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

                                   FORM 10-QSB

                                   (MARK ONE)

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


                FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2006 OR


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

         FOR THE TRANSITION PERIOD FROM ______________ TO ______________

                         COMMISSION FILE NUMBER: 0-25658

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

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

                              PARK 80 WEST, PLAZA ONE,
                               SADDLE BROOK, NJ 07663
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

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

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

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

Yes  X    No

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



           Class                    Number of shares outstanding at May 22, 2006
-------------------------------   ----------------------------------------------
Common stock, $.00001 par value                      133,736,378


<PAGE>
<TABLE>
<CAPTION>

FORM 10-QSB

1ST QUARTER

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

         ITEM 1. FINANCIAL STATEMENTS

         Consolidated balance sheet as at March 31, 2006 (Unaudited)                                   3 - 4

         Consolidated statements of operations for the three-month periods
         ended March 31, 2006 and 2005 (Unaudited)                                                        5

         Condensed consolidated statements of cash flows for the three-month
         periods ended March 31, 2006 and 2005 (Unaudited)                                                6

         Notes to consolidated financial statements (Unaudited)                                        7 - 17

         ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS                                                 18 - 23

         ITEM 3. CONTROLS AND PROCEDURES                                                                 23

PART II - OTHER INFORMATION

         ITEM 1. LEGAL PROCEEDINGS                                                                       24

         ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                             24

         ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                                         24

         ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                     24

         ITEM 5. OTHER INFORMATION                                                                       24

         ITEM 6. EXHIBITS                                                                                24

         SIGNATURES                                                                                      25

</TABLE>

SAFE HARBOR STATEMENT

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



                                        2

<PAGE>
PART I -  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 2006
                                   (Unaudited)


<TABLE>
<CAPTION>

                                     ASSETS

<S>                                                                                                     <C>
Current assets:
     Cash                                                                                      $        45,512
     Trade receivables (including related party of $788,562),
       less allowance for doubtful accounts of $454,995                                              7,962,635
     Prepaid expenses                                                                                  136,125
     Inventories                                                                                       458,708
                                                                                               ---------------
              Total current assets                                                                   8,602,980
Cash, restricted                                                                                       569,702
Property and equipment, net                                                                          1,086,264
Customer list                                                                                          189,762
License                                                                                                 45,500
Goodwill                                                                                               851,739
Long-term receivables, related party                                                                   164,906

                                                                                               ---------------
                                                                                               $    11,510,853
                                                                                               ===============

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Bank overdraft and borrowings                                                             $     1,230,592
     Current portion of capital lease obligations                                                       41,222
     Current portion of term loans                                                                      68,373
     Accounts payable                                                                                1,601,590
     Accrued expenses                                                                                  233,216
     Amount due to an affiliated company                                                               101,848
     Amount due to a director                                                                           61,308
     Income tax payable                                                                                263,586
                                                                                               ---------------
              Total current liabilities                                                              3,601,735
     Term loans, net of current portion                                                                105,209
     Deferred income tax                                                                               163,166
     Deferred gain                                                                                     164,905
                                                                                               ---------------
              Total liabilities                                                                      4,035,015
                                                                                               ---------------


                                  (continued)


                                        3

<PAGE>
               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                           MARCH 31, 2006 (CONTINUED)
                                   (Unaudited)





Minority interest                                                                                      469,081
                                                                                               ---------------
Commitments and contingencies

Shareholders' equity:
     Common stock, $.00001 par value; 350,000,000 shares authorized;
        133,071,488 shares issued                                                                        1,330
     Additional paid-in capital                                                                      5,609,941
     Common treasury stock, 664,890 shares at cost                                                        --
     Options                                                                                            90,984
     Warrants                                                                                          749,715
     Retained earnings                                                                                 384,571
     Accumulated other comprehensive income                                                            170,216
                                                                                               ---------------
              Total shareholders' equity                                                             7,006,757
                                                                                               ---------------
                                                                                               $    11,510,853
                                                                                               ===============
 </TABLE>


           See accompanying notes to consolidated financial statements

                                        4

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

                                                                                March 31,       March 31,
                                                                               2006             2005
                                                                         --------------------------------
                                                                                               (Restated)
<S>                                                                             <C>                <C>
Revenues:
Products and equipment                                                   $       570,283   $      960,954
Services:
  Related parties                                                                860,281           45,789
  Others                                                                       8,344,152        5,513,611
                                                                         ---------------   --------------
                                                                               9,774,716        6,520,354
                                                                         ---------------   --------------
Cost of revenues:
Products and equipment                                                           484,112          848,840
Services:
  Related parties                                                                 24,634           35,789
  Others                                                                       7,937,115        5,045,190
                                                                         ---------------   --------------
                                                                               8,445,861        5,929,819
                                                                         ---------------   --------------
Gross profit                                                                   1,328,855          590,535
                                                                         ---------------   --------------

Operating expenses:
     Sales and marketing                                                           6,874           17,288
     General and administrative:
       Related parties                                                            36,419           21,316
       Others                                                                    683,987          405,760
                                                                         ---------------   --------------
Total operating expenses                                                         727,280          444,364
                                                                         ---------------   --------------
Income from operations                                                           601,575          146,171
                                                                         ---------------   --------------
Other income (expense):
     Interest expense                                                            (20,220)         (43,024)
     Amortization of debt issuance costs                                             --            (6,777)
     Interest income                                                                 --            43,051
     Loss on sale of property and equipment                                      (47,409)            (877)
     Previously deferred gain on sale of technology - related party               23,805           13,684
     Other income                                                                    608           15,737
                                                                         ---------------   --------------
                                                                                 (43,216)          21,794
                                                                         ---------------   --------------

Income before items listed below                                                 558,359          167,965
     Income tax                                                                 (257,838)         (22,368)
     Minority interest                                                            30,322            2,135
     Gain on foreign currency transactions                                        53,728             --
                                                                         ---------------   --------------
Net income                                                                       384,571          147,732

Preferred stock dividend                                                             --          (158,663)

Accretion to preferred stock redemption value                                        --          (275,666)
                                                                         ---------------   --------------
Net income (loss) applicable to common shareholders                      $       384,571   $     (286,597)
                                                                         ===============   ==============

