UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q/A


Amendment
No. 2





(Mark
one)





x
              QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the quarterly period ended September 30,
  2008





or





 ̈
              TRANSITION REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE ACT OF
      1934For
      the transition period from _____________ to
  ___________














Commission
File Number:  0-25658





SECURED
DIGITAL APPLICATIONS, INC.


(Exact
name of registrant as specified in its charter)





DELAWARE
                84-1357927(State
      or other jurisdiction of
                (I.R.S.
      Employerincorporation
      or organization)
                Identification
      No.)





230
PARK AVENUE, 10TH FLOOR,
NEW YORK, NY 10169


(Address
of principal executive offices) (Zip Code)





(212)
551 1747


(Registrant’s
telephone number, including area code)








Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.


x
Yes                   ̈
No





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.  (Check one):





Large
      accelerated filer  ̈
              Accelerated
      filer                          
        ̈Non-accelerated
      filer   ̈
      (Do not check if a smaller reporting company)
              Smaller
      reporting
      company          x




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


 ̈
Yes                      x
No





The
number of shares outstanding of the registrant’s common stock as of January 5,
2009: 139,470,932 shares of common stock, par value $0.00001 per
share.







1


FORM
10-Q/A


3rd
QUARTER





INDEX




PagePART
      I  - FINANCIAL INFORMATIONITEM
      1. FINANCIAL STATEMENTS (Unaudited)Condensed consolidated balance sheets at September 30, 2008
      (Unaudited) and December 31, 2007 (Audited)
                                                              3Condensed consolidated statements of income and comprehensive
      income for the three and nine months ended September 30, 2008 and 2007
      (Unaudited)
                                                              5Condensed consolidated statements of cash flows for the nine
      months periods ended September 30, 2008 and 2007
      (Unaudited)
                                                              7Notes to condensed consolidated financial statements
      (Unaudited)
                                                              8ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS
                                                              13ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK
                                                              19ITEM 4(T). CONTROLS AND PROCEDURES
                                                              19PART
      II - OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS
                                                              20ITEM 1A.  RISK FACTORS
                                                              20ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS
                                                              20ITEM 3. DEFAULTS UPON SENIOR SECURITIES
                                                              20ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS
                                                              20ITEM 5. OTHER INFORMATION
                                                              21ITEM 6. EXHIBITS
                                                              21SIGNATURES
                                                              22


2
 Index




EXPLANATORY
STATEMENT





The
Company is amending its Form 10-Q for the period ended September 30, 2008
previously filed with the Securities and Exchange Commission on November 19,
2008 and subsequently amended on Form 10-Q/A  (Amendment No. 1) on
November 19, 2008 to include in this 10-Q/A (Amendment No. 2) the Company's
unaudited financial statements for the period ended September 30, 2008 as
reviewed by the Company's independent registered public accounting
firm.  The financial statements included in the Form 10-Q and 10-Q/A
(Amendment No. 1) were not reviewed by the Company's independent registered
public accounting firm.  There are no material changes to the
information contained in the previously filed Form 10-Q or Form 10-Q/A
(Amendment No. 1), including the financial statements included therein, with
respect to the period ended September 30, 2008.  The Company directs
the reader's attention to the additional information included in Note 8
(Subsequent Events) to the financial statements contained herein (which
information is also included in Item 5, Other Information) with respect to
events occurring after September 30, 2008.








PART I -
FINANCIAL INFORMATION





ITEM
1.  FINANCIAL STATEMENTS








SECURED
DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS


SEPTEMBER
30, 2008 AND DECEMBER 31, 2007





September 30,
                          2008
                        
                        
                        December 31,
                          2007(Unaudited)
                        
                        
                        (Note
      1)ASSETSCurrent
      assets:Cash
                        
                        $
                        17,821
                        
                        
                        $
                        40,385Trade
      and other accounts receivable less
      allowance for doubtful accounts of $26,592 (unaudited) and $27,699,
      respectively
                        
                        
                        10,917,326
                        
                        
                        
                        8,902,465Prepaid
      expenses
                        
                        
                        18,469
                        
                        
                        
                        18,539Total
      current assets
                        
                        
                        10,953,616
                        
                        
                        
                        8,961,389Property
      and equipment, net
                        
                        
                        3,553,940
                        
                        
                        
                        3,718,150Trademark
                        
                        
                        14,479
                        
                        
                        
                        --Goodwill
                        
                        
                        471,260
                        
                        
                        
                        471,260Total
      assets
                        
                        $
                        14,993,295
                        
                        
                        $
                        13,150,799LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Current
      portion of capital lease obligations
                        
                        $
                        34,209
                        
                        
                        $
                        35,634Accounts
      payable
                        
                        
                        658,584
                        
                        
                        
                        531,133Accrued
      expenses
                        
                        
                        137,889
                        
                        
                        
                        209,877Amount
      due to an affiliated company
                        
                        
                        104,867
                        
                        
                        
                        23,668Amount
      due to a director
                        
                        26,464
                        
                        
                        
                        88,632Income
      tax payable
                        
                        
                        174,601
                        
                        
                        
                        47,151Total
      current liabilities
                        
                        
                        1,136,614
                        
                        
                        
                        936,095Deferred
      tax
                        
                        
                        767,404
                        
                        
                        
                        461,525Total
      liabilities
                        
                        
                        1,904,018
                        
                        
                        
                        1,397,620








(continued)


3
 Index


SECURED
DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS (CONTINUED)


SEPTEMBER
30, 2008 AND DECEMBER 31, 2007





September 30,
                  2008
                
                
                December 31,
                  2007(Unaudited)
                
                
                (Note
      1)Minority
      interest
                
                
                429,213
                
                
                
                218,016Commitments
                
                
                --
                
                
                
                --Stockholders’
      equity:Series
      B convertible preferred stock, $0.10 par value; 1,000,000 shares
      authorized; 100,000 shares issued and outstanding, liquidation preference
      $2,500,000
                
                
                10,000
                
                
                
                10,000Common
      stock, $0.00001 par value: 350,000,000 shares authorized; 145,352,094
      shares issued and  142,726,314 shares outstanding in 2008 and
      143,172,594 shares issued and 137,796,814 shares outstanding in
      2007
                
                
                1,437
                
                
                
                1,375Additional
      paid-in capital
                
                
                9,215,069
                
                
                
                8,692,448Common
      treasury stock - at cost, 2,625,780 shares in 2008 and 5,375,780 shares in
      2007
                
                
                --
                
                
                
                --Deferred
      compensation
                
                
                (164,250
                )
                
                
                --Retained
      earnings
                
                
                3,464,925
                
                
                
                2,280,005Accumulated
      other comprehensive income
                
                
                132,883
                
                
                
                551,335Total
      stockholders’ equity
                
                
                12,660,064
                
                
                
                11,535,163Total
      liabilities and stockholders’ equity
                
                $
                14,993,295
                
                
                $
                13,150,799








See notes
to condensed consolidated financial statements


4
 Index


SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF INCOME


AND
COMPREHENSIVE INCOME


FOR THE
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007


(Unaudited)





Three
      months ended
                      September
      30,
                    
                    
                    Nine
      months ended
                      September
      30,2008
                    
                    
                    2007
                    
                    
                    2008
                    
                    
                    2007Revenues:Services:Related
      Parties
                    
                    $
                    596,735
                    
                    
                    $
                    739,314
                    
                    
                    $
                    2,209,988
                    
                    
                    $
                    1,599,424Others
                    
                    
                    16,034,817
                    
                    
                    
                    11,078,756
                    
                    
                    
                    43,640,687
                    
                    
                    
                    31,599,65816,631,552
                    
                    
                    
                    11,818,070
                    
                    
                    
                    45,850,675
                    
                    
                    
                    33,199,082Cost
      of revenues:Services:Related
      Parties
                    
                    
                    179,020
                    
                    
                    
                    221,794
                    
                    
                    
                    662,997
                    
                    
                    
                    479,827Others  (includes
      a related party of $6,498,468, $4,764,505, $18,350,490 and $13,243,498,
      respectively.)
                    
