UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
  Form
10-K
  (Mark
One)
  x ANNUAL REPORT UNDER
SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the
Fiscal Period year ended December 31, 2009
  o TRANSITION REPORT UNDER
SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the
transition period from ______________ to ___________________
   Commission
file number: 000 - 51977
  MyECheck,
Inc.
 (Exact
name of small business issuer as specified in its charter)
  Nevada
              20-1884354(State
      or other jurisdiction of
                incorporation
      or organization)
              (IRS
      Employer Number)
  1190
Suncast Lane, Suite 5
 El Dorado
Hills, CA 95762
 
 (Address
of principal executive offices)
 
 (916)
932-0900
 (Issuer's
telephone number)
  Former
Address: 916 West Broadway Street, Vancouver, British Columbia, V5Z
1K7
 Former
fiscal year: December 31
  (Former
name, former address and former fiscal year, if changed since last
report)
  Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.Yeso   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 Exchange 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 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 filero
              Accelerated
      filero
              Non-accelerated
      filer  o
              Smaller
      reporting companyx(Do
      not check if asmaller
      reporting company)
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yeso   No x
  State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.)
  Aggregate
market value of the voting and non-voting common equity held by non-affiliates
(29,448,521 shares)computed by reference as of April 14, 2010 is $4,122,793.
  State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date.
  As of
April 15, 2010 there are 70,864,772 common shares outstanding.
  
   MyECheck,
Inc.
 
 FORM
10-K
 
 For the
Fiscal Year ended December 31, 2009
  Part
      IItem
      1.
              
              
              Description
      of Business
              4Item
      1A
              
              
              Risk
      FactorsItem
      2.
              
              
              Description
      of Property
              12Item
      3.
              
              
              Legal
      Proceedings
              12Item
      4.
              
              
              Submission
      of Matters to a vote of Security Holders
              12Part
      IIItem
      5.
              
              
              Market
      for Common Equity and Related Stockholder Matters
              12Item
      6
              
              
              Selected
      Financial Data
              13Item
      7.
              
              
              Management's
      Discussion and Analysis or Plan of Operation
              13Item
      7A.
              
              
              Quantitative
      and Qualitative Disclosures about Market Risk
              15Item
      8.
              
              
              Financial
      Statements
              15Item
      9.
              
              
              Changes
      In and Disagreements with Accountants on Accounting and Financial
      Disclosure
              15Item
      9A.
              
              
              Controls
      and Procedures
              15Item
      9B.
              
              
              Other
      Information
              16Part
      IIIItem
      10.
              
              
              Directors,
      Executive Officers, Promoters and Control Persons; Compliance with Section
      16(a) of the Exchange Ac
              16Item
      11.
              
              
              Executive
      Compensation
              18Item
      12.
              
              
              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
              20Item
      13.
              
              
              Certain
      Relationships and Related Transactions
              21Item
      14.
              
              
              Principal
      Accountants Fees and Services
              21Item
      15.
              
              
              Exhibits
              22Signatures
              
              
              
              23
  2
  FORWARD
LOOKING STATEMENTS
  CERTAIN
STATEMENTS IN THIS ANNUAL REPORT ON FORM 10-K, OR THE "REPORT," ARE
"FORWARD-LOOKING STATEMENTS." THESE FORWARD-LOOKING STATEMENTS INCLUDE, BUT ARE
NOT LIMITED TO, STATEMENTS ABOUT THE PLANS, OBJECTIVES, EXPECTATIONS AND
INTENTIONS OF MYECHECK, INC., A NEVADA CORPORATION AND OTHER STATEMENTS
CONTAINED IN THIS REPORT THAT ARE NOT HISTORICAL FACTS. FORWARD-LOOKING
STATEMENTS IN THIS REPORT OR HEREAFTER INCLUDED IN OTHER PUBLICLY AVAILABLE
DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, OR THE
"COMMISSION," REPORTS TO OUR SHAREHOLDERS AND OTHER PUBLICLY AVAILABLE
STATEMENTS ISSUED OR RELEASED BY US INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH COULD CAUSE OUR ACTUAL RESULTS,
PERFORMANCE (FINANCIAL OR OPERATING) OR ACHIEVEMENTS TO DIFFER FROM THE FUTURE
RESULTS, PERFORMANCE (FINANCIAL OR OPERATING) OR ACHIEVEMENTS EXPRESSED OR
IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FUTURE RESULTS ARE BASED UPON
MANAGEMENT'S BEST ESTIMATES BASED UPON CURRENT CONDITIONS AND THE MOST RECENT
RESULTS OF OPERATIONS. WHEN USED IN THIS REPORT, THE WORDS "EXPECT,"
"ANTICIPATE," "INTEND," "PLAN," "BELIEVE," "SEEK," "ESTIMATE" AND SIMILAR
EXPRESSIONS ARE GENERALLY INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS,
BECAUSE THESE FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES. THERE
ARE IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS, INCLUDING OUR
PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS AND OTHER FACTORS.
  3
  PART
I
  Item 1.
Business
  Business
Summary
 
 MyECheck,
Inc. (“MyECheck” or the “Company”) is an early stage company engaged in the
payment processing industry; specifically MyECheck provides electronic check
image (“e-check”) services to merchants, payment services providers, banks and
other businesses. MyECheck was founded and incorporated in Delaware in October
2004 to capitalize on opportunities created by the passing of The Check Clearing
for the 21st  Century
Act (“Check 21”). MyECheck has commenced formal business operations and is
generating revenue.
 
 MyECheck
was created to satisfy the demand for an alternative payment solution to credit
and debit cards for online commerce. MyECheck has developed and utilizes a
proprietary method of creating and clearing Remotely Created Check (“RCC”)
images on behalf of its e-commerce customers, having successfully implemented
its proprietary RCC service that enables companies to accept real-time check
payments from consumers and businesses online or over a telephone.
 
 MyECheck
provides additional services to support its RCC service including fraud loss
prevention services. MyECheck also provides a number of services such as check
remittance processing and remote deposit capture (“RDC”) services for brick and
mortar companies, such as banks and retailers.
 
 MyECheck
entered into a merger agreement with Sekoya Holdings Ltd., a Nevada corporation
in November 2007, amended and restated February 4, 2008. The merger was
effective March 14, 2008. Shareholders of Sekoya at the time of the merger would
own approximately 40% of the shares of the surviving company and shareholders of
MyECheck would own approximately 60% of the surviving company, with all parties
being diluted by additional financing to be completed following the Merger
(excluding 2,000,000 shares held in escrow as remedies for breaches of the
Merger Agreement).
  Revenue
is generated from transaction fees charged to companies that contract with
MyECheck to utilize the Company’s services.
  About
Check 21
 
 Check 21
was signed into law on October 28, 2003, and became effective on October 28,
2004. Check 21 is designed to foster innovation in the payments system and to
enhance its efficiency by reducing some of the legal impediments to check
truncation. The law facilitates check truncation by creating a new negotiable
instrument called a substitute check, which permits banks to truncate original
checks, to process check information electronically, and to deliver substitute
checks to banks that want to continue receiving paper checks. A substitute check
is the legal equivalent of the original check and includes all the information
contained on the original check. The law does not require banks to accept checks
in electronic form nor does it require banks to use the new authority granted by
the Act to create substitute checks.
  Summary
History of MyECheck
 
 MyECheck
started processing transactions on version one of its software platform in July
of 2005 and continued through March of 2006, after which it ceased processing in
order to further develop and refine its service offerings.
 
 During
the period from March of 2006 through September 2007, MyECheck redesigned and
developed its software platform to better suit the demands of its prospective
customers and to ensure the accurate performance of the software.
  4
  MyECheck
has been sponsored by First Regional Bank, and successfully completed approval
and check image file (ANSI X9.37) testing with the Federal Reserve Bank in the
second quarter of 2007.
 
 Version
two of its software platform was launched in September of 2007 and MyECheck has
been steadily ramping up transaction volume on the system since
then.
 
 The
Services of MyECheck
 
 MyECheck
offers comprehensive, easily implemented solutions that include real-time check
authorization, payment guarantee, check image creation and clearing and complete
online reporting. Set out below are services that MyECheck provides and intends
to provide as part of its business plan.
 
 Remotely
Created Check Service
 
 Internet
merchants and other companies wishing to accept payments online or over a
telephone (“Merchants”) can directly integrate with MyECheck’s payment engine.
Payor check data is collected by the Merchant either at the Merchant’s website
or over the telephone, and is transmitted in real-time to MyECheck for
processing.
 
 MyECheck
uses patent pending technology to generate RCCs in accordance with the Federal
Reserve Check 21 specification. RCC images are formatted and are transmitted in
near real-time to banks, or more commonly directly to the Federal Reserve for
clearing on behalf of MyECheck’s partner bank(s).
  MyECheck
believes that its RCC service overcomes many of the shortcomings of Automated
Clearing House (“ACH”) based e-check systems and cost-effectively provides
higher transaction success rates, faster funds clearing and fewer returned
items.
  MyECheck
believes that it is positioned to capture a significant market share of the
alternative payments industry with a viable alternative payment method for
online payments. Compared to other online payment methods, MyECheck works with
more consumers, with the ability to guarantee payments at rates lower than
non-guaranteed card processing rates.
 
 Check
Authorization Service
 
 MyECheck
offers Check Authorization Service which enables merchants to verify consumer
provided data, check the status of the customer’s bank account, provide evidence
that the consumer has authorized the check and predict the likelihood of a check
being returned unpaid. Businesses that accept payments online through MyECheck
utilize this service to provide greater assurance that the check will clear.
Transactions can be approved or declined based upon the results of the Check
Authorization Service.
  Check
Guarantee Service
 
 MyECheck
co-markets with Check Guarantee Providers to offer Check Guarantee Service. The
Check Guarantee Provider warranties all approved checks and reimburses the Payee
for financial losses incurred as a result of returned checks. The Check
Guarantee Provider buys the returned checks that have been warranted from
merchants for the full face value of the returned checks. MyECheck merchants
utilize Check Guarantee Service so that they can ship products or provide
services immediately without having to wait for the check to clear. The Check
Guarantee Service also eliminates the need for Merchants to collect on returned
checks from their customers. The Check Guarantee Providers are independent third
parties whose services are offered to Merchants separately from the MyECheck
service. MyECheck is not compensated by, and does not compensate, Check
Guarantee Providers. MyECheck may in the future enter into compensated
arrangements with Check Guarantee Providers.
 
 Remote
Deposit Capture and Remittance Processing
 
 MyECheck
provides Remote Deposit Capture and Remittance Processing Solutions that enable
companies to scan paper checks at the brick and mortar point of sale or back
office, and remit check images to MyECheck for processing. MyECheck formats the
check images in accordance with the Federal Reserve Check 21 specification (ANSI
X9.37) and transmits the files in near real-time directly into the check
clearing system, as it does with its RCC image files. RDC reduces Merchant
handling and administrative costs, eliminates paper check transportation, speeds
clearing by an average of 2+ days and improves Merchant cash
flow.
  5
  International
Payment Service
 
 Through
relationships with foreign financial services organizations, MyECheck is
planning to add international bank transfer payment services that will allow
MyECheck merchants to accept non-card associated bank transfers in local
currencies from the world’s largest global markets.
 
 The
methodology expected to be employed with the international service would prevent
consumer initiated repudiation and charge-backs, eliminating most types of
international payments fraud. This service facilitates funds collection in over
50 countries and provides bank transfer remitting capabilities to bank accounts
in over 120 countries. The system currently supports 21 currencies and will
perform foreign exchange if required.
  Merchant
Reporting
 
 Through
our Merchant interface, MyECheck provides the following reports:
 o
              Detailed
      transaction historyo
              Successfulo
              Failedo
              MyECheck
      fees and settlement statements
 
 In
addition to the above, pertinent information is returned at the end of each
transaction to facilitate reporting on the Merchant side.
 
 Company
Competition
 
 Other new
alternative payment brands have emerged and have experienced tremendous success
in recent months and years. Management believes that MyECheck services are in
many ways more viable, and possess greater revenue potential than other
alternative payment services that have emerged.
 
 Most
other alternative payment services enable consumers to pay with either payment
cards or ACH based e-checks. One of the shortcomings of many of these payment
brands is that the consumer is redirected off of the merchant’s site in order to
complete the transaction.
 
 The check
is the largest non-cash payment method in the US, demonstrating that people
often prefer to use checks over cards. In the past 5 years, the number of online
check transactions per quarter has grown from 742,660 to 318,484,650,
approximately a 428% growth rate. In spite of this, many online merchants and
businesses offer no alternative to cards, resulting in lost sales due to many
consumers’ inability or unwillingness to purchase cards.
  MyECheck
provides access to more US consumers than any other payment method because it
can be used to clear checks from 100% of US checking accounts, including
business accounts and accounts where ACH does not work. MyECheck facilitates
faster funds clearing than cards or ACH providing same day or next day
availability of funds to the merchant’s bank. MyECheck also offers fraud control
tools including bank account verification, negative check-writer database
queries and payment guarantee at lower rates.
 
 Because
MyECheck does not use the ACH network, transactions are not subject to National
Automated Clearing House Association (“NACHA”) regulation, including their
rules, fees and fines. MyECheck RCCs are governed by Uniform Commercial Code
(State check laws), and Check 21 law, which is more favorable to the Payee than
NACHA rules and facilitates higher returned item collection rates. The lower
number of returns and higher return collection rates translates to fewer losses,
lower fees for payment guarantee and higher profit margins for MyECheck
Merchants.
  6
 
 E-commerce
& Internet Industry
  Worldwide,
more than one billion people are using the Internet. The number of American
homes and businesses with broadband access capabilities tops 50 million, and a
plethora of new services, entertainment options and time-saving solutions have
become widely available. The U.S. population is becoming more tech-savvy, with
at least 72% of American adults surfing the net on a regular basis. Confidence
in security for online transactions is on the rise, as is the ease of use of
most retail web sites.
 
 Online
advertising, including paid search inclusion at sites like Google and Yahoo!,
has ballooned into a $10 billion business in the U.S. alone, threatening
traditional advertising venues of all types.
 