Net income                                                               $       384,571   $      147,732

Other comprehensive income:

     Foreign currency translation adjustments                                    137,712             --
                                                                         ---------------   --------------
Comprehensive income                                                     $       522,283   $      147,732
                                                                         ===============   ==============
Net income per common share:
     Basic and diluted                                                   $             *   $            *
                                                                         ===============   ==============
Weighted average shares outstanding:
     Basic                                                                   131,372,312       94,924,649
                                                                         ===============   ==============
     Diluted                                                                 131,841,423       95,421,117
                                                                         ===============   ==============
</TABLE>

* Less than $.01 per share

             See accompanying notes to consolidated financial statements

                                        5

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

                                                                                Three Months Ended
                                                                            March 31,       March 31,
                                                                              2006            2005
                                                                        ---------------   --------------
                                                                                             (Restated)
<S>                                                                           <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net cash used in operating activities                              $       (72,825)  $     (172,118)
                                                                        ---------------   --------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Proceeds from disposal of equipment                                         18,566           10,526
     Purchase of equipment                                                         (525)         (72,537)
     Proceeds from sale of investment in associate companies                        --            13,158
                                                                        ---------------   --------------
         Net cash provided by (used in) investing activities                     18,041          (48,853)
                                                                        ---------------   --------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from issuance of common stock                                      80,000              --
     Increase in restricted cash                                                 (3,795)         (46,735)
     Net increase in bank borrowings                                             81,473          131,363
     Net repayment of advances to affiliated company                            (25,281)          (2,141)
     Net payment (repayment) of advances from/to a director                     (26,297)             593
     Payment of term loan                                                       (10,690)         (19,720)
     Payment of obligation under capital leases                                  (3,418)         (11,894)
                                                                        ---------------   --------------
           Net cash provided by financing activities                             91,992           51,466
                                                                        ---------------   --------------

FOREIGN CURRENCY TRANSLATION ADJUSTMENT                                         (38,282)             --
                                                                        ---------------   --------------

Net decrease in cash                                                             (1,074)        (169,505)
Net cash provided by discontinued operations                                        --           143,417
Cash, beginning of period                                                        46,586           92,493
                                                                        ---------------   --------------
Cash, end of period                                                     $        45,512   $       66,405
                                                                        ===============   ==============


Supplemental disclosure of cash flow information:

Cash paid for interest                                                  $        20,220   $       24,450
                                                                        ===============   ==============
Cash paid for income taxes                                              $         4,882   $          343
                                                                        ===============   ==============

Supplemental disclosure of non-cash financing activities:

Accretion to preferred stock redemption value                           $           --    $      275,666
                                                                        ===============   ==============
Preferred stock dividend declared                                       $           --    $      158,663
                                                                        ===============   ==============
Conversion of accrued term note and related accrued interest            $           --    $       32,087
                                                                        ===============   ==============

</TABLE>
             See accompanying notes to consolidated financial statements

                                        6
<PAGE>
                       SECURED DIGITAL APPLICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006
                                   (UNAUDITED)

1.   BASIS OF PRESENTATION

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

RESTATEMENT OF 2005 CONSOLIDATED FINANCIAL STATEMENTS

Subsequent  to the  issuance  of  the  Company's  March  31,  2005  consolidated
financial  statements,  and  based  upon a  further  evaluation  of the  factors
utilized in determining  the accounting and  presentation of a May 2004 issuance
of  preferred  stock of a  subsidiary,  a  convertible  term  note  and  related
warrants,  the Company  determined that both the preferred stock of a subsidiary
and the  convertible  term  note  contained  embedded  derivatives  that must be
bifurcated from their host  instruments  (See notes 7 and 8).  Accordingly,  the
Company's  March 31, 2005 interim  consolidated  financial  statements have been
restated,  resulting in an decrease in net income of $18,682 (less than $.01 per
share)  and a  decrease  in net  income  applicable  to common  shareholders  of
$294,348 (less than $.01 per  share)resulting in a net loss applicable to common
shareholders  of  $286,597.  In  addition,  shareholders'  equity  decreased  by
$2,801,050.

2.   SIGNIFICANT ACCOUNTING POLICIES

TRANSLATION OF CURRENCIES

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

REVENUE RECOGNITION

Revenue represents the net invoiced value of:

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

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

                                        7
<PAGE>
2.   SIGNIFICANT ACCOUNTING POLICIES (continued)

NET INCOME PER COMMON SHARE

Basic net income per share is  calculated  by dividing net income  applicable to
common  shareholders by the weighted average number of common shares outstanding
for the  three-month  periods ended March 31, 2006 and 2005.  Diluted income per
share is computed using the weighted average number of shares determined for the
basic  computations  plus the  number of shares of common  stock  that  would be
issued  assuming all  contingently  issuable  shares having a dilutive effect on
earnings per share were outstanding for the period. The calculation of basic and
diluted income per share is as follows (in thousands, except per-share amounts):

<TABLE>
<CAPTION>
                                                                             Three Months Ended

                                                                   March 31, 2006      March 31, 2005
                                                                   -----------------    ----------------
                                                                                          (Restated)
<S>                                                                              <C>              <C>
Net income                                                         $             385    $           148

Preferred stock dividends                                                         --               (158)

Accretion to preferred stock redemption value                                     --               (276)
                                                                   -----------------   ----------------
Net income (loss) available to common shareholders                 $             385   $           (286)
                                                                   =================   ================
Weighted average shares outstanding - basic                                  131,372             94,925
                                                                   =================   ================
Net income per share - basic                                       $               *   $              *
                                                                   =================   ================

*  less than $.01 per share
                                                                             Three Months Ended

                                                                     March 31, 2006    March 31, 2005
                                                                   -----------------   ----------------
Weighted average shares outstanding - basic                                  131,372             94,925
Common stock issuable to consultant                                              469                461
Dilutive stock options and warrants                                               --                 35

                                                                   -----------------   ----------------
Weighted average shares outstanding - diluted                                131,841             95,421
                                                                   =================   ================

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

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

For the threee  months ended March 31,  2006,  1,080,000  options and  4,600,000
warrants  were  excluded from the  calculation  of earnings per share,  as their
issuance prices were in excess of the average market price for the period.

