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

                                   FORM 10-QSB

                                   (MARK ONE)

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

                    FOR QUARTERLY PERIOD ENDED MARCH 31, 2004

     [ ] 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)

                     SUITE 11.02, 11TH FLOOR MENARA MERAIS,
           NO. 1, JALAN 19/3, 46300 PETALING JAYA, SELANGOR, MALAYSIA
              (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 13, 2004
        -------                   ----------------------------------------------
Common stock, $.00001 par value                  97,928,899



                                       1
<PAGE>




FORM 10-QSB
1ST QUARTER
                                      INDEX

<TABLE>
<CAPTION>
                                                                                                        Page
PART I  -  FINANCIAL INFORMATION

         ITEM 1. FINANCIAL STATEMENTS

<S>                                                       <C> <C>                                         <C>
         Condensed consolidated balance sheet as at March 31, 2004 (Unaudited)                            3

         Condensed consolidated statements of operations for
         the three-month periods ended March 31, 2004 and
         March 31, 2003 (Unaudited)                                                                       4

         Condensed consolidated statements of cash flows for the three-month
         periods ended March 31, 2004 and March 31, 2003 (Unaudited)                                      5

         Notes to condensed consolidated financial statements (Unaudited)                              6 - 13

         ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS                                                 14 - 27

         ITEM 3. CONTROLS AND PROCEDURES                                                                 28


PART II - OTHER INFORMATION

         ITEM 1. LEGAL PROCEEDINGS                                                                       29

         ITEM 2. CHANGES IN SECURITIES AND PURCHASES OF EQUITY SECURITIES                                29

         ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                                         29

         ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                     29

         ITEM 5. OTHER INFORMATION                                                                       29

         ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                        29

         SIGNATURES                                                                                      30
</TABLE>



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. 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 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, the
inability of the Company to raise capital on a timely basis, existing and future
government regulations, the failure to retain qualified personnel, competitive
pressures and potentially adverse tax and cash flow consequences resulting from
operating in multiple countries with different laws and regulations, the
inability to maintain profitability in the future and the general economic and
business conditions in Malaysia, the United States and other countries,
primarily in Asia, in which the Company does or seeks to do business. 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, 2004
                                   (Unaudited)
<TABLE>
<CAPTION>

                                     ASSETS
Current assets:
<S>                                                                                              <C>
     Cash                                                                                        $          154,954
     Accounts receivable, less allowance for doubtful accounts of $156,000                                3,021,616
     Other accounts receivable                                                                               20,566
     Prepaid expenses and other assets                                                                       32,590
     Inventories                                                                                            151,167
                                                                                                    ---------------
              Total current assets                                                                        3,380,893

Furniture and equipment, net                                                                              1,393,616
Goodwill                                                                                                    471,150
Investment in associate companies                                                                            40,040
Long-term receivables, related parties                                                                      447,742
                                                                                                    ---------------
                                                                                                 $        5,733,441
                                                                                                    ===============
                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
     Current portion of capital lease obligations                                                $           66,232
     Accounts payable                                                                                       903,268
     Accrued expenses                                                                                       137,591
     Amount due to an affiliated company                                                                     21,842
     Amount due to a director                                                                                27,258
     Income tax provision                                                                                    39,935
                                                                                                    ---------------
              Total current liabilities                                                                   1,196,126

Capital lease obligations, net of current portion                                                            93,396
Deferred gain                                                                                               447,742
                                                                                                    ---------------
              Total liabilities                                                                           1,737,264
                                                                                                    ---------------
Minority interest                                                                                           514,728
                                                                                                    ---------------
Commitments and contingencies

Shareholders' equity:
     Preferred stock, $0.10 par value; 1,000,000 shares authorized;
       no shares issued and outstanding
     Common stock, $.00001 par value; 100,000,000 shares authorized;
       98,983,899 shares issued                                                                                 989
     Additional paid-in capital                                                                           3,609,297
     Treasury stock, 1,055,000 shares at cost                                                               (44,550)
     Options                                                                                                 14,800
     Accumulated deficit                                                                                   (155,656)
     Accumulated other comprehensive income                                                                  56,569
                                                                                                    ---------------
              Total shareholders' equity                                                                  3,481,449
                                                                                                    ---------------
                                                                                                 $        5,733,441
                                                                                                    ===============
                                 See accompanying notes to condensed consolidated financial statements
</TABLE>


                                       3
<PAGE>



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

                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                                  Three months ended
                                                                                                        March 31
                                                                                                2004               2003
                                                                                                ------          -------
Revenues:
<S>                                                                                          <C>            <C>
     Related parties                                                                         $     414,475  $     125,474
     Others                                                                                      4,062,647      3,456,579
                                                                                             -------------  -------------
                                                                                                 4,477,122      3,582,053

Cost of revenues                                                                                 4,060,700      3,294,638
                                                                                             -------------  -------------
Gross profit                                                                                       416,422       287,415
                                                                                             -------------  -------------
Operating expenses:
     Sales and marketing                                                                             4,697         12,402
     General and administrative:
       Related parties                                                                              21,316         15,000
       Others                                                                                      315,298        192,251
                                                                                             -------------  -------------
Total operating expenses                                                                           341,311        219,653
                                                                                             -------------  -------------
Income from operations                                                                              75,111         67,762
                                                                                             -------------  -------------
Other income (expense):
     Interest expense                                                                               (3,679)        (3,357)
     Gain on disposal of assets, related party                                                     107,258          5,263
     Other income                                                                                    4,764             --
     Share of associate companies loses                                                             (2,632)            --
                                                                                             -------------  -------------
                                                                                                   105,711          1,906
                                                                                             -------------  -------------

Income before income tax and minority interest                                                     180,822         69,668
Income tax                                                                                          (1,842)            --
                                                                                             -------------  -------------
Income before minority interest                                                                    178,980         69,668
Minority interest                                                                                  (15,680)       (12,448)
                                                                                             -------------  -------------
Net income                                                                                   $     163,300  $      57,220
                                                                                             =============  =============

Net income per common share:
     Basic and diluted                                                                       $           *  $           *
                                                                                             =============  =============
Weighted average shares outstanding:
     Basic                                                                                      97,928,899     98,753,677
                                                                                             =============  =============
     Diluted                                                                                    98,228,899     98,753,677
                                                                                             =============  =============