 Management
believes that new methods of taking advantage of efficiencies created by the
Internet are becoming widely accepted as access to high-speed broadband Internet
connections become commonplace. Users of the Internet (both business and
consumer) are multiplying around the globe, and many companies are earning
substantial profits in serving those users.
 
 The
migration to more efficient payment mechanisms is affected by innovations,
incentives, and regulation. While advances in technology have yielded numerous
payment method alternatives, many have not been widely adopted. Numerous payment
innovations have not been widely adopted because many payment system
participants lacked sufficient incentives to change consumer
behavior.
  Gaining
market adoption is a major challenge in the migration to efficient payment
mechanisms. This can be particularly difficult considering the deep emotional
attachment of consumers to more traditional payment forms, e.g., checks, in the
United States. There are incentives that make U.S. consumers and businesses more
likely to adopt less efficient and less secure payment instruments, such as
credit and signature-based debit cards.
 
 Weak
authentication procedures are a main factor driving fraud. The legal and
regulatory framework protects consumers differently based on the payment
instrument used to make purchases.
 
 According
to a survey published June 29, 2006, approximately 74% of consumers would be
willing to spend about $960 more per year on music, games, subscriptions, and
other digital content online if they could use a form of payment that’s safer
and more convenient than a credit or debit card. Given current estimates of
active consumers online, that adds up to $14.4 billion in forgone sales annually
for Internet-based content sellers, according to Javelin Strategy &
Research.
 
 Aside
from those who say they would buy more if given alternatives, some 72% of online
consumers said they have abandoned a purchase when it came time to make payment.
The major finding of the poll is that the availability of secure and convenient
payment options beyond traditional credit and debit cards can drive significant
incremental purchases, subscriptions, and transactions.
 
 Although
many new payment schemes exist today with many more on the horizon, the vast
majority of these systems continue to be based upon the two fundamental payment
methods, credit and debit.
 
 Successful
solutions such as PayPal and more recently BillMeLater offer a slight twist to
the traditional payment mechanism of credit cards. PayPal for example, whose
primary merchant customers are small retailers who typically are not large
enough to qualify for their own merchant account at a bank, offers consumer
payment options consisting of either credit cards or bank debit through the ACH
network.
 
 BillMeLater
is a credit based system whereby the consumer applies for and, if approved, is
granted a line of credit at the time of the transaction.
 
 All other
e-check (online electronic check) solutions are based upon the ACH (automated
clearing house) system. ACH transactions are bank electronic funds transfers
whereby the consumer’s bank account is debited and the recipients account is
credited. ACH transactions work reasonably well in most instances, however the
system does suffer from some shortcomings which have impacted
adoption.
  ACH
transactions are governed by NACHA, (the National Automated Clearing House
Association), which imposes a substantial number of rules and regulations upon
the transactions and their users. Compliance with the many, and continuously
updating, NACHA operating rules can be complicated for Merchants.
 
 ACH
transactions take several days to clear through the system. During the clearing
period the recipient has no way to determine if the transaction is even going
clear or if it will result in an administrative return. ACH has more than 60
reasons why a transaction can fail. Many times it is because the consumer’s bank
has chosen not to participate in ACH, or hasn’t performed the correct system
integration.
  7
 
 Checks
continue to be the number one non-cash payment method in the US, with the value
of checks processed annually around one hundred trillion dollars. Up to 45% of
adults either have no payment cards or have no available credit on their cards,
meaning that as many as 80 Million US adults have no ability to buy online at
the many websites that only accept cards.
 
 Many
online merchants are dissatisfied with credit card and ACH solutions, and many
online industries such as travel and brokerage have no check solution at all.
Management believes this provides MyECheck with a significant market
opening.
 
 Employees
and Contractors
 
 As of
January 1, 2010, MyECheck had 4 full time employees and 6 independent
contractors.
 
 Leases
 
 The
Company leases its corporate office under a non-cancelable rental agreement
through December 2009. Monthly payments at the inception of the lease terms were
$­­­­­­­­­­­­8,576 and increase
4% annually.  During 2009, the Company extended the non-cancelable
operating lease.  This lease expires on February 28,
2012.
  Regulation
 
 MyECheck
is not currently subject to direct federal, state or local regulation, and laws
or regulations applicable to access to or commerce on the Internet, other than
regulations applicable to businesses generally. MyECheck provides transaction
processing services and does not conduct transactions or hold or transfer cash
itself. However, there can be no assurances that MyECheck will not be subject to
such regulation in the future.
  Cost
of Compliance with Environmental Regulation
 
 MyECheck
currently has no costs associated with compliance with environmental
regulations. However, there can be no assurances that MyECheck will not incur
such costs in the future.
 
 Software
Development
 
 In April
2006, MyECheck entered into an open ended software development agreement with R
Systems International Ltd., a software product development company, and that
agreement continues to be in effect. MyECheck also develops some of its software
in-house and utilizes an independent contractor. During the past four years,
research and development costs associated with the development of the software
have been approximately $183,000.
  MyECheck
own proprietary software and intellectual property, and licenses patented
technology from the Company founder Edward R Starrs.
 
 Business
Partners
 
 MyECheck
has entered into a Processor Agreement with First Regional Bank. First Regional
Bancorp (NASDAQ: FRGB) is a bank holding company headquartered in Century City,
California. Its subsidiary, First Regional Bank, specializes in providing
businesses and professionals with the management expertise of a major bank and
the personalized service of an independent. First Regional Bank offers the
latest technology combined with a higher level of service, responsiveness and
cost savings not found at other institutions.
 
 First
Regional Bank has sponsored MyECheck at the Federal Reserve Bank, and MyECheck
is permitted to use First Regional Bank’s FedLine account to electronically
access the Federal Reserve check clearing system.
  During
2008 and 2009, the Company expanded its relationships with larger customers and
as a result of their banking requirements, the Company implemented processing of
Check 21 files directly to the bank instead of entering into agreements to use
their bank’s FedLine account to
electronically access the Federal Reserve check clearing system.  As
more banks have implemented Check 21 clearing processes with the Federal
Reserve, the need to use a bank’s FedLine to process transactions directly to
the Federal Reserve has diminished.
 
 On
January 29, 2010, the Company’s sponsoring bank, First Regional Bank, was closed
by the Federal Deposit Insurance Corporation (FDIC).  The new bank
acquiring the old bank from the FDIC obtained all rights to accept or reject
former contracts. The new bank elected to reject the Company’s agreement
with the old bank.  The Company is in the process of moving its customers
to one of its other processing banks.
  MyECheck
has entered into an Agreement with Cardinal Commerce Corporation, a global
leader in enabling authenticated payments, secure transactions and alternative
payment brands for both eCommerce and mobile commerce. CardinalCommerce enables
payment brands such as Verified by Visa, MasterCard SecureCode, PayPal, eBillme,
Bill Me Later, Google Checkout, MyECheck, and NetCash (with Western Union and
NACHA Secure Vault Payments coming soon) to a network of over 30,000 merchants
and thousands of Banks.
 
 The
Cardinal mobile platform leverages its merchant network, bank network and
payment brands by linking them with end users’ mobile phones through an
integrated mobile platform.  Cardinal's proprietary and easily deployable
technology provides consumers, merchants, card issuers, and processors the
ability to conduct authenticated Internet, wireless and m obile transactions
safely and securely. Headquartered in Cleveland, Ohio, with facilities in the
United States, Europe and Africa, CardinalCommerce services a global customer
base.
 
 In 2009,
MyECheck announced a partnership with Morse Data Corporation.  Morse Data’s
InOrder solution is a leading enterprise management system for multi-channel
merchants, fulfillment service providers and publishers. Easily deployed as an
off-the-shelf system, InOrder accommodates all sales channels, including web,
phone, fax, EDI, POS and catalog sales in real time for immediate and accurate
inventory and order processing.
  8
  MyECheck
also announced that it had signed an agreement with Regal Entertainment Group,
the world’s largest motion picture exhibitor.  Regal patrons are able to
purchase discount movie tickets and gift cards by securely entering their
checking account details on the Regal website. The MyECheck service works with
every checking account in the United States, including all business accounts,
enabling more Regal patrons to purchase online.
 
 Additionally,
MyECheck announced it had entered into a definitive agreement with Simplifile,
the leading provider of electronic recording services. The agreement 
facilitates the MyECheck Remotely Created Check solution into the Simplifile
e-recording service which allows Simplifile customers to make payments for
recording and submission fees using an online check imaging
process.
 
 MyECheck
also announced several other new merchants during the course of 2009. MyECheck
is substantially reliant on these agreements for its business. If MyECheck
develops a broader base of customers and vendor relationships, that reliance may
decrease, but there can be no assurances as to the timing or extent of such
growth.
 
 On
November 17, 2008, the Company announced that it had signed the California State
Teachers’ Retirement Fund (CalSTRS) as a customer. CalSTRS primary
responsibility is to provide retirement related benefits and services to
teachers in public schools and community colleges. It administers retirement,
disability and survivor benefits for California's 813,000 public school
educators and their families from the state's 1,400 school districts, county
offices of education and community college districts.
  The
Merger Agreement
  MyECheck,
Inc., a Delaware corporation (“MEC”) and Sekoya Holdings, Limited (a Nevada
corporation) entered into a Merger Agreement in November 2007, which was amended
and restated as of February 4, 2008, and was filed as an exhibit to the Report
on Form 8-K filed on February 7, 2008 (the Report on Form 8-K and Merger
Agreement are incorporated herein by reference). The merger was effective March
14, 2008.
 
 A total
of 2,000,000 shares otherwise issuable to MEC’s shareholders have been held back
(the “Escrow Shares”) for purposes of compensating MEC and its officers,
directors, employees, agents and affiliates should they sustain any loss due to
a breach of Company’s representations, warranties, covenants or agreements
contained in the Merger Agreement or any related document (a “Loss”).
 
 Item
1A:  Risk Factors
  MYECHECK
IS A HIGH RISK, START-UP COMPANY AND, AS SUCH, THERE IS UNCERTAINTY REGARDING
WHETHER IT WILL SUCCESSFULLY EXECUTE OUR BUSINESS PLAN, GENERATE ENOUGH REVENUE
TO SUPPORT OPERATIONS, RECEIVE ANY INVESTMENT, OR ENGAGE ANY NEW
CUSTOMERS.
 
 “Going
concern” opinion by auditors
 
 The
report of the auditors accompany the Company’s financial statements included
herein notes that the Company has a net loss of $983,793  and net cash
used in operations of $53,944  for the year ended December 31, 2009, a
working capital deficit of $672,276, an accumulated deficit of $3,354,113 and a
stockholders’ deficit of $659,412 at December 31, 2009. As a result of these
factors, the auditors noted that there was “substantial doubt” about the
Company’s ability to continue as a going concern.
 
 The
ability of the Company to continue as a going concern is dependent on
Management's plans, which include the raising of capital through debt and/or
equity markets.  The Company will require additional funding during
the next twelve months to finance the growth of its current and expected
operations and achieve strategic objectives. Additionally, the Company will need
to continually generate revenues through its current business operations in
order to generate enough cash flow to fund operations through
2010.  The Company is also dependent on maintaining their positive
approval status with the Federal Reserve.  If the Company were to lose
this approval, their ability to provide services would be affected
negatively.  The Company is also dependent on bank sponsorship when
processing transactions directly with the Federal Reserve.  If the Company
were to lose bank sponsorship, their ability to provide services would be
affected negatively. On January 29, 2010, the Company’s sponsoring bank was
closed by the Federal Deposit Insurance Corporation (FDIC).  The new bank
acquiring the old bank from the FDIC obtained all rights to accept or reject
former contracts.  The new bank elected to reject the Company’s agreement
with the old bank.  The Company is in the process of moving its customers
to one of its other processing banks.
 
 Product
Risk
 
 There are
no assurances that MyECheck will continue to be able to provide its services.
Changes in laws or interpretation of existing laws may pose significant risk and
may prevent MyECheck from providing its service. MyECheck is dependent on a bank
relationship and there are assurances that MyECheck will be able to maintain its
current bank relationships, or develop new bank relationships.
  9
 
 Market
Risk
  There are
no assurances that the market demand for MyECheck’s services exist, or will
continue to exist in the future. The Internet and high technology industries are
rapidly evolving and changing, and new products or services may be introduced
that may make MyECheck’s services less viable or obsolete.
 
