UNITED STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549









FORM
10-K








x
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT
      OF 1934




For
the fiscal year ended December 31, 2008




or




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




Commission
file number 000-31361










PRIVIAM,
INC.


(Exact
name of registrant as specified in its charter)






New
      Jersey
            
            22-3720628(State
      or other jurisdiction of
              incorporation
      or organization)
            
            (I.R.S.
      Employer
              Identification
      No.)19200
      Von Karman Avenue, Suite 500, Irvine, CA
            
            92612(Address
      of principal executive officers)
            
            (Zip
      Code)




Registrant’s
telephone number, including area code (949) 622-5433




Securities
registered pursuant to Section 12(b) of the Act:




None.




Securities
registered pursuant to Section 12(g) of the Act:




Common
Capital Stock, par value $0.0001


(Title
of Class)










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




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




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




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




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




Large accelerated filer  
       ̈
            
            Accelerated
      filer    ̈
            
            Non-accelerated
      filer    ̈
            
            Smaller reporting company  
      x(Do not check if a smaller reporting company)




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




The
aggregate market value of the voting stock held by non-affiliates of the
Registrant:  N/A




The
number of shares outstanding of the registrant’s common stock at $.0001 par
value as of April 15, 2009 was 44,193,528.




Documents
Incorporated by Reference: None




















TABLE OF
CONTENTS







TABLE
OF CONTENTS




Page No.PART IItem
      1.
                
                Business
                3Item 1A.
                
                Risk
      Factors
                9Item
    2.
                
                Properties
                17Item
    3.
                
                Legal
      Proceedings
                17Item
    4.
                
                Submission of
      Matters to a Vote of Security Holders
                17PART IIItem
    5.
                
                Market for
      Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
                18Item
    6.
                
                Selected Financial
      Data
                18Item
    7.
                
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                18Item 7A.
                
                Quantitative and
      Qualitative Disclosures about Market RiskItem
    8.
                
                Financial Statements
      and Supplementary Data
                21Item
    9.
                
                Changes in and
      Disagreements With Accountants on Accounting and Financial
      Disclosure
                22Item 9A.
                
                Controls and
      Procedures
                22Item
    9B.
                
                Other
      Information
                22PART IIIItem 10.
                
                Directors, Executive
      Officers and Corporate Governance
                23Item
    11.
                
                Executive
      Compensation
                26Item
    12.
                
                Security Ownership
      of Certain Beneficial Owners and Management and Related Stockholder
      Matters
                27Item
    13.
                
                Certain
      Relationships and Related Transactions and Director
      Independence
                28Item
    14.
                
                Principal Accounting
      Fees and Services
                28PART IVItem
    15.
                
                Exhibits, Financial
      Statement Schedules
                29Signatures
                30







2







PART
I





STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS





In this
annual report, references to “Priviam, Inc.”,  “Priviam”, “the
Company”, “we”, “us”, and “our” refer to Priviam, Inc.





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.




Item
1. Description of Business





Business
Development





Priviam,
Inc. 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.; on February 19, 2007, to EncryptaKey, Inc. and finally on August 1, 2008
to Priviam, Inc.





On August
1, 2008, Priviam filed a Restated Certificate of Incorporation (the “Restated
Certificate:”) to (i) change the Company’s name from EncryptaKey, Inc. to
Priviam, Inc.; (ii) increase the number of authorized shares of common stock,
par value $0.0001 per share (the “Common Stock”), of the Company from
100,000,000 shares to 500,000,000 shares; and (iii) authorize a reverse stock
split at a ratio of one (1) for 3.25 of the issued and outstanding shares of
Common Stock of the Company.   The changes reflected by the
Restated Certificate are effective as of August 1, 2008.





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 delay it until we are 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.





The
Company is in the business of developing and marketing 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.





Business
and Plan of Operation





We have
completed our technology development and pilot system, which we call “PriviCom,”
which functions 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
PriviCom hardware device is based on low cost Commercial off the Shelf (COTS)
hardware which we procure from third party vendors and do not require
manufacturing by Priviam. As we enter into established pilot programs and
product / service launch we have created a product offering and delivery model
which substantially reduces our financial challenges regarding deployment.
Priviam is now postured to be able to deliver a viable product to market. The
PriviCom hardware utilizes biometric and non-biometric data to secure personal
and financial information.






3





We
believe that our Priviam technology has the potential to effectively address a
number of security issues plaguing financial institutions and individuals alike.
Industry research suggests that identity fraud, bank and credit card fraud and
corporate espionage costs have risen to $100B and is ever
increasing.




The
PriviCom biometric USB “Thumb Drive” provides a pad which will read and verify a
user’s thumbprint without the need of login. Our lower cost non-biometric
version uses several levels of encrypted login and does not require biometrics.
The USB drives can be any available size with a minimum of 1 Gigabyte and are
programmed with the proprietary operating system along with additional space
(several Gigabytes if required) for holding user data. This flash drive will be
partitioned so that the data is kept separate from the operating system. The
system is designed so that all attempts to physically access the flash drive
will be futile. Further, attempts to hack the data from a lost or stolen Priviam
will be fruitless as the user’s fingerprint and or multi level encrypted login
is required to replicate the unique access code.





When an
end-user receives or purchases a PriviCom USB drive, he or she will first load
it with personal and financial information. This will be done by plugging
PriviCom directly into the USB port of the user’s personal computer. The
computer will then reboot to PriviCom’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 PriviCom 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 Government institutions, financial institutions, Corporate enterprise
users, medical institutions and online retailers to insert our server systems to
their current systems to recognize users authenticated with PriviCom. We believe
that they will do so because of PriviCom’s ability 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
PriviCom.





In
addition to providing secure transactions for online financial and retail
purchase transactions, we also intend for PriviCom 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 PriviCom
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 with our follow on product PriviCom 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
PriviCom such that once a user’s credit card information is loaded into PriviCom
as described above, it can be used for secure POS transactions, provided the
retailer has the appropriate hardware and software systems to recognize
PriviCom.




Our long
term goal with our technology is to have systems in widespread use that will
allow a user, when paying for merchandise at a retail counter, to pull out his
PriviCom 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, PriviCom 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 PriviCom. PriviCom would read and verify that the thumb print matches
the one on file for the registered user. This unlocks PriviCom 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 PriviCom near the sensor pad of an Automated Teller Machine or Wireless
POS Terminal. PriviCom’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 Priviam 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 has been fully developed along with security and provisioning servers,
all based on commercially available hardware. In order to launch our product and
services, we anticipate that, provided we are successful in raising $1,000,000,
we will be able to enter into mass deployment of the system and enter into
several pilot programs during 2009. We do not require any facilities or
equipment capable of manufacturing PriviCom in commercial quantities, with
several vendors in final vetting, we have not yet entered into a finalized
contract with a third party vendor.





We have
successfully built and tested a pre-production version of our proprietary
operating system and successfully installed it on several USB flash drives. We
have demonstrated our pilot system to several interested clients during the
Fourth Quarter of 2008. We were pleased with the acceptance of our
pre-production system. We displayed a working prototype at the Consumer
Electronics Show in Las Vegas during the 4th 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.






4







We
currently have pilot program interest from Government institutions and Defense
prime contractors, financial banking institutions and medical service
institutions though we do not presently have any customers or contracts for
sales or licensing of any product using PriviCom technology. There can be no
assurance that there will be any market demand for any product we may
develop.





We
currently have forecasted the expenditure of approximately $1.6 million during
the next twelve months in order to pilot and launch PriviCom, 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.





In August
of 2008 we entered into an asset purchase agreement with Nexicon, 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
5,000,000 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 2009.





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.





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 strip 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.






5






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:




·
            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.




·
            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.






6






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.




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.
Priviam 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, physical 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 Priviam’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 Priviam technology. Priviam will allow users to securely access and
manage their bank accounts, stock portfolios, and other financial
information.




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. Priviam provides the solution to this problem. Priviam 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 Priviam, 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.






7






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 PriviCom solution may enable
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
PriviCom 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





Constantly
seeking ways to bring greater efficiencies to the healthcare 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. Priviam believes it can be an important
part of that infrastructure.





Other
significant segments of the healthcare industry in which we believe Priviam
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





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 identity 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 to your portable private email.




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 reported
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, Priviam 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, Priviam 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),
Priviam allows users to make credit card purchases, conduct online financial
transactions, and access, view and transmit sensitive personal or corporate data
with complete confidence.






8







Major
Customers





There is
no dependence on one or a few major customers.





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





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 PriviCom 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. The patent is still pending and has not yet been
granted.





