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 THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006 OR


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

FOR THE TRANSITION PERIOD FROM ______________ TO ______________

                         COMMISSION FILE NUMBER: 0-25658


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

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

                 Park 80 West, Plaza One, Saddle Brook, NJ 07663

                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

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

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


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


Yes  X    No

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


                                                    Number of shares
           Class                              outstanding at November 20, 2006
-------------------------------             ------------------------------------
Common stock, $.00001 par value                         138,743,656


<PAGE>
<TABLE>
<CAPTION>

FORM 10-QSB
3RD QUARTER

                                      INDEX

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

         ITEM 1. FINANCIAL STATEMENTS

         Consolidated balance sheet as at September 30, 2006 (Unaudited)             3 - 4

         Consolidated statements of operations for the three-month and
         nine-month periods ended September 30, 2006 and 2005 (Unaudited)            5 - 6


         Condensed consolidated statements of cash flows for the nine-month
         periods ended September 30, 2006 and 2005 (Unaudited)                       7 - 8


         Notes to consolidated financial statements (Unaudited)                      9 - 19

         ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS                               20 - 27

         ITEM 3. CONTROLS AND PROCEDURES                                            27

PART II - OTHER INFORMATION

         ITEM 1. LEGAL PROCEEDINGS                                                  28

         ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS        28

         ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                    28

         ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                28

         ITEM 5. OTHER INFORMATION                                                  28

         ITEM 6. EXHIBITS                                                           28

         SIGNATURES                                                                 29

</TABLE>
<PAGE>

SAFE HARBOR STATEMENT

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

Introductory Note

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

                                        2


<PAGE>

PART I -  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 2006
                                   (Unaudited)


<TABLE>
<CAPTION>


                                     ASSETS

<S>                                                                                      <C>
Current assets:
     Cash                                                                       $        45,798
     Trade and other accounts receivables
       less allowance for doubtful accounts of $160,439                               8,172,901
     Prepaid expenses                                                                    43,777
     Inventories                                                                         38,777
                                                                                ---------------
      Total current assets                                                            8,301,253
Property and equipment, net                                                             207,601
Long-term receivables, related party                                                    122,647
Deferred tax asset                                                                       14,368
Customer list                                                                            31,356
Goodwill                                                                                471,364
                                                                                ---------------

                                                                                $     9,148,589
                                                                                ===============

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Current portion of capital lease obligations                               $        33,209
     Accounts payable (includes related parties of $153,844)                            858,964
     Accrued expenses                                                                    60,900
     Amount due to an affiliated company                                                160,109
     Amount due to a director                                                            59,672
     Income tax payable                                                                 159,219
                                                                                ---------------
              Total current liabilities                                               1,332,073
Deferred gain                                                                           122,646
                                                                                ---------------
              Total liabilities                                                       1,454,719
                                                                                ---------------

                                   (continued)


                                        3


<PAGE>


Minority interest                                                                       162,498
                                                                                ---------------
Commitments and contingencies

Shareholders' equity:
     Common stock, $.00001 par value; 350,000,000 shares authorized;
        138,568,546 shares issued                                                         1,385
     Additional paid-in capital                                                       6,073,213
     Common treasury stock, 74,890 shares at cost                                            --
     Options                                                                             98,264
     Warrants                                                                           749,715
     Retained earnings                                                                  508,968
     Accumulated other comprehensive income                                              99,827
                                                                                ---------------
              Total shareholders' equity                                              7,531,372
                                                                                ---------------
                                                                                $     9,148,589
                                                                                ===============
 </TABLE>



           See accompanying notes to consolidated financial statements

                                        4
<PAGE>
               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                                             Three months ended         Nine months ended
                                                                                September 30,              September 30,
                                                                           2006              2005       2006           2005
                                                                        --------------------------- --------------------------
                                                                              (Restated)                      (Restated)
<S>                                                                          <C>        <C>           <C>                <C>
Revenues:

Services:
  Related parties                                                      $     268,497  $     147,105 $     427,794 $    323,000
  Others                                                                   9,497,706      7,210,739    25,809,309   18,913,977
                                                                       -------------  ------------- ------------- ------------
                                                                           9,766,203      7,357,844    26,237,103   19,236,977
                                                                       -------------  ------------- ------------- ------------
Cost of revenues:

Services:
  Related parties                                                             80,549         43,947       128,414       92,895
  Others                                                                   8,796,423      6,700,919    24,561,588   17,563,861
                                                                       -------------  ------------- ------------- ------------

                                                                           8,876,972      6,744,866    24,690,002   17,656,756
                                                                       -------------  ------------- ------------- ------------

Gross profit                                                                 889,231        612,978     1,547,101    1,580,221
                                                                       -------------  ------------- ------------- ------------

Operating expenses:
     Sales and marketing                                                      13,538         36,040        20,712       45,524
     General and administrative:
       Related parties                                                        36,519         21,315       109,501       63,947
       Others                                                                390,890        334,789     1,438,805      856,231
                                                                       -------------  ------------- ------------- ------------

Total operating expenses                                                     440,947        392,144     1,569,018      965,702
                                                                       -------------  ------------- ------------- ------------

Income (loss) from operations                                                448,284        220,834       (21,917)     614,519
                                                                       -------------  ------------- ------------- ------------

Other income (expense):
     Interest expense                                                           (303)      (139,685)       (1,912)    (219,481)
     Amortization of debt issuance costs                                          --        (41,280)           --      (65,511)
     Interest income                                                              96             --            96           --
     Gain on disposal of assets, others                                         (576)            --            --        6,250
     Previously deferred gain on sale of
       technology - related party                                             22,579         36,974        66,356       76,382
     Other income                                                             98,311         38,229       110,343      152,489
                                                                       -------------  ------------- ------------- ------------
                                                                             120,107       (105,762)      174,883      (49,871)
                                                                       -------------  ------------- ------------- ------------
Income before items listed below                                             568,391        115,072       152,966      564,648
     Income tax credit (tax expense)                                         111,735        (54,275)       26,813     (132,696)
     Minority interest                                                        (7,876)       (19,427)      (18,615)     (58,056)
     Gain (loss) on foreign currency transactions                             (6,590)            --        52,167           --
                                                                       -------------  ------------- ------------- ------------
Income from continuing operations                                            665,660         41,370       213,331      373,896
                                                                       -------------  ------------- ------------- ------------
Discontinued operations:
     Income (loss) from discontinued
     operations - net of minority interest and
     income taxes                                                           (289,876)        11,211       138,988       (6,096)

     Gain on disposal of discontinued subsidiaries                           156,649             --       156,649           --
                                                                       -------------  ------------- ------------- ------------
Income (loss) from discontinued operations                                  (133,227)        11,211       295,637       (6,096)
                                                                       -------------  ------------- ------------- ------------
</TABLE>

           See accompanying notes to consolidated financial statements

                                        5



<PAGE>
               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                           Three months ended               Nine months ended
                                                                              September 30,                   September 30,
                                                                          2006           2005           2006               2005
                                                                    ------------------------------- ------------------------------
                                                                              (Restated)                      (Restated)
<S>                                                                    <C>               <C>            <C>                <C>


Net income                                                          $   532,433     $    52,581    $   508,968     $   367,800
Preferred stock dividend                                                     --         (58,208)            --        (391,870)

Accretion to preferred stock redemption value                                --      (2,761,355)            --      (3,312,689)