 Reliance
on Key Employees
  At least
in its early stage, the Company's business depends to a large extent on
retaining the services of its founder, Mr. Edward R Starrs (Chairman of the
Board of Directors and Chief Executive Officer), as well as MyECheck’s Chief
technical Officer Mr. R. Stephen Blandford and MyECheck’s Chief Financial
Officer Mr. James R Heidinger. The Company's operations could be materially
adversely affected if, for any reason, one or more of the above officers ceases
to be active in MyECheck's management.
  Financial
Risk
  There are
no assurances that MyECheck will always have sufficient money to continue
operations.
  Competitive
Risk
  There are
no assurances that MyECheck will be able to effectively compete against larger,
better funded competitors. Although MyECheck is apparently first to market with
its RCC service, competing services may be developed that may offer more
advantages, cost less or may have higher sales and marketing
success.
  Dependence
on the Internet
  Because
MyECheck’s products and services are provided directly over the Internet, the
future success of MyECheck will depend in large part on whether the Internet
proves to be a viable commercial marketplace. Whether because of inadequate
development of the necessary infrastructure or as a result of fraud, or any
other cause, if customers lack confidence in sourcing products over the
Internet, MyECheck’s business, operating results and financial condition will be
materially adversely affected.
  Rapid
Technologic Change; Dependence on New Product Development
  The
Internet market in which MyECheck intends to compete is characterized by rapid
and significant technological developments, frequent new product introductions
and enhancements, continually evolving business expectations and swift changes.
To compete effectively in such markets, MyECheck must continually improve and
enhance its products and services and develop new technologies and services that
incorporate technological advances, satisfy increasing customer expectations and
compete effectively on the basis of performance and price. MyECheck’s success
will also depend substantially upon its ability to anticipate, and to adapt its
products and services to its collaborative partner’s preferences. There can be
no assurance that technological developments will not render some of MyECheck's
products and services obsolete, or that MyECheck will be able to respond with
improved or new products, services, and technology that satisfy evolving
customers’ expectations. Failure by MyECheck to acquire, develop or introduce
new products, services, and enhancements in a timely manner could have a
material adverse effect on MyECheck’s business, financial condition and
operations. Also, to the extent one or more of MyECheck's competitors introduces
products and services that better address a customer’s needs, MyECheck’s
business would be materially adversely affected.
  Delays
in New Product and Service Development and Introduction
  The
process of developing products and services such as those offered by MyECheck
may prove to be extremely complex and it is highly likely that MyECheck will
experience delays in developing and introducing new products and services in the
future. If MyECheck is unable to develop and introduce new products, services or
enhancements to existing products and services in a timely manner in response to
changing market conditions or customer requirements, MyECheck's business,
operating results and financial conditions would be materially adversely
affected. Also, announcements of currently planned or other new products and
services may cause customers to delay their subscription decisions in
anticipation of such products and services, which could have a material adverse
effect on MyECheck's business, operating results and financial condition,
especially if the introduction of such products and services is
delayed.
  10
 
 Flaws
and Defects in Products and Services
  Products
and services as complex as those offered by MyECheck may contain undetected
flaws or defects when first introduced or as new versions are released. Any
inaccuracy or defects may result in adverse products and service reviews and a
loss or delay in market acceptance. There can be no assurance that flaws or
defects will not be found in MyECheck’s products and services. If found, flaws
and defects would have a material adverse effect upon MyECheck’s business
operations and financial condition.
  Management
of Potential Growth
 MyECheck's
ability to manage its future growth, if any, will require it to continue to
implement and improve its operational, financial and management information
systems and control and to hire and train new employees, including management
and technical personnel, and also to motivate and manage its new employees and
to integrate them into its overall operations and culture. Although the
management team has successfully grown other companies, there can be no
assurance that MyECheck will be able to perform such actions successfully.
MyECheck's failure to manage growth effectively would have a material adverse
effect on MyECheck’s results of operations and its ability to execute its
business strategy.
  Lack
of a Public Market
  There has
not been a regular trading public market for MyECheck’s shares there are no
assurances that a regular trading market will develop in the near term or that,
if developed, it will be sustained. In the event a regular public trading market
does not develop, any investment in MyECheck’s Common Stock would be highly
illiquid. Accordingly, investors in MyECheck may not be able to readily sell
their shares.
 
 There
are risks in trading in “microcap” stocks, including shares of the
Company
  The
Securities and Exchange Commission has advised investors to use caution in
investing in shares of “microcap” companies, which would include the
Company.  http://www.sec.gov/investor/pubs/microcapstock.htm.  The
Company encourages investors to consider the information provided by the SEC
prior to making an investment in the Company’s stock.
  Dividends
  MyECheck
has not paid any dividends or made distributions to its investors and is not
likely to do so in the foreseeable future. MyECheck presently intends to retain
earnings for use in its business. Additionally, MyECheck may fund a portion of
its future expansion through debt financing, and a condition of such financing
may prohibit the payment of dividends while the debt is outstanding. Therefore,
management's goal is to build value by increasing the size of the business and
not by paying dividends.
  Competition
  With the
ever-growing popularity of the Internet and as computer hardware (i.e., servers)
and creating/maintaining virtual private networks becomes more affordable, other
on-line services may appear or are already established which will try to create
an electronic link to provide similar products and services that MyECheck
offers. Some of those businesses may have far greater financial and marketing
resources, operating experience and name recognition than MyECheck. Potential
competitors include PayPal, Google Checkout, BillMeLater and others. All these
companies take different approaches to processing electronic transactions and to
the best of MyECheck's knowledge, none of them currently offer services of the
same type as MyECheck. Notwithstanding, these potential competitors, as well as
the entry of more competitors offering similar services, could have a material
adverse effect upon MyECheck's business, operating results and financial
condition.
 
 Reliance
on license with affiliated party
  The
Company has entered into a memorandum of understanding with Ed Starrs, its
founder and CEO, under which the Company will become the sole licensee of a
newly granted patent for check processing technology.  No royalties
will be due for the patent for one year, and future royalties are subject to
negotiation by the Company and Mr. Starrs.  The Company believes that
it will obtain a competitive advantage from the ability to access the patent.
Failure to agree on future terms of the license could have a material adverse
impact on the Company.
  11
 
 Item
1B. Unresolved Staff Comments.
 
 Not
applicable
 
 Item
2: Description of Property
  MyECheck’s
operates its executive offices from approximately 3,300 square feet of Class A
office space in a business park located in El Dorado Hills, CA. Certain
contractors operate from their homes located in various regions throughout the
country. MyECheck’s primary operational data center is located in a tier IV data
center in Sacramento, CA. Our telephone number is (916) 932-0900.
  Item
3: Legal Proceedings
  MyECheck
may from time to time be involved in various claims, lawsuits, and disputes with
third parties, actions involving allegations of discrimination, intellectual
property infringement, or breach of contract actions incidental to the operation
of its business. However, litigation is subject to inherent uncertainties, and
an adverse result in these or other matters may arise from time to time that may
harm its business. MyECheck is currently not aware of any such legal proceedings
or claims that they believe will have, individually or in the aggregate, a
material adverse affect on its business, financial condition or operating
results.
 
 During
2005, a lawsuit was filed against the Company in the State of California,
claiming the Company was using the technology created by the plaintiff. On March
31, 2010, the Company settled the case with the plaintiff with a payment of
275,000 shares of the Company’s stock.  The stock was valued at
$46,750 ($0.17/share), based upon the quoted closing trading price. Since the
potential loss on settlement existed at December 31, 2009, the Company accrued
the settlement as the amount was known prior to the issuance of these financial
statements.
 
 Item
4: Submission of Matters to a Vote of Security Holders
  There
were no matters submitted to a vote of security holders during the fiscal period
ended December 31, 2009.
  PART
II
  Item
5: Market for Common Equity, Related Stockholder Matters and Small Business
Issuer Purchases of Equity Securities
  The
Company's Common stock is presently listed on the OTC Bulletin Board under the
symbol "MYEC". Our common stock has been listed on the OTC Bulletin Board since
October 2006. There is currently no significant  trading in our common
stock and there has been    little   active
trading since our common stock has been listed on the OTC Bulletin Board. Prior
to the merger, any trading in the Company’s shares did not represent trading
based on the current operations or business of the Company.
  As of
December 31, 2009, the approximate number of holders of Common Stock of the
Company is 54.
 
 Since
our inception date, our boards of directors have not declared any dividend
payments to the shareholders. The declaration and payment of dividends to
holders of our common stock by us, if any, are subject to the discretion of our
board of directors. Our board of directors will take into account such matters
as general economic and business conditions, our strategic plans, our financial
results and condition, contractual, legal and regulatory restrictions on the
payment of dividends by us, and such other factors as our board of directors may
consider to be relevant.
  The
company has never issued securities for any equity compensation
plan.
 
 On March
14, 2008, as a result of the Merger, the former shareholders of MEC became
shareholders of approximately 60% of the Company’s outstanding common
stock.   The transaction was exempt from registration under
Section 4(1) of the Securities Act of 1933.
 
 MyECheck
has entered into subscription agreements with Youngal Group Ltd. and Anshan
Finance Ltd. (together the “Investors”) who have agreed, in the aggregate, to
purchase 4,000,000 shares of MyECheck’s common stock  following the
Effective Time of the Merger. The shares were issued in reliance upon an
exemption from the registration requirements of the Securities Act of 1933
provided by Regulation S.  A total of 4,000,000 shares have been
issued under those subscription agreements, but the Investors did not fully
perform.
  12
  Item
6: Selected Financial Data
 
 Omitted
per Item 301 (c) of Regulation S-K.
 
 Item
7.   Management's Discussion and Analysis or Plan of
Operation
  The
following discussion contains certain forward-looking statements that are
subject to business and economic risks and uncertainties, and MyECheck's actual
results could differ materially from those forward-looking statements. The
following discussion regarding the financial statements of MyECheck should be
read in conjunction with the financial statements and notes
thereto.
 
 MyECheck's
prior full fiscal year ending December 31, 2007 is not indicative of MyECheck's
current business plan and operations. Incorporated in October 2004, MyECheck
currently has limited revenues and is deemed an early stage Company. This plan
of operation will focus on MyECheck's business plan and operations current.
There can be no assurance that MyECheck will generate positive cash flow and
there can be no assurances as to the level of revenues, if any, MyECheck may
actually achieve from its operations.
 
  Implementation
Plan
 
 Following
is an outline of MyECheck's plan to build a widely used payment system. The
success of MyECheck depends on a number of factors including the careful
selection and active participation of qualified Value Added Resellers (“VARs”)
and Payment Service Providers (“PSPs”). The VARs / PSPs commitment to MyECheck
will depend on the commercial viability of MyECheck’s solutions and web-based
services.
 
 MyECheck
targets internet payment gateways and payments software and service providers
for partnership and reseller opportunities. Early emphasis has been on building
sales channels through partnerships. MyECheck has experienced early success in
partnerships with Cardinal Commerce and is in discussions and other major
PSPs.
 
 In
addition to its in-house direct sales department, MyECheck has engaged a number
of specialized independent sales agents such as Sheffield Resource Network and
others, who leverage their existing contacts for direct sales.
 
 MyECheck
has an active PR program and issues press releases on a regular basis which
generate in-bound leads and interest from industry press. Company management
conducts interviews with national press. MyECheck attends and exhibits at
industry trade shows, conferences and other networking events.
 
 MyECheck
in-house sales force and independent sales agents also use email and cold
calling marketing techniques, focusing on the industry’s largest target
companies. MyECheck is currently in discussion with large Independent Sales
Organizations (ISOs) regarding partnership and representation
opportunities.
 
 In
addition to the effective marketing and distribution of MyECheck’s services,
MyECheck’s infrastructure must be able to support a significant increase in
transaction volume. MyECheck plans to enhance its infrastructure by adding a new
data center and new hardware in anticipation of increased transaction volume.
MyECheck plans to continue to scale it’s infrastructure in advance of the
need.
  Critical
Accounting Policies
  Our
financial statements and related public financial information are based on the
application of accounting principles generally accepted in the United States
(“GAAP”). GAAP requires the use of estimates; assumptions, judgments and
subjective interpretations of accounting principles that have an impact on the
assets, liabilities, revenues and expense amounts reported. These estimates can
also affect supplemental information contained in our external disclosures
including information regarding contingencies, risk and financial condition. We
believe our use of estimates and underlying accounting assumptions adhere to
GAAP and are consistently and conservatively applied. We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances. Actual results may differ materially from
these estimates under different assumptions or conditions. We continue to
monitor significant estimates made during the preparation of our financial
statements.
  Our
significant accounting policies are summarized in Note 2 of our financial
statements. While all these significant accounting policies impact our financial
condition and results of operations, we view certain of these policies as
critical. Policies determined to be critical are those policies that have the
most significant impact on our financial statements and require management to
use a greater degree of judgment and estimates. Actual results may differ from
those estimates. Our management believes that given current facts and
circumstances, it is unlikely that applying any other reasonable judgments or
estimate methodologies would cause effect on our consolidated results of
operations, financial position or liquidity for the periods presented in this
report.
  We
believe the following critical accounting policies and procedures, among others,
affect our more significant judgments and estimates used in the preparation of
our consolidated financial statements:
 13
  Revenue
recognition
  The
Company records revenue when all of the following have occurred; (1) persuasive
evidence of an arrangement exists, (2) product delivery has occurred, (3) the
sales price to the customer is fixed or determinable, and (4) collectibility is
reasonably assured.
 
 The
Company earns revenue from services, which has included the
following:  electronic check processing, financial verification,
identity verification and check guarantee services. The services are performed
under the terms of a contract with a customer, which states the services to be
utilized and the terms and fixed price for all services under
contract.  The price of these services may be a fixed fee per
transaction and/or a percentage of the transaction processed depending on the
service.
 
 Revenue
from electronic check processing is derived from fees collected from merchants
to convert merchant customer check data into an electronic image of a paper
draft, which allows the Company to deposit the funds to the merchant’s bank
through image clearing with the Federal Reserve on behalf of the
bank.  The Company recognizes the revenue related to electronic check
processing fees when the services are performed.
 
 Revenue
from financial verification is derived from fees collected from merchants to
process requests to validate financial verifications to an outside service
provider under contract with the Company.  This revenue is recognized
when the transaction is processed, since the Company has no further
obligations.
 
 Revenue
from check guarantee services is derived from fees collected from merchants to
process transaction to an outside service provider under contract with the
Company.  This revenue is recognized when the transaction is
processed, since the Company has no further obligations.
  Stock-based
compensation
  Generally,
all forms of share-based payments, including stock option grants, restricted
stock grants and stock appreciation rights are measured at their fair value on
the awards’ grant date, based on the estimated number of awards that are
ultimately expected to vest. Share-based compensation awards issued to
non-employees for services rendered are recorded at either the fair value of the
services rendered or the fair value of the share-based payment, whichever is
more readily determinable. The expense resulting from share-based payments are
recorded in general and administrative expense in the consolidated statement of
operations.
 