In addition to our intellectual property as contained
in US patent application number 60745514 and follow on related patent
applications, Priviam is in the patent application process of several new and
improved patents related to our expanded product and service
offerings.





Research
and Development





We did
not incur any research and development expenditures in the fiscal year ended
December 31, 2008. 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 Priviam technology.  During 2009 we anticipate spending
approximately $250,000 of our total anticipated capital needs of approximately
$1.4 million on further research and development of our Priviam technology. The
focus of these expenditures during 2009 will be further work on pilot programs
and product launch.





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 Government services and agencies, corporate
enterprise services, financial services, medical data service, and merchant
services along with internet retailers. We have and will continue to demonstrate
the feasibility of our products to our potential customers via pilot projects.
We anticipate we will expend approximately $200,000 during 2009 on sales and
marketing activities, including the salaries of any new or existing employees
and consultants involved in sales and marketing.





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 two full-time employees.   We believe that our relations with our employees are
good.




Item
1A.  Risk Factors





You
should carefully consider the following risk factors and other information in
this report before deciding to become a shareholder of our common stock. Your
investment in our common stock is highly speculative and involves a high degree
of risk. You should not invest in our common stock unless you can afford to lose
your entire investment and you are not dependent on the funds you are
investing.







9





Because
we have a limited operating history, you may not be able to accurately evaluate
our operations.





We have
had limited operations to date and have never generated revenue. Therefore, we
have a limited operating history upon which to evaluate the merits of investing
in the Company. Because we are in the early stages of operating our business, we
are subject to many of the same risks inherent in the operation of a business
with a limited operating history, including the potential inability to continue
as a going concern.





We
are dependent on outside financing for continuation of our
operations.





Because
we have never generated revenue and currently operate at a significant loss, we
are completely dependent on the continued availability of financing in order to
continue our business. There can be no assurance that financing sufficient to
enable us to continue our operations will be available to us in the future. Our
failure to obtain future financing or to produce levels of revenue to meet our
financial needs could result in our inability to continue as a going concern
and, as a result, investors in the Company could lose their entire
investment.





Our
business will not grow unless the market for biometric products and services
expands both domestically and internationally.





Our
revenues will be derived from the sale of biometric products and services.
Biometric products have not gained widespread commercial acceptance. We cannot
accurately predict the future growth rate, if any, or the ultimate size of the
biometric technology market. The expansion of the market for our anticipated
products depends on a number of factors including without
limitation:


·
            national
      or international events which may affect the need for or interest in
      biometric products or services;·
            the
      cost, performance and reliability of our products and services and those
      of our competitors;·
            customers’
      perception of the perceived benefit of biometric products and services and
      their satisfaction with our products and services;·
            public
      perceptions of the intrusiveness of these products and services and the
      manner in which firms are using the information
  collected;·
            public
      perceptions regarding the confidentiality of private
      information;·
            proposed
      or enacted legislation related to privacy of
      information; and·
            marketing
      efforts and publicity regarding these products and
    services.





The
Technologies We Have Developed May Not Gain Market Acceptance.





Our
biometric products utilize new technologies.  As with any new
technologies, in order for us to be successful, these technologies must gain
market acceptance.  Since the technologies that we are introducing to
the marketplace will encroach upon markets that presently utilize or are
serviced by products from competing technologies, meaningful commercial markets
may not develop for our technologies.





We
May Not Be Able To Compete Successfully.





Although
our biometric products represents a new technology, and although at present time
we are aware of only a limited number of companies that have publicly disclosed
their attempts to develop a similar technology, we anticipate that a number of
companies are or will attempt to develop technologies/products that compete or
will compete with our technologies.  Further, even if we are first to
market with a technology of this type, and even if the technology is protected
by patents or otherwise, because of the vast market of such a product, we
anticipate that the market will be flooded by a variety of competitors, many of
which will offer a range of products in areas other than those in which we
compete, which may make our competitors more attractive to prospective
customers.  In addition, many if not all of our competitors and
potential competitors will initially be larger and have greater financial
resources than we do. Some of the companies with which we may now be in
competition, or with which we may compete in the future, have or may have more
extensive research, marketing and manufacturing capabilities and significantly
greater technical and personnel resources than we do, and may be better
positioned to continue to improve their technology in order to compete in an
evolving industry. Further, technology in this industry may evolve rapidly once
an initially successful product is introduced, making timely product innovations
and use of new technologies essential to our success in the marketplace. The
introduction by our competitors of products with improved technologies or
features may render any product we initially market obsolete and unmarketable.
If we do not have available to us products that respond to industry changes in a
timely manner, or if our products do not perform well, our business and
financial condition will be adversely affected.







10









Certain
groups have publicly objected to the use of biometric products for some
applications on civil liberties grounds and legislation has been proposed to
regulate the use of biometric security products.





From time
to time, biometrics technologies have been the focus of organizations and
individuals seeking to curtail or eliminate such technologies on the grounds
that they may be used to diminish personal privacy rights. If such initiatives
result in restrictive legislation, the market for biometric solutions may be
adversely affected. Even if biometric solutions gain wide market acceptance, our
products and services may not adequately address the requirements of the market
and may not gain wide market acceptance.




We
may face intense competition from other biometric solution providers as well as
identification and security systems providers.





A
significant number of established and startup companies are marketing or
developing software and hardware for facial and/or fingerprint biometric
products and applications that may compete with our proposed
offerings.





The
biometric security market is a rapidly evolving and intensely competitive, and
we believe that additional significant long-term competitors will continue to
enter the market. We expect competition in the biometrics markets to increase
and intensify in the near term. Companies competing with us may introduce
products that are targeted at our target markets and competitively priced, have
increased performance or functionality or incorporate technological advances we
have not yet developed or implemented. Some present and potential competitors
have financial, marketing, research, and manufacturing resources substantially
greater than ours. Other players in the biometric do have the potential to
directly compete with us. Among these companies are Sagem Morpho, Inc., Cogent,
NEC, Printrak International, Inc., (a Motorola company), and Saflink. However,
these companies primarily focus on networked-based, or computer based systems
that require a sophisticated computer-based infrastructure to operate. Our
company’s products are embedded and self contained and do not require a computer
to operate.





The
biometrics industry is characterized by rapid technological change and requires
introduction of new and enhanced products at competitive
prices.





In order
to compete effectively in the biometrics market, we must continually design,
develop and market new and enhanced products at competitive prices and we must
have the resources available to invest in significant research and development
activities. Our future success will depend upon our ability to address the
changing and sophisticated needs of the marketplace. Frequently, technical
development programs in the biometric industry require assessments to be made of
the future directions of technology and technology markets generally, which are
inherently risky and difficult to predict. Delays in introducing new products,
services and enhancements, the failure to choose correctly among technical
alternatives or the failure to offer innovative products and services at
competitive prices may cause customers to forego purchases of our products and
services and purchase those of our competitors, and could adversely affect our
business operations, financial results and stock price.





If
we are unable to establish and maintain relationships with retailers and
insurance providers or attract franchisees, we may not be able to continue our
operations





We intend
to establish relationships with retailers and insurance
providers.  However, there is intense competition for these
relationships and we may not be able to attract and retain these groups’
interest in light of competitors with larger budgets and pre-existing
relationships.  In addition, if we are unable to develop a market for
our products, it will be very difficult, if not impossible, to attract
franchisees interested in selling our products.





Our
operating results and revenue may be subject to fluctuations caused by many
economic factors associated with our industry and the markets for our products
and services, which, in turn, may individually and collectively affect our
revenue, profitability and cash flow in adverse and unpredictable
ways.








11





Quarterly
and annual results of operations may be affected by a number of factors
associated with our industry and the markets for our products and services,
including those listed below, which in turn could adversely affect our revenue,
profitability and cash flow in the future.





Our
operating results may vary and may fluctuate significantly in the future as a
result of a variety of factors, many of which are outside our control. These
factors include the following:




•
            the
      size, timing and shipment of individual orders for our
      products;•
            changes
      in our operating expenses;•
            the
      timing of personnel departures and new hires and the rate at which new
      personnel become productive;•
            the
      timing of the introduction or enhancement of our products and our
      competitors’ products;•
            customers
      deferring their orders in anticipation of the introduction of new products
      by us or our competitors;•
            market
      acceptance of new products;•
            changes
      in the mix of products sold;•
            changes
      in product pricing, including changes in our competitors’ pricing
      policies;•
            development
      and performance of our direct and indirect distribution channels and
      changes in the mix of vertical markets to which we sell our
      products;•
            the
      amount and timing of charges relating to restructurings and the impairment
      or loss of value of some of our assets, especially goodwill and intangible
      assets; and•
            general
      economic conditions.




