UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
 Washington,
D. C. 20549
 
 FORM
10-K/A-2
 
 [X]
              ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the fiscal year ended December 31,
2007
 
 Commission
file number 000-30013
 
 CARDTREND
INTERNATIONAL, INC.
 (Exact
name of registrant as specified in its charter)
 
 Nevada
 (State
or other jurisdiction of incorporation or organization)
 
 800
5th
Avenue, Suite 4100
 Seattle,
Washington 98104
 (Address
of principal executive offices, including zip code.)
 
 206-447-1379
 (Registrant's
telephone number, including area code)
 
 Securities
registered pursuant to Section 12(b) of the Act: None.
 
 Securities
registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par
value
 
 Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. [   ]
Yes  No [X]
 
 Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act: [   ] Yes No
[X]
 
 Indicate
by check mark whether the registrant(1) has filed all reports required by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 day.   [X]
Yes [   ] No
 
 Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulations S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy ir information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[   ]
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 if the
Exchange Act.
 
 Large
      Accelerated filer
              
              [   ]
              
              Accelerated
      filer            
              [   ]Non-accelerated
      filer
              [   ]
              
              Smaller
      reporting company  [X](Do
      not check if a smaller reporting
company)
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). [   ]
Yes   [X] No
 
 State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity, as of April 10, 2008: $6.16
Million.















EXPLANATORY NOTE






Cardtrend
International Inc. (the Registrant) is filing this amended Form 10-K/A-2 to
include the revised audit report and related financial statements, both of which
were previously filed with the SEC.




This
Form 10-K/A-2 should be read in conjunction with the original Form 10-KSB, which
continues to speak as of the date of the Form 10-KSB. Except for the “Report of
Independent Registered Public Accounting Firm”, this Form 10-K/A-2 does not
modify or update disclosures in the original Form 10-KSB. Accordingly, this Form
10-K/A-2 does not reflect events occurring after the filing of the Form 10-KSB
or modify or update any related or other disclosures.



























-2-




PART II






ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA




Cardtrend
      International Inc. and SubsidiariesAudited
      ConsolidatedFinancial
      Statements for the years ended December 31, 2007 and
      2006Contents
            PageReport of Independent Registered
      Public Accounting Firm
            F-1Consolidated Balance
      Sheets
            F-2Consolidated Statements of
      Operations and Comprehensive Loss
            F-3Consolidated Statements of
      Changes in Stockholders Equity
            F-4Consolidated Statements of Cash
      Flows
            F-5Notes to the Consolidated
      Financial Statements
            F-7


















-3-









REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of
Directors


Cardtrend
International Inc. and Subsidiaries


Seattle,
WA





We have
audited the accompanying consolidated balance sheets of Cardtrend International
Inc. and Subsidiaries (the “Company”), as of December 31, 2007 and 2006, and the
related statements of operations, stockholder’s equity and cash flows for each
of the two years in the period ended December 31, 2007. These consolidated
financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.





We have
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe our audits provide a reasonable
basis for our opinion.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Cardtrend
International Inc. and Subsidiaries at December 31, 2007 and the results of
their operations and their cash flows for the each of the two years in the
period ended December 31, 2007 and 2006, in conformity with accounting
principles generally accepted in the United States of America.





The
accompanying consolidated financial statements have been prepared assuming that
the company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company had suffered recurring losses
from operations and has an accumulated deficit as of December 31, 2007. These
conditions raise substantial doubt about Company’s ability to continue as a
going concern. Managements' plans in regard to these matters are also
described in Note 1 to the consolidated financial statements. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.










RBSM LLP


RBSM
LLP










New York,
New York


April
12, 2008










F-1









-4-


CARDTREND INTERNATIONAL INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSDECEMBER 31, 2007 AND 20062007
            
            
            2006ASSETSCurrent assets:Cash and cash equivalents
            $
            211,603
            
            $
            343,262Accounts receivable, net of allowance for doubtful accounts of
      $6,381 andof December 31, 2007 and 2006, respectively
            
            521,625
            
            
            309,779Other receivables
            
            5,700
            
            
            10,169Inventories, at cost
            
            2,716
            
            
            4,221Prepaid expenses
            
            9,773
            
            
            2,095Total current assets
            
            751,417
            
            
            669,526Property, plant and equipment, net
            
            555,489
            
            
            309,088Goodwill
            
            5,961,793
            
            
            5,897,731Intellectual Property, net of accumulated amortization of $116,667
      and $16,667 as ofDecember 31, 2007 and 2006, respectively
            
            383,333
            
            
            483,333Other assets and deposits
            
            38,701
            
            
            134,557Total Assets
            $
            7,690,733
            
            $
            7,494,235LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable
            $
            526,919
            
            $
            140,324Unearned income
            
            7,488
            
            
            101,954Accrued liabilities and other payables
            
            637,829
            
            
            779,129Due to related parties
            
            228,293
            
            
            514,269Loan payable
            
            108,679
            
            
            100,000Total Current Liabilities
            
            1,509,208
            
            
            1,635,676Derivative Liability
            
            -
            
            
            640,201Convertible loan payable, net of unamortized discount of $576,986
      and $0 forDecember 31, 2007 and 2006,
      respectively
            
            223,014
            
            
            -Total Liabilities
            
            1,732,222
            
            
            2,275,877Commitments and contingenciesMinority Interest
            
            -
            
            
            21,892Stockholders’ EquityPreferred stock10,000,000 authorized preferred shares of $0.001 par value,
      6,000,000 issued andoutstanding as of December 31, 2007 and 2006
            
            6,000
            
            
            6,000Common stock250,000,000 authorized common shares of $0.001 par value,
      82,408,276 and48,057,836 shares issued and outstanding as ofDecember 31, 2007 and 2006, respectively
            
            82,408
            
            
            48,058Additional paid-in capital
            
            21,269,252
            
            
            17,285,905Deferred stock based compensation
            
            (977,563
            )
            
            (771,608
            )Accumulated deficit
            
            (14,513,137
            )
            
            (11,414,602
            )Accumulated other comprehensive income
            
            91,551
            
            
            42,713Total Stockholders’ equity
            
            5,958,511
            
            
            5,196,466Total Liabilities and Stockholders’ Equity
            $
            7,690,733
            
            $
            7,494,235The accompanying notes are an integral part of these consolidated
      financial statementsF-2


5




---

CARDTREND INTERNATIONAL INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
      LOSSESFOR THE YEARS ENDED DECEMBER 31, 2007 AND 20062007
            
            
            2006Net revenue
            $
            1,727,392
            
            $
            346,738Cost of goods and services
            
            (1,307,581
            )
            
            (211,683
            )Gross profit
            
            419,811
            
            
            135,055Operating expenses:Selling, general and administrative expenses
            
            1,771,099
            
            
            1,316,702Stock based compensation
            
            1,131,934
            
            
            3,093,874Depreciation and amortization
            
            213,053
            
            
            29,697Total operating expense
            
            3,116,086
            
            
            4,440,273Net operating loss
            
            (2,696,275
            )
            
            (4,305,218
            )Other income (expenses)Net change in fair value of derivative liability
            
            348,402
            
            
            (333,725
            )Interest expense
            
            (666,003
            )
            
            (257,861
            )Loss from Equity investment
            
            (105,263
            )
            
            -Net loss before income taxes
            
            (3,119,139
            )
            
            (4,896,804
            )Income Taxes
            
            (1,288
            )
            
            -Net Loss before minority interest
            
            (3,120,427
            )
            
            (4,896,804
            )Minority interest
            
            21,892
            
            
            4,340Net Loss
            $
            (3,098,535
            )
            $
            (4,892,464
            )Loss per share, basic and diluted
            $
            (0.06
            )
            $
            (0.13
            )Weighted average shares outstanding- basic and diluted
            
            55,682,478
            
            
            37,343,008Net loss
            $
            (3,098,535
            )
            $
            (4,892,464
            )Other Comprehensive income
            
            48,838
            
            
            41,667Comprehensive loss
            $
            (3,049,697
            )
            $
            (4,850,797
            )The accompanying notes are an integral part of these consolidated
      financial statements.F-3


6




---

CARDTREND INTERNATIONAL INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
      EQUITYFOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006Common Stock
            Preferred Shares
            
            Add'l
            
            
            Deferred
            
            
            Accumulated
            
            
            OtherShares
            
            Amounts
            Shares
            
            Amounts
            
            Pd In Cap
            
            
            Compensation
            
            
            Earnings
            
            
            Comprehensive
            
            TotalBalance, January 1,2006
            35,619,765
            $
            35,620
            -
            $
            -
            $
            9,817,936
            
            $
            (3,871,367
            )
            $
            (6,522,138
            )
            $
            1,046
            $
            (538,903
            )Common Stock Issuedfor ConsultingServices
            4,150,000
            
            4,150
            
            
            
            
            558,350
            
            
            
            
            
            
            
            
            
            
            562,500Preferred Sharesissued for Acquisition
            
            
            
            6,000,000
            
            6,000
            
            7,433,286
            
            
            
            
            
            
            
            
            
            
            7,439,286Common Stock issuedin exchange of debt
            7,088,071
            
            7,088
            
            
            
            
            779,873
            
            
            
            
            
            
            
            
            
            
            786,961Common Stock issuedfor services
            1,050,000
            
            1,050
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,050Common Stock issuedfor options exercised
            150,000
            
            150
            
            
            
            
            (150
            )
            
            
            
            
            
            
            
            
            
            -Stock basedcompensation
            
            
            
            
            
            
            
            25,791
            
            
            
            
            
            
            
            
            
            
            25,791Amortization ofdeferred compensation
            
            
            
            
            
            
            
            624,198
            
            
            1,347,399
            
            
            
            
            
            
            
            1,971,597Reclassification ofwarrants to derivativeliability
            
            
            
            
            
            
            
            (306,476
            )
            
            
            
            
            
            
            
            
            
            (306,476
            )Beneficial conversionfeature
            
            
            
            
            
            
            
            105,457
            
            
            
            
            
            
            
            
            
            
            105,457Reversal of stockbased Compensation
            
            
            
            
            
            
            
            (1,752,360
            )
            
            1,752,360
            
            
            
            
            
            
            
            -Foreign exchange gain
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            41,667
            
            41,667Net Loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            (4,892,464
            )
            
            
            
            (4,892,464
            )Balance as ofDecember 31, 2006
            48,057,836
            $
            48,058
            6,000,000
            $
            6,000
            $
            17,285,905
            
            $
            (771,608
            )
            $
            (11,414,602
            )
            $
            42,713
            $
            5,196,466Common Stock Issuedfor ConsultingServices
            1,250,000
            
            1,250
            -
            
            -
            
            44,250
            
            
            -
            
            
            -
            
            
            -
            
            45,500Common Stock issuedin exchange of debt
            9,494,374
            
            9,494
            -
            
            -
            
            751,266
            
            
            -
            
            
            -
            
            
            -
            
            760,760Common Stock issuedfor Convertible Loans
            13,606,066
            
            13,606
            -
            
            -
            
            408,182
            
            
            -
            
            
            -
            
            
            -
            
            421,788Common Stock issuedin lieu of sign-onbonus
            10,000,000
            
            10,000
            -
            
            -
            
            790,000
            
            
            -
            
            
            -
            
            
            -
            
            800,000Stock basedcompensation
            -
            
            -
            -
            
            -
            
            9,800
            
            
            (845,500
            )
            
            -
            
            
            -
            
            (835,700
            )Amortization ofdeferred compensation
            -
            
            -
            -
            
            -
            
            472,785
            
            
            669,045
            
            
            -
            
            
            -
            
            1,141,830Adjustment to reclasswarrant liability toequity
            -
            
            -
            -
            
            -
            
            291,799
            
            
            -
            
            
            -
            
            
            -
            
            291,799Beneficial conversionfeature
            
            
            
            -
            
            -
            
            1,205,461
            
            
            -
            
            
            -
            
            
            -
            
            1,205,461Reversal of stockbased Compensation
            -
            
            -
            -
            
            -
            
            9,804
            
            
            (29,500
            )
            
            -
            
            
            -
            
            (19,696
            )Foreign exchange gain
            -
            
            -
            -
            
            -
            
            -
            
            
            -
            
            
            -
            
            
            48,838
            
            48,838Net Loss
            -
            
            -
            -
            
            -
            
            
            
            
            -
            
            
            (3,098,535
            )
            
            -
            
            (3,098,535
            )Balance as ofDecember 31, 2007
            82,408,276
            $
            82,408
            6,000,000
            $
            6,000
            $
            21,269,252
            
            $
            (977,563
            )
            $
            (14,513,137
            )
            $
            91,551
            $
            5,958,511


7




---

CARDTREND INTERNATIONAL INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2007 AND 20062007
            
            
            2006CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
            $
            (3,098,535
            )
            
            (4,892,464
            )Adjustments to reconcile net loss to net cash
            
            
            
