SECURITIES
AND EXCHANGE COMMISSION




Washington, D.C. 20549


FORM 10-K




x  ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the Fiscal Year Ended December 31, 2008o  TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




Commission
File Number 000-30013


CARDTREND
INTERNATIONAL INC.


(Exact
name of registrant as specified in its charter)




Nevada
            
            98-0204780(State
      or other jurisdiction of incorporation or organization)
            
            (I.R.S.
      Employer Identification No.)800
      5thAvenue, Suite 4100, Seattle, WA
              (Address of
      principal executive offices)
            
            98014
              (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:




Title of each
      class:
            
            Name
      of each exchange on which registered:Common
      Stock, $.001 par value
            
            Over-the-Counter
      Bulletin Board





Indicate
by check mark if a registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities
Act.    Yes  o
  No  x




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the
Act.    Yes  o
  No  x




Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past
90 days.    Yes  x
  No  o




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant’s knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this
Form 10-K.    o




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




Large
      Accelerated Filer  o
            
            Accelerated
      Filer  oNon-accelerated
      Filer   o
              (Do
      not check if a smaller reporting company)
            
            Smaller
      Reporting Company  x




Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act).    Yes  o
  No  x




As of
March 31, 2009, 124,103,862 shares of the registrant’s common stock were held by
non-affiliates. The aggregate market value as of that date, based on the $0.005
closing stock price as of March 31, 2009, was $620,519.





As of
March 31, 2009, the registrant had 155,818,136 shares of Common Stock
outstanding





DOCUMENTS
INCORPORATED BY REFERENCE


Location
      in Form 10-K
                      
                      Incorporated
      DocumentItem
      15. Exhibits And Financial Statements Schedules
                      
                      See
      Exhibit
Index














CARDTREND
INTERNATIONAL INC.





Table
of Contents








PART
      IITEM
      1.  BUSINESS
            3ITEM
      1A.  RISK FACTORS
            7ITEM
      1B.  UNRESOLVED STAFF COMMENTS
            9ITEM
      2.  DESCRIPTION OF PROPERTY
            9ITEM
      3.  LEGAL PROCEEDINGS
            9ITEM
      4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS
            9PART
      IIITEM
      5.   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
      MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY
      SECURITIES
            10ITEM
      6.  SELECTED FINANCIAL DATA
            11ITEM
      7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF
      FINANCIAL CONDITION AND RESULTS 0F OPERATIONS
            11ITEM
      7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
      RISK
            17ITEM
      8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY
      DATA
            17ITEM
      9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
      ON ACCOUNTING AND FINANCIAL DISCLOSURE
            44ITEM
      9A.  CONTROLS AND PROCEDURES
            44ITEM
      9B.  OTHER INFORMATION
            44PART
      IIIITEM
      10.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
      PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
      ACT
            45ITEM
      11.   EXECUTIVE COMPENSATION
            47ITEM
      12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
      AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
            51ITEM
      13.   CERTAIN RELATIONSHIPS AND RELATED
      TRANSACTIONS
            52ITEM
      14.   PRINCIPAL ACCOUNTANT FEES AND
SERVICES
            53PART
      IVITEM
      15.   EXHIBITS AND FINANCIAL STATEMENT
      SCHEDULES
            53SIGNATURES
            56EXHIBITS
            57














































-2-








FORWARD
LOOKING INFORMATION





Our
disclosure contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These include statements about our
expectations, beliefs, intentions or strategies for the future, which we
indicate by words or phrases such as “anticipate”, “expect”, “potential”,
“continue”, “intend,” “plan”, “may”, “will”, “should”, “we believe”, “our
company believes”, “management believes” or other similar expressions or
language. Our forward-looking statements are subject to risks and uncertainties.
You should note that many factors, some of which are described in this Part I or
discussed elsewhere in this document, could affect our company in the future and
could cause our results to differ materially from those expressed in our
forward-looking statements, including those matters discussed under the heading
“Risk Factors” below. Our actual results may differ materially from results
anticipated in these forward-looking statements. We base the forward-looking
statements on information currently available to us, and we assume no obligation
to update or revise them, whether as a result of new information, future events
or otherwise. In addition, our historical financial performance is not
necessarily indicative of the results that may be expected in the future and we
believe that such comparisons cannot be relied upon as indicators of future
performance.





As used in
this Annual Report on form 10-K, “Company,” “us,” “we,” “our” or
any similar term means Cardtrend International Inc. a Nevada
corporation.





PART
I





ITEM
1.  BUSINESS





Overview


Cardtrend
International Inc. (“Cardtrend”), formerly known as Asia Payment Systems, Inc.,
is a provider of products and services in the payments and loyalty rewards
industries in Asia , Pacific, Australia and Middle East Regions, with special
focus in China. It was incorporated in the State of Nevada on October 2, 1998,
and maintains its principal office at 800 5th Avenue,
Suite 4100, Seattle, WA 98104. After the acquisition of Cardtrend Systems
Sdn. Bhd. and Interpay International Group Ltd. in December 2006, we grouped our
businesses under three synergistic business units: Processing Business Unit,
Cards Business Unit and Prepaid Business Unit. We develop and own a range of
card management software (“CMS”) which, in addition to being licensed to
operators and acceptors of payment cards (credit cards, debit cards and prepaid
cards of international brands such as MasterCard and Visa Cards or proprietary
brands) and loyalty cards (cross industries, multiple stores or single location
outlet) or distributors of prepaid products, is being used to provide data
processing services to such operators and acceptors. We make use of our card
operational and technical know-how to provide technical services and management
services to operators of payment cards and loyalty cards and distributors of
prepaid products/services. We form joint-venture companies in Asia countries to
operate payment cards business, loyalty cards business or prepaid products cards
business. In almost all instances, we also provide CMS to our joint-venture
companies.





Our
History


In August
1999, we, then known as Asia Alliance Ventures, Inc., entered into a joint
venture agreement with Shandong Hengtong Chemical Industrial Company, Ltd.
(“Shandong Industrial”), a large, established company in Linyi City, partially
owned by the People’s Republic of China (“China” or “PRC”) and located in the
southeast of Shandong Province. Together with Shandong Industrial, we formed
Shandong Hengtong Development Chemical Co. Ltd (“Shandong Development”) as our
joint venture enterprise. The purpose of the joint venture was to acquire
and run the nitrogen fertilizer plant of Shandong Industrial, to expand the
fertilizer operations by adding power generation plants and to acquire other
fertilizer plants. From 1999 to mid 2003, our former management attempted
unsuccessfully to raise $13 million, which was to be our contribution to the
joint venture.





In August
2003, we terminated the joint venture with Shandong Industrial and sought to
acquire a new business. We acquired WelWay Development Limited, a corporation
organized under the laws of Hong Kong SAR, China, in consideration of 6,500,000
restricted shares of our common stock. WelWay was developing a business to
provide credit card clearing services for merchants in China and throughout
Asia, as well as providing third party credit card clearing services to
financial institutions and oil companies in China.





In
November 2003, we changed our name to Asia Payment Systems, Inc. In February
2004, we completed the acquisition of WelWay. The management and assets of
WelWay were transferred to us, and we ceased to use the name WelWay Development.
Subsequently, our common stock began trading on the Over-The-Counter Bulletin
Board under the symbol “APYM.OB” in March 2004.





In
September 2004, we completed the development of our credit card transaction
processing systems (“ApayCard”) integrating with Triversity retail POS system.
In December 2004, we commenced providing our third party credit card transaction
processing services to a duty free retailer in Okinawa, Japan, DFS Okinawa KK,
using ApayCard system, generating our maiden revenue. This marked the beginning
of our business in the payments industry in Asia.





In October
2005, we established a wholly owned subsidiary in Shanghai, China, known as Asia
Payment Systems (China) Co. Ltd. (“APS China”), to facilitate the development of
our intended business in China.





In October
2006, we acquired, in consideration of 25 million restricted shares of our
common stock, Cardtrend Systems Sdn. Bhd. (“Cardtrend Systems”), a company
incorporated in Malaysia which has developed card processing systems selling to
operators of credit cards, prepaid cards, debit cards, loyalty cards and airtime
reloads. Its customers are multinational companies in Asia like Shell and other
national and regional oil companies, banks and telecommunication services
companies. It has been awarded the Multimedia Super Corridor (MSC) status by the
Government of Malaysia and enjoys tax-free benefit.





In
December 2006, we acquired, in consideration of 17.5 million restricted shares
of our common stock, Interpay International Group Ltd. (“IIG”), a holding
company of various companies in Asia involving in the payment cards (credit
cards and prepaid cards) and loyalty cards (discount cards, bonus reward cards
and rebate cards) industries. It has a joint venture credit card company, a
loyalty card company and a prepaid card distribution company in
Malaysia.





In July
2007, in order to reflect the expanded business scope of the Company, we changed
our name to Cardtrend International Inc., and our stock is now traded under the
symbol “CDTR.”.





In
November 2007, through our wholly owned subsidiary in Shanghai, China, we
acquired, in consideration of CNY 1,500,000 (approximately $198,176, at the then
exchange rate) the operating assets of Global Uplink Communications Ltd., a
business process outsourcing company in Guangzhou, Guangdong Province, China. At
the same time we recruited four executives and about 110 staff and began to
generate revenues in China. At about the same time, we acquired Global
Uplink Ltd., the marketing company in Hong Kong associated with Global
Uplink Communication Ltd. for a cash consideration of HK$500,000 (approximately
$64,610 at the then exchange rate).





-3-





Our
Strategy


From
November 2006 onwards and throughout the fiscal year ended December 31, 2008, we
implemented our new strategic direction (“New Strategy”) developed in the summer
of 2006. The New Strategy, which calls for a clear definition of our business in
order to move forward, is as follows:


*
            We
      will grow by forming strategic alliances with and/or merging with and/or
      acquiring existing payments business related companies in Asia by cash
      and/or share exchanges considerations and we will concentrate in providing
      business processes out-sourcing to financial institutions and
      multinational corporations as well as data processing services to small-
      and mid-size operators and acceptors of payment cards and loyalty cards
      throughout Asia while continuing a primary focus on China, and expand our
      scope of business to include the issuance of payment cards and loyalty
      cards and the sale/distribution of prepaid products and services to Asian
      consumers at large.





The New
Strategy has yielded the following results since being implemented:


*
            The
      grouping of our businesses into three distinct business units which
      complement one another: Processing Business Unit, Cards Business Unit and
      Prepaid Business Unit.*
            The
      merger with Cardtrend Systems Sdn. Bhd. (“Cardtrend Systems”), a Malaysia
      based IT company that provides system solutions for operators of payment
      cards and loyalty cards, on October 31, 2006;*
            The
      strategic alliance with and an option to acquire SMS Biz Sdn.
      Bhd.(“SMSBIZ”), a Malaysia based company that issues telecommunications
      prepaid cards, on November 8, 2006;*
            The
      acquisition of Interpay International Group Ltd. (“IIG”), a BVI based
      holding company of a group of subsidiaries and associate companies which
      are operators of payment cards and loyalty cards, on December 7,
      2006;*
            The
      acquisition of Global Uplink Ltd. (“GULHK”), a Hong Kong based company
      that markets BPO services, on October 31, 2007;*
            The
      acquisition of business assets of Global Uplink Communications Ltd. in
      Guangzhou, China and the outsourcing of its business processes to APS
      China’s branch in Guangzhou , on November 1, 2007; and*
            Increase
      in our revenue for the fiscal years ended December 31, 2007 and 2008 over
      that of 2006 and 2005.





Our
Products and Services


Our
products and services being offered to corporations and consumers in Asia,
including China, are:


1.
            Processing
      Business - Provision of business processes out-sourcing (“BPO”), data
      processing outsourcing (“DPO”) and data processing in-sourcing
      (“DPI”) services to operators and acceptors of payments cards (credit
      cards, debit cards and prepaid cards) and loyalty cards and
      distributors of prepaid products/services;2.
            Cards
      Business - Issuance of payments cards (credit cards, debit cards and
      prepaid cards) and loyalty cards to corporations and individuals; and
      acquiring payment cards’ and loyalty cards’ transactions from
      participating merchants; and3.
            Prepaid
      Business - Distribution and sale of prepaid products and services to
      corporations and individuals.





1.   Processing
Business


We
commenced offering credit card transaction processing in-sourcing services to
DFS Okinawa, a duty free retailer in Japan in late 2004. The merger in late
October 2006 with Cardtrend Systems which has developed card management and
processing systems resulted in the Company now able to provide DPO and DPI
services beyond credit card transaction processing. Prior to the mergers,
Cardtrend Systems had provided its systems, on licensing basis to use its
software, to operators of payment cards, loyalty cards and telecommunications
prepaid services in Asian countries (Malaysia, Thailand, Philippines, Brunei,
Indonesia, Hong Kong, Macau and New Zealand). Such operators comprise petrol
companies, financial institutions and prepaid products sales companies
which, on a combined basis, have millions of customers making payments to them
and/or obtaining loyalty bonus points from them. Cardtrend continues to receive
system maintenance fees from majority of these customers. After the merger,
Cardtrend, which will continue the licensing of its card software, has
begun to provide DPO and DPI services to customers. It bills the DPO and DPI
customers a one-time set-up fee plus a monthly fee based on the number of
transactions processed or a share on the customers’ revenues.





With the
acquisition of business assets from Global Uplink Communications Ltd. in
Guangzhou, China, APS China now offers BPO services, including telephone call
handling and telemarketing sales of credit cards and loyalty cards, as well as
the distribution of such cards on-behalf of our customers.





2.   Cards
Business


With the
capabilities we have acquired through the merger with Cardtrend Systems and the
acquisition of IIG, we are in a position to form joint venture companies to
issue payments cards to corporations and individuals in Asian countries. The
payments cards issued or to be issued through our subsidiaries and associated
companies are multi-purpose prepaid cards, charge cards and credit cards using
international brands such as MasterCard and/or Visa, as well as proprietary
brands for nation-wide use or single purpose use such as gift cards. For the
issuance of credit cards, our subsidiaries and associated companies will align
with financial institutions to provide revolving credit facilities to their
cardholders. Revenues are earned from card fees, interchange fees, merchant
discount fees, cash advance fees and interest income.





We are
also in a position to form joint venture companies to issue loyalty cards to
consumers in Asian countries. The loyalty cards issued or to be issued by us
through our subsidiaries and associated companies are multi-purpose point-based
cards which are honored by merchants of different industries. Revenues are
earned from card fees and merchant commissions.





3.   Prepaid
Business


We
distribute and sell prepaid products and services such as cell-phone prepaid
airtime and long distance IDD call airtime. The prepaid products and services
are supplied by third parties such as telecommunication companies.








-4-





Our
Prepaid Businesses are conducted through our subsidiaries and associated
companies which distribute our products physically to retailers or through
electronic means to a network of retailers called “E-Top Dealers” which are
equipped with electronic data capture terminals and/or cell-phones and/or
personal computers to order and obtain stocks on a real-time-on-line basis.
Revenues are derived from the sales of prepaid products. The E-Top Dealers are
recruited by a network of agents called “E-Top Agents” appointed by our
subsidiaries and associated companies. The E-Top Dealers earn a discount on the
face value (retail price) of the prepaid products and services ranging from 3%
to 28%.The E-Top Agents are paid commissions based on the amount of purchases
made by the E-Top Dealers.





The
Market and Competition


Since
early 2007, we divided Asia into four markets: Emerging Asia Market, Affluent
Asia Market and Outer Asia Market (collectively referred to as “Other Asia
Markets”) and China Market. Emerging Asia Market consists of Malaysia,
Indonesia, Philippines, Thailand, Vietnam and India. Affluent Asia Market
consists of Hong Kong, Taiwan, Korea, Japan, Singapore, Australia and New
Zealand. Outer Asia Market consists of Mongolia, Pakistan, Bangladesh,
other South-east Asia countries and Middle-eastern countries. China Market,
where the Company’s special focus is, consists of no other country except China.
For reference purpose, China, Hong Kong, Macao and Taiwan are collectively
referred to as “Greater China”.





1.   China
Market


China
Market remains our prime market for our products and services. With a population
of 1.3 billion, China is in the early stage of growth in the payments and
loyalty related products and services, including the prepaid products and
services (e.g. cell phone prepaid airtime, gift cards, prepaid transportation
and entertainment tickets, etc).The China’s middle class (which is expected to
rise to 250 million) is the engine that propels the economic growth in China.
The number of credit cards per capita is still below 0.1, a number way below a
mature market like the US which has about 5 cards per capita. As consumer
spending is growing exponentially in the China Market, all types of
corporations, including banks, will create loyalty related programs to attract
and retain their customers.





As banks,
financial institutions and major corporations expand their consumer businesses,
demands for outsourcing their business processes to third parties increase in
tandem. Our subsidiary in China continues to gear up to meet some of these
demands in Processing Business. However, the current global financial crisis
will slow down this previously expected growth somewhat in the near to
mid-term.





For the
data processing services , we believe that the capabilities in providing IT
solutions and infrastructures for the payments and loyalty industries in China
still remains low to support the anticipated robust growth. We continue our
aggressive pursuit of this opportunity by seeking the small- and mid-size
potential operators of payments cards and loyalty cards. Unlike large banks,
such operators, which are city and regional banks, co-op banks, retail chains
and service establishments, operators of food and entertainment outlets, will,
we believe, be very reluctant to spend millions of dollars or for that matter,
hundreds of thousands of dollars, in procuring a system and/or professional
services to set-up and operate their payments cards (credit cards, charge cards,
prepaid cards and/or debit cards) and/or loyalty cards (bonus points-based
and cash-back cards). We believe our competitors (First Data, EDS and China
Union Pay) in the data processing outsourcing services sector will not pay
sufficient attention to this segment of the market, and we also believe that
there exists no significant competitor in this service sector. We continue to
believe that there exists an opportunity for us to use our technology, know-how
and experience gained in other countries (like Malaysia, New Zealand and Oman)
in the prepaid top-up solution to rapidly penetrate the prepaid airtime reload
market in China which has over 500 million cell phone users who prepay for the
airtime, either as a distributor (using the Etop brand). Although there are a
few operators of prepaid airtime reload utilizing similar electronic
distribution method, major competition still comes from the operators who
distribute the physical prepaid cards. As for the card issuance side of our Card
Business, we are not permitted to issue payment cards (credit cards and prepaid
cards) as yet due to the current regulations relating to such business. We
continue to hold discussions with some second-tier banks for a joint-issuance
program. After observing some positive results in the pilot test of our
point-based loyalty card issued through Global Uplink Communications Ltd. in
Guangzhou, we strongly believe that there exists an opportunity for us to launch
a nation-wide loyalty card in China. However, the current lack of funds has
delayed our plan to launch the loyalty card business in China.





2.   Emerging
Asia Market


For the
past years, the fast growing economies of the rest of the emerging markets in
Asia, referred to as the Emerging Asia Market (Malaysia, Vietnam, Thailand,
Philippines, Thailand, Indonesia, and India), having a total population of over
1 billion, were experiencing urbanization, rapid growth of middle class, readily
available consumer credit, high usage of prepaid cell-phone airtime, and
increasing consumer spending. These markets provide us with opportunities to
offer our products and services in each market over the next decade, especially
when our competitors are still focusing in the large customers in the China
Market. We are pursuing these opportunities through joint-venture initiatives as
well as identifying potential targets for acquisitions. However, current global
financial crisis coupled with the political instability in some of the countries
is hindering our efforts in growing our businesses in this market.





3.
 Affluent Asia Market


The
competition in the payments and loyalty industries is intense and keen in the
high-income markets of Asia Pacific region, referred to as Affluent Asia Market
(Hong Kong, Taiwan, Japan, Korea, Singapore, New Zealand and Australia), where
the average number of credit cards per capita is among the highest in Asia,
with Taiwan leading at 2.0, Hong Kong trailing at 1.0, Singapore at 0.7 and
Australia at 0.6. However, all these markets are still well below that of the US
in terms of credit card penetration and opportunities exist for us in the
medium-and small-size operators segments. Similarly, with a mature and high
spending consumer base, in each of the countries in this Affluent Asia Market,
loyalty cards, prepaid cards and gift cards are becoming more acceptable to the
consumers as well as the merchants who compete rather intensely to gain and
retain their customers. There are opportunities for us to provide our card
processing solutions and services to these merchants. We continue to pursue
these opportunities through strategic alliances or joint-venture initiatives and
identifying potential targets for acquisitions.





4.
 Outer Asia Market


Being
under-developed in both consumer financial and retail services sectors, the rest
of the markets in Asia, referred to as Outer Asia Market (Mongolia, Bangladesh,
Sri Lanka, Pakistan, Kampuchea, South Pacific and some of the Middle Eastern
countries) opportunities exist for financial institutions to offer payments
cards to their more affluent customers. Demands for such services are growing
and financial institutions are eager to seek technological and operational
assistance with affordable costs. Since we possess both the technology and
operational know-how, we are well positioned to meet their needs.





Developments





1.   Resignations
of Directors


On January
23, 2008, Mr. Robert Clarkeresigned as a Director
and Chairman of the Board of directors.On March 7, 2008, Mr.
Michael Oliver resigned as director of the Company. On March 7, 2008, Mr.
Charlie Rodriguez resigned as director and Secretary and Treasurer of the
Company. These three ex-directors have no dispute or disagreement with any
director or the Company. The current members of the Board were of the opinion
that the replacement for these resigned directors would be carried out at the
appropriate time.





2.
 Appointment of Mr. Jee Sam Choo as Chairman of the Board of
Directors


On January
25, 2008, Mr. Jee Sam Choo who has been a Director of the Company since
September 2006, was appointed as the Chairman of the Board of
Director.


-5-





3.   Appointment
of Ms. Katherine YL Tung as Secretary and Treasurer


On April
15, 2008, Ms. Katherine YL Tung was appointed as the Secretary and Treasurer of
the Company for a term of one year and for a stock option granted under the 2007
Non-qualified Stock Option Plan to purchase 100,000 shares of the Company’s
common stock at an exercised price of $0.05 per share which was subsequently
modified to $0.02 per share on September 22, 2008.





4.   Engagement
and Termination of Various Consultants


On January
1, 2008, we engaged Mr. Steve Chaussy to provide consulting services in the
financial reporting related matters for a quarterly fee of $3,000. We terminated
such engagement on April 15, 2008 as the Board of Directors was of the opinion
that Mr. Chaussy’s services would no longer be required.





On January
1, 2008, we engaged Mr. Wong Yee Tat and Mr. Wan Mu Chun to provide consultancy
services in the area of business development and marketing in China to support
our business and growth for a term of one year and for a stock option each
granted under the 2007 Non-qualified Stock Option Plan to purchase 50,000 shares
of the Company’s common stock at an exercise price of $0.08 per share. The
contracts expired on December 31, 2008.





On January
30, 2008, we retained Willow Cove Investment Group Inc., a company based in San
Diego, USA, as a consultant of Company on matters pertaining to the business of
development efforts of Company for a period of one year and thereafter on a
month-to-month basis until terminated by either party. The fees are payable on a
contingency basis based on success of introduction of businesses, joint ventures
and other services as may be assigned to the consultant.





On March
10, 2008, we retain Mr. Lim Han Seng, a Malaysian, as a consultant of Company on
matters pertaining to the business of development efforts of Company for a
period of one year and thereafter on a month-to-month basis until terminated by
either party. The fees are payable on a contingency basis based on success of
introduction of businesses, joint ventures and other services as may be assigned
to the consultant.





On April
7, 2008, we engaged KateLin Enterprise Inc., a company based in Los Angeles, USA
and related to Katherine YL Tung, our Secretary and Treasurer, to provide
administrative services for a term of one year for a monthly fee of $2,000 per
month. The contract expired on April 6, 2009.





On April
21, 2008, we engaged Adrian Yeo & Co., an accounting firm based in Malaysia,
to provide consultancy services on matters pertaining to the accounting and
financial related areas for a term of one year at a total fee of
$17,000.





On May 20,
2008 we terminated the consulting service contract with a consultant who had
breached the fundamental undertakings and terms of a two-year agreement dated
November 15, 2007 in providing strategic and financial planning services to the
Company. On the same date, we also terminated the consulting service contract
with another consultant who had breached the fundamental undertakings and terms
of a two-year agreement dated November 15, 2007 in providing investor and public
relations services to the Company. We rescinded 562,500 of the 750,000
restricted shares of our common stock, as well as 500,000 warrants at an
exercise price of $0.40, issued to the latter consultant who had also forfeited
the accrued fees of $2,500 per month since November 15, 2007.





On
September 12, 2008, we retained Mr. Kim Kok Hai, a Malaysian, as a consultant of
the Company on matters pertaining to the developments in the payment transaction
processing systems using various technology, including the mobile phone SMS
technology and EMV Compliances, for a term of six months and for a stock option
granted under the 2007 Non-qualified Stock Option Plan to purchase 2,100,000
shares of the Company’s common stock at an exercise price of $0.001 per share.
The contract ended March 11, 2009.





5.
 Acquisition of SMS Biz Sdn. Bhd. (“SMSBIZ”) in Malaysia


On January
21, 2008, the Company entered into a share exchange agreement
(“SMSBIZ SEA”) with SMSBIZ, YAP and CHUA to acquire the entire
shareholdings of YAP and CHUA in SMSBIZ for the issuance by the Company for a
total of 7 million shares of the Company’s common stock (“Shares”) upon closing
of the SMSBIZ SEA (“Closing”). Upon SMSBIZ, YAP and CHUA fulfilling certain
conditions as stipulated in the SMSBIZ SEA on September 8, 2008, the Company
issued 7 million Shares (valued at $105,000) to YAP, CHUA and their
designees but withheld 4/7 of the issued Shares which would be released on a
quarterly basis at a rate of 10 Shares for every US$1.00 of pre-tax profit that
SMSBIZ may earn from the date of Closing until all the 4 million Shares are
fully released or until the end of 20 quarters from the date of Closing (“End
Date”), whichever is the sooner, and should there remain any unreleased Shares
as at the End Date, the Company should be entitled to buy, and YAP and CHUA
should sell, all the unreleased Shares at US$0.001 per Share. (See Note 4
of the “Notes To Consolidated Financial Statements” for the purchase price
allocation and the proforma results of operations for the years ended
December 31, 2008 and 2007 assume that the acquisition of SMS BIZ occurred on
January 1, 2008 and 2007, respectively.)





6.
 Capitalization of Asia Payment Systems (China) Co. Ltd. (“APS China”) in
China


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. As of December
31, 2008, the full amount of the incremental $200,000 was paid into APS (China)
by the Company. The authorized capital of APS China was further increased to
$1,000,000 on July 1, 2008. As of December 31, 2008, $86,000 of the latest
incremental $200,000 was paid up. The Company has been sourcing, and will
continue to source, for such required fund. The Company can not guarantee that
it would be successful in sourcing for such fund in the current global financial
turmoil.





7.
 Joint Venture Agreement to Form a Card Company in Mongolia


On May 2,
2007, Asia Payment Systems (HK) Ltd.(“APS HK”), the Company’s wholly owned
subsidiary incorporated in Hong Kong, signed a joint venture agreement with two
Mongolian individuals to form a payment card company in Mongolia, called
Interpay Co. Ltd. APS HK would purchase the Card Management System (“CMS”)
software from Cardtrend Systems Sdn. Bhd., our wholly owned subsidiary in
Malaysia, for $250,000 and then sell the CMS to Interpay Co. Ltd. for $250,000
and install it in the office of Interpay Co. Ltd. which is located in Ulaan
Baatar, the capital city of Mongolia. Instead of paying APS HK $250,000 for the
CMS installed, Interpay Co. Ltd. would issue a certificate evidencing APS HK’s
50% interest in Interpay Co. Ltd. which would have a paid up capital of
$500,000. The issuance of the share certificate has been delayed due to the
delay in obtaining the user’s acceptance of the CMS installed. Meanwhile,
Interpay Co. Ltd. test launched Interpay Credit Card with Anod Bank in Mongolia
in February 2008. However, due to the recent failure of Anod Bank which is now
placed under the management of the Central Bank of Mongolia, all activities of
Anod Bank Interpay credit Cards have ceased. Given the current situation, the
Board of Directors of the Company has, on April 1, 2009, authorized the
termination of the joint venture agreement





8.
 Disposal of SMS Biz Sdn. Bhd.


On
November 24, 2008, the Company entered into an agreement to sell back its entire
interest in SMS Biz to the previous shareholders for the return by the said
shareholders all the 7 million shares of the Company’s common stock previously
issued to them. The Board of Directors approved the sell-back after due
considerations given to the sharp drop in sale due to the adverse impact of the
global economic crisis and the confession by the said shareholders that they
would not be in a position to subscribe for the additional capital within
the next 24 months as called for prior to the closing of the SMSBIZ SEA.
The Company recorded a loss in disposing SMSBIZ in the amount of
$85,629.




-6-





9.
 Joint Venture Agreement to Form a Processing Company to Conduct Business
in EMENA Region


On October
1, 2008, Cardtrend Systems entered into a joint venture agreement with 3
individuals to form a company in a country in Europe to conduct card related
services businesses in Europe, Middle East and North Africa (“EMENA”) region
with a registered capital of $499,200, upon incorporating the contemplated
joint venture company, Cardtrend Systems shall own 50.08% of the joint venture
company by contributing four units of software with a total fair value of
$250,000. As at the date of this Report, the contemplated joint venture company
is being incorporated.





10.
 Corporate Restructuring


On October
1, 2008, the Board of Directors of the Company approved the re-structuring of
the Company’s subsidiaries into two business groups – Card Services Group and
Outsourcing Services Group, and each group shall be operating under a separate
wholly owned subsidiary to be incorporated in Nevada under the name of Cardtrend
Inc. and Global Uplink Inc., respectively. The corporate re-structuring was
expected to be completed by the end of December 31, 2008 and the estimated
re-structuring cost is approximately $20,000. As at the date of this Report, the
Board had revisited the approved plan in view of the current global economic
crisis and rescinded its earlier decision and decided that the corporate
restructuring be deferred to a later date with possible changes from the earlier
plan. Hence, the Segment Reporting for the year ending December 31, 2008
continues to be reported as the existing three groups.





11.
 Incorporation of Two New Companies in Nevada


On October
14, 2008, the Company incorporated a wholly owned subsidiary in Nevada, known as
Cardtrend Inc., with an authorized capital of 250,000,000 shares of common stock
with a par value of $0.001each, and 15,000,000 shares of preferred stock at a
par value of $0.001 each. Cardtrend Inc. shall be made the holding company for
all the Company’s subsidiaries which are under the Card Services
Group.





On October
21, 2008, the Company incorporated another wholly owned subsidiary in Nevada,
known as Global Uplink Inc., with an authorized capital of 250,000,000 shares of
common stock with a par value of $0.001each, and 15,000,000 shares of preferred
stock at a par value of $0.001 each. Global Uplink Inc. shall be made the
holding company for the Company’s subsidiaries which are under the Outsourcing
Services Group.




Our
Employees


As at
December 31, 2007, the total staff strength was 144. As at December 31, 2008,
the total staff strength was 135. None of our employees are represented by a
labor union and we believe that our employee relations are good. All employees
are contracted on full-time basis.