To be competitive we may need to
acquire other companies or purchase or license technology from third parties in
order to introduce new products and services or enhance our existing products
and services.





We may
not be able to find businesses that have the technology we need and, if we find
such businesses, may not be able to purchase or license the technology on
commercially favorable terms or at all. Once we have completed an acquisition or
technology license, the acquired business or our relationship with the licensor
may not be successful. In addition, acquisitions and technology licenses are
difficult to identify and complete for a number of reasons, including the cost
of potential transactions, competition among prospective buyers and licensees
and the need for regulatory approvals. In order to finance a potential
transaction, we may need to raise additional funds by selling our stock or
borrowing money. We may not be able to find financing on favorable terms, and
the sale of our stock may result in the dilution of our existing
stockholders.




Some of our anticipated products may
have long and unpredictable sales cycles, which may impact our quarterly
operating results.





Transactions
for some of our anticipated products often involve large expenditures by our
customers. The sales cycles for these transactions can be long and unpredictable
due to a number of uncertainties such as:




•
            customers’
      willingness to invest potentially substantial resources and modify their
      network infrastructures to take advantage of our
  products;•
            customers’
      budgetary constraints;•
            the
      need to educate potential customers about our products’
      capabilities;•
            the
      timing of customers’ budget cycles;•
            delays
      caused by customers’ internal review
processes; and•
            for
      sales to government customers, governmental regulatory, approval and
      purchasing requirements.







12







During times when the global economy
experiences weakness or uncertainty, we may have difficulty selling our products
and services.





The
global economy, especially the technology sector, can be volatile, and an
economic slowdown can have serious negative consequences for our business and
operating results. For example, during a period of economic weakness or
uncertainty, current or potential customers may defer purchases, go out of
business or have insufficient capital to buy or pay for our products and
services. During the last several years, we have observed that many companies
have reduced their budgets for information technology products and services,
which may reduce or eliminate some potential sales of our products and
services.




If we fail to become competitive,
then we may fail to gain market share for our products and services.





We have
seen increased competition in our market in recent years, and we expect this
trend to continue. A number of competitive factors could cause us to lose
potential sales or to sell our products and services at lower prices or at
reduced margins, including, among others:




•
            Some
      of our competitors offer e-security products with features and
      functionality that our products do not currently offer. In addition,
      potential customers may perceive some of our competitors’ products and
      services as being more convenient and easier to use than
    ours.•
            Some
      computer and software companies that have not traditionally offered
      e-security products are now offering free or low-cost e-security products
      and functionality bundled with their own computer and software
      products.•
            Some
      of our current and potential competitors have greater financial, marketing
      and technical resources than we do, allowing them to leverage an installed
      customer base and distribution network, adapt more quickly to new
      technologies and changes in customer requirements, or devote greater
      resources to the promotion and sale of their products and services than we
      can.




We depend heavily on key, talented
employees in a competitive labor market.





Our
success depends on our ability to attract, motivate and retain skilled personnel
especially in the areas of management, sales and engineering. We compete with
other companies for a small pool of highly qualified employees. Although we
believe that our compensation plans are competitive, we may not be able to hire
and retain the employees we need.




If the market for e-security
solutions does not continue to grow, then demand for our products and services
may decrease.




The
market for some of our e-security solutions is continuing to develop, and demand
for our products and services depends on, among other things:




•
            the
      perceived ability of our products and services to address real customer
      problems;•
            the
      perceived quality, price, ease-of-use and interoperability of our products
      and services as compared to those of our competitors;•
            the
      market’s perception of how easy or difficult it is to deploy our products,
      especially in complex, heterogeneous network
  environments;•
            the
      continued evolution of electronic commerce as a viable means of conducting
      business;•
            market
      acceptance and use of new technologies and standards;•
            the
      ability of network infrastructures to support an increasing number of
      users and services;•
            the
      public’s perception of the need for secure electronic commerce and
      communications over both wired and wireless computer
networks;•
            the
      U.S. government’s continued focus on e-security as a means to
      counteract terrorism and other hostile acts;•
            the
      pace of technological change and our ability to keep up with these
      changes;•
            the
      market’s perception of our products’ ability to address the e-security
      aspects of various laws; and•
            general
      economic conditions, which, among other things, influence how much money
      our customers and potential customers are willing to allocate to their
      information technology budgets.






13






Unless we keep up with the ongoing
changes in e-security technology and standards, our
anticipated  products and services could become obsolete.





Our
success depends in part upon our ability to introduce new, competitively priced
products and solutions with features that meet changing market requirements, all
in a timely and cost-effective manner. A number of factors, including the
following, could have a negative impact on the success of our products and
services:




•
            quality,
      reliability or security failures, which could result in product returns,
      delays in collecting accounts receivable, unexpected service or warranty
      expenses, reduced orders and a decline in our competitive
      position;•
            delays
      or difficulties in the development of our products and
      services;•
            our
      competitors’ introduction of new products or services ahead of our new
      products or services, or their introduction of superior or cheaper
      products or services;•
            the
      availability of free, unpatented implementations of encryption algorithms
      and security protocols;•
            the
      market’s failure to accept new technologies, including consumer
      authentication, connected authentication devices, biometric devices,
      enterprise strong authentication, web access management and digital
      certificates;•
            our
      failure to include features in our products, or obtain industry and
      governmental certifications, that our customers or U.S. or foreign
      government regulators may require;•
            our
      failure to anticipate changes in customers’ requirements;
    and•
            the
      implementation of industry or government standards that are inconsistent
      with the technology embodied in our products and services.




International
sales make up a significant portion of our business.





We intend
to expand our international operations and international sales and marketing
activities. For example, we expect to expand our operations and marketing
activities throughout Asia, Europe, Latin America and South America. Expansion
in these international markets can require significant and continued management
attention and resources. We may also need to tailor some of our other services
for a particular market and to enter into international distribution and
operating relationships. We have limited experience in localizing our services
and in developing international distribution or operating relationships. We may
not succeed in expanding our services into international markets. Failure to do
so could harm our business. In addition, there are risks inherent in doing
business on an international basis, including, among others:




•
            foreign
      regulatory requirements and the burdens of complying with a wide variety
      of foreign laws;•
            legal
      uncertainty regarding liability and the costs of resolving or litigating a
      dispute internationally;•
            difficulties
      in the enforcement of intellectual property rights;•
            export
      and import restrictions on cryptographic technology and products
      incorporating that technology;•
            difficulties
      and delays in establishing international distribution
      channels;•
            the
      need to tailor or “localize” our products in order to compete in
      particular international markets and to comply with foreign
      laws;•
            difficulties
      in collecting international accounts receivable;•
            fluctuations
      in currency exchange rates;•
            potentially
      adverse tax consequences, including restrictions on the repatriation of
      earnings;•
            tariffs
      and other trade barriers; and•
            political
      instability.






14






We rely
on patents to protect our proprietary rights in our technology, but patents may
not provide complete protection:




•
            It
      is possible that any patent that we or our licensors hold might be
      invalidated, circumvented, challenged or terminated.•
            It
      is possible that patent examiners might reject the claims described in our
      pending or future patent applications.•
            The
      laws of some countries in which our products are now, or may in the future
      be, developed or sold may not protect our products and intellectual
      property rights to the same extent as the laws of the United
      States.•
            All
      patents expire after a period of years. When each of our patents expires,
      other companies may develop and sell products based on our previously
      patented technology.•
            During
      the life of a patent, third parties may design and sell “work-around”
      solutions that accomplish the goals of our patented inventions but do not
      infringe the patents themselves.




We must establish and maintain
strategic relationships.




We need
to create relationships with third parties, including some of our competitors,
to ensure that our products will interoperate with the third parties’ products.
If our products do not work with third-party products used by our customers and
potential customers, then our products could lose or fail to achieve market
acceptance. We may not be able to find appropriate strategic partners or may not
be able to enter into relationships on commercially favorable terms.
Furthermore, the relationships we do enter into may not be successful. Because
our strategic relationships are generally non-exclusive, our strategic partners
may decide to pursue alternative technologies or to develop alternative products
in addition to or instead of our products, either on their own or in
collaboration with our competitors.




Security technologies are under
constant attack.





