UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549





**FORM
      10-KSB**





[X]
            ANNUAL
                REPORT
                UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934For
                the fiscal year endedDecember
                31, 2006[  
                ]
            TRANSITION
                REPORT UNDER
                SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACTFor
                the transition period from _________ to ________Commission
                file number000-31361




EncryptaKey,
                Inc.(Name
                of small business issuer in its charter)New
                Jersey
            22-3720628(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)10805
                Holder Street, Suite 210, Cypress, CA
            90630(Address
                of principal executive offices)
            (Zip
                Code)Issuer’s
                telephone number:714-821-8093




Securities
                registered under Section 12(b) of the Exchange Act:Title
                of each class
            Name
                of each exchange on which registeredNone
            Not
                ApplicableSecurities
                registered under Section 12(g) of the Exchange Act:Common
                Stock, par value $0.0001(Title
                of class)





Check
      whether the Issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Securities Exchange Act during the past 12 months (or for such
      shorter period that the registrant was required to file such reports), and
      (2)
      has been subject to such filing requirements for the past 90 days. Yes [X]
      No [
      ]





Check
      if
      disclosure of delinquent filers in response to Item 405 of Regulation S-B is
      not
      contained in this form, and no disclosure will 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-KSB or any amendment
      to
      this Form 10-KSB [ ]





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes
      [X]
      No [ ]





State
      issuer’s revenue for its most recent fiscal year. $ 0





State
      the
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates computed by reference to the average bid and asked price of
      such
      common equity, as of a specified date within the past 60 days. Unavailable





State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date. 50,906,784 Common Shares as of March 23,
      2007





Transitional
      Small Business Disclosure Format (Check One): Yes [  ] No
      [X]





*Table
          of Contents*


**TABLE
      OF CONTENTS**








PagePART
                IItem
                1.
            Description
                of Business
            3Item
                2.
            Description
                of Property
            16Item
                3.
            Legal
                Proceedings
            16Item
                4.
            Submission
                of Matters to a Vote of Security
                Holders
            16PART
                IIItem
                5.
            Market
                for Common Equity and Related Stockholder Matters
            17Item
                6.
            Management’s
                Discussion and Analysis or Plan of
                Operation
            18Item
                7.
            Financial
                Statements
            23Item
                8.
            Changes
                In and Disagreements With Accountants on Accounting
                and Financial Disclosure
            24Item
                8A.
            Controls
                and Procedures
            24Item
                8B.
            Other
                Information
            25PART
                IIIItem
                9.
            Directors,
                Executive Officers, Promoters and Control
                Persons; Compliance With Section 16(a) of the Exchange
                Act
            26Item
                10.
            Executive
                Compensation
            29Item
                11.
            Security
                Ownership of Certain Beneficial Owners and
                Management and Related Stockholder Matters
            31Item
                12.
            Certain
                Relationships and Related
                Transactions
            32Item
                13.
            Exhibits
            32Item
                14.
            Principal
                Accountant Fees and Services
            33











2
 *Table
          of Contents*


**** **PART
      I**


**Item
      1. Description of Business**





**Business
      Development**





We
      were
      incorporated in the State of New Jersey on April 6, 2000 under the name “Segway
      VI Corp.” On August 13, 2003, we changed our name to 3DLP International Inc. In
      June of 2004, we changed our name to Futomic Industries, Inc. and subsequently
      filed Articles of Amendment with the State of New Jersey formally implementing
      that name change on October 15, 2005.





Previously,
      we were engaged in the research, development and distribution of various
      technologies including a 3D Adapter for the Sony Playstation II, and an
      incomplete 3D Laser projection system to display 3D images. On June 20, 2005,
      we
      sold our video game related technologies to SplitFish Gameware Inc. of Edmonton,
      Canada, a company owned by Mr. Ken Tetterington who was formerly our
      principal shareholder, officer and director. As a result of this transaction,
      we
      are no longer in the video game hardware business. The primary reason for
      exiting this business was to allow us to focus on our other business, the
      research and development of smart card technology related to the biometric
      security industry. However, we lacked the funding to pursue this line of
      business and were forced to shelve it until such time as we were able to acquire
      the necessary capital to proceed. At present, and for the foreseeable future,
      our smart card related security business plan remains on hold.





Our
      current business plan is focused upon the research, development, manufacture
      and
      sale of the biometric security technology we recently acquired from Owen
      Consulting, LLC, an entity owned and controlled by our current CEO and director,
      Kelly Owen. On September 28, 2006, we entered into an Asset Purchase Agreement
      with Owen Consulting LLC, a California limited liability company. Pursuant
      to
      that agreement, we acquired technology called the “EncryptaKey Secure
      Communication Portal” as described in a patent application pending before the
      Patent and Trademark Office as application no. 60745514, filed April 24, 2006,
      titled “Invisidesk Private Communication, Authentication and Connection Portal”
and the related intellectual property in exchange for 5,500,000 shares of our
      restricted common stock. As a result of our acquisition of the EncryptaKey
      technology, we have changed the focus of our efforts in the security products
      business away from smart cards and towards more sophisticated biometric devices
      that use the EncryptaKey technology.





Also
      on
      September 28, 2006, our Board of Directors resolved to expand the size of the
      Board to two members and appointed Kelly Owen to fill the newly created seat.
      Our Board also appointed Mr. Owen to act as our sole officer, serving as each
      of
      CEO, CFO, President, Secretary and Treasurer. Our Board believes that Mr. Owen
      is best suited to develop products based on the EncryptaKey technology and
      to
      develop, market, and sell applications utilizing this technology to government,
      institutional, commercial, and individual consumers.





On
      October 1, 2006, we retained Owen Consulting, LLC, to develop the EncryptaKey
      technology into a marketable product.





3
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          of Contents*





**Forward-Looking
      Statements**




Certain
      statements, other than purely historical information, including estimates,
      projections, statements relating to our business plans, objectives, and expected
      operating results, and the assumptions upon which those statements are based,
      are “forward-looking statements” within the meaning of the Private Securities
      Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933
      and Section 21E of the Securities Exchange Act of 1934. These
      forward-looking statements generally are identified by the words “believes,”
“project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,”
“may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and
      similar expressions. We
      intend
      such forward-looking statements to be covered by the safe-harbor provisions
      for
      forward-looking statements contained in the Private Securities Litigation Reform
      Act of 1995, and are including this statement for purposes of complying with
      those safe-harbor provisions. Forward-looking
      statements are based on current expectations and assumptions that are subject
      to
      risks and uncertainties which may cause actual results to differ materially
      from
      the forward-looking statements. Our
      ability to predict results or the actual effect of future plans or strategies
      is
      inherently uncertain. Factors which could have a material adverse affect on
      our
      operations and future prospects on a consolidated basis include, but are not
      limited to: changes in economic conditions, legislative/regulatory changes,
      availability of capital, interest rates, competition, and generally accepted
      accounting principles. These risks and uncertainties should also be considered
      in evaluating forward-looking statements and undue reliance should not be placed
      on such statements. We
      undertake no obligation to update or revise publicly any forward-looking
      statements, whether as a result of new information, future events or otherwise. Further
      information concerning our business, including additional factors that could
      materially affect our financial results, is included herein and in our other
      filings with the SEC.





**Description
      of Business and Plan of Operation**





Our
      objective for our new technology is to have our first anticipated hardware
      product, which we have preliminarily called “EncryptaKey,” function so as to
      allow a user to (1) manage his finances, (2) shop online, and (3) access his
      home or work computer remotely and securely. The EncryptaKey hardware device
      is
      presently in the development stage only and many significant technical and
      financial challenges remain before we anticipate being able to deliver a viable
      product to market. We anticipate that, provided we are successful in raising
      the
      funding necessary to do so, we will be able to finalize all functions of the
      system and test-market working prototypes by the end of 2007. It is our plan
      that, when development is complete, the hardware EncryptaKey will utilize
      biometric data to secure personal and financial information.





We
      believe that our EncryptaKey technology has the potential to effectively address
      a number of security issues plaguing financial institutions and individuals
      alike. Industry research suggests that identity fraud victimized nine million
      adults in the United States during 2005, resulting in $56.6 Billion in losses
      for financial institutions and retailers, and endless frustration for consumers.
      We believe that EncryptaKey technology has the potential to become a cost
      effective means for businesses and consumers to reduce these
      losses.









4
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          of Contents*




As
      presently designed, an EncryptaKey hardware device will be approximately the
      size of a USB “Thumb Drive” (4” x 1” x .25”) and will contain both a pad which
      will read and verify a user’s thumbprint and an active RFID transmitter which
      can only be activated by the user. Inside the physical casing will be a 1
      Gigabyte flash drive that will hold user data as well as the proprietary
      operating system. This flash drive will be partitioned so that the data is
      kept
      separate from the operating system. The system is designed so that, should
      anyone attempt to physically access the flash drive, the memory is immediately
      and completely erased. Further, attempts to hack the data from a lost or stolen
      EncryptaKey will be fruitless as the user’s fingerprint is required to replicate
      the unique access code.





As
      designed, when an end-user receives or purchases an EncryptaKey hardware device,
      he or she will first load it with personal and financial information. This
      will
      be done by plugging the EncryptaKey directly into the USB port of the user’s
      personal computer. The computer will then reboot to EncryptaKey’s proprietary
      operating system and will connect through our web portal to the user’s financial
      institutions to download information or perform online financial activities.
      Once the device is set up with the user’s fingerprint, thereafter the
      EncryptaKey will know who has logged on because a unique key will have been
      created using biometric data from the user’s fingerprint as well as his or her
      login name and password. This will not be able to be duplicated by anyone but
      the user because of the universal uniqueness of the user’s thumbprint.





Our
      plan
      is for financial institutions and online retailers to adapt their current
      systems to recognize users authenticated with an EncryptaKey. We believe that
      they will do so because of the ability of EncryptaKey, as designed, to reduce
      fraudulent transactions in general, particularly those based on identity theft.
      There can be no assurance that we will be successful in convincing financial
      institutions and online retailers to allow their online transaction systems
      to
      work with EncryptaKey.





In
      addition to providing secure transactions for online financial and retail
      purchase transactions, we also intend for EncryptaKey to allow a user to
      securely access home or work computers over the internet as an alternative
      to
      storing sensitive information on a portable laptop. We believe that secure
      remote access features will appeal to our target customers because the ability
      to remotely access home and work computers greatly reduces the security risks
      associated with the potential for having a laptop containing sensitive
      information on the internal hard drive lost or stolen while traveling. Because
      sensitive information will no longer need to be kept on the laptop in order
      for
      EncryptaKey users to have access to the information, there is no security risk
      if the laptop is lost or stolen. Users can remotely and securely access their
      computers either from laptops or public terminals. No information ever resides
      on the hard drive of the laptop or terminal, nor is it transmitted over the
      internet. Therefore, it cannot be intercepted or mined later.





We
      further believe that, over the longer term, the EncryptaKey could potentially
      supplant traditional credit cards in many face to face retail purchase
      transactions because of its security features. Despite the recent growth of
      online retail purchase transactions, a vast number of credit card sales are
      still face-to-face Point of Service (POS) transactions. We intend to design
      the
      EncryptaKey such that, once a user’s credit card information is loaded into the
      EncryptaKey as described above, it can be used for secure POS transactions,
      provided the retailer has the appropriate hardware and software systems to
      recognize EncryptaKey.






5
 *Table
          of Contents*





Our
      long
      term goal with our technology is to have a system in widespread use that will
      allow a user, when paying for merchandise at a retail counter, to pull out
      his
      EncryptaKey instead of reaching for a credit card. We believe such a use has
      considerable potential because, whereas credit cards can be lost or stolen
      and
      used by others to run up charges, EncryptaKey will not be able to be used by
      anyone but the primary user because of the built in biometric security features.
      In order to pay for merchandise, a user would place his or her thumb on the
      thumb pad of the EncryptaKey. The EncryptaKey would read and verify that the
      thumb print matches the one on file for the registered user. This unlocks the
      EncryptaKey and allows the user to select which credit or debit card he wishes
      to use in order to pay for the merchandise, just as if the user was sitting
      at
      his or her desktop computer making an online purchase. The user will then press
      a transmit button while holding the EncryptaKey near the sensor pad of an
      Automated Teller Machine or Wireless POS Terminal. The EncryptaKey’s low power
      active RFID transmitter then transmits the requisite information to confirm
      payment with the merchant and the bank. We have not yet designed or built,
      even
      in the prototype phase, the hardware devices and supporting software systems
      that would allow EncryptaKey to be used in POS transactions. There can be no
      assurance that we will be able to do so or that we would be able to convince
      any
      retail or financial institutions to adopt such systems.





Our
      first
      product, the hardware EncryptaKey, is presently still under development. We
      anticipate that, provided we are successful in raising the funding necessary
      to
      do so, we will be able to finalize all functions of the system and test-market
      working prototypes by the end of 2007. There can be no assurance that we will
      successfully complete the design and testing of any products, including the
      EncryptaKey hardware device. We do not have any facilities or equipment capable
      of manufacturing the EncryptaKey in commercial quantities, nor do we have a
      contract with a third party manufacturer. There can be no assurance that we
      will
      be able to manufacture or contract for the manufacture of the EncryptaKey at
      a
      reasonable cost, or at all.