Our
Facilities


During
2008, Cardtrend continued to rent the corporate service center located at 800
5th
Avenue, Suite 4100, Seattle, WA. APS China is located in a commercial office in
Shanghai, China which it rented since October 2006. On December 31, 2008, APS
China terminated the lease agreement at the Science City and relocated our
Data Processing Centre to our operating centre in Guangzhou City which it
rents since November 1, 2007. During 2008, Interpay Asia rented a premise in
Petaling Jaya, Malaysia to house all the Finance staff and the staff of Etop
Services (Malaysia). Cardtrend Systems rented an office at Cyberjaya, Malaysia
as its technology research centre (which was terminated in September 2008) while
having a commercial office in a rented premise located in Petaling Jaya,
Malaysia. Except for one lease in the Guangzhou operating center, all the leases
are for terms of no more than two years.




ITEM
1A.  RISK FACTORS





Risks
Related To Our Business:


1.We require additional financing to be
able to meet ourChinasubsidiary’s working
capital.


In our
Annual Report for the fiscal year ended December 31, 2007 filed in a Form 10K
dated April 10, 2008, we stated that APS China would require additional
investment of another $400,000 (making the total investment of $1 million) to
fund the working capital of the Operating Centre and Data Processing Centre in
Guangzhou for the first two quarters of 2008. We managed to obtain $275,000 of
the needed fund through convertible loans during 2008. We curtailed certain
planned expenses for the growth of the BPOS business as well as the launch of
our loyalty card business in Guangzhou. This has slowed down the revenue
growth of APS China for the year 2008 and would continue to slow down the growth
of revenue in 2009.




2.   Our
results of operations are subject to significant foreign economic and political
risks.


Our
operations are currently established in Malaysia, Hong Kong, and the People’s
Republic of China (“PRC”) and are being established in other Asian countries.
Our revenues are derived from the provision of BPOS to financial institutions
and major corporations in China as well as card management software and
solutions to operators of payment cards and loyalty cards as well as prepaid
products in the Asia Pacific region. Accordingly, our business, financial
condition and results of operations may be influenced by the political, economic
and legal environments in PRC and other Asian countries, and by the general
state of the economy in those countries. Our operations in the PRC 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. Our results may be adversely affected by changes in
the political and social conditions in the PRC, 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.





3.   We
have short history of operations in China to predict the level of market
acceptance we can expect for our services.


Our
success and growth will depend upon our ability to market our products and
services in China. As we are not a well-known enterprise, we will be facing with
the issue of the potential customers’ acceptance and comparison with other
well-known enterprises. We intend to overcome this issue with Cardtrend’s
successes in the South-east Asian and Pacific regions as well as the skills of
our senior management team and executives, but there is no guarantee that
such credentials will be able to substantially overcome such risk as our
competitors (both the Chinese and multi-national corporations) have
substantially greater financial and marketing resources than us.





4.   Our
subsidiary in Malaysia, Payment Business Solutions Sdn. Bhd., lost its only
reseller and the inability to replace such reseller may result in the subsidiary
departing from the business of distributing prepaid IDD cards.


In our
Annual Report for year ended December 31, 2007 filed in a Form 10KSB dated April
10, 2008, we stated that Payment Business Solutions Sdn. Bhd. (“PBS”,) a wholly
owned subsidiary of IIG in Malaysia, which was appointed as a major distributor
of SMS Biz Sdn Bhd., a licensed provider of long distance IDD call services ,
was facing the risk of loss of revenue if it lost its only reseller or a
significant orders from this reseller or the inability of this reseller to meet
its financial obligations in a timely manner. In November 2008, we ceased to
supply the prepaid cards to this reseller due to its inability to pay certain
outstanding amount in accordance to the normal credit terms, resulting in a
substantial loss of revenue in our prepaid card distribution business. However,
such loss of revenue did not have a material adverse impact in our consolidated
gross profit due to its low sale margin of about 1%. Should we not able to
recruit one or more resellers in the near future, we may decide to depart from
the prepaid card distribution business even though it would not have material
impact to the financial condition of the Company.








-7-





5.   Our
two subsidiaries, Asia Payment Systems (China) Co. Ltd. in China and Cardtrend
Systems Sdn. Bhd. in Malaysia may be subject to product and/or service failure
liability claims from the use of our products and/or our services that could
result in costs or damages payable by us adversely affecting our business,
financial condition, and results of operations.


We could
be subject to product and/or service failure liability claims in the event our
products or products under development fail to perform as intended or we fail to
deliver our services to the agreed level as provided for in the service
agreements. Even unsuccessful claims could result in the expenditure of funds in
litigation and the diversion of management time and resources and could damage
our reputation and impair the marketability of our products and/or services.
While we limit our liabilities to a certain amount as provided for in our
licensing and service contracts (hence, we do not deem necessary to take up any
product/service failure liabilities insurance in order to save our cost of doing
business), it is possible that a successful claim could be made against us, that
the amount of fees received would not be adequate to cover the costs of
defending against or paying such a claim, or that damages payable by us would
have a material adverse effect on profitability and cash flows.





6.   We
are subject to government regulations and any action on the part of regulators
could have a material adverse effect on our business.


As our
subsidiaries and associated companies are involved in the payments and loyalty
related businesses, we may be subjected to the approvals of the monetary
authorities of most of the countries we are operating or intend to operate in,
as well as compliance with such government authorities’ requirements from time
to time. Such approvals in certain countries we may intend to operate in may be
subject to significant delays. Any such actions by regulatory agencies could
materially adversely affect our growth objectives.





7.   Our
intellectual property rights or patent rights might not provide protection and
might be invalid or unenforceable.


Our
ability to commercialize any of our products under development will depend, in
part, on our ability to obtain patents, enforce those patents, preserve trade
secrets, and operate without infringing on the proprietary rights of third
parties. The patent applications licensed to or owned by us may not result in
issued patents, patent protection may not be secured for any particular
technology, any patents that have been or may be issued to us may not be valid
or enforceable and patents issued to us may not provide meaningful
protection.





8.   Our
subsidiary in Malaysia, Etop Services (Malaysia) Sdn. Bhd., which distributes
prepaid cards rely on third parties to supply the products, making us vulnerable
to supply disruption which could delay our product delivery to our
customers.


Our
Prepaid Business subsidiaries rely on third parties to supply most of their
prepaid products. Their arrangements with these third party suppliers are not
contractual and there shall be no claims against them should there be any
interruption of supplies. If such interruptions arise regularly, our
subsidiaries may face the risk of the customers losing confidence with them and
may discontinue the business relationship with them, thereby adversely affecting
their revenue and profitability.





9.   We
are substantially dependent upon the continued service of our senior management
staff and key technical and managerial personnel.


Our
success has been and will continue to be dependent on the services of our
current senior management staff and key technical and managerial personnel who
are in great demand in the payments and loyalty industries in Asia. Although we
have implemented a long-term employee option plan and have entered into 5-year
contracts with the senior management staff and 3-year or 5-year contracts with
the technical and middle management staff, we are, however, still facing
with the risk that we may not be able to fully compensate them with cash–based
salaries and thereby not able to retain such employees, and our failure to do so
could adversely affect our business.





10.
 We may be required to indemnify our officers and directors for liability
to shareholders or the public.


Our
articles of incorporation and bylaws provide that we will indemnify any
director, officer, agent and/or employee for liabilities on the terms and
conditions permitted by the corporate laws of the State of Nevada. We may
purchase and maintain insurance on behalf of any such persons whether or not we
would have the power to indemnify such person against the liability insured.
This could result in substantial expenditures by us and prevent our recovery
from such officers, directors, agents and employees for losses incurred by us as
a result of their actions. We have been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act of 1933, as amended, and is,
therefore, unenforceable.





11.
 We may be subjected to the Investment Company Regulation.


We do not
intend to become classified as an "investment company" under the Investment
Company Act of 1940 (the "Investment Act"). We believe that we will not become
subject to regulation under the Investment Act because (i) we will not be
engaged in the business of investing or trading in securities, and (ii) most of
the joint ventures undertaken or to be undertaken by us and/or our wholly owned
subsidiaries will result in us owning a majority or substantial minorities
interest. Should there be a requirement to register as an investment company, it
would cause significant registration and compliance costs. Any violation of the
Investment Act will subject us to materially adverse consequences. Should the
SEC find that we are subject to the Investment Act, and order registration under
the Investment Act, we would resist such finding and take steps to avoid such
registration. Irrespective of whether the SEC or we were to prevail in such
dispute about whether or not we are an investment company, however, the damages
and delays would be costly.





12.
 We may be subjected to Other Regulations.


Any
acquisition made by us may be of a business that is subject to regulation or
licensing by federal, state, or local authorities. Foreign companies may also be
considered, and be subject to similar business regulations as are applicable in
the United States and also may be subject to limitations on ownership by foreign
persons and entities. Compliance with such regulations and licensing can be
expected to be a time-consuming, expensive process and may limit our other
expansion opportunities. We are pursuing and intend to continue to pursue
potential business opportunities in foreign countries, including China, and as
such, such opportunities will be subject to foreign country laws and regulations
affecting foreign investment, business operations, currency exchange,
repatriation of profits, and taxation, which will increase the risk of your
investment.





Risks
Related To Our Common Stock:


1.  We
do not plan to pay dividends and shareholders may not receive any return on
their investment.


We do not
plan to pay dividends, cash or otherwise, on our common stock in the foreseeable
future. Future dividends will depend on earnings, if any, our financial
requirements and other factors beyond our control.





2.   The
market price for shares of our common stock could be volatile and you may be
unable to resell your shares in the market.


The market
price for the shares of our common stock may fluctuate in response to a number
of factors, many of which are beyond our control. Such factors may include,
without limitation, the general economic and monetary environment and the
open-market trading of our shares in particular. Such market trading may include
speculative short-selling by speculators. Investors may be unable to resell
their shares in the market due to variations in trading volume or other
market conditions.








-8-





3.   Existing
shareholders may experience some dilution upon the exercise of outstanding
warrants and options and conversion of shares of preferred stock.


The
holders of some of our warrants have up to four years from their issuance date
to exercise their warrants with exercise prices ranging from $0.08 to $1.75 per
share. On February 26, 2007, the employees, officers and directors have been
granted over 11 million of options at strike price of $0.10 and subsequently
modified to $0.02 per share on September 5, 2008. Holders of Series A and Series
B preferred stock had converted to 42.5 million restricted shares of common
stock in January 2008. Exercise of these warrants and options may cause dilution
in the interests of other shareholders as a result of the additional shares of
common stock that would be issued upon exercise. In addition, sales of the
shares of our common stock issuable upon exercise of the warrants and options as
well as sale of the restricted shares under Rule 144 (see #4 below) could have a
depressive effect on the price of our stock, particularly if there is not a
coinciding increase in demand by purchasers of our common stock. Further, the
terms on which we may obtain additional financing during the period that any of
the warrants remain outstanding may be adversely affected by the existence of
these warrants.





Moreover,
we will need to raise additional funds in the future to finance our existing
operations. If we raise additional funds through the issuance of new equity or
equity-linked securities, other than on a pro rata basis to our existing
shareholders, the percentage equity ownership of the existing shareholders will
be reduced. Existing shareholders may experience subsequent dilution, and such
newly issued securities may have rights, preferences and privileges senior to
those of the existing shareholders





4.   Possible
Rule 144 Sales.


Although
most of our issued and outstanding shares of our common stock as at March 31,
2009 (totaling 155,818,136) are "restricted securities" within the meaning under
the Securities Act 1933, as amended (the "Act"), most of these shares shall have
piggy-back registration rights or the restriction period has lapsed. These
stockholders may be able to sell their shares pursuant to an effective
registration statement. A sale under Rule 144 or under any other exemption from
the Act, if available, or pursuant to subsequent registrations of our shares,
may have a depressive effect upon the price of our shares in any market
that may develop.





5.   We
have effected or entered into (and will likely continue to effect or enter into)
capital raising transactions, acquisitions, debt settlements and contracts for
services that involve the issuance of shares of our common stock (or securities
convertible into or exchangeable for such shares) and, as a result, the value of
our common stock may be further diluted.


We have
effected and entered into (and will likely continue to effect and enter into)
capital raising transactions, acquisitions, debt settlements and contracts for
services that involve the issuance of shares of our common stock or securities
convertible into or exchangeable for such shares. These share issuances may
dilute the value of our common stock and may result in a decrease in the
market price of our common stock.





6.   Our
stock price has reflected a great deal of volatility, including a significant
decrease over the past 24 months. The volatility may mean that, at times, our
shareholders may be unable to resell their shares at or above the price at which
they acquired them.


During
2007, the price range was $0.150 and $0.021. During 2008, the price range was
$0.075 and $0.001. During the first quarter of 2009, our share price range was
$0.0005 to $0.0070 and the price of our common stock has been, and may
continue to be, highly volatile and subject to wide fluctuations. The market
value of our common stock has declined in the past, in part, due to our
operating financial performance and the current global financial crisis. In
the future, broad market and industry factors may decrease the market price of
our common stock, regardless of our actual operating performance. Declines in
the market price of our common stock could affect our access to capital, which
may, in the future, impact our ability to continue as a going concern. In
addition, declines in the price of our common stock may harm employee morale and
retention, curtail business expansion opportunities presented to us, and
negatively impact other aspects of our business. As a result of any such
declines, shareholders may be unable to resell their shares at or above the
prices at which they acquired them.





7.  We
have the right to issue additional common stock and preferred stock without the
consent of our stockholders. This would have the effect of diluting their
ownership and could decrease the value of their investment in our
company.


We have
additional authorized, but unissued shares of our common stock totaling
344,181,864 as at March 31, 2009 that may be issued later by us for any purpose
without the consent or vote of our shareholders that would dilute their
percentage ownership of our company. In addition, we have additional authorized
but unissued shares of preferred stock totaling 10 million as at March 31, 2009.
If issued, the rights, preferences, designations and limitations of such
preferred stock would be set by our Board and could operate to the disadvantage
of the outstanding common stock. Such terms could include, among others,
preferences as to dividends and distributions on liquidation.





ITEM
1B.   UNRESOLVED STAFF COMMENT





None.





ITEM
2.    DESCRIPTION OF PROPERTY





We do not
own any real estate. Except for the lease of our operating center in Guangzhou,
all our office premises are leased for terms of no more than two (2) years. Our
business operating assets, comprising personal computers, telephone equipment,
fixture, furniture and computer equipment are located in APS China’s Guangzhou
Branch office in Guangzhou City (China), DFS data center in Okinawa (Japan),
Etop Services (Malaysia)’s office in Petaling Jaya (Malaysia); and Cardtrend
Systems’ office in Petaling Jaya (Malaysia), have a total book value of $393,314
as at December 31, 2008. In addition, upon the closing of the merger with
Cardtrend Systems on October 31, 2007, we had engaged the service of an
independent valuation firm which had valued the suite of card management
software (“CMS”) developed and owned by Cardtrend Systems at $500,000. The book
value of CMS as at December 31, 2008 was $283,333. The CMS is located at the
office of Cardtrend Systems in Malaysia. The source codes of all the CMS
software are only accessible by authorized personnel only.





ITEM
3.   LEGAL PROCEEDINGS





We are not
a party to any legal proceedings and we are not aware of any threatened legal
proceedings that could cause a material adverse impact on our business, assets
or results of operations.





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





There was
no submission of matters to a vote of security holders during 2008.





On January
15, 2009, the Company obtained the votes of a majority of the shareholders of
all classes of the Company’s common stock in favor to increase the authorized
number of shares of its common stock from 250,000,000 to 500,000,000. The change
was effective January 30, 2009.





-9-








PART
II





ITEM
5.   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES





Securities


Effective
July 24, 2007, the Company was authorized to issue 250,000,000 shares of common
stock with a par value of $0.001 per share. As of December 31, 2007 and December
31, 2008, the Company had issued and outstanding 82,408,276 and
155,818,136 shares of common stock, respectively. On January 30, 2009, the
Company was effectively authorized to issue 500,000,000 shares of common stock.
As of March 31, 2009, the Company had issued and outstanding 155,818,136 shares
of common stock.





The
Company is also authorized to issue 10,000,000 shares of preferred stock with a
par value of $0.001 per share. As of December 31, 2007, the Company had issued
and outstanding 3,500,000 shares of Series A preferred stock and 2,500,000
shares of Series B preferred stock. As of January 22, 2008, none of the shares
of preferred stock was outstanding due to the conversion of all these shares of
preferred stock to 42,500,000 shares of common stock on that date pursuant to
the shares exchange agreements for the acquisition of IIG and the merger of
Cardtrend Systems. As at the date of this Report, no share of preferred stock
was issued.





Our
securities commenced trading in February 2004 on the OTC Bulletin Board under
the symbol “APYM”. On August 16, 2007, due to the change of our name from Asia
Payment Systems, Inc. to Cardtrend International Inc., the symbol was changed to
“CDTR”.





The
following table sets forth the closing high and low bid prices of the common
stock for each quarter within the last two years, from January 2007 through
December 2008. The quotations reflect inter-dealer prices and do not represent
retail mark-ups, markdowns, commissions, and may not reflect actual
transactions.





2008
                                  2007High
                                  
                                  Low
                                  
                                  High
                                  
                                  LowQuarter
      ended31-March
                                  $
                                  0.075
                                  
                                  $
                                  0.040
                                  $
                                  0.11
                                  
                                  $
                                  0.0630-June
                                  $
                                  0.045
                                  
                                  $
                                  0.015
                                  $
                                  0.09
                                  
                                  $
                                  0.0230-September
                                  $
                                  0.004
                                  
                                  $
                                  0.005
                                  $
                                  0.15
                                  
                                  $
                                  0.0231-December
                                  $
                                  0.014
                                  
                                  $
                                  0.001
                                  $
                                  0.10
                                  
                                  $
                                  0.04





Emerging
companies and the stock market generally have experienced significant price and
volume fluctuations. Similarly, the market price of our common shares may
fluctuate related to a number of events and reasons, often not related to or
consistent with operating performance.


Shareholders


On
December 31, 2007, we had 101 shareholders of common stock (excluding beneficial
owners in the street names) and 16 shareholder of preferred stock on record. On
December 31, 2008, we had approximately 105 shareholders of common stock
(excluding beneficial owners in street names) and no shareholders of preferred
stock.





Dividends


We have
not declared any cash dividends, nor do we intend to do so in the foreseeable
future.





Securities
Authorized for Issuance under Equity Compensation Plans


The
following table contains certain information relating to outstanding stock
options to purchase our common stock granted pursuant to compensation
arrangements as of December 31, 2008:





Number
      of
                            Weighted
                            Number of
      SecuritiesSecurities
      To
                            Average
                            Remaining Available
      ForBe Issued
                            Exercise
                            Future Issuance
      UnderUpon
      Exercise
                            Price
                            Equity
      CompensationOf
                            Of
                            Plans
      [ExcludingOutstanding
                            Outstanding
                            Securities
      ReflectedPlan Category
                            Options
                            Options
                            In Column (a)](a)
                            (b)
                            (c)2004
      Option Plan (1)
                            -
                            $
                            -
                            -2005
      Option Plan (1)
                            -
                            
                            -
                            -2006
      Unregistered Option Plan (2)
                            10,550,000
                            $
                            0.020
                            No
      limit set2007
      Option Plan (1)
                            6,050,000
                            $
                            0.021
                            78,148Total
                            16,600,000
                            $
                            0.020
                            78,148











-10-








(1)
            On
      various dates during the four years between 2004 and 2007, we filed with
      the SEC a Registration Statement on Form S-8 to register 5,000,000,
      5,000,000 and 25,000,000 shares of our common stock issuable under each of
      the 2004 Stock Option Plan, 2005 Stock Option Plan and 2007 Stock Option
      Plan, respectively(2)
            In
      May 2006, the Board of directors approved a stock option plan without
      Registration Statement being filed (referred to as “Unregistered Plan”).
      There is no limit established for the Unregistered Plan and shares to be
      issued pursuant to the exercised of the options granted under this
      Unregister Plan will be restricted under Rule
  144.





Unregistered
sales of securities


On January
2, 2008, the Company cancelled 82,912 shares of common stock valued at $6,000
due to clerical error resulting in overpayment of debt owed to Management
Services of Arizona, Inc.





On January
14, 2008, the Company issued a total of 3,023,119 shares of the Company’s common
stock valued at $151,155 for the settlement of debts (salaries and advances owed
to employees and officers). 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
$151,152 were fully expensed at the time the options were granted.





On January
22, 2008 and February 1, 2008, an aggregate of 11 convertible loans with a total
value of $722,112 were converted into equity for 17,133,263 shares of commons
stock of the Company upon their maturities (See Note 14 to the Notes to
Consolidated Financial Statements).





On May 20,
2008, 562,500 shares of common stock valued at $33,751 were cancelled due to
termination of a contract with a consulting services firm.





On August
31, 2008, the Company issued 1,931,900 shares of free trading common stock value
at $38,638 for the compensation of three months salaries for an early
termination of an employee (See Note 13 to the Notes to Consolidated Financial
Statements).





On
September 8, 2008, the Company issued 7,000,000 shares of restricted common
stock valued at $105,000 for the exchange of all issued and fully paid up shares
of SMS BIZ. Subsequent on November 24, 2008, the Company cancelled 7,000,000
shares of common stock valued at $21,000 for the sale of SMS BIZ back to the
original shareholders (See Note 4 to the Notes to Consolidated Financial
Statements).





On
September 12, 2008, the Company issued 2,100,000 shares of restricted common
stock at a market fair value of $0.01 per share for the consulting services
rendered (See Note 13 to the Notes to Consolidated Financial
Statements).





On
September 19, 2008, the Company issued 3,696,938 shares of restricted common
stock valued at $18,485 for the compensation of early termination to an employee
(See Note 13 to the Notes to Consolidated Financial Statements).





On
September 22, 2008, the Company issued 3,701,943 shares of restricted common
stock valued at $18,510 for a partial compensation of early termination to an
employee (See Note 13 to the Notes to Consolidated Financial
Statements).





On
September 23, 2008, the Company cancelled 31,891 shares of common stock valued
at $2,328 due to a clerical error from the overpayment of salary to a former
employee.





ITEM
6.   SELECTED FINANCIAL DATA





We are a
smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are
not required to provide the information required under this item.





ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS





Currently,
the Company does not have sufficient capital to implement the Company’s entire
plan of operations. The information contained herein also reflects a prospective
plan of future operation. There are no assurances as to when, if ever, the
Company will have the funds to implement this plan of operations. The
following discussion and analysis of the Company’s financial condition and
results of operations should be read in conjunction with the accompanying
consolidated financial statements and related notes included in this annual
report.





Business
Review


1.   Processing
Business Unit


Since the
merger with Cardtrend Systems, we now provide Processing Business to include
data processing outsourcing (“DPO”) and data processing in-sourcing (“DPI”)
services to operators of payments cards and loyalty cards, as well as
distributors of prepaid products. In addition, our sources of revenues for the
Processing Business are derived from Japan, China, Hong Kong, Malaysia,
Thailand, Brunei, Indonesia, Oman, Australia and New Zealand. Cardtrend Systems
has recurring income from the maintenance services pursuant to the licenses
granted to its clients (which include Shell Oil (Asia Region), iNet of Thailand,
Petron of Philippines, and Islamic Bank of Brunei) which are using its Cards
Management Software (“CMS”) to process their credit cards, loyalty cards and
prepaid products. Cardtrend Systems income is based on one-time licensing fee
plus annual maintenance fees as well as on the number of transactions and/or
cards processed through its CMS via an in-sourced or out-sourced
arrangement.





Cardtrend
Systems now conducts the Processing Business in the Emerging Asia Market,
Affluent Asia Market and Outer Asia Market while Asia Payment Systems (China)
Co. Ltd. (”APS China”) is responsible to conduct the Processing Business in the
China Market. As the Technology Centre of Cardtrend International group of
companies, Cardtrend Systems continues to enhance its existing systems and
develops new ones. For reporting purposes, the revenues earned by Cardtrend
Systems, APS HK, and APS China are grouped under the Processing Business
Unit.








-11-








(i)
In China Market


In April
2006, the Company entered into a strategic alliance agreement with a business
processes out-sourcing (“BPO”) company (Global Uplink), located in Guangzhou,
China. This agreement has subsequently led to an agreement for the purchase by
Asia Payment Systems (China) Co. Ltd. (“APS China”), the Company’s wholly owned
subsidiary in Shanghai, China, of the assets in the operating centre of Global
Uplink Communications Ltd. (“Global Uplink”), the appointment of APS China as
the exclusive provider of BPO and CRM related services. The operating centre is
equipped to provide BPO services, which include telephone call services, data
capturing and management services, and document management and distribution
services. In December 2007, APS China set up a branch in Guangzhou to operate
the Operating Centre as well as the Data Processing Centre that the Company set
up in March 2007 for the provision of data processing out-sourcing (“DPO”)
services to operators of payment cards and loyalty cards in China, including
Global Uplink. APS China produced the Company’s maiden revenue in China Market
in November 2007 and continued to produce revenue throughout 2008. However, due
to relative high expenses in developing the business in China, APS China
suffered losses in 2008. In anticipation of the negative effects of the global
financial crisis, we began to curtail our operating and development expenses in
China since the beginning of fourth quarter of 2008.





(ii)
In Other Asia Markets (Affluent Asia, Emerging Asia and Outer Asia)


Since the
beginning of 2007, we continued to provide credit card transaction processing
services to our customer, DFS, in Okinawa, Japan through a new agreement it
signed with Cardtrend Systems. In addition, our sources of revenues for the
Processing Business in Other Asia Markets have now expanded from Japan to
include Malaysia, Thailand, Brunei, Indonesia, Oman, Australia and New Zealand.
Cardtrend Systems are also soliciting potential clients in Vietnam and
Middle East countries amid the current economic downturn.




2.   Cards
Business Unit


With the
acquisition of IIG, Cardtrend has expanded its scope of businesses to include
the issuance of payments cards and loyalty cards (“Cards Business”). Our
strategy is to form joint-venture companies with local parties to conduct
payment cards (using our proprietary brand, Interpay Card, and international
brands such as MasterCard and Visa) or loyalty cards (using our proprietary
brand). The payment cards companies normally will have to partner with banks
which provide revolving line of credit facilities to the company’s cardholders.
The payment cards companies earn their revenues in several streams, namely,
annual fees, merchant discounts, interchange fees, cash advance fees, interest
income and other charges or fees. The loyalty cards companies earn their
revenues from the commission paid by the merchants who participate in the
loyalty program and from the annual fees that may be charged to the card
members. As the Company operates the Cards Business through joint venture
companies which may not be controlled by us, revenues earned by such entities
may not be consolidated in the Company’s financial statements. Should that be
the case, the Company will account for any dividends received from such entities
as the Company’s income. Hence, the Cards Business Unit is expected to be the
smallest contributor to the Company’s consolidated revenues for the next few
years.





(i)
In China Market


Under the
current Chinese Government regulations, no foreign enterprise is permitted to
conduct payment cards business in China unless with an approval from the
relevant authority. Several multinational financial institutions have
‘conducted’ MasterCard/ Visa/ China Union Pay credit cards issued in their names
but legally under their respective bank partners’ in which they own a ‘strategic
stake’. Such bank partners are large Chinese banks who would otherwise have
out-sourced their card processing needs to large and well known third party
DPO service providers, including China Union Pay, the Chinese card association
owned by the Chinese banks. The Company does not have the financial strength and
banking reputation to adopt such entry strategy. However, the Company is
pursuing with a strategy that involves the offering of management services
including administration of business processes and in-sourcing of data
processing services to medium- and small-size Chinese banks on a revenue sharing
basis.





To the
best of the Company’s knowledge, there exists no regulation in China on the
business of issuing loyalty cards. However, the Company has decided that for
commercial reasons, the issuance of loyalty cards will be best undertaken by
Chinese companies (like Global Uplink) or joint venture companies with Chinese
parties under a franchise license from us (through APS China) which will involve
the use of the brand known as “BP Card” and the provision of all the related
data processing requirements on a revenue sharing basis. Such revenues are
recorded in APS China under the Processing Business Unit. APS China has begun in
December 2007 discussions with several Chinese parties in several major cities
in China to form joint-venture companies to conduct the BP Card business. The
revenues of or dividends from these joint venture companies (if any) will be
recorded in APS China under the Cards Business Unit. The efforts spent in 2008
did not produce any joint venture. The Company shall continue to search for a
potential partner in 2009.





(ii)
In Other Asia Markets (Emerging Asia, Affluent Asia and Outer Asia)


The
Company has grouped the entities conducting the Cards Businesses in Other Asia
Markets under Interpay International Resources Ltd, (“IIR”), a BVI incorporated
wholly owned subsidiary of IIG, which has a 20%-owned loyalty cards company and
a 20%-owned payment cards company in Malaysia. In 2006, IIR has entered into 2
joint venture agreements to conduct payments cards business, one in Mongolia
(for which the Company would own 50%) and the other in Qatar (for which the
Company would own 40%). As at the date of this report, the Qatar joint venture
has not yet been implemented due to the non-availability of a bank partner. The
Mongolia joint venture has taken off but the issuance of shares of the joint
venture company has not been completed as the subscription of shares has not
been completed as of the date of this report. The Company continues to source
for, as well as negotiating with, local parties in other Asian and Middle
Eastern countries for similar joint ventures to set up payment cards and/or
loyalty cards companies. The joint venture payment cards companies will be using
MasterCard or Visa, as well as proprietary brands. The Company’s contributions
for the paid-up capital of the joint venture card companies are derived from
supplying the Company’s Card Management Software (“CMS”) and technical services
to the joint venture companies where the values of such software and services
are established and agreed upon by the joint venture partners. Towards the end
of 2008, the bank that was working with the company in Mongolia in operating a
domestic proprietary credit card was taken over by the Central Bank of Mongolia
which has stopped all lending activities of the bank including the revolving
line of credit for the proprietary credit cards. We will be terminating the
joint venture agreement in Mongolia by the end of second quarter 2009.
Meanwhile, although our joint venture card company in Malaysia has launched
their MasterCard Credit Cards with a bank in Malaysia providing the revolving
line of credit to their cardholders, the issuance of such credit cards has so
far been disappointing.





3.   Prepaid
Business Unit


The
acquisition of IIG has also resulted in us having the Prepaid Business Unit
which consists of entities involving in the buying and selling of prepaid
products such as prepaid cell-phone airtime, prepaid Internet airtime, prepaid
long distance IDD calls, entertainment and transportation prepaid tickets,
prepaid virtual games and prepaid gift cards. The Prepaid Business companies
earn their revenue from sale of prepaid products to consumers through resellers
who obtain a discount on the fixed retail price. The prepaid business companies
purchase prepaid products from the suppliers at a higher discount than that
given by them to the resellers, thereby making a net profit margin. Similar to
the Cards Business Unit, the Company may operate the Prepaid Business in certain
countries through associated joint venture companies which may not be controlled
by us. Hence revenues earned by such associated companies may not be
consolidated by us. Instead, the Company will account for the dividends (if any)
received from such entities as its income. Prior to the global financial crisis,
the Company expected the Prepaid Business Unit in Other Asia Markets to be a
significant contributor of the Company’s consolidated revenues. However, the
expectation has now changed due to difficulty in sourcing for funds for the
expansion of such business in the near future.