                                        8

<PAGE>
2.   SIGNIFICANT ACCOUNTING POLICIES (continued)

GOODWILL AND INTANGIBLE ASSETS

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

Intangible  assets  consist  of a  customer  list  and  a  Malaysian  government
registered  contractor license acquired in September 2004. The customer list has
a gross  carrying  value of $189,000  and is amortized  using the straight  line
method over its expected life of 7 years.  Amortization  expense for each of the
three  months  ended  March  31,  2006  and  2005 was  $6,750.  The  accumulated
amortization at March 31, 2006 was $40,500.  The registered  contractor  license
has a carrying value of $65,000 and is amortized  using the straight line method
over its expected  life of 5 years.  Amortization  expense for each of the three
months ended March 31, 2006 and 2005 was $3,250. The accumulated amortization at
March 31, 2006 was $19,500.

Customer  relationships  with a cost of $59,423 were acquired on April 30, 2005,
and are being  amortized using the straight line method over an expected life of
3 years.  Amortization  expense  for the three  months  ended March 31, 2006 was
$4,953, and accumulated amortization at March 31, 2006 was $18,161.

INVENTORIES

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

TREASURY STOCK

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

INCOME TAXES

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

For the three-month periods ended March 31, 2006 and 2005,  provision for income
taxes amounted to $257,838 and $22,368,  respectively, net of the benefit of any
available  net  operating  losses,  for income tax payable on its  operations in
Malaysia.

STOCK-BASED COMPENSATION

The Company adopted FAS No. 123R, "Share-Based Payments", effective from January
1,  2006,  utilizing  the  "modified  prospective"  method as  described  in the
standard.  Under  the  "modified  prospective"  method,   compensation  cost  is
recognized for all Share-based payments granted after the effective date and for
all unvested awards granted prior to the effective date. Prior to adoption,  the
Company accounted for Share-based payments under the recognition and measurement
principles of Accounting  Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees", and Related interpretations. The Company recognized $4,947
in total  stock-based  compensation  expense during the three months ended March
31, 2006. Total unvested  stock-based  compensation expense was $26,065 at March
31, 2006 and had a total weighted average remaining term of 3.42 years.

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

STOCK-BASED COMPENSATION (continued)

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

On August 3, 2004, the Company granted certain officers, directors and employees
of the Company options to purchase up to an aggregate of 2,000,000 shares of the
Company's common stock at $0.20 per share.  The options are exercisable  through
August  2009,  contingent  upon  continuous  service by the  officers/directors/
employees through  specified dates.  500,000 options were exercisable on October
3, 2004,  200,000 options were exercisable on February 3, 2005,  500,000 options
are  exercisable  on August 3, 2005,  and the  remaining  800,000  options  were
exercisable in equal numbers on each of February 3, 2006,  2007,  2008 and 2009,
respectively.  In  addition,  on August 3, 2004 the Company  granted  options to
purchase  100,000 shares of the Company's  common stock at $0.12 per share to an
independent  director  as  compensation  for serving on the  Company's  Board of
Directors.  These options are exercisable  with immediate  effect through August
2009.  250,000  of the  options  were  exercised  on April  28,  2005 for a cash
consideration of $50,000, 40,000 of the options were exercised on April 29, 2005
for a cash consideration of $8,000,  60,000 of the options were exercised on May
3, 2005 for a cash  consideration of $12,000.  On January 31, 2006,  100,000 and
300,000 options which were granted to an independent  director with an option to
purchase the Company's common stock at $0.12 and $0.20 per share,  respectively,
were forfeited when he resigned from the Company.  On February 19, 2006, 270,000
options  which were granted to an officer were  forfeited  when he resigned from
the Company.

Had compensation cost for options been determined based on the fair value at the
grant  date  consistent  with the method  prescribed  under  SFAS No.  123,  the
Company's  pro forma net income and net income per share during the three months
ended March 31, 2005 would have been as follows:
<TABLE>
<CAPTION>
                                                                                  Three Months Ended
                                                                                       March 31,
                                                                                        2005
                                                                                   ---------------
                                                                                      (Restated)
<S>                                                                                       <C>
Net loss applicable to common stockholders                                         $      (286,597)
Add: Stock-based employee compensation expense
         included in reported net income, net of related tax                                 9,477
Less: Total stock-based employee compensation expense
         determined under fair value based method for all
         awards, net of related tax effects                                                (35,000)
                                                                                   ---------------
Pro forma net loss                                                                 $      (312,120)
                                                                                   ===============
Loss per share:
 Basic and diluted - as reported                                                   $             *
                                                                                   ===============
 Basic and diluted - pro forma                                                     $             *
                                                                                   ===============

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

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


                                                  FAS No.123R        FAS No.123
                                                    Expense          Pro forma
                                                   March 31,          March 31,
                                                     2006               2005
                                                 -------------      ------------
Risk free interest rate                                   2%              2%-4%
Dividend yield                                            0%                 0%
Expected life of option in years                   3.4 years          4.5 years
Expected volatility                              139% - 163%        115% - 163%


The Company did not issue any options to employees and officers during the three
months ended March 31, 2006.


                                       10

<PAGE>
2.   SIGNIFICANT ACCOUNTING POLICIES (continued)

ESTIMATES

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

BUSINESS RISK

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

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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

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

RECLASSIFICATIONS

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

3.   RESTRICTED CASH

As of March 31, 2006, the Company has the following restricted cash balances:

Cash deposited with financial institutions in Malaysia        $         569,702
                                                              =================

Restricted cash of $569,702(RM2,101,916) deposited  with financial  institutions
in  Malaysia  represent  time  deposit  accounts  used as  collateral  for trade
financing and bank overdraft  facilities  granted to Gallant IT Holdings Sdn Bhd
("GIH")and  Gallant  Zone (M) Sdn Bhd ("GZ").  The time  deposit  accounts  have
original maturity periods of one year and are automatically renewed on an annual
basis.  The time deposit  accounts  earn  interest at rates ranging from 3.0% to
3.7% per  annum.  Interest  earned  on the time  deposits  is to be added on and
rolled over with the principal sum.