Although
      we have not yet built a working model of the EncryptaKey that includes the
      thumbprint and active RFID security features we intend to include in our final
      production model, we have successfully built a beta version of our proprietary
      operating system and successfully installed it on a flash drive. We displayed
      this working prototype at the Consumer Electronics Show in Las Vegas during
      the
      4 th Quarter
      of 2006. We were pleased with the acceptance of our prototype and were
      recognized by the trade show organizers with the *Best
      of Show - New Innovations* award.





We
      do not
      presently have any customers or contracts for sales or licensing of any product
      using the EncryptaKey technology, including the EncryptaKey hardware device
      presently under development. There can be no assurance that there will be any
      market demand for any product we may develop.





We
      presently lack the funds necessary to complete our business plan. During the
      4 th Quarter
      of 2006, we raised $1,135,200 through an ongoing private placement of our common
      stock. Also during the 4 th Quarter,
      we spent approximately $845,000 of those funds on operations related to the
      development of the Encryptakey technology. After the end of the reporting
      period, we raised an additional $834,985 in that same private placement, which
      closed February 7, 2007. In total,






6
 *Table
          of Contents*




we
      privately placed 6,900,664 shares of common stock at a purchase price of $0.30
      per share for total cash proceeds of $2,070,185. Despite this additional
      capital, we will need to raise additional funds over the next twelve months,
      through borrowing or through sales of securities, in order to continue to pursue
      our business plan in 2007.





We
      currently have forecasted the expenditure of approximately $3,600,000 during
      the
      next twelve months in order to further develop the EncryptaKey technology,
      on
      sales and marketing, on general and administrative expenses, and for working
      capital requirements, including the anticipated cost of compliance with the
      reporting requirements of the Securities Exchange Act of 1934. These estimates
      do not include any unanticipated capital requirements that may be needed should
      we identify any products or business acquisitions that may add value to our
      current products.





The
      completion of our business plan for the next 12 months is contingent upon us
      obtaining that financing. If we are unable to obtain sufficient financing,
      our
      business plan will be significantly impaired. We do not have any formal
      commitments or arrangements for the sales of stock or the advancement or loan
      of
      funds. Without the necessary financing, we will not be able to pursue our plan
      of operations until such time as the necessary funds are raised. There can
      be no
      assurance that additional financing will be available to us when needed or,
      if
      available that it can be obtained on commercially reasonable terms. If we are
      not able to obtain the additional funding on a timely basis, if and when it
      is
      needed, we will be forced to scale down or perhaps even cease operation of
      our
      business.





In
      the
      long-term, our ability to continue as a going concern is dependent upon
      successful and sufficient market acceptance of our product offerings and any
      new
      product offerings that we may introduce, the continuing successful development
      of our products and related technologies, and finally achieving a profitable
      level of operations. The issuance of additional equity securities by us could
      result in a significant dilution of equity interest of our current stockholders.
      Obtaining commercial loans, assuming those loans would be available, would
      increase our liabilities and future cash commitments.





After
      the
      close of the reporting period, on February 5, 2007, we entered into an Asset
      Purchase Agreement with Owen Consulting Inc., a Nevada Corporation. Pursuant
      to
      that agreement, we acquired assets consisting of all right, title and interest
      in server hardware and software in exchange for 636,120 shares of our restricted
      common stock. The equipment and software we acquired will allow us to continue
      development of our primary product. We do not anticipate that we will need
      to
      acquire a plant or purchase any additional, significant equipment during 2007.





***Industry
      Overview***





As
      computer use migrates towards a networked environment, and our economy shifts
      towards information as a primary asset, individuals and organizations are
      becoming more concerned with protecting individual privacy and ensuring the
      security of information maintained on personal computers, the Internet, and
      corporate networks.









7
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          of Contents*




Traditional
      processes for authenticating and identifying individuals have long histories,
      but inherent weaknesses. Criminals and imposters can easily compromise these
      processes by falsifying credentials by forging a signature, altering a
      photograph on a driver’s license or passport, or stealing a credit card.
      Imposters can use the compromised credentials to gain unauthorized access to
      confidential information, such as medical data and financial records, and cause
      significant harm. Traditional authentication and identification methodologies
      can also be cumbersome and inefficient to use. Individuals are required to
      remember several passwords and PINs for the multitude of access, credit and
      membership cards they carry. The costs incurred by organizations to administer
      these traditional processes can be significant.





A
      number
      of technologies and strategies have been developed in the Information Security
      industry in recent years to address these concerns, including encryption
      methods, firewalls, intrusion detection tools, access permission systems,
      passwords, identification cards or tokens, magnetic stripe cards, digital
      certificates, bootable thumb drives, and single sign-on applications. However,
      the effectiveness of each of these technologies and strategies is dependent
      upon
      the most critical and vulnerable component of the security process - positive
      personal identification and authentication of the individual seeking access.




With
      the
      growth of electronic commerce and the realities of business operations, access
      points to the Internet and enterprise networks have increased significantly,
      and
      now include desktops, home PCs, mobile laptops, and hand-held devices including
      cellular phones. Computer industry leaders have called for the end of passwords
      as a means to access computers and networks. This is due to the fact that using
      passwords as the primary method of verifying the identity of users (remote
      and
      local) is subject to a number of security weaknesses. Passwords are frequently
      shared. Passwords are often written down and placed where others can see them.
      Common passwords like a pet’s name or spouse’s name can be guessed. More complex
      passwords can be broken in minutes through sophisticated “dictionary” attacks
      based on tools that are easily available from Internet websites. Attempts to
      increase security by requiring complex passwords comprised of letters, numbers,
      and symbols are often met with significant resistance by users. For large
      organizations, there is also a measurable cost of managing forgotten and expired
      passwords relating to administration overhead and lost employee productivity.




Financial
      organizations, government agencies, corporations, and other organizations
      performing computer-based electronic transactions have sought a simple and
      secure way of digitally authenticating identities. The use of biometric
      authentication represents a cost-effective means of providing positive proof
      of
      identity when approving computer-based transactions. The resultant audit trail
      of events links certain events to an individual’s unique biometric
      characteristics. Similar identification techniques can be applied to
      point-of-service purchases at retail locations when paired with credit cards
      or
      other instruments.




We
      believe that a sustainable market is developing for higher assurance
      authentication technologies used in information security, data privacy, and
      electronic access control applications. There are several factors that we
      believe will contribute to the growth of this industry:








8
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·
            Highly
                publicized security breaches in computer networks and Internet sites,
                which have been traced to the vulnerability of password-based
                authentication systems by hackers and unauthorized access by disgruntled
                employees.





·
            The
                growth of e-commerce as a medium for business and consumer transactions,
                which requires the implementation of technologies that facilitate
                the
                positive identification of anonymous parties.





·
            The
                cost and inconvenience of using multiple or complex passwords that
                are
                frequently changed. Businesses are realizing true cost and time savings
                by
                implementing password alternatives for user authentication.





·
            The
                information technology industry is beginning to utilize advanced
                solutions
                to protect computer information. The primary means of protecting
                computer
                information is data encryption, which requires protection of the
                encryption “keys” used to lock up the data. Today, these keys are
                generally stored in computers or smart cards and are commonly protected
                by
                PINs or passwords. We believe biometrics will play an increasingly
                important role in protecting these keys from unauthorized access.





·
            IT
                industry leaders such as Microsoft, Citrix, Computer Associates,
                Dell,
                Hewlett Packard, Novell, MPC Computers, IBM, and Intel are supporting
                the
                integration of biometrics within their system platforms and have
                publicly
                announced that information security is a top corporate focus.





·
            Falling
                prices for biometric collection devices, such as fingerprint sensors,
                digital cameras, microphones, etc., and improvements in accuracy,
                performance, and acceptance of this technology have made integration
                of
                biometrics for physical access, desktop PCs, and portable computers
                a cost
                effective security alternative for the public sector and commercial
                market.





·
            New
                biometric devices, such as silicon chip-based fingerprint sensors
                and iris
                recognition cameras, are now widely available from name-brand commercial
                vendors such as Targus and Panasonic.







·
            The
                April 12, 2007 issue of the Wall Street Journal reported: “A majority of
                Americans have said they are comfortable with the use of biometric
                identification. In a survey published in February, Unisys found that
                63%
                of those polled were worried about identity fraud and 69% said they
                would
                prefer that banks, credit-card companies, health-care providers,
                and
                government organizations adopt biometrics over smart-card readers,
                security tokens or passwords.”





·
            Legislation
                and regulations adoption—such as the landmark Health Insurance Portability
                and Accountability Act (HIPPA) healthcare regulations, the
                Gramm-Leach-Bliley Financial Modernization Act—require that customer
                information, data, and financial records be kept secured, and outline
                substantial penalties for failure to do so. The FDA regulation 21CFR
                Part
                11 requires positive authentication of digital signatures placed
                on
                electronic records created within regulated industries such as
                pharmaceutical manufacturing.






9
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·
            The
                BioAPI Consortium, a group of over 120 organizations from the biometrics
                industry, government and information technology vendors, was successful
                in
                having the BioAPI Specification accepted as an official standard
                by the
                American National Standards Institute (ANSI). This specification
                defines a
                single industry-standard specification for connecting biometric devices
                to
                computer systems and is expected to encourage implementation of biometrics
                by facilitating the interoperability of different biometric technologies.
                This standard is now before the International Organization for Standards
                (ISO) for balloting to become an international
                standard.








*Evolution
      of Biometric Authentication and Identification Processes*




The
      inadequacies of traditional authentication and identification processes, coupled
      with more stringent security requirements and an increasingly global economy
      and
      mobile population, have in recent years contributed to the increased focus
      on
      the development of biometrics for Information Security. Biometrics is the
      automated use of unique physiological characteristics of individuals, such
      as
      fingerprints, palm prints, faces or irises, to determine or verify an
      individual’s identity. The individual’s biometric characteristic is captured and
      encoded and then compared against previously encoded biometric data stored
      in an
      electronic database to determine or verify the individual’s identity. Because
      biometrics technology utilizes an unchanging, unique characteristic of a person
      that cannot be lost, stolen, shared or forgotten, it has the capability to
      be
      more accurate, convenient and cost-effective than traditional methodologies.




Fingerprints
      have been, and we believe will continue to be, the most widely used biometric
      because they are relatively simple to capture, are relatively non-intrusive,
      and
      benefit from a substantial existing infrastructure that employs fingerprints
      for
      identification. The American National Standard Institute and the National
      Institute of Standards and Technology have standardized a common format, called
      ANSI/NIST, which is used to describe and classify fingerprints.




*Growth
      Expected in the Market for Fingerprint Biometrics Products and Solutions*




The
      market for fingerprint biometrics solutions is expected to increase in coming
      years. Advances in technology and widespread deployment of biometric systems
      are
      resulting in both increased public awareness and acceptance of biometric
      solutions and the establishment of an infrastructure that we believe will
      expedite the adoption of other fingerprint biometrics solutions. Fingerprint
      biometric solutions have become much more sophisticated and capable of
      application in a number of other environments. Several initiatives requiring
      increased spending on other fingerprint biometrics solutions have already begun.
      For example, numerous foreign jurisdictions around the world have begun to
      establish national identification card programs, which will require the issuance
      of smart ID cards with embedded fingerprint information for each citizen.








10
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Foreign
      jurisdictions such as Hong Kong, Italy, Morocco, the United Kingdom and Thailand
      have implemented or are in the process of implementing national identification
      programs. In addition, countries such as Venezuela have begun to use fingerprint
      biometrics systems to streamline the voting process and prevent fraud in local
      and national elections. Moreover, consumers have also begun to embrace
      biometrics authentication, particularly for the purposes of providing increased
      security on laptops, cell phones and other smart handheld devices that are
      beginning to store increasing amounts of personal information.





***Market
      for Our Products and Services***





We
      plan
      on marketing our products and services to both institutions and end consumers.
      While we believe that our institutional customers will push our products through
      to the end user, the inverse is also true - demand from end users will encourage
      large entities to embrace our products and services. Both markets will be driven
      by a need to protect the privacy of their electronic information.





*Individual
      Users*





With
      the
      ongoing explosion of identity theft and financial fraud in the United States,
      individuals are now, more than ever, looking for a way to protect their identity
      and their private information from both online and more traditional theft.
      EncryptaKey provides a comprehensive solution to the information security issues
      facing individuals today. We will initially provide security for online
      transactions, point-of-service retail transactions, internet access, access
      to
      financial data and medical records, physically access to buildings and vehicles,
      and access to desktop or laptop computers. A myriad of other possible future
      applications suggests that our technology could become the cornerstone for
      an
      individual’s complete security solution in the future.





