of one year and maybe extended for a further period to
be agreed by both parties.  This  agreement  was renewed for a further  one-year
term commencing July 1, 2004.

In  January  2003,  the  Company  signed  a  Reseller   Agreement  with  FaceKey
Corporation  ("FaceKey")  to  sell  FaceKey's   biometric-based   products.  The
agreement is for one year and will  thereafter  be  automatically  renewable for
two-year terms on each  anniversary.  Under the terms of the agreement,  FaceKey
will  grant the  Company  exclusive  distribution  rights  for its  products  in
Malaysia if the  Company  purchases  an agreed  minimum  value of products  from
FaceKey during 2003.  Although the Company  achieved  minimum sales in 2003, the
agreement  with  Facekey  was  automatically   renewed  for  another  two  years
commencing  January 2004.  FaceKey develops  products to control access,  record
time and  attendance  and  restrict  use of  personal  computers  by  using  two
biometric  technologies,  face recognition and fingerprint  matching in a manner
that will be highly  competitive with magnetic cards, PIN numbers and passwords.
The  combination  of both  face  and  fingerprint  recognition  technologies  is
believed by the Company to be  extremely  reliable,  providing a security  level
equivalent to a DNA test.

On September 10, 2003, the Company's Malaysian  subsidiary,  SDAM entered into a
letter  agreement to  establish a joint  venture  company,  Temasya Wira Sdn Bhd
("TWSB"),  to  undertake  the  research and  development  of biometric  security
applications.  SDAM will initially hold 60% of TWSB's equity while two Malaysian
individuals  will hold the  remaining  40%.  SDAM's  holding will  eventually be
diluted  to 30%  when  EMI  acquires  30%  equity  interest  in TWSB  after  the
completion of the joint venture agreement to be executed between the Company and
FaceKey Corporation as described below. However, due to disagreement with TWSB's
minority shareholders on the business and financial matters of the joint venture
company,  SDAM  sold its 60%  equity  interest  in TWSB in  December  2004 to an
unrelated  party.  SDAM is presently in the process of identifying  new business
partners for the intended joint venture company.

                                       26
<PAGE>
On September 24, 2003,  the Company  announced  that it had executed a Letter of
Intent to form a joint venture with FaceKey  Corporation  ("FaceKey") to develop
biometric  applications  for the  MyKad  "smart"  national  identification  card
("MyKad")  held by more than 7 million  people in Malaysia.  EMI will be used as
the joint  venture  company  to  develop  a system  and  applications  utilizing
FaceKey's face and  fingerprint  technologies  to verify a live  fingerprint and
face with data stored in a smartcard,  which  permits  retrieval of  information
about   the   cardholder   electronically.   Due  to  some   disagreement   over
implementation  and  operational  issues,  the  Company  and  Facekey  are still
negotiating  the terms of the definitive  agreement.  The definitive  agreement,
which requires  FaceKey to acquire a 49% equity  interest in EMI, will be signed
only  after  both  parties  have  agreed  on the  terms  of the  development  of
applications for MyKad. EMI will subsequently acquire a 30% equity interest in a
joint venture company to be established  between Facekey,  the Company and other
Malaysian  companies.  The Company and FaceKey will be jointly  responsible  for
marketing the products globally.

In December 2003, the Company was appointed by Testech Inc. ("Testech") of South
Korea to distribute its biometrics  security  products.  Testech's product range
includes  fingerprint  access control system,  fingerprint  time and attendance,
fingerprint  door lock and  fingerprint  authentication  module.  These products
support  both TCP/IP  protocol and RS422 serial  communication.  Four  different
combinations of  authentication  methods are utilized:  fingerprint,  pin number
with  fingerprint,  pin number with smart card, and fingerprint with smart card.
Testech   holds  a  U.S.   patent  for  contact   light   emitting   fingerprint
authentication  sensor which is used in the above products.  Testech's  products
are  competitively  priced for the mass  market and enable the Company to have a
wider range of  biometrics  security  products  that could be customized to meet
clients' requirements.