* Less than $.01 per share







                                 See accompanying notes to condensed consolidated financial statements


</TABLE>


                                       4
<PAGE>


               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>


                                                                                            Three Months Ended
                                                                                                 March 31
                                                                                           2004                 2003
                                                                                         --------             --------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                 <C>                   <C>
     Net cash provided by operating activities                                      $          74,727     $        10,644
                                                                                    ------------------    ---------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Proceeds from disposal of equipment                                                       11,517                  --
     Purchase of equipment                                                                     (2,859)                 --
                                                                                    -----------------     ---------------
           Net cash provided by investing activities                                           (8,658)                 --
                                                                                    -----------------     ---------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Payment for reacquisition of shares of common stock                                           --             (29,348)
     Net repayment of advances to affiliated company                                         (126,484)            (20,683)
     Net repayment of advances to a director                                                  (29,298)             33,508
     Payment of obligation under capital leases                                               (17,568)             (2,864)
                                                                                    -----------------     ---------------
           Net cash used in financing activities                                             (173,350)            (19,387)
                                                                                    ------------------    ---------------

Net decrease in cash                                                                          (89,965)             (8,743)
Cash, beginning of period                                                                     244,919              10,077
                                                                                    ------------------    ---------------
Cash, end of period                                                                 $         154,954     $         1,334
                                                                                    =================     ===============

Supplemental disclosure of non-cash financing activities:

Payments on accounts receivable made directly by customers to an
   affiliated company for amounts the Company owed it.                              $              --     $        35,263
                                                                                    =================     ===============
Supplemental disclosure of non-cash financing activities-
 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
                                                                                    =================








                                 See accompanying notes to condensed consolidated financial statements


</TABLE>


                                       5
<PAGE>


                       SECURED DIGITAL APPLICATIONS, INC.
          NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                 MARCH 31, 2004
                                   (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:

a)   EyStar Media Inc. ("EMI"), a Delaware corporation wholly-owned by the
     Company;
b)   Animated Electronic Industries Sdn Bhd ("AEI"), Asiaco Multi Corporation
     Sdn Bhd ("AMC") and Secured Shipping Sdn Bhd ("SS"), all Malaysian
     corporations wholly-owned by the Company;
c)   Perwimas Telecommunications Sdn Bhd ("PTSB"), AEI's 86% owned Malaysian
     subsidiary;
d)   Temasya Wira Sdn Bhd ("TW"), AEI's 60% owned Malaysian subsidiary;
e)   Asiaco Material Handling (East Coast) Sdn Bhd ("AEC"), AMC's 80% owned
     Malaysian subsidiary;
f)   Asiaco Logistic Sdn Bhd ("ALG"), AMC's 67% owned Malaysian subsidiary;
g)   Asiaco Services Sdn Bhd ("ASS"), AMC's 60% owned Malaysian subsidiary;
h)   Asiaco Taiping Sdn Bhd ("ATG"), AMC's 62% owned Malaysian subsidiary, from
     the date of acquisition on February 9, 2004; and i) Vista Positive Sdn Bhd
     ("VP"), AEI's wholly-owned subsidiary, from the date of incorporation on
     February 17, 2004.

All significant intercompany accounts and transactions have been eliminated on
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, 2003 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.


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.


                                       6
<PAGE>



2.   SIGNIFICANT ACCOUNTING POLICIES (continued)

REVENUE RECOGNITION

Revenue represents the net invoiced value of

o    goods sold;

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

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

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

NET INCOME PER COMMON SHARE

Basic net income per common share is calculated by dividing net income by the
weighted average number of common shares outstanding for the three-month period
ended March 31, 2004 and 2003. Diluted income per common share reflects
additional common shares that would have been outstanding if dilutive potential
common shares had been issued, as well as any adjustment to income that would
result from the assumed issuance. Potential common shares that may be issued by
the Company relate to outstanding stock options and are determined using the
treasury stock method.

GOODWILL

Goodwill, arising from the purchase of PTSB, represents the purchase price paid
and liabilities assumed in excess of the fair market value of tangible assets
acquired. The Company performed a goodwill impairment test in the fourth quarter
of 2003 and determined that there was no goodwill impairment as of that test
date. A goodwill impairment test will be performed annually in the fourth
quarter or upon significant changes in the Company's business environment.

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 period ended March 31, 2004, the Company made a provision of
$1,842 for income tax payable on its operations in Malaysia. There was no
provision for income taxes for the three-month March 31, 2003, as net income was
offset by a net operating loss carry forward. At December 31, 2003, the Company
had approximately $2.6 million of net operating loss carry forwards, of which
$1.1 million relates to the Company's activities in Malaysia and $1.5 million
relates to the Company's activities in the United States. The Malaysian net
operating loss carry forward can be carried forward indefinitely while the
Untied States net operating loss carry forward expires through the year 2023.
The United States net operating loss carry forward may be subject to annual
limitations based on ownership changes in the Company's common stock as provided
by in Section 382 of the Internal Revenue Code.


                                       7
<PAGE>


2.   SIGNIFICANT ACCOUNTING POLICIES (continued)

INVENTORIES

Inventories, which are comprised of peripherals for surveillance and wireless
communication; and material handling equipment and related spare parts 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 excess of cost over
par value is allocated to additional paid-in capital. The Company reissues stock
from the treasury on a first-in, first-out basis.

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.

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.

RECLASSIFICATIONS

Certain 2003 balances have been reclassified to conform to the current
presentation.


                                       8
<PAGE>


3.   BUSINESS ACQUISITION

On November 17, 2003,  AEI signed an asset  purchase  agreement with Asiaco
Material Handling Sdn Bhd ("AMH"),  a Malaysian  company,  to purchase,  through
AMC, the business assets and selected  liabilities of AMH and seven companies in
the Asiaco group.  The definitive  agreement also provides for AMC 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 have been accounted for as purchases. The total consideration is to
be satisfied by issuance of AMC's common stock to the owner upon full completion
of the asset purchase  agreements between the Company and AMH. Through March 31,
2004,  the  Company  had paid a total of  $263,158  to AMH as  advances  for the
incorporation  of AMC and for the purchase of equity in four  subsidiary as well
as  two  associate  companies:  46%  in  Asiaco  Transport  and  33%  in  Asiaco
Engineering. These advances will be deducted from the final purchase price to be
determined by AEI when it has completed its  verification of the net asset value
of AMH and its  subsidiaries.  The purchase price for the entire  acquisition is
expected  to be  approximately  $1.8  million  and  shall  be  determined  after
completion of the financial due diligence. As a result of these acquisitions the
Company has entered into the equipment material handling business.