-12-








(i)
In China Market


The
Company has been, and still is, planning to form joint venture with Chinese
parties to conduct the prepaid business in China along the same model adopted in
Malaysia. The Company will adopt an entry strategy similar to that of the Cards
Business discussed above, i.e. APS (China) to provide business processes and
data processing to operators of the Prepaid Business in China on a revenue
sharing arrangement, and such revenues, if generated, shall be recorded by APS
China under the Processing Business Unit in China Market. In addition, APS China
will also consolidate the revenues of or dividends from such joint venture
companies, if available, under the Prepaid Business Unit in the China
Market.





(ii)
In Other Asia Markets (Emerging Asia, Affluent Asia and Outer Asia)


Through a
Singapore incorporated wholly owned subsidiary of IIG, Interpay International
Airtime Pte. Ltd., the Company has a 60% owned subsidiary in Malaysia, Etop
Services (Malaysia) Sdn. Bhd. (“Etop Malaysia”), which launched its Prepaid
Business in Malaysia in late February 2007. To expand the Prepaid Business in
Malaysia and other Asian countries, in November 2006 the Company entered into a
strategic alliance agreement with a provider of a long distance
telecommunication services in Malaysia, SMS Biz Sdn. Bhd., to appoint another
subsidiary of IIG, Payment Business Solutions Sdn. Bhd. (“PBS”), to distribute
its prepaid IDD airtime to wholesalers and corporations in Malaysia. In search
of a quicker solution to expand the prepaid business in Malaysia, the Company
acquired SMS Biz in September 2008 but quickly sold back the company to its
original shareholders because of a sudden decline in its sales due to the change
of economic conditions in Malaysia arising from the global financial crisis. The
Company’s prepaid business in Malaysia has also been adversely affected because
of this and has stopped such business since the end of 2008.





Management
Initiatives and Plans


During
2008, the Company continued to implement the following strategies which were
devised in late 2006 to achieve the Company’s new vision: which is to be an
internationally recognized and profitable provider of payments and
loyalty-rewards related products and services to financial institutions,
corporations and consumers at large in Asia, with a substantial operation in
China:





(a)
            Focus
      on three lines of payments and loyalty-rewards related businesses:
      Processing Business, Cards Business and Prepaid Business (see Item 1 of
      Part I of the Form 10K)(b)
            Rapidly
      growing revenues of the 3 Business Units in the China Market, Emerging
      Asia Market, Affluent Asia Market and the Outer Asia Market through joint
      ventures, acquisitions and/or mergers.(c)
            Expand
      the Management Team to effectively drive the three Business
      Units.(d)
            Establish
      a Technology Centre to further develop and enhance existing systems to
      support the growth objectives of the 3 Business
  Units.





The
Company intends to adopt the strategy of expense curtailing while growing the
businesses through joint ventures, mergers and acquisitions.





The
Company has established the following plans for each of the Business Units in
China market and Other Asia Markets for 2009:





1.   Processing
Business Unit:


(i)
            China
      Market(a)
            To
      search for joint venture partners to expand BPO
  business.(b)
            To
      curtail business development related and administrative
      expenses.





(ii)
            Other
      Asia Markets(a)
            To
      form one joint venture company or acquire a company to expand our
      Processing Business in Other Asia Markets.(b)
            To
      increase sales efforts for DPO services in South East Asia
      countries.





2.   Cards
Business Unit:


(i)
            China
      Market(a)
            To
      source for and negotiate with Chinese parties with a view to form a joint
      venture loyalty card company.




(ii)
            Other
      Asia Markets(a)
            To
      source for and negotiate with local parties in Other Asia Markets with a
      view to form a joint venture payments cards
  company.





3.   Prepaid
Business Unit:


(i)
            China
      Market(a)
            To
      source for and negotiate with local parties in China Market with a view to
      form a joint venture company to conduct Prepaid
  Business.




(ii)
            Other
      Asia Markets(a)
            To
      source for companies involving in the Prepaid Business for
      acquisitions.




Company’s
Outlook


The
demands for payments and loyalty related products and services by both the
consumers and corporations still remain strong and growing in Asia, particularly
in China Market. The Company’s management team, comprising the CEO, COO, CFO,
and Chief Officer – Greater China, have during 2008, been implementing the New
Strategy with a set of new action plans to achieve the vision and objectives of
the Company. The organizational structure has been solidified with increased
staff strength. In view of the current global financial crisis, the Company
expects that it will be difficult for it to raise further funds needed for the
management to continue implementing the New Strategy and plans to continue its
momentum in increasing its revenues from all its 3 Business Units in 2009.
Therefore, the Company will restructure its subsidiaries and curtail its
expenses in all areas to avoid the need of external funds.











-13-











Critical
Accounting Policies


In
preparing the Company’s financial statements, we make estimates, assumptions and
judgments that can have a significant effect on the Company’s revenues, income
or loss from operations, and net income or net loss, as well as on the value of
certain assets on the Company’s balance sheet. We believe that there are several
accounting policies that are critical to an understanding of the Company’s
historical and future performance as these policies affect the reported amounts
of revenues, expenses, and significant estimates and judgments applied by
management. While there are a number of accounting policies, methods and
estimates affecting the Company’s financial statements, the following policies
are considered critical. In addition, you should refer to the Notes to the
accompanying consolidated financial statements for further discussion of the
Company’s accounting policies.





1.
            Business
      Combinations2.
            Stock-based
      Compensation3.
            Revenue
      Recognition4.
            Goodwill
      and Purchased Intangible





1.   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. We
use 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
historical information.





2.   Stock-based
Compensation


We adopt
SFAS No. 123 (revised 2004), "Share-Based Payment" ("SFAS No.
123R") using the fair value method. Under SFAS No. 123R, stock-based
compensation expense is measured at the grant date based on the fair value
of the award or using the Black-Scholes pricing model and is recognized as
expense over the appropriate service period.





3.   Revenue
Recognition


For our
Processing Business, our products are integrated with software that is essential
to the functionality of the Company’s equipment. Additionally, we provide
unspecified upgrades and enhancements related to the Company’s integrated
software through the Company’s maintenance contracts for most of its products.
Accordingly, we accounts for revenue in accordance with Statement of Position
No. 97-2, Software Revenue Recognition, and all related interpretations. We
recognize revenue when persuasive evidence of an arrangement exists, delivery or
performance has occurred, the sales price is fixed or determinable and
collectibility is reasonably assured. Evidence of an arrangement generally
consists of customer purchase orders and, in certain instances, sales contracts
or agreements. Shipping terms and related documents, or written evidence of
customer acceptance, when applicable, are used to verify delivery or
performance. We assess whether the sales price is fixed or determinable based on
payment terms and whether the sales price is subject to refund or adjustment. We
assess collectibility based on the creditworthiness of the customer as
determined by credit checks and the customer’s payment history to
us.





For
arrangements with multiple elements, we allocate revenue to each element using
the residual method based on vendor specific objective evidence of fair value of
the undelivered items. Vendor specific objective evidence of fair value is based
on the price charged when the element is sold separately. The Company then
recognizes revenue on each deliverable in accordance with the Company’s policies
for product and service revenue recognition. The Company’s ability to recognize
revenue in the future may be affected if actual selling prices are significantly
less than fair value. In addition, the Company’s ability to recognize revenue in
the future could be impacted by conditions imposed by the Company’s
customers.





We record
reductions to revenue for estimated product returns and pricing adjustments,
such as rebates and price protection, in the same period that the related
revenue is recorded. The amount of these reductions is based on historical sales
returns and price protection credits, specific criteria included in rebate
agreements, and other factors known at the time. Additional reductions to
revenue would result if actual product returns or pricing adjustments exceed the
Company’s estimates.





For our
Cards Business, if the entity conducting the payment card business is our
subsidiary, we recognize revenues for fees earned from merchants, cardholders,
interchange fee from card transactions acquirers, and from the sharing of
interest income earned by partner financial institutions which extend revolving
line of credit to our credit card cardholders. If the entity conducting the
loyalty card business is our subsidiary, we recognize revenues for fees earned
from merchants and the breakage of bonus points (or expired bonus points)
granted to the cardholders. If the entity conducting the cards business is not a
subsidiary but an associate in which we own less than fifty percent in equity,
we recognize revenue from the dividends actually declared and distributed by the
entity.





For our
Prepaid Business, if the entity conducting the business is our subsidiary, we
recognize revenues from sales of the prepaid products after the discounts
accorded to our dealers/distributors. We record reductions to revenue for
product returns (due to invalid usage or defects) on an actual basis. If
the entity is not our subsidiary but an associate in which we own less than
fifty percent in equity, we recognize revenue from the dividends actually
declared and distributed by the entity.





-14-








4.   Goodwill
and Purchased Intangible Assets


Goodwill
is recorded as the difference, if any, between the aggregate consideration paid
for an acquisition and the fair value of the net tangible and intangible assets
acquired. The amounts and useful lives assigned to other intangible assets
impact the amount and timing of future amortization, and the amount assigned to
in-process research and development is expensed immediately. The value of the
Company’s intangible assets, including goodwill, could be impacted by future
adverse changes such as: (i) future declines in the Company’s operating results,
(ii) a decline in the valuation of technology company stocks, including the
valuation of the Company’s common stock, (iii) significant slowdown in the
worldwide economy or the payments and loyalty rewards industries or (iv) failure
to meet the performance projections included in the Company’s forecasts of
future operating results. We evaluate these assets on an annual basis as of in
the fourth quarter of each fiscal year or more frequently if we believe
indicators of impairment exist. In the process of the Company’s annual
impairment review, we use the market approach as well as the income approach
methodology of valuation that includes the discounted cash flow method to
determine the fair value of the Company’s intangible assets. Significant
management judgment is required in the forecasts of future operating results
that are used in the discounted cash flow method of valuation. The estimates we
have used are consistent with the plans and estimates that we use to manage the
Company’s business. It is possible, however, that the plans and estimates used
may be incorrect. If the Company’s actual results, or the plans and estimates
used in future impairment analyses, are lower than the original estimates used
to assess the recoverability of these assets, we could incur additional
impairment charges.





For the
year end December 31, 2008, we have determined that the goodwill for (i) the IIG
group of companies acquired in December 2006 amounting to $3,272,258 was
totally impaired; (ii) the goodwill for Cardtrend Systems Sdn. Bhd. acquired in
October 2006 was impaired by $2,472,262, leaving an amount of $153,212 as at
December 31, 2008; and (iii) the goodwill for Global Uplink Ltd. acquired in
October 2007 amounting to $64,601 was totally impaired.





Results
of Operations


Full
Year Ended December 31, 2008 Compared to Full Year Ended December 31,
2007





1.   Revenue and Operating
Expenses


Net
revenue for the Company’s Processing Business Unit totaled $1,061,550 for the
year ended December 31, 2008 as compared to $748,465 for the year ended December
31, 2007, an increase of $313,085 or 42%. The increase was primarily resulted
from net revenue of $528,835 generated by the Company’s subsidiary in China, APS
China. The corresponding cost of sales was $419,751 for the year ended
December 31, 2008 and $344,239 for the same corresponding period in 2007. Gross
margin for the year ended December 31, 2008 was approximately 60%, while gross
margin for the same corresponding period in 2007 was approximately 54%. The
gross margin was higher because the effect of inclusion of higher gross margin
revenue from CTS Malaysia which is within the expectation of the
Company.




Net
revenue for the Company’s Prepaid Business Unit totaled $666,772 for the year
ended December 31, 2008 as compared to $978,927 for the year ended December 31,
2007, a decrease of 32% due to lower than expected sales of our IDD prepaid
cards. This revenue was generated from the Company’s two subsidiaries in
Malaysia. The corresponding costs of sales and discounts given to the Company’s
dealers totaled $657,138 for the year ended December 31, 2008 as compared to
$963,342 for the year ended December 31, 2007. Gross profit for the year ended
December 31, 2008 was $9,634 as compared to $15,585 for the year ended December
31, 2007, giving rise to a gross margin of about 1.44% and 1.59%,
respectively.





The
Company did not record any revenue or income from the Cards Business Division
for the year ended December 31, 2008 and year ended December 31, 2007 as there
were no dividends received from the Company’s associated companies in Malaysia,
in each of which the Company owns 20% equity interest of these associated
companies.





On a
consolidated basis, the Company’s net revenue for the Company for the year ended
December 31, 2008 totaled $1,728,322, as compared to $1,727,392 for the year
ended December 31, 2007, an increase of about 0.05%. The corresponding total
costs of sales were $1,076,889 for the year ended December 31, 2008 as compared
to $1,307,581 for the same corresponding period in 2007, a decrease of about
18%. The total gross profit recorded by the Company was $651,433 for the year
ended December 31, 2008 as compared to $419,811 for the year the year ended
December 31, 2007, an increase of about 55%.





The
Company incurred total operating expenses of approximately $9,240,920 in 2008,
as compared to $3,116,086 in 2007. The increase of operating expenses in the
amount of $6,124,834 (or approximately 197%) was primarily contributed by the
decrease in the stock based compensation expenses of $267,774, which is off-set
by an increase in impairment loss on goodwill of $5,809,130, Depreciation
and amortization, allowance for doubtful accounts, consulting and management
service fee and selling, general and administrative expenses amounting to
$301,885, $30,194, $44,262 and $2,191,289 respectively.





Financing
expense for the full year ended December 31, 2008 was approximately $937,677, as
compared to $666,003 for the same corresponding period in 2007, a increase of
41%. This increase was due to the interest and intrinsic values of the
convertible loans obtained in 2008 in the amount of $457,625, as compared to a
total of $805,000 convertible loans obtained in 2007. The interest amount for
the convertible loans totaled $57,055 in 2008 as compared to $39,621 in 2007, an
increase of 44%, whereas the expensed intrinsic values of the conversion
features of all the convertible loans obtained in 2008 totaled $879,263 as
compared to $628,476 for those loans obtained in 2007, an increase of
40%.





For year
ended December 31, 2008, we incurred a goodwill impairment charge of $3,272,258,
$,2,472,262 and $64,610 for our investments made in IIG group of companies,
Cardtrend Systems and GUL HK, respectively, as compared to no goodwill
impairment charge for the year 2007 except for a loss from equity investment of
$105,263 (equivalent to RM400,000) in Synergy Cards Sdn. Bhd., a company in
Malaysia which we have a 20% equity stake as at December 31, 2007 and 2008.
Synergy Cards has incurred losses since inception however our losses are limited
to our investment Synergy Cards. Although Synergy Cards has launched its
MasterCard credit cards in late 2008, the sales of its credit cards have been
very low. Hence, we do not expect to receive any dividends from this investment
of ours for the foreseeable future.





Net loss
for the year ended December 31, 2008 was $9,628,304 as compared to $3,098,535
for the year ended December 31, 2007, an increase in net loss of
$6,529,769 (or approximately 211%). This increase was mainly due to the
goodwill impairment charges.





2.   Liquidity
and Capital Reserve


As of
December 31, 2008, the Company had cash of $14,919, as compared to the ending
cash balance at of December 31, 2007 in the amount of $211,603, a decrease of
$196,684 (or approximately 93%).





Net cash
used in operating activities was $979,976 for the year ended December 31, 2008,
compared to $970,660 for the same corresponding period cash used in 2007. The
increase in net cash used in operations reflects increase of administrative
expenses in China due to expansion of its operations..





Net cash
provided by financing activities was $745,288 for the year ended December 31,
2008, compared to $1,213,679 for the year ended December 31, 2007. All the
proceeds was financed by the convertible loans and loans from
directors.


-15-





As of
December 31, 2008, total current liabilities exceeded total current assets by
$1,847,819 compared to $757,791 at December 31, 2007. Shareholders, directors
and related party advances comprise $519,964 of the current liabilities,
compared to $228,293 at December 31, 2007. Current liabilities include $100,000
owing to the Company’s former JV partner, Shandong Hengtong Chemical Industrial
Company Ltd., $157,727 owing to Kok Keng Low, the Company’s director and Chief
Operating Officer, $63,975 owing to Jee Sam Choo, the Company’s director and
Chairman of the Board, $143,763 owing to King K. Ng, the Company’s director and
Chief Executive Officer, $77,233 owing to Yu Hua Chen, the Company’s director
and Chief Officer – China, $49,158 owing to Thomas Wong, Chief Financial Officer
and $17,578 owing to a company controlled by Katherine YL Tung, and $10,530 to
Katherine YL Yung, the Company’s secretary and Treasurer.





3.   Financial
Condition


As of
December 31, 2008, the Company’s consolidated cash and cash equivalents totaled
$14,919. Cardtrend International Inc. had a cash balance of $5,365 while
Cardtrend Systems, Interpay International Group of companies, Asia Payment
Systems (HK) Group, Asia Payment Systems (Singapore), Global Uplink Ltd. Asia
Payment Systems (Singapore) and Asia Payment Systems (China) had a cash balance
of $381, $838, $1,335, $3,687, $100 and $3,213, respectively, which are
available to use by the respective subsidiaries to meet their commitments and
on-going requirements. The Company believes that with the exception of Cardtrend
Systems, the Company and its other subsidiaries have insufficient funds to
operate their existing business. The Company’s goal is for all its active
subsidiaries to curtail their expenses and be self sufficient for their
respective operations. The Company’s capital requirements depend on a variety of
factors, including but not limited to, the rate of increase or decrease in the
Company’s existing business base, the success, timing, and amount of investment
required to launch new businesses, revenue growth or decline, and potential
acquisitions. Failure to generate positive cash flow from operations will have a
material adverse effect on the Company’s business, financial condition and
results of operations. The Company’s ability to achieve the planned revenue
targets and/or generate positive cash flows from operations in the future is
predicated upon numerous factors with varying levels of importance as
follows:





*
            First,
      the Company’s Business Units will attempt to successfully implement their
      business plans, manage expenditures according to their budgets, and
      generate positive cash flow from their operations;*
            Second,
      the Company’s Business Units will attempt to each develop an effective
      marketing and sales strategy in order to grow the Company’s businesses and
      compete successfully in the Company’s markets;*
            Third,
      the Company will attempt to increase positive cash flow with respect to
      the Company’s Processing Business undertaken by Cardtrend Systems in order
      to provide the Company with cash
flow.





The
Company has established a management plan to guide the Company and its
subsidiaries in curtailing their expenses and generate cash flows from
operations during 2009. The major components of the plan are discussed on the
subsection of Item 6 Part II entitled “Management Initiatives & Plans” of
this Annual Report. No assurance can be given that the Company will be
successful in implementing the plan. The Company’s revenues and cash flows from
operations depend on many factors including the success of the Company’s
marketing programs, the maintenance and reduction of expenses and the Company’s
ability to successfully forming joint venture companies and acquiring
companies.





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. In
2008, the Company incurred a net loss of $9,628,304 (as compared to $3,098,535
in 2007), and a negative cash flow from operations of $979,976 (as compared to
$970,660 in 2007). As of December 31, 2008, the Company had a working capital
deficit of $1,847,821 (as compared to $757,791 as at December 31, 2007) and an
accumulated deficit of $24,141,441 (as compared to $14,513,137 as at December
31, 2007). The independent auditor's report on the Company's December 31, 2008
financial statements included in this Annual Report states that 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. Continuation of the Company's existence
is dependent upon its ability to obtain additional capital and sustain
profitable operations. The uncertainty related to these conditions also raises
doubt about the Company's ability to continue as a going concern. The
accompanying consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.





Although
the Company has funded and will continue to fund the acquisitions and mergers by
the issuance of the Company’s common shares, the Company requires additional
cash to meet on-going operating expenses. To date, the Company’s primary source
of funds has been equity investments, debt financing and shareholder and
director advances, and this trend is expected to continue over the next twelve
months and beyond. The Company does not currently have any agreements with
investors or the Company’s shareholders or directors for future equity
investment. The Company expects to raise such additional capital through
additional private financings, as well as borrowings and other resources. The
Company may also raise additional funds in a public offering or from the
exercise of currently outstanding options and warrants. To the extent that
additional capital is raised through the sale of equity or equity-related
securities or the exercise of currently outstanding options and warrants, the
issuance of such securities could result in further dilution of the
Company’s stockholders. There can be no assurance that additional funding
will be available on favorable terms, if at all. If adequate funds are not
available when required, the Company will be required to curtail or suspend
operations or to seek funding through arrangements with collaborative partners
or others that may require the Company to relinquish rights that the Company
would not otherwise relinquish. Since much of the information contained in this
report herein reflects a prospective plan of future operation, there is no
assurance that the plan will be implemented as described.





4.   Contractual
Obligations


The
Company’s contractual obligations as required to be disclosed by Item 303(a)(5)
of Regulation S_K are tabulated as follows:




Contractual
      obligations
            Payments
      due by periodTotal
            Less
      than
              1
      year
            1-3
      years
            3-5
      years
            More
      than 5 yearsLong-Term
      Debt Obligations
            $
            -
            $
            -
            $
            -
            $
            -
            $
            -Capital
      Lease Obligations
            $
            4,780
            $
            4,780
            $
            -
            $
            -
            $
            -Operating
      Lease Obligations
            $
            172,560
            $
            99,914
            $
            72,646
            $
            -
            $
            -Purchase
      Obligations
            $
            -
            $
            -
            $
            -
            $
            -
            $
            -Other
      Long-Term Liabilities Reflected on the Registrant's Balance Sheet under
      GAAP
            $
            -
            $
            -
            $
            -
            $
            -
            $
            -Total
            $
            177,340
            $
            104,694
            $
            72,646
            $
            -
            $
            -


-16-





The
following summarizes the Company’s significant short-term contractual
obligations as of December 31, 2008, and the effect such obligations were
expected to have on the Company’s liquidity and cash flows in future
periods:





*
            The
      conversion of $200,000 Convertible Loan on May 6, 2009 into shares of
      common stock of the company, which the Company believed, would not have
      any impact on the Company’s liquidity and cash flow in the future
      periods;*
            The
      redemption during 2009 of any or all other convertible loans totaling
      $589,041 instead of converting to shares of common stock of the Company,
      which the Company believed would have great impact on the Company’s
      liquidity and cash flow in the future
periods.





The
expected timing or payment of obligations discussed above was estimated based on
information known to the Company as at December 31, 2008. Timing of payments and
actual amounts paid may be different depending on changes to agreed-upon amounts
for some obligations and the options on the part of the lenders to demand for
repayment of loans (plus interests) in cash or converting such loans to shares
of the Company’s common stock.


5.   Off-Balance
Sheet Arrangements


We have
not entered into any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on the Company’s financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources and would be considered
material to investors.





6.   Inflation


The effect
of inflation on the Company's revenue and operating results was not
significant.





ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK





We are a
smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are
not required to provide the information required under this item.





ITEM 8.FINANCIAL
STATEMENTS





Cardtrend
      International Inc.Index
      to Consolidated Financial StatementsPageReport
      of Independent Registered Public Accounting Firm, ZYCPA Company Limited
      (formerly Zhong Yi (Hong Kong) C.P.A. Company
    Limited)
              F-2Report
      of Independent Registered Public Accounting Firm, RBSM LLP
              F-3Consolidated
      Balance Sheets
              F-4Consolidated
      Statements of Operations and Comprehensive Loss
              F-5Consolidated
      Statements of Changes in
      Stockholders’ (Deficit) Equity
              F-6 –
      F-7Consolidated
      Statements of Cash Flows
              F-8 –
      F-9Notes
      to the Consolidated Financial Statements
              F-10 – F-27


























F-1





-17-




















REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





The Board
of Directors and stockholders of


Cardtrend
International Inc.





We have
audited the accompanying consolidated balance sheet of Cardtrend International
Inc. and its subsidiaries (“the Company”) as of December 31, 2008 and the
related consolidated statements of operations and comprehensive loss, cash flows
and stockholders’ equity for the year ended December 31, 2008. The consolidated
financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.





We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated 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 includes 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 consolidated financial statements, assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall consolidated financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of December
31, 2008 and the results of their income and their cash flows for the year ended
December 31, 2008 and 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 2 to the
consolidated financial statements, the Company has incurred substantial losses
and capital deficit, all of which raise substantial doubt about its ability to
continue as a going concern. Management’s plans in regard to these matters are
also described in Note 2. These consolidated financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.














ZYCPACOMPANY
LIMITED





ZYCPA
Company Limited


(Formerly
Zhong Yi (Hong Kong) C.P.A. Company Limited)


Certified
Public Accountants





Hong Kong,
China


April 15,
2009

























F-2




-18-











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 the related
statements of operations, stockholder’s equity and cash flows for the year then
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 audit in accordance with 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 year then ended December 31, 2007,
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








New York,
New York


April 12,
2008




















































F-3




-19-








CARDTREND INTERNATIONAL
      INC.CONSOLIDATED BALANCE
      SHEETSAS OFDECEMBER 31, 2008 AND
      2007(Currency
      expressed in United States Dollars (“US$”), except for number of
      shares)As
      of December 31,2008
                                                            
                                                            
                                                            2007ASSETSCurrent
      assets:Cash
      and cash equivalents
                                                            $
                                                            14,919
                                                            
                                                            $
                                                            211,603Accounts
      receivable, net of allowance for doubtful accounts of $36,986
      and $6,381as
      of December 31, 2008 and 2007, respectively
                                                            
                                                            223,933
                                                            
                                                            
                                                            521,625Inventories
                                                            
                                                            2,693
                                                            
                                                            
                                                            2,716Other
      receivables and prepayments
                                                            
                                                            67,428
                                                            
                                                            
                                                            15,473Total
      current assets
                                                            
                                                            308,973
                                                            
                                                            
                                                            765,417Plant
      and equipment, net
                                                            
                                                            393,314
                                                            
                                                            
                                                            555,489Goodwill
                                                            
                                                            153,212
                                                            
                                                            
                                                            5,961,793Intellectual
      property, net of accumulated amortization of $216,667 and $116,667 as
      ofDecember
      31, 2008 and 2007, respectively
                                                            
                                                            283,333
                                                            
                                                            
                                                            383,333Other
      assets and deposits
                                                            
                                                            -
                                                            
                                                            
                                                            38,701TOTAL
      ASSETS
                                                            $
                                                            1,138,832
                                                            
                                                            $
                                                            7,690,733LIABILITIES
      AND STOCKHOLDERS' (DEFICIT) EQUITYCurrent
      liabilities:Accounts
      payable
                                                            $
                                                            26
                                                            
                                                            $
                                                            526,919Deferred
      revenue
                                                            
                                                            80,541
                                                            
                                                            
                                                            7,488Accrued
      liabilities and other payables
                                                            
                                                            1,085,369
                                                            
                                                            
                                                            637,829Due
      to related parties
                                                            
                                                            519,964
                                                            
                                                            
                                                            228,293Loan
      payable
                                                            
                                                            104,671
                                                            
                                                            
                                                            108,679Convertible
      promissory note, net of unamortized discount $0 as of December 31,
      2008
                                                            
                                                            366,223
                                                            
                                                            
                                                            -Total
      current liabilities
                                                            
                                                            2,156,794
                                                            
                                                            
                                                            1,509,208Derivative
      liabilityConvertible
      promissory note, net of unamortized discount of $576,986 as
      of December 31, 2007
                                                            
                                                            -
                                                            
                                                            
                                                            223,014Total
      liabilities
                                                            
                                                            2,156,794
                                                            
                                                            
                                                            1,732,222Commitments
      and contingenciesMinority
      interest
                                                            
                                                            -
                                                            
                                                            
                                                            -Stockholders’ (deficit)
      equity:Preferred
      stock10,000,000 authorized preferred shares of $0.001 par value, 0
      and 6,000,000 shares issued andoutstanding
      as of December 31, 2008 and 2007, respectively
                                                            
                                                            -
                                                            
                                                            
                                                            6,000Common
      stock250,000,000
      authorized common shares of $0.001 par value, 155,818,136
      and82,408,276
      shares issued and outstanding as of December 31, 2008 and 2007,
      respectively
                                                            
                                                            155,818
                                                            
                                                            
                                                            82,408Additional
      paid-in capital
                                                            
                                                            23,504,772
                                                            
                                                            
                                                            21,269,252Deferred
      stock based compensation
                                                            
                                                            (666,666
                                                            )
                                                            
                                                            (977,563
                                                            )Accumulated
      deficits
                                                            
                                                            (24,141,441
                                                            )
                                                            
                                                            (14,513,137
                                                            )Accumulated
      other comprehensive income
                                                            
                                                            129,555
                                                            
                                                            
                                                            91,551Total
      stockholders’ (deficit) equity
                                                            
                                                            (1,017,962
                                                            )
                                                            
                                                            5,958,511Total
      liabilities and stockholders’ (deficit) equity
                                                            $
                                                            1,138,832
                                                            
                                                            $
                                                            7,690,733See
      accompanying notes to consolidated financial
    statementsF-4





-20-








CARDTREND INTERNATIONAL
      INC.CONSOLIDATED
      STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSSFOR THE YEARS ENDED DECEMBER
      31, 2008 AND 2007(Currency
      expressed in United States Dollars (“US$”), except for number of
      shares)As
      of December 31,2008
                                                                        
                                                                        
                                                                        2007REVENUE,
      NETSales
                                                                        $
                                                                        1,059,902
                                                                        
                                                                        $
                                                                        1,727,392Sales,
      related party
                                                                        
                                                                        668,420
                                                                        
                                                                        
                                                                        -Total
      revenue, net
                                                                        
                                                                        1,728,322
                                                                        
                                                                        
                                                                        1,727,392COST OF REVENUE(exclusive of
      depreciation and amortization)
                                                                        
                                                                        (1,076,889
                                                                        )
                                                                        
                                                                        (1,307,581
                                                                        )GROSS
      PROFIT
                                                                        
                                                                        651,433
                                                                        
                                                                        
                                                                        419,811OPERATING
      EXPENSES:Depreciation and amortization
                                                                        
                                                                        301,885
                                                                        
                                                                        
                                                                        213,053Allowance
      for doubtful accounts
                                                                        
                                                                        30,194
                                                                        
                                                                        
                                                                        -Stock based compensation
                                                                        
                                                                        864,160
                                                                        
                                                                        
                                                                        1,131,934Consulting
      and management service fee, related party
                                                                        
                                                                        44,262
                                                                        
                                                                        
                                                                        -Impairment
      loss on goodwill
                                                                        
                                                                        5,809,130
                                                                        
                                                                        
                                                                        -Selling, general and administrative expenses
                                                                        
                                                                        2,191,289
                                                                        
                                                                        
                                                                        1,771,099Total
      operating expenses
                                                                        
                                                                        9,240,920
                                                                        
                                                                        
                                                                        3,116,086LOSS
      FROM OPERATIONS
                                                                        
                                                                        (8,589,487
                                                                        )
                                                                        
                                                                        (2,696,275
                                                                        )OTHER
      INCOME (EXPENSES):Net change in fair value of derivative
    liability
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        348,402Amortization
      of debt discount
                                                                        
                                                                        (879,263
                                                                        )
                                                                        
                                                                        (666,003
                                                                        )Interest
      income
                                                                        
                                                                        9,691
                                                                        
                                                                        
                                                                        -Interest expense
                                                                        
                                                                        (1,359
                                                                        )
                                                                        
                                                                        -Interest
      expense – convertible promissory note
                                                                        
                                                                        (57,055
                                                                        )
                                                                        
                                                                        -Loss
      from equity investment
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        (105,263
                                                                        )Loss
      on disposal of subsidiaries
                                                                        
                                                                        (85,629
                                                                        )
                                                                        