The
strength of our cryptographic and other e-security technologies is constantly
being tested by computer professionals, academics and “hackers.” Any significant
advance in the techniques for attacking e-security solutions could make some or
all of our products obsolete or unmarketable. If a third party successfully
“hacks” any of our products and makes its findings public, then we may need to
dedicate engineering and other resources to eliminate the published
vulnerabilities. Customers could require that we replace some or all of their
Priviam authenticators with authenticators that are more secure. If we are
required to make these replacements or if we cannot address the vulnerabilities
in our products in a timely fashion, then our business and operating results
could be adversely impacted. In addition, our customers and potential customers
could perceive our products as unreliable, making it more difficult for us to
sell our products.




We may incur significant expenses
and damages because of liability claims.





An actual
or perceived breach of network or data security at our facilities or at a
customer’s facilities could result in a product liability claim against us. A
substantial product liability claim against us could harm our operating results
and financial condition. In addition, any actual or perceived breach of network
or data security, whether or not caused by the failure of one of our products,
could hurt our reputation and cause potential customers to turn to our
competitors’ products.





Failure
to Achieve and Maintain Internal Controls in Accordance with Sections 302 and
404(a) of the Sarbanes-Oxley Act of 2002 Could Have A Material Adverse Effect on
Our Business and Stock Price.





If we
fail to maintain adequate internal controls or fail to implement required new or
improved controls, as such control standards are modified, supplemented or
amended from time to time; we may not be able to assert that we can conclude on
an ongoing basis that we have effective internal controls over financial
reporting. Effective internal controls are necessary for us to produce reliable
financial reports and are important in the prevention of financial
fraud.  If we cannot produce reliable financial reports or prevent
fraud, our business and operating results could be harmed, investors could lose
confidence in our reported financial information, and there could be a material
adverse effect on our stock price.   We have examined and evaluated
our internal control procedures to satisfy the requirements of Section 404(a) of
the Sarbanes-Oxley Act, as required for our Annual Report on Form 10-K for the
year ending December 31, 2008.








15







Our
independent registered public accounting firm has expressed substantial doubt
about our ability to continue as a going concern, which may hinder our ability
to obtain future financing.




Our
consolidated financial statements as of December 31, 2008 have been prepared
under the assumption that we will continue as a going concern for the year
ending December 31, 2008. Our independent registered public accounting firm has
issued a report dated April 14, 2009 that included an explanatory paragraph
expressing substantial doubt as to our ability to continue as a going concern
without additional capital or financing becoming available. Our ability to
continue as a going concern ultimately depends on our ability to generate a
profit which is likely dependent upon our ability to obtain additional
equity or debt financing, attain further operating efficiencies and, ultimately,
to achieve profitable operations. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.







RISKS
RELATING TO OUR COMMON STOCK





The market price of our common stock is
likely to be highly volatile and could fluctuate widely in price in response to
various factors, many of which are beyond our control, including the
following:





·
            technological
      innovations or new products and services by us or our
      competitors;





·
            intellectual
      property disputes;





·
            additions
      or departures of key personnel;





·
            sales
      of our common stock (particularly following effectiveness of
      the  resale  registration   statement  required  to  be  filed  in
      connection with the Private
Placement);





·
            our
      ability to execute our business
plan;





·
            operating
      results that fall below
expectations;





·
            loss
      of any strategic relationship;





·
            industry
      developments;





·
            economic
      and other external factors; and





·
            period-to-period
      fluctuations in our financial
results.





In
addition, the securities markets have from time to time experienced significant
price and volume fluctuations that are unrelated to the operating performance of
particular companies.  These market fluctuations may also materially
and adversely affect the market price of our Common Stock.





We
have never paid dividends and do not expect to pay dividends in the foreseeable
future. Any return on investment may be limited to the value of our common
stock.





We have
never paid cash dividends on our common stock and do not anticipate doing so in
the foreseeable future.  The payment of dividends on our common stock
will depend on earnings, financial condition and other business and economic
factors affecting it at such time as our board of directors may consider
relevant. If we do not pay dividends, a return on an investment in our common
stock will only occur if our stock price appreciates.





Our
common stock may be deemed a “penny stock”, which would make it more difficult
for our investors to sell their shares.





Our
common stock may be subject to the “penny stock” rules adopted under
Section 15(g) of the Securities Exchange Act of 1934.  The penny
stock rules apply to non-NASDAQ companies whose common stock trades at less
than $5.00 per share or that have tangible net worth of less than $5.0
million ($2.0 million if the company has been operating for three or more
years).  These rules require, among other things, that brokers
who trade penny stock to persons other than "established customers"
complete certain documentation, make suitability inquiries of investors and
provide investors with certain information
concerning trading  in  the  security,  including  a
risk  disclosure  document  and  quote information
under certain circumstances.  Many brokers have decided not to
trade penny stocks because of the requirements of the penny stock rules
and, as a result, the number of broker-dealers willing to act as market
makers in such securities are limited.  Remaining subject to the
penny stock rules for any significant period could have an adverse effect
on the market, if any, for our securities.  If our securities are
subject to the penny stock rules, investors will find it more difficult to
dispose of our securities.





Furthermore,
for companies whose securities are traded in the OTC Bulletin Board, it is
more difficult to obtain accurate quotations, obtain coverage for
significant news events because major wire services generally do not
publish press releases about such companies and obtain needed
capital.








16





Sales
of a substantial number of shares of our common stock may cause the price of our
common stock to decline.





If our
stockholders sell substantial amounts of our common stock in the public
market, including shares issued upon the exercise of outstanding
options, the market price of our common stock could fall.  These
sales also may make it more difficult for us to sell equity or
equity-related securities in the future at a time and price that we deem
reasonable or appropriate.





Additional stock offerings may
dilute current stockholders .




Given our
expansion plans and our expectation that we may need additional capital and
personnel, we may need to issue additional shares of capital stock or
securities convertible or exercisable for shares of capital stock,
including preferred stock, options or warrants.  The issuance
of additional capital stock may dilute the ownership of our current
stockholders.





Being a public company will increase
our administrative costs and may add other burdens .





As a
public company, we will incur significant legal, accounting and other
expenses that we did not incur as a private company.  In addition,
the Sarbanes-Oxley Act of 2002, rules implemented by the Securities and
Exchange Commission, or SEC, and new listing requirements of the Nasdaq
National Market have required changes in corporate governance practices of
public companies.  We expect these new rules and regulations to
increase our legal and financial compliance costs and to make some
activities more time consuming and costly.  We also expect these
new rules and regulations to make it more difficult and more expensive for
us to obtain director and officer liability insurance, and we may be
required to accept reduced coverage or incur substantially higher costs
to obtain coverage.  These new rules and regulations could also
make it more difficult for us to attract and retain qualified members of
our board of directors, particularly those serving on our audit
committee.




Item 2. Description of Property





We
currently have a 12 month lease of our executive offices, consisting of 256
square feet, located at 19200 Von Karman Ave., Suite 500, Irvine, CA, at a cost
of $1,476 per month.  We believe our facilities are adequate for our
current needs.





Item 3. Legal Proceedings





Other than as noted below, we are not a party to any
pending legal proceeding nor is the property of the Company subject to a pending
legal proceeding that is not in the ordinary course of business or otherwise
material to the financial statements of the Company’s business.





Priviam, Inc., a New Jersey
corporation, formerly known as EncryptaKey, Inc., a New Jersey corporation
vs. Kelly Owen, Owen Consulting LLC, and EncryptaKey, Inc., a Nevada
corporation.





The case
as filed on July 23, 2008 in the Superior Court of the State of
California, In and For the County of Orange, Santa Ana,
California.  Case No. 30-2008-00109638.  Judge assigned is
Judge David Chaffee, Department C17. Case was filed on July 23, 2008. 
The trial date is September 21, 2009. Claims in the case are breach of fiduciary
duty against Kelly Owen, conversion against all three named defendants,
fraud- concealment against Kelly Owen, and an action for an accounting. Relief
sought is rescission of agreement, monetary damages in excess of $3 million, and
rights to IP. We claim that Owen absconded with investment funds of EK- New
Jersey and then attempted to undo his duties to corporation (Owen was sole
officer and director) by trying to return some shares and take IP back into
control.





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, 2008.







17






PART II





Item 5. Market for Common Equity and Related Stockholder
Matters and Issuer Purchases of Equity Securities





Market
Information





There is
presently no public market for our common stock.





As of
April 15, 2009, we had 44,193,528 shares of common stock issued and outstanding
and approximately 76 holders of record of our common stock.