            $used in operating activities:Depreciation and amortization
            
            213,053
            
            
            29,697Amortization of debt discount
            
            628,475
            
            
            232,320Stock based compensation
            
            1,131,934
            
            
            3,093,874Stock issued for settlement of Interest
            
            16,788
            
            
            -Stock issued for settlement of accrued liabilities
            
            760,760
            
            
            -Change in derivative liability
            
            (348,402
            )
            
            333,725Minority Interest
            
            (21,892
            )
            
            21,892Loss from equity investment
            
            105,263
            
            
            -Bad debt expense
            
            6,381
            
            
            17,974Changes in operating assets and liabilities:Accounts receivable
            
            (218,227
            )
            
            199,689Other receivables
            
            4,469
            
            
            75,721Prepaid expenses / Inventories
            
            (15,580
            )
            
            13,986Accounts payable and accrued expenses
            
            (40,681
            )
            
            50,467Unearned income
            
            (94,466
            )
            
            76,114Net cash used in operating activities
            
            (970,660
            )
            
            (747,005
            )CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment , net
            
            (359,453
            )
            
            (2,430
            )Prepayment of Acquisition
            
            (64,062
            )
            
            -Cash acquired from Cardtrend Systems
            
            -
            
            
            156,490Cash acquired from IIG
            
            -
            
            
            2,807Net cash (used in) provided by investing activities
            
            (423,515
            )
            
            156,867CASH FLOWS FROM FINANCING ACTIVITIES:Net Proceed from Hire Purchase
            
            8,679
            
            
            -Proceeds from (repayment of) notes payable and capital
      lease
            
            1,205,000
            
            
            (71,848
            )Proceeds from related parties
            
            -
            
            
            305,160Proceeds from convertible debt
            
            -
            
            
            560,000Payments of deposits
            
            -
            
            
            (13,345
            )Proceeds from exercise of stock options
            
            -
            
            
            1,200Net cash provided by financing activities
            
            1,213,679
            
            
            781,167Effect of exchange rate changes on cash and cash
      equivalents
            
            48,837
            
            
            41,667Net (decrease) increase in cash
            
            (131,659
            )
            
            232,696Cash and cash equivalents, beginning of year
            
            343,262
            
            
            110,566Cash and cash equivalents, end of year
            $
            211,603
            
            $
            343,262Supplemental schedule for non-cash investing and financing
      activities:Common stock issued for settlement of accrued interest and
      debt
            
            421,788
            
            
            -Discount on convertible notes
            
            (1,205,462
            )
            
            -Extinguishment of derivative liability
            
            291,799
            
            
            -Stock issued for services
            
            1,131,934
            
            
            562,500Stock issued for settlement of accrued expenses
            
            760,760
            
            
            786,961Stock issued in exchange for option exercises
            
            -
            
            
            25,500The accompanying notes are an integral part of these consolidated
      financial statements.F-5


8




---

Cardtrend International Inc. and Subsidiaries  Notes to the Consolidated Financial Statements  December 31, 2007 and 2006




1. Operations and Going Concern




Operations  Cardtrend International Inc. (formerly Asia Payment Systems Inc.) (the
"Company") was incorporated under the laws of the State of Nevada in 1998 to
engage in international business as Asian Alliance Ventures Inc. and
subsequently changed its name to Asia Payment Systems Inc. in 2003.




During
the first quarter of 2004 the Company completed the acquisition of all the
assets, business plan, client agreements and intellectual property in a payment
services ("Payment Services") business through the acquisition of WelWay
Development Limited, an inactive company. Effective April 1, 2004 the Company
was focusing all its efforts on the Payment Services business.




The
Company commenced its planned principal operations and started generating
revenue from its pilot project in the first quarter of 2005. In 2005, the
Company continued to develop prototype systems for testing by potential
customers. Revenue generated from the pilot project had yet to be significant,
and therefore, the Company continued to be considered a development stage
company in 2005. However, on December 7, 2006, the Company completed the
acquisition of Interpay International Group Ltd. (“IIG”) group of companies,
which is an operator of payment cards and loyalty cards, and on October 31,
2006, completed the merger with Cardtrend Systems Sdn. Bhd. (“Cardtrend
Systems”) which is a provider of software solutions to operators of payment
cards and loyalty cards. Revenues and expenses from Cardtrend Systems were
recognized from November 2006 onwards while IIG’s revenues and expenses were
recognized from December 8, 2006 onwards.




Prior
to November 2006, the Company was a development state enterprise as defined
under Statement on Financial Accounting Standards No.7, “Development Stage
Enterprises “ ("SFAS No.7"). Subsequent to November 2006, the Company no longer
considers itself as a development stage company.




Going Concern  The
accompanying consolidated financial statements have been prepared on the basis
that the Company will continue as a going concern which assumes the realization
of assets and settlement of liabilities in the normal course of business. Since
its inception till November 2006, the Company has been engaged in organizational
and pre-operating activities. For the year ended December 31, 2007, the Company
incurred a net loss of $3,098,535 and a loss generated in operating activities
of $2,696,275. At December 31, 2007, the Company had a working capital
deficiency of $757,791 and an accumulated deficit of $14,513,137. The Company is
experiencing difficulty in generating sufficient cash flow to meet its
obligations and sustain its operations, which raises substantial doubt about its
ability to continue as a going concern. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.




The
Company's existence is dependent upon management's ability to develop profitable
operations and resolve its liquidity problems. Management anticipates the
Company will attain profitable status and improve its liquidity through the
continued developing, marketing and selling of its products and additional
equity investment in the Company. The accompanying financial statements do not
include any adjustments that might result should the Company be unable to
continue as a going concern.




In
order to improve the Company's liquidity, the Company is actively pursing
additional equity and or debt financing through discussions with investment
bankers and private investors. There can be no assurance the Company will be
successful in its effort to secure additional equity and or debt financing.




If
operations and cash flows continue to improve through these efforts, management
believes that the Company can continue to operate. However, no assurance can be
given that management's actions will result in profitable operations or the
resolution of its liquidity problems.




Economic Dependency  During
the year ended December 31, 2007 approximately $1,181,026 or 68% of total
revenues were derived from 3 customers as compared to $229,335 or 66% of total
revenues from 2 customers for the same period in 2006. During the year ended
December 31, 2007 approximately $900,247 or 68.85% of total services were
purchased from one vendor, as compared to $155,885 or 73.6% from one vendor for
the same period in 2006. However, these dependencies will be greatly reduced
upon the completion of the proposed acquisition of the vendor which is expected
by the end of April 2008.




2. Summary of Significant Accounting Policies




Basis of
Presentation The
audited consolidated financial statements are presented in U.S. dollars and in
accordance with accounting principles generally accepted in the United States of
America.




Principles of Consolidation The
consolidated financial statements include the accounts of the Company and its
wholly owned subsidiaries:




*
            Asia Payment Systems (HK) Ltd. (“APS HK”) incorporated under the
      Company Ordinance of Hong Kong. APS HK was incorporated for nominal
      consideration to facilitate operations in China.*
            100% in Global Uplink Ltd. (“GUL”), incorporated under the Company
      Ordinance of Hong Kong. GUL was acquired on October 31, 2007. GUL acts as
      the marketing for Asia Payment Systems (China) to solicit and sign up
      corporations in Hong Kong for Business Processes Out-sourcing
      services.*
            Asia Payment Systems Pte. Ltd. (“APS Singapore”), incorporated
      under the Company Ordinance of Singapore. APS Singapore was incorporated
      in August 2005 for nominal consideration to facilitate operations in
      South-east Asia. The shares are held by one of the Company's directors in
      trust.


F-6




9




---

*
            Asia Payment System (China) Co., Ltd. (“APS China”), incorporated
      under the Company Ordinance of China. APS China was incorporated
      in October 2005 for an initial registered capital of $200,000, which
      was totally funded as of October 31, 2006. The register and paid up
      capital were increased to $400,000 in September 2007 and further increased
      to $600,000 in November 2007.*
            Cardtrend Systems Sdn Bhd. (“Cardtrend Systems” or “CSSB”),
      incorporated under the Company Ordinance of Malaysia. Cardtrend Systems
      was acquired on October 31, 2006. CSSB provides a complete IT solution for
      payment cards and loyalty cards, as well as data processing services to
      operators of payment cards and loyalty cards mainly in Asia Pacific and
      Middle-east regions.*
            Interpay International Group Ltd. (“IIG”), incorporated under the
      Company Ordinance of British Virgin Islands. IIG was acquired on December
      7, 2006. IIG is the parent company of the following Subsidiaries
      :*    Interpay International Airtime Private Limited (“IIAT”),
      incorporated under the Company Ordinance of Singapore which acts as the
      holding company for Company’s Prepaid Business in Asia, except China.
      60% in Etop Services (Malaysia) Sdn Bhd.
             (“Etop Malaysia”), incorporated
      under the Company Ordinance of Malaysia. Etop Malaysia * distributes third
      parties’ prepaid products and services electronically through it network
      of dealers.*     Interpay Asia Sdn.
      Bhd. (“IA”), incorporated under the Company Ordinance of Malaysia which
      provides general and financial management
services


*
            to Cardtrend International Group of Companies.*     Interpay International Resources
      Ltd. (“IIR”), incorporated under the Company Ordinance of British Virgin
      Islands. IIR was set up for the purposes of forming joint venture payment cards and loyalty cards companies
      in Asia.*
            Interpay International Franchising Ltd. (“IIF”), incorporated under
      the Company Ordinance of British Virgin Islands. IIF was set up for the
      purpose of owning the Intellectual Properties of card products developed
      and franchised/licensed to IIG group’s joint venture companies and other
      third parties.*
            Interpay International Associates Ltd. (“IIA”), incorporated under
      the Company Ordinance of British Virgin Islands. IIA was set up for the
      purpose of entering into management and technical services contracts with
      IIG group’s joint venture companies.*
            Payment Business Solution Sdn Bhd. (“PBS”), incorporated under the
      Company Ordinance of Malaysia. PBS distributes prepaid IDD call cards in
      Malaysia.


All significant inter-company accounts and
transactions have been eliminated in consolidation.




On October 31, 2007, the Company’s wholly owned
subsidiary in Hong Kong, APS HK, completed its acquisition of Uplink HK pursuant
to the sale and purchase agreement (“SAPHK”) it had entered into with the
shareholders of Uplink HK, Mr. Chen Yu Hua and Peng Hai Tao on December 8, 2006.
Uplink HK is a company incorporated in Hong Kong and acts as the marketing arm
of Uplink China’s BPO services. APS HK paid a total cash consideration of
HK$500,000 (approximately $64,610) for the acquisition.




The purchase price as of the acquisition date of
October 31, 2007 was allocated as follows:




Current
      assets
            $
            10,228Fixed assets
            
            -Goodwill
            
            64,610Less: Liabilities acquired
            
            (10,228
            )Purchase Price
            $
            64,610


The following unaudited pro forma results of
operations for the year ended December 31, 2007 and 2006 assume that the
acquisition of Uplink HK occurred on January 1, 2007 and January 1, 2006
respectively. These unaudited pro forma results are not necessarily indicative
of the actual results of operations that would have been achieved nor are they
necessarily indicative of future results of operations.




Dec 31, 2007
            
            
            Dec 31, 2006Net Revenue
            $
            1,820,509
            
            $
            450,709Net loss
            
            (2,956,100
            )
            
            (3,982,884
            )Loss per common share
            
            (0.05
            )
            
            (0.11
            )


Critical Accounting Policies and Estimates




For the year ended December 31, 2006, the
Company recorded increased revenue generated from the Processing Business
operations due to the revenue generated by Cardtrend Systems, as well as from
the Company’s Prepaid Business operation from PBS. For the year ended December
31, 2007, the Company continued to record higher revenue generated from these
subsidiaries. The Company recognized losses from the combined operations of all
the three Business Units, and the foregoing discussion of the Company’s plan of
operations is based in part on the Company’s consolidated financial statements.
These have been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of financial
statements in conformity with generally accepted accounting principles 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 financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates. The estimates and critical accounting policies that are most
important in fully understanding and evaluating the Company’s financial
statements and results of operations are discussed below.




Foreign Currency Translation




The Company translates the foreign currency
financial statements into US Dollars using the year end or average exchange
rates in accordance with the requirements of SFAS No. 52, “Foreign Currency
Translation” . Assets, liabilities and equity of these subsidiaries were translated at
exchange rates as of the balance sheet date. Revenues, expenses and retained
earnings are translated at average rates in effect for the periods presented.
The cumulative translation adjustment is included in the accumulated other
comprehensive gain (loss) within shareholders’ equity. Transaction gains or
losses arising from exchange rate fluctuation on transactions denominated in a
currency other than the functional currency are included in the consolidated
results of operations.




Capital accounts are translated at their historical exchange rates when
the capital transactions occurred. Resulting translation gains and losses, if
any, are accumulated in a separate component of shareholders’
equity.