The following table summarizes the estimated aggregated fair values of the
assets acquired and the liabilities assumed from ATG at February 9, 2004, the
date of the acquisition. The allocation of the purchase prices is subject to
refinement.
<TABLE>
<CAPTION>

<S>                                                                    <C>
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)
Minority interests                                                             (46,192)
                                                                        --------------
                                                                                74,135
                                                                        ==============
</TABLE>

The following unaudited proforma financial information presents results of
operations as if the acquisition of the above four subsidiaries had occurred at
the beginning of the respective three-month periods ended March 31, 2004 and
2003:
<TABLE>
<CAPTION>

                                                                            2004                2003

<S>                                                                    <C>                <C>
Revenue                                                                $     4,504,091    $      3,644,410
                                                                             =========           =========
Net income                                                             $       159,499    $         60,822
                                                                             =========           =========
Basic and diluted net income per common share                          $             *    $              *
                                                                             =========           =========

</TABLE>

* Less than $0.01 per share



                                       9
<PAGE>


4.   RELATED PARTY ACTIVITY

During the three-month periods ended March 30, 2004 and 2003, the Company
recognized revenue of $414,475 and $125,474, respectively, for project
consulting fees from a related party, pursuant to four consulting contracts.

During the three-month period ended March 31, 2003, in lieu of actual cash
payment of project consulting fee receivables, management directed the related
party to pay a total of $30,000 to an affiliated company to whom the Company had
outstanding accounts payable. The net effect to the Company was that revenue was
recognized and recorded payables were reduced by equal amounts.

At December 31, 2003, long-term receivables, related parties, consisted of
$555,000 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 $107,258 and $5,263
of the outstanding receivable during the three-month periods ended March 31,
2004 and 2003, 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. During 2003, in lieu of actual cash
payment of this Company receivable, management directed the related party to pay
the $5,263 to an affiliated company to whom the Company had outstanding accounts
payable.


5.   SHAREHOLDERS' EQUITY

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, which vested March 15, 2003, were valued at $0.044 per
share, and, based upon the Black-Scholes option-pricing model, resulting in
recognition of compensation expense of $5,033 during the three-month period
ended March 31, 2003. 100,000 of the options, which vested May 15, 2003, were
valued at $0.048 per share, and the remaining 100,000 options, which vested
September 15, 2003, were valued at $0.056 per share.

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. As of
March 31, 2004, the Company had a balance of 1,055,000 shares of treasury stock
valued at $44,550 based on an average cost of $0.04 per share.


                                       10
<PAGE>


6.   COMMITMENTS AND CONTINGENCIES

On November 17, 2003, the Company announced that its subsidiary, AEI, had signed
a definitive agreement with Asiaco Material Handling Sdn Bhd ("AMH") to
purchase, through AMC, the business assets and selected liabilities of AMH and
seven companies in AMH's subsidiaries, associates, and related companies ("the
Asiaco group"). The definitive agreement also provides for AMC, to purchase a
majority equity interest in the remaining sixteen companies in the Asiaco group
from AMH's major shareholder. AMH and its subsidiaries are primarily engaged in
supply chain management, land transportation, secured logistics as well as sale,
rental and servicing of material handling equipment. The purchase price for the
above acquisition is approximately $1.8 million. The final purchase price shall
be determined after completion of the financial due diligence. Through March 31,
2004, the Company had paid a total of $263,158 to AMH as advances for the
incorporation of AMC and purchase of equity in the Asiaco group of companies.
These advances will be deducted from the final purchase price to be determined
by AEI when it has completed its verification of the net asset value of AMH and
its subsidiaries.


7.   PROPOSED BUSINESS TRANSACTIONS

In December 2003, the Company entered into two Joint Venture Agreements with
Amove Resources Sdn Bhd ("AR") to jointly implement a secured shipping service
and a Central Monitoring Service ("CMS") in the northern region of Malaysia,
where AR is currently providing armed guard services to clients that include
factories, offices and homes. Pursuant to the Agreement, the Company was also
granted an option to purchase a 51% equity interest in AR for $550,000. On
January 30, 2004, the Company's subsidiary, AEI, entered into a definitive
agreement to acquire 51% equity in AR from AR's principal shareholder for
$526,315 in cash. AEI made an initial cash payment of $26,315. The balance of
the purchase price is to be paid at closing, which is to occur by October 31,
2004. The purchase agreement is subject to customary closing conditions,
including the completion of a financial and legal due diligence audit to the
Company's satisfaction and the renewal of certain contracts with AR's existing
customers. At the date of this report, the Company had yet to close the purchase
agreement as AR's principal shareholder had yet to fulfill the condition
precedent as stated in the definitive agreement.

On December 6, 2003, the Company executed a definitive agreement with AMH's
principal shareholder and Asiaco Material Handling (Thailand) Co. Ltd. ("AMHT")
to purchase the assets and business of AMHT. On December 8, 2003, the Company
announced the incorporation of Asiaco Multi Corporation (Thailand) Co. Ltd
("AMCT"), to be used as a special vehicle to acquire AMHT's net assets and
business, including taking over AMHT's headquarters in Bangkok and branch office
in the industrial city of Rayong. Upon completion of the acquisition, the
Company will own 60% of AMCT's equity. The remaining 40% will be jointly owned
by the existing shareholders of AMHT. The Company and the existing shareholders
of AMHT are still negotiating the terms and conditions for the transfer of
AMHT's net assets and business to AMCT.

On February 17, 2004, the Company announced that its subsidiary, AEI, had
executed a definitive agreement to acquire the business and assets of Izfahan
Enterprise (M) Sdn Bhd ("IE"), a Malaysian freight forwarding company licensed
by the Malaysian Customs Department to provide freight forwarding service in the
northern and central region of Peninsular Malaysia. The purchase of IE's
business and assets would constitute the third strategic acquisition targeted by
the Company to expand its line of business into the logistics and secured
shipping industries. IE's assets will be transferred to Vista Positive Sdn Bhd
("VP"), a wholly-owned subsidiary of AEI to be used as a vehicle for the
acquisition. Under the terms of the agreement, the purchase consideration is not
expected to exceed $400,000 subject to IE fulfilling certain closing conditions,
which includes an undertaking by IE to secure a new freight forwarding license
for VP. AEI intends to integrate VP's operations with SS to provide third party
logistic services. AEI has yet to complete the acquisition of IE as both parties
are still negotiating management issues relating to VP's operations.