                                                                        -Write-off
      on other assets and deposits
                                                                        
                                                                        (25,202
                                                                        )
                                                                        
                                                                        -LOSS
      BEFORE INCOME TAXES AND MINORITY INTEREST
                                                                        
                                                                        (9,628,304
                                                                        )
                                                                        
                                                                        (3,119,139
                                                                        )Minority
      interest
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        21,892Income
      taxes
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        (1,288
                                                                        )NET
      LOSS
                                                                        $
                                                                        (9,628,304
                                                                        )
                                                                        $
                                                                        (3,098,535
                                                                        )Other
      comprehensive income:Foreign
      currency translation gain
                                                                        
                                                                        38,004
                                                                        
                                                                        
                                                                        48,838COMPREHENSIVE
      LOSS
                                                                        $
                                                                        (9,590,300
                                                                        )
                                                                        $
                                                                        (3,049,697
                                                                        )Net
      loss per share - basic and diluted
                                                                        $
                                                                        (0.07
                                                                        )
                                                                        $
                                                                        (0.06
                                                                        )Weighted
      average shares outstanding- basic and diluted
                                                                        
                                                                        144,715,542
                                                                        
                                                                        
                                                                        55,682,478See
      accompanying notes to consolidated financial
statements.F-5








-21-








CARDTREND
      INTERNATIONAL INC.CONSOLIDATED
      STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITYFOR
      THE YEARS ENDED DECEMBER 31, 2008 AND 2007(Currency
      expressed in United States Dollars (“US$”), except for number of
      shares)AccumulatedDeferred
                        
                        
                        
                        
                        
                        otherCommonstock
                        Preferredstock
                        
                        Additional
                        
                        
                        stock
      based
                        
                        
                        Accumulated
                        
                        
                        comprehensiveNo. of shares
                        
                        Amount
                        No. ofshares
                        
                        Amount
                        
                        paid-incapital
                        
                        
                        Compensation
                        
                        
                        deficits
                        
                        
                        income
                        
                        TotalBalance
      as of January 1,2007
                        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
      consulting services
                        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 promissory lnotes
                        13,606,066
                        
                        13,606
                        -
                        
                        -
                        
                        408,182
                        
                        
                        -
                        
                        
                        -
                        
                        
                        -
                        
                        421,788Common
      stock issuedin
      lieu of sign-on bonus
                        10,000,000
                        
                        10,000
                        -
                        
                        -
                        
                        790,000
                        
                        
                        -
                        
                        
                        -
                        
                        
                        -
                        
                        800,000Stock
      based compensation
                        -
                        
                        -
                        -
                        
                        -
                        
                        9,800
                        
                        
                        (845,500
                        )
                        
                        -
                        
                        
                        -
                        
                        (835,700
                        )Amortization
      ofdeferred
      compensation
                        -
                        
                        -
                        -
                        
                        -
                        
                        472,785
                        
                        
                        669,045
                        
                        
                        -
                        
                        
                        -
                        
                        1,141,830Adjustment
      to re-classwarrant
      liability to equity
                        -
                        
                        -
                        -
                        
                        -
                        
                        291,799
                        
                        
                        -
                        
                        
                        -
                        
                        
                        -
                        
                        291,799Beneficial
      conversionfeature
                        
                        
                        
                        -
                        
                        -
                        
                        1,205,461
                        
                        
                        -
                        
                        
                        -
                        
                        
                        -
                        
                        1,205,461Reversal
      of stockbased
      compensation
                        -
                        
                        -
                        -
                        
                        -
                        
                        9,804
                        
                        
                        (29,500
                        )
                        
                        -
                        
                        
                        -
                        
                        (19,696
                        )Foreign
      currency translationAdjustment
                        -
                        
                        -
                        -
                        
                        -
                        
                        -
                        
                        
                        -
                        
                        
                        -
                        
                        
                        48,838
                        
                        48,838Net
      loss for the year
                        -
                        
                        -
                        -
                        
                        -
                        
                        
                        
                        
                        -
                        
                        
                        (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
                        
                        5,958,511Conversion
      of Series Apreferred
      stock intocommon
      stock at 1:5
                        17,500,000
                        
                        17,500
                        (3,500,000
                        )
                        (3,500
                        )
                        (14,000
                        )
                        
                        -
                        
                        
                        -
                        
                        
                        -
                        
                        -Conversion
      of Series Bpreferred
      stock intocommon
      stock at 1:10
                        25,000,000
                        
                        25,000
                        (2,500,000
                        )
                        (2,500
                        )
                        (22,500
                        )
                        
                        -
                        
                        
                        -
                        
                        
                        -
                        
                        -Cancellation
      of sharespayment
      of debts
                        (677,303)
                        
                        (678)
                        -
                        
                        -
                        
                        (41,401
                        )
                        
                        33,751
                        
                        
                        -
                        
                        
                        -
                        
                        (8,328
                        )Common
      stock issued inexchange
      of debts
                        3,023,119
                        
                        3,023
                        -
                        
                        -
                        
                        148,132
                        
                        
                        -
                        
                        
                        -
                        
                        
                        -
                        
                        151,155F-6


-22-








AccumulateDeferred
                                
                                
                                
                                
                                
                                otherCommonstock
                                Preferred stock
                                
                                Additional
                                
                                
                                stock
      based
                                
                                
                                Accumulate
                                
                                
                                comprehensiveNo. of shares
                                
                                Amount
                                No. of shares
                                
                                Amount
                                
                                Paid-in
                                
                                
                                Compensation
                                
                                
                                Deficits
                                
                                
                                income
                                
                                TotalCommon
      stock issued forconvertible
      promissoryNote
                                17,133,263
                                
                                17,134
                                -
                                
                                -
                                
                                704,978
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                722,112Common
      stock issued forcompensation
      on earlyTermination
                                9,330,781
                                
                                9,331
                                -
                                
                                -
                                
                                66,302
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                75,633Common
      stock issued forconsulting
      services
                                2,100,000
                                
                                2,100
                                -
                                
                                -
                                
                                18,900
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                21,000Disposal
      of an investment ina
      subsidiary
                                -
                                
                                -
                                -
                                
                                -
                                
                                84,000
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                84,000Stock
      based compensation
                                -
                                
                                -
                                -
                                
                                -
                                
                                567,212
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                567,212Amortization
      of deferredstock
      based compensation
                                -
                                
                                -
                                -
                                
                                -
                                
                                -
                                
                                
                                277,146
                                
                                
                                -
                                
                                
                                -
                                
                                277,146Beneficial
      conversion feature
                                -
                                
                                -
                                -
                                
                                -
                                
                                723,897
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                723,897Net
      loss for the year
                                -
                                
                                -
                                -
                                
                                -
                                
                                -
                                
                                
                                -
                                
                                
                                (9,628,304
                                )
                                
                                -
                                
                                (9,628,304
                                )Foreign
      currencytranslation
      adjustment
                                -
                                
                                -
                                -
                                
                                -
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                38,004
                                
                                38,004Balance
      as ofDecember
      31, 2008
                                155,818,136
                                $
                                155,818
                                -
                                $
                                -
                                $
                                23,504,772
                                
                                $
                                (666,666
                                )
                                $
                                (24,141,441
                                )
                                $
                                129,555
                                $
                                (1,017,962
                                )See
      accompanying notes to consolidated financial statements.F-7


























































-23-








CARDTREND
      INTERNATIONAL INC.CONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR
      THE YEARS ENDED DECEMBER 31, 2008 AND 2007(Currency
      expressed in United States Dollars (“US$”))As
      of December 31,2008
                                                                  
                                                                  
                                                                  2007CASH FLOWS FROM
      OPERATING
      ACTIVITIES:Net
      loss
                                                                  $
                                                                  (9,628,304
                                                                  )
                                                                  $
                                                                  (3,098,535
                                                                  )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      and amortization
                                                                  
                                                                  301,885
                                                                  
                                                                  
                                                                  213,053Impairment
      loss on goodwill
                                                                  
                                                                  5,809,130
                                                                  
                                                                  
                                                                  -Loss
      on disposal of subsidiaries
                                                                  
                                                                  85,629
                                                                  
                                                                  
                                                                  -Amortization
      of debt discount
                                                                  
                                                                  879,263
                                                                  
                                                                  
                                                                  628,475Stock
      based compensation
                                                                  
                                                                  864,160
                                                                  
                                                                  
                                                                  1,131,934Stock
      issued for settlement of interest
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  16,788Stock
      issued for settlement of accrued liabilities
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  760,760Change
      in derivative liability
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  (348,402
                                                                  )Minority
      interest
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  (21,892
                                                                  )Loss
      from equity investment
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  105,263Change
      in discount on convertible promissory loan
                                                                  
                                                                  (725,095
                                                                  )
                                                                  
                                                                  -Allowance
      for doubtful debts
                                                                  
                                                                  30,194
                                                                  
                                                                  
                                                                  6,381Write-off
      on other assets and deposits
                                                                  
                                                                  25,202
                                                                  
                                                                  
                                                                  -Changes
      in operating assets and liabilities:Accounts
      receivable
                                                                  
                                                                  267,498
                                                                  
                                                                  
                                                                  (218,227
                                                                  )Other
      receivables
                                                                  
                                                                  (20,192
                                                                  )
                                                                  
                                                                  4,469Inventories
                                                                  
                                                                  23
                                                                  
                                                                  
                                                                  (15,580
                                                                  )Accounts
      payable
                                                                  
                                                                  (526,893
                                                                  )
                                                                  
                                                                  -Accrued
      liabilities and other payables
                                                                  
                                                                  1,584,471
                                                                  
                                                                  
                                                                  (40,681
                                                                  )Deferred
      revenue
                                                                  
                                                                  73,053
                                                                  
                                                                  
                                                                  (94,466
                                                                  )Net
      cash used in operating activities
                                                                  
                                                                  (979,976
                                                                  )
                                                                  
                                                                  (970,660
                                                                  )CASH FLOWS FROM INVESTING
      ACTIVITIES:Purchase
      of plant and equipment
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  (359,453
                                                                  )Prepayment
      of acquisition
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  (64,062
                                                                  )Net
      cash used in investing activities
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  (423,515
                                                                  )CASH FLOWS FROM FINANCING
      ACTIVITIES:Proceeds
      from loan payable
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  8,679Repayment
      of loan payable
                                                                  
                                                                  (4,008
                                                                  )
                                                                  
                                                                  -Advances from
      related parties
                                                                  
                                                                  291,671
                                                                  
                                                                  
                                                                  -Proceeds
      from convertible promissory note
                                                                  
                                                                  457,625
                                                                  
                                                                  
                                                                  1,205,000Net
      cash provided by financing activities
                                                                  
                                                                  745,288
                                                                  
                                                                  
                                                                  1,213,679Effect
      of exchange rate changes on cash and cash
equivalents
                                                                  
                                                                  38,004
                                                                  
                                                                  
                                                                  48,837NET
      CHANGE IN CASH AND CASH EQUIVALENTS
                                                                  
                                                                  (196,684
                                                                  )
                                                                  
                                                                  (131,659
                                                                  )CASH
      AND CASH EQUIVALENTS, BEGINNING OF YEAR
                                                                  
                                                                  211,603
                                                                  
                                                                  
                                                                  343,262CASH
      AND CASH EQUIVALENTS, END OF YEAR
                                                                  $
                                                                  14,919
                                                                  
                                                                  $
                                                                  211,603SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONCash
      paid for income taxes
                                                                  $
                                                                  -
                                                                  
                                                                  $
                                                                  -Cash
      paid for interest expenses
                                                                  $
                                                                  683
                                                                  
                                                                  $
                                                                  -F-8





-24-








SUPPLEMENTAL
      DISCLOSURE FOR NON-CASH INVESTING AND FINANCING ACTIVITIESCommon
      stock issued for settlement of accrued interest and
    debt
                                            
                                            393,816
                                            
                                            
                                            421,788Discount
      on convertible promissory notes
                                            
                                            136,054
                                            
                                            
                                            (1,205,462
                                            )Stock
      issued for services
                                            
                                            21,000
                                            
                                            
                                            1,131,934Stock
      issued for settlement of accrued expenses
                                            
                                            -
                                            
                                            
                                            760,760Stock
      issued for convertible promissory notes
                                            
                                            722,111
                                            
                                            
                                            -Stock
      issued for acquisition
                                            
                                            21,000
                                            
                                            
                                            -Stock
      rescinded
                                            
                                            63,078
                                            
                                            
                                            -Extinguishment
      of derivative liability
                                            
                                            -
                                            
                                            
                                            291,799Amortization
      of stock based compensation
                                            
                                            988,027
                                            
                                            
                                            -See
      accompanying notes to consolidated financial statements.F-9
























































































-25-








CARDTREND
INTERNATIONAL INC.


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2008 and 2007


(Currency
expressed in United States Dollars (“US$”))





1.  ORGANIZATION
AND BUSINESS BACKGROUND





Cardtrend
International Inc. ("CDTR") was incorporated under the laws of the State of
Nevada in 1998 to engage in international business as Asian Alliance Ventures
Inc. In November 2003, the name was changed to Asia Payment Systems Inc. On July
24, 2007, the Company further changed its current company name to Cardtrend
International Inc.





On
September 8, 2008, the Company completed the acquisition of SMS Biz Sdn. Bhd.
(“SMS BIZ”), including its wholly owned subsidiary, KB Reload Sdn. Bhd. (“KB
Reload”), pursuant to the Share Exchange Agreement (the “SEA”) entered into with
the shareholders of SMS BIZ, Yap Kit Chuan (“YAP”) and Chua Tong Ling (“CHUA”)
and issued 7,000,000 shares restricted common stocks in exchange for all issued
and fully paid up shares of SMS BIZ. SMS BIZ is engaged in the issuance of
prepaid and postpaid IDD call cards in Malaysia.





On October
9, 2008, the Company incorporated a new wholly owned subsidiaries namely
Cardtrend Inc. with 250,000,000 shares of authorized common stock with a par
value of $0.001 per share and 15,000,000.shares of preferred stock with a par
value of $0.001 per share. As of December 31, 2008, 200,000 shares of common
stock with a par value of $0.001 per share were issued and outstanding. The
principal activity of Cardtrend Inc. is to engage in the provision of provision
of payment and loyalty cards related services.





On October
21, 2008, the Company incorporated another new wholly owned subsidiaries namely
Global Uplink Inc. with 250,000,000 shares of authorized common stock with a par
value of $0.001 per share and 15,000,000.shares of preferred stock with a par
value of $0.001 per share. As of December 31, 2008, 200,000 shares of common
stock with a par value of $0.001 per share were issued and outstanding. The
principal activity of Cardtrend Inc. is to engage in the provision of data and
business processes outsourcing services.





On
November 24, 2008, the Company entered into a share repurchase agreement with
the previous shareholders of SMSBIZ, YAP and CHUA, to dispose all the shares of
common stock of SMSBIZ in consideration for the return of 7,000,000 shares
restricted common stock of the Company previously issued to them pursuant to the
SEA completed on September 8, 2008.





Details of
the Company’s subsidiaries are described below:


Place
      of incorporation
              Principal
      activities
              Particulars
      of issued/
              EffectiveName
              andkind
      oflegalentity
              Andplace ofoperation
              registeredsharecapital
              interestheldAsia
      Payment Systems (HK) Limited
              Hong
      Kong, a limited
              Provision
      of data and business
              100
      issued shares of
              100%(“APSHK”)
              liability
      company
              processes
      outsourcing services
              Common
      stock of HK$1 eachAsia
      Payment Systems
              PRC,
      a limited
              Provision
      of data & business
              US$1,000,000
              100%(China)
      Company Limited
              liability
      company
              processes
      outsourcing services and(“APS
      china”)
              
              issuance
      of payment/loyalty cardsGlobal
      Uplink Limited
              Hong
      Kong, a limited
              Marketing
      of business processes
              10,000
      issued shares of
              100%(“GUL
      HK”)
              liability company
              outsourcing services
      in Hong Kong
              common
      stock of HK$1 eachAsia
      Payment Systems Pte. Ltd.
              Singapore,
      a limited
              Dormant
              20
      issued shares of
              100%(“APS Singapore”)
              liability
      company
              
              common
      stock S$1 eachWelway
      Development Limited
              Hong
      Kong, a limited
              Dormant
              100,000
      issued shares of
              100%(“WDL”)
              liability
      company
              
              common
      stock of HK$1 eachCardtrend
      Systems Sdn. Bhd.
              Malaysia,
      a limited
              Provision
      of IT solution for payment
              700,000
      issued shares of
              100%(“Cardtrend Systems”)
              liability
      company
              Cards
      and loyalty cards in Asia and
              common
      stock ofMiddle
      East regions
              MYR
      1 eachInterpay
      International Group Ltd.
              British
      Virgin Islands,
              Holding
      company of Interpay’s group
              100
      issued shares of
              100%(“IIG”)
              a
      limited liability company
              of 
      companies in Asia
              common
      stock US$1 eachInterpay
      International Franchising Ltd.
              British
      Virgin Islands,
              Franchising/licensing of
      payment card
              100
      issued shares of
              100%(“IIF”)
              a
      limited liability company
              and
      loyalty card products
              common
      stock of US$1 eachF-10








-26-








Place
      of incorporation
                                            Principal
      activities
                                            Particulars
      of issued/
                                            EffectiveName
                                            and kind of legal entity
                                            And place of operation
                                            registeredsharecapital
                                            interestheldInterpay
      International Associates Ltd.
                                            British
      Virgin Islands,
                                            Provision
      of management and technical
                                            100
      issued shares of
                                            100%(“IIA”)
                                            a
      limited liability company
                                            services for
      payment and loyalty cards
                                            common
      stock US$1 eachInterpay
      International Resources Ltd.
                                            British
      Virgin Islands,
                                            Holding
      company of joint venture
                                            100
      issued shares of
                                            100%(“IIR”)
                                            a
      limited liability company
                                            payment and
      loyalty cards companies
                                            common
      stock US$1 eachInterpay
      Asia Sdn. Bhd.
                                            Malaysia,
      a limited
                                            Provision
      of general and financial
                                            2
      issued shares of
                                            100%(“IA”)
                                            liability
      company
                                            management services
      for
                                            common
      stock of MYR 1 eachCardtrend International
      groupInterpay
      International M-Commerce Pte. Ltd.
                                            Singapore,
      a limited
                                            Dormant
                                            2
      issued shares of
                                            100%(“IIM”)
                                            liability
      company
                                            
                                            common
      stock of SGD$1 eachEtop
      International Pte. Ltd. (Formerly
                                            Singapore,
      a limited
                                            Holding
      company of joint venture
                                            2
      issued shares of
                                            100%Interpay
      International Airtime Pte. Ltd.) (“EI”)
                                            limited
      liability company
                                            Prepaid companies
      in Asia
                                            common
      stock of SGD$1 eachEtop
      Services (Malaysia) Sdn. Bhd.
                                            Malaysia,
      a limited
                                            Distribution
      of third parties’ prepaid
                                            200,000
      issued shares of
                                            60%(“Etop Malaysia”)
                                            liability company
                                            products
      and services electronically
                                            common
      stock of MRY 1 eachin
      Malaysia
                                            and 1,020,000
      issued sharesof
      preferred stock of MRY 1 eachPayment
      Business Solutions Sdn. Bhd.
                                            Malaysia,
      a limited
                                            Distribution
      of prepaid IDD call cards
                                            2
      issued shares of  common
                                            100%(“PBS”)
                                            liability
      company
                                            in
      Malaysia
                                            stock
      of MYR 1 eachCardtrend
      Inc.
                                            USA,
      a limited
                                            Provision
      of payment and
                                            200,000
      issued shares of
                                            100%liability
      company
                                            loyalty
      cards related services
                                            common
      stock of $0.001 eachGlobal
      Uplink Inc.
                                            USA,
      a limited
                                            Provision
      of data and business
                                            200,000
      issued shares ofliability
      company
                                            processes
      outsourcing services
                                            common
      stock of $0.001 each
                                            100%





2.   GOING
CONCERN UNCERTAINTIES





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. For
the year ended December 31, 2008, the Company incurred a net loss of $9,628,304
and generated a negative cash flow of $979,977 from operating activities. At
December 31, 2008, the Company had a working capital deficiency of $1,847,819
and the accumulated deficits of $24,141,441. 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 continuation of the Company 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 from the
outcome of the Company’s ability to continue as a going concern.





3.   SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES





Basis
of presentation


These
accompanying financial statements have been prepared in accordance with
generally accepted accounting principles in the United States of America (“US
GAAP”).





Use
of estimates


In
preparing these condensed consolidated financial statements, management makes
estimates and assumptions that affect the reported amounts of assets and
liabilities in the balance sheets and revenues and expenses during the years
reported. Actual results may differ from these estimates.





Principles
of consolidation


The
consolidated financial statements include the financial statements of CDTR and
its subsidiaries.





All
significant inter-company balances and transactions within the Company have been
eliminated upon consolidation.





F-11





-27-








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 historical information.





Cash and cash equivalents


Cash and
cash equivalents are carried at cost and represent cash on hand, demand deposits
placed with banks or other financial institutions and all highly liquid
investments with an original maturity of three months or less as of the purchase
date of such investments.





Accounts
receivable


Accounts
receivable are recorded at the invoiced amount and do not bear interest. The
Company extends unsecured credit to its customers in the ordinary course of
business but mitigates the associated risks by performing credit checks and
actively pursuing past due accounts. An allowance for doubtful accounts is
established and determined based on managements’ assessment of known
requirements, aging of receivables, payment history, the customer’s current
credit worthiness and the economic environment.





Inventories


Inventories
consisted of computer hardware and parts and they are recorded at the lower of
cost or market value using the first-in-first-out method. As of December 31,
2008 and 2007, inventories were $2,693 and $2,716, respectively.





Plant
and equipment, net


Plant and
equipment are stated at historical cost less accumulated depreciation and
accumulated impairment losses, if any. Depreciation is calculated on the
straight-line basis over the expected useful lives from the date on which they
become fully operational, generally ranging from 8 to 10 years. Expenditure for
maintenance and repairs is expensed as incurred. When assets have retired or
sold, the cost and related accumulated depreciation are removed from the
accounts and any resulting gain or loss is recognized in the results of
operations.





Goodwill


Goodwill
represents the excess of the purchase consideration payable in acquisitions of
subsidiaries over the fair value of the net assets acquired at the time of
acquisition. Goodwill on consolidation is stated at cost when it arises. As part
of an ongoing review of the valuation of goodwill, management assesses the
carrying value of the goodwill to determine if changes in facts and
circumstances suggest that it may be impaired. If this review indicates that the
goodwill is not recoverable, the carrying value of the goodwill would be reduced
to its estimated fair market value.





For the
year ended December 31, 2008, the Company tested for impairment in accordance
with the SFAS No. 142 and an impairment loss of $5,809,130 was charged to the
statement of operations.





Intellectual
property


Intellectual
property represented internal developed card system software with a historical
cost of $500,000. Amortization is calculated on the straight-line basis over the
expected useful life of 5 years.





For the
years ended December 31, 2008 and 2007, the amortization expense was $100,000
and $100,000, respectively.





Impairment
of long-lived assets


Long-lived
assets primarily include plant and equipment and intellectual property. In
accordance with SFAS No. 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets”, the Company reviews its long-lived assets
for impairment whenever events or changes in circumstances indicate that the
carrying amount of the assets may not be fully recoverable. If the total of the
expected undiscounted future net cash flows is less than the carrying amount of
the asset, a loss is recognized for the difference between the fair value and
carrying amount of the asset. There has been no impairment as of December
31, 2008 or 2007.





Revenue
recognition


The
Company recognizes revenue in accordance with SEC’s Staff Accounting Bulletin
No. 104 “Revenue Recognition in Financial
Statement”(“SAB 104”). 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. 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.





(a)         Processing
business


Revenue
from Processing Business operations is recognized 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.


F-12


-28-





(b)         Prepaid
business


Revenue
from Prepaid Business operations is recognized 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.





(c)         Interest
income


Interest
income is recognized on a time apportionment basis, taking into account the
principal amounts outstanding and the interest rates applicable.





Cost
of revenue


Cost of
revenue included cost of computer hardware and parts, prepaid phone cards
and labor costs.





Deferred
revenue


Revenue
from processing business received in advance from rendering of service is
recorded as deferred revenue and are amortized into revenue ratably over the
related contract period.





Advertising
expense


Advertising
costs are expensed as incurred under SOP 93-7, “Reporting for Advertising
Costs”. The Company incurred no such cost for the years ended December
31, 2008 and 2007.





Income
taxes


The
Company accounts for income tax using SFAS No. 109 “Accounting for Income Taxes”,
which requires the asset and liability approach for financial accounting and
reporting for income taxes. Under this approach, deferred income taxes are
provided for the estimated future tax effects attributable to temporary
differences between financial statement carrying amounts of assets and
liabilities and their respective tax bases, and for the expected future tax
benefits from loss carry-forwards and provisions, if any. Deferred tax assets
and liabilities are measured using the enacted tax rates expected in the years
of recovery or reversal and the effect from a change in tax rates is recognized
in the statements of operations and comprehensive income in the period of
enactment. A valuation allowance is provided to reduce the amount of deferred
tax assets if it is considered more likely than not that some portion of, or all
of the deferred tax assets will not be realized.





The
Company also adopts Financial Accounting Standards Board ("FASB") Interpretation
No. (FIN) 48,"Accounting for
Uncertainty in Income Taxes"and FSP FIN 48-1, which amended certain
provisions of FIN 48. FIN 48 clarifies the accounting for uncertainty in income
taxes recognized in the financial statements in accordance with SFAS No. 109,
“Accounting for Income Taxes.” FIN48 provides
that a tax benefit from an uncertain tax position may be recognized when it is
more likely than not that the position will be sustained upon examination,
including resolutions of any related appeals or litigation processes, based on
the technical merits. Income tax positions must meet a more-likely-than-not
recognition threshold at the effective date to be recognized upon the adoption
ofFIN48 and in subsequent periods. This
interpretation also provides guidance on measurement, derecognition,
classification, interest and penalties, accounting in interim periods,
disclosure and transition.





In
connection with the adoption of FIN 48, the Company analyzed the filing
positions in all of the federal, state and foreign jurisdictions where the
Company and its subsidiaries are required to file income tax returns, as well as
all open tax years in these jurisdictions. The Company adopted the policy of
recognizing interest and penalties, if any, related to unrecognized tax
positions as income tax expense. The Company did not have any unrecognized tax
positions or benefits and there was no effect on the financial condition or
results of operations for the years ended December 31, 2008 and
2007.





The
Company conducts its major businesses in the PRC, Hong Kong and Malaysia and is
subject to tax in these jurisdictions. As a result of its business activities,
the Company files tax returns that are subject to examination by the local and
foreign tax authority.





Net
loss per share


The
Company calculates net loss per share in accordance with SFAS No. 128, “Earnings per Share”. Basic
loss per share is computed by dividing the net (loss) income by the
weighted-average number of common shares outstanding during the period. Diluted
(loss) income per share is computed similar to basic loss per share except
that the denominator is increased to include the number of additional common
shares that would have been outstanding if the potential common stock
equivalents had been issued and if the additional common shares were
dilutive.





Comprehensive
(loss) income


SFAS No.
130, “Reporting Comprehensive
Income”, establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income as defined
includes all changes in equity during the period from non-owner sources.
Accumulated comprehensive income consists of changes in unrealized gains and
losses on foreign currency translation. This comprehensive income is not
included in the computation of income tax expense or benefit.





Foreign
currencies translation


Transactions
denominated in currencies other than the functional currency are translated into
the functional currency at the exchange rates prevailing at the dates of the
transaction. Monetary assets and liabilities denominated in currencies other
than the functional currency are translated into the functional currency using
the applicable exchange rates at the balance sheet dates. The resulting exchange
differences are recorded in the condensed consolidated statement of
operations.





The
reporting currency of the Company is United States dollar ("US$"). The
functional currency of the Company's subsidiaries operating in Hong Kong is Hong
Kong dollars ("HKD") and its financial records are maintained and its statutory
financial statements are prepared in HKD. The functional currency of the
Company's subsidiaries established in the PRC is Renminbi Yuan ("RMB") and its
financial records are maintained and its financial statements are prepared in
RMB. The functional currency of the Company's subsidiaries established
in Singapore is Singapore dollars ("SGD") and its financial records are
maintained and its financial statements are prepared in SGD. The functional
currency of the Company's subsidiaries established in Malaysia is Malaysian
Ringgit ("MYR") and its financial records are maintained and its financial
statements are prepared in MYR.





In
general, for consolidation purposes, assets and liabilities of its subsidiaries
whose functional currency is not US$ are translated into US$, in accordance with
SFAS No 52. “Foreign Currency Translation”,
using the exchange rate on the balance sheet date. Revenues and expenses are
translated at average rates prevailing during the period. The gains and losses
resulting from translation of financial statements of foreign subsidiaries are
recorded as a separate component of accumulated other comprehensive income
within the statement of stockholders’ equity.





F-13





-29-








Translation
of amounts from the local currency of the Company’s subsidiaries into US$1 has
been made at the following exchange rates for the respective year:





2008
                2007Year
      end HKD : US$1 exchange rate
                7.7507
                7.8049Average
      period HKD : US$1 exchange rate
                7.7874
                7.80255Year
      end Renminbi: US$1 exchange rate
                6.8542
                7.3141Average
      period Renminbi: US$1 exchange rate
                6.9623
                7.6172Year
      end RM: US$1 exchange rate
                3.4872
                3.3151Average
      period RM: US$1 exchange rate
                3.3391
                3.44714Year
      end SGD: US$1 exchange rate
                1.4426
                1.4467Average
      period SGD: US$1 exchange rate
                1.4156
                1.5072





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.





Stock
based compensation


The
Company adopts SFAS No. 123 (revised 2004), "Share-Based Payment" ("SFAS
No. 123R") using the fair value method. Under SFAS No. 123R, stock-based
compensation expense is measured at the grant date based on the fair value
of the award or using the Black-Scholes pricing model and is recognized as
expense over the appropriate service period.





Retirement
plan costs


Contributions
to retirement schemes (which are defined contribution plans) are charged to
general and administrative expenses in the consolidated statements of operation
and comprehensive income as and when the related employee service is
provided.





Related
parties


Parties,
which can be a corporation or individual, are considered to be related if the
Company has the ability, directly or indirectly, to control the other party or
exercise significant influence over the other party in making financial and
operating decisions. Companies are also considered to be related if they are
subject to common control or common significant influence.





Segment
reporting


SFAS No.
131 “Disclosures about Segments of an
Enterprise and Related Information” establishes standards for reporting
information about operating segments on a basis consistent with the Company’s
internal organization structure as well as information about geographical areas,
business segments and major customers in the financial statements. The Company
operates three reportable segments in processing business, prepaid business, and
cards business, respectively.





Fair
value of financial instruments


The
Company values its financial instruments as required by SFAS No. 107, “Disclosures about Fair Value of
Financial Instruments”. The estimated
fair value amounts have been determined by the Company, using available market
information and appropriate valuation methodologies. The estimates presented
herein are not necessarily indicative of amounts that the Company could realize
in a current market exchange.





The
Company’s financial instruments primarily consist of cash and cash equivalents,
accounts receivable, other receivables and prepayments, accounts payable, loan
payable, accrued liabilities and other payables and due to related
parties.