F-7




10




---

December 31, 2007
            December 31, 2006Period end HKD : US$ exchange rate
            7.8049
            7.779Average period HKD : US$ exchange rate
            7.80255
            7.769Period end Renminbi: US$ exchange rate
            7.3141
            7.818Average period Renminbi: US$ exchange rate
            7.6172
            7.982Period end RM: US$ exchange rate
            3.3151
            3.531Average period RM: US$ exchange rate
            3.44714
            3.565Period end SGD: US$ exchange rate
            1.4467
            1.535Average period SGD: US$ exchange rate
            1.5072
            1.541


There are no material foreign currency
transaction gains or loss for the years ended December 31, 2007 and 2006




Comprehensive Income/Loss




Statement of Financial Accounting Standards No. 130 ("SFAS 130"),
"Reporting Comprehensive Income," establishes standards for reporting and
displaying of comprehensive income, its components and accumulated balances.
Comprehensive income is defined to include all changes in equity except those
resulting from investments by owners and distributions to owners. Among other
disclosures, SFAS 130 requires that all items that are required to be recognized
under current accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements. Comprehensive income includes gains and losses on
foreign currency translation adjustments and is included as a component of
stockholders' equity.




Economic and Political Risks




The
Company's operations are conducted in Asia. Accordingly, the Company's business,
financial condition and results of operations may be influenced by the
political, economic and legal environments in Asia, particularly in China where
the Company has increased its activities substantially, as well as in Malaysia
where majority of the Company’s operations is now located resulting from the
acquisition of IIG and the merger of Cardtrend Systems, and by the general state
of the Asian economy.




The
Company's operations in Asia, particularly for those planned in China, are
subject to special considerations and significant risks not typically associated
with companies in the North America and Western Europe. These include risks
associated with, among others, the political, economic and legal environment and
foreign currency exchange. The Company's results may be adversely affected by
changes in the political and social conditions in Asia, and by changes in
governmental policies with respect to laws and regulations, anti-inflationary
measures, currency conversion, remittances abroad, and rates and methods of
taxation, among other things.




Derivative Financial Instruments




Pursuant to Emerging Issues Task Force Issue 00-19 “Accounting for
Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Company’s Own Stock” (“EITF 00-19”), outstanding stock warrants, conversion
features and vested stock options issued to parties other than employees are
classified as liabilities and derivative financial instruments if the Company
has insufficient authorized stock to settle its obligations were holders to
exercise their purchase or conversion rights. Employee stock options are not
classified as liabilities or as derivatives but are considered as having a claim
on authorized but unissued shares when determining if sufficient shares are
available to satisfy the Company’s other potential share obligations. When
classified as derivative liabilities, the liability is recorded at estimated
fair value at each balance sheet date. For any equity instrument initially
classified as equity but subsequently reclassified as a liability, additional
paid-in capital is reduced by the estimated fair value at the reclassification
date. Changes in fair value subsequent to classification as a liability are
recorded as gains or losses on derivatives.




For
the year ended December 31, 2006, the fair value of the derivative liability
recognized was $640,201 representing all of the Company’s outstanding warrants
and vested non-employee stock options. $306,476 of this amount was reclassified
from additional paid-in capital (equity) based on the initial related fair
values. The additional $333,725 was recorded as a charge to net income in 2006.
As at December 31, 2007, the Company determined it had sufficient shares to meet
the equity obligations therefore the derivative liability recognized previously
in the amount of $291,799 was extinguished and the initial related fair value
reclassified back into additional paid in capital.




Financial Instruments




The
Company has various financial instruments that include cash, accounts
receivable, other receivable, accounts payable, other payable and accrued
liabilities. It was not practicable to determine the fair value of the amounts
due to related parties or the loans payable due to their uncertain repayment
terms. The carrying values of all other financial instruments approximate their
fair value due to their relatively short period to maturity.




Accounts Receivable




As of December 31, 2007, the Company has total
account receivables amounted to $521,625 as compared to $309,779 as at December
31, 2006.




The Company periodically reviews its accounts
receivables in determining its allowance for doubtful accounts. As of December
31, 2007 and 2006, allowance for doubtful accounts balance for trade receivables
was $6,381 and $17,974, respectively.




Provision of doubtful accounts :




F-8




11




---

SEGMENTS
            
            2007
            
            2006Business Processing
            $
            6,381
            $
            17,974Prepaid
            
            -
            
            -Card
            
            -
            
            -Corporate Unallocated
            
            -
            
            -Total
            
            6,381
            
            17,974


The Company has adopted Statement of Financial
Accounting Standards No. 144 (SFAS No. 144). SFAS No. 144 requires that
long-lived assets and certain identifiable intangibles held and used by the
Company be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Events
relating to recoverability may include significant unfavorable changes in
business conditions, recurring losses, or a forecasted inability to achieve
break-even operating results over an extended period. The Company evaluates the
recoverability of long-lived assets based upon forecasted undercounted cash
flows. Should impairment in value be indicated, the carrying value of intangible
assets will be adjusted, based on estimates of future discounted cash flows
resulting from the use and ultimate disposition of the asset. SFAS No. 144 also
requires assets to be disposed of be reported at the lower of the carrying
amount or the fair value less costs to sell.




During the years ended December 31, 2007 and
2006, the Company management performed an evaluation of its intangible assets
(goodwill) for purposes of determining the implied fair value of the assets at
each respective year. The tests did not indicate that the recorded remaining
book value of its goodwill exceeded its fair value, as determined by discounted
cash flows. Considerable management judgment is necessary to estimate the fair
value. Accordingly, actual results could vary significantly from management’s
estimates.




As of December 31, 2007 and 2006, the book value
of the Company’s goodwill was $5,961,793 and $5,897,731, respectively.




Revenue Recognition




The
Company recognizes revenue in accordance with Securities and Exchange Commission
Staff Accounting Bulletin No. 104 (“SAB 104”), “Revenue Recognition in Financial
Statements.” Revenue is recognized when the price is fixed or determinable,
persuasive evidence of an arrangement exists, the service is performed, and
collectibility is reasonably assured. SAB 104 incorporates Emerging Issues
Task Force 00-21 (“EITF 00-21"), Multiple-Deliverable Revenue Arrangements. EITF
00-21 addresses accounting for arrangements that may involve the delivery or
performance of multiple products, services and/or rights to use assets. The
effect of implementing EITF 00-21 on the Company’s financial position and
results of operations was not significant. The Company further recognizes
revenue from the licensing of Cardtrend Systems’ software in accordance with
Statement of Position (“SOP”) 97-2, “Software Revenue Recognition,” as amended
by SOP 98-9, “Modification of SOP 97-2, and Software Revenue Recognition with
Respect to Certain Transactions.” Under the residual method, the fair value of
the undelivered elements is deferred and the remaining portion of the
arrangement fee is recognized as revenue.




For
the Company’s Processing Business operations, the Company recognizes revenue as
the Company at the time services are rendered to the Company’s clients
progressively and/or periodically as agreed in a service contract. Revenue for
the licensing of software is recognized when the criteria in the preceding
paragraph have been met and delivery has occurred. If, as is usually the case,
the delivery of the software is part of an arrangement that includes the
installation of the software, revenue is recognized when the installation is
complete and customer acceptance has occurred. Contracts for the maintenance and
support of the software are priced separately for one year period and revenue is
recognized ratably over service period.




For
the year ended December 31, 2007, the Processing Business Unit, comprising
Cardtrend Systems and Asia Payment Systems (China) Co. Ltd., recorded net
revenue of $748,465 as compared to $188,251 for the year ended December 31,
2006, an increase of 298%. Asia Payment Systems, Inc. terminated the DFS Okinawa
Contract as at December 31, 2006 and Cardtrend Systems entered into a 2-year
renewable contract with DFS Okinawa effective January 1, 2007. Hence, Asia
Payment Systems, Inc. no longer contributes any revenue to the Processing
Business Unit effective January 1, 2007 onwards.




For
the Company’s Prepaid Business operations, the Company recognizes revenue as the
Company at the time services are rendered to its dealers for goods delivered.
The Company records the goods sold as gross revenue and less discounts given to
the dealers to obtain net revenue, and then less costs of goods sold (i.e. face
value of the goods less discounts received from the Company’s suppliers) to
arrive at the Company’s gross profits before operating expenses. For the year
ended December 31, 2007, the Prepaid Business Unit, comprising Etop Malaysia and
PBS, both being subsidiaries of IIG, recorded net revenue of $978,927 as
compared to $158,487 for the year ended December 31, 2006, an increase of 518%.




For
the Company’s Cards Business operations, the Company recognizes revenue from the
Company’s subsidiaries and associated companies which the Company can determine
that the Company has management control over the operations. Such subsidiaries
and associated companies recognize revenues earned from card fees, merchant fees
or commissions, interchange fees, cash advance/withdrawal fees, interest or
share of interest income and any other fees billed to cardholders as well as to
merchants. The Company do not recognize revenue generated by the Company’s
associated companies which the Company do not have management control but the
Company record dividends received (if any) from such associated companies. In
2006 and 2007, the Company did not record any revenue from external customers
nor did the Company receive any dividend from the Company’s associated companies
under the Cards Business Unit.




For
the year ended December 31, 2007, the Company recorded total net revenue of
$1,727,392 as compared to $346,738 for the year ended December 31, 2006, an
increase of about 398%.




Cash Equivalents




For the purpose of the accompanying financial
statements, all highly liquid investments with a maturity of three months or
less are considered to be cash equivalents.




Concentrations of Credit Risk




Financial instruments and related items, which
potentially subject the Company to concentrations of credit risk, consist
primarily of cash, cash equivalents and trade receivables. The Company places
its cash and temporary cash investments with high credit quality institutions.
At times, such investments may be in excess of the FDIC insurance limit.




Advertising




The Company follows the policy of charging the
costs of advertising to expense as incurred. The Company did not incur any
advertising costs for the year ended December 31, 2007.




F-9




12




---

Income Taxes




The Company follows SFAS No. 109, “Accounting
for Income Taxes” (SFAS No. 109) for recording the provision for income taxes.
Deferred tax assets and liabilities are computed based upon the difference
between the financial statement and income tax basis of assets and liabilities
using the enacted marginal tax rate applicable when the related asset or
liability is expected to be realized or settled. Deferred income tax expenses or
benefits are based on the changes in the asset or liability during each period.
If available evidence suggests that it is more likely than not that some portion
or all of the deferred tax assets will not be realized, a valuation allowance is
required to reduce the deferred tax assets to the amount that is more likely
than not to be realized. Future changes in such valuation allowance are included
in the provision for deferred income taxes in the period of change. Deferred
income taxes may arise from temporary differences resulting from income and
expense items reported for financial accounting and tax purposes in different
periods. Deferred taxes are classified as current or non-current, depending on
the classification of assets and liabilities to which they relate. Deferred
taxes arising from temporary differences that are not related to an asset or
liability are classified as current or non-current depending on the periods in
which the temporary differences are expected to reverse.




Shipping and Handling




Shipping and handling costs associated with
inbound freight are included in cost of goods sold. Shipping and handling costs
associated with outbound freight are generally billed to the customer and are
recorded as revenue and the related expense is included in cost of goods
sold. Debt Issuance Costs




The Company records debt discount for beneficial
conversion features and warrants, on a relative fair value basis and amortizes
debt discount over the life of the debt instrument. Beneficial conversion
features are recorded pursuant to EITF Issue No. 98-5, “Accounting for
Convertible Securities with Beneficial Conversion Features or Contingently
Adjustable Conversion Ratios”, and EITF Issue No. 00-27, “Application of EITF
Issue No. 98-5 to Certain Convertible Instruments”. The amounts allocated to
warrants and beneficial conversion rights are recorded as unamortized debt
discount and additional paid-in-capital to be amortized over the life of the
convertible debts. The amounts recorded are based on valuation models. The
volatility of the Company’s stock price and other factors affecting the
Company’s stock price are important determinants of the values
determined.




Inventory




Inventories are recorded at the lower of
historical cost or market using the first in first out method of accounting. At
December 31, 2007 and 2006, inventories were $2,716 and $4,221, respectively.




Stock Based Compensation




Effective January 1, 2006, the beginning of the Company's first fiscal
quarter of 2006, the Company adopted the fair value recognition provisions of
SFAS 123R, using the modified-prospective transition method. Under this
transition method, stock-based compensation expense was recognized in the
financial statements for granted, modified, or settled stock options.
Compensation expense recognized included the estimated expense for stock options
granted on and subsequent to January 1, 2006, based on the grant date fair value
estimated in accordance with the provisions of SFAS 123®, and the estimated
expense for the portion vesting in the period for options granted prior to, but
not vested as of January 1, 2006, based on the grant date fair value estimated
in accordance with the original provisions of SFAS 123. Results for prior
periods have not been restated, as provided for under the modified-prospective
method. SFAS 123(R) requires forfeitures to be estimated at the time of grant
and revised, if necessary, in subsequent periods if actual forfeitures differ
from those estimates. In the Company's pro forma information required under SFAS
123 for the periods prior to fiscal 2006, the Company accounted for forfeitures
as they occurred.