                                       11
<PAGE>


7.   PROPOSED BUSINESS TRANSACTIONS (continued)

In April 2004, the Company announced it had signed a Teaming Agreement with
ImageWare Systems, Inc. ("IW") to market biometric verification and
identification systems. Under the terms of the Teaming Agreement, the Company
will act as prime contractor for the marketing and development of biometric
verification and identification systems based on thumbprint and photo extraction
technology. IW will provide to the Company products and/or services, including
their Omni Biometric EngineTM ("Omni"), to extract data from the web-based ASP
programs developed by the Company. Initially, the Company and IW will market
products and services on an exclusive basis to private and public sector clients
in Malaysia, Thailand and Brunei and on a non-exclusive basis in Indonesia.
Revenues generated from Team projects will be shared equally. Each company will
bear its own costs of developing products, programs and systems necessary for
each project. One of the initial projects to be pursued by the Company and IW
Systems is the development of a biometric verification and identification system
to be used with the Malaysian Government's "MyKad" national identification card.
It is anticipated the project will be available for field trials by the fourth
quarter of 2004. The total project cost to develop the systems necessary to
conduct the field trials is estimated to be under $1 million with each company
responsible for its own development costs. Revenues will be generated on a
fee-per-transaction basis with the amount of the fee to be determined.

8.   SIGNIFICANT CONCENTRATIONS OF CREDIT RISK

The Company grants credit, generally without collateral, to its customers. Two
customers accounted for substantially all revenue earned during the three-month
periods ended March 31, 2004 and 2003. For the three months ended March 31, 2004
and 2003, one customer accounted for approximately 43% and 57% of revenue,
respectively, and another customer accounted for approximately 42% and 39% of
revenue, respectively.

One supplier accounted for substantially all cost of revenue during the
three-month periods ended March 31, 2004 and 2003. The Company is not dependent
upon one supplier to provide the services that it requires. Since the fourth
quarter of 2001, the Company has made a strategic decision to engage the
services of one sole supplier 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.

9.   SEGMENT INFORMATION

The Company has two reportable segments as a result of the establishment and
acquisition of new subsidiaries. The Company classifies its business into two
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 (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.



                                       12
<PAGE>



9.   SEGMENT INFORMATION (continued)

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 did not include segment reporting in the report for the three-month
period ended March 31, 2003 as the Company functioned as a single operating
unit. 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>

                                                                      Three-month ended March 31, 2004
                                                               Applications       Material            Total
                                                                                  Handling
                                                            ---------------- ----------------  ----------------
Revenue:
<S>                                                         <C>              <C>               <C>
   Related parties                                          $       414,475  $             --  $       414,475
   Others                                                         3,791,841           270,806        4,062,647
                                                            ---------------  ----------------  ---------------
                                                            $     4,206,316  $        270,806  $     4,477,122
                                                            ===============  ================  ===============
Net income (loss) from operating segments                   $       205,560  $        (42,260) $       163,300
                                                            ===============  ================  ===============
Depreciation expense                                        $        58,716  $          7,993
                                                            ===============  ================
Interest expense                                            $         3,260  $            419
                                                            ===============  ================
Income tax expense                                          $         1,842  $             --
                                                            ===============  ================
Share of associate companies' results                       $            --  $         (2,632)
                                                            ===============  ================
Expenditures for additions to long lived assets             $            --  $          2,859
                                                            ===============  ================

Consolidated total assets as of March 31, 2004 are as follows:
   Applications                                                                                $     4,907,609
   Material handling                                                                                   785,792
   Investments in associate companies                                                                   40,040
                                                                                               ---------------
   Total consolidated assets                                                                   $     5,733,441
                                                                                               ===============

</TABLE>

                                       13
<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 involved in application development, broadband network
operation, delivery of value added applications and services; sale of devices
that utilize broadband networks and the sale of biometric security devices.
During 2003, the Company expanded its business to include the development,
integration and provision of secured shipping and supply chain management
services. The Company's principal operations include 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 include the EyStar SmartHome Console, broadband
modems, biometric systems and Internet-based cameras. The Company also generates
revenue from the sale, rental and servicing of material handling equipment and
the provision of land transportation, industrial moving and engineering services
through its subsidiary, Asiaco Multi Corporation ("AMC"). In 2004, the Company
hopes to generate additional income from its new business in the development,
integration and provision of secured shipping and supply chain management
services.

The Company conducts its principal operations in Malaysia, and has the following
subsidiaries as of March 31, 2004:

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.   Animated Electronic Industries Sdn Bhd ("AEI"), a wholly owned Malaysian
     subsidiary involved in the design, development and production of multimedia
     content; provision of consulting services for website development, network
     engineering and project management in IT related projects.
3.   Perwimas Telecommunications Sdn Bhd ("PTSB"), an 86%-owned Malaysian
     subsidiary of AEI, provides broadband and application services under
     licenses granted by the government of Malaysia.
4.   Asiaco Multi Corporation Sdn Bhd ("AMC"), presently a wholly owned
     Malaysian subsidiary of AEI, 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.
5.   Secured Shipping Sdn Bhd ("SS"), presently a wholly owned Malaysian
     subsidiary of AEI, will be the joint venture vehicle between the Company
     and Amove Resources Sdn Bhd ("AR") to provide secured shipping services.
     AEI's equity holding in SS will be reduced to 51% upon fulfillment of all
     closing conditions stipulated in the joint venture agreement executed
     between the Company and AR.
6.   Temasya Wira Sdn Bhd ("TW"), a 60%-owned Malaysian subsidiary of AEI was
     established to undertake the research and development of biometric security
     applications in Malaysia.

                                       14
<PAGE>


7.   Asiaco Material Handling (East Coast) Sdn Bhd ("AEC"), an 80%-owned
     Malaysian subsidiary of AMC, is primarily involved in the sale, servicing
     and rental of material handling equipment in the eastern region of
     Malaysia.
8.   Asiaco Logistic Sdn Bhd ("ALG"), a 67%-owned Malaysian subsidiary of AMC,
     is primarily involved in industrial moving, packing and unpacking of
     industrial equipment and secured logistics.
9.   Asiaco Services Sdn Bhd ("ASS"), a 60%-owned Malaysian subsidiary of AMC,
     is primarily involved in providing maintenance, repair and restoration
     services for all material handling equipment.
10.  Asiaco Taiping Sdn Bhd ("ATG"), a 62%-owned Malaysian subsidiary of AMC, is
     primarily involved in the sale, servicing and rental of material handling
     equipment in the northern region of Malaysia.
11.  Vista Positive Sdn Bhd ("VP"), presently a wholly-owned Malaysian
     subsidiary of AEI, will be used as a vehicle to acquire the business and
     assets of Izfahan Enterprise (M) Sdn Bhd ("IE"), a Malaysian freight
     forwarding company, as the Company seeks to expand its line of business
     into third party logistics and secured shipping industries.