Early redemption penalty on preferred stock                                  --        (302,994)            --        (302,994)
                                                                    -----------     -----------    -----------     -----------
Net income (loss) applicable to common
 shareholders                                                       $   532,433     $(3,069,976)   $   508,968     $(3,639,753)
                                                                    ===========     ===========    ===========     ===========
COMPREHENSIVE INCOME

Net income                                                          $   532,433     $    52,581    $   508,968     $   367,800

Other comprehensive income:

Foreign currency translation adjustments                                (85,138)             --         67,324              --
                                                                    -----------     -----------    -----------     -----------

Comprehensive income                                                $   447,295     $    52,581    $   576,292     $   367,800
                                                                    ===========     ===========    ===========     ===========
Net income (loss) per common share:
     Basic and diluted **                                           $         *     $      (.03)   $         *     $      (.04)
                                                                    ===========     ===========    ===========     ===========
Weighted average shares outstanding:
     Basic                                                          137,745,028     117,854,404    134,349,121     102,997,797
                                                                    ===========     ===========    ===========     ===========
     Diluted                                                        138,126,006     118,933,000    136,443,626     103,532,000
                                                                    ===========     ===========    ===========     ===========
</TABLE>

* Less than $.01 per share
** Net income (loss) per common share for discontinued operations is less than
$.01 per share for all periods and  not presented separately.


           See accompanying notes to consolidated financial statements

                                        6


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

                                                                                       September 30,  September 30,
                                                                                           2006           2005

                                                                                        -----------    ----------
                                                                                                        (Restated)
<S>                                                                                        <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Change in operating assets and liabilities of continuing operations                $  (100,689)   $ (527,621)
     Change in operating assets and liabilities of discontinued operations                 (380,769)      328,580
                                                                                        -----------    ----------
         Net cash used in operating activities                                            ( 481,458)     (199,041)
                                                                                        -----------    ----------
CASH FLOWS FROM INVESTING ACTIVITIES
     Proceeds from disposal of equipment                                                    631,828            --
     Proceeds from disposal of equipment of discontinued operations                              --        35,526
     Purchase of equipment                                                                  (37,008)       (2,968)
     Purchase of equipment of discontinued operations                                        (1,010)      (43,009)
     Proceeds from sale of investment in associate companies                                     --        13,158
     Cash acquired on business acquisition                                                       --         1,381
                                                                                        -----------    ----------
         Net cash provided by (used in) investing activities                                593,810         4,088
                                                                                        -----------    ----------
CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from issuance of common stock                                                  80,000       754,495
     Increase (decreases) in restricted cash                                                     --      (107,675)
     Payment of preferred dividend                                                               --      (256,666)
     Net payment (repayment) of advances from/to affiliated company                          49,934       (90,556)
     Net payment (repayment) of advances from/to a director                                 (12,213)      (60,282)
     Payment of obligation under capital leases                                             (11,431)      (25,159)
     Payment of term loan of discontinued operations                                        (60,929)      (32,619)
                                                                                        -----------    ----------
           Net cash provided by financing activities                                         45,361       181,538
                                                                                        -----------    ----------

FOREIGN CURRENCY TRANSLATION ADJUSTMENT - continuing activities                            (257,019)           --
                                        - discontinued activities                           108,545            --
                                                                                        -----------    ----------

Net increase (decrease) in cash                                                               9,239       (13,415)
Cash, beginning of period                                                                    36,559        30,739
                                                                                        -----------    ----------
Cash, end of period                                                                     $    45,798    $   17,324
                                                                                        ===========    ==========

Supplemental disclosure of cash flow information:

Cash paid for interest     -   continuing operations                                    $     1,912    $    4,160
                           -   discontinued operations                                       69,313        59,597
                                                                                        ===========    ==========
                                                                                             71,225        63,757
                                                                                        ===========    ==========

Cash paid for income taxes - continuing operations                                      $       135    $       --
                             - discontinued operations                                       57,236        21,557
                                                                                        ===========    ==========
                                                                                             57,371        21,557
                                                                                        ===========    ==========
</TABLE>

           See accompanying notes to consolidated financial statements


                                        7

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

<TABLE>
<CAPTION>




<S>                                                                                        <C>           <C>
Supplemental disclosure of non-cash financing activities:

Accretion to preferred stock redemption value                                           $        --   $ 3,312,689
                                                                                        ===========   ===========
Restricted cash (paid) received in exchange for preferred stock
of subsidiary                                                                           $        --   $(6,105,138)
                                                                                        ===========   ===========
Conversion of accrued term note and related accrued interest into
common stock                                                                            $        --   $   122,581
                                                                                        ===========   ===========
Issuance of common stock for payment of term note and preferred
stock of subsidiary                                                                     $        --   $   800,000
                                                                                        ===========   ===========

BUSINESS ACQUISITION:

Acquisition of subsidiary in April 2005

Net assets acquired:
   Property, furniture and equipment                                                                  $     2,119
   Accounts receivable                                                                                     10,365
   Cash                                                                                                    54,033
   Customer relationships                                                                                  59,423
   Accounts payable                                                                                       (19,689)
                                                                                                      -----------
                                                                                                          106,251
Less: Minority interest                                                                                   (21,099)
   Common stock issued                                                                                    (32,500)
   Cash acquired                                                                                          (54,033)
                                                                                                      -----------
Net cash received in acquisition of subsidiary                                                        $    (1,381)
                                                                                                      ===========

</TABLE>

           See accompanying notes to consolidated financial statements

                                        8

<PAGE>

                       SECURED DIGITAL APPLICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2006
                                   (UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of the Company have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with Item 310(b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the nine months ended September 30, 2006, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2006. These unaudited consolidated financial statements should be
read in conjunction with the audited consolidated financial statements and
footnotes thereto included in the Company's Form 10-KSB for the year ended
December 31, 2005, as filed with the Securities and Exchange Commission.

RESTATEMENT OF 2005 CONSOLIDATED FINANCIAL STATEMENTS

Subsequent to the issuance of the Company's September 30, 2005 consolidated
financial statements, and based upon a further evaluation of the factors
utilized in determining the accounting and presentation of a May 2004 issuance
of preferred stock of a subsidiary, a convertible term note and related
warrants, the Company determined that both the preferred stock of a subsidiary
and the convertible term note contained embedded derivatives that must be
bifurcated from their host instruments (See notes 5 and 6). Accordingly, the
Company's 2005 consolidated financial statements have been restated, resulting
in the following:


1.   A decrease in net income of $180,609 and $109,090 for the nine and three
     months ended September 30, 2005 (less than $.01 per share for both
     periods), respectively.

2.   A decrease in net income available to common shareholders of $2,649,465
     ($.04 per share) and $2,016,612 ($.03 per share) for the nine and three
     months ended September 30, 2005, respectively.

3.   There was no change to shareholders' equity at September 30, 2005.


2.   SIGNIFICANT ACCOUNTING POLICIES

TRANSLATION OF CURRENCIES

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


REVENUE RECOGNITION

Revenue represents the net invoiced value of:

o    goods sold;

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

o    fees earned from provision of information technology related services and o

fees earned from rental and servicing of material handling equipment.