                    
                    15,195,420
                    
                    
                    
                    10,550,968
                    
                    
                    
                    41,486,177
                    
                    
                    
                    30,093,29715,374,440
                    
                    
                    
                    10,772,762
                    
                    
                    
                    42,149,174
                    
                    
                    
                    30,573,124Gross
      profit
                    
                    
                    1,257,112
                    
                    
                    
                    1,045,308
                    
                    
                    
                    3,701,501
                    
                    
                    
                    2,625,958Operating
      expenses:Sales
      and marketing
                    
                    
                    16,708
                    
                    
                    
                    22,131
                    
                    
                    
                    43,456
                    
                    
                    
                    29,255General
      and administrative:Related
      parties
                    
                    
                    37,167
                    
                    
                    
                    36,911
                    
                    
                    
                    112,059
                    
                    
                    
                    110,719Others
                    
                    
                    684,150
                    
                    
                    
                    519,583
                    
                    
                    
                    1,690,248
                    
                    
                    
                    1,305,320Total
      operating expenses
                    
                    
                    738,025
                    
                    
                    
                    578,625
                    
                    
                    
                    1,845,763
                    
                    
                    
                    1,445,294Income
      from operations
                    
                    
                    519,087
                    
                    
                    
                    466,683
                    
                    
                    
                    1,855,738
                    
                    
                    
                    1,180,664Other
      income (expense):Gain
      (loss) on foreign currency transactions
                    
                    
                    (304,732
                    )
                    
                    
                    58,854
                    
                    
                    
                    (140,269
                    )
                    
                    
                    168,672Purchase
      preacquisition income
                    
                    
                    174
                    
                    
                    
                    --
                    
                    
                    
                    (13,754
                    )
                    
                    
                    --Write-off
      of old vendor payables
                    
                    
                    --
                    
                    
                    
                    35,512
                    
                    
                    
                    --
                    
                    
                    
                    35,512Previously
      deferred gain on sale of technology,related
      parties
                    
                    
                    --
                    
                    
                    
                    28,798
                    
                    
                    
                    --
                    
                    
                    
                    84,547Other
      income
                    
                    
                    1,464
                    
                    
                    
                    2
                    
                    
                    
                    4,842
                    
                    
                    
                    5,180(303,094
                    )
                    
                    
                    123,166
                    
                    
                    
                    (149,181
                    )
                    
                    
                    293,911Income
      before provision for income taxes and minority interest
                    
                    
                    215,993
                    
                    
                    
                    589,849
                    
                    
                    
                    1,706,557
                    
                    
                    
                    1,474,575Provision
      for income taxes
                    
                    
                    (158,155
                    )
                    
                    
                    (179,938
                    )
                    
                    
                    (479,401
                    )
                    
                    
                    (396,835
                    )Income
      before minority interest
                    
                    
                    57,838
                    
                    
                    
                    409,911
                    
                    
                    
                    1,227,156
                    
                    
                    
                    1,077,740Minority
      interest
                    
                    
                    (10,605
                    )
                    
                    
                    (11,034
                    )
                    
                    
                    (42,235
                    )
                    
                    
                    (24,726
                    )Income
      from continuing operations
                    
                    
                    47,233
                    
                    
                    
                    398,877
                    
                    
                    
                    1,184,921
                    
                    
                    
                    1,053,014


5
 Index




SECURED
DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF INCOME


AND
COMPREHENSIVE INCOME (CONTINUED)


FOR THE
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007


(Unaudited)





Three
      months ended
                          September
      30,
                        
                        
                        Nine
      months ended
                          September
      30,2008
                        
                        
                        2007
                        
                        
                        2008
                        
                        
                        2007Discontinued
      operations:Loss
      from discontinued operation – net of minority interest and income
      taxes
                        
                        
                        --
                        
                        
                        
                        (2
                        )
                        
                        
                        --
                        
                        
                        
                        (17,250
                        )Gain
      on disposal of discontinued subsidiaries
                        
                        
                        --
                        
                        
                        
                        15
                        
                        
                        
                        --
                        
                        
                        
                        22,999Income
      from discontinued operations
                        
                        
                        --
                        
                        
                        
                        13
                        
                        
                        
                        --
                        
                        
                        
                        5,749Net
      income
                        
                        $
                        47,233
                        
                        
                        $
                        398,890
                        
                        
                        $
                        1,184,921
                        
                        
                        $
                        1,058,763Net
      income
                        
                        $
                        47,233
                        
                        
                        $
                        398,890
                        
                        
                        $
                        1,184,921
                        
                        
                        $
                        1,058,763Other
      comprehensive income:Foreign
      currency translation adjustments
                        
                        
                        (403,945
                        )
                        
                        
                        93,118
                        
                        
                        
                        (418,452
                        )
                        
                        
                        150,904Comprehensive
      income / (loss)
                        
                        $
                        (356,712
                        )
                        
                        $
                        492,008
                        
                        
                        $
                        766,469
                        
                        
                        $
                        1,209,667Net
      income per common share:Basic
      **
                        
                        $
                        *
                        
                        
                        $
                        *
                        
                        
                        $
                        0.01
                        
                        
                        $
                        *Diluted
      **
                        
                        $
                        *
                        
                        
                        $
                        *
                        
                        
                        $
                        0.01
                        
                        
                        $
                        *Weighted
      average shares outstanding:Basic
                        
                        
                        142,690,988
                        
                        
                        
                        133,817,031
                        
                        
                        
                        141,006,467
                        
                        
                        
                        131,303,755Diluted
                        
                        
                        164,932,760
                        
                        
                        
                        156,624,406
                        
                        
                        
                        164,581,966
                        
                        
                        
                        156,711,538








*  Less
than $0.01 per share.





**Net
income per common share for discontinued operations is less than $0.01 per share
and not presented separately.


6
 Index


SECURED
DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007


(Unaudited)





Nine
      months endedSeptember 30, 2008
                                          
                                          
                                          September 30, 2007CASH
      FLOWS FROM OPERATING ACTIVITIESChange
      in operating assets and liabilities of continuing
    operations
                                          
                                          $
                                          472,173
                                          
                                          
                                          $
                                          9,632Change
      in operating assets and liabilities of discontinued
    operations
                                          
                                          
                                          --
                                          
                                          
                                          
                                          (687
                                          )Net
      cash provided by operating activities
                                          
                                          
                                          472,173
                                          
                                          
                                          
                                          8,945CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of property and equipment
                                          
                                          
                                          (683,876
                                          )
                                          
                                          
                                          (6,543
                                          )Purchase
      of trademark
                                          
                                          
                                          (14,479
                                          )
                                          
                                          
                                          --Net
      cash used in investing activities
                                          
                                          
                                          (698,355
                                          )
                                          
                                          
                                          (6,543
                                          )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from issuances of shares of common stock
                                          
                                          
                                          109,000
                                          
                                          
                                          
                                          --Proceeds
      from advances from affiliated company
                                          
                                          
                                          82,050
                                          
                                          
                                          
                                          103,590Proceeds
      from advances from a director
                                          
                                          
                                          --
                                          
                                          
                                          
                                          67,053Repayments
      of loans from a director
                                          
                                          
                                          (59,034
                                          )
                                          
                                          
                                          --Net
      cash provided by financing activities
                                          
                                          
                                          132,016
                                          
                                          
                                          
                                          170,643FOREIGN
      CURRENCY TRANSLATION ADJUSTMENT-
      continuing activities
                                          
                                          
                                          71,602
                                          
                                          
                                          
                                          (127,603
                                          )-
      discontinued activities
                                          
                                          
                                          --
                                          
                                          
                                          
                                          1,162Net
      (decrease) increase in cash
                                          
                                          
                                          (22,564
                                          )
                                          
                                          
                                          46,604Cash,
      beginning of period
                                          
                                          
                                          40,385
                                          
                                          
                                          
                                          7,644Cash,
      end of period
                                          
                                          $
                                          17,821
                                          
                                          
                                          $
                                          54,248








See notes
to condensed consolidated financial statements


7
 Index




SECURED DIGITAL APPLICATIONS, INC.


