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

                                    FORM 10-Q

                                   (MARK ONE)

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

                 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2007 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)

                 230 Park Avenue, 10th Floor New York, NY 10169

                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                                 (212) 551-1747
                (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
                                      ---       ---

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of accelerated
filer and large accelerated filer in Rule 12b-2 of the Exchange Act.

Large accelerated filer       Accelerated filer     Non-accelerated filer  X
                        ---                    ---                        ---

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

                                  Yes        No X
                                     ---       ---

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

             Class               Number of shares outstanding at August 14, 2007
-------------------------------  -----------------------------------------------
Common stock, $.00001 par value                   133,386,814
<PAGE>

FORM 10-Q
2ND QUARTER

<TABLE>
<S>                                                                                         <C>  <C>
                                      INDEX

                                                                                            Page

PART I  - FINANCIAL INFORMATION

         ITEM 1. FINANCIAL STATEMENTS

         Consolidated balance sheets as at June 30, 2007 (Unaudited)                        3 - 4
         and December 31, 2006 (Audited)

         Consolidated statements of income and comprehensive income for the three-month
         and six-month periods ended June 30, 2007 and 2006 (Unaudited)                     5 - 6

         Condensed consolidated statements of cash flows for the six-month
         periods ended June 30, 2007 and 2006 (Unaudited)                                   7

         Notes to consolidated financial statements (Unaudited)                             8 - 14

         ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS                                       15 - 21

         ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                  22

         ITEM 4. CONTROLS AND PROCEDURES                                                    22

PART II - OTHER INFORMATION

         ITEM 1. LEGAL PROCEEDINGS                                                          23

         ITEM 1A. RISK FACTORS                                                              23

         ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                23

         ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                            23

         ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                        23

         ITEM 5. OTHER INFORMATION                                                          23

         ITEM 6. EXHIBITS                                                                   23

         SIGNATURES                                                                         24
</TABLE>

SAFE HARBOR STATEMENT

This Form 10-Q 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 the 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-Q
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 the Company. Forward-looking statements can
be identified by the use of forward-looking terminology such as "believes",
"may", "should", "anticipates", "estimates", "expects", "future", "objective,"
"plan," "predict," "project," " "seek," "will," "would," "will likely result,"
"will continue," "will be," "intends," "hopes" or "plans" or the negative
thereof. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that could cause actual results of the Company
to vary materially from historical results or from any future results expressed
or implied in such forward-looking statements. Such factors include, among
others, the following: the revocation of the Company's broadband network
operator's license, the inability to successfully implement its business plans,
the cancellation or postponement of contracts that the Company has entered into
in connection with its business, the inability to obtain products or services
provided by other companies, the inability of the Company to raise capital on a
timely basis, existing and future government regulations, the failure to retain
qualified personnel, competitive pressures and potentially adverse tax and cash
flow consequences resulting from operations in multiple countries with different
laws and regulations, and the general economic and business conditions in
Malaysia, the United States and the other countries in which we do business,
primarily in Asia. The Company does not undertake to update, revise or correct
any forward-looking statements.

                                        2

<PAGE>
Introductory Note
-----------------

The information contained in this quarterly report on Form 10-Q reflects
the effect of a reorganization during 2006 of the Company's principal operating
subsidiaries and the disposition of certain other assets and operating
subsidiaries in June 2007. As a result, certain results of prior periods have
been reclassified to reflect certain operations, previously reported as
continuing operations, as having been discontinued. The reclassification 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.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

<TABLE>
<S>                                                                             <C>              <C>
               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                  JUNE 30, 2007

                                                                                    June 30,      December 31,
                                                                                      2007            2006
                                                                                ---------------- ---------------
                                                                                  (Unaudited)

                    ASSETS

Current assets:
     Cash                                                                       $         16,591 $         7,644
     Trade and other accounts receivable
       less allowance for doubtful accounts of $26,548 and $26,006                     9,576,380       8,327,515
     Prepaid expenses                                                                     23,191          14,142
     Current assets of discontinued operations                                                --         220,540
                                                                                ---------------- ---------------

      Total current assets                                                             9,616,162       8,569,841
Property and equipment, net                                                              872,548         990,590
Long-term receivables, related party                                                      54,473         108,247
Goodwill                                                                                 471,260         471,260
Non-current assets of discontinued operations                                                 --          28,351
                                                                                ---------------- ---------------

                                                                                $     11,014,443 $    10,168,289
                                                                                ================ ===============

                    LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Current portion of capital lease obligations                               $         34,152 $        33,455
     Accounts payable (includes related parties of $102,489 and $100,396)                509,248         778,907
     Accrued expenses                                                                     76,215          65,595
     Amount due to an affiliated company                                                  88,244          17,927
     Amount due to a director                                                             15,312          10,578
     Income tax payable                                                                  237,359          11,045
     Current liabilities of discontinued operations                                           --         254,150
                                                                                ---------------- ---------------

              Total current liabilities                                                  960,530       1,171,657
Deferred tax                                                                             204,978         208,723
Deferred gain                                                                             54,473         108,247
                                                                                ---------------- ---------------

                   Total liabilities                                                   1,219,981       1,488,627
                                                                                ---------------- ---------------
</TABLE>

                                  (continued)

                                        3
<PAGE>

<TABLE>
<S>                                                                  <C>            <C>
               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEET (CONTINUED)
                                  JUNE 30, 2007


                                                                       June 30,      December 31,
                                                                         2007            2006
                                                                     -------------   ------------
                                                                      (Unaudited)


Minority interest                                                          198,397        180,866
                                                                      ------------   ------------

Commitments and contingencies

Shareholders' equity:
     Series B convertible preferred stock, $0.10 par value;                 10,000         10,000
         1,000,000 shares authorized; 100,000 shares issued and
         outstanding, liquidation preference $2,500,000

     Common stock, $.00001 par value; 350,000,000 shares authorized;
        142,572,594 and 141,572,594 shares issued in 2007 and 2006,
        respectively; 132,846,814 and 128,721,391 shares outstanding
        in 2007 and 2006, respectively                                       1,328          1,287
     Additional paid-in capital                                          7,068,954      6,746,129
     Common treasury stock, 9,725,780 and 12,851,203 shares at cost
         in 2007 and 2006, respectively                                         --             --
     Options                                                               109,164        101,904
     Warrants                                                              869,259        784,875
     Deferred compensation                                                 (83,075)       (48,175)
     Retained earnings                                                   1,317,257        657,384
     Accumulated other comprehensive income                                303,178        245,392
                                                                      ------------   ------------