Upon
adoption of SFAS 123(R), the Company is using the Black-Scholes option-pricing
model as its method of valuation for share-based awards granted beginning in
fiscal 2006, which was also previously used for the Company's pro forma
information required under SFAS 123. The Company's determination of fair value
of share-based payment awards on the date of grant using an option-pricing model
is affected by the Company's stock price as well as assumptions regarding a
number of highly complex and subjective variables. These variables include, but
are not limited to the Company's expected stock price volatility over the term
of the awards, and certain other market variables such as the risk free interest
rate.




For
the year ended December 31, 2007, the Company expensed stock-based compensation
from stock options/warrants granted / issued to directors, officers and
employees (collectively referred to as “Employees”) in the amount of $456,882
(as compared to $2,131,590 for the year ended December 31, 2006) and to
consultants in the amount of $675,052 (as compared to $962,284 for the year
ended December 31, 2006)(including restricted shares), a total of $1,131,934 (as
compared to $3,093,874 for 2006). At December 31, 2007, the unamortized balances
of the fair value of stock options/warrants/shares issued to Employees and
consultants were $2,147,520 (as compared to $1,573,638 at December 31, 2006) and
$274,224 (as compared to $991,203 at December 31, 2006), respectively, a total
of $2,421,745 (as compared to $2,564,841 at December 31, 2006).




Business Combinations




The
Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards ("SFAS") No. 141, Business Combinations, which established
accounting and reporting standards for business combinations and requires that
all business combinations be accounted for by the purchase method. Under the
purchase method of accounting, the cost, including transaction costs, is
allocated to the underlying net assets, based on their respective estimated fair
values. The excess of the purchase price over the estimated fair values of the
net assets acquired is recorded as goodwill.




The
judgments made in determining the estimated fair values and expected useful
lives assigned to each class of assets and liabilities acquired can
significantly impact net income. For example, different classes of assets will
have useful lives that differ. Consequently, to the extent a longer-lived asset
is ascribed greater value under the purchase method than a shorter-lived asset,
there may be less amortization recorded in a given period.




Determining the fair value of certain assets and
liabilities acquired is subjective in nature and often involves the use of
significant estimates and assumptions. The Company uses a one-year period
following the consummation of acquisitions to finalize estimates of the fair
values of assets and liabilities acquired. Two areas, in particular, that
require significant judgment are estimating the fair values and related useful
lives of identifiable intangible assets. While there are a number of different
methods used in estimating the value of acquired intangibles, there are two
approaches primarily used: the discounted cash flow and market comparison
approaches. Some of the more significant estimates and assumptions inherent in
the two approaches include: projected future cash flows (including timing);
discount rate reflecting the risk inherent in the future cash flows; perpetual
growth rate; determination of appropriate market comparables; and the
determination of whether a premium or a discount should be applied to
comparables. Most of the foregoing assumptions are made based on available




Net Loss Per Share




Basic
loss per share is computed by dividing net loss by the weighted average number
of outstanding shares of common stock. Diluted loss per share, if any, is
computed by dividing net loss by the weighted average number of shares adjusted
for the potential dilution that could occur if stock options, warrants and other
convertible securities were exercised or converted into common stock.
Potentially dilutive securities representing 82,160,187 shares of common stock
were not included in the calculation of diluted loss per share as their effect
would be anti-dilutive.




Reclassifications




Certain prior period amounts were reclassified
to conform to the current period’s presentation.




F-10




13




---

Recent Accounting Pronouncements - Recently Issued Accounting Standards




In
February 2006, the FASB issued SFAS No. 155. “ Accounting for certain Hybrid Financial Instruments an amendment of FASB Statements No. 133
and 140,” or
SFAS No. 155. SFAS No. 155 permits fair value remeasurement for any hybrid
financial instrument that contains an embedded derivative that otherwise would
require bifurcation, clarifies which interest-only strips and principal-only
strips are not subject to the requirements of Statement No. 133, establishes a
requirement to evaluate interests in securitized financial assets to identify
interests that are freestanding derivatives or that are hybrid financial
instruments that contain an embedded derivative requiring bifurcation, clarifies
that concentrations of credit risk in the form of subordination are not embedded
derivatives, and amends SFAS No. 140 to eliminate the prohibition on a
qualifying special purpose entity from holding a derivative financial instrument
that pertains to a beneficial interest other than another derivative financial
instrument. SFAS No. 155 is effective for all financial instruments acquired or
issued after the beginning of an entity’s first fiscal year that begins after
September 15, 2006. We did not have a material impact on our financial position,
results of operations or cash flows.




In
March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial
Assets - an amendment to FASB Statement No. 140”. SFAS No. 156 requires that an
entity recognize a servicing asset or servicing liability each time it
undertakes an obligation to service a financial asset by entering into a service
contract under certain situations. The new standard is effective for fiscal
years beginning after September 15, 2006. The adoption of SFAS No.156 did not
have a material impact on the Company's financial position, results of
operations or cash flows.




In
July 2006, the FASB issued Interpretation No. 48. “ Accounting for uncertainty in Income Taxes, an interpretation of SFAS No. 109 (FIN
48)”. FIN
48 clarifies the accounting for Income Taxes by prescribing the minimum
recognition threshold a tax position is required to meet before being recognized
in the financial statements. It also provides guidance on derecognition,
measurement, classification, interest and penalties, accounting in interim
periods, disclosure and transition and clearly scopes income taxes out of SFAS
5, “ Accounting for Contingencies”. FIN
48 is effective for fiscal years beginning after December 15, 2006. The adoption
of FIN 48 did not have a material impact on the Company's financial position,
results of operations or cash flows.




In
September 2006 the FASB issued SFAS No. 157, “Fair Value Measurements”. SFAS No.
157 defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP), and expands disclosures about
fair value measurements. SFAS No. 157 applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is the
relevant measurement attribute. Accordingly, SFAS No. 157 does not require any
new fair value measurements. However, for some entities, the application of SFAS
No. 157 will change current practice. SFAS 157’s effective date is for fiscal
years beginning after November 15, 2007. The Company does not expect adoption of
this standard will have a material impact on its financial position, operations
or cash flows.




In
September 2006 the FASB issued its SFAS No. 158 “Employers’ Accounting for
Defined Benefit Pension and Other Postretirement Plans”. SFAS No. 158 improves
financial reporting by requiring an employer to recognize the overfunded or
underfunded status of a defined benefit postretirement plan (other than a
multiemployer plan) as an asset or liability in its statement of financial
position and to recognize changes in that funded status in the year in which the
changes occur through comprehensive income of a business entity or changes in
unrestricted net assets of a not-for-profit organization. SFAS No. 158 also
improves financial reporting by requiring an employer to measure the funded
status of a plan as of the date of its year-end statement of financial position,
with limited exceptions. The effective date for an employer with publicly traded
equity securities is as of the end of the fiscal year ending after December 15,
2006. The Company does not expect adoption of this standard will have a material
impact on its financial position, results of operations or cash flows as the
Company does not have any defined benefit pension and other post retirement
plans as of December 31, 2007.




In
December 2006, the FASB issued FSP EITF 00-19-2, “Accounting for Registration
Payment Arrangements” ("FSP 00-19-2") which addresses accounting for
registration payment arrangements. FSP 00-19-2 specifies that the contingent
obligation to make future payments or otherwise transfer consideration under a
registration payment arrangement, whether issued as a separate agreement or
included as a provision of a financial instrument or other agreement, should be
separately recognized and measured in accordance with FASB Statement No. 5,
Accounting for Contingencies. FSP 00-19-2 further clarifies that a financial
instrument subject to a registration payment arrangement should be accounted for
in accordance with other applicable generally accepted accounting principles
without regard to the contingent obligation to transfer consideration pursuant
to the registration payment arrangement. For registration payment arrangements
and financial instruments subject to those arrangements that were entered into
prior to the issuance of EITF 00-19-2, this guidance shall be effective for
financial statements issued for fiscal years beginning after December 15, 2006
and interim periods within those fiscal years. The Company adopted FSP 00-19-2
in the preparation of the financial statements (see Note 1).




In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities.” SFAS No. 159 permits entities to
choose to measure many financial instruments, and certain other items, at fair
value. SFAS No. 159 applies to reporting periods beginning after November 15,
2007. The adoption of SFAS 159 is not expected to have a material impact on the
Company’s financial position, results of operations, or cash flows.




In
June 2007, the Accounting Standards Executive Committee issued Statement of
Position 07-1, “Clarification of the Scope of the Audit and Accounting Guide
Investment Companies and Accounting by Parent Companies and Equity Method
Investors for Investments in Investment Companies” (“SOP 07-1”). SOP 07-1
provides guidance for determining whether an entity is within the scope of the
AICPA Audit and Accounting Guide Investment Companies (the “Audit Guide”). SOP
07-1 was originally determined to be effective for fiscal years beginning on or
after December 15, 2007, however, on February 6, 2008, FASB issued a final Staff
Position indefinitely deferring the effective date and prohibiting early
adoption of SOP 07-1 while addressing implementation issues.




In
June 2007, the FASB ratified the consensus in EITF Issue No. 07-3, “Accounting
for Nonrefundable Advance Payments for Goods or Services to be Used in Future
Research and Development Activities” (EITF 07-3), which requires that
nonrefundable advance payments for goods or services that will be used or
rendered for future research and development (R&D) activities be deferred
and amortized over the period that the goods are delivered or the related
services are performed, subject to an assessment of recoverability. EITF 07-3
will be effective for fiscal years beginning after December 15, 2007. The
Company does not expect that the adoption of EITF 07-3 will have a material
impact on our consolidated financial position, results of operations or cash
flows.




In
December 2007, the FASB issued SFAS No. 141(R), "Business Combinations" ("SFAS No. 141(R)"), which establishes principles and requirements for how an
acquirer recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any noncontrolling interest in an
acquiree, including the recognition and measurement of goodwill acquired in a
business combination. SFAS No. 141(R) is effective as of the beginning of the
first fiscal year beginning on or after December 15, 2008. Earlier adoption is
prohibited and the Company is currently evaluating the effect, if any, that the
adoption will have on its financial position, results of operations or cash
flows.




In
December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interest in Consolidated Financial Statements, an
amendment of ARB No. 51" ("SFAS No. 160"), which will change the accounting and reporting for minority
interests, which will be recharacterized as noncontrolling interests and
classified as a component of equity within the consolidated balance sheets. SFAS
No. 160 is effective as of the beginning of the first fiscal year beginning on
or after December 15, 2008. Earlier adoption is prohibited and the Company is
currently evaluating the effect, if any, that the adoption will have on its
financial position, results of operations or cash flows.




F-11




14




---

In
December 2007, the FASB ratified the consensus in EITF Issue No. 07-1,
“Accounting for Collaborative Arrangements” (EITF 07-1). EITF 07-1 defines
collaborative arrangements and requires collaborators to present the result of
activities for which they act as the principal on a gross basis and report any
payments received from (made to) the other collaborators based on other
applicable authoritative accounting literature, and in the absence of other
applicable authoritative literature, on a reasonable, rational and consistent
accounting policy is to be elected. EITF 07-1 also provides for disclosures
regarding the nature and purpose of the arrangement, the entity’s rights and
obligations, the accounting policy for the arrangement and the income statement
classification and amounts arising from the agreement. EITF 07-1 will be
effective for fiscal years beginning after December 15, 2008, which will be the
Company’s fiscal year 2009, and will be applied as a change in accounting
principle retrospectively for all collaborative arrangements existing as of the
effective date. The Company has not yet evaluated the potential impact of
adopting EITF 07-1 on our consolidated financial position, results of operations
or cash flows.




Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force), the AICPA, and the SEC did not, or are not believed by
management to, have a material impact on the Company’s present or future
consolidated financial statements.




3. Property , Plant and Equipment




Property and equipment are stated at cost. When
retired or otherwise disposed, the related carrying value and accumulated
depreciation are removed from the respective accounts and the net difference
less any amount realized from disposition, is reflected in earnings. Maintenance
and repairs to property and equipment are charged to current period earning as
incurred. The cost of computer equipment and vehicles is depreciated on a
straight-line basis over their estimated life of three to five years.




Property and equipment as of December 31, 2007
and 2006 is summarized as follows:




2007
            
            
            2006Office equipment and renovation
            $
            698,505
            
            $
            330,096Accumulated Depreciation
            
            (143,016
            )
            
            (21,008
            )$
            555,489
            
            $
            309,088


Depreciation expense recorded in the statement
of operations for the years ended December 31, 2007 and 2006 is $113,053 and
$13,030 respectively.




4. Related Party Transactions




The Company had the following transactions for
the years ended December 31, 2007 and 2006, with related parties:




Incurred $10,882 and $42,392 in the years ended December 31, 2007 and
2006, respectively, for administrative and consulting services provided by
companies in which certain officers and/or shareholders have a controlling
interest. Incurred net $127,578 in year ended December 31, 2007 for sales
transaction to a company, in which a director has a controlling interest.