As of the
balance sheet date, the estimated fair values of the financial instruments were
not materially different from their carrying values as presented due to the
short term maturities of these instruments and that the interest rates on the
borrowings approximate those that would have been available for loans of similar
remaining maturity and risk profile at respective year ends.





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.





Recently
accounting pronouncements


The
Company has reviewed all recently issued, but not yet effective, accounting
pronouncements and do not believe the future adoption of any such pronouncements
may be expected to cause a material impact on its financial condition or the
results of its operations.





F-14








-30-





In September 2006, the FASB issued Statement of Financial
Accounting Standard (“SFAS“) No. 157, "Fair Value Measurements"
("SFAS No. 157"). SFAS No. 157 defines fair value, establishes a framework for
measuring fair value and enhances disclosures about fair value measures required
under other accounting pronouncements, but does not change existing guidance as
to whether or not an instrument is carried at fair value. SFAS No. 157 is
effective for fiscal years beginning after November 15, 2007. In February 2008,
the FASB deferred SFAS No. 157's effective date for all non-financial assets and
liabilities, except those items recognized or disclosed at fair value on an
annual or more frequently recurring basis, until years beginning after November
15, 2008. The Company believes that SFAS No. 157 should not have a material
impact on the consolidated financial position or results of
operations.





In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial
Assets and Financial Liabilities" ("SFAS No. 159"). SFAS No. 159 permits
entities to choose to measure, on an item-by-item basis, specified financial
instruments and certain other items at fair value. Unrealized gains and losses
on items for which the fair value option has been elected are required to be
reported in earnings at each reporting date. SFAS No. 159 is effective for
fiscal years beginning after November 15, 2007, the provisions of which are
required to be applied prospectively. The Company believes that SFAS No. 159
should not have a material impact on the consolidated financial position or
results of operations.





In March
2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and
Hedging Activities"("SFAS No. 161"). SFAS No. 161 requires companies
with derivative instruments to disclose information that should enable
financial-statement users to understand how and why a company uses derivative
instruments, how derivative instruments and related hedged items are accounted
for under FASB Statement No. 133 "Accounting for Derivative Instruments and
Hedging Activities" and how derivative instruments and related hedged items
affect a company's financial position, financial performance and cash flows.
SFAS No. 161 is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008. The adoption of this
statement is not expected to have a material effect on the Company's future
financial position or results of operations.





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles”(“SFAS No. 162”). This
statement identifies the sources of accounting principles and the framework for
selecting the principles to be used in the preparation of financial statements
in conformity with generally accepted accounting principles (GAAP) in the United
States. This statement is effective 60 days following the SEC’s approval of the
Public Company Accounting Oversight Board amendments to AU Section 411, “The
Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles”. The Company does not expect the adoption of SFAS No. 162 to
have a material effect on the financial condition or results of operations of
the Company.





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





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





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





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





In
September 2008, the FASB issued FSP 133-1 and FIN 45-4,“Disclosures about Credit Derivatives and Certain
Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No.
45; and Clarification of the Effective Date of FASB Statement No.161”(“FSP FAS 133-1” and
“FIN 45-4”). FSP FAS 133-1 and FIN 45-4 amends disclosure requirements for
sellers of credit derivatives and financial guarantees. It also clarifies the
disclosure requirements of SFAS No. 161 and is effective for quarterly periods
beginning after November 15, 2008, and fiscal years that include those periods.
The adoption of FSP FAS 133-1 and FIN 45-4 did not have a material impact on the
Company’s current consolidated financial position, results of operation or cash
flows.





In October
2008, the FASB issued Staff Position (“FSP”) No. 157-3,“Determining the Fair Value of a Financial Asset
When the Market for That Asset is Not Active” (“FSP FAS 157-3.”) FSP FAS
157-3 clarifies the application of SFAS No. 157 in an inactive market. It
illustrated how the fair value of a financial asset is determined when the
market for that financial asset is inactive. FSP FAS 157-3 was effective upon
issuance, including prior periods for which financial statements had not been
issued. The adoption of FSP FAS 157-3 did not have a material impact on the
Company’s current consolidated financial position, results of operations or cash
flows.





F-15








-31-





4. ACQUISITION
AND DISPOSAL OF SMS BIZ SDN. BHD.





On
September 8, 2008, the Company completed the acquisition of SMS Biz Sdn. Bhd.
(“SMS BIZ”), including its wholly owned subsidiary, KB Reload Sdn. Bhd. (“KB
Reload”), pursuant to the Share Exchange Agreement (the “SEA”) entered into with
the shareholders of SMS BIZ, Yap Kit Chuan (“YAP”) and Chua Tong Ling (“CHUA”)
and issued 7,000,000 shares restricted common stocks in exchange for all issued
and fully paid up shares of SMS BIZ. SMS BIZ is engaged in the issuance of
prepaid and postpaid IDD call cards in Malaysia.





The
acquired assets and assumed liabilities of SMS BIZ were recorded at their
carrying value of $230,247 and $447,369, respectively at the date upon SMS BIZ,
YAP and CHUA delivered all the required deliveries as stated in the SEA to the
Company (the “Closing Date”). The accounting date of the acquisition was August
31, 2008 and was accounted for under the purchase method. The fair value of
$105,000 of the restricted common stocks issued to YAP and CHUA was based on the
average quoted market price of the common stock on the Closing Date plus the
three trading days before and after the Closing Date. Goodwill of $322,122 was
resulted as the purchase consideration exceeded the carrying value of the net
liabilities acquired. Prior to the signing of the SEA, the Company performed a
purchase price determination using a combination of discounted cash flow method
and price-earning method.  It was determined that the fair value of
SMS BIZ exceeded the purchase price of 100% of the interest of SMS BIZ based on
the Company's expectation of a net present value based on a discount of 18% per
annum and a price earning of 8 for the type of industry SMS BIZ is
in.





The
purchase price as of the acquisition date of August 24, 2008 was allocated as
follows:


Current
      assets
                        $
                        230,247Goodwill
                        
                        322,122Less:
      liabilities acquired
                        
                        (447,369
                        )Purchase
      price
                        $
                        105,000





The
following unaudited pro forma results of operations for the year ended December
31, 2008 and 2007 assume that the acquisition of SMS Biz occurred on January 1,
2008 and 2007, 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.





For the years ended December
      31,2008
                                
                                
                                
                                2007Net
      revenue
                                $
                                245,313
                                
                                
                                $
                                47,971Net
      loss
                                
                                (2,460,042
                                )
                                
                                
                                (4,094,571
                                )Loss
      per share
                                $
                                (0.02
                                )
                                
                                $
                                (0.12
                                )





On
November 24, 2008, the Company entered into an agreement to sell back its entire
interest in SMS BIZ to the previous shareholders for the return by the said
shareholders all the 7 million shares of the Company’s common stock previously
issued to them. The Board of Directors approved the sell-back after due
considerations given to the sharp drop in sale due to the adverse impact of the
global economic crisis and the confession by the said shareholders that they
would not be in a position to subscribe for the additional capital within the
next 24 months as called for prior to the closing of the SMS BIZ SEA. The
Company recorded a loss on disposal of SMS BIZ of
$85,629.





5.   ACCOUNTS
RECEIVABLE, NET





The
majority of the Company’s sales are on open credit terms and in accordance with
terms specified in the contracts governing the relevant transactions. As of
December 31, 2008, the Company has total account receivables amounted to
$223,933 as compared to $521,625 as at December 31, 2007. The Company
evaluates the need of an allowance for doubtful accounts based on specifically
identified amounts that management believes to be uncollectible. If actual
collections experience changes, revisions to the allowance may be required. For
the years ended December 31, 2008 and 2007, the Company made the allowance for
doubtful accounts of $30,605 and $6,381, respectively.





6.     OTHER
RECEIVABLES AND PREPAYMENTS





Other
receivables and prepayments consisted of the followings:





As of December 31,2008
                          
                          2007Prepayments
                          
                          $
                          17,659
                          
                          $
                          9,773Utility
      and rental deposits
                          
                          
                          18,620
                          
                          
                          -Other
      taxes recoverable
                          
                          
                          10,291
                          
                          
                          -Other
      receivables
                          
                          
                          20,858
                          
                          
                          5,700$
                          67,428
                          
                          $
                          15,473





7.   PLANT
AND EQUIPMENT, NET





As of
December 31, 2008 and 2007, plant and equipment consisted of office equipment
and renovation totally an aggregate cost of $757,676 and $698,505, respectively
with their accumulated depreciation of $64,362 and $143,016. Depreciation
expense for the years ended December 31, 2008 and 2007 were $201,885 and
$113,053 respectively.





F-16







-32-





8.   GOODWILL





Goodwill
represented the difference between the aggregate consideration paid for the
acquisition and the fair value of the net tangible and intangible assets of SMS
BIZ in September 2008, GUL HK during 2007 and Cardtrend Systems and IIG group of
companies during 2006.





On
September 8, 2008, the Company acquired all the shares of SMS BIZ in exchange
for the issuance of 7,000,000 shares restricted common stock of the Company and
a goodwill of $322,122 was recorded. Subsequent on November 24, 2008, the
Company cancelled 7,000,000 shares of common stock valued at $21,000 pursuant to
the return of the shares by the previous shareholders of SMS BIZ in
consideration for the purchase of SMS BIZ. The goodwill of $322,122 was fully
reversed for the disposal (see Note 4).





On October
31, 2007, the Company’s subsidiary in Hong Kong, APS HK, completed its
acquisition of GUL HK. APS HK paid a total cash consideration of approximately
$64,610 (equivalent to HK$500,000) for the acquisition. The total cash
consideration is attributed to goodwill as there was no net asset value in GUL
HK as of the date of completion. GUL HK is engaged in the provision of marketing
of data and business processes outsourcing services and issuance of payment
cards and loyalty cards in the mainland China. For the year ended December
31, 2008, GUL HK did not perform to the management’s expectation due to lack of
business development fund. As the current adverse global economic crisis, the
management of the Company determined that no further capital will be contributed
to GUL HK and therefore a positive business growth will not be expected in GUL
HK.





On
September 28, 2006, the Company merged with Cardtrend Systems in exchange for
the issuance of 2,500,000 shares of the Company’s Series B Preferred Stock which
are convertible to 25,000,000 shares of the Company’s common stock. The
2,500,000 shares of Series B Preferred Stock had a fair value of $3,464,286 at
September 28, 2006, as estimated by an independent valuation firm, of which
$2,625,474 is attributable to goodwill and $500,000 to the fair value of the
software developed and owned by Cardtrend Systems as estimated by an independent
valuation. Cardtrend Systems is a provider of software solutions to operators of
payment cards and loyalty cards. On January 2, 2008, the Company approved the
conversion of 2,500,000 shares of Series B Preferred Stock at a conversion ratio
of 1:10 into 25,000,000 shares of restricted common stock with a par value of
$0.001 per share (see Note 11). Cardtrend System is engaged in the provision of
IT solution for payment cards and loyalty cards in Asia and Middle East regions.
For the year ended December 31, 2008, most of the prospective clients that
Cardtrend Systems had approached and solicited during the year were all
tightened their expenditure budget, except for a petroleum company in Malaysia
which has entered a sales contract with Cardtrend Systems of approximately
$570,000 (equivalent to MYR 2,000,000) with a yearly maintenance fee of
approximately $28,500 (equivalent to MYR 100,000) subsequently in February 2009.
Therefore, the management of the Company is of the opinion that
Cardtrend System would experience a negative growth in the next few
years.





On May 18,
2006, the Company acquired all the shares of IIG group of companies in exchange
for the issuance of 3,500,000 shares of Series A Preferred Stock which were
convertible to 17,500,000 shares common stock of the Company. The 3,500,000
shares of Series A Preferred Stock had a fair value of $3,975,000 at May 18,
2006, as estimated by an independent valuation firm, of which, $3,272,258 is
attributable to goodwill. IIG group is an operator of payment cards and loyalty
cards. On January 2, 2008, the Company approved the conversion of 3,500,000
shares of Series A Preferred Stock at a conversion ratio of 1:5 into 17,500,000
shares of restricted common stock with a par value of $0.001 per share (see Note
11). The two income generating subsidiaries under the IIG group are mainly
engaged in the distribution of third parties prepaid IDD call cards, prepaid
mobile phone cards and services electronically in Malaysia. For the year ended
December 31, 2008, the management of the Company is of the opinion that the
Company will depart away from the prepaid business as a substantial reduction of
demand for the prepaid cards is foreseen due to the change of Malaysian
government policy in reducing numbers of foreign workers during the last
quarter of 2008.





For the
year ended December 31, 2008, the management of the Company evaluated the
recoverability of the goodwill using a combination of discounted cash flow
method and price-earning method to determine the fair value of IIG group,
Cardtrend Systems and GULHK. The tests resulted that the fair value of each of
IIG group, Cardtrend Systems, and GULHK is less than the carrying value of
goodwill and therefore the Company recognized the impairment charge for the
aggregate amount of $5,808,581, consisting of (i) the goodwill on IIG group
amounting to $3,272,258 was totally impaired; (ii) the goodwill on Cardtrend
Systems was impaired by $2,472,262, leaving an amount of $153,212 and (iii)
the goodwill on GULHK amounting to $64,610 was totally impaired. For the year
ended December 31, 2007, there was no impairment loss recognized.





9.   ACCRUED
LIABILITIES AND OTHER PAYABLES





Accrued
liabilities and other payables are comprised of the
following:


As ofDecember
      31,2008
                              
                              2007Accrued
      expenses
                              $
                              468,340
                              
                              
                              $
                              205,577Other
      tax payables
                              
                              -
                              
                              
                              
                              1,064Salaries
      and expenses owed to employees
                              
                              271,704
                              
                              
                              
                              62,486Other
      payables
                              
                              345,325
                              
                              
                              
                              368,702Total
                              $
                              1,085,369
                              
                              
                              $
                              637,829





Other
payables consisted of temporary advances from independent third parties with no
interest bearing, unsecured and have no fixed terms of repayment.





F-17






















-33-








10.
 INCOME TAX





For the
year ended December 31, 2008, the local (“United States”) and foreign components
of loss from operations before income taxes and minority interest were comprised
of the following:




Tax
      jurisdictions from:-
      local
                                              $
                                              (8,890,992
                                              )-
      foreign
                                              
                                              (736,763
                                              )Loss
      before income taxes and minority interest
                                              $
                                              (9,627,755
                                              )





For the
year ended December 31, 2008, no provision for income tax has been made as
the Company did not have any assessable profits for the year.




For the
year ended December 31, 2007, the provision for income tax of $1,288
related to foreign income tax incurred from the PRC tax
agent.





The
effective tax rate in the periods presented is the result of the mix of income
earned in various tax jurisdictions that apply a broad range of income tax
rates. The Company has subsidiaries that operate in various locations: the
United States of America, Hong Kong, the PRC, Singapore, Malaysia and British
Virgin Islands that are subject to tax in the jurisdictions in which they
operate, as follows:





United
States of America


The
Company is registered in the State of Nevada and is subjected to the United
States of America tax law.





As of
December 31, 2008, the U.S. operation had $8,890,992 net operating losses
available for federal tax purposes, which are available to offset future taxable
income. The net operating loss carry forwards begin to expire in 2019. The
Company has provided for a full valuation allowance of $3,022,937 for future tax
benefits from net operating loss carry forwards as the management believes it is
more likely than not that these assets will not be realized in the
future.





Hong
Kong


As of
December 31, 2008, the Hong Kong profits tax rate was 16.5%. For the year ended
December 31, 2008, no Hong Kong profits tax has been provided for as the
Company’s subsidiaries operating in Hong Kong incurred an operating loss of
$92,149.





The
PRC


The
Company’s subsidiary operating in PRC is subject to the Corporate Income Tax
governed by the Income Tax Law of the PRC. Effective from January 1, 2008, the
Corporate Income Tax Law of the PRC (the “New CIT Law”) is followed. Under the
New CIT Law, an unified income tax rate of 25% is imposed for both domestic and
foreign invested enterprises. APS China, is considered a foreign invested
enterprise and enjoys the unexpired tax holidays from a full exemption of
income tax for the first two profit making years with a 50% exemption of income
tax for the next three years. The ultimate applicable effective tax rate in 2008
and beyond will be subject to a transitional policy under the Corporate
Income Tax Law, whether APS China can continue to enjoy the unexpired tax
holidays.





For the
year ended December 31, 2008, no provision for corporate income tax has
been made as APS China incurred an operating loss of $527,986.





Singapore


Pursuant
to the Singapore Income Tax Laws, the Corporate Income Tax is at a statutory
rate of 20%. Unutilized tax losses and capital allowances may be carried forward
indefinitely to offset future taxable income provided that the beneficial
ownership of the company remains substantially (at least 50%) the same as at
certain relevant dates. For capital allowances, there is an additional
requirement that the same trade or business in respect of which these capital
allowances were made continues to be carried on. Carrybacks or transfers to
other companies are not permitted. No provision for Singapore Corporate Income
Tax has been made as the subsidiaries operating in Singapore incurred an
operating loss of $2,087 for the year ended December 31, 2008.





Malaysia


Pursuant
to the Malaysia Income Tax Laws, the Corporate Income Tax is at a statutory rate
of 26%. Unutilized tax losses and capital allowances may be carried forward
indefinitely to offset future taxable income. For capital allowances, there is
an additional requirement that the same trade or business in respect of which
these capital allowances were made continues to be carried on. No provision for
Malaysia Corporate Income Tax has been made as the subsidiaries operating in
Malaysia incurred a total operating loss of $111,801 for the year ended December
31, 2008, net of an operating income of $31,880 from Cardtrend Systems for the
year ended December 31, 2008. As Cardtrend System has been awarded a Multimedia
Super Corridor (MSC) certificate by the government of Malaysia in July 2004, the
annual operating income generated is fully tax exempted for a period of up to 10
years.





The
reconciliation of income tax rate to the effective income tax rate for the years
ended December 31, 2008 is as follows:




Loss
      before income taxes from operation
                                  
                                  $
                                  (101,113)Statutory
      income tax rate
                                  
                                  
                                  26%Income
      tax expense at statutory rate
                                  
                                  
                                  (26,289)Effect
      from tax holiday
                                  
                                  
                                  (12,744)Tax
      effect on non-deductible expenses
                                  
                                  
                                  25,183Tax
      effect on tax allowances
                                  
                                  
                                  (2,722)Net
      operating losses carryforward
                                  
                                  
                                  16,572Income
      tax expense
                                  
                                  $
                                  -








F-18







-34-





British
Virgin Islands


Under the
current BVI law, those BVI subsidiaries are not subject to tax on income. For
the year ended December 31, 2008, the Company’s subsidiaries incurred a loss
from operations of $2,740.





The
following table sets forth the significant components of the aggregate net
deferred tax assets of the Company as of December 31, 2008:




Deferred
      tax assets:Net
      operating loss carryforward-
      United States
                                                    
                                                    $
                                                    3,022,937-
      Hong Kong
                                                    
                                                    
                                                    15,205-
      China
                                                    
                                                    
                                                    131,996-
      Malaysia
                                                    
                                                    
                                                    29,068-
      Singapore
                                                    
                                                    
                                                    417Less:
      valuation allowance
                                                    
                                                    
                                                    (3,199,623)Net
      deferred tax assets
                                                    
                                                    $
                                                    -





Management
believes that it is more likely than not that the deferred tax assets will not
be fully realizable in the future. Accordingly, the Company provided for a full
valuation allowance against its deferred tax assets of $3,199,623 and $1,053,502
as of December 31, 2008 and 2007, respectively. During 2008, the valuation
allowance increased by $2,146,121, primarily relating to net operating loss
carryforwards from the local and foreign tax regimes.





11.
 CAPITAL STOCK





Preferred
Stock


The
Company is authorized to issue 10,000,000 shares of preferred stock with a par
value of $0.001 per share.





On January
2, 2008, the Company approved the conversion of 3,500,000 shares of Series A
Preferred Stock at a conversion ratio of 1:5 into 17,500,000 shares of
restricted common stock with a par value of $0.001 per share to satisfy with the
purchase consideration (see Note 8). Upon the conversion of the 3,500,000 shares
of Series A Preferred Stock, the par value of common stock totaling $17,500 is
recognized as common stock issued and outstanding. The excess of $14,000 is
recognized as a reduction to the additional paid-in capital.





At the
same date on January 2, 2008, the Company approved the conversion of 2,500,000
shares of Series B Preferred Stock at a conversion ratio of 1:10 into 25,000,000
shares of restricted common stock with a par value of $0.001 per share to
satisfy with the purchase consideration (see Note 8). Upon the conversion of the
2,500,000 shares of Series B Preferred Stock, the par value of common stock
totaling $25,000 is recognized as common stock issued and outstanding. The
excess of $22,500 is recognized as a reduction to the additional paid-in
capital.





As of
December 31, 2008 and 2007, there was 0 and 6,000,000 shares issued and
outstanding preferred stock, respectively.





Common
Stock


The
Company is authorized to issue 250,000,000 shares of common stocked with a
par value of $0.001 per share.





On January
2, 2008, the Company cancelled 82,912 shares of common stock valued at $6,000
due to clerical error resulting in overpayment of debt owed to Management
Services of Arizona, Inc.





On January
14, 2008, the Company issued a total of 3,023,119 shares of the Company’s common
stock valued at $151,155 for the settlement of debts (salaries and advances owed
to employees and officers). 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
$151,152 were fully expensed at the time the options were granted.





On January
22, 2008 and February 1, 2008, an aggregate of 11 convertible promissory notes
with a total value of $722,112 were converted into equity for 17,133,263 shares
of commons stock of the Company upon their maturities (See Note
14).





On May 20,
2008, 562,500 shares of common stock valued at $33,751 were cancelled due to
termination of a contract with a consulting services firm.





On August
31, 2008, the Company issued 1,931,900 shares of free trading common stock value
at $38,638 for the compensation of three months salaries for an early
termination of an employee (See Note 12).





On
September 8, 2008, the Company issued 7,000,000 shares of restricted common
stock valued at $105,000 for the exchange of all issued and fully paid up shares
of SMS BIZ. Subsequently on November 24, 2008, the Company cancelled 7,000,000
shares of common stock valued at $21,000 pursuant to the return of the shares by
the original shareholders of SMS BIZ in consideration for the purchase of
SMS BIZ (See Note 4).





On
September 12, 2008, the Company issued 2,100,000 shares of restricted common
stock at a market fair value of $0.01 per share for the consulting services
rendered (See Note 13).





F-19







-35-





On
September 19, 2008, the Company issued 3,696,938 shares of restricted common
stock valued at $18,485 for the compensation of early termination to an employee
(See Note 13).





On
September 22, 2008, the Company issued 3,701,943 shares of restricted common
stock valued at $18,510 for a partial compensation of early termination to an
employee (See Note 13).





On
September 23, 2008, the Company cancelled 31,891 shares of common stock valued
at $2,328 due to a clerical error from the overpayment of salary to a former
employee.





As of
December 31, 2008 and 2007, the Company had 155,818,136 and 82,408,276
shares of common stock issued and outstanding.





12.
            NET
      LOSS PER SHARE





The
following table sets forth the computation of basic and diluted net loss per
share for the years indicated:


For the years ended December
      31,2008
                                  
                                  2007Basic
      and diluted net loss per share calculationNumerator:Net
      loss in computing basic net loss per share
                                  
                                  $
                                  9,628,304
                                  
                                  $
                                  3,098,535Denominator:Weighted
      average ordinary shares outstanding
                                  
                                  
                                  144,715,542
                                  
                                  
                                  55,682,478Basic
      and diluted net loss per share
                                  
                                  $
                                  0.07
                                  
                                  $
                                  0.06





Since the
Company reported a net loss for the years ended December 31, 2008 and 2007, all
potential common shares have been excluded from the computation of the dilutive
net loss per share for all periods presented because the effect would have been
anti-dilutive.





13.   STOCK
BASED COMPENSATION





Options


In 2004,
2005 and 2007, the Company approved non-qualified incentive stock option plans
(the "2004 Plan", the “2005 Plan” and the “2007 Plan”, or collectively, the
“Registered Option Plans”) for the benefit of employees or other persons
associated with the Company. In accordance with the 2004 Plan, 2005 Plan, and
2007 Plan, the Company is authorized to grant stock options for the purchase of
5,000,000, 5,000,000 and 25,000,000 unrestricted shares of common stock,
respectively. The Company decided to enact an unregistered stock option plan in
2006 to accommodate stock options granted outside of the Registered Option Plans
for the benefit of employees and persons associated with the Company to purchase
restricted shares of common stock (“2006 Unregistered Plan”).





On January
1, 2008, the Company granted options to two new employees 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
1, 2008, the Board of Directors approved the granting of options to 2
consultants 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 were amortized and expensed over one year,
the contract period for the provision of business development and advisory
services in China.





On January
14, 2008, the Company granted options to 7 employees and 3 officers to purchase
a total of 3,023,139 shares of the Company’s common stock (105,020 under the
2004 Plan, 919,000 under the 2005 Plan and 1,999,119 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 April
7, 2008, Ms. Katherine YL Tung, Secretary & Treasurer of the Company 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, with a vesting
provision of 25,000 shares at the end of every three months commencing from
April 1, 2008 for a one year term. The fair value 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 234%; (3)
risks free interest rates of 1.72%; (4) expected lives of 1 year; and (5) at a
market price $0.03. The fair value will be amortized and expensed over one year,
the contract period for the provision of the said administrative
services.





On August
5, 2008, the Company granted an option under the Unregistered Plan to four
employees and four directors each to purchase 300,000 restricted shares of the
Company’s common stock at an exercise price of $0.02 per share, with a vesting
provision of 25,000 shares and 75,000 shares for employees and directors,
respectively at the end of every three months commencing from September 30, 2008
for a one year term. The fair value of these options amounting to $40,800 were
computed using a Black-Scholes model with the following assumptions: (1)
dividend yield of 0%; (2) expected volatility of 236%; (3) risks free interest
rates of 2.26% to 2.83%; (4) expected lives of 3 years; and (5) at a market
price $0.02.


F-20






-36-





On August
31, 2008, the Company granted options under the 2004 Plan, 2005 Plan and 2007
Plan to a former employee to purchase 683,000 shares, 250,000 shares and 998,900
shares, respectively of the Company’s common stock at an exercise price of $0.02
per share to compensate the early termination. The former employee immediately
exercised all the options on the same day (See Note 11).





On
September 5, 2008, a group of officers and directors of the Company voluntarily
cancelled an aggregate amount of options of 8,150,000 shares (including those
shares which were vested and unexercised) under 2007 Plan which the Company
granted at an exercise price ranging from $0.08 to $0.10 per share on February
26, 2007. On the same day, the Company granted those officers and directors an
option each under the Unregistered Plan to purchase an aggregate of 8,150,000
shares restricted common stock of the Company at an exercise price of $0.02 per
share.





On
September 5, 2008, the Company adjusted the exercise price of an aggregate
amount of options of 5,850,000 shares under the 2007 Plan which granted to 12
middle management employees of the Company on February 26, 2007 from ranging
$0.08 to $0.10 per share to $0.02 per share. The Company recorded and expensed
$18,800 as additional fair value due to modification of exercise
price.





On
September 12, 2008, the Company granted options under the 2007 Plan to a
consultant to purchase 2,100,000 shares restricted common stock of the Company
at an exercise price of $0.001 per share for the six months consulting services
to be rendered commencing from September 12, 2008. The consultant immediately
exercised all the options on the same day (See Note 11).





On
September 19, 2008, the Company granted options under the 2007 Plan to a former
employee to purchase 3,696,938 shares of the Company’s common stock at an
exercise price of $0.005 per share to compensate the early termination. The
former employee immediately exercised all the options on the same day (See Note
11).





On
September 22, 2008, the Company granted options under the 2007 Plan to a former
employee to purchase 3,701,943 shares of the Company’s common stock at an
exercise price of $0.005 per share to partially settle the compensation of four
months salaries for an early termination. The former employee immediately
exercised all the options on the same day (See Note 11).





On
September 22, 2008, the Company adjusted the exercise price of options of
100,000 shares granted under the 2007 Plan to the Secretary and Treasurer of the
Company on April 7, 2008 from $0.05 per share to $0.02 per share. The Company
recorded and expensed $100 as additional fair value due to modification of
exercise price.