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



                                        9
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES (continued)

NET INCOME PER COMMON SHARE

Basic net income per share is calculated by dividing net income applicable to
common shareholders by the weighted average number of common shares outstanding
for the three and nine months ended September 30, 2006 and 2005. Diluted income
per share is computed using the weighted average number of shares determined for
the basic computations plus the number of shares of common stock that would be
issued assuming all contingently issuable shares having a dilutive effect on
earnings per share were outstanding for the period. The calculation of basic and
diluted income per share is as follows (in thousands, except per-share amounts):

<TABLE>
<CAPTION>
                                                             Three Months Ended                Nine Months Ended
                                                 -----------------------------------------   -------------------------------------
                                                    September 30,        September 30,       September 30,          September 30,
                                                       2006                  2005               2006                     2005
                                                 ------------------    -----------------   ----------------       ----------------
                                                                           (Restated)                                  (Restated)
<S>                                                      <C>                   <C>                 <C>                   <C>
Net income                                        $             532    $              53   $            509       $            368

Preferred stock dividends                                        --                  (58)                --                   (392)

Accretion to preferred stock redemption value                    --               (2,761)                --                 (3,313)

Early redemption penalty on preferred stock                      --                 (303)                --                   (303)

                                                 ------------------    -----------------   ----------------       ----------------
Net income (loss) available to common
shareholders                                     $              532    $          (3,069)  $            509       $         (3,640)
                                                 ==================    =================   ================       ================

Weighted average shares outstanding - basic                 137,745              117,854            134,349                102,998
                                                 ==================    =================   ================       ================

Net income (loss) per share - basic              $                *    $            (.03)  $              *       $           (.04)
                                                 ==================    =================   ================       ================

*  less than $.01 per share

                                                       Three Months Ended                      Nine Months Ended
                                               ------------------------------------ ------------------------------------
                                                September 30,         September 30,  September 30,        September 30
                                                     2006                  2005           2006                2005
                                               ----------------     --------------- -----------------   ----------------
                                                                       (Restated)                          (Restated)

Weighted average shares outstanding - basic             137,745             117,854          134,349             102,998
Common stock issuable to consultant                         381               1,079            2,095                 534
Dilutive stock options and warrants                          --                  --               --                  --

                                               ----------------     --------------- -----------------   ----------------
Weighted average shares outstanding - diluted           138,126             118,933           136,444            103,532
                                               ================     =============== =================   ================

Net income per share - diluted                 $              *     $            ** $               *   $             **
                                               ================     =============== =================   ================

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

For the nine and three months ended September 30, 2006, 1,080,000 options and
4,600,000 warrants were excluded from the calculation of earnings per share, as
their issuance prices were in excess of the average market price for the period.



                                       10
<PAGE>

2. SIGNIFICANT ACCOUNTING POLICIES (continued)


GOODWILL AND INTANGIBLE ASSETS

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

Customer relationships with a cost of $59,423 were acquired on April 30, 2005,
and are being amortized using the straight line method over an expected life of
three years. Amortization expense for the three and nine months ended September
30, 2006 was $4,953 and $14,859, respectively, $4,953 and $8,255 for three and
nine months ended September 30, 2005. Accumulated amortization at September 30,
2006 was $28,067.


INVENTORIES

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


TREASURY STOCK

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


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 and nine months ended September 30, 2006, provision for income
taxes (tax credits) amounted to ($111,735) and ($26,813), respectively, and
$54,275 and $132,696 for the three and nine months ended September 30, 2005,
respectively. The provisions are net of the benefit of any available net
operating losses, for income tax payable on its operations in Malaysia.


STOCK-BASED COMPENSATION

The Company adopted FAS No. 123R, "Share-Based Payments", effective from January
1, 2006, utilizing the "modified prospective" method as described in the
standard. Under the "modified prospective" method, compensation cost is
recognized for all Share-based payments granted after the effective date and for
all unvested awards granted prior to the effective date. Prior to adoption, the
Company accounted for Share-based payments under the recognition and measurement
principles of Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees", and Related interpretations. The Company recognized $3,640
and $12,227 in total stock-based compensation expense during the three months
and nine months ended September 30, 2006. Total unvested stock-based
compensation expense was $18,785 at September 30, 2006 and had a total weighted
average remaining term of 2.92 years.

On August 1, 2004, the Company granted options to purchase an aggregate of
300,000 shares of the Company's common stock at $0.30 per share to a consultant
for services to be provided to the Company. These options were exercisable
through July 2009, contingent upon continuous service by the consultant through
specified dates. On March 9, 2005 these options were forfeited when the Company
terminated the service agreement with the consultant.


                                       11

<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES (continued)

STOCK-BASED COMPENSATION (continued)

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

In addition, on August 3, 2004 the Company granted options to purchase 100,000
shares of the Company's common stock at $0.12 per share to an independent
director as compensation for serving on the Company's Board of Directors. These
options are exercisable with immediate effect through August 2009. 250,000 of
the options were exercised on April 28, 2005 for a cash consideration of
$50,000, 40,000 of the options were exercised on April 29, 2005 for a cash
consideration of $8,000, 60,000 of the options were exercised on May 3, 2005 for
a cash consideration of $12,000. On January 31, 2006, 100,000 and 300,000
options which were granted to an independent director with an option to purchase
the Company's common stock at $0.12 and $0.20 per share, respectively, were
forfeited when he resigned from the Company. On February 19, 2006, 270,000
options which were granted to an officer were forfeited when he resigned from
the Company.

Had compensation cost for options been determined based on the fair value at the
grant date consistent with the method prescribed under SFAS No. 123, the
Company's pro forma net income and net income per share during the three months
and nine months ended September 30, 2005 would have been as follows:

<TABLE>
<CAPTION>
                                                                                   Three Months Ended        Nine Months Ended
                                                                                      September 30,             September 30,
                                                                                          2005                      2005
                                                                                    ----------------          ----------------
                                                                                      (Restated)                  (Restated)
<S>                                                                                     <C>                         <C>
Net loss applicable to common stockholders                                          $     (3,069,976)         $     (3,639,753)
Add: Stock-based employee compensation expense
         included in reported net income, net of related tax                                   4,790                    22,409
Less: Total stock-based employee compensation expense
         determined under fair value based method for all
         awards, net of related tax effects                                                  (29,000)                  (93,000)

                                                                                    ----------------          ----------------
Pro forma net loss                                                                  $     (3,094,186)         $     (3,710,344)
                                                                                    ================          ================
Loss per share:
 Basic and diluted - as reported                                                    $           (.03)         $           (.04)
                                                                                    ================          ================
 Basic and diluted - pro forma                                                      $           (.03)         $           (.04)
                                                                                    ================          ================

</TABLE>

The value of the options issued is calculated using the Black-Scholes
methodology as prescribed by SFAS No. 148 with the following weighted-average
assumption for all options granted during the quarter:
<TABLE>
<CAPTION>

                                                                          FAS No.123R     FAS No.123
                                                                            Expense       Pro forma
                                                                         September 30,   September 30,
                                                                             2006           2005
                                                                         -------------  -------------
<S>                                                                            <C>           <C>
Risk free interest rate                                                        2%            2%-4%
Dividend yield                                                                 0%              0%

Expected life of option in years                                            2.9 years      4.2 years
Expected volatility                                                        128% - 163%     115% - 163%

</TABLE>



                                       12
<PAGE>


2. SIGNIFICANT ACCOUNTING POLICIES (continued)


STOCK-BASED COMPENSATION (continued)

The Company did not issue any options to employees and officers during the nine
months ended September 30, 2006.


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. The Company also is subject to risks and uncertainties related to its
operations outside the United States, including uncertainties in economic and
political conditions and fluctuations in currency exchange rates.


RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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

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

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



                                       13

<PAGE>

2. SIGNIFICANT ACCOUNTING POLICIES (continued)


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

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

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


RECLASSIFICATIONS

Certain 2005 balances have been reclassified to conform to the current
presentation.


3. DISCONTINUED OPERATIONS

On July 4, 2006, the Company incorporated a new wholly-owned subsidiary company,
DigitalApps Sdn Bhd ("DASB"), that designs, develops and produces multimedia
content and provides consulting services for website development, network
engineering and project management in IT related projects. In addition to its
activities as a multimedia developer and IT consultant, DASB provides
centralized management and back-office support to SDA's other subsidiaries from
its office in Petaling Jaya, Malaysia.

On July 5, 2006, DASB acquired the entire shares of SDAM from SDA. DASB also
acquired the entire shares of Secured Shipping Sdn Bhd ("SSSB") and Digital
Image ID Sdn Bhd ("DID"). SSSB and DID were wholly owned subsidiaries of SDAM.
Further, SSSB had acquired all the shares of Innospective Sdn Bhd from SDAM.
Innospective was renamed iSpec Sdn Bhd and SSSB was renamed DigitalApps
Technologies Sdn Bhd ("DAT").

On July 27, 2006, DASB incorporated a new wholly owned subsidiary company,
DigitalApps Media Sdn Bhd ("DAM") to provide outsourced business process
services.

On September 4, 2006, DASB incorporated a new wholly owned subsidiary company,
Digital Kiosk Technologies Sdn Bhd ("DKT") (f/k/a Century Jubilee Sdn Bhd). DKT
is involved in the supply of a network of free-standing, interactive display and
payment kiosk services.

On September 18, 2006, DASB sold all the shares of SDAM which included its
subsidiary companies, AMS, AMSSB, a 60% owned subsidiary of AMS, GSC, GIT, a 55%
owned subsidiary of GSC and GIT's wholly-owned subsidiaries GZ, GF and GID to a
third party, for RM16 million (approx. $4,337,000) in cash and the offset of
certain liabilities. The sale resulted in a gain on disposal of $156,649. The
receivable is due in one year or less from the date of sale unless extended by
the parties and the receivable bears no interest. At September 30, 2006, the
Company was owed $282,570 and such amount is included in trade and other
accounts receivables.

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

                                       14

<PAGE>

4. RELATED PARTY ACTIVITY

During the three and nine months ended September 30, 2006 and 2005, the Company
recognized revenue of $268,497, $427,794, $147,105 and $323,000, respectively,
for project consulting fees from a related party, pursuant to four consulting
contracts. In association with these contracts, during the three and nine months
ended September 30, 2006 and 2005, the Company recognized costs of revenue
amounting to $80,549, $128,414, $43,947 and $92,895, respectively.

As of September 30, 2006, accounts receivable from the related entity totaled
$122,647.

At December 31, 2005, long-term receivables, related parties, consisted of
$183,098 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 $22,579, $66,356,
$36,974 and $76,632 of the outstanding receivable during the three and nine
months ended September 30, 2006 and 2005, 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.

General and administrative expenses - related parties of continuing operations
for the three and nine months ended September 30, 2006 and 2005 totaled $36,500,
$96,500, $15,000 and $45,000, respectively. These expenses included management
fees and administrative expenses payable by the Company to LSH. Related parties
of discontinued operations for the three and nine months ended September 30,
2006 and 2005 totaled $ 0, $13,001, $6,315 and $18,947, respectively.

For the three and nine months ended September 30, 2006 and 2005, LSH billed the
Company's Malaysian continuing subsidiary for administrative expenses of
$6,500, $0, $0 and $0, respectively.

For the three and nine months ended September 30, 2006 and 2005, LSH billed the
Company's Malaysian discontinued subsidiary for administrative expenses of $0,
$13,001, $6,315 and $18,947, respectively.

The Company also incurred management fees of $30,000, $90,000, $15,000 and
$45,000 for the three and nine months ended September 30, 2006 and 2005,
respectively. The management fees were charged on the basis of time spent for
the administration and management services provided to the Company.

On September 18, 2006, DASB acquired 1,050,000 shares of PTSB from its
directors, Mr. Mustaffar Yacob and Dato' Wan Abdul Razak for a total
consideration of RM567,500 (approx. $154,000). The balance is due in one year or
less from the date of purchase unless extended by the parties and such debt
bears no interest. At September 30, 2006, the Company owes the directors
$153,844 and such amount is included in accounts payable.

DASB's interest in PTSB increased from 86.38% to 95% arising from this
acquisition.

5. CONVERTIBLE TERM NOTES

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

On August 1, 2005, the Company repaid the term note in full.

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

1.   The Note had a three-year term with a maturity date of May 28, 2007.
2.   Interest rate of 2% above the "prime rate" as published by the Wall Street
     Journal from time to time subject to a floor of 6%. The monthly interest
      will be adjusted downward based on a minimum increase of 25 percent of the
     price of the common stock above the conversion price.
3.   Monthly principal payments of $14,706 commencing on September 1, 2004 with
     the unpaid principal balance and any unpaid and/or accrued interest due and
     payable on May 28, 2007.
4.   The principal and the interest could be paid in cash or in common stock at
     the Master Fund's option, as defined.
5.   The Note was convertible into shares of the Company's common stock.


                                       15

<PAGE>
5.   CONVERTIBLE TERM NOTES (Continued)


6.   The Company issued warrants to purchase up to 300,000 shares of the
     Company's common stock, subject to the conversion limitations as defined in
     the Note. The warrants have a seven-year term and an exercise price of
     $0.40 per share for the first 100,000 shares, $0.43 per share for the
     second 100,000 shares and $0.47 per share for the third 100,000 shares.
7.   The Company granted a security interest in all of its net assets and the
     net assets of one of its wholly-owned subsidiaries, until such time that
     the Note was satisfied.
8.   The SPA also included a condition that required the Company to cause its
     common stock to be listed on the NASDAQ Smallcap Market, NASDAQ National
     Market System, the American Stock Exchange or the New York Stock Exchange
     on or prior to November 15, 2004 ("the Listing Condition").

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

In 2004, the Company recorded an initial liability of $246,681 for the value of
the embedded liability. The initial value of the embedded liability was
amortized over the term of the Note. For the three and nine months ended
September 30, 2006 and 2005, the Company recognized amortization expense of $0,
$0, $26,551 and $179,862 respectively, and is included in interest expense.

In 2004, the Company recorded debt discount and amortization costs of $95,346,
which included the initial value of the warrants of $62,525. These costs were
amortized over the term of the Note. Amortization in the amount of $0, $0,
$41,280 and $65,511 for the three and nine months ended September 30, 2006 and
2005, respectively, is included in amortization of debt issuance costs in the
statement of operations.


6. PREFERRED STOCK

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

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

The Series A Preferred was convertible, subject to certain conversion
limitations, into common stock of the Company at the option of the Master Fund
and was entitled to cumulative preferential dividends at a rate per annum
equivalent to the "prime rate" published in The Wall Street Journal from time to
time plus 2%, subject to a floor of 6% per annum.

In 2004, the Company determined that the nature of the cumulative preferred
dividends on and the economic characteristics of the Series A Preferred,
required the Series A Preferred to be classified outside of permanent equity.
Similar to the Note, the Company also evaluated the Series A Preferred's
conversion feature to determine if it gave rise to an embedded derivative that
would need to be accounted for separately under SFAS No. 133 and EITF 00-19. The
Company concluded that certain provisions common to both it and the Note also
resulted in the Series A Preferred conversion feature being an embedded
derivative that must be bifurcated and recorded as a derivative liability.