              Total shareholders' equity                                 9,596,065      8,498,796
                                                                      ------------   ------------

              Total liabilities and shareholders' equity             $  11,014,443  $  10,168,289
                                                                      ============   ============
</TABLE>


           See accompanying notes to consolidated financial statements

                                        4

<PAGE>

<TABLE>
<CAPTION>
                                  SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                               CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                                      (Unaudited)

                                                                          Three months ended        Six months ended
                                                                               June 30,                  June 30,
                                                                           2007        2006          2007        2006
                                                                        ----------  ----------    ----------  ----------
Revenues:

Services:
<S>                                                                    <C>          <C>          <C>         <C>
  Related parties                                                      $   558,228  $   77,185   $   860,110 $   159,297
  Others                                                                10,451,982   7,970,517    20,520,902  15,843,678
                                                                        ----------  ----------    ----------  ----------
                                                                        11,010,210   8,047,702    21,381,012  16,002,975
                                                                        ----------  ----------    ----------  ----------

Cost of revenues:

Services:
  Related parties                                                          167,469      23,232       258,033      47,865
  Others                                                                 9,952,718   7,833,750    19,542,329  15,331,470
                                                                        ----------  ----------    ----------  ----------
                                                                        10,120,187   7,856,982    19,800,362  15,379,335
                                                                        ----------  ----------    ----------  ----------
Gross profit                                                               890,023     190,720     1,580,650     623,640
                                                                        ----------  ----------    ----------  ----------
Operating expenses:
     Sales and marketing                                                     3,240       2,117         7,124       3,602
     General and administrative:
       Related parties                                                      36,973      36,563        73,808      72,982
       Others                                                              386,419     466,643       785,737     997,241
                                                                        ----------  ----------    ----------  ----------
Total operating expenses                                                   426,632     505,323       866,669   1,073,825
                                                                        ----------  ----------    ----------  ----------
Income (loss) from operations                                              463,391   (314,603)       713,981   (450,185)
                                                                        ----------  ----------    ----------  ----------
Other income (expense):
     Interest expense                                                           --       (867)            --     (1,609)
     Gain (loss) on foreign currency transactions                          (1,134)       5,029       109,818      58,757
     Previously deferred gain on sale of technology - related
      party                                                                 30,459      20,549        55,749      44,354
     Other income                                                            2,615       9,979         5,178      18,233
                                                                        ----------  ----------    ----------  ----------
                                                                            31,940      34,690       170,745     119,735
                                                                        ----------  ----------    ----------  ----------
Income (loss) before provision for income taxes
and minority interest                                                      495,331   (279,913)       884,726   (330,450)

Provision for income taxes                                               (153,388)    (45,069)     (216,897)    (84,922)
                                                                        ----------  ----------    ----------  ----------
Income (loss) before minority interest                                     341,943   (324,982)       667,829   (415,372)

Minority interest                                                          (7,571)     (4,880)      (13,692)     (8,870)
                                                                        ----------  ----------    ----------  ----------
Income (loss) from continuing operations                                   334,372   (329,862)       654,137   (424,242)
                                                                        ----------  ----------    ----------  ----------
Discontinued operations:
     Income (loss) from discontinued operations - net of minority
      interest and income taxes                                            (8,583)    (78,172)      (17,248)     400,778

     Gain on disposal of discontinued subsidiaries                          22,984          --        22,984          --
                                                                        ----------  ----------    ----------  ----------
Income (loss) from discontinued operations                                  14,401    (78,172)         5,736     400,778
                                                                        ----------  ----------    ----------  ----------
</TABLE>

           See accompanying notes to consolidated financial statements
                                        5
<PAGE>

<TABLE>
<CAPTION>
               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
     CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (CONTINUED)
                                   (Unaudited)

                                                                          Three months ended         Six months ended
                                                                               June 30,                  June 30,
                                                                          2007         2006         2007         2006
                                                                       -----------  -----------  -----------  -----------

<S>                                                                   <C>          <C>          <C>          <C>
Net income                                                            $    348,773 $  (408,034) $    659,873 $   (23,464)
                                                                       ===========  ===========  ===========  ===========

COMPREHENSIVE INCOME

Net income                                                            $    348,773 $  (408,034) $    659,873 $   (23,464)

Other comprehensive income:

Foreign currency translation adjustments                                     (565)       14,750       57,786      152,462
                                                                       -----------  -----------  -----------  -----------
Comprehensive income                                                  $    348,208 $  (393,284) $    717,659 $    128,998
                                                                       ===========  ===========  ===========  ===========
Net income per common share:
     Basic and diluted **                                             $          * $          * $          * $          *
                                                                       ===========  ===========  ===========  ===========
Weighted average shares outstanding:
     Basic                                                             130,807,803  133,859,992  130,026,288  132,226,594
                                                                       ===========  ===========  ===========  ===========
     Diluted                                                           154,817,144  134,631,200  154,923,321  132,238,494
                                                                       ===========  ===========  ===========  ===========
</TABLE>

*  Less than $.01 per share

** Net income per common share for discontinued operations is less than $.01 per
   share and not presented separately.

           See accompanying notes to consolidated financial statements

                                        6
<PAGE>

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

                                                                                                 Six Months Ended
                                                                                             June 30,       June 30,
                                                                                               2007           2006
                                                                                          -------------- ---------------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                       <C>            <C>
     Change in operating assets and liabilities of continuing operations                  $       43,319 $       112,057
     Change in operating assets and liabilities of discontinued operations                          (184)        (49,355)
                                                                                           -------------  --------------
         Net cash provided by operating activities                                               43,135           62,702
                                                                                           -------------  --------------
CASH FLOWS FROM INVESTING ACTIVITIES
     Proceeds from disposal of equipment of discontinued operations                                   --          27,836
     Proceeds from disposal of equipment                                                              --             142
     Purchase of equipment                                                                        (6,274)         (1,333)
     Purchase of equipment of discontinued operations                                                 --            (995)
                                                                                           -------------  --------------
         Net cash provided by (used in) investing activities                                      (6,274)         25,650
                                                                                           -------------  --------------
CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from issuance of common stock                                                           --          80,000
     Net proceeds from (repayment of) advances from affiliated company                            70,098          11,392
     Net proceeds from (repayment of) advances from a director                                     4,567         (28,333)
     Payments of obligations under capital leases                                                     --          (8,836)
     Financing activities of discontinued operations                                                  --         (42,025)
                                                                                           -------------  --------------
         Net cash provided by financing activities                                                74,665          12,198
                                                                                           -------------  --------------