A summary
of the changes in the Company's common stock purchase options granted to
directors, officers & employees (“Employees”) and consultants
(“Consultants”) in the fiscal years 2008 and 2007 is presented
below:


Unregistered
                              
                              
                              
                              
                              
                              
                              Average2004 Plan
                              
                              2005Plan
                              
                              Plan
                              
                              2007 Plan
                              
                              Total
                              
                              
                              Exercise PriceBalance
      as of January 1, 2007
                              583,000
                              
                              1,030,000
                              
                              11,350,000
                              
                              -
                              
                              12,963,000
                              
                              $
                              0.200Granted
                              -
                              
                              -
                              
                              750,000
                              
                              22,806,863
                              
                              23,556,863
                              
                              $
                              0.088Forfeited
      and cancelled
                              (100,000
                              )
                              (580,000
                              )
                              (12,100,000
                              )
                              (600,000
                              )
                              (13,380,000
                              )
                              $
                              0.193Exercised
                              -
                              
                              -
                              
                              -
                              
                              (6,406,863
                              )
                              (6,406,863
                              )
                              $
                              0.069Balance
      as of December. 31, 2007
                              483,000
                              
                              450,000
                              
                              -
                              
                              15,800,000
                              
                              16,733,000
                              
                              $
                              0.103Granted
                              788,020
                              
                              1,169,000
                              
                              10,550,000
                              
                              13,196,900
                              
                              25,703,920
                              
                              $
                              0.019Forfeited
      & cancelled
                              (483,000
                              )
                              (450,000
                              )
                              -
                              
                              (10,481,911
                              )
                              (11,414,911
                              )
                              $
                              0.107Exercised
                              (788,020
                              )
                              (1,169,000
                              )
                              -
                              
                              (12,464,989
                              )
                              (14,422,009
                              )
                              $
                              0.016Balance
      as of December. 31, 2008
                              -
                              
                              -
                              
                              10,550,000
                              
                              6,050,000
                              
                              16,600,000
                              
                              $
                              0.020





A summary
of the changes in the Company’s stock options granted to Employees in fiscal
years 2008 and 2007 is presented below:


Unregistered
                              
                              
                              
                              
                              
                              
                              Average2004 Plan
                              
                              2005 Plan
                              
                              Plan
                              
                              2007 Plan
                              
                              Total
                              
                              
                              ExercisePriceBalance
      as of January 1, 2007
                              43,000
                              
                              -
                              
                              11,350,000
                              
                              -
                              
                              11,393,000
                              
                              $
                              0.180Granted
                              -
                              
                              -
                              
                              750,000
                              
                              22,306,863
                              
                              23,056,863
                              
                              $
                              0.090Forfeited
      & cancelled
                              -
                              
                              -
                              
                              (12,100,000
                              )
                              (600,000
                              )
                              (12,700,000
                              )
                              $
                              0.173Exercised
                              -
                              
                              -
                              
                              -
                              
                              (5,906,863
                              )
                              (5,906,863
                              )
                              $
                              0.075Balance
      as of December. 31, 2007
                              43,000
                              
                              -
                              
                              -
                              
                              15,800,000
                              
                              15,843,000
                              
                              $
                              0.095Granted
                              788,020
                              
                              1,169,000
                              
                              10,550,000
                              
                              10,996,900
                              
                              23,503,920
                              
                              $
                              0.019Forfeited
      & cancelled
                              (43,000
                              )
                              -
                              
                              -
                              
                              (10,481,911
                              )
                              (10,524,911
                              )
                              $
                              0.096Exercised
                              (788,020
                              )
                              (1,169,000
                              )
                              -
                              
                              (10,364,989
                              )
                              (12,322,009
                              )
                              $
                              0.018Balance
      as of December 31, 2008
                              -
                              
                              -
                              
                              10,550,000
                              
                              5,950,000
                              
                              16,500,000
                              
                              $
                              0.020








F-21
















-37-








A summary
of the changes in the Company’s stock options granted to Consultants in fiscal
years 2008 and 2007 is presented below:


Unregistered
                              
                              
                              
                              
                              
                              
                              Average2004Plan
                              
                              2005 Plan
                              
                              Plan
                              
                              2007Plan
                              
                              Total
                              
                              
                              ExercisePriceBalance
      as of January 1, 2007
                              540,000
                              
                              1,030,000
                              
                              -
                              
                              -
                              
                              1,570,000
                              
                              $
                              0.370Granted
                              -
                              
                              -
                              
                              -
                              
                              500,000
                              
                              500,000
                              
                              $
                              0.088Forfeited
      & cancelled
                              (100,000
                              )
                              (580,000
                              )
                              -
                              
                              -
                              
                              (680,000
                              )
                              $
                              0.551Exercised
                              -
                              
                              -
                              
                              -
                              
                              (500,000
                              )
                              (500,000
                              )
                              $
                              0.055Balance
      as of December 31, 2007
                              440,000
                              
                              450,000
                              
                              -
                              
                              -
                              
                              890,000
                              
                              $
                              0.234Granted
                              -
                              
                              -
                              
                              -
                              
                              2,200,000
                              
                              2,200,000
                              
                              $
                              0.005Forfeited
      & cancelled
                              (440,000
                              )
                              (450,000
                              )
                              -
                              
                              -
                              
                              (890,000
                              )
                              $
                              0.236Exercised
                              -
                              
                              -
                              
                              -
                              
                              (2,100,000
                              )
                              (2,100,000
                              )
                              $
                              0.001Balance
      as of December 31, 2008
                              -
                              
                              -
                              
                              -
                              
                              100,000
                              
                              100,000
                              
                              $
                              0.080





Additional
information regarding total options outstanding (for Employees and Consultants)
at December 31, 2008 is as follows:


Outstanding
                          
                          ExercisableWeighted
                          
                          
                          
                          
                          Weightedaverage
                          Weighted
                          
                          
                          Weighted
                          averageNumber
                          remaining
                          average
                          
                          Number
                          average
                          remainingExercise
                          of
                          contractual
                          exercise
                          
                          of
                          exercise
                          Contractualprice
                          options
                          life (years)
                          price
                          
                          options
                          price
                          life
      (years)$
                          0.08
                          100,000
                          1.08
                          $
                          100,000
                          
                          100,000
                          $
                          0.080
                          1.08$
                          0.02
                          16,500,000
                          8.13
                          $
                          6,391,867
                          
                          6,391,867
                          $
                          0.020
                          8.11Total
                          16,600,000
                          8.08
                          $
                          0.020
                          
                          6,492,867
                          $
                          0.021
                          8.00








Additional
information regarding total options outstanding (for Employees only) at December
31, 2008 is as follows:


Outstanding
                        
                        ExercisableWeighted
                        
                        
                        
                        
                        Weightedaverage
                        Weighted
                        
                        
                        Weighted
                        averageNumber
                        remaining
                        average
                        
                        Number
                        average
                        RemainingExercise
                        of
                        contractual
                        exercise
                        
                        of
                        exercise
                        contractualprice
                        options
                        life (years)
                        price
                        
                        options
                        price
                        life
      (years)$
                        0.02
                        16,500,000
                        8.13
                        $
                        0.020
                        
                        6,391,867
                        $
                        0.020
                        8.11





Additional
information regarding total options outstanding (for Consultants only) at
December 31, 2008 is as follows:


Outstanding
                      
                      ExercisableWeighted
                      
                      
                      
                      
                      Weightedaverage
                      Weighted
                      
                      
                      Weighted
                      averageNumber
                      remaining
                      average
                      
                      Number
                      average
                      RemainingExercise
                      of
                      contractual
                      exercise
                      
                      of
                      exercise
                      contractualprice
                      options
                      life (years)
                      price
                      
                      options
                      price
                      life (years)$
                      0.08
                      100,000
                      1.08
                      $
                      0.080
                      
                      100,000
                      $
                      0.080
                      1.08





The fair
value for the options granted was estimated at the date of grant using the
Black-Scholes Option Pricing model with the following assumptions:


Year ended December 31,
  2008Risk-free
      interest rate (per annum)
              0.76%
      - 4.55%Expected
      life (in years)
              1 -
      5 yearsExpected
      volatility
              199%
      - 294%Expected
      dividend yield
              0%





F-22





-38-








The
Company recognized $864,160 and $1,131,934 of stock-based compensation to
operations for the years ended December 31, 2008 and 2007 by applying the fair
value method in accordance with SFAS No. 123(R). As of December 31, 2008 and
2007, $277,148 and $1,121,638 was recorded as a reduction in deferred
compensation and $587,012 and $80,704 was recorded as an increase and a decrease
in additional paid-in capital, respectively. As of December 31, 2008, the amount
of stock based compensation that will be recognized in future periods as a
result of additional vesting of option shares is $997,607.





Warrants


On January
22, 2008 and February 1, 2008, the Company granted 17,133,263 warrants to 5
individuals upon the conversion of convertible promissory notes held by them
with the principal and accrued interest totaling $722,112 (See Note
14).





On May 20,
2008, 500,000 warrants at an exercise price of $0.40 per share granted to a
consultant were cancelled due to the termination of the service contract with
the consultant





Transaction
involving warrants issued to investors and consultants in fiscal years 2008 and
2007 are summarized as follows (Warrants were not issued to
employees):





Share
      issuableUpon
                        
                        Averageexercise
      of
                        
                        price
      perWarrants
                        
                        ShareOutstanding
      as of January 1, 2007
                        12,428,287
                        
                        
                        $
                        0.45Granted
                        14,106,066
                        
                        
                        $
                        0.07Exercised
                        -
                        
                        
                        $
                        -Canceled
                        (3,607,166
                        )
                        
                        $
                        0.36Outstanding
      as of December 31, 2007
                        22,927,187
                        
                        
                        $
                        0.23Granted
                        17,133,263
                        
                        
                        $
                        0.084Exercised
                        -
                        
                        
                        $
                        -Cancelled
                        (500,000
                        )
                        
                        $
                        0.40Outstanding
      as of December 31, 2008
                        39,560,450
                        
                        
                        $
                        0.168





Additional
information regarding warrants outstanding as of December 31, 2008 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
                          contractualprice
                          warrants
                          life (years)
                          price
                          
                          warrants
                          price
                          life (years)$
                          0.062
                          23,665,206
                          1.93
                          $
                          0.062
                          
                          23,665,206
                          $
                          0.062
                          1.93$
                          0.112
                          5,504,464
                          2.17
                          $
                          0.112
                          
                          5,504,464
                          $
                          0.112
                          2.17$
                          0.130
                          1,569,659
                          2.17
                          $
                          0.130
                          
                          1,569,659
                          $
                          0.130
                          2.17$
                          0.159
                          645,644
                          0.75
                          $
                          0.159
                          
                          645,644
                          $
                          0.159
                          0.75$
                          0.200
                          4,638,333
                          1.00
                          $
                          0.200
                          
                          4,638,333
                          $
                          0.200
                          1.00$
                          0.300
                          1,448,985
                          0.75
                          $
                          0.300
                          
                          1,448,985
                          $
                          0.300
                          0.75$
                          0.713
                          1,000,000
                          1.67
                          $
                          0.713
                          
                          1,000,000
                          $
                          0.713
                          1.67$
                          2.000
                          1,088,159
                          1.67
                          $
                          2.000
                          
                          1,088,159
                          $
                          2.000
                          1.67Total
                          39,560,450
                          1.79
                          $
                          0.168
                          
                          39,560,450
                          $
                          0.168
                          1.79





14.
CONVERTIBLE PROMISSORY NOTE PAYABLE





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 convertible promissory notes obtained during
the years ended December 31, 2007and 2008 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.





During the
year ended December 31, 2008, the Company had the following transactions
relating to the convertible promissory notes:





F-23








-39-








(a)
2007 Convertible notes


On January
22, 2008 and February 1, 2008, the Company issued 17,133,263 shares of common
stock of the Company to 5 individuals upon the conversion of convertible notes
held by them with the principal and accrued interest totaling $722,112 at a
conversion price ranging from $0.031 to $0.065, which were agreed in the
Convertible Promissory Notes.





On August
7, 2008, a convertible note of $100,000 was matured with a full repayment of
$110,194 including principal and accrued interest.





On
February 20, 2008 and August 8, 2008, the Company issued a one-year, callable on
demand convertible note (“Notes”) of $35,000 and $110,194 to the same individual
(“Note Holder”), respectively. The Notes had a term of 1 year from their
effective dates, carried an interest rate of 10% per annum, principal and
accrued interest payable anytime during the term of the Note at the option of
the Note Holder, in either cash or shares. The Note and accrued interest may be
convertible into shares of common stock of the Company at a conversion price of
$0.048 and $0.02 per share, respectively at the option of the Note Holders at
its maturity date or earlier. Upon the conversion of these Notes, the Company
will be required to issue the equivalent number of common stock purchase
warrants to the Note Holder, with an exercise price of $0.096 and $0.04 per
share, respectively in a warrant life of three (3) years from the date of
issuance.





On
September 19, 2008, the Note Holder called for redemption and on the same day
the Company issued a new Note to the same Note Holder with the same aggregated
amount of principal and accrued interest redeemed in terms of  (1)
principal and accrued interest will become payable by cash after the expiration
of six (6) months from its effective date, or at its maturity date, whichever is
earlier, (2) upon the conversion, the Notes will be convertible into shares of
the Company’s common stock at a conversion price of $0.005 per share or the
average closing bid price of the Company’s common stock 5 days preceding the
date of conversion, whichever is lower; (3) no warrants will be issued upon the
conversion of the Notes.





(b)
2008 Convertible notes


During the
year ended December 31, 2008 the Company issued a numbers of callable, on-demand
convertible notes (“Notes”) to certain individuals and directors of the Company
(“Notes Holders”) for an aggregate amount of $508,942. The Notes had a term of 1
year from its effective drawdown date, carried an interest rate of 10% per
annum, principal and accrued interest payable anytime during the term of the
Note at the option of the Note Holder, in either cash or shares. The Notes and
accrued interest may be convertible into shares of common stock of the Company
at a conversion price ranging from $0.02 to $0.05 per share at the option of the
Notes Holders at its maturity date or earlier.





Upon the
conversion of these Notes, the Company will be required to issue the equivalent
number of common stock purchase warrants to the Notes Holders, with an exercise
price ranging from $0.04 to $0.10 per share in a warrant life of three (3) years
from the date of issuance.





Particulars
of the issued convertible promissory notes during the year ended December 31,
2008 which were all redeemed as of December 31, 2008 are as follow:





Number
      of
                              ConvertibleDate
      of convertible
                              convertible
                              promissory
                              Conversion
                              Exercise
      price
                              Intrinsicpromissory noteagreement
                              loans
                              noteamount
                              Price
                              ofwarrant
                              valueFebruary
      18, 2008
                              1
                              $
                              50,000
                              $
                              0.048
                              $
                              0.096
                              $
                              23,333February
      20, 2008
                              2
                              
                              65,000
                              
                              0.048
                              
                              0.096
                              
                              30,896March
      13, 2008
                              1
                              
                              50,000
                              
                              0.040
                              
                              0.080
                              
                              36,726March
      26, 2008
                              3
                              
                              81,000
                              
                              0.050
                              
                              0.100
                              
                              39,463April
      16, 2008
                              1
                              
                              86,317
                              
                              0.048
                              
                              0.096
                              
                              41,670May
      5, 2008
                              3
                              
                              36,000
                              
                              0.048
                              
                              0.096
                              
                              17,939May
      12, 2008
                              3
                              
                              39,000
                              
                              0.040
                              
                              0.080
                              
                              18,200June
      10, 2008
                              3
                              
                              30,000
                              
                              0.030
                              
                              0.060
                              
                              14,667July
      10, 2008
                              2
                              
                              14,000
                              
                              0.020
                              
                              0.040
                              
                              5,310July
      25, 2008
                              3
                              
                              35,625
                              
                              0.020
                              
                              0.040
                              
                              13,513August
      18, 2008
                              1
                              
                              22,000
                              
                              0.020
                              
                              0.040
                              
                              8,067Total
                              
                              $
                              508,942
                              
                              
                              
                              
                              $
                              249,784





On
September 19, 2008, all the Note Holders called for redemption with an
aggregated principal and interest amounted to $589,041 and on the same day the
Company issued six new Notes to the same group of Note Holders with the same
aggregate amount for a term of 12 months from its effective date, carried an
interest rate of 10% per annum, and at the option of the Note
Holders, principal and accrued interest may be  redeemable in
cash at anytime after 6 months from the effective date of the Note or
convertible into shares of common stock of the Company at a conversion price of
$0.005 per share or the average closing bid price of the Company’s common stock
5 days preceding the date of conversion, whichever is lower, and no warrants
will be issued upon the conversion of the Notes.





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 promissory note as interest
expense in accordance with EITF No. 00-27 Application of EITF 98-5 “ Accounting
for Convertible Securities with Beneficial Conversion Features or Contingently
Adjustable Conversion Ratios ” and APB No. 14, “Accounting for Convertible Debt
and Debt Issued with Stock Purchase Warrants” . For the year ended December 31,
2008, the Company recognized a total discount of $725,095 which was charged to
additional paid in capital. The Company has charged $879,263 to the
statement of operation as amortization of debt discount.








F-24





-40-








(c)
Convertible promissory note to service provider


On May 5,
2008, the Company issued a convertible promissory note of $200,000 to RBSM LLP,
the predecessor auditor of the Company for a term of 6 months, bearing interest
at a rate of 7% per annum and payable at its maturity date, due November 4,
2008. The convertible promissory note is unsecured and upon the maturity date,
the Company may, at its election, pay cash to RBSM LLP for the principal balance
plus accrued interest or convert such amount into shares of common stock of the
Company, in whole or in part, at a conversion price equal to the average closing
bid price of the Company’s common stock 5 days preceding the date of maturity.
On October 30, 2008, the Company and RBSM LLP signed an agreement to extend
the maturity of the convertible promissory noted to May 4, 2009 for a
consideration of $5,000 paid by the Company





15.
RELATED PARTY TRANSACTIONS





The
Company had the following transactions for the years ended December 31, 2008 and
2007, with related parties:





Incurred
$44,262 and $0 for the years ended December 31, 2008 and 2007, respectively, for
administrative, management services and consulting services provided by
companies in which certain officers and/or shareholders have a controlling
interest. Incurred net $668,420 and $0 for the years ended December 31, 2008 and
2007, respectively, for sales transaction at a fair value in a normal course of
business to a company, in which a director has a controlling
interest.





The
following balances, which represent temporary advances from directors, officers
and companies controlled by certain officers and/or directors, carry no interest
charges with no fixed terms of repayment, were outstanding as of:





December 31,
      2008
                            
                            December 31, 2007Salaries
      payable
                            $
                            358,500
                            
                            $
                            78,758Loan
      from directors
                            
                            161,464
                            
                            
                            148,055Expenses
      claims
                            
                            -
                            
                            
                            1,480Due
      to related parties
                            $
                            519,964
                            
                            $
                            228,293





16 SEGMENT
INFORMATION





(a)
Segment Information


For the
years ended December 31, 2008 and 2007, the Company’s business units have been
aggregated in three reportable segments: business processing (“Processing
Business Unit”), prepaid communications products (“Prepaid Business Unit”) and
payment and loyalty cards (“Card Business Unit”), as defined by SFAS No. 131,
“Disclosures about Segments of
an Enterprise and Related Information”("SFAS No. 131"). 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 concerning the Company’s reportable segments is shown in
the following tables for the years ended December 31, 2008 and
2007:


For the yearended December 31, 2008Processing
                                                    
                                                    
                                                    Prepaid
                                                    
                                                    
                                                    CardBusiness
                                                    
                                                    
                                                    Business
                                                    
                                                    
                                                    Business
                                                    
                                                    
                                                    Corporate
                                                    
                                                    
                                                    TotalOperating
      revenues, net
                                                    $
                                                    1,061,550
                                                    
                                                    $
                                                    666,772
                                                    
                                                    $
                                                    -
                                                    
                                                    $
                                                    -
                                                    
                                                    $
                                                    1,728,322Cost
      of revenues
                                                    
                                                    (419,751
                                                    )
                                                    
                                                    (657,138
                                                    )
                                                    
                                                    -
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    (1,076,889
                                                    )Gross
      profit
                                                    
                                                    641,799
                                                    
                                                    
                                                    9,634
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    651,433Depreciation
      and amortization
                                                    
                                                    226,777
                                                    
                                                    
                                                    71,365
                                                    
                                                    
                                                    3,743
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    301,885Net
      loss
                                                    
                                                    (6,173,036
                                                    )
                                                    
                                                    (3,419,192
                                                    )
                                                    
                                                    (36,076
                                                    )
                                                    
                                                    -
                                                    
                                                    
                                                    (9,628,304
                                                    )Total
      assets
                                                    
                                                    949,757
                                                    
                                                    
                                                    163,855
                                                    
                                                    
                                                    25,220
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    1,138,832Expenditure
      for long-lived assets
                                                    $
                                                    -
                                                    
                                                    $
                                                    -
                                                    
                                                    $
                                                    -
                                                    
                                                    $
                                                    -
                                                    
                                                    $
                                                    -





For the yearended December31, 2007Processing
                                                                            
                                                                            
                                                                            Prepaid
                                                                            
                                                                            
                                                                            CardBusiness
                                                                            
                                                                            
                                                                            Business
                                                                            
                                                                            
                                                                            Business
                                                                            
                                                                            
                                                                            Corporate
                                                                            
                                                                            
                                                                            TotalOperating
      revenues, net
                                                                            $
                                                                            748,465
                                                                            
                                                                            $
                                                                            978,927
                                                                            
                                                                            $
                                                                            -
                                                                            
                                                                            $
                                                                            -
                                                                            
                                                                            $
                                                                            1,727,392Cost
      of revenues
                                                                            
                                                                            (344,239
                                                                            )
                                                                            
                                                                            (963,342
                                                                            )
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            (1,307,581
                                                                            )Gross
      profit
                                                                            
                                                                            404,226
                                                                            
                                                                            
                                                                            15,585
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            419,811Depreciation
      and amortization
                                                                            
                                                                            147,652
                                                                            
                                                                            
                                                                            62,853
                                                                            
                                                                            
                                                                            2,139
                                                                            
                                                                            
                                                                            409
                                                                            
                                                                            
                                                                            213,053Net
      loss
                                                                            
                                                                            (2,362,097
                                                                            )
                                                                            
                                                                            (134,711
                                                                            )
                                                                            
                                                                            (70,864
                                                                            )
                                                                            
                                                                            (530,862
                                                                            )
                                                                            
                                                                            (3,098,535
                                                                            )Total
      assets
                                                                            
                                                                            3,886,123
                                                                            
                                                                            
                                                                            2,149,632
                                                                            
                                                                            
                                                                            1,654,978
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            7,690,733Expenditure
      for long-lived assets
                                                                            $
                                                                            351,470
                                                                            
                                                                            $
                                                                            967
                                                                            
                                                                            $
                                                                            17,976
                                                                            
                                                                            $
                                                                            -
                                                                            
                                                                            $
                                                                            370,413





F-25







-41-








(b)
Geographical Information


The
Company’s operations are located in three main geographical areas. The Company’s
sales by geographical market are analyzed as follows:





For the yearended December 31,2008
                                  
                                  
                                  2007Revenue,
      net:PRC
                                  $
                                  1,178,374
                                  
                                  $
                                  127,578Hong
      Kong
                                  
                                  21,113
                                  
                                  
                                  -Malaysia
                                  
                                  528,835
                                  
                                  
                                  1,599,814$
                                  1,728,322
                                  
                                  $
                                  1,727,392





For the yearended December 31,2008
                                  
                                  
                                  2007Gross
      profit/(loss):PRC
                                  $
                                  348,015
                                  
                                  $
                                  (52,703)Hong
      Kong
                                  
                                  4,865
                                  
                                  
                                  -Malaysia
                                  
                                  298,553
                                  
                                  
                                  472,514$
                                  651,433
                                  
                                  $
                                  419,811





For the
year ended December 31, 2008, 47% and 53% of the Company’s long-lived assets
were located in the PRC and Malaysia, respectively.





For the
year ended December 31, 2007, 50% and 50% of the Company’s long-lived assets
were located in the PRC and Malaysia, respectively.





17.
            PENSION
      PLAN





Malaysia





The
Company’s subsidiaries operating in Malaysia participate in a defined
contribution pension scheme under the Employee Provident Fund “EPF” operated by
the local government for all its eligible employees in Malaysia.





The EPF is
available to all employees aged 18 to 65 with a term of service in the
employment in Malaysia. The Company’s subsidiaries are required to contribute a
specified percentage of the participants’ relevant income based on their ages
and wages level. The participants are entitled to 100% of the Company’s
contributions together with accrued returns irrespective of their length of
service with the Company’s subsidiaries. The total contributions made for EPF
were $39,248 and $44,160 for the years ended December 31, 2008 and 2007,
respectively.





The
PRC





Under the
PRC Law, full-time employees of the Company’s PRC subsidiaries are entitled to
staff welfare benefits including medical care, welfare subsidies, unemployment
insurance and pension benefits through a PRC government-mandated multi-employer
defined contribution plan. The Company’s PRC subsidiaries are required to accrue
for these benefits based on certain percentages of the employees’ salaries. The
total contributions made for such employee benefits were $70,068 and $3,641 for
the years ended December 31, 2008 and 2007.





18  CONCENTRATIONS
OF RISK





The
Company is exposed to the following concentrations of risk:





(a)
Major Customers


For the
year ended December 31, 2008, the customers who accounts for 10% or
more of revenue of the Company are presented as follows:




For
      the year ended December 31, 2008Revenue
                                                            
                                                            Percentage
                                                              of
      revenue
                                                            
                                                            Accounts
                                                              receivableCustomer
      A
                                                            
                                                            $
                                                            458,388
                                                            
                                                            27%
                                                            
                                                            $
                                                            -Customer
      B
                                                            
                                                            
                                                            504,908
                                                            
                                                            29%
                                                            
                                                            
                                                            -Total:
                                                            
                                                            $
                                                            963,296
                                                            
                                                            56%
                                                            
                                                            $
                                                            -




During the
year ended December 31, 2007, approximately $1,181,036 or 68% of total
revenues were derived from 3 customers.





(b)
Major Vendors


For the
years ended December 31, 2008 and 2007, 1 vendor represented more than 10% of
the Company’s purchases with the amount of $488,363 or 45% and
$900,247 or 69%, respectively.





(c)
Credit Risk


Financial
instruments that potentially subject the Company to significant concentrations
of credit risk consist principally of cash and trade accounts receivable. The
Company performs ongoing credit evaluations of its customers’ financial
condition, but does not require collateral to support such
receivables.





F-26




-42-








(d)
Interest Rate Risk


As the
Company has no significant interest-bearing assets, the Company’s income and
operating cash flows are substantially independent of changes in market interest
rates.





The
Company’s interest-rate risk arises from long-term borrowings. Borrowings issued
at variable rates expose the Company to cash flow interest-rate risk. Borrowings
issued at fixed rates expose the Company to fair value interest-rate risk.
Company policy is to maintain approximately all of its borrowings in fixed rate
instruments. As of December 31, 2008, all of borrowings were at fixed
rates.





(e)
Exchange Rate Risk


The
reporting currency of the Company is US$, to date the majority of the revenues
and costs are denominated in RMB and MYR and a significant portion of the assets
and liabilities are denominated in RMB, MYR and SGD. As a result, the Company is
exposed to foreign exchange risk as its revenues and results of operations may
be affected by fluctuations in the exchange rate between US$, RMB, MYR and SGD.
If RMB, MYR and SGD depreciate against US$, the value of RMB, MYR and SGD
revenues and assets as expressed in US$ financial statements will decline. The
Company does not hold any derivative or other financial instruments that expose
to substantial market risk.





19.   COMMITMENTS
AND CONTINGENCIES





(a)
Operating Lease Commitment


The
subsidiaries operating in Malaysia and the PRC were committed under various
non-cancelable operating leases with a term ranging from one to four years with
fixed monthly rentals. The monthly aggregate lease payment for the year ended
December 31, 2008 was approximately $9,252. None of the leases included
contingent rentals.




As of
December 31, 2008, the committed annual operating lease payments are as
follows:


Years
      ending December 31,2009
                    
                    $
                    99,9142010
                    
                    
                    46,6012011
                    
                    
                    24,2192012
                    
                    
                    1,826Total
                    
                    $
                    172,560





(b)
Consulting services contracts commitment


As of
December 31, 2008, the Company had 1 consulting service contract expiring within
4 months with a cash payment of $2,000 per month, 1 consulting service contract
expiring within 4 months with a cash payment of averagely $4,250 per quarter, 1
consulting service contract expiring within 3 months with a stock based
compensation valued at $21,000, 2 consulting service contracts expired, each
with an option to purchase 50,000 shares of the Company’s common stock at an
exercise price of $0.08 per share within 12 months, and 2 consulting service
contracts expiring within 18 months with a commission based compensation
scheme.





20. COMPARATIVE
FIGURES





The
financial statements in the current period are presented to conform to those
presented in prior periods.





21.  SUBSEQUENT
EVENTS





On March
21, 2009, the Company accepted an offer each from two individuals, of callable,
on-demand convertible loans of $10,000 each, bearing no interest. The lenders
will have the option to convert any money advanced and/or interest in arrears
into shares of the Company’s common stock priced at $0.002 per share, if the
said loans are converted within 6 months from the effective date of the loans.
The Company recorded an intrinsic value of the beneficial conversion feature of
the loans at $8,000.





On April
1, 2009, the Board of Director approved the termination of the joint venture
agreement entered into with two Mongolians. The Company intends to send the
termination notice to the Mongolians before the end of
April 2009.





On April
6, 2009, the Company received the notices from the six Note Holders as described
in Note 14(b) to convert the entire principal in an aggregated amount of
$589,041 and accrued interests in an aggregated amount of $32,725 as of
April 6, 2009, to 163,622,600 shares of common stock of the Company at
$0.0038 per share. The directors of the Company have approved and proceeded the
conversion on April 7, 2009.





F-27




















-43-








ITEM
9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIALDISCLOSURE





On April
22, 2008, we terminated RBSM LLP at 5 West 37th Street, 9th Floor, New York, NY,
as our independent registered public accounting firm. Except as noted that there
was substantial doubt as to our ability to continue as a going concern as we had
suffered negative working capital, had experienced negative cash flows from
continuing operating activities and also due to uncertainty with respect to our
ability to meet short-term cash requirements, the reports of RBSM LLP’s
consolidated financial statements for the years ended December 31, 2007 and
2006 and for the period January 1, 2006 through December 31, 2007 did not
contain an adverse opinion or disclaimer of opinion, and such reports were not
qualified or modified as to uncertainty, audit scope, or accounting principle.
During the years ended December 31, 2007 and 2006 and for the period January 1,
2006 through December 31, 2007, and through April 22, 2008 we have not had any
disagreements with RBSM LLP on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which
disagreements, if not resolved to RBSM LLP’s satisfaction, would have caused it
to make reference to the subject matter of the disagreements in its reports on
our consolidated financial statements for such years or in connection with its
reports in any subsequent interim period through the date of dismissal. During
the years ended December 31, 2007 and 2006, and through April 22, 2008, there
were no reportable events, as defined in Item 304(a)(1)(v) of Regulation
S-K.





On April
23, 2008, we engaged ZYCPA Company Limited (formerly Zhong Yi (Hong Kong) C.P.A.
Company Limited) (“ZYCPA”), at 9/F Chinachem Hollywood Centre, 1-13 Hollywood
Road, Central, Hong Kong, an independent registered public accounting firm, as
our principal independent accountant with the approval of our board of
directors. We have not consulted with ZYCPA on any accounting issues prior to
engaging them as our new auditors. During the two most recent fiscal years
and through the date of engagement, we have not consulted with ZYCPA regarding
either: 1. The application of accounting principles to any specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on our financial statements, and neither a written report
was provided to us nor oral advice was provided that ZYCPA concluded was an
important factor considered by us in reaching a decision as to the accounting,
auditing or financial reporting issue; or 2. Any matter that was either subject
of disagreement or event, as defined in Item 304(a)(1)(iv)(A) of Regulation S-K
and the related instruction to Item 304 of Regulation S-K, or a reportable
event, as that term is explained in Item 304(a)(1)(iv)(A) of Regulation
S-K.





In
connection with the audit for fiscal year ended December 31, 2008 and in
connection with ZYCPA’s review of the interim periods ended March 31, 2008
through September 30, 2008, there have been no disagreements between the Company
and ZYCPA on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which, if not resolved to
the satisfaction of ZYCPA, would have caused ZYCPA to make reference thereto in
its report on the Company’s consolidated financial statements for the current
fiscal year.





ITEM
9A. CONTROLS AND PROCEDURES





Evaluation
of Disclosure Controls and Procedures


We
maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) that are designed to be effective in providing reasonable assurance that
information required to be disclosed in our reports under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the Securities and Exchange Commission (the “SEC”),
and that such information is accumulated and communicated to our management to
allow timely decisions regarding required disclosure.





In
designing and evaluating disclosure controls and procedures, management
recognizes that any controls and procedures, no matter how well designed and
operated, can provide only reasonable, not absolute assurance of achieving the
desired objectives. Also, the design of a control system must reflect the fact
that there are resource constraints and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, have been detected. These
inherent limitations include the realities that judgments in decision-making can
be faulty and that breakdowns can occur because of simple error or mistake. The
design of any system of controls is based, in part, upon certain assumptions
about the likelihood of future events and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future
conditions.





As of the
end of the period covered by this report, we carried out an evaluation, under
the supervision and with the participation of management, including our Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures. Based upon that
evaluation, management concluded that our disclosure controls and procedures are
effective as of December 31, 2008 to cause the information required to be
disclosed by us in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods prescribed
by SEC, and that such information is accumulated and communicated to management,
including our chief executive officer and principal financial officer, as
appropriate, to allow timely decisions regarding required
disclosure.





Evaluation
of and Report on Internal Control over Financial Reporting


Management
is responsible for establishing and maintaining adequate internal control over
financial reporting of the Company. Management, with the participation of our
principal executive officer and principal financial officer, has evaluated the
effectiveness of our internal control over financial reporting as of December
31, 2008 based on the criteria established in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on this evaluation, because of the Company’s limited resources
and limited number of employees, management concluded that, as of December 31,
2008, our internal control over financial reporting is not effective in
providing reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with U.S. generally accepted accounting principles.