In June 2004, the Company  announced plans to conduct a field trial of an online
biometric  payment portal for electronic  commerce and credit card  transactions
using biometric  products and systems developed by its current partner companies
for  identification  and  verification  during the second  half of 2004.  Due to
delays in the  development  work,  the field  trial is not  expected to commence
until the third quarter of 2005. Merchants who sign up as clients of the payment
portal will enroll their customers into the Company's  system.  Thereafter,  the
merchant's  clients when making  purchases will have their identity  verified by
using face and fingerprint biometric  technology.  After authentication of their
identity,  the  transaction  will be processed and payment  approval sought from
banks and credit  card  issuers.  The  Company  intends to  generate  revenue by
charging a fee based on a percentage of the transaction  value executed  through
the  portal.  Implementation  of the portal is  scheduled  for early  2006.  The
initial  deployment  of the  portal  would be for the  Malaysian  and  Singapore
markets  with  subsequent  deployment  across  the  Asia-Pacific  region.  After
successfully  implementing the payment portal for the Asia-Pacific  region,  the
Company intends to introduce a similar portal for the North American market. The
payment portal will be partly funded by internally  generated funds and proceeds
from the private placement of the Company's securities to the Master Fund.

COMPARISON  OF THE THREE  MONTHS  ENDED MARCH 31, 2005 TO THE THREE MONTHS ENDED
MARCH 31, 2004

REVENUES

Revenues for the three months ended March 31, 2005 totaled  $6,520,354  compared
to  $4,362,974  for the three  months  ended  March 31,  2004,  an  increase  of
$2,157,380 or 49%. The increase in net sales in the three months ended March 31,
2005 as  compared  to the same  period in 2004 was mainly due to an  increase in
fees earned from the production of multimedia programs.  Included in revenue for
the three  months  ended  March 31,  2005 and 2004 was  income  of  $45,789  and
$414,475,  respectively,  received from a related  party for project  consulting
fees. Revenues for the three months ended March 31, 2005 also included income of
$1,011,804 or 16% of total revenue,  generated by the Gallant subsidiaries.  For
the three months ended March 31, 2005, two customers,  each accounted for 41% of
total  revenue,  respectively.  For the three months  ended March 31, 2004,  two
customers, respectively, accounted for 44% and 43% of total revenue.

                                       27
<PAGE>
GROSS PROFIT

Gross  profit  increased  to $590,535 for the three months ended March 31, 2005,
compared to $398,376 for the three  months ended March 31, 2004,  an increase of
$192,159  or 48%.  The  increase  in gross  profit was  primarily  due to higher
revenue in 2005.  As a result of higher  revenue,  cost of revenue  increased by
$1,965,221, or 50%, to $5,929,819 in 2005 from $3,964,598 in 2004. The high cost
of revenue percentage is a result of the Company requiring  additional  external
resources  in order to  fulfill  the  demand  for the  Company's  services.  The
outsourcing of content  production work enabled the Company to develop a team of
contractors  that will assist the Company in  producing  multimedia  content and
applications that are crucial to its future business operation.

SALES AND MARKETING EXPENSES

Sales and  marketing  expenses  increased by $12,591 or 268%, to $17,288 for the
three months ended March 31, 2005  compared to $4,697 for the three months ended
March 31, 2004. Higher sales and marketing expenses in 2005 was primarily due to
higher promotion  expenses  incurred by the Gallant  subsidiaries and travelling
expenses incurred to introduce the Company's biometric products to customers and
resellers in Malaysia.

GENERAL AND ADMINISTRATIVE EXPENSES

General and  administrative  expenses  were  $427,953 for the three months ended
March 31, 2005,  compared to $279,341 for the three months ended March 31, 2004,
an  increase  of $148,612  or 53%.  The  increase in general and  administrative
expenses was mainly  attributable to additional expenses incurred by the Gallant
subsidiaries  and higher  expenses  incurred for consulting  fees,  compensation
expenses,  public  relations  services,  maintenance  expenses and higher rental
expenses.   The  Gallant  subsidiaries'  general  and  administrative   expenses
contributed  $120,927 or 28% of total  general and  administrative  expenses for
2005.

INTEREST EXPENSE

Interest  expense  increased  by $39,764 or 1220%,  to $43,024 for three  months
ended March 31, 2005 as compared to $3,260 for the three  months ended March 31,
2004.  Interest  expense for the three  months  ended March 31,  2005,  included
$8,568  related to a $500,000  convertible  term note issued on June 4, 2004 and
$18,473 incurred by the Gallant subsidiaries.  These accounted for approximately
20% and 43%, respectively,  of total interest expense for the three months ended
March 31, 2005.