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
30, 2008


(UNAUDITED)








NOTE
1:   BASIS OF PRESENTATION





The
accompanying condensed balance sheet as of December 31, 2007 has been derived
from audited financial statements and 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 10-01 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 nine months ended September 30, 2008, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2008.  These unaudited consolidated financial statements
should be read in conjunction with the audited consolidated financial statements
and footnotes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2007, as filed with the United States Securities and
Exchange Commission (the “SEC”).





There is
no provision for dividends for the quarter to which this quarterly report
relates.








NOTE
2:  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS





In
December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
160, Non-controlling Interests in Consolidated Financial Statements - an
amendment of ARB No. 51 (“SFAS 160”). SFAS 160 requires companies with
non-controlling interests to disclose such interests clearly as a portion of
equity but separate from the parent's equity. The non-controlling interest's
portion of net income must also be clearly presented on the income statement.
SFAS 160 is effective for financial statements issued for fiscals years
beginning after December 15, 2008 and will be adopted by the Company in the
first quarter of fiscal year 2009. The Company does not expect that the adoption
of SFAS 160 will have a material impact on our financial condition or results of
operation.





In
December 2007, the FASB issued SFAS No. 141(R), Business Combinations (revised
2007) (“SFAS 141(R)”). SFAS 141(R) applies the acquisition method of accounting
for business combinations established in SFAS 141 to all acquisitions where the
acquirer gains a controlling interest, regardless of whether consideration was
exchanged. SFAS No. 141(R) requires an acquirer to recognize the assets
acquired, the liabilities assumed, and any non-controlling interest in the
acquiree at the acquisition date, measured at their fair values as of that
date.  SFAS 141(R) is effective for financial statements issued for
fiscal years beginning after December 15, 2008 and will be adopted by the
Company in the first quarter of fiscal year 2009. The Company does not expect
that the adoption of SFAS 141(R) will have a material impact on our financial
condition or results of operation.





In March
2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities, - an amendment of FASB Statement
No. 133 (“FAS 161”).  FAS 161 requires enhanced disclosures about
an entity’s derivative and hedging activities and thereby improves the
transparency of financial reporting. The objective of the guidance is to provide
users of financial statements with an enhanced understanding of how and why an
entity uses derivative instruments; how derivative instruments and related
hedged items are accounted for; and how derivative instruments and related
hedged items affect an entity’s financial position, financial performance, and
cash flows. FAS 161 is effective for fiscal years beginning after
November 15, 2008. Management is currently evaluating the impact FAS 161
will have on the Company’s consolidated financial statements, but it currently
does not expect the effect to be material.





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles (“SFAS No. 162”).  SFAS No. 162 identifies the
sources of accounting principles and provides entities with a framework for
selecting the principles used in the preparation of financial statements that
are presented in conformity with GAAP.  The FASB believes the GAAP
hierarchy should be directed to entities because it is the entity (not its
auditors) that is responsible for selecting accounting principles for financial
statements that are presented in conformity with GAAP.  The adoption
of SFAS No. 162 is not expected to have a material impact on the Company’s
financial statements.





Also in
May 2008, the FASB issued SFAS No. 163, "Accounting for Financial Guarantee
Insurance Contracts--an interpretation of FASB Statement No. 60" ("SFAS No.
163"). SFAS No. 163 interprets Statement 60 and amends existing accounting
pronouncements to clarify their application to the financial guarantee insurance
contracts included within the scope of that Statement. SFAS No. 163 is effective
for financial statements issued for fiscal years beginning after December 15,
2008, and all interim periods within those fiscal years. As such, the Company is
required to adopt these provisions at the beginning of the fiscal year ended
December 31, 2009. The Company is currently evaluating the impact of SFAS No.
163 on its financial statements but does not expect it to have an effect on the
Company's financial position, results of operations or cash
flows.


8
 Index


In May
2008, the FASB issued FSP APB 14-1, "Accounting for Convertible Debt Instruments
that may be Settled in Cash upon Conversion (Including Partial Cash Settlement)"
("FSP APB 14-1"). FSP APB 14-1 applies to convertible debt securities that,
upon conversion, may be settled by the issuer fully or partially in cash. FSP
APB 14-1 specifies that issuers of such instruments should separately account
for the liability and equity components in a manner that will reflect the
entity's nonconvertible debt borrowing rate when interest cost is recognized in
subsequent periods. FSP APB 14-1 is effective for financial statements issued
for fiscal years after December 15, 2008, and must be applied on a retrospective
basis. Early adoption is not permitted. The adoption of this statement is not
expected to have a material effect on the Company's future financial position or
results of operations.





In June
2008, the FASB issued FASB Staff Position ("FSP") EITF 03-6-1, "Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities" ("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses whether
instruments granted in share-based payment transactions are participating
securities prior to vesting, and therefore need to be included in the earnings
allocation in computing earnings per share under the two-class method as
described in SFAS No. 128, Earnings per Share. Under the guidance of FSP EITF
03-6-1, unvested share-based payment awards that contain nonforfeitable rights
to dividends or dividend equivalents (whether paid or unpaid) are participating
securities and shall be included in the computation of earnings-per-share
pursuant to the two-class method. FSP EITF 03-6-1 is effective for financial
statements issued for fiscal years beginning after December 15, 2008 and all
prior-period earnings per share data presented shall be adjusted
retrospectively. Early application is not permitted. The Company is assessing
the potential impact of this FSP on the earnings per share
calculation.





In June
2008, the FASB ratified EITF No. 07-5, "Determining Whether an Instrument (or an
Embedded Feature) is Indexed to an Entity's Own Stock" ("EITF 07-5"). EITF 07-5
provides that an entity should use a two-step approach to evaluate whether an
equity-linked financial instrument (or embedded feature) is indexed to its own
stock, including evaluating the instrument's contingent exercise and settlement
provisions. EITF 07-5 is effective for financial statements issued for fiscal
years beginning after December 15, 2008. Early application is not permitted. The
Company is assessing the potential impact of this EITF 07-5 on the financial
condition and results of operations.