*Institutional
      Users*





The
      key
      to EncryptaKey’s widespread acceptance and use is the adoption of our
      technology, products, and services by large, institutional organizations such
      as
      financial institutions, internet portals, government agencies, large
      corporations, and healthcare organizations. They are highly motivated to secure
      their data and transactions as they book billions of dollars of losses each
      year
      as a result of fraud. If they adapt their infrastructure to allow us to provide
      the solution to their information security issues, it will drive large numbers
      of individuals who use their products and services to adapt and accept our
      security solutions as well.





Financial
      Institutions





The
      finance industry is initially our primary target market. The nature of the
      transactions in this industry, both online and face to face, and the level
      and
      number of fraudulent transactions in the finance industry make it a perfect
      fit
      with our EncryptaKey technology. EncryptaKey will allow users to securely access
      and manage their bank accounts, stock portfolios, and other financial
      information.








11
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Web
      portals and Services





Web
      portals such as Google and Yahoo provide a means to reach hundreds of thousands
      of potential EncryptaKey users. Although these portals have been consumer
      focused for much of their history, a new business model is starting to emerge.
      For example, Google is has launched its premium business service which allows
      corporations to access its non-windows based productivity suite of tools (eg
      Word, Excel, etc) for a nominal annual fee. The EncryptaKey solution is
      perfectly shaped to enhance the current strategies of these portal sites. The
      EncryptaKey solution fits in the following ways:





·
            Provides
                a secure environment for the use of online productivity
                tools


·
            Provides
                varied functionality such as VoIP, email, chat, news and other
                services


·
            Consumers
                can utilize the safety of the EncryptaKey Transaction Server when
                shopping
                via the portal


·
            Allows
                for promotions and discounts to be downloaded directly to EncryptaKey
                Device for in-store redemption





Corporate
      Customers





With
      the
      ever increasing amount of data to process, companies of every shape and size
      are
      struggling with how to best secure their information from internal and external
      threats. EncryptaKey provides the solution to this problem. EncryptaKey provides
      intellectual property protection, SOX compliance, secure remote workforce
      connections, and support for existing network infrastructure designed to protect
      critical systems. The remote workforce connection application is particularly
      appealing to corporations as the modern workforce continues to become more
      mobile each year. When employees log in to a company’s computer network, or even
      has the capability to do so, that company’s network and the data contained
      thereon are at risk. By utilizing EncryptaKey, companies can provide a
      significantly higher level of protection for their data and improved tracking
      of
      data access, thus preventing significant losses from fraud, hacking, and
      sabotage.





Government
      Agencies





Government
      agencies, like other large organizations, are concerned with protecting
      sensitive data, allowing secure access from remote computers, and protecting
      major systems from malicious attack. The EncryptaKey solution allows individuals
      secure access to various electronic government information and services. In
      the
      future, this could evolve into electronic voting, passports, national identity
      cards or access to social security records. Within the United States government,
      there are several agencies that could benefit from the EncryptaKey solution,
      including Law enforcement (police departments, CIA, FBI, etc.); Homeland
      Security; Internal Revenue Service; Social Security Administration; and
      Department of Veterans Affairs. Other national governments around the world
      have
      similar agencies, which could similarly benefit from our products and
      services.





Healthcare
      Organizations





Health
      care is a multi-billion dollar industry. Constantly seeking ways to bring
      greater






12
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efficiencies
      to this market, many companies are offering technical solutions covering every
      aspect of the healthcare value chain. Because of HIPAA (Health Insurance
      Portability and Protection Act), one area receiving increasing attention is
      the
      Electronic Medical Record (EMR).





From
      doctors and nurses to technicians and billing clerks, roughly 150 different
      people have access to at least part of a patient's records during
      hospitalization. More than 600,000 payers, providers and other entities handle
      the billing and payment of healthcare transactions. Because of the potential
      productivity gains, the number one goal for the National Coordinator for Health
      Information Technology is to build a national electronic health information
      infrastructure capable of offering Electronic Medical Records (EMR) for most
      Americans within the next seven years. EncryptaKey could be an important part
      of
      that infrastructure.





Other
      significant segments of the healthcare industry where EncryptaKey could provide
      a solution to information access and security issues are hospitals and medical
      centers; large physician medical groups; claims processing firms; physician
      offices; and individual patients.





***Competition***





We
      operate in a highly competitive industry. Many companies are involved in the
      development of information security products and services, and many have unique
      solutions to the problems facing the industry. We are competing with the
      solutions offered by these other companies rather than with specific products
      that mirror our own.





*MasterCard
      PayPass* is a new
      contactless way to pay. By tapping a card, key fob, or mobile phone, consumers
      can pay at retail checkout locations. *PayPass* uses a
      hidden embedded computer chip and radio frequency antennae. After consumers
      tap
      their *PayPass* at
      checkout, payment details are sent wirelessly to the MasterCard network, and
      payment confirmation is sent back. Speed and convenience are the hallmarks
      of
      this product. However, should someone steal or find a consumer’s *PayPass* ,
      there
      is nothing to prevent them from making charges with the device until the
      consumer reports it stolen. MasterCard compensates by offering the same
      liability protection they offer with all their cards.





*StealthSurfer* is a
      Windows PC compatible key-sized USB device that is preloaded with Firefox,
      Anonymizer, RoboForm , and Thunderbird software configured and integrated for
      optimum privacy. Users insert the device into a computer’s USB port - home
      computer, laptop, or public terminal - and the computer reboots to the operating
      system stored on StealthSurfer. Thereafter, all information is run through
      the
      StealthSurfer - not the computer’s traditional memory and storage mediums. When
      using StealthSurfer, all sensitive Internet files such as cookies, internet
      history, and cache are stored on the StealthSurfer USB device instead of the
      user’s computer. Password protection maintains the user’s data's privacy and
      security. StealthSurfer conceals the user’s web surfing habits, files, and
      visited web sites from anyone who has physical access to the user’s computer as
      a way of blocking indentity theft. StealthSurfer keeps surfing information
      encrypted, hidden, and anonymous - it protects identities. Passwords are stored
      on the StealthSurfer with 3DES encryption and allows users to log on to web
      sites quickly and easily. Advanced and secure E-mail programs are included
      in
      StealthSurfer so your portable private email.









13
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*Dell,
      Hewlett-Packard, Sony, IBM,* and a
      myriad of other computer manufacturers now build laptops and even desktop
      computers with biometric authentication available. Only users with fingerprints,
      which have been authorized for use on that machine, will be allowed access
      to
      the computer, eliminating the need for passwords and allaying many data security
      concerns. The April 12, 2007 Wall Street Journal reports that approximately
      10%
      of new laptops sold in the United States come equipped with fingerprint
      sensors.





*Sony* produces
      two additional products that offer competitive solutions for information
      security concerns. The first is a Micro Vault Fingerprint Access USB Flash
      Drive. It works as any other flash drive, but a fingerprint scan is required
      to
      access the information on the flash drive. The FIU-810 Personal Puppy Suite
      Fingerprint Identity Token Bundle is also a fingerprint access USB flash drive.
      The FIU-810, however, can be used to log in to Windows, effectively requiring
      biometric authentication for computer access. It also encrypts files and
      replaces all of your online IDs and passwords so that your fingerprint scan
      is
      required to access internet sites.





Most
      certainly, EncryptaKey will face formidable competitive challenges in the near
      and long term as we compete with other companies who have significantly greater
      resources than ourselves. While
      each of these companies, and many others like them, are offering unique
      solutions to some of the problems facing the information security industry,
      EncryptaKey offers the highest level of online and in-person identity protection
      currently known to be available. With five levels of authentication made up
      of
      something you have (the key), something you know (user name, password and
      symbol) and something you are (biometric finger print), EncryptaKey allows
      users
      to make credit card purchases, conduct online financial transactions, and access, view and transmit
      sensitive personal or corporate data with complete confidence.





***Patents,
      Licenses, Trademarks, Franchises, Concessions, Royalty Agreements, or Labor
      Contracts***





We
      rely
      on a combination of patents, trademarks, copyright and trade secret laws,
      confidentiality procedures and licensing arrangements to protect our
      intellectual property rights.





We
      will
      continue to pursue patent protection and other intellectual property protection
      for technology that we believe to be proprietary and that offers a potential
      competitive advantage for our products.





On
      September 28, 2006, we entered into an Asset Purchase Agreement with Owen
      Consulting LLC, a California limited liability company. Pursuant to that
      agreement, we acquired assets consisting of all right, title and interest in
      technology commonly known as the EncryptaKey Secure Communication Portal and
      memorialized in a patent application pending before the Patent and Trademark
      Office as application no. 60745514, filed April 24, 2006, titled “Invisidesk
      Private Communication, Authentication and Connection Portal” and the related
      intellectual property. That patent has not been granted.





We
      have
      not yet sought protection for any of our intellectual property except as
      contained in US patent application number 60745514.








14
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          of Contents*





***Research
      and Development***





We
      did
      not incur any research and development expenditures in the fiscal year ended
      December 31, 2005. We incurred research and development expenditures in the
      fiscal year ended December 31, 2006, of approximately $890,000, all of which
      was
      related to our EncryptaKey technology. During 2007 we anticipate spending
      approximately $2,400,000 of our total anticipated capital needs of approximately
      $3,600,000 on further research and development of our EncryptaKey technology.
      The focus of these expenditures during 2007 will be further work on our
      operating system, our web portal and in adding biometric security features
      to
      our EncryptaKey prototype device.





***Sales
      and Marketing***





We
      have
      begun promoting and marketing our products through multiple channels in order
      to
      develop pilot projects in our various verticals. We plan to direct our initial
      marketing effort to target financial institutions, credit card processors,
      and
      internet retailers. We will demonstrate the feasibility of our products to
      our
      potential customers via pilot projects. We anticipate we will expend
      approximately $800,000 during 2007 on sales and marketing activities, including
      the salaries of any new or existing employees and consultants involved in sales
      and marketing.





***Existing
      and Probable Governmental Regulation***





Our
      current business plan envisions that we will attempt to convince financial
      institutions to recognize EncryptaKey-authenticated users. We recognize that
      financial institutions are subject to significant governmental regulation.
      We
      have not investigated whether, should we be able to convince these regulated
      institutions to recognize our systems, we would then become subject to
      governmental regulation or require governmental approval of our products or
      services. In the event this is required, it could have a material effect on
      our
      business.





With
      the
      exception of the foregoing, we are not aware of existing or probable
      governmental regulations that may impact our business at this time. Changes
      in
      government regulations may adversely affect our financial condition and results
      of operations because we may have to incur additional expenses if we are
      required to change or implement manufacturing or control
      procedures.




***Compliance
      with Environmental Laws***





We
      did
      not incur any costs in connection with the compliance with any federal, state,
      or local environmental laws.





***Employees***





We
      currently have one full-time employee, Eric Linxwiler. Most of our operations
      are outsourced to Owen Consulting, LLC, pursuant to our Consulting Agreement
      dated October 1, 2006, which contract has thus far permitted us to avoid
      directly hiring a significant number of employees. Our contract with Owen
      Consulting, LLC, is scheduled to terminate on September 30, 2007.








15
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We
      anticipate that we will continue to use Owen Consulting, LLC, to manage our
      technology through at least September 30, 2007. We have not yet determined
      whether we will seek to extend the contract or hire employees to manage our
      operations directly after September 30, 2007. Our director and sole officer,
      Kelly Owen is a member and manager of Owen Consulting, LLC.





**Item
      2. Description of Property**





We
      currently have a twelve month lease of our executive offices located 10805
      Holder Street, Suite 210, Cypress, CA 90630 at a cost of $3,983.70 per
      month.





**Item
      3. Legal Proceedings**





We
      are
      not a party to any pending legal proceeding. We are not aware of any pending
      legal proceeding to which any of our officers, directors, or any beneficial
      holders of 5% or more of our voting securities are adverse to us or have a
      material interest adverse to us.





**Item
      4. Submission of Matters to a Vote of Security
      Holders**





No
      matters have been submitted to our security holders for a vote, through the
      solicitation of proxies or otherwise, during the fourth quarter of the fiscal
      year ended December 31, 2006.





Subsequent
      to the reporting period, holders of a majority of the voting power of our
      outstanding common stock approved an amendment to our Articles of Incorporation
      to change our corporate name to “EncryptaKey, Inc.” by written
      consent.








16
 *Table
          of Contents*


**PART
      II**





**Item
      5. Market for Common Equity and Related Stockholder
      Matters**





**Market
      Information**





There
      is
      presently no public market for our common stock. In order to be quoted on the
      OTCBB, a market maker must file an application on our behalf in order to make
      a
      market for our common stock. We intend to contact an authorized Over-The-Counter
      Bulletin Board market maker for sponsorship of our securities on the
      Over-The-Counter Bulletin Board, but there can be no assurance that we will
      be
      successful. We can provide no assurance that our shares will be traded on the
      bulletin board, or if traded, that a public market will
      materialize.