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

For the three months ended March 31, 2004, 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 and the provision
     of land transportation, industrial moving and engineering services


Significant Business Developments and Plan of Operation

During 2004, the Company anticipates that it will continue to provide its
existing multimedia development, consulting and broadband services, market the
EyStar SmartHome Console, introduce and actively market a new line of biometrics
security products capable of integration with the EyStar SmartHome Console 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 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.



                                       15
<PAGE>

On November 17, 2003, the Company announced that its subsidiary, AEI, had signed
a definitive agreement with Asiaco Material Handling Sdn Bhd ("AMH") to
purchase, through AMC, the business assets and selected liabilities of AMH and
seven companies in the Asiaco group. The definitive agreement also provides for
AMC, to purchase a majority equity interest in the remaining sixteen companies
in the Asiaco group from AMH's major shareholder. AMH and its subsidiaries are
primarily engaged in supply chain management, land transportation, secured
logistics as well as sale, rental and servicing of material handling equipment.
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 have been accounted for as
purchases. The total consideration is to be satisfied by issuance of AMC's
common stock to the owner upon full completion of the asset purchase agreements
between the Company and AMH. Through March 31, 2004, the Company had paid a
total of $263,158 to AMH as advances for the incorporation of AMC and for the
purchase of equity in four subsidiary as well as two associate companies: 46% in
Asiaco Transport and 33% in Asiaco Engineering. These advances will be deducted
from the final purchase price to be determined by AEI when it has completed its
verification of the net asset value of AMH and its subsidiaries. The purchase
price for the entire acquisition is expected to be approximately $1.8 million
and shall be determined after completion of the financial due diligence. As a
result of these acquisitions the Company has entered into the equipment material
handling business.

The following table summarizes the estimated aggregated fair values of the
assets acquired and the liabilities assumed from ATG at February 9, 2004, the
date of the acquisition. The allocation of the purchase prices is subject to
refinement.
<TABLE>
<CAPTION>

<S>                                                                    <C>
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)
Minority interests                                                             (46,192)
                                                                        --------------
                                                                                74,135
                                                                              ========
</TABLE>

As of the date of this report, the Company is working towards completing the
transfer of business, customers and selected net assets (selected assets less
selected liabilities) from four Asiaco Companies: APT, AHL, ASL and AML. The
transfer of business and net assets from the above companies will take time as
the transfer of title on some assets require approval from the relevant
authorities. The Company presently expects the transfer to be completed by the
third quarter of 2004. The purchase will be funded by cash from internally
generated funds and an advance from the Company's principal shareholder, as well
as through the issuance of preferred stock.


                                       16
<PAGE>


On December 6, 2003, the Company executed a definitive agreement with AMH's
principal shareholder and Asiaco Material Handling (Thailand) Co. Ltd. ("AMHT")
to purchase all of the assets and business of AMHT. On December 8, 2003, the
Company announced the incorporation of Asiaco Multi Corporation (Thailand) Co.
Ltd ("AMCT"), to be used as a special vehicle to acquire AMHT's net assets and
business including taking over AMHT's headquarters in Bangkok and branch office
in the industrial city of Rayong. Upon completion of the acquisition, the
Company will own 60% of AMCT's equity. The remaining 40% will be jointly owned
by the existing shareholders of AMHT. The Company and the existing shareholders
of AMHT are still negotiating the terms and conditions for the transfer of
AMHT's net assets and business to AMCT.

On December 3, 2003, the Company entered into a Joint Venture Agreement with
Amove Resources Sdn Bhd ("AR") to jointly implement a secured shipping service.
The Company has incorporated Secured Shipping Sdn Bhd ("SS") to be used as the
joint venture company. Pursuant to the Agreement, the Company was also granted
an option to purchase a 51% equity interest in AR for $550,000. This option to
purchase was exercisable on or before January 31, 2004. On January 30, 2004, the
Company's subsidiary, AEI, entered into a definitive agreement to acquire 51%
equity in AR for $526,315 in cash from AR's principal shareholder. AEI made an
initial cash payment of $26,315. The balance of the purchase price is to be paid
at closing, which is to occur by October 31, 2004. The purchase agreement is
subject to customary closing conditions, including the completion of a financial
and legal due diligence audit to the Company's satisfaction and the renewal of
certain contracts with AR's existing customers, which include multinational
companies and Fortune 50 U.S. companies operating in Malaysia. AEI will fund the
balance of the purchase price from internally generated funds. AR's principal
shareholder will retain 49% equity in AR and continue to serve as the Chief
Executive Officer of AR. He will also guarantee a minimum profit after tax of
$137,000 for fiscal years ending December 2004 to 2008. At the date of this
report, the Company had yet to close the purchase agreement as AR's principal
shareholder had yet to fulfill the condition precedent as stated in the
definitive agreement.

In addition to implementing a secured shipping service, the Company and AR also
agreed to jointly implement a Central Monitoring Service ("CMS"), through SS, in
the northern region of Malaysia where AR is currently providing armed guard
services to clients that include factories, offices and homes. The central
monitoring station will be installed with the latest state-of-the-art digital
surveillance and recording systems. Clients will be provided 24-hour monitoring
of their premises. When an intrusion is detected, AR's armed guards will be
dispatched immediately to the premises and law enforcement agencies and the
client will be notified. The system will permit clients access to the Company's
home and business surveillance portal via the Internet. The Company will hold a
majority equity interest in SS after consummation of the Joint Venture
Agreement. SS had yet to commence operation as the Company is still negotiating
with AR on the operational and administrative arrangements for the Joint
Venture.


                                       17
<PAGE>


On February 17, 2004, the Company announced that its subsidiary, AEI, had
executed a definitive agreement to acquire the business and assets of Izfahan
Enterprise (M) Sdn Bhd ("IE"). IE is a Malaysian freight forwarding company
licensed by the Malaysian Customs Department to provide freight forwarding
service in the northern and central region of Peninsular Malaysia. The purchase
of IE's business and assets, once completed, would constitute the third
strategic acquisition targeted by the Company to expand its line of business
into the logistics and secured shipping industries. Izfahan's assets will be
transferred to Vista Positive Sdn Bhd ("VP"), a wholly-owned subsidiary of AEI
that was recently incorporated to be used as a vehicle for the acquisition.
Under the terms of the agreement, the purchase consideration is not expected to
exceed $400,000 subject to IE fulfilling certain closing conditions, which
includes an undertaking by IE to secure a new freight forwarding license for VP.
The Chief Executive Officer and key personnel of IE will be retained by AEI upon
completion of the acquisition. AEI intends to integrate VP's operations with SS
to provide third party logistic services. AEI has yet to complete the
acquisition of IE as both parties are still negotiating management issues
relating to VP's operations.