                                       11
<PAGE>
4.   BANK OVERDRAFT AND BORROWINGS

As of March  31,  2006,  the  Company's  subsidiaries  have the  following  bank
facilities:
<TABLE>
<CAPTION>
                                                                    GIH              GZ               Total
                                                              -------------     -------------    -------------
<S>                                                                <C>               <C>              <C>
Bank overdraft                                                $     135,520     $     108,415    $     243,935
Trade financing facilities                                          216,832           867,326        1,084,158
                                                              -------------     -------------    -------------
Total bank facilities available                               $     352,352     $     975,741    $   1,328,093
                                                              =============     =============    =============
Balance utilized as of March 31, 2006                         $     280,077     $     950,515    $   1,230,592
                                                              =============     =============    =============
</TABLE>
The above bank  facilities  are  repayable on demand and bear  interest at rates
ranging from 1.5% to 8.40% per annum and are secured by:

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

5.   RELATED PARTY ACTIVITY

During the  three-month  periods  ended  March 31,  2006 and 2005,  the  Company
recognized revenue of $860,281 and $45,789, respectively, for project consulting
fees from a related party,  pursuant to four consulting  contracts.  As of March
31, 2006, accounts receivable from the related entity totaled $778,164.

At December 31,  2005,  long-term  receivables,  related  parties,  consisted of
$183,098 due from Synervest Sdn Bhd ("SSB").  This amount primarily arose in the
year ended  December  31, 1998 when the  Company  sold to SSB assets used in the
operations of a subsidiary.  Due to the uncertainty of collection of the related
receivable,  a related  gain on the sale of the assets was deferred and is to be
recognized  only  after  all costs  have  been  recovered  and as  payments  are
received.  During the year ended  December  31, 2002,  payments  received by the
Company  exceeded all remaining  costs. The Company received $23,805 and $13,684
of the outstanding  receivable  during the  three-month  periods ended March 31,
2006 and  2005,  respectively,  resulting  in a  realization  of gain on sale of
assets,  related  party for those  periods.  The deferred  gain  included in the
balance sheet has been reduced accordingly.

6.   TERM LOANS

As  of  March 31,  2006,  the Company  has  term loan  liabilities  of  $173,582
(RM640,431).  These term loans,  which were  granted  by financial  institutions
in Malaysia,  are secured by personal  guarantees  provided by third parties and
two directors of GIH and bear interest at 8% - 8.4% per annum.

7.   CONVERTIBLE TERM NOTES

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

1.   The Note has a three-year term with a maturity date of May 28, 2007.

2.   Interest  rate of 2% above the "prime rate" as published by the Wall Street
     Journal  from time to time  subject to a floor of 6%. The monthly  interest
     will be adjusted  downward based on a minimum increase of 25 percent of the
     price of the common stock above the conversion price.

3.   Monthly principal  payments of $14,706 commencing on September 1, 2004 with
     the unpaid principal balance and any unpaid and/or accrued interest due and
     payable on May 28, 2007.

4.   The principal and the interest  could be paid in cash or in common stock at
     the Master Fund's option, as defined.


                                       12
<PAGE>
7.   CONVERTIBLE TERM NOTES (CONTINUED)

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

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

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

In 2004, the Company recorded an initial  liability of $246,681 for the value of
the  embedded  liability.  The  initial  value  of the  embedded  liability  was
amortized  over the term of the Note.  For the three months ended March 31, 2006
and  2005,  the  Company  recognized  amortization  expense  of $0  and  $14,377
respectively, and is included in interest expense.

In 2004, the Company recorded debt discount and  amortization  costs of $95,346,
which  included the initial  value of the warrants of $62,525.  These costs were
amortized over the term of the Note. Amortization in the amount of $0 and $6,777
for the three months ended March 31, 2006 and 2005, respectively, is included in
amortization of debt issuance costs in the statement of operations.

8.   PREFERRED STOCK

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

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

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

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


                                       13
<PAGE>
8.   PREFERRED STOCK (continued)

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

Black-Scholes  valuations were performed on the derivative  liability associated
with the Series A  Preferred  and the  related  warrants.  In 2004,  the Company
recorded an initial derivative liability of $3,206,857. The initial value of the
derivative  liability was being accreted over three years based on  management's
estimate of the  expected  term.  For the three  months ended March 31, 2006 and
2005,  accretion  amounted to $0 and $194,749  respectively,  and is included in
accretion to preferred stock redemption value.

In 2004, the Company recorded  issuance costs of $1,051,927,  which included the
initial value of the warrants of $625,248. These costs were amortized over three
years.  Amortization  of  issuance  costs  totaled $0 and  $80,917 for the three
months ended March 31, 2006 and 2005, respectively, and is included in accretion
to preferred stock redemption value.

9.   COMMON STOCK

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

On June 2, 2005, the Company  reissued from its treasury stock 199,218 shares of
common  stock at $0.103 per share for total  consideration  of $20,466;  843,446
shares  of  common  stock on  August  9,  2005 at  $0.108  per  share  for total
consideration  of $91,092;  and 295,632  shares of common stock on September 23,
2005 at $0.085 per share for total  consideration of $25,129, to a consultant as
payment for services rendered to the Company during fiscal 2005. In August 2005,
the Company  reissued  609,756  shares of its common  stock from  treasury to an
investor for cash of $50,000 in private placement  exercises.  These shares were
issued at a price equal to 85% of the average of the five lowest  closing prices
of the common  stock  during the  twenty-two  trading  days prior to the date of
issuance, as reported by Bloomberg News Services. On August 9, 2005, the Company
reissued from its treasury  stock  240,000  shares of common stock at $0.139 per
share for a total  consideration of $33,360.  On September 27, 2005, the Company
issued  240,000  shares  of  common  stock  at  $0.098  per  share  for a  total
consideration  of $23,520 and on February 8, 2006 the Company  reissued from its
treasury  stock  240,000  shares of common  stock at $0.09 per share for a total
consideration  of $21,600  during the three  months  ended  March 31,  2006 to a
consultant pursuant to a compensation agreement dated July 15, 2005, under which
the Company is to issue an aggregate of 960,000  shares of its common stock,  to
the  consultant  as payment  for  services to be rendered to the Company for the
twelve-month period ending July 14, 2006. The 720,000 shares were valued,  based
on the respective market price on the date of issuance.