The
      Securities Exchange Commission has adopted rules that regulate broker-dealer
      practices in connection with transactions in penny stocks. Penny stocks are
      generally equity securities with a price of less than $5.00, other than
      securities registered on certain national securities exchanges or quoted on
      the
      NASDAQ system, provided that current price and volume information with respect
      to transactions in such securities is provided by the exchange or system. The
      penny stock rules require a broker-dealer, prior to a transaction in a penny
      stock, to deliver a standardized risk disclosure document prepared by the
      Commission, that: (a) contains a description of the nature and level of risk
      in
      the market for penny stocks in both public offerings and secondary trading;(b)
      contains a description of the broker's or dealer's duties to the customer and
      of
      he rights and remedies available to the customer with respect to a violation
      to
      such duties or other requirements of Securities' laws; (c) contains a brief,
      clear, narrative description of a dealer market, including bid and ask prices
      for penny stocks and the significance of the spread between the bid and ask
      price;(d) contains a toll-free telephone number for inquiries on disciplinary
      actions;(e) defines significant terms in the disclosure document or in the
      conduct of trading in penny stocks; and;(f) contains such other information
      and
      is in such form, including language, type, size and format, as the Commission
      shall require by rule or regulation.





The
      broker-dealer also must provide, prior to effecting any transaction in a penny
      stock, the customer with; (a) bid and offer quotations for the penny stock;(b)
      the compensation of the broker-dealer and its salesperson in the transaction;(c)
      the number of shares to which such bid and ask prices apply, or other comparable
      information relating to the depth and liquidity of the market for such stock;
      and (d) a monthly account statements showing the market value of each penny
      stock held in the customer's account.





In
      addition, the penny stock rules require that prior to a transaction in a penny
      stock not otherwise exempt from those rules; the broker-dealer must make a
      special written determination that the penny stock is a suitable investment
      for
      the purchaser and receive the purchaser's written acknowledgment of the receipt
      of a risk disclosure statement, a written agreement to transactions involving
      penny stocks, and a signed and dated copy of a written suitability
      statement.





These
      disclosure requirements may have the effect of reducing the trading activity
      in
      the secondary market for our stock if it becomes subject to these penny stock
      rules. Therefore, because our common stock is subject to the penny stock rules,
      stockholders may have difficulty selling those securities.






17
 *Table
          of Contents*






**Holders
      of Our Common Stock**





As
      of
      December 31, 2006, we had approximately 70 holders of record of our common
      stock.





**Dividends**





As
      of
      December 31, 2006, no dividends have been declared or issued.





**Recent
      Sales of Unregistered Securities**





We
      did
      not issue any of our securities without registration under the Securities Act
      of
      1933 during the reporting period except as have been previously included in
      a
      Quarterly Report on Form 10-QSB or Current Report on Form 8-K.





**Securities
      Authorized for Issuance under Equity Compensation Plans**





No
      securities have been authorized for issuance under an equity compensation plan
      as of December 31, 2006.





**Item
      6. Management’s Discussion and Analysis or Plan of
      Operation**





**Plan
      of Operation**





We
      are
      still in our relative infancy as a viable commercial entity, and consequently
      our focus has been on the identification of our market needs, the development
      of
      products and services to meet those needs, and the branding of our company
      and
      services. Please
      see “Description of Business and Plan of Operation,” above.





**Results
      of Operations for the Years Ended December 31, 2006 and
      2005**





We
      generated no revenue and expenses of $1,143,949 for the year ended December
      31,
      2006, for a net loss of $1,054,117 after a Gain on Forgiveness of Debt of
      $89,832 is included. We generated no income and expenses of $87,340 for the
      year
      ended December 31, 2005, for a net loss of $87,334 after Interest Income of
      $6
      is included. Our losses were significantly greater in 2006 than in 2005 due
      primarily to our acquisition of and subsequent efforts to develop our
      EncryptaKey technology. We acquired that technology September 28, 2006.




**Liquidity
      and Capital Resources**





As
      of
      December 31, 2006 we had current assets of $186,554 consisting entirely of
      cash
      and cash equivalents. Our total liabilities as of December 31, 2006, were $0.00,
      including current liabilities in the amount of $0.00. Thus, our working capital
      as of December 31, 2006 was $186,554. As discussed in “Description of Business
      and Plan of Operation,” above, we anticipate








18
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no
      revenue in 2007 and expenditures of approximately $3,600,000 through December
      31, 2007.


Cash
      flows provided by financing activities during the year ended December 31, 2006
      consisted of $1,385,200 for proceeds related to the sale of common stock minus
      $93,253 for Loans to Related Parties, resulting in a total of $1,291,947 in
      cash
      provided by Financing Activities. Cash used by Investment Activities was $61,225
      for the year ended December 31, 2006, and Net Cash Used by Operating Activities
      was $1,074,833.





We
      relied
      on proceeds of private sales of our common stock to fund our operations during
      the year ended December 31, 2006. During the 4 th Quarter
      of 2006, we raised $1,135,200 through an ongoing private placement of our common
      stock. After the end of the reporting period, we raised an additional $834,985
      in that same private placement, which closed February 7, 2007. In total, we
      privately placed 6,900,664 shares of common stock at a purchase price of $0.30
      per share for total cash proceeds of $2,070,185. Despite this additional
      capital, we will need to raise additional funds over the next twelve months,
      through borrowing or through sales of securities, in order to continue to pursue
      our business plan in 2007.





**Off
      Balance Sheet Arrangements**





As
      of
      December 31, 2006, there were no off balance sheet arrangements.





**Going
      Concern**





We
      have
      incurred an accumulated total net loss of $1,480,396 for the period from
      inception (June 24, 2003) through December 31, 2006 and are not presently
      generating any revenue. We do not anticipate generating any revenue in 2007.
      Our
      future is dependent upon successful and sufficient market acceptance of our
      product offerings and any new product offerings that we may introduce, the
      continuing successful development of our products and related technologies,
      and
      finally achieving a profitable level of operations. We plan to seek additional
      financing in a private equity offering to secure funding for our operations.
      There can be no assurance that such additional financing will be available
      to us
      on acceptable terms or at all. These factors, among others, raise substantial
      doubt about our ability to continue as a going concern.




**Critical
      Accounting Policies**





In
      December 2001, the SEC requested that all registrants list their three to five
      most “critical accounting polices” in the Management Discussion and Analysis.
      The SEC indicated that a “critical accounting policy” is one which is both
      important to the portrayal of a company’s financial condition and results, and
      requires management’s most difficult, subjective or complex judgments, often as
      a result of the need to make estimates about the effect of matters that are
      inherently uncertain. We believe that the following accounting policies fit
      this
      definition.





*Accounting
      Basis*





The
      statements were prepared following generally accepted accounting principles
      of
      the United States of America consistently applied.






19
 *Table
          of Contents*





*Management
      Certification*





The
      financial statements herein are certified by the officers of the Company to
      present fairly, in all material respects, the financial position, results of
      operations and cash flows for the periods presented, in conformity with
      accounting principles generally accepted in the United States of America,
      consistently applied.





*Fiscal
      Year*





The
      Company operates on a December 31 st fiscal
      year end.





*Research
      and Development Costs*





Research
      and Development costs are expensed as incurred in accordance with generally
      accepted accounting principles. Costs in association with the development of
      a
      patented technology when computer software is developed will be capitalized
      when
      technological feasibility is established in accordance with financial accounting
      standard No. 86





*Basic
      and Diluted Net Income (Loss) Per Share*





The
      Company computes net income (loss) per share in accordance with Statement of
      Financial Accounting Standards (“SFAS”) No. 128, " *Earnings
      per Share* ".
      SFAS
      No. 128 requires presentation of both basic and diluted earnings per share
      (EPS)
      on the face of the income statement. Basic EPS is computed by dividing net
      income (loss) available to common shareholders (numerator) by the weighted
      average number of shares outstanding (denominator) during the period. Diluted
      EPS gives effect to all dilutive potential common shares outstanding during
      the
      period using the treasury stock method..





The
      numerators and denominators used in the computations of basic and diluted EPS
      are presented in the following table:





December
      31,     2006  2005





Numerators
      for Basic and Diluted EPS


Net
      income/(loss) to common shareholders    ($1,054,117)   ($87,334)





Denominators
      for Basic EPS


Weighted
      average of shares outstanding    39,818,551  38,075,000





Basic
      Earnings/(Loss) Per Share   ($0.03)  ($0.00)





Denominators
      for Diluted EPS


Weighted
      average of shares outstanding    86,473,551  84,730,000





Diluted
      Earnings/(Loss) Per Share   ($0.01)   ($0.00)









20
 *Table
          of Contents*




*Dividends*





The
      Company has not yet adopted any policy regarding payment of dividends. No
      dividends have been paid during the periods shown.





*Use
      of Estimates*





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





*Property
      and Equipment*





Property
      and equipment are carried at cost and depreciated on a straight-line bases
      over
      their useful lives. Office Equipment is depreciated over five years.





*Income
      Taxes*





The
      provision for income taxes is the total of the current taxes payable and the
      net
      of the change in the deferred income taxes. Provision is made for the deferred
      income taxes where differences exist between the period in which transactions
      affect current taxable income and the period in which they enter into the
      determination of net income in the financial statements.





**Recently
      Issued Accounting Pronouncements**





Below
      is
      a listing of the most recent accounting standards SFAS 150-154 and their effect
      on the Company.





***Statement
      No. 150***  *Accounting
      for Certain Financial Instruments with Characteristics of both Liabilities
      and
      Equity* (Issued
      5/03)





This
      Statement establishes standards for how an issuer classifies and measures
      certain financial instruments with characteristics of both liabilities and
      equity.





***Statement
      No. 151***  *Inventory
      Costs* -an
      amendment of ARB No. 43, Chapter 4 (Issued 11/04)





This
      statement amends the guidance in ARB No. 43, Chapter 4, *Inventory
      Pricing* ,
      to
      clarify the accounting for abnormal amounts of idle facility expense, freight,
      handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter
      4, previously stated that “...under some circumstances, items such as idle
      facility expense, excessive spoilage, double freight and re-handling costs
      may
      be so abnormal ass to require treatment as current period charges....” This
      Statement requires that those items be recognized as current-period charges
      regardless of whether they meet the criterion of “so abnormal.” In addition,
      this Statement requires that allocation of fixed production overheads to the
      costs of conversion be based on the normal capacity of the production
      facilities.









21
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***Statement
      No. 152***  *Accounting
      for Real Estate Time-Sharing Transactions* (an
      amendment of FASB Statements No. 66 and 67)





This
      Statement amends FASB Statement No. 66, *Accounting
      for Sales of Real Estate* ,
      to
      reference the financial accounting and reporting guidance for real estate
      time-sharing transactions that is provided in AICPA Statement of Position (SOP)
      04-2, *Accounting
      for Real Estate Time-Sharing Transactions* .





This
      Statement also amends FASB Statement No. 67, Accounting *for
      Costs and Initial Rental Operations of Real Estate Projects* ,
      states
      that the guidance for (a) incidental operations and (b) costs incurred to sell
      real estate projects does not apply to real estate time-sharing transactions.
      The accounting for those operations and costs is subject to the guidance in
      SOP
      04-2.





***Statement
      No. 153***  *Exchanges
      of Non-monetary Assets* (an
      amendment of APB Opinion No. 29)





The
      guidance in APB Opinion No. 29, *Accounting
      for Non-monetary Transactions* ,
      is
      based on the principle that exchanges of non-monetary assets should be measured
      based on the fair value of the assets exchanged. The guidance in that Opinion,
      however, includes certain exceptions to the principle. This Statement amends
      Opinion 29 to eliminate the exception for non-monetary exchanges of similar
      productive assts and replaces it with a general exception for exchanges of
      non-monetary assets that do not have commercial substance. A non-monetary
      exchange has commercial substance if the future cash flows of the entity are
      expected to change significantly as a result of the exchange.





***Statement
      No. 154*** ****** *Accounting
      Changes and Error Corrections (a replacement of APB Opinion No. 20 and FASB
      Statement No. 3)*





This
      Statement replaces APB Opinion No. 20, *Accounting
      Changes,* and FASB
      Statement No. 3, *Reporting
      Accounting Changes in Interim Financial Statements,* and
      changes the requirements for the accounting for and reporting of a change in
      accounting principle. This Statement applies to all voluntary changes in
      accounting principle. It also applies to changes required by an accounting
      pronouncement in the unusual instance that the pronouncement does not include
      specific transition provisions. When a pronouncement includes specific
      transition provisions, those provisions should be followed.





The
      adoption of these new Statements is not expected to have a material effect
      on
      the Company’s current financial position, results or operations, or cash flows.