To
mitigate the current limited resources and limited employees, we rely heavily on
direct management oversight of transactions, along with the use of legal and
accounting professionals. As we grow, we expect to increase our number of
employees, which will enable us to implement adequate segregation of duties
within the internal control framework.





This
Annual Report does not include an attestation report of the company's registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the company's registered
public accounting firm pursuant to temporary rules of the SEC that permit the
company to provide only management's report in this Annual Report.





Changes
in Internal Control over Financial Reporting


There were
no changes in internal controls over financial reporting that occurred during
the period covered by this report that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.





ITEM
9B.   OTHER INFORMATION





None.








-44-





PART
III





ITEM 10.   DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a)
OF THE EXCHANGE ACT.





Executive
Officers and Directors





Our directors and principal executive officers during 2008 and as at the date of
this report are as specified on the following table:


TermName
              
              Age
              Position
              (years)
              Period Served in
      OfficeKing
      K. Ng
              (1)
              58
              Director,
      Chief Executive Officer and President
              5
              From
      May 22, 2006 to present.Kok
      Keng Low
              (2)
              50
              Director
      and Chief Operating Officer
              5
              From
      September 28, 2006 to present.Jee
      Sam Choo
              (3)
              65
              Director
      and Chairman
              1
              From
      June 19, 2006 to present (appointed Chairman on January 25,
      2008Yu
      Hua Chen
              (4)
              41
              Director,
      Chief Officer – Greater China
              5
              From
      November 8, 2007 to presentMichael
      J. Oliver
              (5)
              60
              Director
      (Resigned)
              1
              From
      July 20, 2005 to March 7, 2008.Charlie
      Rodriguez
              (6)
              64
              Director,
      Secretary and Treasurer (Resigned)
              1
              From
      September 21, 2000 to March 7, 2008.Robert
      Clarke
              (7)
              64
              Director
      and Chairman (Resigned)
              1
              From
      October 22, 1998 to January 23, 2008.Thomas
      CL Wong
              (8)
              48
              Chief
      Financial Officer
              4.5
              From
      January 1, 2007 to present.Katherine
      YL Tung
              (9)
              54
              Secretary
      and Treasurer
              1
              From
      April 7, 2008 to
present.








(1)
            King K. Ng has been a member of
      the Board of Directors since June 1, 2006. He was appointed President
      & Chief Executive Officer on May 22, 2006. Mr. Ng founded Interpay
      International Group Ltd. (“IIG”) in 1995 and has been its Chief Executive
      Officer since. Prior to founding IIG, Mr. Ng was the President of Cards
      & Payment Services of MBf Group, a conglomerate based in Malaysia.
      Under the leadership of Mr. Ng and during his tenure with MBf Group, MBf
      became the largest issuer of MasterCard cards in South-east Asia and
      expanded into several countries in Asia, including China. Mr. Ng began to
      build MBf’s payments and loyalty-rewards cards businesses for MBf Group in
      1986 after leaving American Express as its Division Vice President of
      Business Development for the Travel Related Services Group in Asia Pacific
      & Australia Division based in Hong Kong. Mr. Ng was the Vive President
      & General Manager of American Express’ Travel Related Services Group
      for Malaysia and Brunei from 1978 to 1985. During his tenure in American
      Express Malaysia, Mr. Ng built and led it to become the largest issuer of
      credit/charge cards in Malaysia prior to his departure for his posting in
      Hong Kong. Between 1991 and 1995, Mr. Ng served as a Director of Maestro
      International and an Alternate Director of the MasterCard International’s
      Asia Pacific Board of Directors. He was an independent consultant of
      MasterCard Advisors between 2003 and 2005.Mr. Ng received his tertiary
      education in England and possesses a B.Sc. (Engineering) Degree from
      University of London, London and a M.Sc. (Administrative Sciences) Degree
      from the City University Graduate Business School,
      London. He is fluent in English and Chinese, including a few Chinese
      dialects.(2)
            Kok Keng Lowhas been a member
      of the Board of Directors since September 28, 2006. Mr. Low was appointed
      as the Chief Technology Officer and Head of Processing Business on the
      same day. He was promoted to the position of Chief Operating Officer in
      August 2007. Mr. Low began his career in 1984 with British Steel PLC in
      Scotland. He then worked as General Manager of MBf Group Technology
      Division of Malaysia where he was responsible for supporting ICT needs of
      the Group’s finance, insurance and card businesses in Asia Pacific. He
      then joined Magnate Computers Sdn. Bhd., a Malaysian based IT company
      providing payment solutions to operators of card business. From 1999 to
      2002, Mr. Low served as Asia Pacific Regional Director of Business
      Development for a New Zealand based company providing card and payment
      solutions. In 2002, he founded Cardtrend Systems Sdn. Bhd., which
      developed its own payments, loyalty-rewards and other related systems.
      Cardtrend is a MSC status company as designated by the Government of
      Malaysia under its Multimedia Super Corridor Program. In September 2006,
      Cardtrend Systems successfully merged with Asia Payment Systems, Inc. on
      October 31, 2007. Mr. Low possesses a B.Sc. (East London University, UK)
      and a M.Sc. (Lancaster & Strathclyde University, UK) in Operational
      Research. He speaks fluent English and has a working knowledge of
      Chinese (Mandarin and other Chinese dialects).(3)
            Jee Sam Choohas been a member
      of the Board of Directors since June 28, 2006. Mr. Choo is a seasoned
      Malaysian businessman, who speaks fluent Mandarin, and is currently a
      director of several private companies in Malaysia. He was a director and
      the Chairman of the audit committee of a publicly listed company, Seni
      Jaya Corporation Bhd., which is a leading outdoor advertising media
      specialist in Malaysia. He also has his own investment holding company, JS
      Choo Holdings Pte Ltd, concentrating on property investments. Mr. Choo’s
      career includes senior management appointments with several international
      companies including Diner’s Club and Bata Shoes. He also served in the
      1990’s as the Senior Vice President/General Manager of MBf Card Services,
      the largest MasterCard issuer in South East Asia at the time. Mr. Choo
      holds a degree in Bachelor of Arts (Honours) from the University of Malaya
      and a Master in Business Administration (Distinction) from The Asian
      Institute of Management, the Philippines. He has also been active in the
      Rotary International for the past 22 years and has made a strong
      contribution to the development of social and charitable services in
      Malaysia, including fund raising for four dialysis centers to serve low
      income patients. Mr. Choo was appointed as the Chairman of the Board on
      February 1, 2008.(4)
            Yu Hua Chenhas been a member
      of the Board of Directors since November 8, 2007, replacing Ms. Rosaline
      Tam. Mr. Chen was appointed as the Chief Officer for our Greater China
      region on November 1, 2007. Mr. Chen was a senior executive of China
      Southern Post & Telecommunication prior to his resignation in 2002 to
      form a business process out-sourcing services company in Guangzhou which
      provides services to financial institutions and multinational companies in
      China. Mr. Chen holds a degree in Business Management from the University
      of Jinam, Guangzhou, China.





-45-








(5)
            Michael J. Oliverhad
      been a member of the Board of Directors since July 20, 2005. Mr. Oliver
      resigned as director of the Company on March 7, 2008.(6)
            Charlie Rodriguezhad been a member
      of the Board of Directors since September 21, 2000. He was appointed
      Secretary/Treasurer on December 17, 2004. From 1995 to current, he is the
      President of Management Services of Arizona, a personally owned business
      consulting company which provided consultancy services to the Company
      until Mr. Rodriguez’s resignation as director of the Company on March 7,
      2008.(7)
            Robert G. Clarke had
      been a member of the Board of Directors since its inception on October 2,
      1998 and until December 17, 2004 he was also our Chairman. He was
      re-appointed Chairman on October 5, 2005. On October 15, 2005, he became
      Chief Executive Officer until May 22, 2006. Mr. Clarke resigned as
      director and chairman of the Board on January 23, 2008.(8)
            Thomas CL Wonghas been the Chief
      Financial Officer of the Company since January 1, 2007, replacing Mr.
      Bernard Chan who resigned on December 31, 2006. Mr Wong joined the Company
      from Interpay International Group Ltd. on July 1, 2006 as Head of
      Accounting and Finance. Mr. Wong started his career in accounting and
      finance with American Express Malaysia office in 1980. He was Manager –
      Finance with MBf Card Services in Malaysia looking after accounting and
      financial control in MBf’s card businesses in the Asia Pacific region. He
      left MBf in 1996 and became the Senior Manager- Finance of iSynergy, the
      joint venture card company of Interpay International Group Ltd. which is a
      licensee of MasterCard in Malaysia. In order to gain further experience in
      the financial matters relating to credit card business in a commercial
      bank, Mr.. Wong left iSynergy in January 2002 and joined AmBank,
      a commercial bank in Malaysia, which issues MasterCard and Visa
      credit cards. Mr. Wong was appointed as the chief financial officer of
      Interpay International Group Ltd. in 2005.(9)
            Katherine YL Tungwas appointed as
      Secretary and Treasurer, replacing Mr. Rodriguez, on April 7, 2008. Ms.
      Tung is an US citizen and possesses business experiences in the Asian
      region as well as in the US. Ms. Tung worked for American Express Card
      Division in Singapore between 1977 to 1982 holding positions in
      secretarial and administrative functions with the last being
      Supervisor – Customer Services prior to her departure to set up trading
      companies of her own in Singapore and Malaysia. She worked in various
      companies (including BankCard Solutions, Inc. where she was the
      Administrative Assistant & Office Manager from January 2004 to April
      2007) in the US where she has been since 1986. She is the principal
      officer of Katelin Enterprises, Inc., a California based company which
      provides administrative and consultancy services to the Company for a term
      of one year from April 7, 2008.


Audit
Committee and Charter


Our audit
committee consists of our entire board of directors. Our audit committee,
established in 2004, during the year 2008 and as at the date of this Annul
Report, comprises all of our directors – Robert Clarke (resigned on January 25,
2008), Charlie Rodriguez (resigned on March 7, 2008), Michael Oliver (resigned
on March 7, 2008), Jee Sam Choo (Chairman), King K. Ng (Chief Executive
Officer), Kok Keng Low (Chief Operating Officer) and Yu Hua Chen (Chief Officer
– Greater China). Our audit committee is responsible for:





*
            Selection
      and oversight of our independent accountant;*
            Establishing
      procedures for the receipt, retention and treatment of complaints
      regarding accounting, internal controls and auditing
    matters;*
            Establishing
      procedures for the confidential, anonymous submission by our employees of
      concerns regarding accounting and auditing matters;*
            engaging
      outside advisors; and*
            Sourcing
      for funds for fee payments to the outside auditor and any outside advisors
      engaged by the Company.





A copy of
our audit committee charter was filed as an exhibit to our Annual Report on Form
10-KSB for the year ended December 31, 2004.





Audit
Committee Financial Expert


We do not
have a financial expert in our Audit Committee. We believe the cost related to
retaining a financial expert at this time is prohibitive. On January 1, 2008 and
April 21, 2009, we retained a consultant and a financial consulting services
company, respectively, to provide the Company with advices on accounting and
financial matters. As at the time of this Annual Report, the service of the
consultant has been terminated while the service of the consulting services
company will be expiring on April 20, 2008.





Compliance
with Section 16(a) of the Exchange Act


The
following individual failed to file on a timely basis, as disclosed in the above
Forms, reports required by Section 16(a) during the most recent fiscal
year:


Number
      ofTransactions
              Known
      FailuresNumber
      of
              Not
      Reported on
              To
      File AName
              LateReports
              A Timely
      Basis
              FormJee
      Sam Choo (1)
              1
              1
              -


(1) The
transaction was for shares of common stock issued for the conversion of
loans.





Code
of Ethics


We have
adopted a corporate code of ethics applicable to our principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. A copy of the code of
ethics was filed as an exhibit to our Annual Report on Form 10-KSB for the year
ended December 31, 2004.





-46-





ITEM
11.   EXECUTIVE COMPENSATION





Compensation
of Officers.


Option
award compensation is the fair value for stock options vested during the fiscal
years ended December 31, 2006, 2007 and 2008, a notional amount estimated at the
date of the grant using the Black-Scholes option-pricing model. The actual value
received by the executives may differ materially and adversely from that
estimated. A summary of cash and other compensation paid in accordance with
management consulting contracts for our Principal Executive Officers and other
executives for the most recent two years is as follows:


Non-equity
              NonqualifiedName
      and
              
              
              
              
              
              Incentive
              Deferred
              OtherPrincipal
              
              
              
              Stock
              Option
              Plan
              compensation
              CompensationPosition
              Year
              Salary ($)
              Bonus ($)
              awards
      ($)
              awards
      ($)
              compensation
      ($)
              earnings
      ($)
              ($)
              Total ($)(a)
              (b)
              (c)
              (d)
              (e)
              (f)
              (g)
              (h)
              (i)
              (j)King
      K. Ng
              2006
              96,538
              -
              -
              49,575
              -
              -
              -
              146,113President,
      CEO, and
              2007
              153,796
              -
              -
              126,125
              -
              -
              -
              279,921Director
      (1)(11)
              2008
              147,582
              -
              -
              104,439
              -
              -
              -
              252,021Kok
      Keng Low
              2006
              28,961
              -
              -
              13,013
              -
              -
              -
              41,974Executive
      Vice President, COO, and
              2007
              131,762
              -
              -
              55,272
              -
              -
              -
              187,034Director
      (2)(11)
              2008
              126,557
              -
              -
              39,410
              -
              -
              -
              165,967Yu
      Hua Chen
              2006
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
              N/AChief
      Officer – Greater China , and
              2007
              16,661
              -
              16,000
              -
              -
              -
              -
              32,661Director
      (3)(11)
              2008
              100,175
              -
              96,000
              25,650
              -
              -
              -
              221,825Thomas
      Chee Leong Wong
              2006
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
              N/ACFO
      (4)
              2007
              76,172
              -
              -
              28,701
              -
              -
              -
              104,8732008
              72,231
              -
              -
              29,770
              -
              -
              -
              102,001Katherine
      YL Tung
              2006
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
              N/ASecretary
      & Treasurer (5)
              2007
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A2008
              17,578
              -
              -
              1,100
              -
              -
              -
              18,678Charlie
      Rodriguez
              2006
              72,000
              -
              -
              121,763
              -
              -
              -
              193,763Ex-
      Secretary & Treasurer, and
              2007
              72,000
              -
              -
              20,994
              -
              -
              -
              92,994Ex-Director
      (6)(11)
              2008
              12,000
              -
              -
              -
              -
              -
              -
              12,000Robert
      Clark
              2006
              -
              -
              -
              187,688
              -
              -
              -
              187,688Ex-CEO
      and Ex-Director
              2007
              -
              -
              -
              20,994
              -
              -
              -
              20,994&
      Ex-Chairman (7)(11)
              2008
              -
              -
              -
              -
              -
              -
              -
              -Benny
      Lee Shing Bun
              2006
              39,000
              -
              -
              268,575
              -
              -
              -
              307,575Ex-President
      and
              2007
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
              N/AEx-Director
      (8)
              2008
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
              N/AEdith
      Ho
              2006
              51,667
              -
              -
              241,800
              -
              -
              -
              293,467Ex-
      CFO (9)
              2007
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A2008
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
              N/ABernard
      Kwong-Chung Chan
              2006
              -
              -
              -
              13,500
              -
              -
              -
              13,500Ex-CFO
      (10)
              2007
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A2008
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A














-47-








(1)
            King
      K. Ng became President, CEO and a Director on May 22,
  2006.(2)
            Kok
      Keng Low became a CTO and Director on September 28, 2006 and COO on August
      1, 2007.(3)
            Yu
      Hua Chen became the Chief Officer – Greater China on November 1, 2007 and
      Director on November 8, 2007.(4)
            Thomas
      Chee Leong Wong became the CFO on January 1, 2007.(5)
            Katherine
      YL Tung became Secretary and Treasurer from April 7, 2008. She was not
      associated with the company prior to that date.(6)
            Charlie
      Rodriguez was Director and Secretary & Treasurer during 2006 and 2007,
      and he resigned from these positions on March 7, 2008.(7)
            Robert
      Clarke was the Chairman and Director during 2006 and 2007, and was the CEO
      between Jan. 15, 2006 to May 22, 2006. Mr. Clarke resigned as Director and
      Chairman on January 23, 2008.(8)
            Benny
      Lee resigned as President effective May 2006, and as a Director on
      September 26, 2006.(9)
            Edith
      Ho resigned as CFO on June 15, 2006.(10)
            Bernard
      Kwong-Chung Chan was the CFO from July 1, 2006 to December 31,
      2006(11)
            Inclusive
      of options awarded as Director's Compensation. (See “Directors’
      Compensation” below)





Narrative Disclosure To
Summary Compensation Table





(1)   King
K. Ng, President and Chief Executive Officer and a Director, has a 5-year
employment contract with the Company commencing from May 22, 2006. For the
fiscal years ended December 31, 2008 and 2007, Mr. Ng received a total salary of
HK$1,200,000 (approximately $147,582) and HK$1,200,000 (approximately $153,796),
respectively, from the Company. For the fiscal years ended December 31, 2008 and
2007, the Company expensed $104,439 and $126,125, respectively, of the total
fair values of the options granted to Mr. Ng in 2006, 2007 and 2008 , amounting
to $442,210, which are vesting over 1 year to 5 years from the date of grant of
the various options. Unvested options will be cancelled should early termination
of Mr. Ng’s employment occur. Mr. Ng did not receive any other compensation in
2008 and 2007.





(2)   Kok
Keng Low, Executive Vice President and Chief Operating Officer and a Director,
has a 5-year employment contract with the Company commencing from September 28,
2006. For the fiscal years ended December 31, 2008 and 2007, Mr. Low received a
total salary of HK$950,000 (approximately $126,557) and HK$950,000
(approximately $131,762), respectively, from the Company and a subsidiary of the
Company. For the fiscal years ended December 31, 2008 and 2007, the Company
expensed $39,410 and $55,272, respectively, of the total fair values of the
options granted to Mr. Low in 2006, 2007 and 2008, amounting to $180,921, which
are vesting over 1 to 5 years from the date of grant of the various options.
Unvested options will be cancelled should early termination of Mr. Low’s
employment occur. Mr. Low did not receive any other compensation in 2008 and
2007.





(3)   Yu
Hua Chen was appointed as the Chief Officer – Greater China on November 1, 2007.
Mr. Chen has a five-year employment contract with the Company commencing from
November 1, 2007. For the fiscal years ended December 31, 2008 and 2007, Mr.
Chen received a total salary of HK$780,000 (approximately $100,175) and
HK$130,000 (approximately $16,661), respectively, from the Company and a
subsidiary of the Company. For the fiscal years ended December 31, 2008 and
2007, the Company expensed $96,000 and $16,000, respectively, of the fair value
of the 6,000,000 restricted shares, amounting to $480,000, granted to Mr. Chen
as the sign-on fee for his 5-year employment contract with the Company. (The
sign-on fee amount will be amortized over 5 years commencing from November 1,
2007). For the fiscal years ended December 31, 2008 and2007, the Company
expensed $25,650 and $0, respectively, of the total fair value of the options
granted to Mr. Chen in 2007 and 2008, amounting to $148,800,. Unvested options
will be cancelled should early termination of Mr. Chen’s employment occur. Mr.
Chen did not receive any other compensation in 2008 and 2007.





(4)   Thomas
CL Wong was appointed Chief Operating Officer on January 1, 2007, replacing Mr.
Bernard Chan. Mr. Wong has a 5-year employment contract with the Company
commencing from August 1, 2006. Mr. Wong was not an Officer of the Company in
2006. For the fiscal years ended December 31, 2008 and 2007, Mr. Wong received a
total salary of HK$576,000 (approximately $72,231) and HK$576,000 (approximately
$76,172), respectively, from the Company and a subsidiary of the Company. For
the fiscal years ended December 31, 2008 and 2007, the Company expensed $29,770
and $28,701, respectively, of the total fair values of the options granted to
Mr. Wong in 2006, 2007 and 2008, amounting to $84,070, which are vesting over 3
to 5 years from the date of grant of the various options. Unvested options will
be cancelled should early termination of Mr. Wong’s employment occur. Mr. Wong
did not receive any other compensation in 2008 and 2007.





(5)   Katherine
YL Tung was not associated with the Company until her appointment as Secretary
and Treasurer on April 7, 2008. She provides her service through a company which
she controls and which has entered into an administrative services agreement
with the Company on April 7, 2008 for a fee of $2,000 per month for a period of
1 year. Ms. Tung did not receive any salary and was not granted any option in
2007. For the fiscal year ended December 2008, the Company expensed $17,578 as
management service fees payable to Ms. Tung’s company, and expensed $1,100 of
the total fair value of the options granted to Ms. Tung’s company in 2008,
amounting to $2,200. Unvested options will be cancelled should early termination
of the service agreement occur. Ms. Tung did not receive any other compensation
in 2008 and 2007.





(6)   Charlie
Rodriguez was not paid any salary as Secretary and Treasurer of the Company but
a company related to him was paid $12,000 in 2008 and $72,000 in 2007 from the
Company for providing the secretarial and treasury services through Mr.
Rodriguez. Mr. Rodriguez did not have an employment contract. Mr. Rodriguez
served as a Director during 2007 and from January 1, 2008 to March 7, 2008, the
date of his resignation. For the fiscal years ended December 31, 2008 and 2007,
the Company expensed $0 and $20,994, respectively, of the total fair value of
the options granted to Mr. Rodriguez in 2005 and 2006, and 2007 amounting to
nil, Mr. Rodriguez did not have any unvested options at the time of his
resignation on March 7, 2008, otherwise, any unvested option would have been
cancelled upon his resignation. Mr. Rodriguez did not receive any other
compensation in 2008 and 2007.





(7)   Robert
Clarke was not paid any salary when he was Chief Executive Officer between
August 2005 to May 2006. He was also not paid any salary as the non-executive
Chairman during 2006 and 2007. The Company expensed $187,688 and $20,994 for the
options granted to him as a director of the Company for the fiscal years ended
December 31, 2006 and December 31, 2007, respectively, which were vested over a
year for each option granted., the period of serving as director for the year.
Mr. Clarke did not have any unvested options at the time of his resignation on
January 23, 2008, otherwise, any unvested option would have been canceled upon
his resignation. Mr. Clarke did not receive any other compensation in 2006 and
2007.








-48-





(8)   Benny
Lee, who severed as President prior to his resignation on July 31, 2006, did not
have an employment contract and was paid a salary of $39,000 for his services
from January 1, 2006 to July 31, 2006. For the fiscal year ended December 31,
2006, the Company expensed $268,575 of the total fair value of all the options
and warrants granted to Mr. Lee in 2005 and 2006, amounting to $783,100. Mr. Lee
did not receive any other compensation in 2006. Mr. Lee was serving as a
Director until his resignation on September 28, 2006 and forfeited all rights to
his options and warrants 30 days thereafter.





(9)   Edith
Ho served as the Chief Financial Officer until June 15, 2006. Mrs. Ho was paid a
salary of $51,667 from January 1, 2006 to June 15, 2006 before she resigned. She
did not have an employment contract with the Company. For the fiscal year ended
December 31, 2006, the Company expensed $241,800 of the total fair values of the
options and warrants granted to Mrs. Ho in 2005 and 2006, amounting to $707,100.
Mrs. Ho did not receive any other compensation in 2006 and she resigned as the
CFO on June 15, 2006 and her stock options and warrants were forfeited 30 days
after her resignation.





(10)  Bernard
Kwong-Chung Chan served as Executive Vice President - Chief Financial Officer
between July1, 2006 to December 31, 2006. He did not receive any cash
compensation but was granted an unregistered option to purchase 750,000 shares
of the Company at $0.23 per share. For the fiscal year ended December 31, 2006,
the Company expensed $13,500 of the total fair value of the option amounting to
$81,000. Mr. Chan did not receive any other compensation and he resigned as CFO
on December 31, 2006 and forfeited all rights to his options.





(11)  During
the two most recent fiscal years, none of the Officers were granted any stock
options other than those applicable to the specific employment contract and as
director’s compensation and for the settlement of salaries owed to
them.




Executive
Compensation Agreements





Principal Executive
  OfficerOn
      May 22, 2006, the Company entered into an employment contract with King K.
      Ng as the Principal Executive Officer on the following
    terms:*
                  Mr.
      Ng will serve as the Company’s President and Chief Executive Officer for a
      period of five years effective immediately, and renewable for a further
      term of five years subject to a notice of negotiation for renewal terms to
      be given by either party 180 days prior to the expiration of the initial
      term.*
                  Mr.
      Ng to be appointed as a director of the Company.*
                  Mr.
      Ng will receive an initial base salary of HK$100,000 per month or its
      equivalent in US Dollars.*
                  Mr.
      Ng shall be entitled to an annual profit share payable by us in the amount
      of two percent (2%) of our annual earnings before interest, taxes,
      depreciation and amortization (“EBITDA”) and before stock based
      compensation.*
                  Mr.
      Ng will be granted an option to purchase an aggregate of 2,500,000 shares
      of our common stock at an exercise price of $0.25 per share on the
      following vesting schedule: 100,000 shares at the end of every quarter
      during the five year term of his employment contract, with an additional
      500,000 shares at the end of the fifth year.*
                  Mr.
      Ng will receive, upon the termination of his employment, a total payment
      of HKD 1,200,000 or its equivalent in US Dollars in two (2) equal
      installments, one upon the termination of his employment and the other at
      the end of one (1) year after the termination of his employment, for his
      agreement not to compete with the Company for a period of one (1) year
      after the termination of his employment.Chief
      OperatingOfficerOn
      September 28, 2006, the Company entered into a five-year employment
      contract with Kok Keng Low as the Executive Vice President with the
      following terms:*
                  Mr.
      Low will serve as our Chief Operating Officer (Changed from Chief
      Technology Officer on August 1, 2007) and for a period of five (5) years
      effective immediately and renewable for a further term of five years
      subject to a notice of negotiation for renewal terms to be given by either
      party 180 days prior to the expiration of the initial
  term.*
                  Mr.
      Low to be appointed as a Director of the Company.*
                  Mr.
      Low will be granted an option to purchase an aggregate of 1,850,000 shares
      of our common stock at an exercise price of US$ 0.13 per share on the
      following vesting schedule: 75,000 shares every quarter during the
      five-year term of his employment contract with an additional 350,000
      shares at the end of the fifth year.*
                  Mr.
      Low will receive an initial base salary of HK$75,000 per month or its
      equivalent in US Dollars.*
                  Mr.
      Low will receive a profit sharing incentive payment of one and a half
      percent (1.5%) of the Company's annual earnings before interest, tax,
      depreciation and amortization (EBITDA) and stock based
      compensation.*
                  Mr.
      Low will receive, upon the termination of his employment, a total payment
      of HK$ 900,000 payable in two (2) equal installments, one upon the
      termination of his employment and the other at the end of one year after
      the termination of his employment, in return for his agreement not to
      compete with the Company for a period of one year after the termination of
      his employment.Chief Financial OfficerOn
      July 1, 2006, the Company’s subsidiary, Asia Payment Systems (HK) Ltd,
      entered into an employment contract with Thomas Chee Leong Wong to serve
      as the Senior Vice President – Accounting & Finance for a period of
      three years. On January 1, 2007, the employment contract was amended for
      Mr. Wong to serve as Executive Vice President - Chief Financial Officer of
      the Company with the following terms:*
                  The
      period of service has been extended to five years and Mr. Wong will serve
      as the Chief Financial Officer of the Company from January 1, 2007 to June
      30, 2011.*
                  In
      addition to the 450,000 shares of the Company’s common stock that Mr. Wong
      is entitled to purchase under an unregistered option at an exercise price
      of $0.20 per share which the Company had granted to Mr. Wong on July 1,
      2006, such shares vesting at the rate of 37,500 shares at the end of every
      three months from July 1, 2006, Mr. Wong will receive another option to
      purchase 750,000 shares of the Company’s common stock at an exercise price
      of $0.10 per share, vesting 62,500 shares at the end of every three months
      from January 1, 2007.*
                  Mr.
      Wong’s initial base salary shall be HK$48,000 per month effective from
      January 1, 2007.


-49-








Chief
      Officer–GreaterChinaOn
      November 1, 2007, the Company entered into an employment contract with Yu
      Hua Chen to serve as the Chief Officer – Greater China with the following
      terms:*
                Mr.
      Chen will serve as our Chief Officer-Greater China for a period of five
      (5) years effective immediately subject to a notice of negotiation for
      renewal terms to be given by either party 180 days prior to the expiration
      of the initial term.*
                Mr.
      Chen to be appointed as a Director of the Company*
                Mr.
      Chen will be granted an option to purchase an aggregate of 1,850,000
      shares of the Company’s common stock at an exercise price of US$ 0.08 per
      share on the following vesting schedule: 75,000 shares at the end of every
      quarter during the 5-year term of his employment contract with an
      additional 350,000 shares at the end of the fifth year.*
                Mr.
      Chen will be granted 6,000,000 restricted shares of the Company’s common
      stock as sign-on fee on the commencement of his employment with the
      Company.*
                Mr.
      Chen will receive an initial base salary of HK$ 65,000 per month or its
      equivalent in US Dollars.*
                Mr.
      Chen shall be entitled to participate in any performance incentive plan
      that the Company may implement from time to time.Other Executive OfficersDuring
      2007 and 2008, other than those disclosed above, no other employment
      contracts have been executed by the Company for any other Executive
      Officer. Ms. Katherine YL Tung, Secretary & Treasurer, does not have
      an employment contract but a company related to her has entered into an
      administrative contract with the Company on April 7, 2008. Ms. Tung was
      awarded an option to purchase 50,000 shares of the Company’s common stock
      vesting at the end of every three months from April 7,
    2008.