 Derivative
Financial Instruments
 
 Fair
value accounting requires bifurcation of embedded derivative instruments such as
conversion features in convertible debt or equity instruments, and measurement
of their fair value for accounting purposes. In determining the appropriate fair
value, the Company uses the Black-Scholes option-pricing model. In assessing the
convertible debt instruments, management determines if the convertible debt host
instrument is conventional convertible debt and further if there is a beneficial
conversion feature requiring measurement. If the instrument is not considered
conventional convertible debt, the Company will continue its evaluation process
of these instruments as derivative financial instruments.
  Once
determined, derivative liabilities are adjusted to reflect fair value at each
reporting period end, with any increase or decrease in the fair value being
recorded in results of operations as an adjustment to fair value of derivatives.
In addition, the fair value of freestanding derivative instruments such as
warrants, are also valued using the Black-Scholes option-pricing
model.
  Income
Taxes
 
 The
Company accounts for income taxes in accordance with accounting guidance now
codified as FASB ASC Topic 740, “Income Taxes,” which requires that the Company
recognize deferred tax liabilities and assets based on the differences between
the financial statement carrying amounts and the tax bases of assets and
liabilities, using enacted tax rates in effect in the years the differences are
expected to reverse. Deferred income tax benefit (expense) results from the
change in net deferred tax assets or deferred tax liabilities. A valuation
allowance is recorded when it is more likely than not that some or all deferred
tax assets will not be realized.
 
 Accounting
guidance now codified as FASB ASC Topic 740-20, “Income Taxes – Intraperiod Tax
Allocation,” clarifies the accounting for uncertainties in income taxes
recognized in accordance with FASB ASC Topic 740-20 by prescribing guidance for
the recognition, de-recognition and measurement in financial statements of
income tax positions taken in previously filed tax returns or tax positions
expected to be taken in tax returns, including a decision whether to file or not
to file in a particular jurisdiction. FASB ASC Topic 740-20 requires that any
liability created for unrecognized tax benefits is disclosed. The application of
FASB ASC Topic 740-20 may also affect the tax bases of assets and liabilities
and therefore may change or create deferred tax liabilities or assets. The
Company would recognize interest and penalties related to unrecognized tax
benefits in income tax expense. At December 31, 2009 and 2008, respectively, the
Company did not record any liabilities for uncertain tax positions.
 
 Earnings
per Share
 
 In
accordance with accounting guidance now codified as FASB ASC Topic 260,
“Earnings per Share,”  basic earnings (loss) per share is computed by
dividing net income (loss) by weighted average number of shares of common stock
outstanding during each period.  Diluted earnings (loss) per share is
computed by dividing net income (loss) by the weighted average number of shares
of common stock, common stock equivalents and potentially dilutive securities
outstanding during the period.
  14
  Off-Balance Sheet
Arrangements
  We do not
have any off-balance sheet arrangements, financings, or other relationships with
unconsolidated entities or other persons, also known as “special purpose
entities” (SPEs).
 
 Operating
Lease
 
 The
Company leased its corporate office under a non-cancelable rental agreement from
May 2005 through December 2009.  During 2009, the Company extended the
non-cancelable operating lease.  This lease expires on February 28,
2012.
  Liquidity
 
 As of
December 31, 2009, MyECheck had cash on hand amounting to $7,255. MyECheck is
currently operating cash flow negative and its operating expenses exceed its
operating income.
 
 There are
currently no commitments for capital expenditures.
  There are
trends in sales that would have a material affect on MyECheck. In recent months
there has been a marked increase in the number of applications for MyECheck’s
services. Management expects this trend to continue throughout 2010, however
there can be no assurances that the current trend will continue.
 
 There are
currently no guarantees or other off balance sheet arrangements.
 
 Revenue
from operations during the year ended December 31, 2009 was $725,331. During the
year ended December 31, 2008, revenue from operations was $548,159.
 
 MyECheck
started processing transactions on version one of its software platform in July
of 2005 and continued through March of 2006, after which it ceased processing in
order to further develop and refine its service offerings. During the period
from March of 2006 through September 2007, MyECheck redesigned and developed its
software platform to better suit the demands of its prospective customers and to
ensure the accurate performance of the software. MyECheck launched revenue
generating operations on version two of its software platform in September
2007.
 
 The
Company’s auditors have issued a “going concern” qualification to their opinion
on the Company’s financial statements.  The Company expects to require
additional capital infusions during
2010and may not survive without such capital
infusions.
 
 Item
7A: Quantitative and Qualitative Disclosures About Market Risk
 
 Omitted
per Item 305(e)  of Regulation S-K.
 
 Item
8: Financial Statements
  The
consolidated financial statements required to be filed pursuant to this Item 8
begin on page F-1 of this report.
  Item
9: Changes In Disagreements With Accountants on Accounting and Financial
Disclosure
  Berman
& Company, P.A., the Company’s Independent Registered Public Accounting
Firm (the “Firm”), have been the only auditor since inception and there
have been no disagreements between MyECheck and the Firm.
  Item
9A: Controls and Procedures
  Our Chief
Executive Officer and Chief Financial Officer (the "Certifying Officers") are
responsible for establishing and maintaining disclosure controls and procedures
for the Company. The Certifying Officers have designed such disclosure controls
and procedures to ensure that material information is made known to them,
particularly during the period in which this report was prepared. The Certifying
Officers have evaluated the effectiveness of the Company's disclosure controls
and procedures within 90 days of the date of this report and believe that the
Company's disclosure controls and procedures are effective based on the required
evaluation. There have been no significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
  15
  Internal
control over financial reporting is a process to provide reasonable assurance
regarding the reliability of consolidated financial reporting and the
preparation of financial statements for external purposes in accordance with
U.S. generally accepted accounting principles. There has been no change in the
Company’s internal control over financial reporting during the year ended
December 31, 2009 that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
 
 The
Company’s management, including the Company’s CEO and CFO, does not expect that
the Company’s disclosure controls and procedures or the Company’s internal
controls will prevent all errors and all fraud. A control system, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, 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 the
controls can provide absolute assurance that all control issues and instances of
fraud, if any, within the Company have been detected.
  Management
conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on this evaluation, management concluded that the company’s
internal control over financial reporting was effective as of December 31,
2009.
 
 Berman
& Company, P.A., the Company’s independent registered public accounting
firm, has not issued an attestation report on the effectiveness of the Company’s
internal controls over financial reporting since we are not yet required to
comply with this provision of Section 404(B) of the Sarbanes-Oxley
Act.
  Changes
in Internal Control over Financial Reporting
  There
were no changes in the Company’s internal control over financial reporting
during the year ended December 31, 2009, that have materially affected, or are
reasonably likely to materially affect, the Company’s internal control over
financial reporting.
  Item
9B: Other Information
  None
  Item
10: Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act
  There is
no involvement by any of Director, Executive Officer or Control Person in
bankruptcy, criminal proceeding, injunctions, or violation of securities law in
the past 5 years.
 
 The
following table sets forth the names and ages of the current directors and
executive officers of MyECheck, the principal offices and positions with
MyECheck held by each person and the date such person became a director or
executive officer of MyECheck. The executive officers of MyECheck are elected
annually by the Board of Directors. The directors serve one year terms until
their successors are elected. The executive officers serve terms of one year or
until their death, resignation or removal by the Board of Directors. There are
no family relationships between any of the directors and executive officers. In
addition, there was no arrangement or understanding between any executive
officer and any other person pursuant to which any person was selected as an
executive officer.
  The
directors and executive officers of MyECheck are as follows:
 
 Name
              
              Age
              
              Position(s)
              
              Date
      AppointedEdward
      Robert Starrs
              
              49
              
              President
              
              October
      29, 2004Chief
      Executive OfficerChairman
      of the BoardDirectorRobert
      Stephen Blandford
              
              50
              
              Vice
      President of Technology
              
              October
      29, 2004Chief
      Technology OfficerSecretaryDirectorJames
      Ronald Heidinger
              
              53
              
              Vice
      President of Finance
              
              May
      15, 2006Chief
      Financial OfficerTreasurerDirector
  16
 
 Edward R
Starrs
 
 Mr.
Starrs has more than 20 years experience as an international business executive
with management experience in multiple industries. He has been an officer and
director of MyECheck since its formation in 2004. Previously, Mr. Starrs was
President of Starnet Systems International, Inc., a wholly owned subsidiary of a
public company that was processing more than $2 billion annually in Internet
transactions.
 
 Mr.
Starrs owned and operated several successful companies including, ERS Marketing,
Inc., where he produced over $20 million in contracts for his clients, and Bay
Distributing, Inc. a major distributor of over 800 product categories to Fortune
500 accounts.
 
 From
January, 2002 through October, 2004, Mr. Starrs was President of Digency, Inc.,
an online payment processing company engaged in credit card and eCheck
transaction processing for Internet Merchants.
 
 Starrs
has also held senior management positions with Fortune 100 companies including
McCaw Communications, Inc. (AT&T), and AMF, Inc., the world’s largest
sporting goods conglomerate.
  R Stephen
Blandford
 
 Mr.
Blandford possesses more than 15 years experience as a Senior Information
Technology Professional including serving as CTO for companies in the online
entertainment and gaming industries.
 
 Mr.
Blandford’s professional experience includes i2 Corp, MXM Media, Maxum
Entertainment Group, Perspective Technologies, WinStreak and
others.
 
 From
January 2002 through October 2004, Mr. Blandford was Chief Technology Officer
for Digency, Inc., an online payment processing company engaged in credit card
and eCheck transaction processing for Internet Merchants.
 
 Mr.
Blandford has expertise in the design and implementation of Java streaming media
solutions for multiple platforms, using Coldfusion, PHP, & SQL DBs. For more
than a decade Blandford has architected systems featuring virtually every
emerging technology.
 
 James
Heidinger, BS, CPA
 
 During
the period from 2000 through 2005, Mr. Heidinger served as Chief Financial
Officer for ORBA Financial Management, an investment and insurance sales and
marketing firm licensed in all 50 states.  With over 450 independent
registered representatives and premium and investment sales of over $750
million, ORBA is the top production leader for Western Reserve Life and
InterSecurities, both subsidiaries of AEGON NV, the third largest
international insurance firm in the world and a major investor in ORBA Financial
Management.
 
 Previously,
Mr. Heidinger was recruited to create and implement a corporate accounting
system, provide financial statements, perform a systems conversion and set up a
cash management system for Cucina Holdings, Inc. a $50 million food and beverage
manufacturer, wholesaler and retailer.  Its branded names include Java City
Coffee, Caravali Coffees and La Petite Boulangerie.
  17
 
 Audit
Committee Financial Expert
  We do not
have an audit committee financial expert as we believe the cost related to
retaining a financial expert at this time is prohibitive. Further, because we
are only beginning our commercial operations, at the present time, we believe
the services of a financial expert are not warranted.
  Conflicts
of Interest
  The only
conflict that we foresee is that our officers and directors devote time to
projects that do not involve us.
  SECTION
16(A) BENEFICIAL OWNER REPORTING COMPLIANCE
  Section
16(a) of the Securities and Exchange Act of 1934 requires that the Company's
directors, executive officers, and persons who own more than 10% of registered
class of the Company's equity securities, or file with the Securities and
Exchange Commission (SEC), initial reports of ownership and report of changes in
ownership of common stock and other equity securities of the Company. Officers,
directors, and greater than 10% beneficial owners are required by SEC regulation
to furnish the Company with copies of all Section 16(a) reports they
file.
  Code of
Ethics
  The
Company has adopted code of ethics for all of the employees, directors and
officers.
  Item
11: Executive Compensation
  On
January 1, 2007, MyECheck entered into a three year Employment Agreement with
Mr. Edward R Starrs, MyECheck's President and Chief Executive Officer, whereby
MyECheck will pay Mr. Starrs an annual salary of $240,000. The Agreement also
requires MyECheck to provide, at its expense, complete health insurance coverage
for Mr. Starrs and his children.
 
 MyECheck
pays. R Stephen Blandford, MyECheck's Vice President of Technology and Chief
Technology Officer, an annual salary of $90,000 and provides health insurance
coverage for Mr. Blandford.
 
 MyECheck
pays Mr. James R Heidinger, MyECheck's Vice President of Finance and Chief
Financial Officer, an annual salary of $135,000 and provides complete health
insurance coverage for Mr. Heidinger.
 
 MyECheck
does not provide compensation for its directors.
  18
 
 The
following table sets forth the total compensation MyECheck pays its
Officers.
  Annual
      Compensation
              
              Long-Term
      CompensationAwards
              
              Pay-outsName
      and
                Principal
                Position
              
              
              Year
              
              Salary($)
              
              Bonus($)
              
              Other
      Annual
                Compensation
      ($)
              
              Restricted
                Stock
                Award(s)
      ($)
              
              Securities
                Underlying
                Options/SARs
      (#)
              
              LTIP
                Payouts
              
              All
      Other
                Compensation
      ($)Edward
      R Starrs
              
              
              2009
              
              240,000
              
              0
              
              19,317
              
              128,356
              
              0
              
              0
              
              0(Chairman
      & CEO)R
      Stephen Blandford
              
              
              2009
              
              90,000
              
              0
              
              6,816
              
              99,960
              
              0
              
              0
              
              0(Chief
      Technology Officer, Director)James
      R Heidinger
              
              
              2009
              
              135,000
              
              0
              
              9,268
              
              99,960
              
              0
              
              0
              
              0(Chief
      Financial Officer, Director)
 
 Option/SAR
Grants
 
 
 On April
7, 2009 the Company adopted the 2009 Equity Incentive Plan (the “Plan”) covering
10,000,000 stock rights including options, restricted stock and stock
appreciation rights. Under the Plan, employees, and consultants receive initial
grants of options, which vest immediately, and the remaining unvested portion of
a grant vests ratably over a three-year period.
 
 On May
11, 2009, the Company granted 7,300,000 non-qualified stock options to employees
and non-employee consultants for services to be rendered over a three-year
period.  The options are exercisable over a 5 - 10 year term at $0.13
per share and vest 25% immediately while the remaining 75% vests monthly in
equal increments over a three-year period.  These options had a fair
value of $871,828 using the Black-Scholes option-pricing model.
 
 There are
no retirement, pension, or profit sharing plans for the benefit of our officers
and directors.
 