22
 *Table
          of Contents*


**Item
      7. Financial Statements**





Index
      to
      Financial Statements:







**Audited
                Financial Statements:**F-1
            Report
                of Independent Registered Public Accounting FirmF-2
            Balance
                Sheet as of December 31, 2006 and December 31, 2005F-3
            Statements
                of Operations - Years Ended December 31, 2006 and December 31, 2005
                and
                the period from June 24, 2003 (Inception) through December 31,
                2006F-4
            Statement
                of Stockholders’ Equity (Deficit) and Comprehensive Loss for the Years
                Ended December 31, 2006, 2005, 2004, and 2003 and June 24, 2004
                (Inception)F-5
            Statements
                of Cash Flows for the Years Ended December 31, 2006 and December
                31, 2005
                and the period from June 24, 2003 (Inception) through December 31,
                2006F-6
            Notes
                to Financial Statements












*Table
          of Contents*




**MOORE
        & ASSOCIATES, CHARTERED**
 ** *ACCOUNTANTS
        AND ADVISORS*
 *PCAOB
        REGISTERED*
 
 
 REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 To
        the
        Board of Directors
 Encrypta
        Key Inc (Formerly Futomic Industries)
 
 
 We
        have
        audited the accompanying balance sheet of Encrypta Key Inc (Formerly Futomic
        Industries) as of December 31, 2006 and 2005, and the related statements
        of
        operations, stockholders’ equity and cash flows from inception June 24, 2003,
        through December 31, 2006. These financial statements are the responsibility
        of
        the Company’s management. Our responsibility is to express an opinion on these
        financial statements based on our audits.
 
 We
        conducted our audits in accordance with standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audits to obtain reasonable assurance about whether the
        financial statements are free of material misstatement. An audit includes
        examining, on a test basis, evidence supporting the amounts and disclosures
        in
        the financial statements. An audit also includes assessing the accounting
        principles used and significant estimates made by management, as well as
        evaluating the overall financial statement presentation. We believe that
        our
        audits provide a reasonable basis for our opinion.
 
 In
        our
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of Encrypta Key Inc (Formerly Futomic
        Industries) as of December 31, 2006 and 2005 and the results of its operations
        and its cash flows from inception June 24, 2003, through December 31, 2006,
        in
        conformity with accounting principles generally accepted in the United States
        of
        America.
 
 The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern. As discussed in Note 3 to the financial
        statements, the Company’s net losses of $1,480,396 as of December 31, 2006 raise
        substantial doubt about its ability to continue as a going concern. Management’s
        plans concerning these matters are also described in Note 3. The financial
        statements do not include any adjustments that might result from the outcome
        of
        this uncertainty.
 
 
 ***/s/
        Moore & Associates, Chartered***
 
 Moore
        & Associates Chartered
 Las
        Vegas, Nevada
 April
        13,
        2007
 
 
 
 *2675
        S. Jones Blvd. Suite 109, Las Vegas, NV 89146 (702) 253-7511 Fax (702)
        253-7501*







F-1
 *Table
          of Contents*


**EncryptaKey,
      Inc.**


formerly
        Futomic Industries, Inc.
 (A
        Development Stage Company)
  Balance
        Sheets


December
                  31,2006
              
              2005**ASSETS**Current
                  AssetsCash
              $
              186,554
              
              $
              30,665Security
                  Deposits
              
              -
              
              
              1,070Total
                  Current Assets
              
              186,554
              
              
              31,735Fixed
                  AssetsFurniture
                  and Equipment - Net
              
              60,674
              
              
              2,685Invisidesk
                  Portal - Net
              
              550
              
              
              -Total
                  Long Term Assets
              
              61,224
              
              
              2,688Total
                  Assets
              $
              247,778
              
              $
              34,423**LIABILITIES
                  AND STOCKHOLDERS' EQUITY**LiabilitiesLoans
                  Payable - Related Parties
              $
              -
              
              $
              95,942Accrued
                  Expenses
              
              -
              
              
              3,625Wages
                  Payable
              
              -
              
              
              18,711Total
                Liabilities
              
              -
              
              
              118,278Stockholders'
                  EquityPreferred
                  Stock, authorized
                20,000,000
                  shares, par value $0.0001,
                no
                  preferred stock is outstanding
              
              -
              
              
              -Common
                  Stock, authorized
                100,000,000
                  shares, par value $0.0001,
                issued
                  and outstanding on December 31,
                2006
                  and 2005 is 49,859,000 and
                38,075,000
                  shares respectively
              
              4,986
              
              
              3,808Paid
                  in Capital
              
              2,223,189
              
              
              338,617Subscriptions
                Receivable
              
              (500,000)
              
              
              -Accumulated
                Deficit During
                Development
                  Stage
              
              (1,480,397)
              
              
              (426,280)Total
                Stockholders' Equity
              
              247,778
              
              
              (83,855)Total
                  Liabilities and Stockholders' Equity
              $
              247,778
              
              $
              34,423




The
        accompanying notes are an integral part of these statements










F-2
 *Table
          of Contents*


**EncryptaKey,
      Inc.**


formerly
          Futomic Industries, Inc.
 (A
          Development Stage Company)
  Statements
          of Operation
   June
                      24, 2003(Inception)
                      toYear
                      Ended December 31,
                  
                  December
                      31,2006
                  
                  2005
                  
                  2006Operating
                      ExpensesGeneral
                      and Administrative
                  
                  $
                      89,988
                  
                  $
                      82,092
                  
                  $
                      336,461Interest
                      Expense
                  
                  -
                  
                  2,096
                  
                  3,523Advertising
                      and Promotion
                  
                  129,961
                  
                  -
                  
                  129,961Research
                      and Development
                  
                  890,000
                  
                  3,152
                  
                  1,066,327Professional
                      Fees
                  
                  34,000
                  
                  -
                  
                  34,000Total
                      Expenses
                  
                  1,143,949
                  
                  87,340
                  
                  1,570,272Net
                      (Loss) before Extraordinary Items
                  
                  (1,143,949)
                  
                  (87,340)
                  
                  (1,570,272)Extraordinary
                      ItemsGain
                      on Forgiveness of Debt
                  
                  
                  89,832
                  
                  
                  -
                  
                  
                  89,832Interest
                      Income
                  
                  
                  -
                  
                  
                  6
                  
                  
                  44Net
                      Income/(Loss)
                  
                  $
                  (1,054,117)
                  
                  $
                  (87,334)
                  
                  $
                  (1,480,396)Basic
                      and Diluted(Loss)
                      per Share
                  
                  $
                  (0.03)
                  
                  $
                  (0.00)Weighted
                      Average
                    Number
                      of Shares
                  
                  
                  39,818,551
                  
                  
                  38,075,000Basic
                      and Diluted(Loss)
                      per Share
                  
                  $
                  (0.01)
                  
                  $
                  (0.00)Weighted
                      Average
                    Number
                      of Shares
                  
                  
                  86,473,551
                  
                  
                  84,730,000a
                      =
                      Less than ($0.01) per share
 The
            accompanying notes are an integral part of these
            statements


The
      accompanying notes are an integral part of these statements












F-3
 *Table
          of Contents*


**EncryptaKey,
      Inc.**


formerly
            Futomic Industries, Inc.
 (A
            Development Stage Company)
  **Statements
            of Stockholders' Deficit**


From
        June
        24, 2003 (Inception) to December 31, 2006


DeficitAccumulatedPrice
              
              
              
              
              
              
              
              
              
              During
                  theIssue
              
              Per
              
              Common
                  Stock
              
              Paid
                  in
              
              Subscriptions
              
              Development
              
              TotalDate
              
              Share
              
              Shares
              
              Amount
              
              Capital
              
              Receivable
              
              Stage
              
              Equity**Balance
                  at inception, June 24, 2003**
              
              
              
              
              
              
              
              
              25,000,000
              
              $
              2,500
              
              $
              502
              
              $
              -
              
              $
              (4,502)
              
              $
              (1,500)Adjustment
                  effected in reverseacqusition
              
              
              15-Aug-03
              
              $
              0.002
              
              
              56,855,000
              
              
              5,686
              
              
              111,944
              
              
              
              
              
              4,502
              
              
              122,132Net
                  (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (152,649)
              
              
              (152,649)**Balance,
                  December 31, 2003**
              
              
              
              
              
              
              
              
              81,855,000
              
              
              8,186
              
              
              112,446
              
              
              -
              
              
              (152,649)
              
              
              (32,017)Common
                  shares issued for cash
              
              
              15-Mar-04
              
              $
              0.04
              
              
              375,000
              
              
              38
              
              
              14,962
              
              
              
              
              
              
              
              
              15,000Common
                  shares issued for cash
              
              
              15-Jul-04
              
              $
              0.10
              
              
              2,500,000
              
              
              250
              
              
              249,750
              
              
              
              
              
              
              
              
              250,000Net
                  (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (186,297)
              
              
              (186,297)**Balance,
                  December 31, 2004**
              
              
              
              
              
              
              
              
              84,730,000
              
              
              8,474
              
              
              377,158
              
              
              -
              
              
              (338,946)
              
              
              46,686Common
                  shares re-purchased by theCompany
                  and retired
              
              
              01-Jan-05
              
              $
              0.001
              
              
              (46,655,000)
              
              
              (4,666)
              
              
              (38,541)
              
              
              
              
              
              
              
              
              (43,207)Net
                  (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (87,334)
              
              
              (87,334)**Balance,
                  December 31, 2005**
              
              
              
              
              
              
              
              
              38,075,000
              
              
              3,808
              
              
              338,617
              
              
              -
              
              
              (426,280)
              
              
              (83,855)Common
                  shares issued for purchaseof
                  technology
              
              
              28-Sep-06
              
              $
              0.0001
              
              
              5,500,000
              
              
              550
              
              
              
              
              
              
              
              
              
              
              
              550Common
                  shares issued for cash
              
              
              12-Dec-06
              
              $
              0.30
              
              
              6,284,000
              
              
              628
              
              
              1,884,572
              
              
              (500,000)
              
              
              
              
              
              1,385,200Net
                  (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,054,117)
              
              
              (1,054,117)**Balance,
                  December 31, 2006**
              
              
              
              
              
              
              
              
              49,859,000
              
              $
              4,986
              
              $
              2,223,189
              
              $
              (500,000)
              
              $
              (1,480,397)
              
              $
              247,778On
                  August 7, 2006 the Company exercised a 5:1 forward stock split
                  that has
                  been retroactively applied to this schedule thereby increasing
                  the number
                  of
                shares
                  issued and decreasing the price per share.






The
        accompanying notes are an integral part of these statements








F-4
 *Table
          of Contents*


**EncryptaKey,
      Inc.**


formerly
              Futomic Industries, Inc.
 (A
              Development Stage Company)
  **Statements
              of Cash Flow**




June
                  24, 2003(Inception)
                  toYear
                  Ended December 31,
              
              
              December
                  31,2006
              
              
              2005
              
              
              2006Operating
                  ActivitiesNet
                  Profit / (Loss)
              
              $
              (1,054,117)
              
              $
              (87,334)
              
              $
              (1,480,396)Significant
                  Non-Cash TransactionsStock
                  Issued to founders
              
              
              -
              
              
              -
              
              
              3,002Adjustment
                  for reverse acqusition
              
              
              -
              
              
              -
              
              
              117,630Stock
                  issued to purchase asset
              
              
              550
              
              
              -
              
              
              550Depreciation
              
              
              -
              
              
              1,728
              
              
              5,279Changes
                  in Assets and Liabilities(Increase)/Decrease
                  in Deposits
              
              
              1,070
              
              
              (170)
              
              
              -Increase/(Decrease)
                  in Accounts Payable
              
              
              -
              
              
              (7,868)
              
              
              -Increase/(Decrease)
                  in Accrued Liabilities
              
              
              (3,625)
              
              
              2,095
              
              
              -Increase/(Decrease)
                  in Wages Payable
              
              
              (18,711)
              
              
              (3,000)
              
              
              -Net
                  Cash (Used) by Operating Activities
              
              
              (1,074,833)
              
              
              (94,549)
              
              
              (1,353,935)Investment
                  ActivitiesPurchase
                  of Invisidesk Portal
              
              
              (550)
              
              
              -
              
              
              (550)Equipment
                  Purchase
              
              
              (60,675)
              
              
              -
              
              
              (65,955)Cash
                  Used by Investment Activities
              
              
              (61,225)
              
              
              -
              
              
              (66,505)Financing
                  ActivitiesNet
                  Proceeds from loans - Related Parties
              
              
              (93,253)
              
              
              45,488
              
              
              -Purchase
                  of Treasury Stock
              
              
              -
              
              
              (35,016)
              
              
              (43,207)Proceeds
                  from sale of Common Stock
              
              
              1,385,200
              
              
              -
              
              
              1,650,200Cash
                  Provided by Financing Activities
              
              
              1,291,947
              
              
              10,472
              
              
              1,606,993Net
                  Increase/(Decrease) in Cash
              
              
              155,889
              
              
              (84,077)
              
              
              186,553Cash,
                  Beginning of Period
              
              
              30,664
              
              
              114,741
              
              
              -Cash,
                  End of Period
              
              $
              186,553
              
              $
              30,664
              
              $
              186,553Supplemental
                  Information:Interest
                Paid
              
              $
              -
              
              $
              3,523
              
              $
              3,523Income
                Taxes Paid
              
              $
              -
              
              $
              -
              
              $
              -Significant
                  Non-Cash Transactions1.
                  The company issued 25,000,000 post-split common shares to the founders
                  valued at $3,002.2.
                  The Company issued 56,855,00 common shares valued at $117,630 and
                  decreased the accumulated deficit by $4,502 to effect a
                reverse
                  acqusition on August 15, 2003.3.
                  On September 28, 2006 the Company issued 5,500,000 common shares
                  at
                  $0.0001 par-value to acquire technology.