Dividends





We have
never declared or paid any cash dividends on our capital stock. We currently
intend to retain earnings, if any, to support our growth strategy and do not
anticipate paying cash dividends in the foreseeable future. Payment of future
dividends, if any, will be at the discretion of our Board of Directors after
taking into account various factors, including our financial condition,
operating results, current and anticipated cash needs and plans for
expansion.





Securities
Authorized for Issuance under Equity Compensation Plans





No
securities have been authorized for issuance under an equity compensation plan
as of December 31, 2008.




Recent
Sales of Unregistered Securities





On August 28, 2008, the Company entered into a
technology asset purchase agreement with Nexicon, Inc., pursuant to which the
Company acquired all right, title and interest in the NexiOne device and all
intellectual property related thereto in exchange for 5,000,000 shares of the
Company’s common stock.





Item
6. Selected Financial Data.





Not
Applicable.





Item
7.  Management’s Discussion and Analysis of Financial Condition and
Results of Operations.





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.





The
Company has sufficient funds to complete initial product development within a
three month period and sustain its operations six months beyond product
development completion.  The Company anticipates additional funding
required during the product rollout cycle for operations growth and customer
pilot programs.





Product
research and development performed during the duration of this plan will address
scalability issues of database and hardware over the short term.  On a more
long range basis, research and development will continue in the same areas as
that which produced the Company’s product and services, with an eye to spin-offs
from the technology for future projects and fine-tuning of the present
system.  There are several modules in the works to expand the utility of
the device.  There will be continued perfection of the PriviCom
device, including finalizing the programming of the Associated Portal and the
operating system.





There are
no plans for the purchase of significant capital equipment for the first six
months of the research and development phase.  Additional capital
equipment purchases are scheduled as funding permits.  These purchases
are related to telecom services expansion of the current infrastructure systems
and biometric hardware devices required for customer fulfillment.





Employee
growth will be minimal during the next twelve months and will increase
significantly after completion of additional financing.  The company
anticipates the addition of 18 to 25 employees by the first part of
2010.





18







Results
of Operations for the Years Ended December 31, 2008 and 2007





We
generated no income and incurred expenses of $107,487 for the year ended
December 31, 2008, for a net loss of $48,009 after a forgiveness of
debt.




Results
of Operations for the Years Ended December 31, 2007 and 2006





We
generated no income and incurred no expenses for the year ended December 31,
2007, for a net loss of $2,231,657 after loss of discontinued operations of
$2,231,657 is included. We generated no revenue and expenses of $1,143,949 for
the year ended December 31, 2006, for a net loss of $1,055,117 after a Gain on
Forgiveness of Debt of $88,832 is included. Our losses were significantly
greater in 2007 than in 2006 due primarily to discontinuing
operations.




Liquidity
and Capital Resources





As of
December 31, 2008 we had current assets of $21,121. Our total liabilities as of
December 31, 2006 were $1,264,429. Thus, our working capital as of December 31,
2007 was $0. As discussed in “Description of Business and Plan of Operation,
above, we anticipated no revenue in 2008 and expenditures of approximately
$500,000 to $1,000,000 for Portal equipment software and infrastructure through
December 31, 2008.





Cash
flows provided by financing activities during the year ended December 31, 2007
consisted of $720,000 for proceeds related to the sale of common stock plus
$1,204,952 for Loans to Related Parties, resulting in a total of $1,924,951 in
cash provided by Financing Activities. Cash used by Investment Activities was
$61,224 for the year ended December 31, 2007, and Net Cash Used by Operating
Activities was $2,172,729.





We relied
on proceeds of private sales of our common stock to fund our operations during
the year ended December 31, 2007. We will need to raise additional funds over
the next twelve months, through borrowing or through sales o securities, in
order to continue to pursue our business plan in 2008.





Off
Balance Sheet Arrangements





As of
December 31, 2008, there were no off balance sheet arrangements.





Going
Concern





We have
incurred an accumulated total net loss of $3,760,062 for the period from
inception (June 24, 2003) through December 31, 2008 and are not presently
generating any revenue. We do not anticipate generating any revenue in
2008.  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 as 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.










19







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:




Decembers
      31 ,
                        
                        2008
                        
                        
                        2007Numerators
      for Basic and Diluted EPSNet
      income/(loss) to common shareholders
                        
                        $
                        (2,231,657
                        )
                        
                        $
                        (1,055,117
                        )Denominators
      for Basic EPSWeighted
      average of shares
      outstanding
                        
                        
                        50,331,317
                        
                        
                        
                        39,818,551Basic
      and Diluted Earnings/(Loss) Per Share
                        
                        $
                        (0.04
                        )
                        
                        $
                        (0.03
                        )




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 basis 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.






20





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.





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.





Item 8. Financial Statements and Supplementary
Data







21






MOORE
& ASSOCIATES, CHARTERED
 ACCOUNTANTS AND
ADVISORS
 PCAOB
REGISTERED
 
 
 REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
 
 To
the Board of Directors
 Priviam,
Inc.
 (formerly
EncryptaKey, Inc.)
 (A
Development Stage Company)
 
 We have
audited the accompanying balance sheets of Priviam, Inc. (A Development Stage
Company) as of December 31, 2008 and 2007, and the related statements of
operations, stockholders’ equity (deficit) and cash flows for the years ended
December 31, 2008 and 2007, and since inception from June 23, 2003 through
December 31, 2008. 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 audit 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 Priviam, Inc. (A Development Stage
Company) as of December 31, 2008 and 2007, and the related statements of
operations, stockholders’ equity (deficit) and cash flows for the years ended
December 31, 2008 and 2007, and since inception from June 23, 2003 through
December 31, 2008, 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 has an accumulated deficit of $4,031,414 as of
December 31, 2008, which raises 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
 May 8,
2009
   
 6490 West Desert Inn Rd, Las
Vegas, NV 89146 (702) 253-7499 Fax (702) 253-7501








F-1






Priviam,
      Inc.(formerly
      EncryptaKey, Inc.)(a
      Development Stage Company)Balance
      Sheets  December
      31,2008
                        
                        
                        2007AssetsCurrent
      assets:Cash
                        
                        $
                        497
                        
                        
                        $
                        -Prepaid
      expenses and current deposits
                        
                        
                        523
                        
                        
                        
                        -Total
      current assets
                        
                        
                        1,020
                        
                        
                        
                        -Fixed
      assets, net of accumulted depreciation of $837and
      $0 as of 12/31/08 and 12/31/07, respectively
                        
                        
                        5,383
                        
                        
                        
                        -Total
      assets
                        
                        $
                        6,403
                        
                        
                        $
                        -Liabilities
      and Stockholders' EquityCurrent
      liabilities:Accounts
      payable
                        
                        $
                        41,570
                        
                        
                        $
                        59,478Notes
      payable, net of discount
                        
                        
                        112,500
                        
                        
                        
                        1,204,950Total
      current liabilities
                        
                        
                        154,070
                        
                        
                        
                        1,264,428Stockholders'
      equityPreferred
      stock, $0.0001 par value, 20,000,000 sharesauthorized,
      no shares issued and outstanding
                        
                        
                        -
                        
                        
                        
                        -Common
      stock, $0.0001 par value, 500,000,000 sharesauthorized,
      44,193,528 and 15,762,600 shares issuedand
      42,305,491 and 13,874,563 shares outstandingas
      of 12/31/08 and 12/31/07, respectively
                        
                        
                        4,420
                        
                        
                        
                        1,576Additional
      paid-in capital
                        
                        
                        4,070,713
                        
                        
                        
                        2,637,435(Deficit)
      accumulated during development stage
                        
                        
                        (4,031,414
                        )
                        
                        
                        (3,712,053
                        )Less
      common stock in Treasury (1,888,037 shares)
                        
                        
                        (191,386
                        )
                        
                        
                        (191,386
                        )(147,667
                        )
                        
                        
                        (1,264,428
                        )Total
      Liabilities and Stockholders' Equity
                        
                        $
                        6,403
                        
                        
                        $
                        -


The
accompanying notes are an integral part of these statements






F-2






Priviam,
      Inc.(formerly
      EncryptaKey, Inc.)(a
      Development Stage Company)Statements
      of OperationsFor
      the years ended
                                
                                
                                June
      23, 2003December
      31,
                                
                                
                                (Inception)
      to2008
                                
                                
                                2007
                                
                                
                                December
      31, 2008Expenses:Advertising
      and promotion
                                
                                $
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                129,961Depreciation
                                
                                
                                837
                                
                                
                                
                                -
                                
                                
                                
                                837General
      and administrative expenses
                                
                                
                                132,143
                                
                                
                                
                                -
                                
                                
                                