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

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

In February 21, 2006,  the Company  reissued  from its  treasury  stock  500,000
shares of common stock at $0.10 per share for total  consideration of $50,000 to
a consultant  pursuant to a  compensation  agreement  dated  September 12, 2005,
under  which the Company is to issue an  aggregate  of  2,000,000  shares of its
common stock to the  consultant at $0.10 per share as payment for services to be
rendered to the Company for the  twelve-month  period ending September 12, 2006.
For the three months ended March 31, 2006, the Company  recognized  compensation
expense of $50,000.

On February 22, 2006, the Company  reissued  200,000 shares of common stock from
its  treasury  stock to a  consultant  as payment for  services  rendered to the
Company over a two year period.  The Company  recognized $18,000 as compensation
expense based on the market value of $0.09 per share on the date of issuance. On
March 8, 2006,  the Company  reissued  447,058  shares of common  stock from its
treasury  stock to a consultant as payment for services  rendered to the Company
for total  consideration of $40,235 based on the market value of $0.09 per share
on the date of  issuance.  As of March  31,2006,  the  Company  had a balance of
664,890 repurchased shares in its treasury.


                                       14
<PAGE>
10.  SIGNIFICANT CONCENTRATIONS OF CREDIT RISK

Cash and restricted  cash are maintained  with major  financial  institutions in
Malaysia. Deposits at these institutions exceed the amount of insurance provided
on such deposits.  The Company has not  experienced  any losses in such accounts
and  believes  it is not  exposed  to any  significant  credit  risk on cash and
restricted cash.

The Company grants credit,  generally without collateral,  to its customers. Two
customers  accounted for approximately 81% and 82% of revenues earned during the
three  months ended March 31, 2006 and 2005,  respectively.  In the three months
ended March 31, 2006, the two customers, respectively, accounted for 41% and 40%
of total  revenue.  In the three months ended March 31, 2005,  the two customers
each  accounted for 41% of total  revenue.  At March 31, 2006, the two customers
accounted for 90% of trade accounts receivable.

Allowance for doubtful  accounts  receivable was $454,995 at March 31, 2006. The
Company will continue to pursue vigorously the collection of all its outstanding
accounts receivable.

Three suppliers accounted for 87% cost of revenues during the three months ended
March  31,  2006,  and one  supplier  accounted  for  substantially  all cost of
revenues  during the three  months  ended  March 31,  2005.  The  Company is not
dependent  upon one supplier to provide the services that it requires but made a
strategic  decision to engage the  services of only a small  number of suppliers
after taking into  consideration the quality of service and competitive  pricing
being offered.  Should the need arise, the Company believes that it will be able
to utilize alternative suppliers for the services that it requires.

11.  SEGMENT INFORMATION

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

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

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

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

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

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

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

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


                                       15
<PAGE>
11.  SEGMENT INFORMATION (CONTINUED)

<TABLE>
<CAPTION>
                                                  Material
                                Applications      Handling        Gallant       Corporate          Total
                              --------------- --------------- -------------- --------------- ---------------
<S>                                <C>              <C>            <C>             <C>               <C>
Three-month period ended
March 31, 2006 :

Revenue:

Products and equipment        $            -- $            -- $      570,283 $            -- $       570,283
services:
   Related parties                     82,112              --        778,169              --         860,281
   Others                           8,320,213          23,482            457              --       8,344,152
                              --------------- --------------- -------------- --------------- ---------------
                                    8,402,325          23,482      1,348,909              --       9,774,716
Cost of revenue:

Products and equipment                     --              --        484,112              --         484,112
services:
   Related parties                     24,634              --             --              --          24,634
   Others                           7,920,204          16,911             --              --       7,937,115
                               --------------- -------------- -------------- --------------- ---------------
Gross profit                  $       457,487  $        6,571 $      864,797 $            -- $     1,328,855
                               =============== ============== ============== =============== ===============

Net income (loss)
from operating segments       $      (102,555)$       (34,871)$      521,997 $            -- $       384,571
                              =============== =============== ============== =============== ===============
Depreciation expense          $        61,520 $         1,981 $        9,444 $            -- $        72,945
                              =============== =============== ============== =============== ===============
Interest expense              $           742 $            -- $       19,478 $            -- $        20,220
                              =============== =============== ============== =============== ===============
Income tax expense            $        39,852 $            -- $      217,986 $            -- $       257,838
                              =============== =============== ============== =============== ===============
Expenditures for additions
  to long lived assets        $           160 $            -- $          365 $            -- $           525
                              =============== =============== ============== =============== ===============


Material
                                Applications      Handling        Gallant       Corporate           Total
                              --------------- --------------- -------------- --------------- ---------------
Three-month period ended
March 31, 2005 (Restated):

Revenue:

Products and equipment        $            -- $            -- $      960,954 $            -- $       960,954
services:
   Related parties                     45,789              --             --              --          45,789
   Others                           5,371,579          91,182         50,850              --       5,513,611
                              --------------- --------------- --------------  -------------- ---------------
                                    5,417,368          91,182      1,011,804              --       6,520,354
Cost of revenue:

Products and equipment                     --               --       848,840              --         848,840
services:
   Related parties                     35,789              --             --              --          35,789
   Others                           4,953,540          87,624          4,026              --       5,045,190
                              --------------- --------------- --------------  -------------- ---------------
Gross profit                  $       428,039 $         3,558 $      158,938  $           -- $       590,535
                              =============== =============== ==============  ============== ===============

Net income (loss)
from operating segments       $       161,866 $        (6,919)$        11,467 $      (18,682)$       147,732
                              =============== =============== == ============ ============== ===============
Depreciation expense          $        60,862 $         4,318 $        7,534  $           -- $        72,714
                              =============== =============== =============== ============== ===============
Interest expense              $        10,174 $            -- $        18,473 $       14,377 $        43,024
                              =============== =============== =============== ============== ===============
Interest Income               $        43,051 $            -- $            -- $           -- $        43,051
                              =============== =============== =============== ============== ===============
Income tax expense            $        22,368 $            -- $            -- $           -- $        22,368
                              =============== =============== =============== ============== ===============
Expenditures for additions
  to long lived assets        $            -- $            -- $        72,537 $           -- $        72,537
                              =============== =============== =============== ============== ===============