The
        accompanying notes are an integral part of these statements
    F-5
 *Table
            of Contents*


**EncryptaKey,
      Inc.**


**Formerly
        Futomic Industries, Inc.**
 (A
        Development Stage Company)
 **NOTES
        TO AUDITED FINANCIAL STATEMENTS**
 **(December
        31, 2006 and December 31, 2005)**
 
 
 **NOTE
        1.**  **GENERAL
        ORGANIZATION AND BUSINESS**
 
 EncryptaKey,
        Inc., (the Company), was incorporated in the state of New Jersey on April
        6,
        2000 as Segway VI Corp. The company has undergone the following name changes:
        on
        August 13, 2003 to 3DLP International Inc., on April 19 2004 to Futomic
        Industries Inc.; and then on February 19, 2007, subsequent to the date of
        these
        statements, to EncryptaKey, Inc.
 
 On
        August
        15, 2003, the Company acquired Selectrics Corporation (Selectrics), a Delaware
        Corporation organized on June 24, 2003, in a one-for-one common stock exchange.
        This transaction resulted in a change of control and was treated as a reverse
        acquisition with EncryptaKey, Inc. being the surviving legal entity and
        Selectrics the surviving accounting acquirer. Accordingly, the equity accounts
        and accumulated deficits prior to the merger have been adjusted to reflect
        those
        of Selectrics. The Company is considered to be in the development
        stage.
 
 The
        company is in the business to develop and market identity and data security
        technologies that enable the highest level of secure commercial and financial
        transaction both in person and over the internet, providing an effective
        shield
        to identity theft.
 
 
 **NOTE
        2.**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING PRACTICES**
 
 The
        relevant accounting policies and procedures are listed below.
 
 Accounting
        Basis
 
 The
        statements were prepared following generally accepted accounting principles
        of
        the United States of America consistently applied.
 
 Management
        Certification
 
 The
        financial statements herein are certified by the officers of the Company
        to
        present fairly, in all material respects, the financial position, results
        of
        operations and cash flows for the periods presented, in conformity with
        accounting principles generally accepted in the United States of America,
        consistently applied.
 
 Fiscal
        Year
 
 The
        Company operates on a December 31 st fiscal
        year end.
    F-6
 *Table
            of Contents*
 
 Research
        and Development Costs
 
 Research
        and Development costs are expensed as incurred in accordance with generally
        accepted accounting principles. Costs in association with the development
        of a
        patented technology when computer software is developed will be capitalized
        when
        technological feasibility is established in accordance with financial accounting
        standard No. 86
 
 Basic
        and Diluted Net Income (Loss) Per Share
 
 The
        Company computes net income (loss) per share in accordance with Statement
        of
        Financial Accounting Standards (“SFAS”) No. 128, " *Earnings
        per Share* ".
        SFAS
        No. 128 requires presentation of both basic and diluted earnings per share
        (EPS)
        on the face of the income statement. Basic EPS is computed by dividing net
        income (loss) available to common shareholders (numerator) by the weighted
        average number of shares outstanding (denominator) during the period. Diluted
        EPS gives effect to all dilutive potential common shares outstanding during
        the
        period using the treasury stock method..
 
 The
        numerators and denominators used in the computations of basic and diluted
        EPS
        are presented in the following table:
 
 December 31,
              2006
              2005Numerators
                  for Basic and Diluted EPS
                Net
                  income/(loss) to common shareholders
              ($1,054,117)
              ($87,334)Denominators
                  for Basic EPS
                Weighted
                  average of shares outstanding
              39,818,551
              38,075,000Basic Earnings/(Loss) Per
                Share
              ($0.03)
              ($0.00)Denominators
                  for Diluted EPS
                Weighted
                  average of shares outstanding
              86,473,551
              84,730,000Diluted Earnings/(Loss) Per
                Share
              ($0.01)
              ($0.00)
 
 Dividends
 
 The
        Company has not yet adopted any policy regarding payment of dividends. No
        dividends have been paid during the periods shown.
 
 Use
        of
        Estimates
 
 The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States of America requires management to
        make
        estimates and assumptions that affect the reported amounts of assets and
        liabilities and disclosure of contingent
  F-7
 *Table
            of Contents*
  assets
        and liabilities at the date of the financial statements and the reported
        amounts
        of revenue and expenses during the reporting period. Actual results could
        differ
        from those estimates.
 
 Property
        and Equipment
 
 Property
        and equipment are carried at cost and depreciated on a straight-line bases
        over
        their useful lives. Office Equipment is depreciated over five years.
 
 Income
        Taxes
 
 The
        provision for income taxes is the total of the current taxes payable and
        the net
        of the change in the deferred income taxes. Provision is made for the deferred
        income taxes where differences exist between the period in which transactions
        affect current taxable income and the period in which they enter into the
        determination of net income in the financial statements.
 
 
 **NOTE
        3.**  **GOING
        CONCERN**
 
 The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern, which contemplates the realization of its
        assets and the liquidation of its liabilities in the normal course of business.
        However, the Company is in its development stage and has never generated
        revenues. The Company has accumulated a loss of $1,480,396 during its
        development stage. This raises substantial doubt about the Company’s ability to
        continue as a going concern. The financial statements do not include any
        adjustments that might result from this uncertainty.
 
 Management ’ s
        Plan
 
 Management
        has successfully raised $2,070,186 in a private offering that has closed
        on
        February 7, 2007 subsequent to the closing date of these financials. The
        Company
        continue to seek funding from its shareholders and other qualified investors
        to
        pursue its business plan.
 
 
 **NOTE
        4.**  **STOCKHOLDERS’
        EQUITY**
 
 Preferred
        Stock
 
 The
        Company is authorized 20,000,000 shares of preferred stock at a $0.0001 par
        value and currently has zero shares of preferred stock issued and
        outstanding.
 
 Common
        Stock
 
 The
        Company is authorized to issue 100,000,000 shares of common stock, par value
        $0.0001 per share. As of December 31, 2006, there were 49,859,000 shares
        of
        common stock outstanding. On August 7, 2006, the Company exercised a five
        for
        one forward stock split. All share amounts
    F-8
 *Table
            of Contents*
  herein
        are adjusted to give effect to the stock split and have also been adjusted
        to
        reflect the adjusted equity resulting from the August 15, 2003 reverse merger.
 
 During
        2003, the Company issued 81,855,000 post-split shares of common stock in
        the
        following transactions:
 
 ·
            On
                June 24, 2003, the Company issued 25,000,000 shares to its founder
                for
                $3,002. 
 ·
            On
                August 15, 2003 the Company 56,855,000 common shares to execute the
                acquisition of Selectrics Corporation in a one for one share exchange
                for
                a value of $121,882. This acquisition was recorded as a reverse merger
                with Selectrics the surviving historical accounting company. Accordingly
                the equity and accumulated deficit are adjusted to reflect Seletrics
                history. 
 During
        2004, the Company issued 2,875,000 post-split shares of common stock in the
        following transactions:
 
 ·
            On
                March 15, 2004, the Company issued 375,000 shares for $15,000 cash
                in a
                private placement. 
 ·
            On
                July 23, 2004 the Company issued 2,500,000 shares in a private placement
                for $250,000 cash. 
 During
        2005, the Company received 46,655,000 common shares into its treasury from
        a
        shareholder for cash and other property valued at $43,207.
 
 During
        2006, the Company issued 11,784,000 shares of common stock in the following
        transactions:
 
 ·
            On
                September 28, 2006, the Company entered into an Asset Purchase Agreement
                with Owen Consulting LLC to acquire the right, title and interest
                in
                technology commonly known as the EncryptaKey Secure communication
                Portal
                by issuing 5,500,000 shares of common stock at $0.0001 per share.
                The
                technology and associated intellectual property has been memorialized
                by
                patent application. However, it is still in development and the associated
                costs are expensed to research and development. Because of the limited
                public market for the Company stock, Par-value was used to record
                this
                transaction. 
 ·
            On
                December 12, 2006, the Company issued 6,284,000 common shares in
                a private
                offering at $0.30 per share for $1,385,200 and $500,000 subscriptions
                receivable. The Company extended the closing of the offering to February
                7, 2007 to allow for collection of funds and sale to additional investors
                resulting in the subsequent issue of an additional 616,664 shares
                at $0.30
                and the collection of all outstanding subscription receivables related
                to
                this placement which will be reflected in the following quarterly
                financials. 
  F-9
 *Table
            of Contents*
  **NOTE
        5.**  **COMMITMENTS
        AND CONTINGENCIES - RELATED PARTY**
 
 Research
        and Development with Owens Consulting, LLC
 
 On
        September 28, 2006, the Company entered into an Asset Purchase Agreement
        with
        Owen Consulting LLC, a California limited liability company with Mr. Kelly
        Owen,
        the Company’s CEO the principle member. Pursuant to that agreement, the Company
        issued 5,500,000 shares of common stock and acquired assets consisting of
        all
        right, title and interest in a biometric security technology commonly known
        as
        the EncryptaKey Secure Communication Portal memorialized in a patent
        application.
 
 On
        October 1, 2006 the Company entered into an associated consulting agreement
        with
        Owen Consulting, LLC to complete the development of the EncryptaKey Secure
        Communication Portal. The terms of the agreement require payment at the rate
        of
        $25.00 per hour for actual hours incurred for research and development. The
        project involves the efforts of over 100 programmers and technicians. As
        of
        December 31, 2006 the Company has been invoiced and paid $890,000 on this
        contract which has been expensed as Research and Development costs.
 
 During
        the first quarter of 2007 the company has be invoiced and paid an additional
        $700,000 on this contract and expects that its commitment to complete the
        development of the EncryptaKey technology to exceed $2,500,000.
 
 Gain
        on Forgiveness of Debt
 
 From
        time-to-time shareholders advance the Company its working capital needs.
        The
        balance at December 31, 2006 and 2005 was $0.00 and $95,942 respectively.
        Interest is accrued on these loans at a rate of 3% on an annual
        basis.
  As
        of
        December 31, 2006 the Company recognized forgiveness of related party debt
        in a
        transaction that included the transfer of the Company’s assets. Forgiveness of
        debt amounted to $89,832.
 
 
 **NOTE
        6.**  **PROVISION
        FOR INCOME TAXES**
 
 The
        Company provides for income taxes under Statement of Financial Accounting
        Standards NO. 109, Accounting for Income Taxes. SFAS No. 109 requires the
        use of
        an asset and liability approach in accounting for income taxes.
 
 SFAS
        No.
        109 requires the reduction of deferred tax assets by a valuation allowance
        if,
        based on the weight of available evidence, it is more likely than not that
        some
        or all of the deferred tax assets will not be realized. The total deferred
        tax
        asset is $325,687 as of December 31, 2006 which is calculated by multiplying
        a
        22% estimated tax rate by the cumulative NOL of $860,646 The total valuation
        allowance is a comparable $325,687.
  F-10
 *Table
            of Contents*
  The
        provision for income taxes for the period ended December 31, 2006 and 2005
        follows:
   Year Ended December
                31,
              2006
              
              2005Deferred Tax Asset
              $                   
                  231,906
              
              $                     
                  19,216Valuation Allowance
              (231,906)
              
              (19,216)Current
                Taxes Payable
              0.00
              
              0.00Income
                Tax Expense
              $                     
                   0.00
              
              $                   
                     0.00
 
 Below
        is
        a chart showing the estimated federal net operating losses and the years
        in
        which they will expire.
 
   Year
                Amount
                
                Expiration2003
                $152,649
                
                20232003
                186,296
                
                20242004
                87,334
                
                20252005
                1,054,117
                
                20062006Total
                $1,480,396
 
  
 
 **NOTE
        7.**  **COMMITMENTS
        AND CONTINGENCIES**
 
 On
        October 1, 2006 the Company entered into a consulting agreement with Owen
        Consulting, LLC to complete the development of the EncryptaKey Secure
        Communication Portal. The terms of the agreement require payment at the rate
        of
        $25.00 per hour actual hour incurred for research and development through
        September 30, 2007. The project currently involves the efforts of over 100
        programmers and technicians. As of December 31, 2006 the Company has been
        invoiced and paid $890,000 on this contract.
 
 During
        the first quarter of 2007 the company has be invoiced and paid an additional
        $700,000. The Company expects that its commitment to complete the development
        of
        the EncryptaKey technology to exceed $2,500,000.
 
 
 **NOTE
        8.**  **THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS**
 
 Below
        is
        a listing of the most recent accounting standards SFAS 150-154 and their
        effect
        on the Company.
 
 **Statement
        No. 150**  *Accounting
        for Certain Financial Instruments with Characteristics of both Liabilities
        and
        Equity* (Issued
        5/03)
 
 This
        Statement establishes standards for how an issuer classifies and measures
        certain financial instruments with characteristics of both liabilities and
        equity.
 