FOREIGN CURRENCY TRANSLATION ADJUSTMENT - continuing activities                                 (103,240)        (81,410)
                                        - discontinued activities                                    661         (28,400)
                                                                                           -------------  --------------
Net increase (decrease) in cash                                                                    8,947          (9,260)
Cash, beginning of period                                                                          7,644          32,983
                                                                                           -------------  --------------
Cash, end of period                                                                       $       16,591 $        23,723
                                                                                           =============  ==============
Supplemental disclosure of cash flow information:

Cash paid for interest - continuing operations                                            $           -- $         1,591
                       - discontinued operations                                                      --          45,439
                                                                                           =============  ==============
                                                                                                      --          47,030
                                                                                           =============  ==============

Cash paid for income taxes - continuing operations                                        $           -- $         6,855
                           - discontinued operations                                                  --             726
                                                                                           =============  ==============
                                                                                                      --           7,581
                                                                                           =============  ==============
</TABLE>

           See accompanying notes to consolidated financial statements

                                        7
<PAGE>

                       SECURED DIGITAL APPLICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2007
                                   (UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying  unaudited consolidated financial statements of Secured Digital
Applications,  Inc.  (the  "Company  ") have been  prepared in  accordance  with
generally accepted accounting  principles for interim financial  information and
with Item 10-1 of Regulation  S-X.  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 six months ended June
30, 2007, are not necessarily indicative of the results that may be expected for
the year ending  December  31,  2007.  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,  2006,  as filed  with the  Securities  and  Exchange
Commission.

2. SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

Revenue represents the net invoiced value of:

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

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

ACCOUNTS RECEIVABLE AND CREDIT POLICIES

The Company grants credit,  generally without collateral,  to its customers. The
Company  continuously  monitors  collections and payments from its customers and
maintains  an  allowance  for  estimated   uncollectible   accounts  based  upon
historical  experience and specific  customer  collection  issues that have been
identified.

INVENTORIES

Inventories, which were comprised of peripherals for  surveillance  and wireless
communication,  information technology hardware,  software and accessories, were
stated at the lower of cost or net  realizable  value.  Cost is  determined on a
first-in-first-out basis. The value of the inventories was written down to $0 in
2006 as it was deemed to be unsaleable.

GOODWILL

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

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 six months  ended June 30,  2007,  provision  for income taxes
amounted to $153,388 and $216,897, respectively, and $45,069 and $84,922 for the
three and six months ended June 30, 2006,  respectively.  The provisions are net
of the benefit of any available net operating losses,  for income tax payable on
its operations in Malaysia.

                                        8

<PAGE>

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

COMPREHENSIVE INCOME

The Company has adopted Statement of Financial  Accounting Standards (SFAS) 130,
"Reporting  Comprehensive Income", which establishes requirements for disclosure
of comprehensive  income including  certain items previously not included in the
statements of operations,  including minimum pension  liability  adjustments and
foreign  currency  translation  adjustments,  among others.  The Company's  only
components of comprehensive income are foreign currency translation adjustments.

The functional  currency of the Company's  subsidiaries is the Malaysian Ringgit
("RM").  The financial  statements of these  subsidiaries  are  translated  into
United States dollars  ("USD") using  period-end rate of exchange for assets and
liabilities,  and the  average  rate 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.

TREASURY STOCK

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

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 six months  ended June 30, 2007 and 2006.  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            Six Months Ended
                                                   June 30,      June 30,      June 30,      June 30,
                                                     2007          2006          2007          2006
                                                ------------- ------------- ------------- -------------

<S>                                             <C>           <C>           <C>           <C>
Net income                                      $         349 $       (408) $         660 $        (23)
                                                ============= ============= ============= =============

Weighted average shares outstanding - basic           130,808       133,860       130,026       132,227
                                                ============= ============= ============= =============

Net income per share - basic **                 $           * $           * $           * $           *
                                                ============= ============= ============= =============
</TABLE>

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

<TABLE>
<CAPTION>
                                                    Three Months Ended           Six Months Ended
                                                  June 30,      June 30,      June 30,       June 30,
                                                    2007          2006          2007           2006
                                                ------------- ------------- ------------- -------------

<S>                                             <C>           <C>           <C>           <C>
Weighted average shares outstanding - basic           130,808       133,860       130,026       132,227
Common stock issuable to consultant                     4,009           771         4,622            11
Convertible preferred stock                            20,000            --        20,000            --
Dilutive stock options and warrants                        --            --           275            --
                                                ------------- ------------- ------------- -------------
Weighted average shares outstanding - diluted         154,817       134,631       154,923       132,238
                                                ============= ============= ============= =============
Net income per share - diluted **               $           * $           * $           * $           *
                                                ============= ============= ============= =============
</TABLE>

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

For the six and three  months  ended June 30, 2007 and 2006,  1,080,000  options
were  excluded  from the  calculation  of earnings  per share as their  issuance
prices were in excess of the average market price for the period.  For the three
months  ended  June  30,  2007,   6,300,000  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.

                                        9

<PAGE>

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

STOCK-BASED COMPENSATION

The Company  adopted  SFAS 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. The Company  recognized
$2,200 and $5,360,  $3,640 and $8,587 in total stock-based  compensation expense
during the three and six  months  ended  June 30,  2007 and 2006,  respectively.
Total unvested stock-based  compensation expense was $9,785 at June 30, 2007 and
had a total weighted average remaining term of 2.17 years.

The Company did not issue any options to employees  and officers  during the six
months ended June 30, 2007.

Stock options and warrants granted to  non-employees  are recorded at their fair
value,  as determined in accordance  with SFAS 123,  "Accounting for Stock Based
Compensation" and Emerging Issues Task Force Consensus No. 96-18, and recognized
over the related service period.

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.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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.
FIN 48 did not have an effect on the financial position or results of operations
of the Company.