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


                                       16


<PAGE>


6. PREFERRED STOCK (Continued)


In September 2004, the Master Fund converted $500,000 of the Series A Preferred
resulting in the issuance of 2,500,000 shares of common stock. On August 1,
2005, the balance of the Series A Preferred was redeemed in full.

Black-Scholes valuations were performed on the derivative liability associated
with the Series A Preferred and the related warrants. In 2004, the Company
recorded an initial derivative liability of $3,206,857. The initial value of the
derivative liability was being accreted over three years based on management's
estimate of the expected term. For the three and nine months ended September 30,
2006 and 2005, accretion amounted to $0, $0, $2,140,988 and $2,530,487,
respectively, and is included in accretion to preferred stock redemption value.

In 2004, the Company recorded issuance costs of $1,051,927, which included the
initial value of the warrants of $625,248. These costs were amortized over three
years. Amortization of issuance costs totaled $0, $0, $620,367 and $782,202 for
the three and nine months ended September 30, 2006 and 2005, respectively, and
is included in accretion to preferred stock redemption value.


7. COMMON STOCK

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

On June 2, 2005, the Company reissued from its treasury stock 199,218 shares of
common stock at $0.103 per share for total consideration of $20,466; 843,446
shares of common stock on August 9, 2005 at $0.108 per share for total
consideration of $91,092; and 295,632 shares of common stock on September 23,
2005 at $0.085 per share for total consideration of $25,129, to a consultant as
payment for services rendered to the Company during fiscal 2005. In August 2005,
the Company reissued 609,756 shares of its common stock from treasury to an
investor for cash of $50,000 in private placement exercises. These shares were
issued at a price equal to 85% of the average of the five lowest closing prices
of the common stock during the twenty-two trading days prior to the date of
issuance, as reported by Bloomberg News Services. On August 9, 2005, the Company
reissued from its treasury stock 240,000 shares of common stock at $0.139 per
share for a total consideration of $33,360. On September 27, 2005, the Company
issued 240,000 shares of common stock at $0.098 per share for a total
consideration of $23,520. On February 8, 2006 and May 3, 2006, the Company
reissued from its treasury stock a total of 480,000 shares of common stock at
$0.09 per share for a total consideration of $43,200 to a consultant pursuant to
a compensation agreement dated July 15, 2005, under which the Company is to
issue an aggregate of 960,000 shares of its common stock, to the consultant as
payment for services to be rendered to the Company for the twelve-month period
ending July 14, 2006. The 480,000 shares were valued, based on the respective
market prices on the date of issuance, and the Company recognized compensation
expense of $3,600 and $47,120 for the three and nine months ended September 30,
2006.

On October 4, 2005 and February 21, 2006 , the Company reissued from its
treasury stock 1,000,000 shares of common stock at $0.10 per share for total
consideration of $100,000. In addition, on June 12, 2006 and August 10, 2006,
the Company issued 1,000,000 shares of common stock at $0.10 per share for total
consideration of $100,000 to a consultant pursuant to a compensation agreement
dated September 12, 2005, under which the Company is to issue an aggregate of
2,000,000 shares of its common stock to the consultant at $0.10 per share as
payment for services to be rendered to the Company for the twelve-month period
ending September 12, 2006. For the three months and nine months ended September
30, 2006, the Company recognized compensation expense of $38,889 and $138,889
respectively.

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

On February 8, 2006, the Company reissued 2,000,000 shares of common stock from
its treasury stock to a consultant as payment for services rendered to the
Company to develop a shopping portal and recognized $180,000 as compensation
expense based on the market value of $0.10 per share on the date of issuance.



                                       17

<PAGE>

7. COMMON STOCK (Continued)


On February 22, 2006, the Company reissued 200,000 shares of common stock from
its treasury stock to a consultant as payment for services rendered to the
Company over a two year period. The Company recognized $18,000 as compensation
expense based on the market value of $0.09 per share on the date of issuance.

On March 8, 2006, the Company reissued 447,058 shares of common stock from its
treasury stock to a consultant as payment for services rendered to the Company
for total consideration of $40,235 based on the market value of $0.09 per share
on the date of issuance. On June 12, 2006, the Company issued 568,994 shares and
776,501 shares of common stock to a consultant as payment for services rendered
to the Company for total consideration of $48,364 and $67,944, respectively
based on the market value of $0.085 per share and $0.0875 per share,
respectively on the date of issuance.

On June 12, 2006, the Company issued 1,000,000 shares of common stock to a
consultant as payment for services rendered to the Company over a one year
period. The Company recognized $90,000 as compensation expense based on the
market value of $0.09 per share on the date of issuance.

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

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

On August 23, 2006, the Company reissued from its treasury stock 350,000 shares
of common stock to a consultant as payment for services rendered to the Company.
The Company recognized $24,151 as compensation expense based on the market value
of $0.069 per share on the date of issuance.

On October 16, 2006, the Company issued 250,000 shares of common stock at $0.06
per share for a total consideration of $15,000 to a consultant pursuant to a
compensation agreement dated April 15, 2006, under which the Company is to issue
an aggregate of 1,000,000 shares of its common stocks to the consultant as
payment for services to be rendered to the Company for the twelve-month period
ending April 15, 2007.


8. SIGNIFICANT CONCENTRATIONS OF CREDIT RISK

The Company grants credit, generally without collateral, to its customers. Two
customers accounted for the following revenue:

<TABLE>
<CAPTION>
                            Three Months Ended                     Nine Months Ended
                     September 30,       September 30,          September 30,   September 30,
                        2006                   2005                 2006              2005
                  ----------------      ---------------      -----------------   ---------------
                                           (Restated)                               (Restated)
<S>                       <C>                 <C>                  <C>                <C>
Customer 1                 48%                 47%                 48%                 48%
Customer 2                 48%                 46%                 48%                 48%

                  ----------------      ---------------      -----------------   ---------------
Total                      96%                 93%                 96%                 96%
                  ================      ================     =================   ===============
</TABLE>


                                       18


<PAGE>

8. SIGNIFICANT CONCENTRATIONS OF CREDIT RISK (Continued)

At September 30, 2006, the two customers accounted for 99% of trade accounts
receivable. The large concentration of revenues with the two customers is a
result of the Company's strategy of using the two customers as contractors to
service certain accounts with certain long-standing accounts established by the
Company, reducing credit risk and carrying costs. Allowance for doubtful
accounts receivable was $160,439 at September 30, 2006. The Company will
continue to pursue vigorously the collection of all its outstanding accounts
receivable.

Three suppliers accounted for 99% cost of revenues during the nine months ended
September 30, 2006, and one supplier accounted for substantially all cost of
revenues during the nine months ended September 30, 2005. The Company is not
dependent upon one supplier to provide the services that it requires but made a
strategic decision to engage the services of only a small number of suppliers
after taking into consideration the quality of service and competitive pricing
being offered. Should the need arise, the Company believes that it will be able
to utilize alternative suppliers for the services that it requires.