 **Statement
        No. 151**  *Inventory
        Costs* -an
        amendment of ARB No. 43, Chapter 4 (Issued 11/04)
   F-11
 *Table
            of Contents*
   This
        statement amends the guidance in ARB No. 43, Chapter 4, *Inventory
        Pricing* ,
        to
        clarify the accounting for abnormal amounts of idle facility expense, freight,
        handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter
        4, previously stated that “...under some circumstances, items such as idle
        facility expense, excessive spoilage, double freight and re-handling costs
        may
        be so abnormal ass to require treatment as current period charges....” This
        Statement requires that those items be recognized as current-period charges
        regardless of whether they meet the criterion of “so abnormal.” In addition,
        this Statement requires that allocation of fixed production overheads to
        the
        costs of conversion be based on the normal capacity of the production
        facilities.
 
 **Statement
        No. 152**  *Accounting
        for Real Estate Time-Sharing Transactions* (an
        amendment of FASB Statements No. 66 and 67)
 
 This
        Statement amends FASB Statement No. 66, *Accounting
        for Sales of Real Estate* ,
        to
        reference the financial accounting and reporting guidance for real estate
        time-sharing transactions that is provided in AICPA Statement of Position
        (SOP)
        04-2, *Accounting
        for Real Estate Time-Sharing Transactions* .
 
 This
        Statement also amends FASB Statement No. 67, Accounting *for
        Costs and Initial Rental Operations of Real Estate Projects* ,
        states
        that the guidance for (a) incidental operations and (b) costs incurred to
        sell
        real estate projects does not apply to real estate time-sharing transactions.
        The accounting for those operations and costs is subject to the guidance
        in SOP
        04-2.
 
 **Statement
        No. 153**  *Exchanges
        of Non-monetary Assets* (an
        amendment of APB Opinion No. 29)
 
 The
        guidance in APB Opinion No. 29, *Accounting
        for Non-monetary Transactions* ,
        is
        based on the principle that exchanges of non-monetary assets should be measured
        based on the fair value of the assets exchanged. The guidance in that Opinion,
        however, includes certain exceptions to the principle. This Statement amends
        Opinion 29 to eliminate the exception for non-monetary exchanges of similar
        productive assts and replaces it with a general exception for exchanges of
        non-monetary assets that do not have commercial substance. A non-monetary
        exchange has commercial substance if the future cash flows of the entity
        are
        expected to change significantly as a result of the exchange.
 
 **Statement
        No. 154** *Accounting Changes and Error Corrections (a replacement of APB Opinion No.
        20
        and FASB Statement No. 3)*
 
 This
        Statement replaces APB Opinion No. 20, *Accounting
        Changes,* and FASB
        Statement No. 3, *Reporting
        Accounting Changes in Interim Financial Statements,* and
        changes the requirements for the accounting for and reporting of a change
        in
        accounting principle. This Statement applies to all voluntary changes in
        accounting principle. It also applies to changes required by an accounting
        pronouncement in the unusual instance that the pronouncement does not include
        specific transition provisions. When a pronouncement includes specific
        transition provisions, those provisions should be followed.
 
 The
        adoption of these new Statements is not expected to have a material effect
        on
        the Company’s current financial position, results or operations, or cash flows.
 
 F-12
 *Table
            of Contents*
 
 **NOTE
        9.**  **SUBSEQUENT
        EVENTS**
 
 On
        December 12, 2006, the Company issued 6,284,000 common shares in a private
        offering at $0.30 per share for $1,385,200 and $500,000 subscriptions
        receivable. The Company extended the closing of the offering to February
        7, 2007
        to allow for collection of funds and sale to additional investors resulting
        in
        the subsequent issue of an additional 616,664 shares at $0.30 and the collection
        of all outstanding subscription receivables related to this placement which
        will
        be reflected in the following quarterly financials.
 
 During
        the period ended March 14, 2007 the Company has been invoiced and paid an
        additional $700,000 to Owen Consulting, LLC related to research and development
        hours incurred in the development of the EncryptaKey technology.









F-13
 *Table
          of Contents*


**Item
      8. Changes In and Disagreements with Accountants on Accounting and
      Financial****Disclosure**





No
      events
      occurred requiring disclosure under Item 304(b) of Regulation S-B.





On
      February 1, 2007, Gately & Associates, LLC (the “Former Accountant”) was
      dismissed as our accountant. We engaged Moore & Associates, Chtd. as our
      principal accountant’s effective February 1, 2007. The decision to change
      accountants was approved by our board of directors. We did not consult with
      Moore & Associates, Chtd. on any matters prior to retaining such firm as our
      principal accountants.





During
      our fiscal years ended December 31, 2004 and December 31, 2005 and through
      the
      interim period ended September 30, 2006, there were no disagreements with the
      Former Accountant on any matters concerning accounting principles or practices,
      financial statement disclosure or auditing scope or procedures which
      disagreements, if not resolved to the satisfaction of the Former Accountant
      would have caused them to make reference to the subject matter of the
      disagreements in connection with their reports on the financial statements
      for
      such periods.





The
      Former Accountants’ audit report for our fiscal year ended December 31, 2004 and
      the audit report for our fiscal year ended December 31, 2005, did not contain
      any adverse opinion or a disclaimer of opinion or was qualified or modified
      as
      to uncertainty, audit scope or accounting principles.





During
      our fiscal years ended December 31, 2004 and December 31, 2005 and through
      the
      interim period ended September 30, 2006, the Former Accountant did not advise
      us
      with respect to any of the matters described in paragraphs (a)(1)(iv)(A) and
      (B)
      of Item 304 of Regulation S-B.





**Item
      8A. Controls and Procedures**





We
      carried out an evaluation of the effectiveness of the design and operation
      of
      our disclosure controls and procedures (as defined in Exchange Act Rules
      13a-15(e) and 15d-15(e)) as of December 31, 2006. This evaluation was carried
      out under the supervision and with the participation of our Chief Executive
      Officer and Chief Financial Officer, Kelly Owen. Based upon that evaluation,
      our
      Chief Executive Officer and Chief Financial Officer concluded that, as of
      December 31, 2006, our disclosure controls and procedures are effective. There
      have been no significant changes in our internal controls over financial
      reporting during the quarter ended December 31, 2006 that have materially
      affected or are reasonably likely to materially affect such controls.





Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed in our reports filed or
      submitted under the Exchange Act are recorded, processed, summarized and
      reported, within the time periods specified in the SEC's rules and forms.
      Disclosure controls and procedures include, without limitation, controls and
      procedures designed to ensure that information required to be disclosed in
      our
      reports filed






*Table
          of Contents*






under
      the
      Exchange Act is accumulated and communicated to management, including our Chief
      Executive Officer and Chief Financial Officer, to allow timely decisions
      regarding required disclosure.





Limitations
      on the Effectiveness of Internal Controls





Our
      management does not expect that our disclosure controls and procedures or our
      internal control over financial reporting will necessarily prevent all fraud
      and
      material error. Our disclosure controls and procedures are designed to provide
      reasonable assurance of achieving our objectives and our Chief Executive Officer
      and Chief Financial Officer concluded that our disclosure controls and
      procedures are effective at that reasonable assurance level. 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 controls
      can provide absolute assurance that all control issues and instances of fraud,
      if any, within our company have been detected. These inherent limitations
      include the realities that judgments in decision-making can be faulty, and
      that
      breakdowns can occur because of simple error or mistake. Additionally, controls
      can be circumvented by the individual acts of some persons, by collusion of
      two
      or more people, or by management override of the internal control. The design
      of
      any system of controls also is based in part upon certain assumptions about
      the
      likelihood of future events, and there can be no assurance that any design
      will
      succeed in achieving its stated goals under all potential future conditions.
      Over time, control may become inadequate because of changes in conditions,
      or
      the degree of compliance with the policies or procedures may deteriorate.





**Item
      8B. Other information**





None.





*Table
          of Contents*


**PART
      III**





**Item
      9. Directors, Executive Officers, Promoters and Control Persons;
      Compliance with**


**Section
      16(a) of the Exchange Act**





The
      following information sets forth the names of our current directors and
      executive officers, their ages and their present positions.





**Name**
            **Age**
            **Position(s)
                and Office(s) Held**Kelly
                Owen
            42
            Chief
                Executive Officer, President, Chief Financial Officer, and
                DirectorFrancisco
                Schipperheijn
            43
            Director







Set
      forth
      below is a brief description of the background and business experience of each
      of our current executive officers and directors.





Kelly
      Owen is a director and our sole officer, including our Chief Executive Officer
      and Chief Financial Officer. Mr. Owen is also the founder, principal and owner
      of both Owen Consulting, Inc. and Owen Consulting LLC, a Los Alamitos,
      California based consulting company specializing in information technology
      and
      has been its CEO since 2002. Key projects have included the development and
      installation of Secure ASP in the Netherlands, the development of the Value
      Point Gaming Portal, and the creation of the technology we acquired by reason
      of
      the Asset Purchase Agreement, commonly known as the EncryptaKey Secure
      Communication Portal. Previously, from 1999 to 2002, Mr. Owen was Director
      of
      Information Systems at ITS, an information technology consulting company based
      in Long Beach, California. His responsibilities included leading a department
      in
      determining efficient network infrastructure and application design, and
      designing and implementing a WAN for the delivery of customers’ nationwide
      mission critical applications.





Francisco
      Schipperheijn served as our Chief Executive Officer from August 15, 2003 to
      September 28, 2006 and continues to serve as one of our Directors. Mr.
      Schipperheijn is the founder of Internet Service Brokers, Inc., a company that
      designed custom web sites and built Canada’s first online backup utility Backup
      2000, later renamed Backup Manager. He has experience in technology development
      that includes the development of a UNIX based POS distribution software system
      that involved the development of a music database called Multimedia Service
      Brokers Database (MSBD) representing the US, Canadian, Australian, German,
      UK
      and Japanese major and Independent Record labels.








**Term
      of Office**





Our
      directors are appointed for a one-year term to hold office until the next annual
      meeting of our shareholders or until removed from office in accordance with
      our
      bylaws.






*Table
          of Contents*






Our
      executive officers are appointed by our board of directors and hold office
      until
      removed by the board.





**Significant
      Employees**





We
      have
      no significant employees other than our officers and directors.





**Family
      Relationships**





There
      are
      no family relationships between or among the directors, executive officers
      or
      persons nominated or chosen by us to become directors or executive
      officers.





**Involvement
      in Certain Legal Proceedings**





To
      the
      best of our knowledge, during the past five years, none of the following
      occurred with respect to a present director, person nominated to become
      director, executive officer, or control person: (1) any bankruptcy petition
      filed by or against any business of which such person was a general partner
      or
      executive officer either at the time of the bankruptcy or within two years
      prior
      to that time; (2) any conviction in a criminal proceeding or being subject
      to a
      pending criminal proceeding (excluding traffic violations and other minor
      offenses); (3) being subject to any order, judgment or decree, not subsequently
      reversed, suspended or vacated, of any court of competent jurisdiction,
      permanently or temporarily enjoining, barring, suspending or otherwise limiting
      his or her involvement in any type of business, securities or banking
      activities; and (4) being found by a court of competent jurisdiction (in a
      civil
      action), the SEC or the Commodities Futures Trading Commission to have violated
      a federal or state securities or commodities law, and the judgment has not
      been
      reversed, suspended or vacated.





**Audit
      Committee**





We
      do not
      have a separately-designated standing audit committee. The entire board of
      directors performs the functions of an audit committee, but no written charter
      governs the actions of the board of directors when performing the functions
      of
      that would generally be performed by an audit committee. The board of directors
      approves the selection of our independent accountants and meets and interacts
      with the independent accountants to discuss issues related to financial
      reporting. In addition, the board of directors reviews the scope and results
      of
      the audit with the independent accountants, reviews with management and the
      independent accountants our annual operating results, considers the adequacy
      of
      our internal accounting procedures and considers other auditing and accounting
      matters including fees to be paid to the independent auditor and the performance
      of the independent auditor.





We
      do not
      have an audit committee financial expert because of the
      size
      of our company and our board of directors at this time. We believe that we
      do
      not require an audit committee financial expert at this time because we retain
      outside consultants who possess these attributes.





For
      the
      fiscal year ending December 31, 2006, the board of directors:








*Table
          of Contents*





1.
            Reviewed
                and discussed the audited financial statements with management,
                and





2.
            Reviewed
                and discussed the written disclosures and the letter from our independent
                auditors on the matters relating to the auditor's
                independence.





Based
      upon the board of directors’ review and discussion of the matters above, the
      board of directors authorized inclusion of the audited financial statements
      for
      the year ended December 31, 2006 to be included in this Annual Report on Form
      10-KSB and filed with the Securities and Exchange Commission.