NOTE 3:NET INCOME PER COMMON
SHARE





The
Company computes earnings per share in accordance with the provisions of
SFAS No. 128, Earnings per Share (“SFAS
128”). Under the provisions of SFAS 128, basic net income per share is computed
by dividing net income by the weighted average number of common shares
outstanding during the period presented.  Diluted net income per share
reflects the potential dilution that could occur from common stock issuable
through stock based compensation including stock options, restricted stock
awards, warrants and other convertible securities. The calculation of basic and
diluted earnings per share is as follows (in thousands, except per-share
amounts):




Three
      Months Ended
                                          
                                          
                                          Nine
      Months Ended(Unaudited)
                                          
                                          September
      30,
                                          
                                          
                                          September
      30,
                                          
                                          
                                          September
      30,
                                          
                                          
                                          September
      30,2008
                                          
                                          
                                          2007
                                          
                                          
                                          2008
                                          
                                          
                                          2007Net
      income
                                          
                                          $
                                          47
                                          
                                          
                                          $
                                          399
                                          
                                          
                                          $
                                          1,185
                                          
                                          
                                          $
                                          1,059Weighted
      average shares outstanding - basic
                                          
                                          
                                          142,691
                                          
                                          
                                          
                                          133,817
                                          
                                          
                                          
                                          141,006
                                          
                                          
                                          
                                          131,304Net
      income per share – basic
                                          
                                          $
                                          *
                                          
                                          
                                          $
                                          *
                                          
                                          
                                          $
                                          0.01
                                          
                                          
                                          $
                                          *Weighted
      average shares outstanding - basic
                                          
                                          
                                          142,691
                                          
                                          
                                          
                                          133,817
                                          
                                          
                                          
                                          141,006
                                          
                                          
                                          
                                          131,304Common
      stock issuable to consultant
                                          
                                          
                                          1,236
                                          
                                          
                                          
                                          1,252
                                          
                                          
                                          
                                          1,523
                                          
                                          
                                          
                                          4,637Convertible
      preferred stock
                                          
                                          
                                          20,000
                                          
                                          
                                          
                                          20,000
                                          
                                          
                                          
                                          20,000
                                          
                                          
                                          
                                          20,000Dilutive
      stock options and warrants
                                          
                                          
                                          1,006
                                          
                                          
                                          
                                          1,555
                                          
                                          
                                          
                                          2,053
                                          
                                          
                                          
                                          770Weighted
      average shares outstanding – diluted
                                          
                                          
                                          164,933
                                          
                                          
                                          
                                          156,624
                                          
                                          
                                          
                                          164,582
                                          
                                          
                                          
                                          156,711Net
      income per share – diluted
                                          
                                          $
                                          *
                                          
                                          
                                          $
                                          *
                                          
                                          
                                          $
                                          0.01
                                          
                                          
                                          $
                                          *





*  Less
than $.01 per share


** Net
income per common share for discontinued operations is less than $0.01 per share
and not presented separately.


9
 Index


There are
outstanding options to purchase 460,000 shares of the Company’s common stock at
each of the three and nine months ended September 30, 2008 and outstanding
options to purchase 3,080,000 shares of the Company’s common stock at each of
the three and nine months ended September 30, 2007 that 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 and nine months ended
September 30, 2008 and 2007, warrants to purchase 4,600,000 shares of common
stock were excluded in the calculation of earnings per share as their issuance
prices were in excess of the average market price for the period.





NOTE
4: DISPOSAL OF SUBSIDIARIES





On June
27, 2007, the Company sold its wholly owned subsidiary, DigitalApps Technologies
Sdn Bhd (“DAT”), which included DAT’s 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.





Results
of discontinued operations are as follows for the periods
indicated:





Three
      Months Ended
                
                
                Nine
      Months EndedSeptember
      30,
                
                
                September
      30,
                
                
                September
      30,
                
                
                September
      30,2008
                
                
                2007
                
                
                2008
                
                
                2007Revenue
                
                $
                --
                
                
                $
                --
                
                
                $
                --
                
                
                $
                --Cost
      of revenues
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                --Gross
      profit
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                --Operating
      expenses
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                (17,250
                )Loss
      from operations
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                (17,250
                )Other
      income
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                --Loss
      before tax
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                (17,250
                )Income
      tax
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                --Loss
      from discontinued operations
                
                $
                --
                
                
                $
                --
                
                
                $
                --
                
                
                $
                (17,250
                )








NOTE
5: RELATED PARTY TRANSACTIONS








LSH ASSET HOLDINGS SDN BHD
("LSH"):





LSH, a
company owned by Patrick Lim, the Company’s Chief Executive Officer, and his
wife, billed the Company management fees totaling $30,000 for each of the three
months ended September 30, 2008 and 2007 and $90,000 for each of the nine months
ended September 30, 2008 and 2007. LSH also billed the Company’s Malaysian
principal operating subsidiary, DigitalApps Sdn Bhd ("DASB"), $ 7,167 and $6,911
for the three months ended September 30, 2008 and 2007, respectively, and
$22,059 and $20,719 for the nine months ended September 30, 2008 and 2007,
respectively, for administrative and clerical charges. LSH also made short term
advances to the Company from time to time for working capital purposes during
the three months ended September 30, 2008. At September 30, 2008 and December
31, 2007, the amount due to LSH was $104,867 and $23,668, 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."





CHIEF
EXECUTIVE OFFICER





As of
September 30, 2008 and December 31, 2007, the Company owed Patrick Lim, the
Company’s Chief Executive Officer, $26,464 and $88,632, respectively, for
short-term cash advances made to the Company from time to time for working
capital purposes. 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."


10
 Index


MY ARCHITECT
("MYA")





Mustaffar
bin Yacob, a minority stockholder of one of the Company's Malaysian
subsidiaries, Perwimas Telecommunications Sdn Bhd (“PTSB”), is a principal
partner of MYA. The Company received payment from consulting contracts that it
entered into with MYA amounting to $596,735 and $2,209,988, for the three and
nine months ended September 30, 2008, respectively, and $739,314 and $1,599,424
for the three and nine months ended September 30, 2007, respectively. The terms
of repayment for the amount due from MYA are similar to terms accorded to the
Company's other existing customers. At September 30, 2008 and December 31, 2007,
there was no balance owed to the Company by MYA.




ULTIMATE
SERIES SDN BHD ("USSB")





USSB is
wholly owned by Mustaffar bin Yacob. The Company incurred fees of $6,498,468 and
$18,350,490 for the three and nine months ended September 30, 2008,
respectively, and $4,764,505 and $13,243,498 for the three and nine months ended
September 30, 2007, respectively, for sub-contractor work that it entered into
with USSB. The terms of repayment for the amounts due to USSB by the Company are
similar to terms accorded to the Company's other existing suppliers. At
September 30, 2008 and December 31, 2007, there was no balance owed to
USSB.








NOTE
6: STOCKHOLDERS' EQUITY





COMMON
STOCK





The
Company issued from its treasury stock 250,000 shares of common stock on each of
October 17, 2007, February 20, 2008, April 18, 2008 and July 14, 2008 to a
consultant pursuant to a compensation agreement dated August 20, 2007, 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 to the Company for the
12-month period ended July 14, 2008. The Company recognized compensation expense
of $17,767 and $71,375 for the three and nine months ended September 30, 2008
related to this compensation agreement.





On March
5, 2008, the Company issued 1,679,500 shares of common stock to Patrick Lim, the
Company's Chief Executive Officer, upon the exercise of warrants. The Company
received proceeds totaling $109,000 from Mr. Lim’s warrant
exercise.





On April
17, 2008, the Company issued 500,000 shares of common stock to Mr. Lim for
achieving a compounded growth in group revenues of at least 15% percent pursuant
to a Stock Award Agreement dated October 21, 2006. The total consideration
amount of $86,500 is based on the market value of $0.173 per share on the date
of grant.





On April
21, 2008, the Company issued from its treasury stock 2,000,000 shares of common
stock to a consultant pursuant to a compensation agreement dated April 18, 2008,
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 12-month
period ending April 17, 2009. The total consideration amount of $300,000 is
based on the market value of $0.15 per share on the date of issuance. The
Company recognized compensation expense of $75,000 for the three months ended
September 30, 2008 related to this compensation agreement.