Incurred $72,000 and $78,154 in the years ended December 31, 2007 and
2006 respectively, for management services provided by companies in which
certain officers and/or shareholders have a controlling interest.




The
following balances, which bear no interest and have no fixed terms of repayment,
owed to directors, officers and companies controlled by certain officers and/or
directors, were outstanding as of December 31,:




2007
            
            2006Salaries owed to staff
            
            
            78,758
            
            164,095Loans from Directors
            
            
            148,055
            
            343,227Expense Claims
            
            
            1,480
            
            6,947Due to related parties
            
            $
            .228,293
            $
            514,2695. Other ReceivablesOther receivable are comprised of the following:Other receivables
            
            
            2007
            
            2006Deposit and Prepayment
            
            $
            283
            $
            283Other debtors
            
            
            5,417
            
            9,886$
            5,700
            $
            10,1696. Accrued LiabilitiesAccrued liabilities are comprised of the following:Accrued liabilities
            
            
            2007
            
            2006$Accrued Expenses
            
            $
            205,577
            $
            254,383Tax Payable
            
            
            1,064
            
            -Salaries and Expenses owed to Employees.
            
            
            62,486
            
            191,891Sundries and other creditors
            
            
            368,702
            
            332,855$
            637,829
            $
            779,129


F-12




15




---

7. Loan Payable




In
2001, a joint venture partner in China advanced $100,000 to the Company. The
loan is non-interest bearing, with no repayment terms and is outstanding as of
December 31 2007.




In December 2005, the Company obtained a loan of
$70,000 per agreement signed in December 2005. This loan was fully repaid with
interest in June 2006.




The
Company’s 60% own subsidiary, Etop Services (Malaysia), obtained a 3-year
financial lease facility totaling about $14,160 from a financial institution in
Malaysia in December 2006. Balance outstanding as of December 31, 2007 is
$8,679.




8. Income Tax




The
Company’s deferred income tax assets total approximately $1,002,460 and are
offset by a valuation allowance of the same amount. Substantially all of the
deferred tax assets relate to the Company’s net operating loss carryovers. Such
carryovers are estimated to be approximately $2,931,655. The deferred tax asset
has been entirely offset by a valuation allowance because the Company has not
established a history of earnings and it is therefore inappropriate to assume as
it is more likely than not that the loss carryovers will be utilized before they
expire in various years beginning in 2019.




Even
if there is taxable income prior to the expiration of the net operating loss
carryovers it is possible that some, all or even more than 100% of consolidated
taxable income could be subject to income tax in jurisdictions that do not allow
for the use of the carryovers or for losses from other
subsidiaries.




A reconciliation of the expected income tax
benefit at the federal income tax rate with the income tax benefit actually
recorded is as follows:




2007
            
            
            2006Net Loss
            $
            3,098,535
            )
            $
            4,892,464Expected income tax benefit at 34%
            $
            1,053,502
            
            $
            1,663,438Less effects of nondeductible expenses:Increase in deferred tax valuation allowance
            $
            (1,053,502
            )
            $
            (1,663,438
            )Income tax expense
            $
            
            
            $
            0


The provision for income tax in the amount of
$1,288 related to foreign income tax incurred from the Chinese tax
agent.9. Capital
Stock   Preferred Stock




The Company is authorized to issue 10,000,000
shares of preferred stock with a par value of $.001 per share. There were
6,000,000 shares of preferred stock issued and outstanding at December 31, 2007
and at December 31, 2006.




Common Stock




The
Company is authorized to issue 250,000,000 shares of common stock with a par
value of $.001 per share. As of December 31, 2007 and 2006 the Company has
issued and outstanding 82,408,276 and 48,057,836 shares of common stock,
respectively.




During
the year ended December 31, 2007 a total of 1,250,000 shares of the Company’s
common stock valued at $45,500 was issued to 2 consultants for services. The
value of the shares was recorded and amortized over 2 years from November 2007,
the contractual period of the services.




During
the year ended December 31, 2007, a total of 1,687,511 shares of the Company’s
common stock valued at $168,751 was issued for the settlement of debt (salary
owed to an ex-officer and fees owed to 4 ex-consultants)




During
the year ended December 31, 2007 a total of 7,806,863 shares of the Company’s
common stock valued at $592,009 for the settlement of debts (salaries and
advances owed to employees, officers and directors). These shares were issued
through the options granted to and exercised immediately by these employees at
an exercise price equaled to the market price of our common stock at the time of
grant. The fair values of these options, determined using the Black-Scholes
option pricing model, totaling $22,561 were fully expensed at the time the
options were granted.




During
the year ended December 31, 2007 a total of 10,000,000 shares of the Company’s
common stock valued at $800,000 was issued as fees payable to the Chief Officer
– Greater China and three other staff for the Greater China region.[Note: These
shares were issued on January 2, 2008]. These fees are amortized over 5 years,
the contractual period of the employment of the said individuals, commencing
from November 1, 2007.




During
the year ended December 31, 2007, 13,606,066 shares were issued by the Company
for 8 convertible loans converted into equity at a total value of $421,788. (See
Note 12).




During
the year ended December 31, 2006 a total of 1,850,000 shares of the Company’s
common stock valued at 425,150 was issued to 8 consultants for services. The
values of the shares were recorded and amortized over the respective periods of
the services of one year each.




During
the year ended December 31, 2006 a total of 81,000 shares of the Company’s
common stock valued at $24,300 for the settlement of debts (fees owed to 6
consultants and salary to 1 officer). These shares were issued through the
options granted to and exercised all the shares are exercised at grant date by
the consultants and officer at an exercise price of $0.30, the market price of
our common stock at the time of grant. The fair values of these options,
determined using the Black-Scholes option pricing model, totaling $168,751 were
fully expensed at the time the options were granted.




During
the year ended December 31, 2006 a total of 274,109 shares of the Company’s
common stock valued at $30,152 was issued for the settlement of debt (salary
owed to an ex-officer)




During
the year ended December 31, 2006, a total of 106,000 shares were issued arising
from the exercises of warrants previously granted to an officer and an investor
for a total proceed of $52,000.




During
the year ended December 31, 2006, a total of 3,200,000 shares of the Company’s
common stock valued at $299,000 was issued to 5 consultants for services. The
value of the shares were recoded and amortized over one year from December 2006,
the contractual period of the services.




During the year ended December 31, 2006,
6,732,962 shares were issued by the Company for 8 convertible loans converted
into equity at a total value of $732,833. (See Note 12)




F-13




16




---

From
July 2006 onwards, since the Company did not have sufficient authorized shares
to enable the exercise of the Company’s outstanding common stock purchase
warrants and consultant options, the Company has reclassified the fair value of
the warrants and consultant options as a liability on the balance sheet at
December 31, 2006. (See Note 12)




On July 24, 2007, the authorized shares were
increased to 250,000,000 shares of common stock with a par value of $ 0.001 and
10,000,000 shares of preferred stock with a par value of $ 0.001. As a result of
the increased authorized shares, the Company had sufficient number of common
shares available to meet equity obligations therefore the derivative liability
balance of $291,799 in the balance sheet was extinguished with the initial
valuation of the underlying securities returned to equity. The Company recorded
a gain in derivative liability for $348,402 from January 2007 to July 2007 in
the Statement of Operations due to lower stock market price compared to stock
price at liability dates.




10. Stock Options and warrants




In
2004 and 2005, the Company enacted non-qualified incentive stock option plans
(the "2004 Plan" and the “2005 Plan”, or the “Plans”) for the benefit of
employees or other persons associated with the Company. In accordance with the
Plans, the Company is authorized to grant stock options for the purchase of
10,000,000 shares of common stock. The Company had decided to enact another
stock option plan in 2006 (but this was delayed to February 2007) to accommodate
stock options granted outside of the Plans.




During
the year ended December 31, 2006, the Company granted a total of 12,961,000
stock options to directors, employees and consultants for services; 600,000
pursuant to 2004 non-qualified stock option plan, 1,011,000 pursuant to 2005
non-qualified stock option plan and 11,350,000 unregistered option. The options
were granted at the exercise price at $0.001 to $0.30 per share. The fair value
of 11,350,000 stock options granted to directors, officers and employees was
estimated to be $1,479,550 for the life of the options, of which, $128,663 was
fully expensed in the year ended December 31, 2006, the balance of $1,350,888
will be expensed over the remaining period of service of the employees,
directors and officers. The fair value of 1,596,000 stock options granted to
independent consultants was estimated to be $171,574 for the life of the
options, of which, $46,977 was expensed in the year ended December 31, 2006 and
$108,718 will be amortized over the remaining period of service of the
consulting services contracts. This fair value was estimated at the date of
grant using the Black-Scholes option pricing model with the following
weighted-average assumptions: risk free interest rate of 4.62% to 5.13%,
expected volatility of 130% - 145%, an expected option life of 1 to 5 years and
no expected dividends. The weighted average fair value of options granted was
$0.18 per share.




On
February 2, 2007, the directors of the Company approved the 2007 Nonqualified
Stock Option Plan (“2007 Plan”) for persons employed or associated with the
Company, including without limitation any employee, director, general partner,
officer, attorney, outsourced accountant or outsourced professionals, is
intended to advance the best interests of the Company by providing additional
incentive to those persons who have a substantial responsibility for its
management, affairs, and growth by increasing their proprietary interest in the
success of the Company, thereby encouraging them to maintain their relationships
with the Company. Further, the availability and offering of Stock Options under
the Plan supports and increases the Company's ability to attract, engage and
retain individuals of exceptional talent upon whom, in large measure, the
sustained progress growth and profitability of the Company and the shareholders.
The total number of shares available for grants of stock options under the 2007
Plan is 25,000,000 common shares.




On
February 6, 2007, the Company granted options to 12 employees and a consultant
under the Company’s 2005 Stock Option Plan for them to purchase a total of
1,900,000 shares of the Company’s common stock at an exercise price of $0.078
per share with all the shares vested at the grant date. The total proceed
amounting to a total of $148,200 was used to set-off partial amount of salaries
owed to the said employees as of December 31, 2006. The fair value of the
1,900,000 options granted with immediate vesting was computed to be $3,800 using
a Black Scholes model with a risk-free interest rate of 5.14%, an expected
volatility of 131%, an expected option life of 1 day, no expected dividends and
at the market price of $0.078 on the date of grant. The said shares were issued
on February 12, 2007.




On
February 26, 2007, the directors approved the cancellation of 11,350,000
unregistered options granted to 21 employees, officers and directors during 2006
at various exercise prices ranging from $0.10 to $0.25, and at the same time,
approved the granting of similar respective amount of options to the employees,
officers, under the 2007 Plan at an exercise price of $0.13. The vested options
may only be exercised on or after April 15, 2007 or the effective date of the
Company’s authorized number of shares being increased to at least 200,000,000,
whichever is the later. The fair value of the modification of the 11,350,000
shares of stock option will be recognized over the remaining contractual terms
ranging from one year to five years from the modification date. The Company has
recognized $115,141 as additional stock-based compensation expenses for the year
ended December 31, 2007 as resulted from the modification of non-vested shares
options in accordance with SFAS No. 123(R).




On
June 1, 2007, the Company granted a new employee an option to purchase 200,000
shares of the Company’s common stock under the 2007 Plan at an exercise price of
$0.10 per share. The vested options may only be exercised on or after April 15,
2007 or the effective date of the Company’s authorized number of shares being
increased to at least 200,000,000, whichever is the later




The
fair values of the above total of 16,400,000 options granted to the directors,
officers and employees at an exercise price of $0.10 per share under the 2007
Option Plan were computed using a Black-Scholes model with the following
assumptions: (1) dividend yield of 0%; (2) expected volatility between 130% and
201%; (3) risks free interest rates between 4.02% to 4.74%; (4) expected lives
of 3 to 5 years; and (5) at a market price between $0.073 to $0.10. The fair
values will be expensed off over the period of vesting for each director,
officer and employee.




On
March 26, 2007, the directors approved the reinstatement of 240,000 warrants
granted to a consultant on December 10, 2005 which was cancelled on December 15,
2006 by error.




On
August 27, 2007, the Company granted options to 9 employees, 3 officers, the
Chairman of the Board and a management service consulting firm which is related
to our Secretary/Treasurer to purchase a total of 4,856,196 shares of the
Company’s common stock under the 2007 Plan at an exercise price of $0.073 per
share with immediate vesting to settle salaries owing to them as at June 30,
2007 and advances made by them for the Company’s expenses totaling $354,503. The
fair values of these options were computed using a Black-Scholes model with the
following assumptions: (1) dividend yield of 0%; (2) expected volatility between
196%; (3) risks free interest rates between 4.74%; (4) expected lives of 1 day;
and (5) at a market price $0.073. The fair values, totaling $14,363, were
expensed off at the time of granting the options.