AMORTIZATION OF DEBT ISSUANCE COSTS

Amortization  of debt issuance  costs of $6,777 for the three months ended March
31,  2005  relates to the  issuance of  preferred  stock of a  subsidiary  and a
convertible term note on May 28, 2004. See a further discussion in the Liquidity
and Capital Resources section.

GAIN ON DISPOSAL OF ASSETS, RELATED PARTY

Gain on disposal of assets,  related party, for the three months ended March 31,
2005 and 2004 included  recognition of a previously deferred gain of $13,684 and
$107,258,  respectively,  related to a similar amount the Company  received from
its  long-term  receivable,  related  party.  The  receivable  balance and total
deferred gain was $309,584,  respectively,  as of December 31, 2004. This amount
arose in the year ended  December  31, 1998 when the Company sold assets used in
the operations of a subsidiary to a related  company.  Due to the uncertainty of
collection of the related receivable, the related gain on the sale of the assets
was deferred and is to be  recognized  only after all costs have been  recovered
and as payments are received.  During the year ended December 31, 2002, payments
received  by the  Company  exceeded  all  remaining  costs.  As a result of cash
payment received, the Company's long-term receivable, related party and deferred
gain balances were reduced to $295,900 respectively, as of March 31, 2005.

INCOME FROM CONTINUING OPERATIONS

The Company recorded income from continuing operations of $147,732 for the three
months ended March 31, 2005,  as compared to $183,894 for the three months ended
March 31, 2004.  Income from  continuing  operations  for the three months ended
March 31, 2005 and 2004 included  recognition  of a deferred gain of $13,684 and
$107,258, respectively. Excluding these non-recurring transactions, the recorded
income  from  continuing  operations  would  have  been  $134,048  and  $76,636,
respectively, for the three-month periods ended March 31, 2005 and 2004.


                                       28
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2005, the Company had net cash of $66,405,  and restricted  cash
of approximately $6,000,000 from the sale of securities to a Master Fund.

On May 28, 2004,  the Company  entered into  agreements  with the Master Fund to
secure a $7.0 million funding through private placement of securities consisting
of a convertible term note,  convertible  preferred stock issued by a subsidiary
corporation,  SDA America,  Inc.,  and warrants to purchase  common stock of the
Company. The Company has secured from the Master Fund:

a)   $500,000  funding through the sale of a Convertible  Term Note (the "Note")
     in the principal  amount of $500,000,  which is convertible  into shares of
     the Company's  common stock at a fixed  conversion price of $0.20 per share
     and  warrants  to  purchase up to 300,000  shares of the  Company's  common
     stock. The term note has a three-year term and a coupon at a rate per annum
     equivalent  to the "prime rate"  published in The Wall Street  Journal from
     time to time  plus 2%,  subject  to a floor of 6% per  annum.  The  monthly
     interest  will be  adjusted  downward  based on a  minimum  increase  of 25
     percent of the price of the common stock above the  conversion  price.  The
     warrants  have a seven-year  term and an exercise  price of $0.40 per share
     for the first 100,000 shares, $0.43 per share for the second 100,000 shares
     and $0.47 per share for the third 100,000 shares.

b)   $6,500,000  funding  through  the  sale of  6,500,000  shares  of  Series A
     Convertible  Preferred  Stock (the "Series A  Preferred")  of the Company's
     wholly owned subsidiary,  SDA America,  Inc. ("SDAA"),  at a price of $1.00
     per share,  which is convertible  into shares of the Company's common stock
     and warrants to purchase up to  3,000,000  shares of the  Company's  common
     stock.  The Series A  Preferred  is  entitled  to  cumulative  preferential
     dividends at a rate per annum  equivalent to the "prime rate"  published in
     The Wall Street Journal from time to time plus 2%, subject to a floor of 6%
     per annum.  The warrants  have a seven-year  term and an exercise  price of
     $0.40 per share for the  first  1,000,000  shares,  $0.43 per share for the
     second 1,000,000 shares and $0.47 per share for the third 1,000,000 shares.