In September 2006, the FASB issued SFAS 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. SFAS No. 157 is effective for financial statements issued for
fiscal years  beginning  after  November 15, 2007.  The  implementation  of this
guidance  is not  expected  to have any  impact  on the  Company's  consolidated
financial statements.

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  does not expect
this  pronouncement  to have a  material  effect on the  financial  position  or
results of operations of the Company.

In February  2007,  the FASB issued  SFAS No.  159,  "The Fair Value  Option for
Financial  Assets and Financial  Liabilities."  SFAS No. 159 permits entities to
choose to measure eligible  financial  instruments at fair value. The unrealized
gains and  losses on items for which  the fair  value  option  has been  elected
should be reported in  earnings.  The decision to elect the fair value option is
determined  on an instrument  by  instrument  basis,  it should be applied to an
entire  instrument,  and it is irrevocable.  Assets and liabilities  measured at
fair value  pursuant to the fair value option  should be reported  separately in
the balance sheet from those  instruments  measured  using  another  measurement
attributes.  SFAS No. 159 is effective  as of the  beginning of the first fiscal
year that begins after November 15, 2007. The Company is currently analyzing the
potential  impact of  adoption  of SFAS No.  159 to its  consolidated  financial
statements.

                                       10

<PAGE>

3. DISCONTINUED OPERATIONS

During  the  third  quarter  of 2006,  the  Company  reorganized  the  Company's
operating subsidiaries.  Under the reorganization plan, substantially all of the
assets and liabilities of our principal  operating  subsidiary,  Secured Digital
Applications  (M)  Sdn  Bhd  ("SDAM"),  were  transferred  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.

Through   reorganization,   the  Company  disposed  of  a  number  of  operating
subsidiaries.  The assets and  liabilities  of  Gallant  Service  Centre Sdn Bhd
("GSC"),  through  which the  Company  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 a third party on September 18, 2006.

On September  18, 2006,  the Company sold all the shares of SDAM which  included
its subsidiary  companies,  AMS,  AMSSB, a 60% owned  subsidiary of AMS, GSC and
other Gallant  subsidiaries,  to a third party and recognized a gain on disposal
of  $46,472.  The  receivable  from the sale is due in one year or less from the
date of  sale  unless  extended  by the  parties  and the  receivable  bears  no
interest.  At June 30, 2007 and December 31, 2006,  the Company was owed $37,558
and  $46,472,  respectively,  and such  amounts are  included in trade and other
accounts receivable.

On June  27,  2007,  the  Company  sold  its  wholly-owned  subsidiary  company,
DigitalApps   Technologies  Sdn  Bhd  ("DAT"),   which  included  its  55%-owned
subsidiary,  Ispec Sdn Bhd  ("ISS"),  to a third party and  recognized a gain on
disposal of $22,984.  Both DAT and ISS were operating at a loss and did not meet
the Company's criteria for return on investment.

The  results  of  operations  of  SDAM  and  its  subsidiaries  and  DAT and its
subsidiary have been retroactively restated as discontinued  operations pursuant
to SFAS No. 144,  "Accounting  for the  Impairment  or  Disposal  of  Long-Lived
Assets."

The results of  discontinued  operations for the three and six months ended June
30, 2007 and 2006 are as follows:

<TABLE>
<CAPTION>
                                                    Three Months Ended         Six Months Ended
                                                  June 30,     June 30,     June 30,      June 30,
                                                    2007         2006         2007          2006
                                                ------------ ------------ ------------ ------------
<S>                                             <C>          <C>          <C>          <C>
Revenue                                         $         -- $    484,147 $         -- $  2,303,578
Cost of revenues                                          --      435,362           --    1,358,865
                                                ------------ ------------ ------------ ------------
Gross profit                                              --       48,785           --      944,713
Operating expenses                                     8,583      225,639       17,248      440,497
                                                ------------ ------------ ------------ ------------
Income (loss) from operations                        (8,583)    (176,854)     (17,248)      504,216
Other income                                              --       90,082           --       71,634
                                                ------------ ------------ ------------ ------------
Income before tax                                    (8,583)     (86,772)     (17,248)      575,850
Income tax                                                --          603           --    (217,381)
                                                ------------ ------------ ------------ ------------
Income (loss) before minority interest               (8,583)     (86,169)     (17,248)      358,469
Minority interest                                         --        7,997           --       42,309
                                                ------------ ------------ ------------ ------------
Income (loss) from discontinued operations      $    (8,583) $   (78,172) $   (17,248) $    400,778
                                                ============ ============ ============ ============
</TABLE>

                                       11
<PAGE>

4. RELATED PARTY ACTIVITY (CONTINUED)

LSH ASSET HOLDINGS SDN BHD ("LSH"):

LSH is a company  wholly-owned by the Company's Chief Executive  Officer and his
wife. LSH billed the Company management fees totaling $30,000,  $60,000, $30,000
and  $60,000  for the  respective  three and six months  ended June 30, 2007 and
2006. LSH also billed DASB and SDAM $6,973,  $13,808, $6,563 and $12,982 for the
respective three and six months ended June 30, 2007 and 2006, for administrative
and clerical charges. LSH also made short term advances to the Company from time
to time for working capital purposes. As of June 30, 2007 and December 31, 2006,
the amount due to LSH was  $88,244  and  $17,927,  respectively.  This amount is
unsecured,  bears no interest, has no fixed terms of repayment,  and is recorded
in the financial statements as "Amount due to an affiliated company".

SYNERVEST SDN BHD ("SSB")

A director of one of the Company's  Malaysian  subsidiaries is a director of SSB
and  holds a 60%  equity  interest  in SSB.  At  December  31,  2006,  long-term
receivables,  related  parties,  consisted of $108,247 due from 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. These assets, comprised of analog
video hardware and peripherals and a patent for image display,  were sold to SSB
for a total sum of  $1,661,175.  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  $30,459,  $55,749,
$20,549  and  $44,354  of the  outstanding  receivable  during the three and six
months ended June 30, 2007 and 2006, 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.  As of June 30, 2007
and December 31,  2006,  accounts  receivable  from the related  entity  totaled
$54,473 and $108,247, respectively.

MY ARCHITECT ("MYA")

A director of one of the Company's Malaysian subsidiaries is a principal partner
of MYA.  During  the three and six  months  ended  June 30,  2007 and 2006,  the
Company received fees of $558,228, $860,110, $77,185 and $159,297, respectively,
from consulting  contracts that it entered into with MYA. The terms of repayment
for the amount due from MYA are similar to terms accorded to the Company's other
existing customers. At June 30, 2007 and December 31, 2006, there was no balance
owed by MYA.