The
Company signed a compensation agreement with a consultant on July 9, 2008 under
which the Company agreed to issue an aggregate of 1,000,000 shares of its common
stock to the consultant for services to be rendered for the 12-month period
ending July 14, 2009.  On October 17, 2008, the Company issued 250,000
shares of common stock to the consultant pursuant to this agreement for
aggregate consideration in the form of services to be rendered by the consultant
equal to $10,500.


11
 Index


NOTE
7: SIGNIFICANT CONCENTRATIONS





Two major
customers accounted for the following revenue for the three and nine months
ended September 30, 2008 and 2007:





Three
      Months Ended
                    
                    
                    Nine
      Months EndedSeptember
      30,
                    
                    
                    September
      30,
                    
                    
                    September
      30,
                    
                    
                    September
      30,2008
                    
                    
                    2007
                    
                    
                    2008
                    
                    
                    2007Customer
      1
                    
                    
                    48%
                    
                    
                    
                    48%
                    
                    
                    
                    49%
                    
                    
                    
                    48%Customer
      2
                    
                    
                    40%
                    
                    
                    
                    45%
                    
                    
                    
                    43%
                    
                    
                    
                    47%Total
                    
                    
                    88%
                    
                    
                    
                    93%
                    
                    
                    
                    92%
                    
                    
                    
                    95%





At
September 30, 2008 and 2007, the two major customers accounted for substantially
all trade accounts receivable.





Three
suppliers (including USSB – see Note 5) accounted for substantially all cost of
revenues during the nine months ended September 30, 2008 and 2007. 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 could
utilize alternative suppliers for the services that it requires.








NOTE
8: SUBSEQUENT EVENTS





The
Company signed a compensation agreement with a consultant on October 9, 2008
under which the Company agreed to issue 1,000,000 shares of its common stock to
a consultant for services to be rendered for the six-month period ending April
8, 2009.  On October 9, 2008, the Company issued 1,000,000 shares of
common stock to the consultant pursuant to this agreement for aggregate
consideration in the form of services to be rendered by the consultant equal to
$38,000.





On
November 7, 2008, the Board of Directors of the Company approved and the Company
entered into a share exchange agreement with the Company’s Chief Executive
Officer and Chairman Patrick Lim, whereby Mr. Lim agreed to exchange 10,000,000
shares of common stock held by him in return for the issuance of 100,000 shares
of the Company’s newly created Series C convertible preferred stock (the “Series
C Preferred”). On November 12, 2008, Mr. Lim surrendered 10,000,000 shares of
the Company’s common stock in exchange for 100,000 shares of the Series C
Preferred. On November 12, 2008, the Company filed a Certificate of Designation
with the Delaware Secretary of State amending the Company’s Certificate of
Incorporation, as amended, and establishing the rights, preferences and
privileges of the Series C Preferred.  The Certificate of Designation
created 100,000 shares of Series C Preferred and each such share (a) is
convertible into shares of common stock at a ratio of 100 shares of common stock
for each share of Series C Preferred (subject to customary adjustments) (b) is
entitled to vote with the common stock on all matters submitted to the Company’s
stockholders on the basis of 100 votes per share of Series C Preferred held and
(c) has a liquidation preference of $40, plus any accrued but unpaid dividends.
The 10,000,000 shares of common stock were returned to treasury and are
available for re-issuance at a future date. The Company relied upon the
exemption from the registration requirements of the Securities Act of 1933,
as amended, pursuant to Section 4(2) thereof for the issuance of
the Series C Preferred insofor as we issued such
shares solely to the Company's Chief Executive Officer and
Chairman.
  The
Company signed a compensation agreement with a consultant on December 1, 2008
under which the Company agreed to issue common stock to the consultant for
services to be rendered for the 3-month period ending February 28, 2009. On
December 1, 2008, the Company issued 225,904 shares of common stock to the
consultant pursuant to this agreement for aggregate consideration in the form of
services to be rendered by the consultant equal to $7,500.





The
Company signed a compensation agreement with a consultant on December 1, 2008
under which the Company agreed to issue common stock to the consultant for
services to be rendered for the 3-month period ending February 28, 2009. On
December 1, 2008, the Company issued 85,714 shares of common stock to the
consultant pursuant to this agreement for aggregate consideration in the form of
services to be rendered by the consultant equal to $3,000.





On
December 4, 2008, the Company issued 562,500 shares of common stock to a
consultant as payment for services rendered to the Company for total
consideration of  $45,000.





On
December 31, 2008, the Company issued 4,620,500 shares of common stock to
Patrick Lim, the Company's Chief Executive Officer, upon the exercise of
warrants. The Company received proceeds totaling $299,870 from Mr. Lim’s warrant
exercise.


12
 Index


ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS





This
quarterly report on Form 10-Q/A and the documents incorporated herein by
reference, contain or may contain forward-looking statements, within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934.  Information is provided that is based upon
beliefs of, and information currently available to, the management of Secured
Digital Applications, Inc. (the “Company”), as well as estimates and assumptions
made by the Company's management. The Company is including this cautionary
statement in this Form 10-Q/A to make applicable and to take advantage of the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995
for any forward-looking statements made by or on behalf of us. Statements that
are not statements of historical fact may be deemed to be forward-looking
statements. Forward-looking statements can be identified by the use of
forward-looking terminology such as "believes," "may," "should," "anticipates,"
"estimates," “expects," "future," "intends," "hopes,"
"plans,"  “projects” 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. For a discussion identifying risk factors and other important
factors that could cause actual results to differ materially from those
anticipated, see the Company’s Annual Report on Form 10-K for the year ended
December 31, 2007, as amended.





These
factors include, among others, the following: the inability of the Company to
successfully implement its business plans, the cancellation or postponement of
contracts that the Company has entered into in connection with its business, the
inability to obtain services provided by other companies or service providers,
the inability of the Company to raise capital on a timely basis, the inability
of the Company to meet certain covenants contained in trade financing
agreements, existing and future government regulations, changes and fluctuation
in foreign currency exchange rates, 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,
China, 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, except as required by law.








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.





The
following is management’s discussion and analysis of certain significant factors
affecting our financial position and operating results during the periods
included in the accompanying condensed consolidated financial statements. Except
for the historical information contained herein, the matters set forth in this
report are forward-looking statements.





OVERVIEW





Secured
Digital Applications, Inc. (“SDA,” “Company,” “we,” “us” or “our”) is a provider
of mobile communication and information technology consulting services. Our
strategy is to provide business services to our customers in a manner that is
both superior in quality and more cost efficient than customers can provide for
themselves. Our services are focused in the areas of multimedia production,
information technology and computing consulting services, EyStar Smarthome
Management System, biometric security and Bluetooth, GPS and RFID-enabled
applications. As a supplier and consultant, we rely on a combination of current
technologies to provide high-quality products and services at competitive
prices.





The
Company has provided outsourced information technology and multimedia content
production services since 2000. We began to provide services in security
applications, particularly biometric security applications, during
2003.  We continue to seek to add to our holdings with acquisitions
that meet our management's criteria for inclusion in the group of SDA companies.
In general, we continue to seek regional businesses with strong management
willing to remain in considerable positions of responsibility as minority equity
holders. We also seek businesses that are operating at a profit or near
break-even and which provide a superior opportunity for high rates of growth
after integration into the SDA group of companies. In considering potential
acquisitions, SDA evaluates such factors as:





-
            the
      "fit" of the potential acquisition among SDA's existing subsidiaries, in
      particular whether the acquisition is complementary to SDA's existing
      operating subsidiaries;


-
            the
      capabilities of existing management and the willingness of existing
      management to continue with the enterprise as employees and minority
      equity holders;


-
            whether
      the enterprise provides, in management's view, a superior potential for
      growth and profitability after
acquisition;


-
            whether
      the enterprise, in management's view, can be successfully and beneficially
      integrated with SDA's existing business
  processes;


-
            the
      terms under which existing management is prepared to convey a majority
      interest to SDA; and


-
            the
      demonstrated ability of existing management to operate the enterprise
      profitably.