Pursuant to  amendments  to the  agreements  governing the terms of the Series A
Preferred  in August 2004 and April 2005,  the Master Fund may convert a portion
of the  Note and  Series  A  Preferred  as  follows:  the  first  $2,000,000  of
conversions have been reset to a price equal to 85 percent of the average of the
five  lowest  closing  prices  during the 22  trading  days prior to the date of
conversion  (whether as principal  repayment  or accrued and unpaid  interest or
dividends),  subject to a minimum  conversion price of $0.07 per share; the next
$1,000,000  of  conversions  have been reset to a price of $0.25 per share.  The
remaining  conversions  permitted  under  the terms of the  original  securities
issuance will remain  unchanged at $0.35 per share. In addition to resetting the
conversion prices for a portion of the transaction,  the amendments provide that
all dividend and interest  payments  payable under the investment  would accrue,
rather than be payable in cash,  until the next  conversion  into  common  stock
occurs.  The  amendments  provide  for a waiver of cash  payments of interest or
dividends due prior to the execution of the amendments, with any such amounts to
be  accrued  to the  amounts  payable  under  the  terms of the Note or Series A
Preferred.

Pursuant to the Securities  Purchase  Agreement  between the Master Fund and the
Company and a restricted  account  agreement  entered  into by the Company,  the
Master  Fund and a US bank,  the  $6,500,000  investment  was  deposited  into a
restricted  account as  security  for the  performance  of the  Company  and its
subsidiaries' obligations to the Master Fund. The proceeds, which are restricted
to making  acquisitions  of other  companies  that meet agreed to  criteria  for
sales,  profitability  and  accounting  standards,  may  be  released  from  the
restricted account at such time the preferred stock is converted into the common
stock of the Company pursuant to the relevant transaction documents.

Pursuant to Amendment No. 2 to the SPA executed on November 15, 2004, the Master
Fund agreed to remove the Listing  Condition from the SPA. As consideration  for
the removal of the Listing Condition,  the Company agreed to issue to the Master
Fund warrants to purchase  1,300,000  shares of the Company's  common stock. The
warrants have a seven-year term and an exercise price of $0.35 per share.


                                       29

<PAGE>
For the three  months  ended March 31,  2005,  all  operations  were funded from
internally  generated  funds  and  working  capital  advanced  by Mr.  Lim,  the
Company's principal shareholder,  Chief Executive Officer ("CEO"),  Chairman and
Director. As of March 31, 2005, the Company owed Mr. Lim $69,495.  Additionally,
as of March 31, 2005, the Company owed an affiliated  Company,  in which Mr. Lim
has a financial  interest,  $114,070  for  short-term  cash  advances  made to a
subsidiary of the Company for working capital purposes from time to time and for
management fees. These amounts are unsecured, bear no interest and have no fixed
terms of repayment.

Cash used in operating  activities  of $172,118 for the three months ended March
31, 2005 was mainly  attributable to higher operating  expenses,  higher general
and administrative expenses and higher accounts receivable.

Net cash used in investing  activities  of $48,853 was mainly due to purchase of
equipment.

Net cash provided by financing activities of $51,466 was primarily due to higher
bank borrowings and advances from an affiliated company.

In addition to internally  generated funds and financial support from a director
and major  shareholder,  the  Company  may seek to raise  additional  funds from
equity or debt  financing for its future  working  capital  requirements.  As of
March 31, 2005,  the Company has furniture and equipment of  approximately  $1.3
million for the roll out of its portal, build-out of VISIONET and implementation
of its business  plan. The Company  estimates  that it would require  additional
capital  expenditures  of up to $2.0 million to implement  its business  plan to
become a total system  solution  provider  involved in application  development,
network operation,  delivery of value added applications and services;  and sale
of its EyStar  SmartHome  Console.  The Company has also committed to an initial
purchase of software  and  hardware  valued at $50,000 in  conjunction  with its
announced strategic collaboration with Aptilo Networks, Sweden.

The Company will also be expanding into new businesses that include provision of
secured  shipping and supply chain management  services.  The Company expects to
incur  further  expenses  to  acquire   companies  and  technologies   that  are
synergistic  to the new  businesses and will help the Company to rollout the new
businesses  in the shortest  time  possible.  During 2003 and 2004,  the Company
incurred  $263,000 in the  establishment and acquisition of new subsidiaries and
associates  relating to its new businesses.  Some of these  acquisitions did not
work out well and the Company has sold some of these companies, whose operations
and management were not compatible with the Company's business plan in 2004. For
2005,  the Company  estimates  that it will incur an additional  $2.1 million to
identify,  negotiate and acquire the  businesses  and/or net assets in companies
synergistic to its planned new businesses.  In addition,  the Company  estimates
that it will  require a further  $2.0  million to finance the set-up cost of its
new  businesses.  The Company  also  expects that it will require a further $2.0
million to finance the working  capital of its new  businesses and the operation
of its newly acquired and/or established subsidiaries and associates.