CHIEF EXECUTIVE OFFICER

As of June 30, 2007 and December 31, 2006, the Company owed the Chief  Executive
Officer of the Company  $15,312 and $10,578,  respectively,  for short-term cash
advances made to the Company for working capital purposes from time to time. The
amount owing to the Chief Executive Officer is unsecured, bears no interest, has
no fixed  terms of  repayment  and is recorded in the  financial  statements  as
"Amount due to a director".

DIRECTORS OF MALAYSIAN SUBSIDIARY

On September 18, 2006,  one of the  Company's  Malaysian  subsidiaries  acquired
1,050,000  shares  of  another  Malaysian  subsidiary  from  such  subsidiaries'
directors,  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 June 30, 2007 and December 31, 2006, the Company owes the directors RM354,500
($102,489 at June 30, 2007 and $100,396 at December 31, 2006) and such amount is
included in accounts payable.

5. PREFERRED STOCK

On October 23, 2006, the Company  executed a share  exchange  agreement with LSH
whereby LSH exchanged  20,000,000  shares of the Company's  common stock held by
LSH in exchange  for 100,000  shares of the  Company's  newly  created  Series B
Voting  Convertible   Preferred  Stock  (the  "Voting   Preferred"),   which  is
convertible into shares of common stock at a fixed ratio of 200 shares of common
stock for 1 share of Voting Preferred stock. The 20,000,000 shares were returned
to treasury and are  available  for  re-issuance  at a future  date.  The Voting
Preferred  stock is entitled to receive  dividends in preference to any dividend
on the common  stock,  as,  when and upon such terms as may be  declared  by the
Company.

6. COMMON STOCK

The Company signed a compensation agreement with a consultant on April 15,
2006 under which the Company is to issue an aggregate of 1,000,000 shares of its
common stock to the consultant for services to be rendered for the  twelve-month
period ended April 15, 2007.  The Company  issued 250,000 shares of common stock
on each of the following dates; October 16, 2006, November 22, 2006, January 15,
2007 and April 20, 2007.

                                       12

<PAGE>

6. COMMON STOCK (CONTINUED)

On November 28, 2006, the Company issued  1,500,000  shares of common stock to a
consultant  pursuant to a compensation  agreement dated November 1, 2006,  under
which the Company is to issue an  aggregate  of  2,000,000  shares of its common
stock for services to be rendered for the six-month period ended April 30, 2007.
On April 20, 2007,  the Company  reissued from its treasury stock 500,000 shares
of common stock as final issue of shares.

On December 5, 2006, the Company reissued from its treasury stock 200,000 shares
of common  stock to a  consultant  pursuant to a  compensation  agreement  dated
December 4, 2006,  under which the Company is to issue an  aggregate  of 600,000
shares of its common  stock to the  consultant  as payment  for  services  to be
rendered to the Company for the six-month period ended June 4, 2007. On February
9, 2007,  the Company  reissued from its treasury stock 100,000 shares of common
stock. This agreement was terminated on March 31, 2007.

On February 6, 2007, the Company reissued from its treasury stock 425,423 shares
of common stock to a consultant as payment for services  rendered to the Company
for total consideration of $26,376 based on the market value of $0.062 per share
on the date of issuance.

The Company  signed a  compensation  agreement  with a consultant on May 1, 2007
under which the Company is to issue an aggregate of 400,000 shares of its common
stocks to the consultant for services to be rendered for the twelve-month period
ending April 30, 2008. The Company shall issue to the consultant  100,000 shares
of treasury stock on each quarter in advance commencing May 1, 2007. On June 13,
2007,  the Company  reissued from its treasury  stock  100,000  shares of common
stock.

On October 21, 2006, the Company approved an award of incentive  compensation to
the Chief  Executive  Officer and  Chairman,  Patrick Lim, of 500,000  shares of
common stock per year if the Company in that year  achieves a compounded  growth
of at least 15%.  In 2006,  the  Company  achieved  the growth  rate and accrued
compensation expense of $33,000 for the year ended December 31, 2006. On May 31,
2007, the Company issued 500,000 shares of common stock.

The Company  signed a  compensation  agreement with a consultant on June 1, 2007
under  which the Company is to issue an  aggregate  of  2,000,000  shares of its
common stock to the  consultant  for  services to be rendered for the  six-month
period ending  December 1, 2007.  The Company  reissued from its treasury  stock
1,000,000  shares of common  stock on June 1,  2007 as the  first  tranche.  The
Company shall issue the second tranche on September 1, 2007.

The Company signed a  compensation  agreement with a consultant on June 11, 2007
under  which the Company is to issue an  aggregate  of  2,000,000  shares of its
common stock to the  consultant  for  services to be rendered for the  six-month
period ending December 10, 2007. On June 13, 2007, the Company reissued from its
treasury  stock  1,000,000  shares of common  stock as the  first  tranche.  The
Company shall issue the second tranche on September 11, 2007.

In July 2007, the Company entered into two separate  agreements with an investor
in private placements to purchase 540,000 and 460,000 shares of its common stock
at $.065 and $.07 per share for total  consideration  of  $67,300.  The  closing
dates for the  private  placements  are  August 10,  2007 and  August 30,  2007,
respectively.  On August 10, 2007,  the Company  reissued  540,000 shares of its
common stock from its treasury stock to the investor.