</TABLE>
                                       16
<PAGE>
11.  SEGMENT INFORMATION (CONTINUED)


Consolidated total assets as of March 31, 2006 are as follows:


   Applications                                             $         8,723,625
   Apple                                                              2,706,109
   Material handling                                                     81,119
                                                            --------------------
   Total consolidated assets                                $        11,510,853
                                                            ====================

                                       17

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

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

OVERVIEW

Secured Digital Applications,  Inc. ("SDA" or the "Company") is an integrator of
related   technology-based   business   enterprises   that   provide   practical
applications  for  digital  technologies.  We  generate  revenue  through our 14
majority or wholly owned subsidiary  companies  located in the United States and
Malaysia,   and  operating  in  the  information   technology,   communications,
multimedia, retail, international trade and logistics industries.

Since SDA became a publicly held company through a reverse  acquisition in 1999,
the Company has expanded its lines of business  from a broadband  communications
operator  and  internet  content  provider by  acquiring  majority  interests in
regional  companies that are believed to have superior  potential for growth and
profitability  as a member  of the SDA  Group  of  Companies.  Acquisitions  are
pursued  based  on  management's   criteria  for   acquisition,   which  include
acquisition   costs,   growth  potential,   compatibility  with  SDA's  existing
subsidiaries and the likelihood, in management's view, that the acquired company
will benefit from the centralized  managerial and support  services  provided by
SDA's home office in Petaling Jaya, Malaysia.

SDA's  operating  subsidiaries  offer  products  in  diverse  lines of  business
including the development of internet  content,  digital  security and biometric
products, broadband telecommunications,  secured shipping,  value-added sales of
hardware  and  software,  and  retail  sales  of  Apple  computer  products  and
accessories.

The Company  conducts  its  principal  operations  in  Malaysia.  Its  principal
subsidiaries as of March 31, 2006 are the following companies:

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

2.   SDA  Worldwide,   Inc.("SDAW")(f/k/a   SDA  America,  Inc.)  an  80%  owned
     subsidiary,  organized  under  Delaware law and based in Saddle Brook,  NJ,
     offers  consulting  services to Asian exporters seeking to enter the United
     States markets,  principally on compliance with US customs regulations. The
     company  was  originally  formed as a wholly  owned  corporation  used as a
     special  vehicle to secure a $6.5 million  funding from Laurus  Master Fund
     Ltd. (the "Master Fund") through private placement of securities consisting
     of  convertible  preferred  stock of SDA America.  As a result of the early
     retirement  of the  Laurus  investment,  management  determined  to use the
     corporation  as the vehicle to develop the  company's  international  trade
     consulting business in the United States. SDAW began operations in 2006 and
     did not generate any revenue in 2005.

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

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

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

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


                                       18
<PAGE>
7.   Gallant Service Centre (M) Sdn Bhd ("GSC"),  SDAM's wholly-owned subsidiary
     from the date of acquisition on September 29, 2004 is primarily involved in
     the provision of scheduled  maintenance and repair services for information
     technology  products.  The Company is using GSC as the special  vehicle for
     its investment in the Gallant group of companies.

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

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

10.  Innospective  Sdn Bhd ("ISS"),  a 55%-owned  subsidiary  of SDAM from April
     2005, is a systems integration firm specializing in the design, development
     and implementation of wireless applications and electronic solutions.


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

For the three months ended March 31, 2006,  the Company's  revenue was generated
primarily from the following activities:

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

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

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

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

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

Significant Business Developments and Plan of Operation

During 2006,  the Company  anticipates  that it will  continue to implement  its
strategy  and to  operate  its  existing  lines  of  businesses,  including  its
multi-media content operations, the retail computer outlets and the provision of
IT and wireless  technology  consulting.  In  addition,  we plan to continue our
efforts to commercialize our logistics and supply chain services and technology.

We plan to operate in the United States during 2006  primarily  through SDAW and
CST and to provide  consulting  services to Asian  companies that are seeking to
establish a presence in the US markets.  We will focus our efforts on developing
contracts with  Malaysian  manufacturers.  During 2005,  our subsidiary  Gallant
opened  its second  and third  Apple  retail  centers  located  in the  Hartamas
Shopping Centre in Sri Hartamas and Bangsar Village Shopping Center,  suburbs of
Kuala Lumpur. The new outlets focus on the "digital lifestyle" concept developed
by the Company and offer a one-stop  showroom for retailing of Apple products as
well as products  developed  by the Company and its newly  acquired  subsidiary,
ISS.  Gallant  began  to  implement  new  purchasing  and  inventory  management
techniques  during  2006,  including  increased  sales  on  consignment  and the
development of proprietary  inventory  systems that management  anticipates will
reduce costs and improve profit margins.

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

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

                                       19
<PAGE>
Strategic Contractual Relationships

The Company seeks to enter strategic agreements,  both formal and informal, with
other  providers of goods or services  that are  compatible  with the  Company's
existing businesses. Such arrangements include license agreements,  requirements
contracts and service agreements.  The Company may also seek to acquire business
enterprises that offer goods and services that are of benefit to the Company and
its shareholders.  The Company's success with these strategic  relationships has
been  uneven,  however,  and with the  exception  of  products  that the company
utilizes  in  performing  its  consulting  contracts,  they  have not  generated
material  amounts  of  revenue.  We  cannot  forecast  whether  these  strategic
relationships will generate significant revenue in 2006.