13
 Index


Since
2000, we have succeeded in financing our acquisitions primarily with internally
generated funds and with issuances of our securities. This strategy has
permitted the Company to maintain a low debt to equity ratio. There can be no
assurance, however, that we will be able to continue to pay for acquisitions
with internally generated funds and it is likely that we will require additional
funding, which may result in the issuance of additional equity or debt. There
also can be no assurance that we will be able to identify, acquire or integrate
businesses into the SDA group of companies.





SDA's
core line of business is 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.





The
accompanying condensed consolidated financial statements include the accounts of
the Company and its subsidiaries.





Reorganization
of Operating Subsidiaries





On May
20, 2008, the Company sold its wholly owned subsidiary, China Sea Trade Company
Inc. (“CST”),  to a third party and recognized a gain on sale of
$1,928. CST was operating at a loss and did not meet the Company's criteria for
return on investment. The effect of the sale of CST is not material and,
therefore, the operating results of CST were not presented separately as
discontinued operations.





On July
31, 2008, the Company sold its wholly owned subsidiary, DigitalApps Media Sdn
Bhd (“DAM”), to a third party at its carrying investment cost. DAM was operating
at a loss and did not meet the Company's criteria for return on investment. The
effect of the sale of DAM is not material and, therefore, the operating results
of DAM were not presented separately as discontinued operations.





For the
three and nine months ended September 30, 2008 and 2007, the Company's revenue
was generated primarily from the following activities:





-
            Designing,
      producing, hosting and distribution of interactive multimedia content,
      websites, programs and
applications;


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


-
            Providing
      project consulting services on broadband communication and networking
      systems for property development
projects.





We
continue to pursue opportunities to provide technical consulting and technical
services to commercial businesses. Further, we continue to seek opportunities to
combine the Company's expertise in supply chain management solutions with
wireless technologies like Bluetooth, RFID and GPS tracking systems and
biometric security systems for the retailing, logistics and warehousing,
telecommunication, transportation, healthcare, security and manufacturing
industries.





In
November 2007, the Company acquired the right to the source code for Bluetooth
cell integration, cell management and proximity marketing software. Since
acquiring the right, the Company has utilized the source code to develop a host
of applications for the retailing, logistics and warehousing, telecommunication,
transportation, healthcare, security and manufacturing industries.








Operations
During 2008





The
Company's principal operations during 2008 included multimedia production,
information technology and computing services, sales of EyStar Smarthome
Management System, biometric security and Bluetooth, GPS and RFID-enabled
applications. We marketed hardware, software and consulting services to a number
of companies in the public and private sectors. Our hardware products included
the EyStar SmartHome Management System, biometric systems and Internet-based
cameras.  SDA sells its products in connection with consulting
contracts that are awarded to the Company. We presently provide these services
principally to customers in Southeast Asia.





The
Company managed to establish a toehold in China when it secured its first
contract during December 2007, valued at $2.825 million, to install and maintain
a real-time GPS fleet tracking management system for 1,100 trucks


owned by
a leading operator in Guangdong Province. The installation work commenced during
the third quarter of 2008 and a total of $1.44 million of revenue has been
recognized.


14
 Index


Negotiations
are underway in Australia with channel partners who will market the Company’s
products and services and secure contracts on our behalf under the Company’s
established trademarks. Our primary goal is to offer our Bluetooth and
RFID-enabled applications for the mining, healthcare, public utilities and
entertainment industries. We anticipate contracts to be executed during the
fourth quarter of 2008.





The
Company has developed a gateway that enables Voice over Internet Protocol (VoIP)
calls to be made from regular cell phones to any regular cell phone or
landline.  The gateway has been used to develop VoIP applications that
include mobile VoIP and mobile advertising.





BluberMax
is the brand name for the Company’s mobile advertising
service.  BluberMax allows its users to make advertisement-sponsored
long distance and international calls from their regular cell
phones.  Users are expected to pay only for their local text messages
to their service providers.





BluberChat
is the brand name for our mobile VoIP service.  BluberChat calls are
offered to users who do not wish to receive advertisements.  Users are
expected to pay a fixed monthly fee for a predetermined number of minutes that
will enable them to make heavily discounted long distance and international VoIP
calls from their regular cell phones.





To
initiate a call on BluberMax or BluberChat, a user would need to send a short
text message consisting of the receiving party’s telephone number along with a 5
or 6 digit common short code to our gateway for connection to the receiving
party.  There is no need for a personal computer or laptop with
Internet connection or any peripherals to initiate a BluberChat or BluberMax
phone call.  This ease of use differentiates BluberMax and BluberChat
from our competitors.





The
Company anticipates launching BluberChat in the United States and Australia
during the first quarter of 2009 followed by China in July 2009. BluberMax is
expected to be launched in the United States in June 2009 followed by Australia
and China in September 2009.








RESULTS
OF OPERATIONS





The
following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the condensed consolidated
financial statements and notes to the condensed consolidated financial
statements, included elsewhere in this quarterly report on Form
10-Q.





The
following table sets forth certain operating data for the Company and its
subsidiaries for the periods as indicated below.





Nine
      Months Ended September 30,(Unaudited)
                  
                  2008
                  
                  
                  2007Revenues
                  
                  $
                  45,850,675
                  
                  
                  $
                  33,199,082Gross
      profit
                  
                  
                  3,701,501
                  
                  
                  
                  2,625,958Sales
      and marketing
                  
                  
                  43,456
                  
                  
                  
                  29,255General
      and administrative
                  
                  
                  1,802,307
                  
                  
                  
                  1,416,039Gain
      on disposal of assets-related parties
                  
                  
                  --
                  
                  
                  
                  84,547Income
      from continuing operations
                  
                  
                  1,184,921
                  
                  
                  
                  1,053,014Income
      from discontinued operations
                  
                  
                  --
                  
                  
                  
                  5,749Net
      income
                  
                  
                  1,184,921
                  
                  
                  
                  1,058,763











COMPARISON
OF THE THREE MONTHS ENDED SEPTEMBER 30, 2008 TO THE THREE MONTHS
ENDED


SEPTEMBER
30, 2007








Revenue





Total
revenue increased by $4,813,482, or 41%, to $16,631,552 for the three months
ended September 30, 2008 as compared to $11,818,070 for the three months ended
September 30, 2007.





The
increase in total revenue for the three months ended September 30, 2008 as
compared to the three months ended September 30, 2007 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 from 2001 through 2003. In the three months ended September 30,
2008, two customers accounted for 48% and 40% of total revenue. In the three
months ended September 30, 2007, the same two customers accounted for 48% and
45% of total revenue.


15
 Index


Gross
Profit





Gross
profit increased to $1,257,112 for the three months ended September 30, 2008
compared to $1,045,308 for the three months ended September 30, 2007. Gross
profit margin reduced to 7.6% in the quarter ended September 30, 2008 versus
8.8% in the quarter ended September 30, 2007.





The
increase in gross profit was due to higher revenue. As a result of higher
revenue, cost of revenues increased  by $4,601,678, or 43%, to
$15,374,440 for the three months ended September 30, 2008 from $10,772,762 for
the three months ended September 30, 2007. The increase in cost of revenues was
primarily due to the Company requiring additional external resources in order to
fulfill the higher demand for the Company's services. The outsourcing of content
production work enabled the Company to develop a team of contractors that will
assist the Company in producing multimedia content and applications that are
crucial to its future business operation.