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 2004 and that it will recognize
revenue from these activities in 2004. 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 has decided that it will be most advantageous to
the Company to revise its strategy for exploiting its broadband license granted
by the Government of Malaysia. The Company believes that the most effective use
of the VISIONET infrastructure is as a point-to-point backhaul service provider
to other broadband and telecommunications providers. This decision was based on
feasibility studies that were conducted after the VISIONET cell was activated.
During 2004, the Company intends to actively market VISIONET as a backhaul
service provider, rather than as a telecommunications company that provides the
"last mile" service. In particular, the Company has 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 2004.



                                       18
<PAGE>


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.


Significant Contracts

For the year 2004, 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 2004. Although the Company provides 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.

a)   In August 2001, the Company was awarded a consulting contract, estimated to
     generate revenue of $2.17 million from January 2004 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, 2003, the
     Company  generated  $680,000 of revenue on this contract.  During the three
     months  ended March 31, 2004 and 2003,  the Company  recognized  additional
     revenue of $111,000  and $44,000,  respectively  on this  contract.  During
     2003,  in lieu of cash  payment,  management  directed  the customer to pay
     $20,000  to an  affiliated  company  to whom the  Company  had  outstanding
     accounts  payable.  The net  effect to the  Company  was that  revenue  was
     recognized and recorded payables were reduced by equal amounts.

b)   In December  2001,  the Company  entered  into a marketing  agreement  with
     Worldlink  Dotcom Sdn. Bhd.  (Worldlink) to distribute its service  gateway
     for home/office automation in Malaysia,  Singapore and Australia.  In 2002,
     Worldlink promoted the Company's service gateway to potential resellers and
     channel  partners in the  targeted  markets.  The  Worldlink  contract  was
     projected  by the  Company to generate  revenues  of $4.0  million in 2003.
     Worldlink  has not been able to secure any sales during 2003 and  indicated
     that additional  time is required to promote the Company's  service gateway
     and secure  orders  from its  resellers  and channel  partners.  Therefore,
     revenue that will be realized  during 2004 cannot be  accurately  forecast.
     The gateway  bridges the Internet with  internal  home and office  networks
     while facilitating the delivery of home and office applications  including,
     but not limited to, security surveillance and video conferencing.

c)   In January 2002, the Company appointed Mutual Base Equity Sdn. Bhd. (MBE)
     as one of its distributors in Malaysia and Singapore for sale of the EyStar
     SmartHome Console. Under the terms of the Distributor Agreement, MBE has
     been appointed for an initial duration of 3 years commencing January 4,
     2002. For fiscal years 2002 and 2003, MBE has been attempting to secure
     contracts for the supply of the EyStar SmartHome Console to property
     developers in Malaysia and Singapore. The sales target for MBE is $17.5
     million over the remaining term of the agreement. There can be no
     assurance, however, that MBE will meet its sales target.

d)   The Company will attempt to secure contracts from local mobile networks to
     be jointly deployed with Aptilo Networks in 2004.


                                       19
<PAGE>


e)   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, is expected
     to be completed by December 2004. As a total solution  provider,  PTSB will
     also be responsible for the supply of its EyStar SmartHome  Console as well
     as providing value-added broadband applications such as high speed Internet
     access, security surveillance, multimedia conferencing, home automation and
     video-on-demand. The Company generated $311,000 of revenue on this contract
     through  December 31, 2003. The Company  recognized  $61,000 and $42,000 of
     revenue,  respectively,  during the three  months  ended March 31, 2004 and
     2003.  During  2003,  in lieu  of cash  payment,  management  directed  the
     customer to pay $10,000 of the $42,000  recognized to an affiliated company
     to whom the Company had outstanding accounts payable. The net effect to the
     Company was that revenue was recognized and recorded  payables were reduced
     by equal amounts.

f)   In September 2002, the Company signed a Channel Partner Agreement with
     PointRed Technologies, Inc., a wireless broadband equipment manufacturer
     and distributor to distribute the EyStar SmartHome Console. Starting with
     its existing client base and expanding into new markets, PointRed will
     sell, install and service the EyStar SmartHome Console, and in doing so,
     may help to accelerate the distribution of the Console in North and South
     America.

g)   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  expects to receive  $550,000  in
     consulting  fees over the next 18 months  beginning  December 1, 2002.  The
     Company generated $273,000 of revenue on this contract through December 31,
     2003.  The Company  recognized  $178,000 and $39,000 of revenue  during the
     three months ended March 31, 2004 and 2003, respectively.  The Company also
     expects to secure additional  contracts sometime in 2005, estimated at $4.0
     million,  from MYA's clients for the supply and  installation of the EyStar
     SmartHome Console and its security system in the two commercial and housing
     developments.

h)   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, 2003, the Company generated $55,000 of revenue from
     this contract and recognized an additional $66,000 of revenue during the
     three months ended March 31, 2004.

i)   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 2004
     cannot be accurately forecast.


                                       20
<PAGE>


j)   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, is 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 2004 may not be accurately forecast.

k)   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.
     The developer of the project is unable to provide a definitive date for the
     completion of construction work. Due to the uncertainty, revenue that will
     be realized from this contract during 2004 cannot be accurately forecast.

l)   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 is 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.

m)   In November 2003, the Company's subsidiary, AMC, was awarded a $4.6 million
     contract to provide electronically secured cargo shipping services for
     goods bound for the United States to a shipping agency operating in Port
     Klang, Malaysia. The contract, expected to commence in the second quarter
     of 2004, is for an initial duration of fifteen months. Through AMC, the
     Company will provide technical expertise in the areas of electronic tagging
     and real-time tracking of maritime shipments bound for the United States
     and supply chain management services to its clients. The containers will be
     tracked from the time they leave the client's facility to the time they
     arrive in a United States port. Consignees in the U.S. will also be able to
     monitor the location of the containers in real-time, detect any tampering
     to the container and insure that the cargo is not substituted.

n)   In December 2003, the Company announced that its subsidiary,  AMC, has been
     awarded a $4.92 million contract to provide a secured shipping service. The
     fifteen  month  contract is  expected  to commence in the first  quarter of
     2004. The contract calls for AMC to provide warehousing, transportation and
     monitoring  of the  cargo  from the  time  the  goods  leave  the  client's
     warehouse to the port of destination in the United States. The Company will
     be responsible for providing the technology to identify  planned and actual
     container contents;  and identify planned and actual container routing. Any
     discrepancies  in the  contents  and/or  routing  will be  reported  to the
     shipper.  The Company will also provide physical  security of the container
     seal and cargo loading  area. To date,  the contract has yet to commence as
     the client and AMC failed to agree on certain implementation issues. AMC is
     trying to resolve the differences  with the client but is unable to provide
     any  assurance  that AMC will be able to  proceed  with  the  contract  and
     generate revenue from this contract in 2004.