Results of Operations

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

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

                                                   Three Months Ended March 31,
                                               ---------------------------------
                                                     2006              2005
                                                     ----              ----
                                                                    (Restated)

Revenues                                       $   9,774,716     $   6,520,354
Gross profit                                       1,328,855           590,535
Sales and marketing                                    6,874            17,288
General and administrative                           720,406           427,076
Loss on disposal of property and equipment           (47,409)             (877)
Gain on disposal of assets-related parties            23,805            13,684
Net income                                           384,571           147,732


Subsequent  to the  issuance  of  the  Company's  March  31,  2005  consolidated
financial  statements,  and  based  upon a  further  evaluation  of the  factors
utilized in determining  the accounting and  presentation of a May 2004 issuance
of  preferred  stock of a  subsidiary,  a  convertible  term  note  and  related
warrants,  the Company  determined that both the preferred stock of a subsidiary
and the  convertible  term  note  contained  embedded  derivatives  that must be
bifurcated from their host  instruments  (See notes 7 and 8).  Accordingly,  the
Company's  March 31, 2005 interim  consolidated  financial  statements have been
restated,  resulting in an decrease in net income of $18,682 (less than $.01 per
share)  and a  decrease  in net  income  applicable  to common  shareholders  of
$294,348 (less than $.01 per  share)resulting in a net loss applicable to common
shareholders  of  $286,597.  In  addition,  shareholders'  equity  decreased  by
$2,801,050.

COMPARISON  OF THE THREE  MONTHS  ENDED MARCH 31, 2006 TO THE THREE MONTHS ENDED
MARCH 31, 2005

REVENUES

Revenues for the three months ended March 31, 2006 ("2006")  totaled  $9,774,716
compared to  $6,520,354  for the three  months  ended  March 31, 2005  ("2005").
Revenue by division is as follows:

                                     2006        2005        Increase     %
                                 -----------   -----------  ----------- -----
                                               (Restated)
Application division             $ 8,402,325   $ 5,417,368  $ 2,984,957   55%
Material handling division            23,482        91,182      (67,700) -74%
Apple division                     1,348,909     1,011,804      337,105   33%
                                 -----------   -----------  -----------  ----
Total revenue                    $ 9,774,716   $ 6,520,354  $ 3,254,362   50%
                                 ===========   ===========  ===========  ====

The  increase  in net sales in 2006 as  compared  to 2005 was  mainly  due to an
increase in fees earned from the production of multimedia  programs and business
contracts.  The increase in revenue from the  production of multimedia  programs
was the result of  sub-contract  work from the  Company's  two major  customers.
Revenue for project  consulting  services was generated  from contracts that the
Company secured in 2001 through 2003. Included in Apple division revenue in 2006
was income of $778,164  from a related  party for project  consulting  fees.  In
2006, two customers accounted for 41% and 40% of total revenue, respectively. In
2005, two customers each accounted for 41% of total revenue.

                                       20
<PAGE>
GROSS PROFIT

Gross profit  increased to  $1,328,855  in the first quarter of 2006 compared to
$590,535  during the comparable  period in 2005.  Gross profit by division is as
follows:

                                     2006        2005        Increase     %
                                 -----------   -----------  ----------- -----
                                               (Restated)
Application division             $   457,487   $   428,039  $    29,448    7%
Material handling division             6,571         3,558        3,013   85%
Apple division                       864,797       158,938      705,859  444%
                                 -----------   -----------  -----------  ----
Total gross profit               $ 1,328,855   $   590,535  $   738,320  125%
                                 ===========   ===========  ===========  ====

The increase in gross profit  dollars was primarily due to higher  related party
revenue earned in the Apple Division in 2006 totaling $778,164.

The gross profit  percentage of the  Application  division  decreased to 5.4% in
2006 from 7.9% in 2005.  The lower gross  profit  percentage  is a result of the
Company requiring  additional  external resources in order to fulfill the demand
for the Company's  services.  The outsourcing of content production work enabled
the  Company to develop a team of  contractors  that will  assist the Company in
producing  multimedia  content and  applications  that are crucial to its future
business operation.

Excluding the related party  revenue,  the gross profit  percentage of the Apple
division was 15.2% and 15.7% for 2006 and 2005, respectively.

SALES AND MARKETING EXPENSES

Sales and marketing expenses decreased by $10,414 or 60%, to $6,874 in the first
quarter of 2006 compared to $17,288 in the first quarter of 2005, primarily as a
result of a decrease in travel expenses.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses relating to non-related parties increased to
$683,987 in 2006 compared to $405,760 in 2005. These expenses by division are as
follows:

                                     2006        2005        Increase     %
                                 -----------   -----------  ----------- -----
                                               (Restated)
Application division             $   540,283   $   223,347  $   316,936  142%
Material handling division            14,737        35,778      (21,041) -59%
Apple division                       128,967       146,635      (17,668) -12%
                                 -----------   -----------  ----------- -----
Total general and
  administrative expenses        $   683,987   $   405,760  $   278,227   69%
                                 ===========   ===========  =========== =====

The  increase in general and  administrative  expenses  relating to  non-related
parties was primarily  due to increases  incurred by the  Application  division,
which accounted for 79% and 55%,  respectively,  of the total.  The increase was
primarily attributable to an increase in consulting fees, compensation expenses,
maintenance  expenses and  professional  fees.  The Material  Handling  division
accounted  for 2% and 8% of  expenses,  respectively,  of the  total.  The Apple
division accounted for 19% and 36% of expenses, respectively, of the total.

For the first quarter of 2006, general and administrative  expenses consisted of
the following: 11% was for depreciation of tangible assets, 13% was for employee
payroll,  18% was for fees for  professional and auditing  services,  1% was for
investor relation expenses,  39% was for stock-based  compensation  expenses and
18% was  for  rent,  utilities,  general  office  supplies,  communications  and
corporate  insurance  expenses.  For 2005, 18% was for  depreciation of tangible
assets,  5% was for consulting  fees, 26% was for employee  payroll,  5% was for
fees for  professional  and  auditing  services,  5% was for  investor  relation
expenses,  15% was for stock-based  compensation  expenses and 26% was for rent,
utilities,  general  office  supplies,  communications  and corporate  insurance
expenses.