7. STOCK OPTIONS

On April 5, 2007, the Company signed an agreement with a consultant  under which
the Company  granted stock  options for an aggregate of 2,000,000  shares of its
common stocks to the  consultant  as a performance  incentive for services to be
rendered for a two year period ending April 4, 2009. The options are exercisable
on a quarterly  basis over the two year term of the  contract  in the  following
manner:

<TABLE>
<CAPTION>
                              Market capitalization                                        Exercise Price
Trading Period                      ($'Million)        Vesting Date       No. of options  Per Share ($/sh)

<S>                                   <C>              <C>                   <C>                <C>
April 5 - July 4, 2007                 13.53           July 5, 2007          250,000            0.10
July 5 - October 4, 2007               20.29           October 5, 2007       250,000            0.125
October 5 - January 4, 2008            30.44           January 5, 2008       250,000            0.15
January 5- April 4, 2008               45.63           April 5, 2008         250,000            0.175
April 5- July 4, 2008                  57.04           July 5, 2008          250,000            0.20
July 5 - October 4, 2008               71.30           October 5, 2008       250,000            0.225
October 5 - January 4, 2009            89.12           January 5, 2009       250,000            0.25
January 5 - April 4, 2009             111.40           April 5, 2009         250,000            0.30
</TABLE>

                                       13
<PAGE>

7. STOCK OPTIONS (CONTINUED)

The stock options may only be exercisable  subject to the consultant meeting the
following conditions:

(1)  progressively  increasing SDA's market capitalization between April 5, 2007
     and April 4, 2008 by at least 50% over the previous trading period;
(2)  progressively  increasing SDA's market capitalization between April 5, 2008
     and April 4, 2009 by at least 25% over the previous  trading  period.  This
     increase shall be maintained for at least five (5) consecutive trading days
     during the trading period; and
(3)  SDA's average  daily trading  volume  exceeding  500,000  shares during the
     trading period.

The Company recognized $1,900 in total compensation expense during the three and
six months  ended June 30,  2007.  The  options  have a total  weighted  average
remaining term of 1.76 years.

8. WARRANTS

On October 21, 2006,  the Company  approved the issuance to the Chief  Executive
Officer  warrants to purchase  6,300,000 shares of the Company's common stock at
110% of the market  price at the close of  business on October  23,  2006,  such
warrants  to be  issued  in three  equal  annual  installments  and which may be
exercised on or before October 21, 2011. Black-Scholes valuations were performed
on the warrants. The initial value of the warrants was $257,518. These costs are
being amortized over three years based on the estimate of the expected term. The
Company  recognized  compensation  expense of $42,192  and $84,384 for the three
months and six months ended June 30, 2007, respectively.

9. SIGNIFICANT CONCENTRATIONS OF CREDIT RISK

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

                  Three Months Ended            Six Months Ended
               June 30,       June 30,       June 30,       June 30,
                 2007           2006           2007           2006
              ----------     ----------     ----------     ----------
Customer 1       49%             48%            49%            44%
Customer 2       46%             46%            47%            43%
              ----------     ----------     ----------     ----------

Total            95%             94%            96%            87%
              ==========     ==========     ==========     ==========

At June 30, 2007,  the two customers  accounted for  substantially  all 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 $26,548 at June 30,  2007 and $26,006 at December  31,
2006.  The Company will continue to pursue  vigorously the collection of all its
outstanding accounts receivable.

Three suppliers  accounted for substantially all cost of revenues during the six
months  ended June 30,  2007 and 2006.  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.

                                       14

<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-Q.

OVERVIEW

Secured  Digital  Applications,  Inc.  ("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,  Asia and Australia including digital
document management,  accounts receivable and payables management,  bookkeeping,
purchasing services and also Radio Frequency  Identification (RFID) applications
including  inventory,  asset and personnel tracking.  We anticipate that we will
begin offering  those  services in late 2007 or early 2008. We generate  revenue
through our majority and 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 that are believed to have
superior  potential for growth and profitability as a member of the SDA group of
companies.  Acquisitions have been made based on management's criteria including
acquisition  costs,  growth  potential  and  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 2006, the Company determined that it was in the best
interests of the business to restructure its 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,  substantially  all of the assets and  liabilities  of our
principal  operating  subsidiary,  Secured  Digital  Applications  (M)  Sdn  Bhd
("SDAM"),  were transferred 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.

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,  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% of Ispec Sdn Bhd ("ISS") (formerly  Innospective Sdn Bhd).
DID owns 100% of Digital Kiosk  Technologies Sdn Bhd ("DKT")  (formerly  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 a third
party.

On June 27,  2007,  the Company sold its  wholly-owned  subsidiary,  DAT,  which
included its 55%-owned  subsidiary,  ISS, to a third party and recognized a gain
on disposal of $22,984.  Both DAT and ISS were  operating  at a loss and did not
meet the Company's  criteria for return on  investment.  The Company  determined
that  it was in its  best  interest  to  dispose  of DAT and  ISS to  allow  its
available  resources and  infrastructure  to be better utilized in the Company's
core  businesses  that  include BPO  services  and systems  integration  of RFID
enabled tracking applications.


                                       15
<PAGE>

SDA's  present  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 June 30, 2007 are the following companies:

-         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.

-         Digital Image ID Sdn Bhd ("DID") (f/k/a Vista Positive Sdn Bhd) DASB's
          wholly-owned subsidiary, from the date of acquisition on July 5, 2006.

-         Digital Kiosk  Technologies Sdn Bhd ("DKT") (f/k/a Century Jubilee Sdn
          Bhd), DID's wholly-owned  subsidiary,  from the date of acquisition on
          September 4, 2006.

-         DigitalApps Media Sdn Bhd ("DAM"), DASB's wholly-owed subsidiary, from
          the date of incorporation on July 7, 2006.

-         China Sea Trade Company, Inc. ("CST") (f/k/a Eystar Media, Inc.), is a
          wholly  owned  subsidiary  of SDA  Worldwide,  Inc.,  organized  under
          Delaware  law.  CST  offers  consulting  and  management  services  to
          regional  firms in Asia  seeking  to  develop  markets  in the  United
          States.  CST began  operations in early 2006 and has not generated any
          revenue to date.

-         SDA Worldwide,  Inc. ("SDAW") (f/k/a SDA America,  Inc.), an 80% owned
          subsidiary,  organized  under Delaware law. 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 a 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 2005 and has not generated any revenue to date.

In addition, as part of the reorganization,  we increased our equity interest in
PTSB  from  86% to 95%  by  purchasing  minority  interests  held  by two of our
directors, Dato' Wan Abdul Razak and Mustaffar Yacob for aggregate consideration
of approximately $154,000.

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

For the three months and six months ended June 30, 2007 and 2006,  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.

                                       16
<PAGE>

Significant Business Developments and Plan of Operation

We are in the process of introducing a business process outsourcing (BPO)
service to companies in the United States, Asia and Australia. Significant
effort has been devoted to the technical development of our outsourced business
process services, primarily in the integration of software and information
systems that we obtain through licenses with third parties. We licensed or
acquired technologies from various sources and utilized the technologies to
develop our integrated online financial accounting and Radio Frequency
Identification (RFID) tracking BPO service. Our integrated BPO service is
marketed as EyStar Station.