 Long-Term
Incentive Plan Awards
  We do not
have any long-term incentive plans.
  Compensation
of Directors
  We do not
have any plans to pay our directors any compensation for Board
participation.
  Indemnification
  The
Corporation Laws of the State of Nevada and MyECheck's Bylaws provide for
indemnification of MyECheck's Directors for liabilities and expenses that they
may incur in such capacities. In general, Directors and Officers are indemnified
with respect to actions taken in good faith in a manner reasonably believed to
be in, or not opposed to, the best interests of MyECheck, and with respect to
any criminal action or proceeding, actions that the indemnitee had no reasonable
cause to believe were unlawful. Furthermore, the personal liability of the
Directors is limited as provided in MyECheck's Articles of
Incorporation
  Regarding
indemnification for liabilities arising under the Securities Act of 1933, which
may be permitted to directors or officers under Nevada law, we are informed
that, in the opinion of the Securities and Exchange Commission, indemnification
is against public policy, as expressed in the Act and is, therefore,
unenforceable.
  19
 
 Item
12: Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
 
 The
following table sets forth information with respect to MyECheck's equity
securities owned of record or beneficially by (i) each Officer and Director of
MyECheck; (ii) each person who owns beneficially more than 5% of each class of
MyECheck's outstanding equity securities; and (iii) all Directors and Executive
Officers as a group, after giving effect to Merger and to the financing and
warrant transactions described herein.
  Name
      and Address of Beneficial Owner
              
              Common
      Stock
              
              PercentageEdward
      Robert Starrs
              
              
              29,168,751
              
              
              41.61
              %674
      Platt CircleEl
      Dorado Hills, CA 95762Robert
      Stephen Blandford
              
              
              2,769,375
              
              
              3.91
              %2624
      Alana CtCameron
      Park, CA 95682James
      Ronald Heidinger
              
              
              1,478,125
              
              
              2.08
              %488
      Lakeridge CourtEl
      Dorado Hills, CA 95762Anshan
      Finance Ltd *
              
              
              4,000,000
              
              
              5.65
              %Jasmine
      Court35A
      Regent StreetBelize
      City, BelizeYoungal
      Group Ltd.*
              
              
              4,000,000
              
              
              5.65
              %Jasmine
      Court35A
      Regent StreetBelize
      City, Belize
   * Anshan
Finance Ltd has agreed to purchase 2,000,000 shares from MyECheck for
$1,000,000, and may be entitled to warrants from MyECheck to acquire an
additional 2,000,000 shares from MyECheck at the price of $2.00 per share.
Youngal Group Ltd.  has agreed to purchase 2,000,000 shares from
MyECheck for $1,000,000, and may be entitled to warrants from MyECheck
to acquire an additional 2,000,000 shares from MyECheck at the price of $4.00
per share. Youngal Group Ltd.  owes MyECheck $400,000 pursuant to a
subscription receivable and the remaining investment has been received by
MyECheck.
 
 As of
December 31, 2008, the Company determined that the balance due pursuant to a
subscription receivable owed by Youngal Group Ltd was deemed
uncollectible.  The Company wrote off the balance due of
$400,000 as a provision for uncollectible stock subscriptions at December
31, 2008.
 
 Except
as described above, there are currently no options, warrants, rights or other
securities conversion privileges granted to our officers, directors or
beneficial owners.
  Securities
Authorized for Issuance Under Equity Compensation Plans.
  We have
no equity compensation plans.
  20
 
 Item
13: Certain Relationships and Related Transactions
 
 MyECheck
has entered into subscription agreements with Youngal Group Ltd. and Anshan
Finance Ltd. (together the “Investors”) who have agreed, in the aggregate, to
purchase 4,000,000 shares of MyECheck’s common stock (the “Shares”) following
the Effective Time of the Merger. The Shares will be issued in reliance upon an
exemption from the registration requirements of the Securities Act of 1933 (the
“Act”) provided by Regulation S and may only be transferred in accordance with
the provisions of Regulation S, pursuant to an effective registration under the
Act, or pursuant to an available exemption from registration under the
Act
  In
connection with the sale of the Shares, MyECheck has entered into warrant
agreements with Youngal Group Ltd. and Anshan Finance Ltd. (the “Warrants”). The
terms of the Warrants provide the Investors the opportunity to purchase up to
4,000,000 additional shares of MyECheck’s common stock for a purchase price of
$4.00 per share or $2.00 per share, respectively. The Warrants may only be
exercised following the effective time of the proposed merger between MyECheck
and Sekoya and the right to exercise the warrants terminates as of 5:00 p.m.
local time in Vancouver, B.C. on the third anniversary of issuance. The Warrants
were to be issued in reliance upon an exemption from the registration
requirements of the Act provided by Regulation S and may only be transferred in
accordance with the provisions of Regulation S, pursuant to an effective
registration under the Act, or pursuant to an available exemption from
registration under the Act.
  The
Investors are affiliates of Shirley Wong, a promoter of Sekoya.
 
 MyECheck
is not required as a Bulletin Board listed company to have independent directors
and at the present time does not have any directors who are not also members of
management.
  Item
14: Principal Accountant Fees and Services
  1) Audit
Fees
  The
aggregate fees billed for the last two fiscal years for professional services
rendered by the principal accountant for the audit of the Company's annual
financial statements and review of financial statements included in the
Company's Form 10-Qs or services that are normally provided by the accountant in
connection with statutory and regulatory engagements for those fiscal years
was:
  2009 -
Berman & Company, P.A.  $41,000
 
 2008 -
Berman & Company, P.A.  $40,000
  
 2) Audit
- Related Fees
  The
aggregate fees billed in each of the last two fiscal years for assurance and
related services by the principal accountants that are reasonably related to the
performance of the audit or review of the Company's financial statements and are
not reported in the preceding paragraph:
  2009 -
Berman & Company, P.A.  None
 
 2008 -
Berman & Company, P.A.  None
  21
 
 3) Tax
Fees - None
  The
aggregate fees billed in each of the last two fiscal years for professional
services rendered by the principal accountant for tax compliance, tax advice,
and tax planning was:
 
 2009 -
Berman & Company, P.A. - None
  2008 -
Berman & Company, P.A. - None
  4) All
Other Fees
  The
aggregate fees billed in each of the last two fiscal years for the products and
services provided by the principal accountant, other than the services reported
in paragraphs (1), (2), and (3) was:
  2009 -
Berman & Company, P.A.  None
 
 2008 -
Berman & Company, P.A.  None
 
 Item
15: Exhibits
  Exhibit
      No.
              
              Description31
              
              Certification
      of the Chief Executive Officer and Chief Financial Officer pursuant to
      Rule 13a-14 of the Securities and Exchange Act of 1934 as amended, as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      200232
              
              Certification
      of the Chief Executive Officer and Chief Financial Officer pursuant to 18
      U.S.C. Section 1350 as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002
  22
  SIGNATURES
  Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized on this 15st day of April,
2010.
  MyECheck,
Inc.
  (Registrant)
  By: /s/
Ed Starrs
  Ed
Starrs
  President
and Chief Executive Officer
   Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated:
  Signature
              
              Title
              
              Date/s/
      Ed Starrs
              
              
              
              April
      15, 2010Edward
      Robert Starrs
              
              President,
      Chief Executive Officer,Chairman
      of the Board, Director/s/
      James Heidinger
              
              
              
              April
      15, 2010James
      Ronald Heidinger
              
              Vice
      President of Finance,Chief
      Financial Officer, Treasurer, Director/s/
      Robert Stephen Blandford
              
              
              
              April
      15, 2010Robert
      Stephen Blandford
              
              Vice
      President of Technology,Chief
      Technology Officer, Secretary, Director
   23


MYECHECK,
INC. AND SUBSIDIARY


CONSOLIDATED
FINANCIAL STATEMENTS


DECEMBER
31, 2009 AND 2008







Contents





PageReport
      of Independent Registered Public Accounting Firm
                    
                    
                    F-1Consolidated
      Balance Sheets as of December 31, 2009 and 2008
                    
                    
                    F-2Consolidated
      Statements of Operations for the Years Ended December 31, 2009 and
      2008
                    
                    
                    F-3Consolidated
      Statement of Changes in Stockholders’ Deficit for the Years Ended December
      31, 2009 and 2008
                    
                    
                    F-4Consolidated
      Statements of Cash Flows for the Years Ended December 31, 2009 and
      2008
                    
                    
                    F-5Notes
      to Consolidated Financial Statements for the Years Ended December 31, 2009
      and 2008
                    
                    
                    F-6
      - F-23













F-1


MyECheck, Inc. and Subsidiary


Consolidated Balance
Sheets





December 31, 2009
                                                              
                                                              
                                                              December 31,2008ASSETSCurrent
      AssetsCash
                                                              
                                                              $
                                                              7,255
                                                              
                                                              
                                                              $
                                                              23,999Accounts
      receivable
                                                              
                                                              
                                                              7,245
                                                              
                                                              
                                                              
                                                              13,253Prepaid
      expenses
                                                              
                                                              
                                                              3,112
                                                              
                                                              
                                                              
                                                              -Debt
      issue costs - net
                                                              
                                                              
                                                              1,358
                                                              
                                                              
                                                              
                                                              -Total
      Current Assets
                                                              
                                                              
                                                              18,970
                                                              
                                                              
                                                              
                                                              37,252Other
      AssetsDeposit
                                                              
                                                              
                                                              12,864
                                                              
                                                              
                                                              
                                                              12,864Total
      Assets
                                                              
                                                              $
                                                              31,834
                                                              
                                                              
                                                              $
                                                              50,116LIABILITIES AND STOCKHOLDERS'
      DEFICITCurrent
      LiabilitiesAccounts
      payable and accrued expenses
                                                              
                                                              $
                                                              220,270
                                                              
                                                              
                                                              $
                                                              184,532Accrued
      compensation - related parties
                                                              
                                                              
                                                              198,969
                                                              
                                                              
                                                              
                                                              96,485Accrued
      settlement payable
                                                              
                                                              
                                                              46,750
                                                              
                                                              
                                                              
                                                              -Loans
      payable - related parties
                                                              
                                                              
                                                              43,864
                                                              
                                                              
                                                              
                                                              38,864Loans
      payable - other
                                                              
                                                              
                                                              46,694
                                                              
                                                              
                                                              
                                                              46,694Derivative
      liabilities
                                                              
                                                              
                                                              116,672
                                                              
                                                              
                                                              
                                                              -Redeemable
      convertible note payable - net
                                                              
                                                              
                                                              18,027
                                                              
                                                              
                                                              
                                                              -Total
      Current Liabilities
                                                              
                                                              
                                                              691,246
                                                              
                                                              
                                                              
                                                              366,575Stockholders'
      DeficitCommon
      stock, $0.001 par value, 200,000,000 shares authorized70,864,772
      and 69,937,501 shares issued and outstanding
                                                              
                                                              
                                                              70,865
                                                              
                                                              
                                                              
                                                              69,938Additional
      paid in capital
                                                              
                                                              
                                                              2,623,835
                                                              
                                                              
                                                              
                                                              1,983,923Accumulated
      deficit
                                                              
                                                              
                                                              (3,354,113
                                                              )
                                                              
                                                              
                                                              (2,370,320
                                                              )Total
      Stockholders' Deficit
                                                              
                                                              
                                                              (659,412
                                                              )
                                                              
                                                              
                                                              (316,459
                                                              )Total
      Liabilities and Stockholders' Deficit
                                                              
                                                              $
                                                              31,834
                                                              
                                                              
                                                              $
                                                              50,116


See
accompanying notes to financial statements


F-2





MyECheck, Inc. and Subsidiary


Consolidated Statements of
Operations





For
      the Years Ended December 31,2009
                    
                    
                    2008Processing
      Revenues
                    
                    $
                    725,331
                    
                    
                    $
                    548,159General
      and Administrative
                    
                    
                    1,506,974
                    
                    
                    
                    1,592,908Loss
      from Operations
                    
                    
                    (781,643
                    )
                    
                    
                    (1,044,749
                    )Other
      (Income)/ExpenseChange
      in fair value of derivative liabilities
                    
                    
                    2,628
                    
                    
                    
                    -Derivative
      expense
                    
                    
                    79,044
                    
                    
                    
                    -Interest
      expense
                    
                    
                    20,910
                    
                    
                    
                    -Loss
      on settlement of accounts payable
                    
                    
                    52,818
                    
                    
                    
                    -Settlement
      expense
                    
                    
                    46,750
                    
                    
                    
                    -Other
      income
                    
                    
                    -
                    
                    
                    
                    (41,373
                    )Total
      Other (Income)/Expense
                    
                    
                    202,150
                    
                    
                    
                    (41,373
                    )Net
      Loss
                    
                    $
                    (983,793
                    )
                    
                    $
                    (1,003,376
                    )Net
      Loss Per Common Share - Basic and Diluted
                    
                    $
                    (0.01
                    )
                    
                    $
                    (0.02
                    )Weighted
      average number of common shares outstandingduring
      the year - basic and diluted
                    
                    
                    70,386,965
                    
                    
                    
                    59,687,159





See
accompanying notes to financial statements


F-3





MyECheck, Inc. and Subsidiary


Consolidated
Statements of Changes in Stockholders' Deficit


For the Years Ended December
31, 2009 and 2008




Common
      Stock
                  
                  
                  Additional
                  
                  
                  AccumulatedShares
                  
                  
                  Amount
                  
                  
                  Paid
      -in Capital
                  
                  
                  Deficit
                  
                  
                  TotalBalance,
      December 31, 2007
                  
                  
                  26,375,000
                  
                  
                  $
                  26,375
                  
                  
                  $
                  73,896
                  
                  
                  $
                  (1,366,944
                  )
                  
                  $
                  (1,266,673
                  )Issuance of shares in reverse
      acquisition treated as a recapitalization
                  
                  
                  39,562,501
                  
                  
                  
                  39,563
                  
                  
                  
                  (85,973
                  )
                  
                  
                  -
                  
                  
                  
                  (46,410
                  )Stock
      issued for cash ($0.50/share)
                  
                  
                  4,000,000
                  
                  
                  
                  4,000
                  
                  
                  
                  1,996,000
                  
                  
                  
                  -
                  
                  
                  
                  2,000,000Net
      loss, 2008
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (1,003,376
                  )
                  
                  
                  (1,003,376
                  )Balance,
      December 31, 2008
                  
                  
                  69,937,501
                  
                  
                  
                  69,938
                  
                  
                  