General and  administrative  expenses - related  parties in the first quarter of
2006 and 2005 were $36,419 and $21,316,  respectively.  These expenses  included
management fees and administrative  expenses payable by the Company to a company
in which Mr.  Patrick  Lim, the  President  and Chief  Executive  Officer of the
Company,  has a financial interest.  In 2006 and 2005, the related company,  LSH
Assets Holdings Sdn Bhd ("LSH") billed the Company's Malaysian subsidiary, SDAM,
administrative expenses of $6,419 and $6,316,  respectively,  for administration
and clerical fees  incurred by LSH on behalf of SDAM.  The Company also incurred
management  fees of  $30,000  and  $15,000 in 2006 and 2005,  respectively.  The
management fee was charged on the basis of time spent for the administration and
management services provided to the Company.

                                       21

<PAGE>
INTEREST EXPENSE

Interest expense decreased by $22,804 or 53%, to $20,220 in the first quarter of
2006 as compared to $43,024 in the comparable  period of 2005.  Interest expense
in 2005 included  approximately  $8,100 related to the $500,000 convertible term
note  issued on May 28,  2004 and  $14,377  related to the  amortization  of the
derivative  liability  associated with the term note. In 2005,  interest expense
relating to the term note accounted for 52% of the expense for the period.

AMORTIZATION OF DEBT ISSUANCE COSTS

Amortization  of  finance  costs of $6,777 in 2005  relate  to the  issuance  of
preferred stock of a subsidiary and a term note on May 28, 2004.

PREVIOUSLY DEFERRED GAIN ON SALE OF TECHNOLOGY - RELATED PARTY

The gain represents the recognition of a previously deferred gain of $23,805 and
$13,684, respectively, related to a similar amount the Company received from its
long-term  receivable - related party. The receivable balance and total deferred
gain was each $183,098, respectively, as of December 31, 2005. This amount arose
in the year ended  December  31, 1998 when the  Company  sold assets used in the
operations  of a subsidiary  to a related  company.  Due to the  uncertainty  of
collection of the related receivable, the related gain on the sale of the assets
was deferred and is to be  recognized  only after all costs have been  recovered
and as payments are received.  During the year ended December 31, 2002, payments
received  by the  Company  exceeded  all  remaining  costs.  As a result of cash
payment  received,  the  Company's  long-term  receivable  -  related  party and
deferred gain balances  were reduced to $164,905  respectively,  as of March 31,
2006.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2006, the Company had net cash of $45,512,  and restricted  cash
of $569,702.

In 2006,  operations  were  funded  primarily  from the  proceeds  of a  private
placement and increased bank borrowings.  As of March 31, 2006, the Company owed
Patrick  Lim, the  Company's  principal  shareholder,  Chief  Executive  Officer
("CEO") and Chairman  $61,308.  Additionally,  as of March 31, 2006, the Company
owed an affiliated company in which Mr. Lim has a financial  interest,  $101,848
for  short-term  cash  advances  made to a subsidiary of the Company for working
capital  purposes from time to time and for management  fees.  These amounts are
unsecured, bear no interest and have no fixed terms of repayment.

Net cash used in operating  activities  of $72,825 in 2006 was  primarily due to
increase in accounts receivable offset by increases in various liabilities.

Net cash provided by investing  activities of $18,041 was mainly due to disposal
of equipment.

Net cash provided by financing  activities of $91,992 was mainly attributable to
higher bank borrowings and a private placement, net of payments made for various
debt.

In addition to internally  generated  funds and financial  support from Mr. Lim,
the Company may seek to raise additional funds from equity or debt financing for
its future working capital  requirements.  As of March 31, 2006, the Company has
furniture  and  equipment  of  approximately  $1 million for the roll out of its
portal,  build-out of VISIONET and  implementation  of its  business  plan.  The
Company estimates that it would require additional capital expenditures of up to
$2.0 million to implement  its business  plan to become a total system  solution
provider involved in application  development,  network  operation,  delivery of
value added applications and services; and sale of its EyStar SmartHome Console.

The Company will also be expanding into new businesses that include provision of
secured  shipping and supply chain management  services.  The Company expects to
incur  further  expenses  to  acquire   companies  and  technologies   that  are
synergistic  to the new  businesses and will help the Company to rollout the new
businesses  in the shortest  time  possible.  During 2003 and 2004,  the Company
incurred  $263,000 in the  establishment and acquisition of new subsidiaries and
associates  relating to its new businesses.  Some of these  acquisitions did not
work out well and the Company has sold some of these companies, whose operations
and management were not compatible with the Company's business plan in 2004. For
2006,  the Company  estimates  that it will incur an additional  $2.1 million to
identify,  negotiate and acquire the  businesses  and/or net assets in companies
synergistic to its planned new businesses.  In addition,  the Company  estimates
that it will  require a further  $2.0  million to finance the set-up cost of its
new  businesses.  The Company  also  expects that it will require a further $2.0
million to finance the working  capital of its new  businesses and the operation
of its newly acquired and/or established subsidiaries and associates.


                                       22
<PAGE>
On July 7, 2004 the Company announced  teaming  agreements with two unaffiliated
entities to  collectively  pursue projects to enable the search and match of DNA
data for newborns and  registered  criminals for use primarily by the Government
of Malaysia.  The project may be developed by a joint venture company led by the
Company. The project may be financed by internally  generated funds.  Additional
financing in the form of a grant may be sought from the  Multimedia  Development
Corporation,   a  Malaysian  Corporation  charged  with  the  responsibility  of
implementing the Multimedia Super Corridor (MSC), a Malaysian initiative for the
global information and communication technology (ICT) industry.

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

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

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

ITEM 3. CONTROLS AND PROCEDURES

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

There has been no change in our internal control over financial reporting during
the quarter ended March 31, 2006 that has materially affected,  or is reasonably
likely to materially affect, our internal control over financial reporting.


                                       23
<PAGE>
PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      None.


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

      None.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

      None.


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

      None.


ITEM 5. OTHER INFORMATION

      None.


ITEM 6. EXHIBITS

       (a) Exhibits

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

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

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

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

                                       24

<PAGE>
                                   SIGNATURES

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


                                       SECURED DIGITAL APPLICATIONS, INC.
                                       (Registrant)



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



DATE: MAY 22, 2006                     BY: /s/ Voon Fui Yong
                                       ------------------------------
                                       Voon Fui Yong
                                       Chief Accounting Officer


                                       25