                                       21
<PAGE>


o)   In March 2004, the Company's  subsidiary,  AEI, 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. Installation is anticipated to begin
     in the third quarter of 2004 and be completed by the third quarter of 2005.
     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.  Installation for the second and third  development is
     anticipated  to begin in the third  quarter of 2004 and be completed by the
     second  quarter  of 2006.  Under the three  contracts,  AEI will  provide a
     comprehensive   biometric  security  system  that  will  include  biometric
     technology  for apartment door locks,  elevator  access  control,  and will
     control  vehicle  access  into  and  out of  the  development  and  visitor
     registration.

p)   In April 2004, the Company's subsidiary, AEI, was awarded a contract valued
     at $1.9 million to deliver a biometric identification and verification
     system by the end of the third quarter of 2004. The contract calls for AEI
     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.


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.

In April 2004, the Company announced it had signed a Teaming Agreement with
ImageWare Systems, Inc. ("IW") to market biometric verification and
identification systems. Under the terms of the Teaming Agreement, the Company
will act as prime contractor for the marketing and development of biometric
verification and identification systems based on thumbprint and photo extraction
technology. This includes developing programs using Application Service Provider
(ASP) technology, web interfaces and infrastructures and providing computer
hardware necessary for operating the systems. IW will provide to the Company
products and/or services, including their Omni Biometric EngineTM ("Omni"), to
extract data from the web-based ASP programs developed by the Company. Omni
enables users to manage databases of all sizes and conduct multi-model,
comparative biometric searches including exhaustive (1:n), specific (1:1) or
investigative (x:n). Initially, the Company and IW will market products and
services on an exclusive basis to private and public sector clients in Malaysia,
Thailand and Brunei and on a non-exclusive basis in Indonesia. Revenues
generated from Team projects will be shared equally. Each company will bear its
own costs of developing products, programs and systems necessary for each
project. One of the initial projects to be pursued by the Company and IW Systems
is the development of a biometric verification and identification system to be
used with the Malaysian Government's "MyKad" national identification card. It is
anticipated the project will be available for field trials by the fourth quarter
of 2004. The total project cost to develop the systems necessary to conduct the
field trials is estimated to be under $1 million with each company responsible
for their own development costs. Revenues will be generated on a
fee-per-transaction basis with the amount of the fee to be determined.

                                       22
<PAGE>



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.

On September 10, 2003, the Company's Malaysian subsidiary, AEI 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. AEI will initially hold 60% of TWSB's equity while two Malaysian
individuals will hold the remaining 40%. AEI'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. TWSB is expected to commence operations
in 2004.

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
TWSB. The Company and FaceKey will be jointly responsible for marketing the
products globally.

In January 2003, the Company signed a Reseller Agreement with FaceKey
Corporation ("FaceKey") to sell FaceKey's biometric-based products. The
agreement is for an initial period of 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. 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.


                                       23
<PAGE>



In December 2002, the Company's subsidiary, AEI 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. 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, AEI 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
is for an initial period of one year and maybe extended for a further period to
be agreed by both parties. Under the terms of the agreement, AEI was required to
achieve a minimum sales of $65,789 (RM250,000) for 2003. Although AEI had
generated minimal sales in 2003, it will continue as a reseller for Tmnet
Streamyx in 2004.

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.

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. 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 2004.




                                       24
<PAGE>


COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2004 TO THE THREE MONTHS ENDED
MARCH 31, 2003


REVENUES

Revenues for the three months ended March 31, 2004 totaled $4,477,122 compared
to $3,582,053 for the three months ended March 31, 2003, an increase of $895,069
or 25%. The increase in net sales in the three months ended March 31, 2004 as
compared to 2003 was mainly due to an increase in fees earned from the
production of multimedia programs and revenue received for project consulting
services. Included in revenue for the three months ended March 31, 2004 and
2003, was income of $414,475 and $125,474, respectively, received from a related
party for project consulting fees. Revenue for 2004 also include income of
$270,806 or 6% of total revenue, generated by the Asiaco subsidiaries. For the
three months ended March 31, 2004, two customers, respectively, accounted for
43% and 42% of total revenue. For the three months ended March 31, 2003, two
customers, respectively, accounted for 57% and 39% of total revenue.


GROSS PROFIT

Gross profit increased to $416,422 for the three months ended March 31, 2004,
compared to $287,415 for the three months ended March 31, 2003, an increase of
$129,007 or 45%. The increase in gross profit was primarily due to increased
consulting revenue in 2004. As a result of higher revenue, cost of revenue
increased by $766,062, or 23%, to $4,060,700 in 2004 from $3,294,638 in 2003.
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 decreased by $7,705, or 62%, to $4,697 for the
three months ended March 31, 2004 compared to $12,402 for the three months ended
March 31, 2003. The decrease was primarily due to lower marketing expenses
incurred to promote the Company's business of developing and producing
multimedia programs and provision of design and consulting services for
interactive website development.


GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses were $336,614 for the three months ended
March 31, 2004, compared to $207,251 for the three months ended March 31, 2003,
an increase of $129,363 or 62%. Included in general and administrative expenses
for 2004 was expenses of $91,840 incurred by the Asiaco subsidiaries. Excluding
expenses incurred by the Asiaco subsidiaries, general and administrative
expenses for 2004 would have been $244,774. General and administrative expenses,
excluding the Asiaco subsidiaries, increased by $37,523 or 18% for the three
months ended March 31, 2004. The increase was mainly attributable to higher
expenses incurred for public relation services and higher professional fees.




                                       25
<PAGE>



GAIN ON DISPOSAL OF ASSETS, RELATED PARTY

Gain on disposal of assets, related party, for the three months ended March 31,
2004 and 2003 included recognition of a previously deferred gain of $107,258 and
$5,263, respectively, related to a similar amount the Company received from its
long-term receivable, related party. The receivable balance and total deferred
gain was $555,000, respectively, as of December 31, 2003. 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 $447,742 respectively, as of March 31, 2004.