Eystar Station provides a single point of entry, through a graphical user
interface available on the Internet, into a customer's most significant business
operations, including custom tailored financial reports, work in progress,
inventory, accounts payable and receivable, expenses, and source documents.
Eystar Station consists of a Web-Based Financial Accounting BPO suite integrated
with RFID enabled tracking applications that include Inventory, Document and
People Tracking.

RFID is a proven technology that uses radio waves to identify individual items
at specific locations. Many enterprises are presently seeking ways to mobilize
and automate their field force operations with RFID, in areas such as asset
management, maintenance, repair, manufacturing, item tracking, delivery
scheduling, customer billing data collection, and work order management.

The purpose of an RFID system is to enable data to be transmitted by a mobile
device, called a tag, which is read by an RFID reader and processed according to
the needs of a particular application. The data transmitted by the tag may
provide identification or location information, or specifics about the product
tagged, such as price, color, date of purchase, etc.

The Company has developed a number of integrated financial accounting and RFID
tracking applications that include:

o        Financial accounting + inventory tracking
o        Financial accounting + document tracking
o        Financial accounting + people tracking
o        Financial accounting + inventory + document + people tracking

The Company intends to launch its nano chip RFID embedded paper during the
fourth quarter of 2007. This versatile security identification paper can be
tracked through the Internet.

Our BPO service will combine the technology available through the Eystar Station
with labor performed at competitive rates at our work center in Petaling Jaya,
Malaysia.

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.

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.

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 2007.

                                       17
<PAGE>

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 the Company and its
subsidiaries for the periods as indicated below.

                                            Six Months Ended June 30,
                                            --------------------------
                                                2007          2006

Revenues                                    $ 21,381,012  $ 16,002,975
Gross profit                                   1,580,650       623,640
Sales and marketing                                7,124         3,602
General and administrative                       859,545     1,070,223
Gain on disposal of assets-related parties        55,749        44,354
Income (loss) from continuing operations         654,137      (424,242)
Income from discontinued operations                5,736       400,778
Net income (loss)                                659,873       (23,464)

                                       18
<PAGE>

COMPARISON  OF THE THREE MONTHS  ENDED JUNE 30, 2007 TO THE THREE MONTHS ENDED
JUNE 30, 2006

REVENUES

Revenues  increased by  $2,962,508  or 37% to  $11,010,210  for the three months
ended June 30, 2007  ("2007") as compared  to  $8,047,702  for the three  months
ended June 30, 2006 ("2006").

The  increase in total  revenue in 2007 as compared to 2006 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 2007, two customers  accounted for 49%
and 46% of  total  revenue,  respectively.  In  2006,  the  same  two  customers
accounted for 48% and 46% of total revenue, respectively.

GROSS PROFIT

Gross profit increased to $890,023 in 2007 compared to $190,720 in 2006.

The gross profit  percentage  increased  to 8.1% in 2007 from 2.4% in 2006.  The
increase  in  gross  profit  percentage  in  2007  was  due to  higher  revenue,
particularly  consulting revenue, which has a higher margin than production work
and incurring  reduced  subcontractor  costs. The Company is striving to improve
its quality of services and efficiency  with the 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  increased  by  $1,123 or 53%,  to $3,240 in 2007
compared  to $2,117 in 2006,  primarily  as a result  of an  increase  in travel
expenses.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses relating to non-related parties decreased to
$386,419 in 2007 compared to $466,643 in 2006.

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

In 2007, general and administrative expenses consisted of the following: 19% was
for  depreciation of tangible  assets,  5% was for consulting  fees, 10% was for
employee payroll,  13% was for fees for professional and auditing  services,  4%
was for investor relation expenses, 8% was for compensation expenses and 41% was
for rent,  utilities,  general  office  supplies,  communications  and corporate
insurance  expenses.  For 2006, 13% was for depreciation of tangible assets,  9%
was for  employee  payroll,  25% was for  fees  for  professional  and  auditing
services,  1% was for  investor  relation  expenses,  38%  was for  compensation
expenses   and  14%  was  for  rent,   utilities,   general   office   supplies,
communications and corporate insurance expenses.

General and administrative expenses - related parties in 2007 and 2006 were
$36,973 and $36,563, respectively. 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 2007 and 2006, the related company, LSH Assets Holdings Sdn Bhd
("LSH"), billed the Company's Malaysian subsidiaries, DASB and SDAM,
administrative expenses of $6,973 and $6,563, respectively, for administration
and clerical fees incurred by LSH on behalf of DASB and SDAM. The Company also
incurred management fees of $30,000 each for 2007 and 2006. The management fee
was charged on the basis of time spent for the administration and management
services provided to the Company.

                                       19

<PAGE>

PREVIOUSLY DEFERRED GAIN ON SALE OF TECHNOLOGY - RELATED PARTY

In 2007 and 2006, the Company included recognition of a previously deferred gain
of $30,459 and $20,549,  respectively,  related to a similar  amount the Company
received from its long-term  receivable - related party.  Each of the receivable
balance and total  deferred  gain was $108,247 as of December  31,  2006.  These
amounts  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,  a related gain on the sale
of the assets was  deferred  and is to be  recognized  only after all costs have
been  recovered and to the extent the  receivable is collected.  During the year
ended December 31, 2002, payments received by the Company exceeded all remaining
costs.  As a result,  the  Company's  long-term  receivable - related  party and
deferred gain balances were each reduced to $54,473, as of June 30, 2007.

INCOME TAXES

Income taxes represent the provision for the Company's Malaysian
operations. There was no provision for the Company's United States operations as
such entities sustained taxable losses.

COMPARISON  OF THE SIX MONTHS  ENDED JUNE 30, 2007 TO THE SIX MONTHS  ENDED JUNE
30, 2006

REVENUES

Revenues  increased by $5,378,037 or 34% to $11,010,210 for the six months ended
June 30, 2007 ("2007") as compared to  $8,047,702  for the six months ended June
30, 2006 ("2006").

The  increase in total  revenue in 2007 as compared to 2006 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 2007, two customers  accounted for 49%
and 47% of  total  revenue,  respectively.  In  2006,  the  same  two  customers
accounted for 44% and 43% of total revenue, respectively.