Sales
and marketing expenses





Sales and
marketing expenses decreased by $5,423, or 25%, to $16,708 for the three months
ended September 30, 2008 compared to $22,131 for the three months ended
September 30, 2007.





General
and administrative expenses





General
and administrative expenses involving non-related parties increased by $164,567,
or 32%, to $684,150 for the three months ended September 30, 2008 as compared to
$519,583 for the three months ended September 30, 2007.





The
increase was primarily attributable to an increase in depreciation of tangible
assets and professional and auditing fees. For the three months ended September
30, 2008, 34% of the total general and administrative expenses of $684,150 was
for depreciation of tangible assets, 2% was for consulting fees and 12% was for
employee payroll. Another 16% was for fees for professional and auditing
services, 29% was for both employee and stock compensation expenses and
approximately 7% was for rent, utilities, general office supplies,
communications and corporate insurance expenses. For the three months ended
September 30, 2007, 14% of the total general and administrative expenses of
$519,583 was for depreciation of tangible assets and 17% was for employee
payroll. Another 8% was for fees for professional and auditing services, 5% was
for investor relations expenses, 46% was for compensation expenses and
approximately 10% was for rent, utilities, general office supplies,
communications and corporate insurance expenses.





General
and administrative expenses - related parties for the three months ended
September 30, 2008 and 2007 were $37,167 and $36,911, respectively. General and
administrative expenses - related parties included management fees and
administrative expenses payable by the Company to LSH, a company owned by Mr.
Lim and his wife. For the three months ended September 30, 2008, LSH billed the
Company's Malaysian subsidiary, DASB, $7,167 and $6,911 for the three months
ended September 30, 2008 and 2007, respectively, for administration and clerical
fees. The Company also incurred management fees of $30,000 for each of the three
months ended September 30, 2008 and 2007.  The management fees were
charged on the basis of time spent for the administration and management
services provided to the Company.





Gain
on disposal of assets - related parties





For the
three months ended September 30, 2007, the Company included recognition of a
previously deferred gain of $28,798, related to an amount the Company received
from its long-term receivable, related party. The receivable balance and total
deferred gain was $0 as of December 31, 2007. 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 reduced to
$25,954, as of September 30, 2007.  This amount was fully settled as
of December 31, 2007.


16
 Index


COMPARISON
OF THE NINE MONTHS ENDED SEPTEMBER 30, 2008 TO THE NINE MONTHS ENDED SEPTEMBER
30, 2007





Revenue





Total
revenue increased by $12,651,593, or 38%, to $45,850,675 for the nine months
ended September 30, 2008, as compared to $33,199,082 for the nine months ended
September 30, 2007.





The
increase in total revenue 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 a result of increased
sub-contract work from the clients of the Company's two major customers. Revenue
for project consulting services was generated from four project consulting
contracts that the Company secured in 2001, 2002 and 2003.  In the
nine months ended September 30, 2008, two customers accounted for 49% and 43% of
total revenue. In the nine months ended September 30, 2007, the same two
customers accounted for 48% and 47% of total revenue.





Gross
Profit





Gross
profit increased to $3,701,501 for the nine months ended September 30, 2008,
compared to $2,625,958 for the nine months ended September 30, 2007, an increase
of $1,075,543, or 41%. Gross profit margin increased to 8.1% for the nine months
ended September 30, 2008 versus 7.9% for the nine months ended September 30,
2007.





The
increase in gross profit for the nine months ended September 30, 2008 was due to
higher revenue, particularly consulting revenue, which has a much higher margin
than production work. As a result of higher revenue, cost of revenues increased
by $11,576,050, or 38%, to $42,149,174 for the nine months ended September 30,
2008 from $30,573,124 for the nine months ended September 30, 2007. The increase
in cost of revenue was primarily due to the Company requiring additional
external resources in order to fulfill the higher demand for the Company's
services. The outsourcing of content production work enabled the Company to
develop a team of contractors that will assist the Company in producing
multimedia content and applications that are crucial to its future business
operation.





Sales
and marketing expenses





Sales and
marketing expenses increased by $14,201, or 49%, to $43,456 for the nine months
ended September 30, 2008 from $29,255 for the nine months ended September 30,
2007, primarily as a result of an increase in travel expenses.





General
and administrative expenses





General
and administrative expenses involving non-related parties increased by $384,928,
or 29%, to $1,690,248 for the nine months ended September 30, 2008, as compared
to $1,305,320 for the nine months ended September 30, 2007.





The
increase was primarily attributable to an increase in depreciation of tangible
assets, salaries, professional and auditing fees and investor relations. For the
nine months ended September 30, 2008, 41% of the total general and
administrative expenses of $1,690,248 was for depreciation of tangible assets,
1% was for consulting fees and 14% was for employee payroll. Another 17% was for
fees for professional and auditing services, 2% was for investor relations
expenses, 17% was for both employee and stock compensation expenses and
approximately 8% was for rent, utilities, general office supplies,
communications and corporate insurance expenses. For the nine months
ended  September 30, 2007, 17% of the total general and administrative
expenses of $1,305,320 was for depreciation of tangible assets, 6% was for
consulting fees and 14% was for employee payroll. Another 11% was for fees for
professional and auditing services, 3% was for investor relations expenses, 40%
was for compensation expenses and approximately 9% was for rent, utilities,
general office supplies, communications and corporate insurance
expenses.





General
and administrative expenses - related parties for the nine months ended
September 30, 2008 and 2007 were $112,059 and $110,719, respectively. General
and administrative expenses - related parties included management fees and
administrative expenses payable by the Company to LSH, a company owned by Mr.
Lim and his wife. For the nine months ended September 30, 2008, LSH billed the
Company's Malaysian subsidiary, DASB, $22,059 and $20,719 for the nine months
ended September 30, 2008 and 2007, respectively, for administration and clerical
fees. The Company also incurred management fees of $90,000 for each of the nine
months ended September 30, 2008 and 2007.  The management fees were
charged on the basis of time spent for the administration and management
services provided to the Company.


17
 Index


Gain
on disposal of assets - related parties





For the
nine months ended September 30, 2007, the Company included recognition of a
previously deferred gain of $84,547, related to an amount the Company received
from its long-term receivable, related party. The receivable balance and total
deferred gain was $0 as of December 31, 2007. 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 reduced to
$25,954, as of September 30, 2007.
This amount was fully settled as of December 31, 2007.





Liquidity
and Capital Resources





As of
September 30, 2008, the Company had cash of $17,821.





For the
nine months ended September 30, 2008, operations were primarily funded from
internally generated funds and working capital advanced from time to time by Mr.
Lim. These advances bear no interest and have no fixed terms of
repayment.





As of
September 30, 2008, the Company owed Mr. Lim $26,464 for short-term cash
advances made to subsidiaries of the Company for working capital purposes from
time to time. Additionally, at September 30, 2008, the amount owed to a company
in which Mr. Lim has a financial interest was $104,867. This amount was for
short-term cash advances made to the Company and its subsidiaries for working
capital purposes from time to time and for management and administrative fees.
These amounts are unsecured, bear no interest and have no fixed terms of
repayment.





The cash
generated from operating activities for the nine months ended September 30, 2008
was $472,173 and was primarily the result of income and non-cash expenses for
the period offset by an increase in accounts receivable.





Cash used
in investing activities of $698,355 for the nine months ended September 30, 2008
was primarily attributable to the purchase of computer software and equipment
totaling $683,876 and the acquisition of a trademark totaling
$14,479.  The Company will continue to develop its products and
services under the brand name “EyStar.”  EyStar is a well established
and recognized brand name in Asia.