**Section
      16(a) Beneficial Ownership Reporting Compliance**





Section
      16(a) of the Exchange Act requires our directors and executive officers and
      persons who beneficially own more than ten percent of a registered class of
      the
      Company’s equity securities to file with the SEC initial reports of ownership
      and reports of changes in ownership of common stock and other equity securities
      of the Company. Officers, directors and greater than ten percent beneficial
      shareholders are required by SEC regulations to furnish us with copies of all
      Section 16(a) forms they file. To the best of our knowledge based solely on
      a
      review of Forms 3, 4, and 5 (and any amendments thereof) received by us during
      or with respect to the year ended December 31, 2006, the following persons
      have
      failed to file, on a timely basis, the identified reports required by Section
      16(a) of the Exchange Act during fiscal year ended December 31, 2006:





**Name
                and principal position**
            **Number
                of**
              **late
                reports**
            **Transactions
                not**
              **timely
                reported**
            **Known
                failures to**
              **file
                a required form**Kelly
                Owen
              Chief
                Executive Officer, President, Chief Financial Officer, and
                Director
            1
            1
            0Francisco
                Schipperheijn
            0
            0
            0





**Code
      of Ethics Disclosure**





We
      adopted a Code of Ethics for Financial Executives, which include our principal
      executive officer, principal financial officer, principal accounting officer
      or
      controller, or persons performing similar functions. The code of ethics was
      filed as an exhibit to the annual report on Form 10-KSB for the fiscal year
      ended December 31, 2005 and filed with the SEC on March 10, 2006.





*Table
          of Contents*


**Item
      10. Executive Compensation**





**Summary
      Compensation Table**




The
      table
      below summarizes all compensation awarded to, earned by, or paid to our former
      or current executive officers for the fiscal years ended 2006 and
      2005.





SUMMARY
                COMPENSATION TABLEName
              and
              principal
              position
            Year
            Salary($)
            Bonus
              ($)
            Stock
              Awards
              ($)
            Option
              Awards
              ($)
            Non-Equity
              Incentive
                Plan
              Compensation
              ($)
            Nonqualified
              Deferred
              Compensation
              Earnings
                ($)
            All
                Other
              Compensation
              ($)
            Total
              ($)Kelly
                Owen(1)
              CEO
                & CFO
            2006
              2005
            n/a
            -
              n/a
            -
              n/a
            -
              n/a
            -
              n/a
            -
              n/a
            60,000
              n/a
            -
              n/aFrancisco
              Schipperheijn
              Former
                CEO & CFO(2)
            2006
              2005
            -
              3,160
            -
              -
            -
              -
            -
              -
            -
              -
            -
              -
            -
              -
            -
              3,160





(1)
            Mr.
                Owen was appointed to serve as our Chief Executive Officer Chief
                Financial
                Officer on September 28, 2006. The information provided in the summary
                compensation table includes all compensation paid to Mr. Owen for
                the full
                fiscal year ended December 31, 2006.




(2)
            Mr.
                Schipperheijn resigned as our Chief Executive Officer and Chief Financial
                Officer on September 28, 2006. The information provided in the summary
                compensation table includes all compensation paid to Mr. Schipperheijn
                for
                the full fiscal years ended December 31, 2006 and 2005.






**Narrative
      Disclosure to the Summary Compensation Table**




Except
      as
      disclosed below, we did not compensate our executive officers for services
      rendered during the fiscal year ended December 31, 2006 or 2005.





The
      amounts disclosed as “All Other Compensation” relate to consulting fees earned
      by our executive officers for the periods indicated.





On
      October 1, 2006, we entered into a Consulting Agreement with Owen Consulting,
      LLC, an entity owned and controlled by our director and sole officer, Mr. Kelly
      Owen to provide consulting services to us, primarily related to the development
      of our EncryptaKey technology and to run our operations. The Consulting
      Agreement is effective for a period of one year commencing October 1, 2006
      and
      we have a right to cancellation anytime upon thirty (30) days written notice.
      Under the terms of the Consulting Agreement, Owen Consulting, LLC, is
      compensated for services rendered to us at a rate of $25 per hour. The total
      compensation paid to Owen Consulting, LLC, during the fiscal year ended December
      31, 2006 was $890,000; approximately $20,000 per month of which went to Mr.
      Owen
      directly. This compensation is included in the summary compensation table
      above in “All Other Compensation.”








*Table
          of Contents*





In
      addition, on September 28, 2006, we entered into an Asset Purchase Agreement
      with Owen Consulting LLC, pursuant to which we acquired technology called the
      “EncryptaKey Secure Communication Portal” as described in a patent application
      pending before the Patent and Trademark Office as application no. 60745514,
      filed April 24, 2006, titled “Invisidesk Private Communication, Authentication
      and Connection Portal” and the related intellectual property in exchange for
      5,500,000 shares of our restricted common stock. The aggregate fair value of
      these shares was computed in accordance with FAS 123R and is reported in the
      summary compensation table above in the column titled “All Other Compensation.”





At
      no
      time during the last fiscal year was any outstanding option repriced or
      otherwise modified. There was no tandem feature, reload feature, or
      tax-reimbursement feature associated with any of the stock options we granted
      to
      our executive officers or otherwise.





**Stock
                and Option Awards**OPTION
                AWARDS
            STOCK
                AWARDSName
            Number
                of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Exercisable
            Number
                of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Unexercisable
            Equity
              Incentive
              Plan
              Awards:
              Number
                of
              Securities
              Underlying
              Unexercised
              Unearned
              Options
              (#)
            Option
              Exercise
              Price
              ($)
            Option
              Expiration
              Date
            Number
              of
              Shares
              or
                Units
              of
              Stock
                That
              Have
              Not
              Vested
              (#)
            Market
              Value
              of
              Shares
              or
              Units
              of
              Stock
              That
              Have
              Not
              Vested
              ($)
            Equity
              Incentive
              Plan
              Awards:
              Number
              of
              Unearned
              Shares,
              Units
                or
              Other
              Rights
              That
                Have
              Not
              Vested
              (#)
            Equity
              Incentive
              Plan
              Awards:
              Market
                or
              Payout
              Value
                of
              Unearned
              Shares,
              Units
                or
              Other
              Rights
              That
              Have
                Not
              Vested
              (#)Kelly
                Owen
            -
            -
            -
            -
            -
            -
            -
            -
            -Francisco
              Schipperheijn
            -
            -
            -
            -
            -
            -
            -
            -
            -








*Table
          of Contents*


**Compensation
      of Directors**





The
      table
      below summarizes all compensation of our directors as of December 31,
      2006.





**DIRECTOR
                COMPENSATION**Name
            Fees
                Earned or
              Paid
                in
              Cash
              ($)
            Stock
                Awards
              ($)
            Option
                Awards
              ($)
            Non-Equity
              Incentive
              Plan
              Compensation
              ($)
            Non-Qualified
              Deferred
              Compensation
              Earnings
              ($)
            All
              Other
              Compensation
              ($)
            Total
              ($)Kelly
                Owen
            -
            -
            -
            -
            -
            -(1)
            -Francisco
                Schipperheijn
            -
            -
            -
            -
            -
            -
            -





(1) See
      description of Summary Compensation to Mr. Owen as an officer, above. Mr. Owen
      did not receive any additional compensation as a director of the
      company.





**Narrative
      Disclosure to the Director Compensation Table**





We
      do not
      pay any cash compensation to our directors.





There
      were no fees or cash or stock options.





**Item
      11. Security Ownership of Certain Beneficial Owners and
      Management and Related**


**Stockholder
      Matters**





The
      following table sets forth, as of March 23, 2007, the beneficial ownership
      of
      our common stock by each executive officer and director, by each person known
      by
      us to beneficially own more than 5% of the our common stock and by the executive
      officers and directors as a group. Except as otherwise indicated, all shares
      are
      owned directly and the percentage shown is based on 50,906,784 shares of common
      stock issued and outstanding on March 23, 2007. Except as otherwise indicated,
      the address of each person named in this table is c/o EncryptaKey, Inc., 10805
      Holder Street, Suite 210, Cypress CA, 90630.





**Title
                of class**
            **Name
                and address**
              **of
                beneficial owner****(1)**
            **Amount
                of**
              **beneficial
                ownership**
            **Percent**
              **of
                class*****Executive
                Officers & Directors:**Common
            Kelly
                Owen
            6,136,120
                shares
            12%Common
            Francisco
                Schipperheijn
            28,330,000
                shares
            56%**Total
                of All Directors and Executive Officers:**
            34,466,120
                shares
            68%**More
                Than 5% Beneficial Owners:
                None**








(1)
            As
                used in this table, "beneficial ownership" means the sole or shared
                power
                to vote, or to direct the voting of, a security, or the sole or shared
                investment power with respect to a security (i.e., the power to dispose
                of, or to direct the disposition of, a security). In addition, for
                purposes of this table, a person is deemed, as of any date, to have
                "beneficial ownership" of any security that such person has the right
                to
                acquire within 60 days after such
                date.









*Table
          of Contents*






**Item
      12.Certain Relationships and Related
      Transactions**





Except
      as
      disclosed below, none of our directors or executive officers, nor any proposed
      nominee for election as a director, nor any person who beneficially owns,
      directly or indirectly, shares carrying more than 5% of the voting rights
      attached to all of our outstanding shares, nor any members of the immediate
      family (including spouse, parents, children, siblings, and in-laws) of any
      of
      the foregoing persons has any material interest, direct or indirect, in any
      transaction since
      the
      beginning of our last fiscal year on January 1, 2006 or
      in any
      presently proposed transaction which, in either case, has or will materially
      affect us.





On
      September 28, 2006, we entered into an Asset Purchase Agreement with Owen
      Consulting LLC, a California limited liability company. Pursuant to that
      agreement, we acquired assets consisting of all right, title and interest in
      technology commonly known as the EncryptaKey Secure Communication Portal and
      memorialized in a patent application pending before the Patent and Trademark
      Office as application no. 60745514, filed April 24, 2006, titled “Invisidesk
      Private Communication, Authentication and Connection Portal” and the related
      intellectual property in exchange for 5,500,000 shares of our restricted common
      stock. Owen Consulting LLC is wholly owned and controlled by Mr.
      Owen.





On
      October 1, 2006, we entered into a Consulting Agreement with Owen Consulting,
      LLC, an entity owned and controlled by our director and sole officer, Mr. Kelly
      Owen to provide consulting services to us, primarily related to the development
      of our EncryptaKey technology and to run our operations. The Consulting
      Agreement is effective for a period of one year commencing October 1, 2006
      and
      we have a right to cancellation anytime upon thirty (30) days written notice.
      Under the terms of the Consulting Agreement, Owen Consulting, LLC, is
      compensated for services rendered to us at a rate of $25 per hour. The total
      compensation paid to Owen Consulting, LLC, during the fiscal year ended December
      31, 2006 was $890,000.





After
      the
      end of the reporting period, on February 5, 2007, we entered into an Asset
      Purchase Agreement with Owen Consulting Inc., a Nevada Corporation. Pursuant
      to
      that agreement, we acquired assets consisting of all right, title and interest
      in server hardware and software in exchange for 636,120 shares of our restricted
      common stock. Owen Consulting, Inc. is wholly owned and controlled by Mr.
      Owen.





**13.
      Exhibits**





Exhibit
              Number
            Description3.1
            Articles
                of Incorporation, as amended March 12,
                20073.2
            By-laws,
                as amended (1)10.1
            Asset
                Purchase Agreement with Owen Consulting, LLC, dated September 28,
                2006(1)10.2
            Consulting
                Agreement with Owen Consulting, Inc. dated October 1, 2006.10.3
            Asset
                Purchase Agreement with Owen Consulting, Inc. dated February 5, 2007(2)31.1
            Certification
                of Chief Executive Officer pursuant to
                Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of 200231.2
            Certification
                of Chief Financial Officer pursuant to
                Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of 200232.1
            Certification
                of 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





(1)
            Incorporated
                by reference to Current report on Form 8-K filed on October 4,
                2006.


(2)
            Incorporated
                by reference to Current report on Form 8-K filed on February 9,
                2007.








*Table
          of Contents*




**Item
      14. Principal Accountant Fees and Services**





**Audit
      Fees**





The
      aggregate fees billed by our auditors for professional services rendered in
      connection with a review of the financial statements included in our quarterly
      reports on Form 10-QSB and the audit of our annual consolidated financial
      statements for the fiscal years ended December 31, 2006 and December 31, 2005
      were approximately $1,500 and
      $3,250 respectively.





**Audit-Related
      Fees**





Our
      auditors did not bill any additional fees for assurance and related services
      that are reasonably related to the performance of the audit or review of our
      financial statements.





**Tax
      Fees**





The
      aggregate fees billed by our auditors for professional services for tax
      compliance, tax advice, and tax planning were $0 and $0 for the fiscal years
      ended December 31, 2006 and 2005.





**All
      Other Fees**





The
      aggregate fees billed by our auditors for all other non-audit services, such
      as
      attending meetings and other miscellaneous financial consulting, for the fiscal
      years ended December 31, 2006 and 2005 were $0 and $0
      respectively.


*Table
          of Contents*





**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to


be
      signed
      on its behalf by the undersigned, thereunto duly authorized.





**EncryptaKey,
      Inc.**





By: /s/
      Kelly Owen


Kelly
      Owen


Chief
      Executive Officer,


Chief
      Financial Officer and Director


April
      16,
      2007







In
      accordance with the Exchange Act, this report has been signed below by the
      following


persons
      on behalf of the registrant and in the capacities and on the dates
      indicated:











By:  /s/
      Kelly Owen


Kelly
      Owen


Director




April
      16,
      2007