                  1,983,923
                  
                  
                  
                  (2,370,320
                  )
                  
                  
                  (316,459
                  )Stock
      issued to settle accounts payable ($0.23/share)
                  
                  
                  377,271
                  
                  
                  
                  377
                  
                  
                  
                  86,395
                  
                  
                  
                  -
                  
                  
                  
                  86,772Stock
      based compensation
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  356,817
                  
                  
                  
                  -
                  
                  
                  
                  356,817Stock
      issued for services ($0.16 and $0.17/share)
                  
                  
                  550,000
                  
                  
                  
                  550
                  
                  
                  
                  91,450
                  
                  
                  
                  -
                  
                  
                  
                  92,000Warrants
      issued for services
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  105,250
                  
                  
                  
                  -
                  
                  
                  
                  105,250Net
      Loss, 2009
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (983,793
                  )
                  
                  
                  (983,793
                  )Balance,
      December 31, 2009
                  
                  
                  70,864,772
                  
                  
                  $
                  70,865
                  
                  
                  $
                  2,623,835
                  
                  
                  $
                  (3,354,113
                  )
                  
                  $
                  (659,412
                  )




See
accompanying notes to financial statements


F-4





MyECheck,
Inc. and Subsidiary


Consolidated Statements of
Cash Flows





For
      the Years Ended December 31,2009
                          
                          
                          2008Cash
      Flows from Operating Activities:Net
      loss
                          
                          $
                          (983,793
                          )
                          
                          $
                          (1,003,376
                          )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Amortization
      of debt discount
                          
                          
                          18,027
                          
                          
                          
                          -Amortization
      of debt issue costs
                          
                          
                          1,442Derivative
      expense
                          
                          
                          2,628
                          
                          
                          
                          -Change
      in fair value of derivative liabilities
                          
                          
                          79,044
                          
                          
                          
                          -Stock
      based compensation
                          
                          
                          356,817
                          
                          
                          
                          -Stock
      issued for services
                          
                          
                          92,000
                          
                          
                          
                          -Warrants
      issued for services
                          
                          
                          105,250
                          
                          
                          
                          -Loss
      on accounts payable settlement
                          
                          
                          52,818
                          
                          
                          
                          -Provision
      for uncollectible subscription receivable
                          
                          
                          -
                          
                          
                          
                          400,000Cash
      overdraft forgiven by bank
                          
                          
                          -
                          
                          
                          
                          (41,373
                          )Changes
      in operating assets and liabilities:(Increase)
      Decrease in:Accounts
      receivable
                          
                          
                          6,008
                          
                          
                          
                          (13,253
                          )Prepaid
      expenses
                          
                          
                          (3,111
                          )
                          
                          
                          -Increase
      in:Accounts
      payable and accrued expenses
                          
                          
                          69,692
                          
                          
                          
                          90,243Accrued
      settlement payable
                          
                          
                          46,750
                          
                          
                          
                          -Accrued
      compensation - related parties
                          
                          
                          102,484
                          
                          
                          
                          96,485Net
      Cash Provided by (Used in) Operating Activities
                          
                          
                          (53,944
                          )
                          
                          
                          (471,274
                          )Cash
      Flows from Investing Activities:Cash
      acquired in reverse acquisition
                          
                          
                          -
                          
                          
                          
                          259Net
      Cash Provided by Investing Activities
                          
                          
                          -
                          
                          
                          
                          259Cash
      Flows from Financing Activities:Cash
      paid as debt issue costs
                          
                          
                          (2,800
                          )
                          
                          
                          -Proceeds
      from loan payable - related parties
                          
                          
                          10,000
                          
                          
                          
                          17,317Repayments
      of loans payable - related party
                          
                          
                          (5,000
                          )
                          
                          
                          (22,000
                          )Proceeds
      from loans payable - other
                          
                          
                          -
                          
                          
                          
                          1,300Repayments
      of loans payable - other
                          
                          
                          -
                          
                          
                          
                          (335
                          )Proceeds
      from convertible note payable
                          
                          
                          35,000
                          
                          
                          
                          -Proceeds
      from capital stock subscribed
                          
                          
                          -
                          
                          
                          
                          400,000Net
      Cash Provided by Financing Activities
                          
                          
                          37,200
                          
                          
                          
                          396,282Net
      Decrease in Cash
                          
                          
                          (16,744
                          )
                          
                          
                          (74,733
                          )Cash
      at Beginning of Year
                          
                          
                          23,999
                          
                          
                          
                          98,732Cash
      at End of Year
                          
                          $
                          7,255
                          
                          
                          $
                          23,999Supplemental Disclosure of Cash Flow
      InformationCash
      Paid for:Taxes
                          
                          $
                          -
                          
                          
                          $
                          1,651Interest
                          
                          $
                          -
                          
                          
                          $
                          -Supplemental Disclosure of Non Cash Investing and
      Financing ActivitiesDerivative
      liability and debt discount arising in connection with issuance of
      convertible note
                          
                          $
                          35,000
                          
                          
                          $
                          -Stock
      issued to settle accounts payable
                          
                          $
                          86,772
                          
                          
                          $
                          -Issuance
      of common stock for prior common stock payable
                          
                          $
                          -
                          
                          
                          $
                          1,200,000Stock
      issued for subscription receivable
                          
                          $
                          -
                          
                          
                          $
                          400,000


See
accompanying notes to financial statements


F-5





MyECheck,
Inc. And Subsidiary


Notes
to Consolidated Financial Statements


December 31, 2009 and
2008





Note 1 Basis of
Presentation, Organization and Nature of Operations





MyECheck,
Inc. (“MEC”) (“the Company”) was incorporated in the state of Delaware on
October 29, 2004.  The Company’s office is located in El Dorado Hills,
California.





Sekoya
Holdings, Ltd. (“Sekoya”) was incorporated in Nevada on May 19, 2005, and was a
development stage company that never achieved revenue.





Reverse
Acquisition and Recapitalization





On March
14, 2008, Sekoya Holdings, Ltd. (“Sekoya”), a then shell corporation, merged
with MEC and MEC became the surviving corporation. This transaction was
accounted for as a reverse acquisition. Sekoya did not have any operations and
majority-voting control was transferred to MEC.  The transaction also
requires a recapitalization of MEC. Since MEC acquired a controlling voting
interest, it was deemed the accounting acquirer, while Sekoya was deemed the
legal acquirer. The historical financial statements of the Company are those of
MEC, and of the consolidated entities from the date of merger and
subsequent.





Since the
transaction is considered a reverse acquisition and recapitalization, presenting
pro-forma financial information was not required.





Under the
terms of the merger, Sekoya’s majority stockholder cancelled 125,000,000 shares
of common stock and the Company issued 39,562,501 shares of common stock to
MEC.  Upon the closing of the reverse acquisition, MEC stockholders
held 60% of the issued and outstanding shares of common stock.





In
connection with the reverse acquisition and recapitalization, all share and per
share amounts were retroactively restated.





Nature
of Operations





The
Company provides the following services:





(A)
Electronic Check Processing





Provided
to merchants who transact business over the internet allowing them to process
checks electronically from their customers.





(B)
Financial Verification





Provided
to merchants to check the status of their customer’s bank account in order to
provide greater assurance that the check will clear.


F-6


MyECheck,
Inc. And Subsidiary


Notes
to Consolidated Financial Statements


December 31, 2009 and
2008





(C)
Guarantee Services





Guarantee
services provide the merchant with guaranteed payment on any returned items for
a fee on all items processed as a means to insure guaranteed payment for
products sold or services rendered.





Note 2 Summary of
Significant Accounting Policies




Principles
of Consolidation





The
consolidated financial statements include the accounts of MEC and Sekoya
(collectively, the “Company”).  All intercompany accounts have been
eliminated in consolidation.





Risks
and Uncertainties





The
Company operates in an industry that is subject to intense competition and rapid
technological change and is in a state of fluctuation as a result of the credit
crisis occurring in the United States.  The Company's operations are
subject to significant risk and uncertainties including financial, operational,
technological, and regulatory risks including the potential risk of business
failure.





See Note
3 regarding going concern matters.





Use
of Estimates





The
preparation of consolidated financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Such estimates and assumptions impact, among
others, the following: the fair value of warrants granted, estimates of the
probability and potential magnitude of contingent liabilities and the valuation
allowance for deferred tax assets due to continuing operating
losses.





Making
estimates requires management to exercise significant judgment. It is at least
reasonably possible that the estimate of the effect of a condition, situation or
set of circumstances that existed at the date of the consolidated financial
statements, which management considered in formulating its estimate could change
in the near term due to one or more future confirming events. Accordingly, the
actual results could differ significantly from our estimates.


F-7


MyECheck,
Inc. And Subsidiary


Notes
to Consolidated Financial Statements


December 31, 2009 and
2008





Cash





The
Company considers all highly liquid investments with original maturities of
three months or less at the time of purchase to be cash
equivalents.  At December 31, 2009 and 2008, the Company had no cash
equivalents.





The
Company minimizes its credit risk associated with cash by periodically
evaluating the credit quality of its primary financial institution. The balance
at times may exceed federally insured limits. At December 31, 2009 and 2008,
there were no balances that exceeded the federally insured limit.





At
December 31, 2008, the Company’s bank forgave a liability recorded on the books
as a cash overdraft in the amount of $41,373.  The Company recorded
the forgiveness as other income.





Accounts
Receivable





Accounts
receivable represents obligations from customers that are subject to normal
collection terms.  The Company periodically evaluates the
collectability of its accounts receivable and considers the need to adjust an
allowance for doubtful accounts based upon historical collection experience and
specific customer information. Actual amounts could vary from the recorded
estimates.





Concentrations





The
following are concentrations associated with the Company’s
operations:





(A)
            Accounts
      Receivable





Customer
                  
                  December 31, 2009
                  
                  
                  December 31, 2008A
                  
                  
                  85
                  %
                  
                  
                  97
                  %B
                  
                  
                  12
                  %
                  
                  
                  -
                  %





(B)
            Revenues





Customer
                      
                      December 31, 2009
                      
                      
                      December 31, 2008A
                      
                      
                      79
                      %
                      
                      
                      96
                      %B
                      
                      
                      16
                      %
                      
                      
                      -
                      %


F-8


MyECheck,
Inc. And Subsidiary


Notes
to Consolidated Financial Statements


December 31, 2009 and
2008





Fair
Value of Financial Instruments





The
carrying amounts of the Company’s short-term financial instruments, including
accounts payable and accrued expenses, accrued compensation – related parties,
loans payable – related parties and loans payable - other, approximate fair
value due to the relatively short period to maturity for these
instruments.





Debt
Issue Costs and Debt Discount





The
Company has paid debt issue costs in connection with raising funds through the
issuance of convertible debt.  These costs are amortized over the life
of the debt to interest expense (see Note 4).





Beneficial
Conversion Feature




For
convertible debt issued in 2009, the convertible feature (See Note 4) indicated
a rate of conversion that was below market value, however, the Company did not
record a "beneficial conversion feature" ("BCF"), since this instrument was
determined to be a derivative financial instrument.





If the
Company were to record a beneficial conversion feature, the relative fair value
of the beneficial conversion feature would be recorded as a discount from the
face amount of the respective debt instrument. The discount would be amortized
to interest expense over the life of the debt.





Derivative
Financial Instruments





Fair
value accounting requires bifurcation of embedded derivative instruments such as
conversion features in convertible debt or equity instruments, and measurement
of their fair value for accounting purposes. In determining the appropriate fair
value, the Company uses the Black-Scholes option-pricing model. In assessing the
convertible debt instruments, management determines if the convertible debt host
instrument is conventional convertible debt and further if there is a beneficial
conversion feature requiring measurement. If the instrument is not considered
conventional convertible debt, the Company will continue its evaluation process
of these instruments as derivative financial instruments.




Once
determined, derivative liabilities are adjusted to reflect fair value at each
reporting period end, with any increase or decrease in the fair value being
recorded in results of operations as an adjustment to fair value of derivatives.
In addition, the fair value of freestanding derivative instruments such as
warrants, are also valued using the Black-Scholes option-pricing
model.


F-9


MyECheck,
Inc. And Subsidiary


Notes
to Consolidated Financial Statements


December 31, 2009 and
2008





Revenue
Recognition





The
Company records revenue when all of the following have occurred; (1) persuasive
evidence of an arrangement exists, (2) product delivery has occurred, (3) the
sales price to the customer is fixed or determinable, and (4) collectibility is
reasonably assured.





The
Company earns revenue from services, which has included the
following:  electronic check processing, financial verification,
identity verification and check guarantee services. The services are performed
under the terms of a contract with a customer, which states the services to be
utilized and the terms and fixed price for all services under
contract.  The price of these services may be a fixed fee per
transaction and/or a percentage of the transaction processed depending on the
service.





Revenue
from electronic check processing is derived from fees collected from merchants
to convert merchant customer check data into an electronic image of a paper
draft, which allows the Company to deposit the funds to the merchant’s bank
through image clearing with the Federal Reserve on behalf of the
bank.  The Company recognizes the revenue related to electronic check
processing fees when the services are performed.





Revenue
from financial verification is derived from fees collected from merchants to
process requests to validate financial verifications to an outside service
provider under contract with the Company.  This revenue is recognized
when the transaction is processed, since the Company has no further
obligations.





Revenue from check guarantee services
is derived from fees collected from merchants to process transaction to an
outside service provider under contract with the Company.  This
revenue is recognized when the transaction is processed, since the Company has
no further obligations.





Earnings
per Share





In
accordance with accounting guidance now codified as FASB ASC Topic 260, “Earnings per
Share,”basic earnings (loss) per share is computed by
dividing net income (loss) by weighted average number of shares of common stock
outstanding during each period.  Diluted earnings (loss) per share is
computed by dividing net income (loss) by the weighted average number of shares
of common stock, common stock equivalents and potentially dilutive securities
outstanding during the period.