Cash
generated from financing activities during the nine months ended September 30,
2008 of $132,016 resulted from proceeds received from the issuance of shares of
the Company’s common stock totaling $109,000, repayment to a director for
short-term cash advances made to subsidiaries of the Company totaling $59,034
and advances from an affiliate totaling $82,050.





The
Company expects to expand into the provision of Mobile Voice over Internet
Protocol (“VoIP”), Mobile Advertising and Bluetooth Proximity Advertising
services in the United States.  The Company expects to incur
additional expenses in acquiring technologies that will help the Company to
rollout the new services in the shortest time possible. The Company estimates
that it will require $1 million during the fourth quarter of 2008 to finance the
initial rollout of its new services. The Company also expects that it will
require an additional $9 million to finance both the working capital and
additional capital expenditures of its new business in 2009.





The
Company believes it will have access to financing sources but there can be no
assurance that such sources of financing will be available on acceptable terms,
on a timely basis or at all.





Off-Balance
Sheet Arrangements




The
Company does not have any off-balance sheet transactions that are expected to
have a material effect on the Company's financial condition, revenues, expenses,
results of operations, liquidity, capital expenditures or capital
resources.


18
 Index


ITEM
3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK.





Not
applicable to smaller reporting companies.





ITEM
4(T).  CONTROLS AND PROCEDURES





(a)
Evaluation of Disclosure Controls and Procedures




Our
principal executive officer and principal financial officer, based on their
evaluation of our disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this
Quarterly Report on Form 10-Q, have concluded that (i) our disclosure controls
and procedures are effective for ensuring that information required to be
disclosed by us in the reports that we file or submit under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission’s rules and
forms and (ii) our disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by us under the Securities Exchange Act of 1934 is accumulated
and communicated to our management, including our principal executive and
principal financial officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required
disclosure.





(b)
Changes in Internal Control over Financial Reporting





During
the quarter ended September 30, 2008, there have been no changes in our internal
controls over financial reporting that have materially affected, or are
reasonably likely to materially affect, these controls.


19
 Index


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 other important factors that could cause actual results to
differ materially from those anticipated, see the Company's Annual Report on
Form 10-K for the year ended December 31, 2007.





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





The
Company signed a compensation agreement with a consultant on August 20, 2007
under which the Company agreed to issue an aggregate of 1,000,000 shares of its
common stock to the consultant for services to be rendered for the 12-month
period ended July 14, 2008.  On July 14, 2008, the Company issued
250,000 shares of common stock to the consultant pursuant to this agreement for
aggregate consideration in the form of services rendered by the consultant equal
to $25,000.





The
Company relied upon the exemptions from registration provided by Section 4(2) of
the Securities Act of 1933, as amended, and Regulation D promulgated thereunder
for the issuances of these securities.





ITEM
3.  DEFAULTS UPON SENIOR SECURITIES





None.





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




On
September 2, 2008, at the Company’s Annual Meeting of Stockholders, two
nominees for the Board of Directors were elected and the votes were as
follows:













Name
      of Nominee
                    Common
                      For
                    Common
      Against
                    Common
      WithheldMs.
      Valerie Hoi-Fah Looi
                    119,525,707
                    0
                    5,085,455Mr.
      Patrick Soon-Hock Lim
                    119,427,357
                    0
                    5,183,805





Name
      of Nominee
                  Preferred
      For/
                    Common
      Equivalent For
                  Preferred
      Against/ Common Equivalent Against
                  Preferred
      Withheld/ Common Equivalent AgainstMs.
      Valerie Hoi-Fah Looi
                  100,000/20,000,000
                  0/0
                  0/0Mr.
      Patrick Soon-Hock Lim
                  100,000/20,000,000
                  0/0
                  0/0





Each of
the nominees received a plurality of the votes cast.


20
 Index


ITEM
5.  OTHER INFORMATION





The
Company signed a compensation agreement with a consultant on July 9, 2008 under
which the Company agreed to issue an aggregate of 1,000,000 shares of its common
stock to the consultant for services to be rendered for the 12-month period
ending July 14, 2009.  On October 17, 2008, the Company issued 250,000
shares of common stock to the consultant pursuant to this agreement for
aggregate consideration in the form of services to be rendered by the consultant
equal to $10,500.





The
Company signed a compensation agreement with a consultant on October 9, 2008
under which the Company agreed to issue 1,000,000 shares of its common stock to
a consultant for services to be rendered for the six-month period ending April
8, 2009.  On October 9, 2008, the Company issued 1,000,000 shares of
common stock to the consultant pursuant to this agreement for aggregate
consideration in the form of services to be rendered by the consultant equal to
$38,000.





On
November 7, 2008, the Board of Directors of the Company approved and the Company
entered into a share exchange agreement with the Company’s Chief Executive
Officer and Chairman Patrick Lim, whereby Mr. Lim agreed to exchange 10,000,000
shares of common stock held by him in return for the issuance of 100,000 shares
of the Company’s newly created Series C convertible preferred stock (the “Series
C Preferred”). On November 12, 2008, Mr. Lim surrendered 10,000,000 shares of
the Company’s common stock in exchange for 100,000 shares of the Series C
Preferred. On November 12, 2008, the Company filed a Certificate of Designation
with the Delaware Secretary of State amending the Company’s Certificate of
Incorporation, as amended, and establishing the rights, preferences and
privileges of the Series C Preferred.  The Certificate of Designation
created 100,000 shares of Series C Preferred and each such share (a) is
convertible into shares of common stock at a ratio of 100 shares of common stock
for each share of Series C Preferred (subject to customary adjustments) (b) is
entitled to vote with the common stock on all matters submitted to the Company’s
stockholders on the basis of 100 votes per share of Series C Preferred held and
(c) has a liquidation preference of $40, plus any accrued but unpaid dividends.
The 10,000,000 shares of common stock were returned to treasury and are
available for re-issuance at a future date. The Company relied upon the
exemption from the registration requirements of the Securities Act of 1933,
as amended, pursuant to Section 4(2) thereof for the issuance of
the Series C Preferred insofor as we issued such
shares solely to the Company's Chief Executive Officer and
Chairman.


The
Company signed a compensation agreement with a consultant on December 1, 2008
under which the Company agreed to issue common stock to the consultant for
services to be rendered for the 3-month period ending February 28, 2009. On
December 1, 2008, the Company issued 225,904 shares of common stock to the
consultant pursuant to this agreement for aggregate consideration in the form of
services to be rendered by the consultant equal to $7,500.





The
Company signed a compensation agreement with a consultant on December 1, 2008
under which the Company agreed to issue common stock to the consultant for
services to be rendered for the 3-month period ending February 28, 2009. On
December 1, 2008, the Company issued 85,714 shares of common stock to the
consultant pursuant to this agreement for aggregate consideration in the form of
services to be rendered by the consultant equal to $3,000.





On
December 4, 2008, the Company issued 562,500 shares of common stock to a
consultant as payment for services rendered to the Company for total
consideration of  $45,000.








ITEM
6. EXHIBITS




3.1
              Certificate
      of Designation Series C Convertible Preferred
  Stock


10.1
              Share
      Exchange Agreement between the Company and Lim Soon Hock dated November 7,
      2008





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





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





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





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


21
 Index


SIGNATURES








Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.








Secured
      Digital Applications, Inc.(registrant)Dated:
      January 5, 2009
                By:  /s/ Patrick Soon-Hock
      LimPatrick
      Soon-Hock LimChairman
      and Chief Executive OfficerDated:
      January 5, 2009
                By:  /s/ Aik-Fun
      ChongAik-Fun
      ChongChief
      Accounting Officer






22