                                468,605Research
      and development
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                1,066,327Professional
      fees
                                
                                
                                179,520
                                
                                
                                
                                -
                                
                                
                                
                                213,520Total
      expenses
                                
                                
                                312,500
                                
                                
                                
                                -
                                
                                
                                
                                1,879,250Other
      income and (expense):Interest
      income
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                44Interest
      expense
                                
                                
                                (66,338
                                )
                                
                                
                                -
                                
                                
                                
                                (69,861
                                )Total
      other expenses
                                
                                
                                (66,338
                                )
                                
                                
                                -
                                
                                
                                
                                (69,817
                                )Operating
      loss
                                
                                
                                (378,838
                                )
                                
                                
                                -
                                
                                
                                
                                (1,949,067
                                )Extraordinary
      items:Loss
      on discontinued operations
                                
                                
                                -
                                
                                
                                
                                (2,231,657
                                )
                                
                                
                                (2,231,657
                                )Gain
      on forgiveness of debt
                                
                                
                                59,478
                                
                                
                                
                                -
                                
                                
                                
                                149,310Total
      other expenses
                                
                                
                                59,478
                                
                                
                                
                                (2,231,657
                                )
                                
                                
                                (2,082,347
                                )(Loss)
      before provision for taxes
                                
                                
                                (319,360
                                )
                                
                                
                                (2,231,657
                                )
                                
                                
                                (4,031,414
                                )Provision
      for income taxes
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Net
      (loss)
                                
                                $
                                (319,360
                                )
                                
                                $
                                (2,231,657
                                )
                                
                                $
                                (4,031,414
                                )Weighted
      average number ofcommon
      shares outstanding - basic and fully diluted
                                
                                
                                25,582,154
                                
                                
                                
                                15,476,769Net
      (loss) per share - basic and fully diluted
                                
                                $
                                (0.01
                                )
                                
                                $
                                (0.14
                                )








F-3




Priviam,
Inc.


(formerly
EncryptaKey, Inc.)


(a
Development Stage Company)
 Statements
of Stockholders' (Deficit)


DeficitAccumulatedIssue
                                                  
                                                  PricePer
                                                  
                                                  
                                                  Common
      Stock
                                                  
                                                  
                                                  Paid
      in
                                                  
                                                  
                                                  Subscriptions
                                                  
                                                  
                                                  During
      theDevelopment
                                                  
                                                  
                                                  Treasury
                                                  
                                                  
                                                  TotalDate
                                                  
                                                  Share
                                                  
                                                  
                                                  Shares
                                                  
                                                  
                                                  Amount
                                                  
                                                  
                                                  Capital
                                                  
                                                  
                                                  Receivable
                                                  
                                                  
                                                  Stage
                                                  
                                                  
                                                  Stock
                                                  
                                                  
                                                  EquityBalance
      at inception, June 24, 2003
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  7,692,308
                                                  
                                                  
                                                  $
                                                  769
                                                  
                                                  
                                                  $
                                                  2,233
                                                  
                                                  
                                                  $
                                                  -
                                                  
                                                  
                                                  $
                                                  (4,502
                                                  )
                                                  
                                                  
                                                  
                                                  
                                                  $
                                                  (1,500
                                                  )Adjustment
      effected in reverseacqusition
                                                  15-Aug-03
                                                  
                                                  $
                                                  0.007
                                                  
                                                  
                                                  
                                                  17,493,846
                                                  
                                                  
                                                  
                                                  1,749
                                                  
                                                  
                                                  
                                                  115,881
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  4,502
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  122,132Net
      (Loss)
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  (152,649
                                                  )
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  (152,649
                                                  )Balance,
      December 31, 2003
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  25,186,154
                                                  
                                                  
                                                  
                                                  2,518
                                                  
                                                  
                                                  
                                                  118,114
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (152,649
                                                  )
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (32,017
                                                  )Common
      shares issued for cash
                                                  15-Mar-04
                                                  
                                                  $
                                                  0.13
                                                  
                                                  
                                                  
                                                  115,385
                                                  
                                                  
                                                  
                                                  12
                                                  
                                                  
                                                  
                                                  14,988
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  15,000Common
      shares issued for cash
                                                  15-Jul-04
                                                  
                                                  $
                                                  0.32
                                                  
                                                  
                                                  
                                                  769,231
                                                  
                                                  
                                                  
                                                  77
                                                  
                                                  
                                                  
                                                  249,923
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  250,000Net
      (Loss)
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  (186,297
                                                  )
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  (186,297
                                                  )Balance,
      December 31, 2004
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  26,070,770
                                                  
                                                  
                                                  
                                                  2,607
                                                  
                                                  
                                                  
                                                  383,025
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (338,946
                                                  )
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  46,686Common
      shares re-purchased by theCompany
      and retired
                                                  01-Jan-05
                                                  
                                                  $
                                                  0.003
                                                  
                                                  
                                                  
                                                  (14,355,385
                                                  )
                                                  
                                                  
                                                  (1,436
                                                  )
                                                  
                                                  
                                                  (41,771
                                                  )
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  (43,207
                                                  )Net
      (Loss)
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  (87,334
                                                  )
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  (87,334
                                                  )Balance,
      December 31, 2005
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  11,715,385
                                                  
                                                  
                                                  
                                                  1,171
                                                  
                                                  
                                                  
                                                  341,254
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (426,280
                                                  )
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (83,855
                                                  )Common
      shares issued for purchaseof
      technology
                                                  28-Sep-06
                                                  
                                                  $
                                                  0.0003
                                                  
                                                  
                                                  
                                                  1,692,308
                                                  
                                                  
                                                  
                                                  169
                                                  
                                                  
                                                  
                                                  381
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  550Common
      shares issued for cash
                                                  12-Dec-06
                                                  
                                                  $
                                                  0.30
                                                  
                                                  
                                                  
                                                  1,933,538
                                                  
                                                  
                                                  
                                                  193
                                                  
                                                  
                                                  
                                                  1,885,007
                                                  
                                                  
                                                  
                                                  (500,000
                                                  )
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  1,385,200Net
      (Loss)
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  (1,054,118
                                                  )
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  (1,054,118
                                                  )Balance,
      December 31, 2006
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  15,341,231
                                                  
                                                  
                                                  
                                                  1,533
                                                  
                                                  
                                                  
                                                  2,226,642
                                                  
                                                  
                                                  
                                                  (500,000
                                                  )
                                                  
                                                  
                                                  (1,480,398
                                                  )
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  247,777Cash
      received on subscriptions
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  500,000
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  500,000Common
      shares issued for cash
                                                  07-Feb-07
                                                  
                                                  $
                                                  0.30
                                                  
                                                  
                                                  
                                                  225,640
                                                  
                                                  
                                                  
                                                  23
                                                  
                                                  
                                                  
                                                  219,977
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  220,000Common
      shares issued to purchase assets
                                                  07-Feb-07
                                                  
                                                  $
                                                  0.30
                                                  
                                                  
                                                  
                                                  195,729
                                                  
                                                  
                                                  
                                                  20
                                                  
                                                  
                                                  
                                                  190,816
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  190,836Common
      shares returned to treasuryfor
      sale of assets
                                                  15-Nov-07
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  (1,888,037
                                                  )
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  (191,386
                                                  )
                                                  
                                                  
                                                  (191,386
                                                  )Net
      (Loss)
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  (2,231,656
                                                  )
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  (2,231,656
                                                  )Balance,
      December 31, 2007
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  13,874,563
                                                  
                                                  
                                                  
                                                  1,576
                                                  
                                                  
                                                  
                                                  2,637,435
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (3,712,054
                                                  )
                                                  
                                                  
                                                  (191,386
                                                  )
                                                  
                                                  
                                                  (1,264,429
                                                  )Common
      shares issued to settle debt
                                                  31-Mar-08
                                                  
                                                  $
                                                  0.31
                                                  
                                                  
                                                  
                                                  1,215,384
                                                  
                                                  
                                                  
                                                  122
                                                  
                                                  
                                                  
                                                  1,204,828
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  1,204,950Common
      shares issued for executivecompensation
                                                  01-Jul-08
                                                  
                                                  $
                                                  0.00
                                                  
                                                  
                                                  
                                                  6,000,000
                                                  
                                                  
                                                  
                                                  600
                                                  
                                                  
                                                  
                                                  1,350
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  1,950Common
      shares issued for asset acqusiton
                                                  01-Jul-08
                                                  
                                                  $
                                                  0.00
                                                  
                                                  
                                                  