On
October 1, 2007, the Company granted 3 new employees options to purchase a total
of 1,000,000 shares of the Company’s common stock under the 2007 Plan at an
exercise price of $0.10 per shares. The fair values of these options were
computed using a Black-Scholes model with the following assumptions: (1)
dividend yield of 0%; (2) expected volatility between 203%; (3) risks free
interest rates between 4.23%; (4) expected lives of 5 years; and (5) at a market
price of $0.10. The fair values will be expensed off over the period of vesting
for each of the employees.




F-14




17




---

On
October 23, 2007, the Company granted options to 7 employees and to 3 officers
to purchase a total of 1,050,667 shares of the Company’s common stock under the
2007 Plan at an exercise price of $0.085 per share with immediate vesting to
settle salaries owing to them as at September 30, 2007 totaling $89,306.71. The
fair values of these options were computed using a Black-Scholes model with the
following assumptions: (1) dividend yield of 0%; (2) expected volatility between
202%; (3) risks free interest rates 3.98%; (4) expected lives of 1 day; and (5)
at a market price $0.085. The fair values, totaling $4,198, were expensed off at
the time of granting the options.




On
November 1, 2007, the Company granted options to a new officer and 3 new
employees to purchase a total of 3,850,000 shares of the Company’s common stock
under the 2007 Plan at an exercise price of $0.08 per share. The fair values of
these options were computed using a Black-Scholes model with the following
assumptions: (1) dividend yield of 0%; (2) expected volatility between 201%; (3)
risks free interest rates between 4.02%; (4) expected lives of 5 years; and (5)
at a market price of $0.08. The fair values will be expensed off over the period
of vesting for the officer and each of the employees.




On
November 15, 2007, the Company granted an option to a consultant to purchase
500,000 shares of the Company’s common stock under the 2007 Plan at an exercise
price of $0.001 per share with immediate vesting to settle the fee payable to
him at a value of $25,000. The fair values of this option was computed using a
Black-Scholes model with the following assumptions: (1) dividend yield of 0%;
(2) expected volatility between 199%; (3) risks free interest rates between
3.74%; (4) expected lives of 1 day; and (5) at a market price $0.06. The fair
value will be amortized and expensed over two years, the contract period.




On
November 15, 2007, the Company granted 500,000 5-year warrants to a consulting
firm at an exercise price of $0.40. The fair value of these warrants was
computed using a Black-Scholes model with the following assumptions: 1) dividend
yield of 0%; (2) expected volatility between 199%; (3) risks free interest rates
between 3.71%; (4) expected lives of 5 years; and (5) at a market price $0.06.
The fair value will be amortized and expensed over two years, the contract
period.




A
summary of the changes in the Company's common stock purchase options granted to
directors, officers & employees (“Employees”) and consultants
(“Consultants”) in fiscal years 2006 and 2007 is presented below:




AverageExercise2004 Plan
            
            2005 Plan
            
            Unregistered
            
            2007 Plan
            
            Total
            
            
            PriceBalance December. 31, 2005
            1,188,000
            
            3,740,000
            
            -
            
            -
            
            4,928,000
            
            $
            0.670Granted
            600,000
            
            1,011,000
            
            11,350,000
            
            -
            
            12,961,000
            
            
            0.160Forfeited and Cancelled
            (605,000
            )
            (2,840,000
            )
            0
            
            -
            
            (3,445,000
            )
            
            0.320Exercised
            (600,000
            )
            (881,000
            )
            0
            
            -
            
            (1,481,000
            )
            
            0.014Balance At December. 31, 2006
            583,000
            
            1,030,000
            
            11,350,000
            
            -
            
            12,963,000
            
            
            0.200Granted
            -
            
            -
            
            750,000
            
            22,806,863
            
            23,556,863
            
            
            0.088Forfeited & Cancelled
            (100,000
            )
            (580,000
            )
            (12,100,000
            )
            (600,000
            )
            (13,380,000
            )
            
            0.193Exercised
            -
            
            -
            
            -
            
            (6,406,863
            )
            (6,406,863
            )
            
            0.069Balance At December. 31, 2007
            483,000
            
            450,000
            
            -
            
            15,800,000
            
            16,733,000
            
            $
            0.103


A summary of the changes in the Company’s stock
options granted to Employees in fiscal years 2006 and 2007 is presented
below:




AverageExercise2004 Plan
            
            2005 Plan
            
            Unregistered
            
            2007 Plan
            
            Total
            
            
            PriceBalance At December. 31, 2005
            343,000
            
            2,550,000
            
            0
            
            -
            
            2,908,000
            
            $
            0.900Granted
            -
            
            15,000
            
            11,350,000
            
            -
            
            11,350,000
            
            
            0.180Forfeited & Cancelled
            (300,000
            )
            (2,550,000
            )
            0
            
            -
            
            (2,850,000
            )
            
            0.830Exercised
            -
            
            (15,000
            )
            0
            
            -
            
            (15,000
            )
            
            0.300Balance At December. 31, 2006
            43,000
            
            0
            
            11,350,000
            
            -
            
            11,393,000
            
            
            0.180Granted
            -
            
            0
            
            750,000
            
            22,306,863
            
            750,000
            
            
            0.090Forfeited & Cancelled
            -
            
            0
            
            (12,100,000
            )
            (600,000
            )
            (12,700,000
            )
            
            0.173Exercised
            -
            
            0
            
            0
            
            (5,906,863
            )
            (5,906,863
            )
            
            0.075Balance At December 31, 2007
            43,000
            
            0
            
            0
            
            15,800,000
            
            15,843,000
            
            $
            0.095


A summary of the changes in the Company’s stock
options granted to Consultants in fiscal years 2006 and 2007 is presented
below:




F-15




18




---

AverageExercise2004Plan
            
            2005 Plan
            
            Unregistered
            2007 Plan
            
            Total
            
            
            PriceBalance At December. 31, 2005
            845,000
            
            1,190,000
            
            0
            -
            
            2,035,000
            
            $
            0.450Granted
            600,000
            
            996,000
            
            0
            -
            
            1,596,000
            
            
            0.030Forfeited & Cancelled
            (305,000
            )
            (290,000
            )
            0
            -
            
            (595,000
            )
            
            0.640Exercised
            (600,000
            )
            (866,000
            )
            0
            -
            
            (1,466,000
            )
            
            0.012Balance At December. 31, 2006
            540,000
            
            1,030,000
            
            0
            -
            
            1,570,000
            
            
            0.370Granted
            -
            
            -
            
            0
            500,000
            
            500,000
            
            
            0.088Forfeited & Cancelled
            (100,000
            )
            (580,000
            )
            0
            -
            
            (680,000
            )
            
            0.551Exercised
            -
            
            -
            
            0
            (500,000
            )
            (500,000
            )
            
            0.055Balance At December 31, 2007
            440,000
            
            450,000
            
            0
            -
            
            890,000
            
            $
            0.234


Additional information regarding total options
outstanding (for Employees and Consultants) at December 31, 2007 is as
follows:




Outstanding
            
            ExercisableWeighted
            
            
            
            
            
            WeightedAverage
            Weighted
            
            Weighted
            AverageNumber
            Remaining
            Average
            Number
            Average
            RemainingExercise
            of
            Contractual
            Exercise
            of
            Exercise
            ContractualLifePrice
            
            Options
            (years)
            Price
            Options
            Price
            Life (years)$
            0.08
            3,850,000
            9.92
            $
            0.08
            -
            $
            0.08
            -$
            0.10
            12,050,000
            9.18
            $
            0.10
            4,004,839
            $
            0.10
            9.05$
            0.13
            100,000
            3.67
            $
            0.13
            100,000
            $
            0.13
            3.67$
            0.20
            43,000
            1.42
            $
            0.20
            43,000
            $
            0.20
            1.42$
            0.25
            400,000
            0.08
            $
            0.25
            400,000
            $
            0.25
            0.08$
            0.30
            290,000
            2.72
            $
            0.30
            290,000
            $
            0.30
            2.7216,733,000
            8.97
            $
            0.10
            4,837,839
            $
            0.13
            7.75Additional information regarding total
      options outstanding (for Employees only) at December 31, 2007 is as
      follows:Outstanding
            
            ExercisableWeighted
            
            
            
            
            
            WeightedAverage
            Weighted
            
            Weighted
            AverageNumber
            Remaining
            Average
            Number
            Average
            RemainingExercise
            of
            Contractual
            Exercise
            of
            Exercise
            ContractualLifePrice
            
            Options
            (years)
            Price
            Options
            Price
            Life (years)$
            0.08
            3,850,000
            9.92
            $
            0.080
            -
            $
            0.08
            -$
            0.10
            11,950,000
            9.17
            $
            0.100
            3,904,839
            $
            0.10
            9.17$
            0.20
            43,000
            1.42
            $
            0.200
            43,000
            $
            0.20
            1.4215,843,000
            9.33
            $
            0.094
            3,947,839
            $
            0.101
            9.09


Additional information regarding total options
outstanding (for Consultants only) at December 31, 2007 is as
follows:




F-17




19




---

Outstanding
            
            
            ExercisableWeighted
            
            
            
            
            
            WeightedAverage
            Weighted
            
            
            Weighted
            AverageNumber
            Remaining
            Average
            Number
            
            Average
            RemainingExercise
            Of
            Contractual
            Exercise
            of
            
            Exercise
            ContractualLifePrice
            Options
            (years)
            Price
            Options
            
            Price
            Life (years)$
            0.10
            100,000
            4.00
            $
            0.100
            100,000
            $
            0.10
            4.00$
            0.13
            100,000
            3.67
            $
            0.130
            100,000
            $
            0.13
            3.67$
            0.25
            400,000
            0.08
            $
            0.250
            400,000
            $
            0.25
            0.08$
            0.30
            290,000
            2.72
            $
            0.300
            290,000
            $
            0.30
            2.72890,000
            1.78
            $
            0.240
            890,000
            $
            0.24
            1.78


Transaction involving warrants issued to investors and consultants in
fiscal years 2006 and 2007 are summarized as follows (Warrants were not issued
to Employees):




Share IssuableUpon
            
            AverageExercise ofWarrants
            
            Per ShareOutstanding At 12-31-2005
            6,795,325
            
            $
            0.80Granted
            6,732,962
            
            $
            0.22Exercised
            -
            
            $
            -Canceled
            (1,100,000
            )
            $
            0.85Outstanding At 12-31-2006
            12,428,287
            
            $
            0.45Granted
            14,106,066
            
            $
            0.07Exercised
            -
            
            $
            -Cancelled
            (3,607,166
            )
            $
            0.36Outstanding At 12-31-2007
            22,927,187
            
            $
            0.23


Additional information regarding warrants
outstanding at December 31, 2007 is as follows (Note: No Warrants were issued to
Employees.)




Outstanding
            
            ExercisableWeighted
            
            
            
            
            
            WeightedAverage
            Weighted
            
            Weighted
            AverageNumber
            Remaining
            Average
            Number
            Average
            RemainingExercise
            of
            Contractual
            Exercise
            of
            Exercise
            ContractualLifePrice
            Warrants
            Life (years)
            Price
            Warrants
            Price
            (years)$
            0.160
            645,644
            1.75
            $
            0.159
            645,644
            $
            0.159
            1.75$
            0.200
            4,638,333
            2.00
            $
            0.200
            4,638,333
            $
            0.200
            2.00$
            0.300
            1,448,985
            1.75
            $
            0.300
            1,448,985
            $
            0.300
            1.75$
            0.713
            1,000,000
            2.67
            $
            0.713
            1,000,000
            $
            0.713
            2.67$
            2.000
            1,088,159
            2.67
            $
            2.000
            1,088,159
            $
            2.000
            2.67$
            0.062
            13,606,066
            2.75
            $
            0.062
            13,606,066
            $
            0.062
            2.75$
            0.400
            500,000
            2.92
            $
            0.400
            500,000
            $
            0.400
            2.9222,927,187
            2.50
            $
            0.235
            22,927,187
            $
            0.235
            2.50






F-18




20




---

11. Commitments




Capital Lease Commitment  Etop
Services (Malaysia) Sdn Bhd, a subsidiary of ours based in Malaysia had obtained
a financing of RM50,000 (approximately USD14,160) for the purchase of computers
and peripherals in December 2006 and there remains an amount of RM33,119
(approximately $9,989) to be repaid within 2 years from December 31,
2007.




Operating Lease Commitment  As at
December 31, 2007, we had 10 operating leases that were entered into by the
Company’s subsidiaries and are expiring within 3 years with a total rental
amount of approximately $9,260 per month, reducing as and when each of the
leases expiring through 2009




Employment Contracts Commitment  As at
December 31, 2007, we had a total of 21 employment contracts expiring within 1
to 5 years, with a payroll amount of approximately $88,500 per month reducing as
and when each contract expires. As at December 31, 2007, there were 124
employment contracts terminable with prior notice of between 1 to 3 months that
were entered into by our subsidiaries, with a payroll amount of approximately
$48,680 per month.