On July 7, 2004 the Company announced  teaming  agreements with two unaffiliated
entities to  collectively  pursue projects to enable the search and match of DNA
data for newborns and  registered  criminals for use primarily by the Government
of Malaysia.  The project may be developed by a joint venture company led by the
Company. The project may be financed by internally  generated funds.  Additional
financing in the form of a grant may be sought from the  Multimedia  Development
Corporation,   a  Malaysian  Corporation  charged  with  the  responsibility  of
implementing the Multimedia Super Corridor (MSC), a Malaysian initiative for the
global information and communication technology (ICT) industry.

The  Company  will also expand its  business in ICT trading  through the Gallant
Group of companies.  On March 28, 2005,  the Company  announced the opening of a
second Apple retail center in the Hartamas  Shopping  Centre in Sri Hartamas,  a
suburb of Kuala  Lumpur,  Malaysia.  The new outlet will expand on the  "digital
lifestyle"  concept  developed by the Company and offers a one-stop showroom for
retailing of Apple products as well as products developed by the Company and its
subsidiary  Innospective  Sdn Bhd  ("ISS").  The  expansion  of the ICT  trading
business is expected to be financed by internal funds and bank borrowings.

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

                                       30

<PAGE>
<TABLE>
<CAPTION>

Contractual Obligations:
                                                                   Payment due by period
                                                              --------------------------------
                                                                 Less than
                                                 Total            1 year         1 - 5 years
                                            --------------    --------------    --------------
<S>                                              <C>               <C>               <C>
Capital lease obligations                   $       62,484    $       30,858    $       31,626
Convertible term note obligations           $      202,251    $      117,102    $       85,149
Bank borrowings                             $    1,090,775    $      969,950    $      120,825
Operating lease commitments                 $      367,300    $      168,000    $      199,300

</TABLE>

ITEM 3. CONTROLS AND PROCEDURES

As of  the  end of  the  period  covered  by  this  report,  we  carried  out an
evaluation,  under the supervision and with the participation of our management,
including our Chief Executive  Officer and our Chief Financial  Officer,  of the
effectiveness of the design and operation of the Company's  "disclosure controls
and procedures" (as defined in Rule 13a-15(e) under the Securities  Exchange Act
of 1934, as amended).  Based upon that evaluation,  our Chief Executive  Officer
and our Chief  Financial  Officer  concluded  that our  disclosure  controls and
procedures are effective to ensure that information  required to be disclosed by
us in  reports  that we file or submit  under  the  Exchange  Act are  recorded,
processed,  summarized  and reported  within the time  periods  specified in the
Securities  and Exchange  Commission  (the "SEC")  rules and forms,  and include
controls  and  procedures  designed  to ensure that  information  required to be
disclosed  by  us in  such  reports  is  accumulated  and  communicated  to  our
management,  including  our Chief  Executive  Officer  and our  Chief  Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.

There has been no change in our internal control over financial reporting during
the quarter ended March 31, 2005 that has materially affected,  or is reasonably
likely to materially affect, our internal control over financial reporting.

                                       31
<PAGE>
PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      None.


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

      None.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     None.


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

     None.


ITEM 5. OTHER INFORMATION

     None.


ITEM 6. EXHIBITS

       (a) Exhibits

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

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

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

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

                                       32

<PAGE>
                                   SIGNATURES

     In accordance  with the  requirements of the Securities and Exchange Act of
1934,  the  Registrant  has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                       SECURED DIGITAL APPLICATIONS, INC.
                                       (Registrant)



DATE: May 22, 2006                     BY: /s/ Patrick Soon-Hock Lim
                                           ------------------------------
                                       Patrick Soon-Hock Lim
                                       Chairman & Chief Executive Officer



DATE: May 22, 2006                     BY: /s/ Voon Fui Yong
                                           ------------------------------
                                       Voon Fui Yong
                                       Chief Accounting Officer
                                       (Principal Financial Officer and
                                       Principal Accounting Officer)


                                       33