                                                  7,692,308
                                                  
                                                  
                                                  
                                                  769
                                                  
                                                  
                                                  
                                                  1,731
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  2,500Common
      shares returned and cancelled
                                                  01-Jul-08
                                                  
                                                  $
                                                  0.00
                                                  
                                                  
                                                  
                                                  (3,692,308
                                                  )
                                                  
                                                  
                                                  (369
                                                  )
                                                  
                                                  
                                                  369
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  -Adjustment
      to Reconcile to Transfer Agent
                                                  01-Jul-08
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  (183,302
                                                  )
                                                  
                                                  
                                                  (18
                                                  )
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  (18
                                                  )Warrants
      issued with note payable
                                                  01-Jul-08
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  225,000
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  225,000Common
      shares issued forExecutive
      compensation
                                                  28-Aug-08
                                                  
                                                  $
                                                  0.00
                                                  
                                                  
                                                  
                                                  12,000,000
                                                  
                                                  
                                                  
                                                  1,200
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  1,200Common
      shares issued to purchase
                                                  28-Aug-08
                                                  
                                                  $
                                                  0.00assets
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  5,000,000
                                                  
                                                  
                                                  
                                                  500
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  500Common
      Shares issued for services
                                                  28-Aug-08
                                                  
                                                  $
                                                  0.00
                                                  
                                                  
                                                  
                                                  10,000
                                                  
                                                  
                                                  
                                                  1
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  1Common
      shares issued for services
                                                  18-Nov-08
                                                  
                                                  $
                                                  0.00
                                                  
                                                  
                                                  
                                                  388,846
                                                  
                                                  
                                                  
                                                  39
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  39Net
      (Loss)
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  (319,360
                                                  )
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  (319,360
                                                  )Balance,
      December 31, 2008
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  42,305,491
                                                  
                                                  
                                                  $
                                                  4,420
                                                  
                                                  
                                                  $
                                                  4,070,713
                                                  
                                                  
                                                  $
                                                  -
                                                  
                                                  
                                                  $
                                                  (4,031,414
                                                  )
                                                  
                                                  $
                                                  (191,386
                                                  )
                                                  
                                                  $
                                                  (147,667
                                                  )
  On 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.
 On July
1, 2008 the Company executed a 1:3.25 reverse stock split that has been
retroactively applied to this schedule thereby decreasing the number of share
issued and increasing the price per share.
   The
accompanying notes are an integral part of these statements
   F-4
   Priviam,
      Inc.(formerly
      EncryptaKey, Inc.)(a
      Development Stage Company)Statements
      of Cash Flows  For
      the years ended
                                                        
                                                        
                                                        June
      24, 2003December
      31,
                                                        
                                                        
                                                        (Inception)
      to2008
                                                        
                                                        
                                                        2007
                                                        
                                                        
                                                        December
      31, 2008Operating
      activitiesNet
      (loss)
                                                        
                                                        $
                                                        (319,360
                                                        )
                                                        
                                                        $
                                                        (2,231,657
                                                        )
                                                        
                                                        $
                                                        (4,031,414
                                                        )Adjustments
      to reconcile net (loss) tonet
      cash (used) by operating activities:Loss
      of discontinued operations
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -Stock
      issued to founders
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (550
                                                        )
                                                        
                                                        
                                                        3,002Stock
      issued for services
                                                        
                                                        
                                                        6,172
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        6,172Gain
      on forgiveness of debt
                                                        
                                                        
                                                        (60,619
                                                        )
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (60,644
                                                        )Adjustment
      for reverse acquisition
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        117,630Stock
      issued to purchase asset
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        191,386Depreciation
      and amortization
                                                        
                                                        
                                                        837
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        837Amortization
      of warrants and beneficial conversion feature
                                                        
                                                        
                                                        112,500
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        112,500Changes
      in operating assets and liabilities:Increase
      (decrease) in employee loans
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -Increase
      (decrease) in prepaid expense
                                                        
                                                        
                                                        523
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        523Increase
      (decrease) in accounts payable
                                                        
                                                        
                                                        41,570
                                                        
                                                        
                                                        
                                                        59,478
                                                        
                                                        
                                                        
                                                        101,074Increase
      (decrease) in wages payable
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -Net
      cash (used) by operating activities
                                                        
                                                        
                                                        (218,377
                                                        )
                                                        
                                                        
                                                        (2,172,729
                                                        )
                                                        
                                                        
                                                        (3,558,934
                                                        )Investing
      activitiesTreasury
      stock
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (191,386
                                                        )Stock
      issued for asset payment
                                                        
                                                        
                                                        (3,000
                                                        )
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (3,000
                                                        )Purchase
      of fixed assets
                                                        
                                                        
                                                        (3,126
                                                        )
                                                        
                                                        
                                                        61,224
                                                        
                                                        
                                                        
                                                        (3,126
                                                        )Net
      cash provided (used) by investing activities
                                                        
                                                        
                                                        (6,126
                                                        )
                                                        
                                                        
                                                        61,224
                                                        
                                                        
                                                        
                                                        (197,512
                                                        )Financing
      activitiesProceeds
      received from note payable, net
                                                        
                                                        
                                                        225,000
                                                        
                                                        
                                                        
                                                        1,204,951
                                                        
                                                        
                                                        
                                                        225,000Stock
      issued to settle debt
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        1,204,950Purchase
      and cancellation of treasury stock
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (43,207
                                                        )Issuances
      of common stock, net
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        720,000
                                                        
                                                        
                                                        
                                                        2,370,200Net
      cash provided (used) by financing activities
                                                        
                                                        
                                                        225,000
                                                        
                                                        
                                                        
                                                        1,924,951
                                                        
                                                        
                                                        
                                                        3,756,943Net
      increase in cash
                                                        
                                                        
                                                        497
                                                        
                                                        
                                                        
                                                        (186,554
                                                        )
                                                        
                                                        
                                                        497Cash
      - beginning
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        186,554
                                                        
                                                        
                                                        
                                                        -Cash
      - ending
                                                        
                                                        $
                                                        497
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        497Supplemental
      disclosures:Interest
      paid
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        10,033
                                                        
                                                        
                                                        $
                                                        13,556Income
      taxes paid
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        -Non-cash
      transactions:Stock
      issued to founders
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        3,002Gain
      on foregiveness of debt
                                                        
                                                        $
                                                        59,478
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        59,478Adjustment
      for reverse acquisition
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        117,630Stock
      issued for services
                                                        
                                                        $
                                                        6,133
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        6,133Stock
      issued to settle debt
                                                        
                                                        $
                                                        1,204,950
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        1,204,950Stock
      issued to purchase asset
                                                        
                                                        $
                                                        3,000
                                                        
                                                        
                                                        $
                                                        191,386
                                                        
                                                        
                                                        $
                                                        194,386Stock
      returned to treasury for sale of assets
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        (191,386
                                                        )
                                                        
                                                        $
                                                        (191,386
                                                        )Depreciation
      and amortization
                                                        
                                                        $
                                                        401
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        401Amortization
      of warrants and beneficial conversion feature
                                                        
                                                        $
                                                        112,500
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        112,500Number
      of warrants issued for financing costs
                                                        
                                                        
                                                        2,250,000
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        2,250,000
 The
accompanying notes are an integral part of these statements
    F-5
   PRIVIAM,
INC.
 (Formerly
EncryptaKey, Inc.)
 (A
Development Stage Company)
 Notes
to Financial Statements
  NOTE
1.        GENERAL ORGANIZATION AND
BUSINESS
 
 Priviam,
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.; on February 19, 2007, to EncryptaKey, Inc. and finally
on July 1, 2008 to Priviam, 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 of developing and marketing 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.
 
 Fiscal
Year
 
 The
Company operates on a December 31st fiscal
year end.
 
 Cash and cash
equivalents
 
 The
Company maintains a cash balance in a non-interest-bearing account that
currently does not exceed federally insured limits.  For the purpose
of the statements of cash flows, all highly liquid investments with an original
maturity of three months or less are considered to be cash
equivalents.  There were no cash equivalents as of December 31, 2008
and 2007.
 
 Concentrations of Risks:
Cash Balances
 
 The
Company maintains its cash in institutions insured by the Federal Deposit
Insurance Corporation (FDIC).  This government corporation insured
balances up to $100,000 through October 13, 2008.  As of October 14,
2008 all non-interest bearing transaction deposit accounts at an FDIC-insured
institution, including all personal and business checking deposit accounts that
do not earn interest, are fully insured for the entire amount in the deposit
account.  This unlimited insurance coverage is temporary and will
remain in effect for participating institutions until December 31,
2009.
 