Consulting Services Contract Commitments  As at
December 31, 2007, we had 2 consulting services expiring within 2 years with a
cash fee payment of $2,500 per month.




12. Convertible Debt




On
January 3, 2007, the Company accepted 2 offers from 2 individual lenders of
callable, on-demand convertible loans of $100,000 each (totaling $200,000), all
bearing 10% annualized interest. The lenders may not convert the loans prior to
the effective date of the Company’s authorized shares of common stock being
increased to 250,000,000 but they will have the option to convert any money
advanced and/or interest in arrears into Units priced at $0.09 per share of the
common stock of the Company or the average closing price of the Company’s common
stock 5 days preceding the date of conversion, whichever is the lower, if the
said loans are converted within 30 days from the effective date of the Company’s
authorized shares of common stock being increased to 250,000,000 and thereafter
at the average closing price of the Company’s common stock 5 days preceding the
date of conversion. Each Unit will consist of one restricted common share and
one three-year warrant at two times the price of the Unit. The Company did not
record any intrinsic value of the beneficial conversion feature of the loan
because the conversion cannot take place until the authorized shares of the
Company’s common stock have been effectively increased to 250,000,000 and that
the conversion price cannot be determined until conversion takes place.




On May
2, 2007, the Company accepted two offers from two individual lenders of
callable, on-demand convertible loans of $50,000 each (totaling $100,000), all
bearing 10% annualized interest. The lenders may not convert the loans prior to
the effective date of the Company’s authorized shares of common stock being
increased to 250,000,000 shares but the lenders will have the option to convert
any money advanced and/or interest in arrears into Units priced at $0.07 per
share of the common stock of the Company or the average closing price of the
Company’s common stock 5 days preceding the date of conversion, whichever is the
lower, if the said loans are converted within 30 days from the effective date of
the Company’s authorized shares of common stock being increased to 250,000,000
shares and thereafter at the average closing price of the of the Company’s
common stock 5 days preceding the date of conversion. Each Unit will consist of
one restricted common share and one three-year warrant at two times the price of
the Unit. The Company did not record any intrinsic value of the beneficial
conversion feature of the loan because the conversion cannot take place until
the authorized shares of the Company’s common stock have been effectively
increased to 250,000,000 shares and that the conversion price cannot be
determined until conversion takes place.




On May
15, 2007, the Company accepted an offer from an individual lender of callable,
on-demand convertible loan of $32,592, bearing 10% annualized interest. The
lender may not convert the loan prior to the effective date of the Company’s
authorized shares of common stock being increased to 250,000,000 shares but the
lender will have the option to convert any money advanced and/or interest in
arrears into Units priced at $0.058 per share of the common stock of the Company
or the average closing price of the Company’s common stock 5 days preceding the
date of conversion, whichever is the lower, if the said loan is converted within
30 days from the effective date of the Company’s authorized shares of common
stock being increased to 250,000,000 shares and thereafter at the average
closing price of the of the Company’s common stock 5 days preceding the date of
conversion. Each Unit will consist of one restricted common share and one
three-year warrant at two times the price of the Unit. The Company did not
record any intrinsic value of the beneficial conversion feature of the loan
because the conversion cannot take place until the authorized shares of the
Company’s common stock have been effectively increased to 250,000,000 shares and
that the conversion price cannot be determined until conversion takes place.




On
June 6, 2007, the Company accepted two offers from two individual lenders of
callable, on-demand convertible loans of totaling $47,408, bearing 10%
annualized interest. The lender may not convert the loan prior to the effective
date of the Company’s authorized shares of common stock being increased to
250,000,000 shares but the lenders will have the option to convert any money
advanced and/or interest in arrears into Units priced at $0.054 per share of the
common stock of the Company or the average closing price of the Company’s common
stock 5 days preceding the date of conversion, whichever is the lower, if the
said loans are converted within 30 days from the effective date of the Company’s
authorized shares of common stock being increased to 250,000,000 shares and
thereafter at the average closing price of the of the Company’s common stock 5
days preceding the date of conversion. Each Unit will consist of one restricted
common share and one three-year warrant at two times the price of the Unit. The
Company did not record any intrinsic value of the beneficial conversion feature
of the loan because the conversion cannot take place until the authorized shares
of the Company’s common stock have been effectively increased to 250,000,000
shares and that the conversion price cannot be determined until conversion takes
place.




On
June 26, 2007, the Company accepted an offer from an individual lender of
callable, on-demand convertible loan of $25,000, bearing 10% annualized
interest. The lender may not convert the loan prior to the effective date of the
Company’s authorized shares of common stock being increased to 250,000,000
shares but the lender will have the option to convert any money advanced and/or
interest in arrears into Units priced at $0.039 per share of the common stock of
the Company or the average closing price of the Company’s common stock 5 days
preceding the date of conversion, whichever is the lower, if the said loan is
converted within 30 days from the effective date of the Company’s authorized
shares of common stock being increased to 250,000,000 shares and thereafter at
the average closing price of the of the Company’s common stock 5 days preceding
the date of conversion. Each Unit will consist of one restricted common share
and one three-year warrant at two times the price of the Unit. The Company did
not record any intrinsic value of the beneficial conversion feature of the loan
because the conversion cannot take place until the authorized shares of the
Company’s common stock have been effectively increased to 250,000,000 shares and
that the conversion price cannot be determined until conversion takes place.




On
August 8, 2007, the Company accepted an offer from a director of the Company and
an offer from the spouse of the director, of callable, on-demand convertible
loans of $100,000 and $200,000, respectively, bearing 10% annualized interest.
The lenders will have the option to convert any money advanced and/or interest
in arrears into Units priced at $0.031 per share of the common stock of the
Company, if the said loans are converted within 12 months from the effective
date of the money deposited to the Company’s bank account. Each Unit will
consist of one restricted common share and one three-year warrant at two times
the price of the Unit. The Company recorded an intrinsic value of the beneficial
conversion feature of the loans at $300,000,




F-19




21




---

On
October 3, 2007, the Company accepted an offer from a director of the Company
and an offer from the spouse of the director, of callable, on-demand convertible
loans of $200,000 and $100,000, respectively, bearing 10% annualized interest.
The lenders will have the option to convert any money advanced and/or interest
in arrears into Units priced at $0.056 per share of the common stock of the
Company, if the said loans are converted within 12 months from the effective
date of the money deposited to the Company’s bank account (“Effective Date”).
Each Unit will consist of one restricted common share and one three-year warrant
at two times the price of the Unit. The Company recorded an intrinsic value of
the beneficial conversion feature of the loans at $300,000,




On
October 19, 2007, the Company accepted an offer each from two individuals, of
callable, on-demand convertible loans of $50,000 each, bearing 10% annualized
interest. The lenders will have the option to convert any money advanced and/or
interest in arrears into Units priced at $0.065 per share of the common stock of
the Company, if the said loans are converted within 12 months from the effective
date of the money deposited to the Company’s bank account. Each Unit will
consist of one restricted common share and one three-year warrant at two times
the price of the Unit. The Company recorded an intrinsic value of the beneficial
conversion feature of the loans at $100,000,




The
Company recorded the intrinsic value (i.e. the difference between the conversion
price and the fair market value of the common stock on the date of issuance)
attributable to the beneficial conversion feature as a discount to be amortized
over the life of each of the above convertible loans as interest expense in
accordance with Emerging Issues Task Force ("EITF") No. 00-27 and APB No. 14,
Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants.
For the year ended December 31, 2007, the Company recognized a total discount of
$1,205,462 which was charged to additional paid in capital during the year. The
Company has charged $628,476 to operation as amortization of Debt Discount as
interest expense.




In
January 2006, the Company borrowed an additional $50,000 under the convertible
loan agreement signed in November 2005, increasing the total debt to $200,000.
These loans together with accrued interest were originally convertible at $0.30
per share. The lender had demanded repayment together with accrued interest in
September 2006 but both parties finally agreed that it be converted on September
28, 2006 to 1,448,985 common shares at a conversion price of $0.15 per share
with an attached 3-year warrant for each common share at an exercise price of
$0.30 per share. The said common shares and warrants were issued and delivered
in November 2006.




On
July 5, 2006, the Company accepted an offer of a callable, on-demand convertible
loan of $50,000, bearing 10% annualized interest. The lender will have the
option to convert any money advanced and/or interest in arrears into Units
priced at 75% of the average closing price of the preceding 5 days of the
Company's common stock. Each Unit will consist of one restricted common share
and one three-year warrant priced at two times the price of the Unit. On October
1, 2006, this loan, together with accrued interest, was converted into 645,644
common shares at $0.0795 per share with 645,644 attached warrants at an exercise
price of $0.159 per share on October 1, 2006. The said shares and warrants were
issued and delivered in November 2006.




In
September 2006, the Company accepted 6 offers of callable, on-demand convertible
loans totaled $460,000, all bearing 10% annualized interest. The lenders will
have the option to convert any money advanced and/or interest in arrears into
Units priced at US$0.10 within 30 days from the date of the agreement and
thereafter at the average closing price of the preceding 5 days of the Company’s
common stock. Each Unit will consist of one restricted common share and one
three-year warrant at two times the price of the Unit. In October 2006, these
loans, together with accrued interest, were converted into 4,638,333 common
shares at a conversion price of $0.10 per shares with 4,638,333 attached
warrants at an exercise price of $0.20 per share. The said common shares and
warrants were issued and delivered in November 2006.




For
the year ended December 31, 2006, the Company recognized a total discount of
$232,320 as interest expense on the total convertible loan payables of $710,000
together with accrued interest.




13. Derivative Liability




As
disclosed in Note 8, the Company does not have sufficient authorized common
shares available to enable the exercise of outstanding options and warrants. Any
increase in authorized shares is subject to shareholder’s approval. Accordingly,
the Company could not be assured that there will be adequate authorized shares
to settle all contractual obligations under the option and warrant agreements
outstanding prior to July, 2007.




Accordingly, in accordance with the provisions of EITF 00-19, "Accounting
for Derivative Financial Instruments Indexed to and Potentially Settled in a
Company's Own Stock", the Company has reviewed all instruments previously
recorded as permanent equity under EITF 00-19. From July 01, 2006, the initial
date on which the Company had insufficient shares to settle all contractual
obligations under option and warrant agreements outstanding, a $167,536 fair
value of instruments previously recorded as permanent equity was recorded as a
liability based upon fair values computed under a Black-Scholes model with the
following assumptions: (1) dividend yield of 0% (2) expected volatility of 140%
(3) risk-free interest rate of approximately 5.10% and (4) expected life and
exercise prices consistent with each individual instrument.




Additionally, during July through December 2006, the $161,413 fair value
of instruments previously recorded as permanent equity was recorded as a
liability based upon fair values computed under a Black-Scholes model with the
following assumptions: (1) dividend yield of 0% (2) expected volatility of 140%
(3) risk-free interest rate of approximately 4.5% and (4) expected life and
exercise prices consistent with each individual instrument. The fair values of
new instruments issued during this period have been classified as liabilities as
of the date of issue. This amount aggregated $407,139 computed under a
Black-Scholes model with the following assumptions: (1) dividend yield of 0% (2)
expected volatility of 140% (3) risk-free interest rate of 4.74% and (4)
expected life and exercise prices consistent with each individual instrument.




At
December 31, 2006, the fair value of each instrument was again computed under a
Black-Scholes model with the following assumptions: (1) dividend yield of 0% (2)
expected volatility of 140% (3) risk-free interest rate of approximately 4.74%
and (4) expected life and exercise prices consistent with each individual
instrument. These calculations resulted in an aggregate value of derivative
instruments of approximately $640,201. As a result, for the year ended December
31, 2006 the Company recorded approximately $333,725 as a charge to Change in
value of Warrant Liability.




The
Company recorded a gain of $348,402 in derivative liability due to lower stock
prices against the stock prices at liability dates from January 2007 to June
2007. In July 2007, the balance of derivative liability amounting to $291,799
was extinguished when the authorized share capital was increased from 50 million
to 250,000,000 shares.




14. Subsequent Events




On
January 1, 2008, we engaged the services of a consultant in the financial
related matters, including the consultation regarding transactional accounting
treatments, choices, disclosures, etc for a fixed fee of $3,000 per quarter.




On
January 1, 2008, the Board of Directors approved the granting of 3 options to 2
consultants and 1 advisor to each purchase 50,000 shares of the Company’s common
stock under the 2007 Plan at an exercise price of $0.08 per share. The fair
values of these options were computed using a Black-Scholes model with the
following assumptions: (1) dividend yield of 0%; (2) expected volatility of
208%; (3) risks free interest rates of 3.34%; (4) expected lives of 1 year; and
(5) at a market price $0.04. The fair values will be amortized and expensed over
one year, the contract period for the provision of business development and
advisory services in China. On April 1, 2008, the Board of Directors rectified
the said resolution to exclude the granting of the option to the advisor as the
advisory service contract was not executed and the Board of Directors decided
not to pursue with the appointment.