9. SUBSEQUENT EVENTS

On October 21, 2006, the Board of Directors of Secured Digital Applications,
Inc. (the "Company") approved an award of incentive compensation to Chief
Executive Officer and Chairman Patrick Lim including the following: warrants to
purchase 6,300,000 shares of the common stock of the Company and an award of
500,000 shares of common stock per year if the Company in that year achieves a
compounded growth rate of at least 15 percent. The award of warrants was
approved by the Board in consideration for Mr. Lim's performance as CEO and in
consideration of historic compensation levels significantly below the
compensation received by chief executive officers of companies with similar
levels of revenue. The warrants will be priced at 110 percent of the closing
price of the common stock of the Company on October 23, 2006, or $0.0649. The
warrants will be issued in three equal annual installments and are exercisable
on or before October 21, 2011. The incentive compensation award payable in
common stock is outside the Corporation's shareholder approved incentive
compensation program.

The Board further approved a share exchange agreement with LSH Asset Holdings
Sdn Bhd, an entity controlled by Mr. Lim, whereby Mr. Lim will exchange
20,000,000 shares of common stock held by LSH for 100,000 shares of newly issued
Series B non-dividend bearing preferred stock. The issuance of the preferred
stock was approved by the Board in consideration of non-interest bearing cash
advances made to the Company since 1999, of which $59,672  remains unpaid, as
well as Mr. Lim's willingness to make future advances to the Corporation for
working capital. The Series B shares each are entitled to 200 votes per share
and have a liquidation preference of $25 per share.


                                       19


<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

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


OVERVIEW

Secured Digital Applications, Inc. ("We", "SDA" or the "Company") is a provider
of subcontracted business services. These include media production, which
develops content for various technologies, including television, the Internet
and free-standing displays. We also provide information technology services in
such areas as biometric technology and security systems. We are in the process
of developing a broad platform of outsourced core business services that will be
offered to companies in the United States, including digital document
management, accounts receivable and payables management, bookkeeping and
purchasing services. We anticipate that we will begin offering those services in
late 2006 or early 2007. We generate revenue through our majority or wholly
owned subsidiary companies located in the United States and Malaysia.

Since SDA became a publicly held company through a reverse acquisition in 1999,
the Company has evolved in its operations. We expanded our initial lines of
business as a broadband communications operator and Internet content provider by
acquiring majority interests in regional companies believed to have superior
potential for growth and profitability as a member of the SDA Group of
Companies. Acquisitions have been made pursued based on management's criteria
for acquisition, which include acquisition costs, growth potential,
compatibility with SDA's existing Subsidiaries. During this acquisition process,
we developed a centralized management and support structure provided by our home
office in Petaling Jaya, Malaysia to support our operating subsidiaries and the
ability of potential acquisitions to benefit from our management structure
became a significant consideration in making acquisitions.

Reorganization of Operating Subsidiaries
----------------------------------------

During the third quarter of 2005, the Company determined that it was in the best
interests of SDA and its shareholders to restructure the Company's operating
subsidiaries. The intent of the reorganization was to improve administrative
efficiency and profit margins, as well as to dispose of certain assets or
subsidiaries that did not meet management's criteria for continued inclusion in
the SDA group of companies. In particular, we determined that our subsidiaries
involved in the developing business of secured shipping and in the established
business of operating retail computer outlets did not meet the Company's
criteria for profitability and/or fit within the Company's organization. Under
the reorganization plan, the assets of our principal operating subsidiary
Secured Digital Applications (M) Sdn Bhd ("SDAM") were sold to an unrelated
third party, which then made a simultaneous assignment of those assets and
liabilities, excluding the operations that we disposed of, to a newly created
subsidiary DigitalApps Sdn Bhd ("DASB"). DASB thus became our principal
operating subsidiary with substantially the same assets and liabilities as the
former SDAM, less the assets that were disposed of, discussed below.

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

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

SDA's core line of business is outsourced media production and information
technology applications, which account for the majority of our revenue. Our
operating subsidiaries offer products in diverse lines of business including the
development of Internet content, digital security and biometric products. We
conduct our principal operations in Malaysia. Our subsidiaries as of September
30, 2006 are the following companies:

 -   China Sea Trade Company, Inc. ("CST") (f/k/a Eystar Media, Inc.), a wholly
     owned subsidiary of SDA Worldwide, Inc., organized under Delaware law and
     based in Saddle Brook, NJ. CST offers consulting and management services to
     regional firms in Asia seeking to develop markets in the United States.
     These include contract sales representation, the contract management of
     joint venture companies and advice and consulting on funding and mergers
     and acquisitions within the United States. CST began operations in early
     2006 and did not generate any revenue in 2005.


                                       20


<PAGE>



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

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

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

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

In addition, as part of the reorganization, we increased our equity interest in
PTSB from 86 percent to 95 percent by purchasing minority interests held by two
of our directors, Dato' Wan Abdul Razak and Mustaffar Yacob for aggregate
consideration of $153,844.

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

For the three months and nine months ended September 30, 2006 and 2005, the
Company's revenue was generated primarily from the following activities:

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

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

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


Significant Business Developments and Plan of Operation

During 2006, the Company anticipates that it will continue to implement its
strategy and to operate its existing lines of businesses, including an expansion
of its multi-media production business into the area of free-standing kiosks and
display advertising. The Company is pursuing a joint venture with KioskMedia (M)
Sdn Bhd, a designer and producer of free-standing interactive kiosks and
free-standing advertising with equipment installed in Asia and Europe.
Management expects to complete the transactions necessary to form the joint
venture company in the fourth quarter of 2006, after which it will own 75
percent of a new company in which Kiosk Media will own 25 percent.

We plan to operate in the United States during 2006 primarily through SDAW and
CST and to provide outsourced business services to small and medium sized United
States business as well as consulting services to Asian companies that are
seeking to establish a presence in the US markets. In addition, we are
developing a sales organization for our media production business and are
seeking to establish a client base within the United States.


                                       21

<PAGE>

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

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

The Company has determined to exit from its limited involvement in the broadband
business in Malaysia as a backhaul provider of telecommunications services. The
decision to exit the broadband business, which was forecast to constitute about
2 percent of the Company's revenue in the current year, is not material to the
Company's operations or assets. The decision to end the Company's broadband
business was approved by the Board of Directors and intended to permit and exit
from a non-core line of business upon favorable terms.

We anticipate that we will incur additional operating expense in introducing
through SDAW our business process outsourcing product and in seeking to develop
a customer base in the United States for our media production and information
technology products. We expect to incur these costs in completing the
acquisition and development of the technology used in the business process
outsourcing product and for marketing, sales and administrative expenses for
personnel employed in the United States. Our strategy is to utilize the
Company's experience in the central administration of multiple operating
subsidiaries and the staff located in our home office in Petaling Jaya to
provide labor for outsourced business processes. We will incur additional
expense to assure that adequate personnel are employed in the home office, which
may not be offset by the revenue generated by sales in the United States.
Although management is optimistic that a significant market exists for
outsourced business processes and that the Company can compete in that market,
there can be no assurance that we will be able to operate such a business
profitably.


Strategic Contractual Relationships

The Company seeks to enter strategic agreements, both formal and informal, with
other providers of goods or services that are compatible with the Company's
existing businesses. Such arrangements include license agreements, requirements
contracts and service agreements. The Company may also seek to acquire business
enterprises that offer goods and services that are of benefit to the Company and
its shareholders. We cannot forecast whether these strategic relationships will
generate significant revenue in 2006.