The
Company had the following potential common stock equivalents at December 31,
2009:





Convertible
      debt – face amount of $35,000, conversion price of $0.066
                
                
                530,303Common
      stock warrants
                
                
                750,000Common
      stock options
                
                
                7,300,000Total
      common stock equivalents
                
                
                8,580,303


F-10


MyECheck,
Inc. And Subsidiary


Notes
to Consolidated Financial Statements


December 31, 2009 and
2008





The
Company had no common stock equivalents at December 31, 2008





Since the
Company reflected a net loss in 2009 and 2008, respectively, the effect of
considering any common stock equivalents, if outstanding, would have been
anti-dilutive. A separate computation of diluted earnings (loss) per share is
not presented.





Income
Taxes





The
Company accounts for income taxes in accordance with accounting guidance now
codified as FASB ASC Topic 740, “Income Taxes,” which requires
that the Company recognize deferred tax liabilities and assets based on the
differences between the financial statement carrying amounts and the tax bases
of assets and liabilities, using enacted tax rates in effect in the years the
differences are expected to reverse. Deferred income tax benefit (expense)
results from the change in net deferred tax assets or deferred tax liabilities.
A valuation allowance is recorded when it is more likely than not that some or
all deferred tax assets will not be realized.





Accounting
guidance now codified as FASB ASC Topic 740-20, “Income Taxes – Intraperiod Tax
Allocation,” clarifies the accounting for uncertainties in income taxes
recognized in accordance with FASB ASC Topic 740-20 by prescribing guidance for
the recognition, de-recognition and measurement in financial statements of
income tax positions taken in previously filed tax returns or tax positions
expected to be taken in tax returns, including a decision whether to file or not
to file in a particular jurisdiction. FASB ASC Topic 740-20 requires that any
liability created for unrecognized tax benefits is disclosed. The application of
FASB ASC Topic 740-20 may also affect the tax bases of assets and liabilities
and therefore may change or create deferred tax liabilities or assets. The
Company would recognize interest and penalties related to unrecognized tax
benefits in income tax expense. At December 31, 2009 and 2008, respectively, the
Company did not record any liabilities for uncertain tax positions.





Advertising





Advertising
is expensed as incurred.  For 2009 and 2008, advertising expense was
$3,853 and $41,457, respectively.





Share-based
payments





Generally,
all forms of share-based payments, including stock option grants, restricted
stock grants and stock appreciation rights are measured at their fair value on
the awards’ grant date, based on the estimated number of awards that are
ultimately expected to vest. Share-based compensation awards issued to
non-employees for services rendered are recorded at either the fair value of the
services rendered or the fair value of the share-based payment, whichever is
more readily determinable. The expense resulting from share-based payments are
recorded in cost of goods sold or general and administrative expense in the
consolidated statement of operations, depending on the nature of the services
provided.


F-11


MyECheck,
Inc. And Subsidiary


Notes
to Consolidated Financial Statements


December 31, 2009 and
2008





Segment
Information





For 2009
and 2008, respectively, the Company only operated in one segment; therefore,
segment information has not been presented.





Reclassification





Certain
amounts in the year 2008 financial statements have been reclassified to conform
to the year 2009 presentation.  The results of these reclassifications
did not materially affect financial position, results of operations or cash
flows.





Recent
Accounting Pronouncements





In
April 2009, the FASB issued guidance now codified as FASB ASC Topic 820,
“Fair Value Measurements and
Disclosures,”which amends previous guidance to require disclosures about
fair value of financial instruments in interim as well as annual financial
statements in the current economic environment. This pronouncement was effective
for periods ending after June 15, 2009. The adoption of this pronouncement
did not have a material impact on the Company’s business, financial condition or
results of operations; however, these provisions of FASB ASC Topic 820 resulted
in additional disclosures with respect to the fair value of the Company’s
financial instruments.





In
May 2009, the FASB issued guidance now codified as FASB ASC Topic 855,
“Subsequent Events,”
which establishes general standards of accounting for, and disclosures of,
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. This pronouncement was effective for
interim or fiscal periods ending after June 15, 2009. The adoption of this
pronouncement did not have a material impact on the Company’s business, results
of operations or financial position; however, the provisions of FASB ASC Topic
855 resulted in additional disclosures with respect to subsequent
events.





In
June 2009, the Financial Accounting Standards Board (FASB) issued guidance
now codified as FASB Accounting Standards Codification (ASC) Topic 105, “Generally Accepted Accounting
Principles,” as the single source of authoritative non-governmental U.S.
GAAP. FASB ASC Topic 105 does not change current U.S. GAAP, but is intended to
simplify user access to all authoritative U.S. GAAP by providing all
authoritative literature related to a particular topic in one place. All
existing accounting standard documents will be superseded and all other
accounting literature not included in the FASB Codification will be considered
non-authoritative. These provisions of FASB ASC Topic 105 were effective for
interim and annual periods ending after September 15, 2009 and,
accordingly, were effective for the Company for the current fiscal reporting
period. The adoption of this pronouncement did not have an impact on the
Company’s business, financial condition or results of operations, but will
impact the Company’s financial reporting process by eliminating all references
to pre-codification standards. On the effective date of FASB ASC Topic 105, the
Codification superseded all then-existing non-SEC accounting and reporting
standards, and all other non-grandfathered non-SEC accounting literature not
included in the Codification became non-authoritative.


F-12


MyECheck,
Inc. And Subsidiary


Notes
to Consolidated Financial Statements


December 31, 2009 and
2008





In
January 2010, the Financial Accounting Standards Board ("FASB") issued updated
guidance to amend the disclosure requirements related to recurring and
nonrecurring fair value measurements. This update requires new disclosures on
significant transfers of assets and liabilities between Level 1 and
Level 2 of the fair value hierarchy (including the reasons for these
transfers) and the reasons for any transfers in or out of Level 3. This
update also requires a reconciliation of recurring Level 3 measurements
about purchases, sales, issuances and settlements on a gross basis. In addition
to these new disclosure requirements, this update clarifies certain existing
disclosure requirements. For example, this update clarifies that reporting
entities are required to provide fair value measurement disclosures for each
class of assets and liabilities rather than each major category of assets and
liabilities. This update also clarifies the requirement for entities to disclose
information about both the valuation techniques and inputs used in estimating
Level 2 and Level 3 fair value measurements. This update will become
effective for the Company with the interim and annual reporting period beginning
January 1, 2010, except for the requirement to provide the Level 3
activity of purchases, sales, issuances, and settlements on a gross basis, which
will become effective for the Company with the interim and annual reporting
period beginning January 1, 2011. The Company will not be required to
provide the amended disclosures for any previous periods presented for
comparative purposes. Other than requiring additional disclosures, adoption of
this update will not have a material effect on the Company's consolidated
financial statements.





Note 3 Going
Concern





As
reflected in the accompanying financial statements, the Company has a net loss
of $983,793 and net cash used in operations of $53,944 for the year ended
December 31, 2009, a working capital deficit of $672,276 and a stockholders’
deficit of $659,412 at December 31, 2009.





The
ability of the Company to continue as a going concern is dependent on
Management's plans, which include the raising of capital through debt and/or
equity markets.  The Company will require additional funding during
the next twelve months to finance the growth of its current and expected
operations and achieve strategic objectives. Additionally, the Company will need
to continually generate revenues through its current business operations in
order to generate enough cash flow to fund operations through
2010.  The Company is also dependent on maintaining their positive
approval status with the Federal Reserve.  If the Company were to lose
this approval, their ability to provide services would be affected
negatively.  The Company is also dependent on bank sponsorship when
processing transactions directly with the Federal Reserve.  If the Company
were to lose bank sponsorship, their ability to provide services would be
affected negatively. On January 29, 2010, the Company’s sponsoring bank was
closed by the Federal Deposit Insurance Corporation (FDIC).  The new bank
acquiring the old bank from the FDIC obtained all rights to accept or reject
former contracts.  The new bank elected to reject the Company’s agreement
with the old bank.  The Company is in the process of moving its customers
to one of its other processing banks.


F-13


MyECheck,
Inc. And Subsidiary


Notes
to Consolidated Financial Statements


December 31, 2009 and
2008





The
Company believes its current available cash, along with anticipated revenues,
may be insufficient to meet its cash needs for the near future.  There
can be no assurance that financing will be available in amounts or terms
acceptable to the Company, if at all.





The
accompanying financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business.  These financial statements do not
include any adjustments relating to the recovery of the recorded assets or the
classification of the liabilities that might be necessary should the Company be
unable to continue as a going concern.





Note 4 Convertible Debt,
Debt Discount. Debt Issue Costs and Fair Value Measurement of Derivative
Financial Instruments





Terms





On June
26, 2009, the Company issued redeemable convertible debt totaling
$35,000.  The Company paid $2,800 in debt issue costs and received net
proceeds of $32,200.  The note has a term of one year and bears
interest at 8%.





Conversion





(1)
            The
      debt is convertible based upon 60% of the average of the three lowest
      closing bid prices within the prior fifteen trading day
      period.  The conversion option may be exercised in the event of
      default or in whole or part at the option of the holder of the note prior
      to the debt’s maturity.  If any portion of the principal and/or
      interest are not paid within 10 days of when it is due (beginning June 26,
      2010), the discount multiplier used to determine the conversion price
      decreases 1% for each period of 10 business days that any portion of the
      amount due remains unpaid by the Company for all conversions
      thereafter.





(2)
            If
      the average price per share (as computed above based upon a 60% discount)
      of the Company’s stock is below $0.10, the Company has the right to prepay
      the portion of the Debenture that the Holder elected to convert, plus any
      unpaid interest, at 150% of such amount.  The Company has the
      option with written notice to the Holder to prepay the note at 150% of the
      principal amount and accrued interest to the date of
    payment.


F-14


MyECheck,
Inc. And Subsidiary


Notes
to Consolidated Financial Statements


December 31, 2009 and
2008





(3)
            If
      conversion is held up by a third party or the Company cannot convert the
      note into common stock, all amounts are accelerated for payment and
      redeemable in cash at a price of 175% of principal plus all unpaid accrued
      interest to date.





(4)
            If
      the note goes into default, the holder may elect to cancel any outstanding
      conversion notice and declare all amounts due and payable in cash at a
      price of 150% of principal plus all unpaid accrued interest to
      date.





On or
before the 4th
business day following the receipt of debt proceeds, June 30, 2009, the Company
was required to file a Form 8-K announcing this debt
transaction.  Since the Company did not file an 8-K within this time
period, the discount multiplier used to determine the conversion price decreases
by 1% for each period of 5 business days that the 8-K is not filed by the
Company following the June 30th due
date.  The Company did not file an 8-K by June 30, 2009 and sought a
waiver from the Holder for this penalty.  On November 9, 2009, the
debt holder waived the condition to file the
8-K.  As  result, the Company remeasured the derivative
financial instrument using a fixed discount multiplier of 60%.





Derivative
Financial Instruments





The
$35,000 convertible debt instrument was determined to have three separate
derivative liability instruments requiring bifurcation and the computation of
fair value.  These features are:





(1)
            Variability
      of the conversion price at 60%
discount.


(2)
            Debt
      is redeemable in cash at 175% of face amount, due to clause allowing for
      acceleration of payment.  Since there is a contingent put option
      (exercisable by the holder in event of default), the put option is not
      clearly and closely related to the debt host
      contract.  Additionally, the contingent put option was indexed
      to an extraneous factor, the event of default, rather than interest rates
      or credit risk.


(3)
            In
      the event of default, holder can cancel any outstanding conversion notice
      and redeem outstanding amount at
150%.





The
Company has computed the commitment date fair value based upon the following
management assumptions:





Expected
      dividends
                  
                  
                  0
                  %Expected
      volatility
                  
                  
                  247.45
                  %Expected
      term
                  
                  1
      yearRisk
      free interest rate
                  
                  
                  0.45
                  %


F-15


MyECheck,
Inc. And Subsidiary


Notes
to Consolidated Financial Statements


December 31, 2009 and
2008





The fair
value of these three embedded conversion options at the commitment date was
$114,044.  Of the total, $35,000 was assigned to debt discount and
$79,044 was recorded as a derivative expense.





Mark
to Market Adjustment





The
Company has marked to market these derivative financial instruments at December
31, 2009, based upon the following management assumptions:





Expected
      dividends
                  
                  
                  0
                  %Expected
      volatility
                  
                  
                  297.77
                  %Expected
      term
                  
                  0.48
      yearsRisk
      free interest rate
                  
                  
                  0.47
                  %





The
Company recorded a change in fair value associated with its derivative
liabilities of $2,628 for the year ended December 31, 2009.





Debt
Discount





In
connection with the issuance of the secured convertible note, the Company
recorded a debt discount of $35,000. These debt issue costs are being amortized
to interest expense through June 26, 2010. For 2009, the Company recorded
amortization of $18,027. At December 31, 2009, debt discount is presented net
totaling $16,973.  At December 31, 2009, redeemable convertible debt,
net of debt discount, is $18,027.





Debt
Issue Costs





In
connection with the issuance of the secured convertible note, the Company paid
debt-offering costs of $2,800. These debt issue costs are being amortized to
interest expense through June 26, 2010. For the year ended December 31, 2009,
the Company recorded amortization of $1,442. Debt issue costs are presented net
totaling $1,358.





Note 5 Loans Payable –
Related Parties and Other





(A)
            Related
      Parties





During
2009, the Company received an advance from its Chief Executive Officer of
$10,000.  This advance is non-interest bearing, unsecured and due on
demand.





During
2009, the Company repaid $5,000 to the Company’s Chief Technical
Officer.


F-16


MyECheck,
Inc. And Subsidiary


Notes
to Consolidated Financial Statements


December 31, 2009 and
2008





During
the year ended December 31, 2008, Company received working capital advances from
certain of its officers aggregating $17,317. During the year ended December 31,
2008 the Company repaid $22,000 in loans to these officers.





(B)
            Other





During
the year ended December 31, 2008, the Company received working capital advances
from a third party aggregating $1,300.  These loans were non-interest
bearing, unsecured and due on demand.  During the year ended December
31, 2008, the Company repaid $335 in loans to a third party.