NET INCOME

The Company recorded net income of $163,300 and $57,220 for the three months
ended March 31, 2004 and 2003, respectively. Net income for 2004 and 2003
included recognition of a deferred gain of $107,258 and $5,263, respectively.
Excluding this non-recurring transaction, the recorded net income would have
been $56,042 and $51,957, respectively, for the three-month periods ended March
31, 2004 and 2003.


LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2004, the Company had cash of $154,954. All operations were
funded from internally generated funds and working capital advanced by the
Company's principal shareholder, director and officer of the Company. These
advances bear no interest and have no fixed terms of repayment.

Cash provided by operating activities of $74,727 for the three months ended
March 31, 2004 was mainly attributable to higher revenue and reduced costs for
the three months ended March 31, 2004.

Net cash provided by investing activities of $8,658 was mainly due to proceeds
from sales of equipment.

Net cash used in financing activities of $173,350 was primarily due to repayment
of $29,298 of advances from Mr. Lim, the Company's principal shareholder, Chief
Executive Officer ("CEO"), Chairman and Director, for short-term cash advances
made to a subsidiary of the Company for working capital purposes from time to
time and repayment of $126,484 of advances from an affiliated company in which
Mr. Lim has a financial interest. As of March 31, 2004, the Company owed the
related party company $21,842 for short-term cash advances made to a subsidiary
of the Company for working capital purposes from time to time and for management
fees. Additionally, as of March 31, 2004 the amount owed to Mr. Lim was $27,258.
These amounts are unsecured, bear no interest and have no fixed terms of
repayment.



                                       26
<PAGE>



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, 2004, the Company has furniture and equipment of approximately $1.4
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 and establishing and
operating a Central Monitoring Service in the Northern Region of Malaysia. 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, the Company
incurred $263,000 in the establishment and acquisition of new subsidiaries and
associates relating to its new businesses. For 2004, the Company estimates that
it will incur an additional $2.1 million to acquire the business, net assets and
equity interest 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.

In April 2004, the Company announced it had signed a Teaming Agreement with
ImageWare Systems, Inc. ("IW") to market biometric verification and
identification systems. Under the terms of the Teaming Agreement, the Company
will act as prime contractor for the marketing and development of biometric
verification and identification systems based on thumbprint and photo extraction
technology. IW will provide to the Company products and/or services, including
their Omni Biometric EngineTM ("Omni"), to extract data from the web-based ASP
programs developed by the Company. Revenues generated from Team projects will be
shared equally. Each company will bear its own costs of developing products,
programs and systems necessary for each project. One of the initial projects to
be pursued by the Company and IW Systems is the development of a biometric
verification and identification system to be used with the Malaysian
Government's "MyKad" national identification card. It is anticipated the project
will be available for field trials by the fourth quarter of 2004. The total
project cost to develop the systems necessary to conduct the field trials is
estimated to be under $1 million with each company responsible for their own
development costs. Revenues will be generated on a fee-per-transaction basis
with the amount of the fee to be determined.

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

Contractual Obligations:
<TABLE>
<CAPTION>
                                                                            Payment due by period
                                                                      ---------------------------------
                                                                       Less than
                                                   Total                1 year              1 - 5 years
                                                ----------          --------------        ---------------
<S>                                         <C>                   <C>                   <C>
Capital lease obligations                   $          159,628    $           66,232    $           93,396
Operating lease commitments                 $          126,100    $           46,000    $           80,100
</TABLE>

                                       27
<PAGE>



ITEM 3. CONTROLS AND PROCEDURES

Within the 90 days prior to the date of this report, the Company's management
concluded its evaluation of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. As of the Evaluation Date, the
Company's Chairman and Chief Executive Officer and its Chief Financial Officer
concluded that the Company maintains disclosure controls and procedures that are
effective in providing reasonable assurance that information required to be
disclosed in the Company's reports under the Securities Act of 1934 (Exchange
Act) is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and communicated to the Company's management, including its Chairman and Chief
Executive Officer and its Chief Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure. The Company's management
necessarily applied its judgment in assessing the costs and benefits of such
controls and procedures, which, by their nature, can provide only reasonable
assurance regarding management's control objectives. There have been no
significant changes in the Company's internal controls or in other factors that
could significantly affect these controls subsequent to the Evaluation Date.


                                       28
<PAGE>




PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      On December 22, 2003, the Company commenced a lawsuit in the Chancery
Division, Hunterdon County, New Jersey against seven anonymous Internet posters,
alleging that the posters had made false statements on certain message boards
sponsored by Terra Lycos, Inc. (Ragingbull.com) and Yahoo! The complaint, in
which president and chairman Patrick Lim is also a plaintiff, alleges that the
false statements were intended to manipulate the price of the Company's common
stock and to damage the reputation of the Company and Mr. Lim. Causes of action
are alleged under New Jersey law for stock manipulation, civil conspiracy and
libel. The Company has been granted leave to conduct discovery to obtain the
identities of the anonymous posters. Five of the seven defendants who provided
representations, directly or through their attorneys, that they are not former
employees of the Company in breach of any agreement of separation and they were
neither purchasers or sellers of the Company's securities have been dismissed
from the action. Damages at law and injunctive relief are sought in the action.
The Company does not anticipate that it will recover damages in an amount
material to the financial condition of the Company.

ITEM 2. CHANGES IN 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 AND REPORTS ON FORM 8-K

       (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 Financial  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 Financial  Officer  pursuant to 18 U.S.C.
               1350

       (b) Reports on Form 8-K:

              The Company filed a Current Report on Form 8-K for an event
              specified in Item 5 of such report on January 7, 2004.

              The Company filed a Current Report on Form 8-K for an event
              specified in Item 5 of such report on January 15, 2004.

              The Company filed a Current Report on Form 8-K for an event
              specified in Item 5 of such report on February 3, 2004.


                                       29
<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 14, 2004            BY: /s/ Patrick Soon-Hock Lim
                                   ------------------------------
                                  Patrick Soon-Hock Lim
                                  Chairman & Chief Executive Officer



DATE: MAY 14, 2004            BY: /s/ Chee Hong Leong
                                  ------------------------------
                                  Chee Hong Leong
                                  Chief Financial Officer
                                   (Principal Financial Officer and
                                   Principal Accounting Officer)




                                       30