Results of Operations

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

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

<TABLE>
<CAPTION>

                                                   Nine Months Ended September 30,
                                                -----------------------------------
                                                      2006                    2005
                                                                         (Restated)
<S>                                                    <C>                   <C>
Revenues                                        $   26,237,103        $  19,236,977
Gross profit                                         1,547,101            1,580,221
Sales and marketing                                     20,712               45,524
General and administrative                           1,548,306              920,178
Gain on disposal of assets-related parties              66,356               76,382
Net income (loss)                                      508,968              367,800
</TABLE>



                                       22
<PAGE>

COMPARISON  OF THE THREE  MONTHS  ENDED  SEPTEMBER  30, 2006 TO THE THREE MONTHS
ENDED SEPTEMBER 30, 2005


REVENUES

Revenues for the three months ended September 30, 2006 ("2006") totaled
$9,766,203 compared to $7,357,844 for the three months ended September 30, 2005
("2005").

The increase in net sales in 2006 as compared to 2005 was mainly due to an
increase in fees earned from the production of multimedia programs and business
contracts. The increase in revenue from the production of multimedia programs
was the result of sub-contract work from the Company's two major customers.
Revenue for project consulting services was generated from contracts that the
Company secured in 2001 through 2003. In 2006 and 2005, two customers each
accounted for 48% of total revenue in both periods. In 2005, two customers
accounted for 46% and 47% of total revenue, respectively.


GROSS PROFIT

Gross profit increased to $889,231 in the third quarter of 2006 compared to
$612,978 during the comparable period in 2005.

The gross profit percentage increased to 9.1% in 2006 from 8.3% in 2005. The
increase in gross profit percentage was primarily due to higher revenue in 2006.
The Company incurring lesser subcontractor costs was also another factor which
contributed to a higher gross profit percentage. The Company is striving to
improve its quality of services and efficiency with objective to increase its
gross profit percentage. 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 $22,502 or 62%, to $13,538 in the
third quarter of 2006 compared to $36,040 in the third quarter of 2005,
primarily as a result of a decrease in travel expenses.


GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses relating to non-related parties increased to
$390,890 in 2006 compared to $334,789 in 2005.

The increase was primarily attributable to an increase in consulting fees,
compensation expenses, maintenance expenses, and professional fees, in
particular legal and accounting fees incurred in connection with a restatement
of financial statements during the first and second quarters of 2006.

In 2006, general and administrative expenses consisted of the following: 5% was
for depreciation of tangible assets, 10% was for employee payroll, 34% was for
fees for professional and auditing services, 3% was for investor relation
expenses, 14% was for compensation expenses and 34% was for rent, utilities,
general office supplies, communications and corporate insurance expenses. For
2005, 17% was for depreciation of tangible assets, 0.4% was for consulting fees,
13% was for employee payroll, 37% was for fees for professional and auditing
services, 20% was for investor relation expenses, 1.6% was for compensation
expenses and 11% was for rent, utilities, general office supplies,
communications and corporate insurance expenses.

General and administrative expenses - related parties of continuing operations
in the third quarter of 2006 were $36,519. These expenses included management
fees and administrative expenses payable by the Company to a company in which
Mr. Patrick Lim, the Chairman and Chief Executive Officer of the Company, has a
financial interest. In the third quarter of 2006, the related company, LSH
Asset Holdings Sdn Bhd ("LSH") billed the Company's Malaysian subsidiary,
DASB, administrative expenses of $6,500 for administration and clerical fees
incurred by LSH on behalf of DASB. The Company also incurred management fees of
$30,000 and $15,000 in the third quarter of 2006 and 2005, respectively. The
management fee was charged on the basis of time spent for the administration and
management services provided to the Company.


                                       23


<PAGE>

Related parties of discontinued operations in the third quarter of 2005 were
$6,315. These expenses included management fees and administrative expenses
payable by the Company to a company in which Mr. Patrick Lim, the Chairman and
Chief Executive Officer of the Company, has a financial interest. In the third
quarter of 2005, the related company, LSH Asset Holdings Sdn Bhd ("LSH") billed
the Company's Malaysian subsidiary, SDAM, administrative expenses of $6,315
for administration and clerical fees incurred by LSH on behalf of SDAM.


INTEREST EXPENSE

Interest expense decreased by $139,382 or 99%, to $303 in the third quarter of
2006 as compared to $139,685 in the comparable period of 2005. Interest expense
in 2006 relates to capital lease obligations and term loans. Interest expense in
2005 included $2,173 related to the $500,000 convertible term note issued on May
28, 2004, $16,164 related to a penalty on the early repayment of the convertible
term note and $119,180 related to the amortization of the derivative liability
associated with the term note. In 2005, interest expense relating to the term
note accounted for 97% of the expense for the period.


AMORTIZATION OF DEBT ISSUANCE COSTS

Amortization of finance costs of $41,280 in the third quarter of 2005 relate to
the issuance of the term note on May 28, 2004.


PREVIOUSLY DEFERRED GAIN ON SALE OF TECHNOLOGY - RELATED PARTY

The gain represents the recognition of a previously deferred gain of $22,579 and
$36,974, respectively, related to a similar amount the Company received from its
long-term receivable - related party. The receivable balance and total deferred
gain was each $183,098, respectively, as of December 31, 2005. 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 $122,647 respectively, as of September
30, 2006.


COMPARISON OF THE NINE MONTHS ENDED  SEPTEMBER 30, 2006 TO THE NINE MONTHS ENDED
SEPTEMBER 30, 2005

REVENUES

Revenues for the nine months ended September 30, 2006 ("2006") totaled
$26,237,103 compared to $19,236,977 for the nine months ended September 30, 2005
("2005"). The increase in net sales in 2006 as compared to 2005 was mainly due
to an increase in fees earned from the production of multimedia programs and
business contracts. The increase in revenue from the production of multimedia
programs was the result of sub-contract work from the Company's two major
customers. Revenue for project consulting services was generated from contracts
that the Company secured in 2001 through 2003. In 2006, two customers, each
accounted for 48% of total revenue. In 2005, two customers each accounted for
48% of total revenue.


GROSS PROFIT

Gross profit decreased to $1,547,101 for the nine months ended September 30,
2006 compared to $1,580,221 during the comparable period in 2005. The gross
profit percentage decreased to 5.9% in 2006 from 8.2% in 2005. The lower gross
profit percentage is a result of the Company incurring additional subcontractor
expenses in the first six months in year 2006 and added competitive pressures to
secure contracts, resulting in reduced margins. The Company is striving to
improve its quality of services and efficiency with objective to increase its
gross profit percentage. 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.


                                       24


<PAGE>

SALES AND MARKETING EXPENSES

Sales and marketing expenses decreased by $24,812 or 55%, to $20,712 for the
nine months ended September 30, 2006 compared to $45,524 in the comparable
period of 2005, primarily as a result of a decrease in travel expenses.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses relating to non-related parties increased to
$1,438,805 in 2006 compared to $856,231 in 2005. These expenses by division are
as follows:

The increase was primarily attributable to an increase in consulting fees,
compensation expenses, maintenance expenses, and professional fees. In 2006,
general and administrative expenses consisted of the following: 10% was for
depreciation of tangible assets, 10% was for employee payroll, 26% was for fees
for professional and auditing services, 1% was for investor relation expenses,
34% was for compensation expenses and 19% was for rent, utilities, general
office supplies, communications and corporate insurance expenses. For 2005, 21%
was for depreciation of tangible assets, 0.1% was for consulting fees, 15% was
for employee payroll, 24% was for fees for professional and auditing services,
8% was for investor relation expenses, 12% was for compensation expenses and
19.9% was for rent, utilities, general office supplies, communications and
corporate insurance expenses.