GROSS PROFIT

Gross  profit  increased  to  $1,580,650  for the six months ended June 30, 2007
compared to $623,640  during the  comparable  period in 2006.  The gross  profit
percentage  increased to 7.4% in 2007 from 3.9% in 2006.  The increase in gross
profit  percentage in 2007 was due to higher  revenue,  particularly  consulting
revenue,  which has a higher margin than production  work and incurring  reduced
subcontractor  costs. The Company is striving to improve its quality of services
and efficiency with the 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  increased by $3,522 or 98%, to $7,124 for the six
months ended June 30, 2007 compared to $3,602 in the comparable  period of 2006,
primarily as a result of an increase in travel expenses.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses relating to non-related parties decreased to
$785,737 in 2007 compared to $997,241 in 2006. These expenses by division are as
follows:

The decrease was primarily attributable to a  decrease in compensation expenses,
maintenance  expenses,  legal  and  professional  fees.  In  2007,  general  and
administrative expenses consisted of the following:  18% was for depreciation of
tangible assets, 10% was for consulting fees, 13% was for employee payroll,  13%
was for  fees  for  professional  and  auditing  services,  2% was for  investor
relation  expenses,  20% was for  compensation  expenses  and 24% was for  rent,
utilities,  general  office  supplies,  communications  and corporate  insurance
expenses.  For 2006, 12% was for  depreciation  of tangible  assets,  8% was for
employee payroll,  24% was for fees for professional and auditing  services,  1%
was for investor relation  expenses,  44% was for compensation  expenses and 11%
was for rent, utilities,  general office supplies,  communications and corporate
insurance expenses.

General and  administrative  expenses - related parties for the six months ended
June 30, 2007 and 2006 were $73,808 and $72,982,  respectively.  These  expenses
included  management fees and administrative  expenses payable by the Company to
LSH. In 2007, LSH billed the Company's  Malaysian  subsidiaries,  DASB and SDAM,
administrative  expenses of $13,808 and $12,982 for  administration and clerical
fees  incurred  by LSH on behalf of DASB and SDAM.  The  Company  also  incurred
management  fees of  $60,000  each for 2007 and  2006.  The  management  fee was
charged  on the  basis  of time  spent  for the  administration  and  management
services provided to the Company.

                                       20
<PAGE>

PREVIOUSLY DEFERRED GAIN ON SALE OF TECHNOLOGY - RELATED PARTY

The gain represents the recognition of a previously deferred gain of $55,749 and
$44,354, respectively, related to a similar amount the Company received from its
long-term  receivable - related party. Each of the receivable  balance and total
deferred  gain was $108,247,  as of December 31, 2006.  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 payments received, the
Company's  long-term  receivable - related party and deferred gain balances were
each reduced to $54,473, as of June 30, 2007.

INCOME TAXES

Income taxes  represent the provision  for the  Company's  Malaysian  opertions.
There was no  provision  for the  Company's  United  States  operations  as such
entities sustained taxable losses.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2007, the Company had net cash of $16,591.

In 2007,  operations were funded  primarily from internally  generated funds and
working  capital  advanced  from  time  to time  by the  principal  shareholder,
director and officer of the Company. These advances bear no interest and have no
fixed terms of repayment.

As of June 30, 2007,  the Company owed  Patrick  Lim,  the  Company's  principal
shareholder,  Chief Executive Officer and Chairman $15,312.  Additionally, as of
June 30,  2007,  the Company owed an  affiliated  company in which Mr. Lim has a
financial interest, $88,244 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  provided by operating  activities of $43,135 in 2007 was primarily the
result of income and non-cash expenses.

Net cash used in investing activities totaled $6,274 and was for the purchase of
equipment.

Net cash  provided by financing  activities  totaled  $74,665 and was due to the
borrowings  from an affiliated  company  totaling  $70,098 and advances from the
Company's principal shareholder of $4,567.

For 2007,  the  Company  will be  expanding  into new  businesses  that  include
provision of outsourced  business services,  RFID enabled tracking solutions and
supply chain management services.  The Company expects to incur further expenses
to acquire technologies that are synergistic to the new businesses and will help
the Company to rollout the new  businesses  in the shortest time  possible.  The
Company  estimates  that it will require $3.5 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  set-up  cost  and  working  capital  of its new
businesses.

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

                                       21
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Foreign Currency Exchange Rates

The  Company  has  intercompany  debt  denominated  in US  dollars,  whereas the
functional  currency of the Company's  subsidiaries  is the  Malaysian  Ringgit,
which results in the Company  recording  other  income/loss  associated  with US
dollars as a function of relative changes in foreign exchange rates. The Company
is unable to predict  whether it will  experience  future gains or future losses
from such  exchange-related  risks on the receivables and payables.  The Company
does not have a program  in place to manage  the  volatility  relating  to these
exposures.

Revenue

Substantially  all of the  Company's  revenue  is earned  outside  of the United
States.

ITEM 4. 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 June 30, 2007 that has materially  affected,  or is reasonably
likely to materially affect, our internal control over financial reporting.

                                       22

<PAGE>

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the ordinary  course of our business we are  periodically  threatened with or
named as a defendant in legal proceedings. As of the end of the period for which
this report is filed,  there are no pending legal  proceedings to which we are a
party or to which  our  property  is  subject  that  management  believes  to be
material to our business, results of operations or financial condition.

ITEM 1A. RISK FACTORS

The Company's business,  financial  condition,  operating results and cash flows
can be  impacted  by a number  of  factors,  any one of which  could  cause  the
Company's  actual  results to vary  materially  from recent  results or from the
Company's anticipated future results. For a discussion  identifying risk factors
and important  factors that could cause actual results to differ materially from
those  anticipated,  see  the  discussion  in  Part  II,  Item  6  "Management's
Discussion  and Analysis" in the Company's  Annual Report on Form 10-KSB for the
year ended December 31, 2006.

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

                                       23

<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: AUGUST 14, 2007                       BY: /s/ Patrick Soon-Hock Lim
                                            ------------------------------
                                            Patrick Soon-Hock Lim
                                            Chairman & Chief Executive Officer



DATE: AUGUST 14, 2007                       BY: /s/ Voon Fui Yong
                                            ------------------------------
                                            Voon Fui Yong
                                            Chief Accounting Officer



                                       24