F-20




22




---

On
January 1, 2008, the Company granted options to two new employees of Asia
Payment Systems (HK) Ltd. to each purchase 250,000 shares of the Company’s
common stock under the 2007 Plan at an exercise price of $0.08 per share. The
fair values of these option were computed using a Black-Scholes model with the
following assumptions: (1) dividend yield of 0%; (2) expected volatility between
208%; (3) risks free interest rates between 3.34%; (4) expected lives of 1 year;
and (5) at a market price $0.04. The fair value will be amortized and expensed
over five year, the contract period for the employment of the two employees..




On
January 14, 2008, the Company granted options to 7 employees and 3 officers to
purchase a total of 3,023,119 shares of the Company’s common stock (105,020
under the 2004 Plan, 919,000 under the 2005 Plan and 1,999,099 under the 2007
Plan) at an exercise price of $0.05 per share with immediate vesting to settle
salaries owing to them as at December 31, 2007 and advances made by them for the
Company’s expenses totaling $151,156. The fair values of these options were
computed using a Black- Scholes model with the following assumptions: (1)
dividend yield of 0%; (2) expected volatility 212%; (3) risks free interest
rates between 3.20%; (4) expected lives of 1 day; and (5) at a market price
$0.05. The fair values were expensed off at the time of granting the options.




On
January 21, 2008, the Company terminated the Business Alliance Agreement with
SMS Biz Sdn. Bhd. (“SMS Biz”) and entered into a share exchange agreement (“SMS
Biz SEA”) with Yap Kit Chuan and Chua Tong Ling, the two shareholders of SMS Biz
to acquire 100% of SMS Biz for a total consideration of 7,000,000 shares of the
Company’s common stock. The SMS Biz SEA is expected to be closed by the end of
April 2008.




On
January 22, 2008, the directors of the Company approved the issuance of
15,563,604 shares of its restricted common stock at an average of $0.0435 per
share, to two accredited investors (one being a director of the Company and the
other, his wife) for the conversion of four convertible loans and accrued
interests totaling $620,083 on January 15, 2008. Pursuant to the agreements, a
total of 15,563,604 3-year warrants at an exercise price of US$0.062 per share
for half of the warrants and US$0.112 per share for the other half, were granted
to the investors. The offer and sale of the shares was exempted from the
registration and prospectus delivery requirements of the Securities Act of 1933
by virtue of Section 4(2) and Rule 406 of Regulation D. The sale did not involve
a public offering or general solicitation. The stock certificates issued to the
purchaser contained a restrictive legend in accordance with Rule 144. The
intrinsic values of the convertible loans were determined at the time the loans
were obtained and were recorded. The intrinsic value balance of $410,959 were
fully charged out as at the date of conversion.




On
January 23, 2008, Mr. Robert Clarke resigned as director and chairman of the
board of directors. Mr. Clarke has no dispute or disagreement with any director
or the Company.




On
January 30, 2008, the Company entered into a business development contract with
Willow Cove Investment Group, Inc. (“Willow Cove”), a California based company,
whereby Willow Cove will render its services on a performance based fee
structure to assist the Company and its executive management in general
corporate development and the structuring and presentation of business
opportunities for consideration by the Company.  A
referral fee ranging from 2% to 5% of the revenue received by the Company from
sales of its products/services to customers referred by Willow Cove will be
payable to Willow Cove for a period of three years following the date the
Company first recognizes revenue from such referred customer. A referral fee
ranging from 2% to 5% of the gross consideration paid by the Company for any
merger or acquisition or on the Company’s portion of the paid in capital for any
joint venture company introduced by Willow Cove will be paid to Willow Cove upon
completion of the merger or acquisition or joint venture. In addition, upon any
loan or debt financing arranged or introduced by Willow Cove to the Company, the
Company will pay Willow Cove two percent (2%) of such gross loans or debt
proceeds. The term of this engagement shall be for a minimum period of one year
from January 30,2008 and continue on a month to month basis thereafter until
terminated by either party.




In January 2008, the Company converted 3,500,000
shares of Series A Preferred Stock to 17,500,000 shares of common stock of the
Company.




In January 2008, the Company converted 2,500,000
shares of Series B Preferred Stock to 25,000,000 shares of common stock of the
Company.




On February 1, 2008, Mr. Jee Sam Choo was
appointed as chairman of the board of directors.




On
February 1, 2008, the directors of the Company approved the issuance of
1,569,659 shares of its restricted common stock at a price of $0.065 per share,
to three accredited investors for the conversion of three convertible loans and
accrued interests totaling $102,028 on January 15, 2008. Pursuant to the
agreements, a total of 1,569,659 3-year warrants at an exercise price of US$0.13
per share were granted to the investors. The offer and sale of the shares was
exempted from the registration and prospectus delivery requirements of the
Securities Act of 1933 by virtue of Section 4(2) and Rule 406 of Regulation D.
The sale did not involve a public offering or general solicitation. The stock
certificates issued to the purchaser contained a restrictive legend in
accordance with Rule 144. The intrinsic values of the convertible loans were
determined at the time the loans were obtained and were recorded. The intrinsic
value balance of $77,260 was fully charged out as at the date of conversion.




On
February 1, 2008, the directors of the Company approved the proposed increase of
the paid up capital of APS China from US$600,000 to US$800,000. On March 12,
2008, US$50,000 of the incremental $200,000 was paid into APS (China) by the
Company.




On
February 20, 2008, the Company accepted an offer from an individual, of a
callable, on-demand convertible loan of $50,000, bearing an interest rate of 10%
per annum. The lender will have the option to convert any money advanced and/or
interest in arrears into Units priced at $0.048 per share of the common stock of
the Company, if the said loan is converted within 12 months from the effective
date of the money deposited to the Company’s bank account. Each Unit will
consist of one restricted common share and one three-year warrant at two times
the price of the Unit. The Company recorded an intrinsic value of the beneficial
conversion feature of the loan at $50,000,




On
February 20, 2008, the Company accepted an offer each from three individuals, of
3 callable, on-demand convertible loans totaling $100,000 ($35,000, $35,000, and
$30,000 respectively), bearing an interest rate of 10% per annum. The lenders
will have the option to convert any money advanced and/or interest in arrears
into Units priced at $0.048 per share of the common stock of the Company, if the
said loans are converted within 12 months from the effective date of the money
deposited to the Company’s bank account. Each Unit will consist of one
restricted common share and one three-year warrant at two times the price of the
Unit. The Company recorded an intrinsic value of the beneficial conversion
feature of the loans at $100,000.




On
March 7, 2008, Mr. Michael Oliver resigned as director of the Company. Mr.
Oliver has no dispute or disagreement with any director or the Company.




On
March 7, 2008, Mr. Charlie Rodriguez resigned as director and Secretary and
Treasurer of the Company. Mr. Rodriguez has no dispute or disagreement with any
director or the Company.




F-21




23




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On
March 10, 2008, the Company entered into a business development contract with
Lim Han Seng (“LHS”), a Malaysian, whereby LHS will render his services on a
performance based fee structure to assist the Company and its executive
management in general corporate development and the structuring and presentation
of business opportunities for consideration by the Company. A
referral fee ranging from 2% to 5% of the revenue received by the Company from
sales of its products/services to customers referred by LHS will be payable to
LHS for a period of three years following the date the Company first recognizes
revenue from such referred customer. A referral fee ranging from 2% to 5% of the
gross consideration paid by the Company for any merger or acquisition or on the
Company’s portion of the paid in capital for any joint venture company
introduced by LHS will be paid to Willow Cove upon completion of the merger or
acquisition or joint venture. In addition, upon any loan or debt financing
arranged or introduced by LHS to the Company, the Company will pay LHS two
percent (2%) of such gross loans or debt proceeds. The term of this engagement
shall be for a minimum period of one year from March 10,2008 and continue on a
month to month basis thereafter until terminated by either party.




On
April 7, 2008, Ms. Katherine YL Tung was appointed as Secretary and Treasurer of
the Company. Ms. Tung does not have an employment contract with the Company but
provides her services to the Company through a company related to her which has
entered into an administrative services contract with the Company for a period
of one year commencing April 7, 2008 for a monthly fee of $2,000. She was
granted an option under the 2007 Plan to purchase 100,000 shares of the
Company’s common stock at an exercise price of $0.05 per share, and vesting at
the end of every three months commencing from April 1, 2008 for a one year term.
The fair values of these options amounting to $2,100 were computed using a
Black-Scholes model with the following assumptions: (1) dividend yield of 0%;
(2) expected volatility of 235%; (3) risks free interest rates of 1.72%; (4)
expected lives of 1 year; and (5) at a market price $0.03. The fair values will
be amortized and expensed over one year, the contract period for the provision
of the said administrative services.




15. Segment Information




The
Company is managed by specific lines of business including business processing
(“Processing Business Unit”), prepaid communications products (“Prepaid Business
Unit”) and payment and loyalty-rewards cards (“Card Business Unit”) . The
Company's management makes financial decisions and allocates resources based on
the information it receives from its internal management system on each of its
lines of business. Certain other expenses associated with the public company
status of Cardtrend are reported at the Cardtrend parent company level, not
within the subsidiaries. These expenses are reported separately in this
footnote. The Company's management relies on the internal management system to
provide sales, cost and asset information by line of business.




Summarized financial information by line of business for the years ended
December 31, 2007 and 2006, as taken from the internal management system
previously discussed, is listed below




For the
      years ended December 31,2007
            
            
            2006Net revenues:Processing Business
            
            
            $
            748,465
            
            $
            188,251Prepaid Business
            
            
            
            978,927
            
            
            158,487Cards Business
            
            
            
            -
            
            
            -Total revenue
            
            
            $
            1,727,392
            
            $
            346,738For the
      years ended December 31,2007
            
            
            2006Gross ProfitProcessing Business
            
            
            $
            404,226
            
            $
            132,453Prepaid Business
            
            
            
            15,585
            
            
            2,602Cards Business
            
            
            
            -
            
            
            -Total Gross Profit
            
            
            $
            419,811
            
            $
            135,055For the
      years ended December 31,2007
            
            
            2006Operating Income/(loss)Processing Business
            
            
            $
            (1,000,618
            )
            $
            (131,604
            )Prepaid Business
            
            
            
            (121,815
            )
            
            (365,719
            )Cards Business
            
            
            
            6,921
            
            
            (366,389
            )Corporate unallocated
            
            
            
            (1,580,763
            )
            
            (3,441,506
            )Total Operating Income (loss)
            
            
            $
            (2,696,275
            )
            $
            (4,305,218
            )At
      December 31,2007
            
            
            2006AssetsProcessing Business
            
            
            $
            3,886,123
            
            $
            3,285,483Prepaid Business
            
            
            
            2,149,632
            
            
            1,954,593Cards Business
            
            
            
            1,654,978
            
            
            1,742,319Corporate unallocated
            
            
            
            -
            
            
            511,841Total Assets
            
            
            $
            7,690,733
            
            $
            7,494,235


F-22




24




---

For the years ended December 31,2007
            
            2006Capital ExpendituresProcessing Business
            $
            351,470
            $
            2,430Prepaid Business
            
            967
            
            -Cards Business
            
            17,976
            
            -Total Capital Expenditures
            $
            370,413
            $
            2,430


The
net operating income (loss) data listed above includes the effects of selling,
general and administrative expenses and depreciation and amortization. The
following tables disclose those amounts for each segment.




For the years ended December 31,2007
            
            2006Operating Expenses :Processing Business
            $
            1,755,088
            $
            264,057Prepaid Business
            
            137,200
            
            368,320Cards Business
            
            16,864
            
            368,353Corporate unallocated
            
            1,206,934
            
            3,439,543Total Operating Expenses
            $
            3,116,086
            $
            4,440,273For the years ended December 31,2007
            
            2006Depreciation and amortization:Processing Business
            $
            147,652
            $
            6,766Prepaid Business
            
            62,853
            
            5,128Cards Business
            
            2,139
            
            -Corporate unallocated
            
            409
            
            17,803Total Depreciation and amortization
            $
            213,053
            $
            29,697














































F-23




25




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SIGNATURES




Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on this 5thday of
June, 2009.




CARDTREND
      INTERNATIONAL INC.A Nevada
      corporationBy:
            KING K.
      NGKing K.
      NgChief (Principal) Executive
      OfficerBy:
            THOMAS CL
      WONGThomas CL
      WongChief (Principal) Financial
      Officer







Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following person on behalf of the Registrant and in
the capacities and on the date indicated.




Signatures
            Title
            DateKING K.
      NGKing K.
      Ng
            Director , President and Chief
      (Principal) Executive Officer
            June 5,
      2009KOK KENG
      LOWKok Keng
      Low
            Director, Executive Vice
      President and Chief Operating Officer
            June 5,
      2009JEE SAM
      CHOOJee Sam
      Choo
            Director,
      Chairman
            June 5,
      2009YU HUA
      CHENYu Hua
      Chen
            Director, Chief Officer – Greater
      China
            June 5,
      2009





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