During
the year ended December 31, 2008, the Company assumed a loan of $46,694 as a
result of the reverse acquisition with Sekoya. The loan is non-interest bearing,
unsecured, and due on demand.





Note 6 Capital Stock
Subscribed and Related Stock Issuance





In
connection with the March 14, 2008 merger, the Company agreed to sell 4,000,000
units of common stock at $0.50/unit for $2,000,000 to third
parties.  Each unit consisted of one share of common stock and one
warrant.  The Company agreed to issue 2,000,000 warrants exercisable
at $2/share and 2,000,000 warrants exercisable at $4/share.  The
warrants would expire two years from the grant date. At December 31, 2007, the
Company had received $1,200,000, and during the year ended December 31, 2008,
the Company received an additional $400,000 for aggregate consideration of
$1,600,000 at December 31, 2008.





On July
24, 2008, the Company issued the 4,000,000 shares, which included a subscription
receivable of $400,000.  In addition, the previously recorded stock
subscription liability, of $1,200,000 received during 2007, was reclassified to
equity, as the stock was issued. On December 31, 2008, the Company deemed the
subscription receivable to be uncollectible and recognized a provision for
uncollectible subscription receivable of $400,000.  The Company
reflects this provision as a component of general and administrative expense. At
December 31, 2009, the warrants have not been issued, and additional funds from
this investor will not be accepted.





Note 7 Stockholders’
Deficit





(A)
Stock Issuances





On May
22, 2009, the Company issued 400,000 shares of common stock to a consultant for
services rendered, having a fair value of $68,000 ($0.17/share), based upon the
quoted closing trading price.


F-17


MyECheck,
Inc. And Subsidiary


Notes
to Consolidated Financial Statements


December 31, 2009 and
2008





On June
25, 2009, the Company issued 377,271 shares of common stock in settlement of
accounts payable totaling $33,954.  The fair value of the shares
issued was $86,772, based upon the quoted closing trading price ($0.23/share).
The Company recorded a loss on settlement of $52,818.





On
November 16, 2009, the Company issued 150,000 shares of common stock to a
consultant for services rendered, having a fair value of $24,000 ($0.16/share),
based upon the quoted closing trading price.





(B)
Stock Option Grants





On April
7, 2009 the Company adopted the 2009 Equity Incentive Plan (the “Plan”) covering
10,000,000 stock rights including options, restricted stock and stock
appreciation rights. Under the Plan, employees, and consultants receive initial
grants of options, which vest immediately, and the remaining unvested portion of
a grant vests ratably over a three-year period.





On May
11, 2009, the Company granted 7,300,000 non-qualified stock options to employees
and non-employee consultants for services to be rendered over a three-year
period.  The options are exercisable over a 5 - 10 year term at $0.13
per share and vest 25% immediately while the remaining 75% vests monthly in
equal increments over a three-year period.  These options had a fair
value of $871,828 using the Black-Scholes option-pricing model.





The fair
value of these options was estimated on the date of grant using the following
management weighted average assumptions:





Risk-free
      interest rate
                  
                  
                  1.44
                  %Expected
      dividend yield
                  
                  
                  0
                  %Expected
      volatility
                  
                  
                  223.25
                  %Expected
      term
                  
                  5-10
      yearsExpected
      forfeitures
                  
                  
                  0
                  %





For the
year ended December 31, 2009, the Company recognized $356,817 in stock based
compensation expense related to 7,300,000 options granted during
2009.


F-18


MyECheck,
Inc. And Subsidiary


Notes
to Consolidated Financial Statements


December 31, 2009 and
2008





The
following is a summary of the Company’s stock option activity:





Options
                          
                          
                          Weighted Average Exercise
    PriceOutstanding
      – December 31, 2007Granted
                          
                          
                          -
                          
                          
                          $
                          -Exercised
                          
                          
                          -
                          
                          
                          $
                          -Forfeited
                          
                          
                          -
                          
                          
                          $
                          -Outstanding
      – December 31, 2008
                          
                          
                          -
                          
                          
                          $
                          -Granted
                          
                          
                          7,300,000
                          
                          
                          $
                          0.13Exercised
                          
                          
                          -
                          
                          
                          $
                          -Forfeited
                          
                          
                          -
                          
                          
                          $
                          -Outstanding
      – December 31, 2009
                          
                          
                          7,300,000
                          
                          
                          $
                          0.13Exercisable
      – December 31, 2009
                          
                          
                          3,041,667
                          
                          
                          $
                          0.13Weighted average fair value of
      options granted
      during the year endedDecember 31, 2009
                          
                          $
                          871,828
                          
                          
                          $
                          0.12Weighted
      average fair value of options exercisable at  December 31,
      2009
                          
                          $
                          363,362
                          
                          
                          $
                          0.12




Options OutstandingRange of
                            exercise price
                          
                          
                          Number
                            Outstanding
                          
                          Weighted
                            Average
                            Remaining
                            Contractual
                            Life (in years)
                          
                          Weighted
                            Average
                            Exercise
                            Price$
                          0.13
                          
                          
                          
                          7,300,000
                          
                          8.64
      years
                          
                          $
                          0.13




Options ExercisableRange of
                          exercise price
                        
                        
                        Number
                          Exercisable
                        
                        Weighted
                          Average
                          Remaining
                          Contractual
                          Life (in years)
                        
                        Weighted
                          Average
                          Exercise
                          Price$
                        0.13
                        
                        
                        
                        3,041,667
                        
                        8.64
      years
                        
                        $
                        0.13
  At
December 31, 2009, the total intrinsic value of options outstanding and
exercisable was $0 and $0, respectively.


F-19


MyECheck,
Inc. And Subsidiary


Notes
to Consolidated Financial Statements


December 31, 2009 and
2008





The
following summarizes the activity of the Company’s stock options that have not
vested for the year ended December 31, 2009:





Options
                  
                  
                  Weighted
                    Average
                    Grant Date
                    Fair ValueOutstanding
      – December 31, 2007Granted
                  
                  
                  -
                  
                  
                  
                  -Vested
                  
                  
                  -
                  
                  
                  
                  -Cancelled
      or forfeited
                  
                  
                  -
                  
                  
                  
                  -Outstanding
      – December 31, 2008
                  
                  
                  -
                  
                  
                  
                  -Granted
                  
                  
                  7,300,000
                  
                  
                  $
                  0.12Vested
                  
                  
                  (3,041,667
                  )
                  
                  
                  0.12Cancelled
      or forfeited
                  
                  
                  -
                  
                  
                  
                  -Outstanding
      – December 31, 2009
                  
                  
                  4,258,333
                  
                  
                  $
                  0.12





Total
unrecognized share-based compensation expense from non-vested stock options at
December 31, 2009 was $508,566 which is expected to be recognized over a
weighted average period of 2.36 years.





Note 8 Commitments and
Contingencies





(A)
Litigations, claims and assessments





From time
to time, the Company may become involved in various lawsuits and legal
proceedings, which arise in the ordinary course of business. However, litigation
is subject to inherent uncertainties, and an adverse result in these or other
matters may arise from time to time that may harm its business. The Company is
currently not aware of any such legal proceedings or claims, other than
disclosed below; that they believe will have, individually or in the aggregate,
a material adverse affect on its business, financial condition or operating
results.





During
2005, a lawsuit was filed against the Company in the State of California,
claiming the Company was using the technology created by the plaintiff. On March
31, 2010, the Company settled the case with the plaintiff with a payment of
275,000 shares of the Company’s stock.  The stock was valued at
$46,750 ($0.17/share), based upon the quoted closing trading price. Since the
potential loss on settlement existed at December 31, 2009, the Company accrued
the settlement as the amount was known prior to the issuance of these financial
statements.





(B)
Accrued Rent





Effective
May 1, 2007, the Company executed a payment plan for $104,969 in rent that had
been in default.  The Company agreed to pay the outstanding balance
within twenty-four months plus 9% interest for total payment of $115,092
($4,796/month).  The Company has $11,687 of scheduled payments
remaining at December 31, 2009, and remains in default under the terms of the
original payment plan.  During 2009, the Company paid $10,298 of the
accrued rent.


F-20


MyECheck,
Inc. And Subsidiary


Notes
to Consolidated Financial Statements


December 31, 2009 and
2008





(C)
Operating Lease





The
Company leased its corporate office under a non-cancelable rental agreement from
May 2005 through December 2009.  Monthly payments at the inception of
the lease terms were $ 8,576 and increase 4% annually.





Total
rent expense amounted to approximately $116,958 and $114,449 for the years ended
December 31, 2009 and 2008, respectively.





During
2009, the Company extended the non-cancelable operating lease.  This
lease expires on February 28, 2012.




The
following are the approximate committed amounts for future minimal rental
payments for the years ending December 31,:





2010
                  
                  $
                  59,0002011
                  
                  
                  73,0002012
                  
                  
                  12,000Total
                  
                  $
                  144,000





(D)
Investor Relations Agreement and Warrants





On August
3, 2009, the Company entered into a consulting agreement with a third party to
provide investor relations services over a six month period.  The
consultant will be paid $10,000 per month and will receive three tranches of
three year, 250,000 cashless warrants on September 3, 2009, October 3, 2009 and
November 2, 2009 with exercise prices of $0.25, $0.35 and $0.45,
respectively.





On
September 3, 2009 the Company applied the Black-Scholes model to determine the
fair value of the first tranche of warrants. The Company has used the following
weighted average assumptions to compute the fair value of these
warrants:





Expected
      dividends
                  
                  
                  0
                  %Expected
      volatility
                  
                  
                  275.10
                  %Expected
      term
                  
                  3
      yearsRisk
      free interest rate
                  
                  
                  1.42
                  %Expected
      forfeiture
                  
                  
                  0
                  %





On
October 3, 2009 the Company applied the Black-Scholes model to determine the
fair value of the second tranche of warrants. The Company has used the following
weighted average assumptions to compute the fair value of these
warrants:


F-21


MyECheck,
Inc. And Subsidiary


Notes
to Consolidated Financial Statements


December 31, 2009 and
2008





Expected
      dividends
                  
                  
                  0
                  %Expected
      volatility
                  
                  
                  284.72
                  %Expected
      term
                  
                  3
      yearsRisk
      free interest rate
                  
                  
                  1.38
                  %Expected
      forfeiture
                  
                  
                  0
                  %





On
November 2, 2009 the Company applied the Black-Scholes model to determine the
fair value of the third tranche of warrants. The Company has used the following
weighted average assumptions to compute the fair value of these
warrants:





Expected
      dividends
                  
                  
                  0
                  %Expected
      volatility
                  
                  
                  290.19
                  %Expected
      term
                  
                  3
      yearsRisk
      free interest rate
                  
                  
                  1.44
                  %Expected
      forfeiture
                  
                  
                  0
                  %





The
Company recognized the grant date fair value of these warrants totaling
$105,250. All warrants outstanding are considered exercisable, and the intrinsic
value is $0.





The
Company has accrued $30,000 for payments required under the terms of the
contract that remain unpaid at December 31, 2009.





The
Company is disputing the delivery of all three tranches of warrants and monthly
fees due to nonperformance. The Company intends to pursue remedies in resolving
this matter.





Note 9 Income
Taxes





The
Company recognized deferred tax assets and liabilities for both the expected
impact of differences between the financial statements and the tax basis of
assets and liabilities, and for the expected future tax benefit to be derived
from tax losses and tax credit carryforwards.  The Company will
establish a valuation allowance to reflect the likelihood of realization of
deferred tax assets.





The
Company has net operating loss carryforwards for tax purposes totaling
approximately $2,126,000 at December 31, 2009, expiring through 2029. There is a
limitation on the amount of taxable income that can be offset by carryforwards
after a change in control (generally greater than a 50% change in
ownership).


F-22


MyECheck,
Inc. And Subsidiary


Notes
to Consolidated Financial Statements


December 31, 2009 and
2008





Significant
deferred tax assets (temporary differences) at December 31, 2009 and 2008 are
approximately as follows:





2009
                
                
                2008Gross
      deferred tax assets:Accrued
      salaries
                
                $
                (142,000
                )
                
                $
                (98,000
                )Net
      operating loss carryforwards
                
                
                (803,000
                )
                
                
                (640,000
                )Total
      deferred tax assets
                
                
                (945,000
                )
                
                
                (738,000
                )Less:
      valuation allowance
                
                
                945,000
                
                
                
                738,000Deferred
      tax asset – net
                
                $
                -
                
                
                $
                -





The
valuation allowance at December 31, 2008 was approximately
$738,000.  The net change in valuation allowance during the year ended
December 31, 2009 was an increase of approximately $207,000.  In
assessing the realizability of deferred tax assets, management considers whether
it is more likely than not that some portion or all of the deferred income tax
assets will be realized.  The ultimate realization of deferred income
tax assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become
deductible.  Management considers the scheduled reversal of deferred
income tax liabilities, projected future taxable income, and tax planning
strategies in making this assessment. Based on consideration of these items,
management has determined that enough uncertainty exists relative to the
realization of the deferred income tax asset balances to warrant the application
of a full valuation allowance as of December 31, 2009.





The
actual tax benefit differs from the expected tax benefit for the years
ended    December 31, 2009 and 2008 (computed by applying
the U.S. Federal corporate tax rate of 34% to income before taxes and 8.84% for
California state taxes, a blended rate of 39.83%) as follows:





2009
                
                
                2008Expected
      tax expense (benefit) – Federal
                
                $
                (305,000
                )
                
                $
                (311,000
                )Expected
      tax expense (benefit) - State
                
                
                (87,000
                )
                
                
                (89,000
                )Non-deductible
      stock based compensation
                
                
                185,000
                
                
                
                -Provision
      for uncollectible subscription receivable
                
                
                -
                
                
                
                159,000Meals
      and entertainment
                
                
                -
                
                
                
                1,000Change
      in valuation allowance
                
                
                207,000
                
                
                
                240,000Actual
      tax expense (benefit)
                
                $
                -
                
                
                $
                -





Note 10 Subsequent
Events




The
Company has evaluated for subsequent events between the balance sheet date of
December 31, 2009 and April 15, 2010, the date the financial statements were
issued.


F-23