General and administrative expenses - related parties of continuing operations
for the nine months ended September 30, 2006 and 2005 were $96,500 and $45,000,
respectively. These expenses included management fees and administrative
expenses payable by the Company to LSH. In 2006, LSH billed the Company's
Malaysian subsidiary, DASB, administrative expenses of $6,500 for
administration and clerical fees incurred by LSH on behalf of DASB. The Company
also incurred management fees of $90,000 and $45,000 in 2006 and 2005,
respectively. The management fee was charged on the basis of time spent for the
administration and management services provided to the Company.

Related parties of discontinued operations for the nine months ended September
30, 2006 and 2005 were $13,001 and $18,947, respectively. These expenses
included management fees and administrative expenses payable by the Company to
LSH. In 2006 and 2005, LSH billed the Company's Malaysian subsidiary, SDAM,
administrative expenses of $13,001 and $18,947 respectively, for administration
and clerical fees incurred by LSH on behalf of SDAM.


INTEREST EXPENSE

Interest expense decreased by $217,569 or 99%, to $1,912 for the nine months
ended September 30, 2006 as compared to $219,481 in the comparable period of
2005. Interest expense in 2006 relates to capital lease obligations. Interest
expense in 2005 included $18,381 related to the $500,000 convertible term note
issued on May 28, 2004, $16,164 related to a penalty on the early repayment of
the convertible term note and $179,862 related to the amortization of the
derivative liability associated with the term note. In 2005, interest expense
relating to the term note accounted for 89% of the expense for the period.


AMORTIZATION OF DEBT ISSUANCE COSTS

Amortization of finance costs of $65,511 in 2005 relate to the issuance of the
term note on May 28, 2004.



PREVIOUSLY DEFERRED GAIN ON SALE OF TECHNOLOGY - RELATED PARTY

The gain represents the recognition of a previously deferred gain of $66,356 and
$76,382, respectively, related to a similar amount the Company received from its
long-term receivable - related party. The receivable balance and total deferred
gain was each $183,098, respectively, as of December 31, 2005. 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 $122,647 respectively, as of September
30, 2006.

                                       25

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2006, the Company had net cash of $45,798.

In 2006, operations were funded primarily from the proceeds of a private
placement and increased bank borrowings. In addition, as of September 30, 2006,
the Company owed Patrick Lim, the Company's principal shareholder, Chief
Executive Officer ("CEO") and Chairman $59,672. Additionally, as of September
30, 2006, the Company owed an affiliated company in which Mr. Lim has a
financial interest, $160,109 for short-term cash advances made to a subsidiary
of the Company for working capital purposes from time to time and for management
fees. These amounts are unsecured, bear no interest and have no fixed terms of
repayment.

Net cash used in operating activities of $481,458 in 2006 was primarily due to
increases in trade receivables net of non-cash expenses incurred by the Company
and increases in various payables.

Net cash provided by investing activities totaled $593,810 and was mainly due to
the sale of equipment of $631,828. In 2006, the Company purchased property and
equipment totaling $38,018.

Net cash provided by financing activities totaled $45,361 and was attributable
to a private placement and borrowings from an affiliated company totaling
$129,934, net of payments made for various debt.

In addition to internally generated funds and financial support from Mr. Lim,
the Company may seek to raise additional funds from equity or debt financing for
its future working capital requirements. As of September 30, 2006, the Company
has furniture and equipment of approximately $1 million for implementation of
its business plan. The Company estimates that it may require additional capital
expenditures of up to $2.0 million to implement its business plan. The Company
expects to incur further expenses to acquire companies and technologies that are
synergistic to the new businesses and will help the Company to rollout the new
businesses in the shortest time possible. During 2003 and 2004, the Company
incurred $263,000 in the establishment and acquisition of new subsidiaries and
associates relating to its new businesses. Some of these acquisitions did not
work out well and the Company has sold some of these companies, whose operations
and management were not compatible with the Company's business plan in 2004. For
2006, the Company presently estimates that it may ultimately incur an additional
$2.1 million to identify, negotiate and acquire businesses and/or net assets in
companies synergistic to its planned new businesses. In addition, the Company
estimates that in the event it makes such acquisitions it would 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.


SUBESEQUENT EVENTS

On October 21, 2006, the Board of Directors of Secured Digital Applications,
Inc. (the "Company") approved an award of incentive compensation to Chief
Executive Officer and Chairman Patrick Lim including the following: warrants to
purchase 6,300,000 shares of the common stock of the Company and an award of
500,000 shares of common stock per year if the Company in that year achieves a
compounded growth rate of at least 15 percent. The award of warrants was
approved by the Board in consideration for Mr. Lim's performance as CEO and in
consideration of historic compensation levels significantly below the
compensation received by chief executive officers of companies with similar
levels of revenue. The warrants will be priced at 110 percent of the closing
price of the common stock of the Company on October 23, 2006, or $0.0649. The
warrants will be issued in three equal annual installments and are exercisable
on or before October 21, 2011. The incentive compensation award payable in
common stock is outside the Corporation's shareholder approved incentive
compensation program.

The Board further approved a share exchange agreement with LSH Asset Holdings
Sdn Bhd, an entity controlled by Mr. Lim, whereby Mr. Lim will exchange
20,000,000 shares of common stock held by LSH for 100,000 shares of newly issued
Series B non-dividend bearing preferred stock. The issuance of the preferred
stock was approved by the Board in consideration of non-interest bearing cash
advances made to the Company since 1999, of which $59,672 remains unpaid, as
well as Mr. Lim's willingness to make future advances to the Corporation for
working capital. The Series B shares each are entitled to 200 votes per share
and have a liquidation preference of $25 per share.



                                       26

<PAGE>


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

Because the Company conducts substantially all of its operations in Malaysia,
the results of its operations are subject to the risk of fluctuations in foreign
currency rates. An increase or decrease in the exchange rate between the
currency of Malaysia, the Ringgit, and the United States dollar will be
reflected in the results of the Company, as results in the Ringgit are converted
to dollars during the preparation of financial statements. The Ringgit has
strengthened against the dollar by about five percent since it was permitted by
the Malaysian government to fluctuate.


ITEM 3. CONTROLS AND PROCEDURES

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


There has been no change in our internal control over financial reporting during
the quarter ended September 30, 2006 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.


                                       27


<PAGE>

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

        None.


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

        None.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        None.


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

        None.


ITEM 5. OTHER INFORMATION

        None.


ITEM 6. EXHIBITS

       (a) Exhibits

31.1    Certification by Chief Executive Officer Required Under Section 302 of
        Sarbanes-Oxley Act of 2002

31.2    Certification by Chief Accounting Officer Required Under Section 302 of
        Sarbanes-Oxley Act of 2002

32.1    Certification by Chief Executive Officer Required Under Section 906 of
        Sarbanes-Oxley Act of 2002

32.2    Certification by Chief Accounting Officer Required Under Section 906 of
        Sarbanes-Oxley Act of 2002



                                       28

<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: NOVEMBER 20, 2006                   BY: /s/ Patrick Soon-Hock Lim
                                          ------------------------------
                                          Patrick Soon-Hock Lim
                                          Chairman & Chief Executive Officer



DATE: NOVEMBER 20, 2006                   BY: /s/ Voon Fui Yong
                                          ------------------------------
                                          Voon Fui Yong
                                          Chief Accounting Officer




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