Outstanding
Equity Awards at Fiscal Year End for Named Executives





Market
                                      
                                      Market
      orNumber
                                      Value
      of
                                      Number
      of
                                      Payout
      ValueEquity
      Incentive Plan Awards
                                      Of
      Shares
                                      Shares
      or
                                      Unearned
                                      of
      UnearnedNumber
      of
                                      Number
      of
                                      Number
      of
                                      
                                      
                                      Or
      Units
                                      Units
      of
                                      Shares,
      Units
                                      Shares,
      UnitsSecurities
                                      Securities
                                      Securities
                                      
                                      
                                      Of
      Stock
                                      Stock
                                      or
      Other
                                      or
      OtherUnderlying
                                      Underlying
                                      Unexercised
                                      Option
                                      Option
                                      That
                                      That
                                      Rights
      That
                                      Rights
      ThatUnexercised
                                      Unexercised
                                      Unearned
                                      Exercise
                                      Expiration
                                      Have
      Not
                                      Have
      Not
                                      Have
      Not
                                      Have
      NotName
                                      Options
                                      Options
                                      Options
                                      Price
                                      Date
                                      Vested
                                      Vested
                                      Vested
                                      Vested(a)
                                      (b)
                                      (c)
                                      (d)
                                      (e)
                                      (f)
                                      (g)
                                      (h)
                                      (i)
                                      (j)Exercisable
                                      UnexercisableKing
      K. Ng
                                      
                                      
                                      
                                      
                                      Maximum
      onePresident,
      CEO
                                      920,000
                                      -
                                      1,580,000
                                      0.02
                                      year
      from
                                      -
                                      -
                                      -
                                      -and
      Director (1)
                                      450,000
                                      -
                                      150,000
                                      0.02
                                      DisassociationKok
      Keng Low
                                      
                                      
                                      
                                      
                                      Maximum
      oneEVP,
      COO
                                      620,000
                                      -
                                      1,230,000
                                      0.02
                                      year
      from
                                      -
                                      -
                                      -
                                      -and
      Director (1)
                                      400,000
                                      
                                      150,000
                                      0.02
                                      DisassociationYu
      Hua Chen
                                      
                                      
                                      
                                      
                                      Maximum
      oneChief
      Officer – Greater
                                      300,000
                                      -
                                      1,550,000
                                      0.02
                                      year
      from
                                      -
                                      -
                                      -
                                      -China,
      and Director (2)
                                      150,000
                                      -
                                      150,000
                                      0.02
                                      DisassociationThomas
      CL Wong
                                      560,000
                                      -
                                      640,000
                                      0.02
                                      Maximum
      one
                                      -
                                      -
                                      -
                                      -CFO
                                      
                                      
                                      
                                      
                                      year
      fromDisassociationKatherine
      YL Tung
                                      50,000
                                      -
                                      50,000
                                      0.02
                                      Maximum
      one
                                      -
                                      -
                                      -
                                      -Secretary
      and Treasurer
                                      
                                      
                                      
                                      
                                      year
      fromDisassociationCharlie
      Rodriguez (3)
                                      250,000
                                      -
                                      -
                                      0.10
                                      March
      6, 2009Ex-Secretary
      & Treasurerand
      Ex-DirectorRobert
      Clark (3)
                                      250,000
                                      -
                                      -
                                      0.10
                                      January
      22, 2009Ex-CEO
      and Ex-Director&
      Ex-Chairman





-50-










(1)
            Options
      granted in 2006 and 2008 for serving as a director of the
      Company.


(2)
            Options
      granted in 2008 for serving as a director of the
  Company


(3)
            Options
      granted in 2006 for serving as a director of the
  Company..





Retirement,
Resignation or Termination Plans


Other than
as provided for in the employment contracts for liquidating damages due to early
termination of employment contracts without cause (for all employment contracts)
and for one year restraining period for non-competitive activities (for Mr. King
K Ng, our CEO, and Mr. Kok Keng Low, our COO and Mr. Yu Hua Chen, our Chief
officer – Greater China), we sponsor no plan, whether written or verbal, that
would provide compensation or benefits of any type to an executive upon
retirement, or any plan that would provide payment for retirement, resignation,
or termination as a result of a change in control of our Company or as a result
of a change in the responsibilities of an executive following a change in
control of our Company.





Directors’
Compensation


We
compensate each director by granting them stock options. The exercise price is
equal to the closing price of our common stock on the date of the grant with the
options vesting over a one year period in equal quarterly amounts. On September
28, 2006, in consideration of their service as directors of the Company for
the period of one year from such date, we awarded the directors options under
the Unregistered Plan to purchase a total of 1,650,000 restricted shares of our
common stock at an exercise price of $0.13 per shares, vesting a quarter of the
number of shares at the end of every three months. On February 26, 2007, the
directors voluntarily cancelled all these unregistered options and we granted
them options under the 2007 Plan to purchase the same amount of shares as the
cancelled options at an exercise price of $0.10, vesting a quarter of the number
of shares on March 1, 2007, May 1, 2007, July 1, 2007 and September 1, 2007. On
August 5, 2008, we granted the 4 existing directors an option each under the
Unregistered Plan to purchase 300,000 restricted shares of our common stock at
an exercise price of $0.02 per share, vesting 75,000 shares on September 30,
2008 and 75,000 shares at the end of every three months thereafter. On September
5, 2008, 3 of the 4 existing directors voluntarily cancelled all their fully
vested options granted to them under the 2007 Plan totaling 750,000 shares and
the Company granted to each of them option under the Unregister Plan to purchase
the same amount of restricted shares at an exercise price of $0.02 per share,
vesting fully at the date of grant.





Indemnification


Pursuant
to the articles of incorporation and bylaws of the corporation, we may indemnify
an officer or director who is made a party to any proceeding, including a law
suit, because of his position, if he acted in good faith and in a manner he
reasonably believed to be in its best interest. In certain cases, we may advance
expenses incurred in defending any such proceeding. To the extent that the
officer or director is successful on the merits in any such proceeding as to
which such person is to be indemnified, we must indemnify him against all
expenses incurred, including attorney’s fees. With respect to a derivative
action, indemnity may be made only for expenses actually and reasonably incurred
in defending the proceeding, and if the officer or director is judged liable,
only by a court order. The indemnification is intended to be to the fullest
extent permitted by the laws of the State of Nevada.





Regarding
indemnification for liabilities arising under the Securities Act of 1933 which
may be permitted for directors or officers pursuant to the foregoing provisions,
we are informed that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy, as expressed in the Act and
is therefore unenforceable.





ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.





The
following table sets forth certain information regarding the beneficial
ownership of our common stock as of March 31, 2008 by each person or entity
known by us to be the beneficial owner of more than 5% of the outstanding shares
of common and/or preferred stock.





Where the
Number of Shares Beneficially Owned includes shares which presently exercisable
options may be purchased upon the exercise of outstanding stock options which
are or within sixty days will become exercisable (“presently exercisable
options”) the percentage of class reported in this column has been calculated
assuming the exercise of such. The percentages below are calculated based on the
sum of 155,818,136 shares of our common stock issued and outstanding as of March
31, 2008 plus presently exercisable options directly owned by the officers and
affiliates totaling 4,545,000 plus 7,040,611 presently exercisable warrants
directly owned by the officers and affiliates, which is equal to
167,403,747.





Name and address
      of
                Amount and nature
      of
                PercentBeneficial
      Owner
                Beneficial
      Ownership
                of
      ClassOfficers
      and Directors:(1)Ng
      King Kau (2)
                7,372,736
                4.70
                %Low
      Kok Keng (3)
                16,040,927
                9.58
                %Katherine
      YL ung  (4)
                75,000
                0.04
                %Choo
      Jee Sam (5)
                14,506,222
                8.67
                %Wong
      Chee Leong (6)
                705,000
                0.42
                %Chen
      Yu Hua (7)
                4,600,000
                2.75
                %All
      Officers and Directors as a Group (7 Persons)
                43,299,885
                25.87
                %











-51-








(1)
            The
      address for each of the Company's directors and executive officers is the
      Company's principal offices, Cardtrend International, Inc. 800 5th Avenue,
      Suite 4100, Seattle, WA 98104.(2)
            Comprises
      5,807,736 directly owned shares of common stock and 1,565,000 shares
      of common stock if exercised under presently exercisable
      options.(3)
            Comprises
      14,865,927 shares of common stock (10,865,927 directly owned shares and
      4,000,000 shares owned by spouse) and 1,175,000 shares of common
      stock if exercised under presently exercisable options.(4)
            75,000
      shares of common stock if exercised under presently exercisable
      option.(5)
            Comprises
      7,040,611 directly owned shares of common stock, 7,040,611 shares of
      common stock if exercised under presently exercisable warrants, and
      425,000 shares of common stock if exercised under presently exercisable
      options.(6)
            705,000
      shares of common stock if exercised under presently exercisable
      options.(7)
            Comprises
      4,000,000 directly owned shares of common stock and 600,000 shares of
      common stock if exercised under presently exercisable
    options.





ITEM 13.CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS





As of
December 31, 2008, our subsidiary, Cardtrend Systems Sdn. Bhd., owed RM291,322
(approximately $83,540) and the Company owed $74,187 to Mr. Kok Keng Low,
one of our directors and Chief Operating officer, arising from balances of
advances and loans extended by Mr. Low to the subsidiary and the Company in
2006, 2007 and 2008.





As of
December 31, 2008, our subsidiary, Interpay Asia Sdn. Bhd., owed RM143,442
(approximately $41,134) and the Company owed $102,629 to Mr. King K. Ng, one of
our directors and Chief Executive Officer, arising from balances of advances and
loans extended by Mr. Ng in 2006, 2007 and 2008.





As of
December 31, 2008, our subsidiary, Interpay Asia Sdn. Bhd. owed RM4,000
(approximately $1,147) and the Company owed $62,828 to Mr. Jee Sam choo, one of
our directors and Chairman of the Board, arising from the balances of loans
extended by Mr. Choo in 2007 and 2008.





As of
December 31, 2008, our subsidiary, Asia Payment Systems (China) Co. Ltd., owed
RMB8,775 (approximately $1,280) and the Company owed $75,935 to Mr. Yu Hua Chen,
one of our directors and Chief Officer – China, arising from balances of
advances extended by Mr. Chen in 2008.





As of
December 31, 2008, the Company owed $10,530 to Ms. Katherine YL Tung, our
Secretary and Treasurer, arising from balances of loans extended by Ms. Tung in
2008.





For the
fiscal year ended December 31, 2008 and 2007, the Company paid a total service
fee of $12,000 and $72,000, respectively, to Management Services of Arizona, a
company related to Mr. Charlie Rodriguez, one of our ex-directors and
ex-Secretary and Treasurer. As at December 31, 2007, we owed a balance of unpaid
management fees of $6,000 to Management Services of Arizona. As at December 31,
2008, there was no owing to Management Services of Arizona.





As at
December 31, 2008, the Company owed $17,578 to KateLin Enterprises Ltd., a
company related to Ms. Tung, arising from the administrative and management
services rendered to the Company for the period April 7, 2007 to December 31,
2008, totaling $17,578.





Interpay
Asia Sdn. Bhd., a wholly owned subsidiary of IIG, continued during 2007, after
IIG being acquired by the Company, to share the rental payable for the office
premises by Safeway Assists Sdn. Bhd., a Malaysia incorporated company
substantially owned by Mr. Jee Sam Choo, a Director of the Company. For the
fiscal year ended December 31, 2007, Interpay Asia’s share of the rental amount
was RM1,500 (approximately $452). As at December 31, 2008, Interpay Asia owed a
total of RM8,620 (approximately $2,472) to Safeway Assist Sdn. Bhd.





Cardtrend
Systems continued during 2007,after being acquired by the Company, to rent the
office premises from Optimara Sdn. Bhd., a company owned by Mr. Kok Keng Low,
our EVP - COO and a Director of the Company, and his wife, for a monthly rental
of RM2,700 (approximately $814). For the fiscal year ended December 31, 2008 and
2007, a total rental amount of RM32,400 (approximately $9,650) and RM18,900
(approximately $5,701), respectively, was charged by Optima Sdn. Bhd. to
Cardtrend Systems. As at December 31, 2008 and 2007, Cardtrend Systems owed
RM2,700 (approximately $774) and nil respectively.





On August 8, 2007 the Company accepted an
offer from Mr. Jee Sam Choo, a director of the Company, and an offer from the
spouse of Mr. Choo, of a callable, on-demand convertible loan of $100,000 and
$200,000, respectively (See Note 12 of Form 10KSB for the year ended December
31, 2007 previously filed). On October 3, 2007, the Company accepted another
offer each from Mr. Choo and his wife, of a callable, on-demand convertible loan
of $200,000 and $100,000, respectively (See Note 12 of Form 10KSB for the year
ended December 31, 2007 previously filed). All the said loans were converted to
shares of common stock on January 15, 2008 (See Note 11 of this
Report).





On March
26, 2008, the Company accepted an offer each from 3 of its directors, Mr. Jee
Sam Choo, Mr. Kok Keng Low and Mr. King K. Ng, of a callable, on-demand
convertible loan of $27,000, totaling $81,000. On April 30, 2008, the Company
accepted from each of the same said directors of a callable, on demand
convertible loan of $12,000, totaling $36,000. On May 12, 2008, Company
accepted from each of the same said directors of a callable, on demand
convertible loan of $13,000, totaling $39,000. On June 10, 2008, Company
accepted from each of the same said directors of a callable, on demand
convertible loan of $10,000, totaling $30,000. On July 10, 2008, the Company
accepted from Mr. Choo, Mr. Low and Mr. Ng of a callable, on demand convertible
loan each of $5,000, $4,500 and $4,500, respectively, totaling $14,000. On July
25, 2008, the Company accepted from Mr. Choo and Mr. Ng of a callable, on demand
loan each of $16,250 and $19,375, respectively, totaling $35,625. All the
said convertible loans were redeemed by the said directors on September 19, 2008
(See Note 11 of this Report).





-52-





On
September 19, 2008, the Company accepted from Mr. Choo, Mr. Low and Mr. Ng of a
convertible loan each, which is callable for repayment in cash after 6 months
from the date of the loan, of $138,637.29, $69,036.39 and $88,718.16,
respectively. As at December 31, 2008, the said convertible loans have neither
been redeemed nor converted to shares of common stock of the Company (See Note
11 of this report.)





ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES





The
following table sets forth fees billed to the Company by (i) Weinberg &
Company, CPA. and RBSM LLP during the year ended December 31, 2007, and (ii)
RBSM LLP and ZYCPA Company Limited (formerly Zhong Yi (Hong Kong) CPA Company
Limited) during the year ended December 31, 2008 for: (i) services rendered for
the audits of the Company’s annual financial statements and the reviews of the
Company’s quarterly financial statements, (ii) services that are reasonably
related to the performance of the audits or reviews of the Company’s financial
statements and that are not reported as Audit Fees, (iii) services rendered in
connection with tax compliance, tax advice and tax planning, and (iv) all other
fees for services rendered.





RBSM LLP
replaced Weinberg & Company, CPA in June 2007 as the Company’s independent
registered public accounting firm to audit the Company’s December 31, 2006
financial statements, as well as to review the re-statement of the financial
statements for the quarter ended September 30, 2006 and the financial statements
for the quarterly periods in 2007.  RBSM LLP also conducted the audit
of the Company’s financial statements for the year ended December 31, 2007 which
was filed on a Form 10KSB on April 15, 2008. ZYCPA Company Limited replaced RBSM
LLP in April 2008 as the Company’s independent registered public accounting firm
to review the financial statements for the quarterly period in 2008 and
conducted the audit for the year ended December 31, 2008 which is now filed on a
Form 10K. The following table shows the amounts of fees charged by Weinberg
& Company, CPA and RBSM LLP, respectively, during the year ended December
31, 2007, and by RBSM LLP and ZYCPA Company Limited, respectively, during the
year ended December 31, 2008, in connection with audits and other services
rendered in 2008 and 2007.











Year
      Ended December 31,2008
                        
                        Year
      Ended December 31,2007ZYCPA
                        
                        
                        
                        Weinberg
      & Co.,RBSM LLP
                        
                        Company Limited
                        
                        RBSM LLP
                        
                        CPA(i)   
      Audit
      Fees
                        $
                        221,135
                        $
                        62,000
                        $
                        325,200
                        $
                        35,341(ii)  
      Audit Related
    Fees
                        $
                        -
                        $
                        -
                        $
                        -
                        $
                        -(iii) 
      Tax Fees
                        $
                        -
                        $
                        -
                        $
                        -
                        $
                        -(iv) All
      Other Fees
                        $
                        -
                        $
                        -
                        $
                        7,200
                        $
                        2,623Total
      fees
                        $
                        221,135
                        $
                        62,000
                        $
                        332,400
                        $
                        37,964





Audit
Fees


“Audit
Fees” consists of fees billed for professional services rendered for the audits
of the Company’s consolidated financial statements and reviews of the interim
consolidated financial statements included in quarterly reports and services
that are normally provided by the Company’s registered public accounting firms
in connection with statutory and regulatory filings or engagements.





Audit-Related
Fees


“Audit-Related
Fees” consists of fees billed for assurance and related services that are
reasonably related to the performance of the audit or review of the Company’s
consolidated financial statements and are not reported under "Audit Fees" There
were no Audit-Related services provided in fiscal years ended December 31, 2008
and 2007.





Tax
Fees


“Tax Fees”
consists of fees billed for professional services for tax compliance, tax advice
and tax planning. There were no tax services provided in the years ended
December 31, 2008 and 2007.





All
Other Fees


“All Other
Fees” consist of fees for products and services other than the services reported
above. There were advisory services rendered during 2007 by RBSM LLP and
Weinberg & Co., CPA, for acquisition and stock option plan. There were no
similar services rendered during 2008.





Policy
on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Auditors


The Audit
Committee which comprises all the members of the Board of Directors is to
pre-approve all audit and permissible non-audit services provided by the
independent auditors. These services may include audit services, audit-related
services, tax services and other services. Pre-approval is generally provided
for up to one year and any pre-approval is detailed as to the particular service
or category of services and is generally subject to a specific budget. The
independent auditors and management are required to periodically report to the
Company’s Board of Directors regarding the extent of services provided by
the independent auditors in accordance with this pre-approval, and the fees for
the services performed to date. The Board of Directors may also pre-approve
particular services on a case-by-case basis.





ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.





The
following documents are filed as part of the Annual Report on form
10-K:


1. All
Financial Statements: The consolidated financial statements are filed as part of
this report under Item 8 - “Financial Statements and Supplementary Data”.
All other schedules are omitted as the required information is inapplicable or
the information is presented in the Consolidated Financial statements and notes
thereto in Item 8 above.





2.
Exhibits: The following exhibits are filed herewith or are incorporated by
reference to exhibits previously filed with the SEC. Cardtrend International
Inc. shall furnish copies of exhibits for a reasonable fee (covering the expense
of furnishing copies) upon request.








-53-





Exhibit
Index:


ExhibitNumber
              
              Description3.1(a)
              
              The
      Registrant’s Certificate of Incorporation, which appears as Exhibit
      2 to the Registrant’s Form 10SB-12G filed on March 20, 2000 (SEC
      file #000-30013) which is incorporated herein by
  reference.3.1(b)
              
              The
      Registrant’s Certificate of Amendment to the Certificate of Incorporation
      dated November 2003, which appears as Exhibit 3.1to the Registrant’s Form
      8K filed on December 19, 2003 (SEC file #000-30013) which is incorporated
      herein by reference.3.1(c)
              
              The
      Registrant’s Certificate of Amendment of Amended Certificate of
      Incorporation dated July 24, 2007, which appears as Exhibit 3.1 to the
      Registrant’s Form 10KSB/A for the year ended December 31, 2006 filed on
      August 23, 2007(SEC#000-30013) which is incorporated herein by
      reference.3.1(d)
              +
              The
      Registrant’s Certificate of Amendment of Amended Certificate of
      Incorporation dated January 30, 2009.3.2
              
              The
      Registrant’s By-Laws, which appears as Exhibit 3 to the Registrant’s
      Form 10-12G filed on March 20, 2000 (SEC File #000-30013) which is
      incorporated herein by reference.3.3
              
              The
      Registrant’s Corporate Charter, which appears as the second Exhibit
      1 to the Registrant’s Form 10SB-12G filed on March 20, 2000 (SEC
      file #000-30013) which is incorporated herein by
  reference10.1*
              
              The
      Registrant’s 2004 Non-qualified Stock Option Plan which appears as Exhibit
      10.1 to the Registrant’s Form S-8 filed on May 20, 2004 (SEC File
      #333-115697)) which is incorporated herein by
reference.10.2*
              
              The
      Registrant’s 2005 Stock Award Plan, which appears as Exhibit 99.1 to
      the Registrant’s Form S-8 filed June 20, 2005 (SEC File # 333-125969)
      which is incorporated herein by reference.10.3*
              
              The
      Registrant’s 2007 Non-qualified Stock Option Plan which appears as Exhibit
      10.1 to the Registrant’s Form S-8 filed on February 2, 2007 which is
      incorporated herein by reference.10.4*
              
              Employment
      Contract of King K. Ng, Chief Executive Officer, dated May 22, 2006, which
      appears as Exhibit 99.2 to the Registrant’s Form 8K filed on
      June 1, 2007 (SEC File # 000-30013) which is incorporated herein by
      reference.10.5*
              
              Employment
      Contract of Kok Keng Low, Chief Operating Officer, dated September 28,
      2006, which appears as Exhibit 10.2 to the Registrant’s
      Form 10QSB for the quarter ended September 30, 2006 filed on November
      17, 2006 (SEC File # 000-30013) which is incorporated herein by
      reference.10.6*
              
              Employment
      Contract dated July 1, 2006 and addendum/amendment to the contract dated
      January 1, 2007 of Thomas CL Wong, CFO, which appears as Exhibit 10.8
      to the Registrant’s Form 10KSB for the year ended December 31, 2006
      filed May 21, 2007 (SEC File # 000-30013) which is incorporated
      herein by reference.10.7*
              
              Employment
      Contract of Yu Hua Chen, Chief Officer – Greater China, dated November 1,
      2007,  which appears as Exhibit 10.1 to the Registrant’s
      Form 10KSB for the year ended December 31, 2007 filed on
      April 15, 2008 (SEC File # 000-30013) which is incorporated herein by
      reference.10.8
              
              Consulting
      Services Agreement between the Registrant and Scott Mac Caughern dated
      November 15, 2007, which appears as Exhibit 10.2 to the Registrant’s
      Form 10KSB for the year ended December 31, 2007 filed April 15,
      2008 (SEC File # 000-30013) which is incorporated herein by
      reference.10.9
              
              Consulting
      Services Agreement between the Registrant and BullMarketMadness.Com LLC
      dated November 15, 2007, which appears as Exhibit 10.3 to thr Registrant’s
      Form 10KSB for the year ended December 31, 2007 filed April 15,
      2008 (SEC File # 000-30013) which is incorporated herein by
      reference.10.10
              
              Consulting
      Services Agreement between the Registrant and Wan Mu Chun dated January 1,
      2007, which appears as Exhibit 10.4 to the Registrant’s Form 10KSB
      for the year ended December 31, 2007 filed April 15, 2008 (SEC File #
      000-30013) which is incorporated herein by reference.10.11
              
              Consulting
      Services Agreement between the Registrant and Wong Yee Tat dated January
      1, 2008, which appears as Exhibit 10.5 to the Registrant’s Form 10KSB
      for the year ended December 31, 2007 filed April 15, 2008 (SEC File #
      000-30013) which is incorporated herein by reference.10.12
              
              Business
      Development Agreement between the Registrant and Willow Cove Investment
      Group Inc.,` dated January 30, 2008,  which appears as
      Exhibit 10.6 to the Registrant’s Form 10KSB for the year ended
      December 31, 2007 filed April 15, 2008 (SEC File # 000-30013) which
      is incorporated herein by reference.10.13
              
              Business
      Development Agreement between the Registrant and Lim Han Seng dated March
      10, 2008, which appears as Exhibit 10.7 to the Registrant’s
      Form 10KSB for the year ended December 31, 2007 filed April 15,
      2008 (SEC File # 000-30013) which is incorporated herein by
      reference.10.14
              
              Administrative
      Services Contract between the Registrant and KateLin Enterprise Ltd. dated
      April 7, which appears as Exhibit 10.8 to the Registrant’s
      Form 10KSB for the year ended December 31, 2007 filed April 15,
      2008 (SEC File # 000-30013) which is incorporated herein by
      reference.10.15
              
              Consulting
      Services Agreement between the Registrant and Adrian Yeo & Co. dated
      April 21, 2008, which appears as Exhibit 10.1 to the Registrant’s
      Form 10Q for the quarter ended September 30, 2008 filed
      November 14, 2008 (SEC File # 000-30013) which is incorporated herein
      by reference.10.16
              
              Consulting
      Services Agreement between the Registrant and Kim Kok Hai dated September
      12, 2008, which appears as Exhibit 10.2 to the Registrant’s Form 10Q
      for the quarter ended September 30, 2008 filed November 14, 2008 (SEC
      File # 000-30013) which is incorporated herein by
    reference.





-54-








10.17
                +
                Convertible
      Promissory Note to RBSM LLP to the amount of $200,000 dated May 5,
      2008.10.18
                +
                Amendment
      to the Convertible Promissory Note to RBSM LLP to the amount of $200,000
      dated October 30, 2008.10.19
                +
                Convertible
      Promissory Note to Ng King Kau to the amount of $88,718.16 dated September
      19, 2008.10.20
                +
                Convertible
      Promissory Note to Low Kok Keng to the amount of $69,036.39 dated
      September 19, 2008.10.21
                +
                Convertible
      Promissory Note to Choo Jee Sam to the amount of $138,637.29 dated
      September 19, 2008.10.22
                +
                Convertible
      Promissory Note to Ho Yoon Fah to the amount of $31,758.33 dated September
      19, 2008.10.23
                +
                Convertible
      Promissory Note to Low Chin Hong to the amount of $148,590.15 dated
      September 19, 2008.10.24
                +
                Convertible
      Promissory Note to Lim Yew Seng to the amount of $112,301.04 dated
      September 19, 2008.11.1
                
                Share
      Exchange Agreement with Ng King Kau and others for the acquisition of
      Interpay International Group Ltd. dated May 19, 2006, which appears as
      Exhibit 99.1 to the Registrant’s Form 8K filed on June 1, 2006 (SEC File #
      000-30013) which is incorporated herein by reference.11.2
                
                Share
      Exchange Agreement with Kok Keng Low and others for the acquisition of
      Cardtrend Systems Sdn. Bhd. dated September 28, 2006, which appears as
      Exhibit 10.1 to the Registrant’s Form 10QSB for the quarter ended
      September 30, 2006 filed on November 17, 2006 (SEC File # 000-30013) which
      is incorporated herein by reference.11.3
                
                Sales
      and Purchase Agreement for the acquisition by Asia Payment Systems (HK)
      Ltd. of Global Uplink Ltd. in Hong Kong dated December 8, 2006, which
      appears as Exhibit 11.4 to the Registrant’s Form 10KSB for the year ended
      December 31, 2006 filed on May 21, 2007 (SEC File # 000-30013) which
      is incorporated herein by reference.11.4
                
                Business
      Alliance Agreement with SMS Biz Sdn. Bhd. dated November 28, 2006, which
      appears as Exhibit 11.1 to the Registrant’s Form 10KSB for the year ended
      December 31, 2006 filed on May 21, 2007 (SEC File # 000-30013) which is
      incorporated herein by reference.11.5
                
                Assignment
      of SMS Biz Distributorship Agreement with Etone Network Sdn. Bhd. to
      Payment Business Solutions Sdn. Bhd. dated December 1, 2006, which appears
      as Exhibit 11.2 to the Registrant’s Form 10KSB for the year ended December
      31, 2006 filed on May 21, 2007 (SEC File # 000-30013) which is
      incorporated herein by reference.11.6
                
                Sales
      and Purchase `Agreement for the assets in the operating center of Global
      Uplink Communications Ltd. entered into between Asia Payment Systems
      (China) Co. Ltd. and Global Uplink Communications Ltd. on December 8, 2006
      which appears as Exhibit 11.3 to the Registrant’s Form 10KSB for the year
      ended December 31, 2006 filed on May 21, 2007 (SEC File # 000-30013) which
      is incorporated herein by reference.11.7
                
                Exclusive
      Service Agreement between Asia Payment Systems (China) Co. Ltd. and Global
      Uplink Communications Ltd. dated October 24, 2007, which appears as
      Exhibit 10.5 to the Registrant’s Form 10Q for the quarter ended
      September 30, 2007 filed November 15, 2007 (SEC File # 000-30013)
      which is incorporated herein.11.8
                
                Share
      Exchange Agreement with Yap Kit Chuan and others for the acquisition of
      SMS Biz Sdn. Bhd. dated January 18, 2009, which appears as Exhibit 11.1 to
      the Registrant’s Form 10KSB filed on April 15, 2008 (SEC File # 000-30013)
      which is incorporated herein by reference14.1
                
                Registrant’s
      Code of Ethics, which appears as Exhibit 14.1 to the Registrant’s Form
      10KSB for the year ended December 31, 2003 filed on April 20, 2004 (SEC
      File # 000-30013) which is incorporated herein by
    reference.16.1
                
                Letter
      from RBSM LLP to the Securities and Exchange Commission regarding change
      in certifying accountant, which appears as Exhibit 16.1 to the
      Registrant’s Form 8-K dated April 23, 2008 (SEC File # 000-30013)
      which is incorporated herein by reference.16.2
                
                Letter
      from Weinberg & Co., CPA to the Securities and Exchange Commission
      regarding change in certifying accountant, which appears as Exhibit 16.1
      to the Registrant’s Form 8-K dated June 8, 2007(SEC File # 000-30013)
      which is incorporated herein by reference.21
                +
                Subsidiaries
      and Associated Companies of the Registrant as of March 31,
      2009.31.1
                +
                Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by King K.
      Ng, the Registrant’s Chief Executive Officer.31.2
                +
                Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by Thomas
      CL Wong,, the Registrant’s Chief Financial Officer.32.1
                +
                Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002, signed by King K. Ng,
      the Registrant’s Chief Executive Officer.32.2
                +
                Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002, signed by Thomas CL
      Wong, the Registrant’s Chief Financial
Officer.





*
            
            Indicates
      that exhibit is a management contract or compensatory plan or
      arrangement.+
            Indicates
      that exhibit is filed herewith in this Annual
  Report.






















-55-







SIGNATURES





In
accordance with Section 13 or 15(d) of the Exchange Act of 1934, the registrants
have duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on this 15th day of
April, 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. NG
                      Director
      , President and Chief (Principal) Executive
      Officer
                      April 15,
      2009King
      K. NgKOK KENG LOW
                      Director,
      Executive Vice President and Chief Operating
      Officer
                      April 15,
      2009Kok
      Keng LowJEE SAM CHOO
                      Director,
      Chairman
                      April 15,
      2009Jee
      Sam ChooYU HUA CHEN
                      Director,
      Chief Officer – Greater China
                      April 15,
      2009Yu
      Hua Chen
















































































-56-








EXHIBITS





ExhibitNumber
                  
                  Description3.1(d)
                  
                  The
      Registrant’s Certificate of Amendment of Amended Certificate of
      Incorporation dated January 30, 2009.10.17
                  
                  Convertible
      Promissory Note to RBSM LLP to the amount of $200,000 dated May 5,
      2008.10.18
                  
                  Amendment
      to the Convertible Promissory Note to RBSM LLP to the amount of $200,000
      dated October 30, 2008.10.19
                  
                  Convertible
      Promissory Note to Ng King Kau to the amount of $88,718.16 dated September
      19, 2008.10.20
                  
                  Convertible
      Promissory Note to Low Kok Keng to the amount of $69,036.39 dated
      September 19, 2008.10.21
                  
                  Convertible
      Promissory Note to Choo Jee Sam to the amount of $138,637.29 dated
      September 19, 2008.10.22
                  
                  Convertible
      Promissory Note to Ho Yoon Fah to the amount of $31,758.33 dated September
      19, 2008.10.23
                  
                  Convertible
      Promissory Note to Low Chin Hong to the amount of $148,590.15 dated
      September 19, 2008.10.24
                  
                  Convertible
      Promissory Note to Lim Yew Seng to the amount of $112,301.04 dated
      September 19, 2008.21
                  
                  Subsidiaries
      and Associated Companies of the Registrant as of March 31,
      2009.31.1
                  
                  Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by King K.
      Ng, the Registrant’s Chief Executive Officer.31.2
                  
                  Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by Thomas
      CL Wong, the Registrant’s Chief Financial Officer.32.1
                  
                  Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002, signed by King K. Ng,
      the Registrant’s Chief Executive Officer.32.2
                  
                  Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002, signed by Thomas CL
      Wong, the Registrant’s Chief Financial
Officer.







































































































-57-