 All other
deposit accounts at FDIC-insured institutions are insured up to at least
$250,000 per depositor until December 31, 2009.  On January 1, 2010,
FDIC deposit insurance for all deposit accounts, except for certain retirement
accounts, will return to at least $100,000 per depositor.  Insurance
coverage for certain retirement accounts, which include all IRA deposit
accounts, will remain at $250,000 per depositor.
 
  F-6
   PRIVIAM,
INC.
 (Formerly
EncryptaKey, Inc.)
 (A
Development Stage Company)
 Notes
to Financial Statements
    NOTE  2.       SUMMARY
OF SIGNIFICANT ACCOUNTING PRACTICES (Continued)
 
 Fair value of financial
instruments
 
 Fair
value estimates discussed herein are based upon certain market assumptions and
pertinent information available to management as of December 31, 2008 and
2007.  The respective carrying value of certain on-balance-sheet
financial instruments approximated their fair values. Fair values were assumed
to approximate carrying values for cash and payables because they are short term
in nature and their carrying amounts approximate fair values or they are payable
on demand.
 
 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
      312008
                                                        
                                                        
                                                        2007Numerators for Basic and Diluted
      EPSNet
      income/(loss) to common shareholders
                                                        
                                                        $
                                                        (319,360
                                                        )
                                                        
                                                        $
                                                        (2,231,657
                                                        )Denominators for Basic and Diluted
      EPSWeighted
      average of shares outstanding
                                                        
                                                        
                                                        25,582,154
                                                        
                                                        
                                                        
                                                        15,476,769Basic and Diluted Earnings/(Loss) Per
      Share
                                                        
                                                        $
                                                        (0.01
                                                        )
                                                        
                                                        $
                                                        (0.14
                                                        )
 
 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.
   F-7
    PRIVIAM,
INC.
 (Formerly
EncryptaKey, Inc.)
 (A
Development Stage Company)
 Notes
to Financial Statements
 NOTE  2.       SUMMARY
OF SIGNIFICANT ACCOUNTING PRACTICES (Continued)
 
 Property and
Equipment
 
 Property
and equipment are carried at cost and depreciated on a straight-line basis over
their useful lives.  Computer Equipment is depreciated over three
years and furniture is depreciated over five years.
 
 Income
Taxes
 
 The
Company follows Statement of Financial Accounting Standard No. 109, “Accounting
for Income Taxes” (“SFAS No. 109”) for recording the provision for income
taxes.  Deferred tax assets and liabilities are computed based upon
the difference between the financial statement and income tax basis of assets
and liabilities using the enacted marginal tax rate applicable when the related
asset or liability is expected to be realized or settled.  Deferred
income tax expenses or benefits are based on the changes in the asset or
liability each period.  If available evidence suggests that it is more
likely than not that some portion or all of the deferred tax assets will not be
realized, a valuation allowance is required to reduce the deferred tax assets to
the amount that is more likely than not to be realized.  Future
changes in such valuation allowance are included in the provision for deferred
income taxes in the period of change.
 
 Deferred
income taxes may arise from temporary differences resulting from income and
expense items reported for financial accounting and tax purposes in different
periods.  Deferred taxes are classified as current or non-current,
depending on the classification of assets and liabilities to which they
relate.  Deferred taxes arising from temporary differences that are
not related to an asset or liability are classified as current or non-current
depending on the periods in which the temporary differences are expected to
reverse.
 
 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
$4,031,414 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.
 
 Managements
Plan
 
 The
Company continues to seek funding from its shareholders and other qualified
investors to pursue its business plan.
 
 NOTE
4.        NOTES PAYABLE –
SHAREHOLDERS
 
 During
the year ended December 31, 2007 the Company had received a total of $1,204,950
in loans from company shareholders that have been settled through the issue of
1,215,384 post-split shares of commons stock.
 
 On July
1, 2008, the Company executed a promissory note for $225,000 due to SH Equity
Partners, LLC, a related party.  The principal balance must be repaid
at the earlier of June 30, 2009 or upon receipt of $2 million in
financing.  The note bears no interest.  The holder can
elect to convert part or all of the debt into shares of common stock at a rate
of $0.077 per share.  The holder also received 2,225,000 warrants with
a five year life and an exercise price of $0.01 per share.  As of
December 31, 2008, the principal balance was $225,000 net of debt discount
totaling $112,500.  During the year ended December 31, 2008, the
Company recorded amortization of the fair value of the warrants and the
beneficial conversion feature of $112,500.
   F-8
  PRIVIAM,
INC.
 (Formerly
EncryptaKey, Inc.)
 (A
Development Stage Company)
 Notes
to Financial Statements
 
 NOTE
5.        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 500,000,000 shares of common stock, par value
$0.0001 per share.  As of December 31, 2008, there were 43,804,682
shares of common stock outstanding.  On August 7, 2006, the Company
exercised a 5 for 1 forward stock split.  On July 1, 2008 the Company
executed a 1 for 3.25 reverse stock split.  All share amounts 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 25,186,154 post-split shares of common stock in the
following transactions:
 
 ·
                                              On
      June 24, 2003, the Company issued 7,692,308 post-split shares to its
      founder for $3,002.
 
 ·
                                              On
      August 15, 2003 the Company issued 17,493,846 common shares to execute the
      acquisition of Selectrics Corporation in a one for one share exchange for
      a value of $117,630.  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 884,616 post-split shares of common stock in the
following transactions:
 
 ·
                                              On
      March 15, 2004, the Company issued 115,385 shares for $15,000 cash in a
      private placement.
 
 ·
                                              On
      July 15, 2004 the Company issued 769,231 shares in a private placement for
      $250,000 cash.
 
 During
2005, the Company received 14,355,385 common shares into its treasury from a
shareholder for cash and other property valued at $43,207.
 
 During
2006, the Company issued 3,625,826 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 1,692,308 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 of the pre-split shares ($550) was used to record
      this transaction.
 
 ·
                                              On
      December 12, 2006, the Company issued 1,933,538 common shares in a private
      offering at $0.30 per pre-split share for $1,385,200 and $500,000
      subscriptions receivable.  The Company extended the closing of
      the offering to February 7, 2007.
 
  F-9
    PRIVIAM,
INC.
 (Formerly
EncryptaKey, Inc.)
 (A
Development Stage Company)
 Notes
to Financial Statements
   NOTE
5.        STOCKHOLDERS’ EQUITY
(Continued)
 
 During
2007, the Company issued 421,369 common shares in the following
transactions:
 
 ·
                                              On
      February 7, 2007 the Company issued 225,640 common shares in a private
      offering at $0.30 per pre-split share for $220,000 and received cash on
      outstanding subscription receivable in the amount of
    $500,000.
 
 ·
                                              On
      February 7, 2007 the Company issued 195,729 common shares at $0.30 per
      pre-split share to purchase fixed assets valued at
    $190,836.
 
 ·
                                              On
      November 15, 2007 the Company received 1,888,037 common shares for the
      sale of all assets with a net value of $191,386.  The shares
      were returned to treasury stock.  However, the shares are being
      held in physical certificate form by the Company pending the outcome of
      outstanding litigation.
 
 During
2008, the Company issued 28,042,082 post-split common shares and cancelled
3,875,610 post-split common shares in the following transactions:
 
 ·
                                              On
      March 31, 2008 the Company issued 1,215,384 common shares in settlement
      and release of $1,204,950 in notes
payable.
 
 ·
                                              On
      July 1, 2008 the Company issued 6,000,000 post-split common shares at
      $0.0001 par value for 19,500,000 pre-split shares or $1,950 for executive
      services.
 
 ·
                                              On
      July1, 2008 the Company issued 7,692,308 post-split common shares at
      $0.0001 par value for 25,000,000 pre-split shares or $2,500 for the
      acquisition of certain program software
assets.
 
 ·
                                              On
      July 1, 2008 the Company received the return and cancelled 3,692,308
      post-split common shares.
 
 ·
                                              On
      July 1, 2008 the Company adjusted its Stockholders equity to reconcile
      with the transfer agent records by reducing the reported outstanding
      shares by 183,302 common shares.
 
 ·
                                              On
      August 28, 2008 the Company issued 12,000,000 common shares at par-value
      of $1,200 for executive compensation; 5,000,000 common shares at par value
      of $500 to acquire certain program software assets; and issued 10,000
      common shares at par value of $1 as an incentive to make a $5,000 loan to
      the company.
 
 As of
December 31, 2008, there have been no additional issuances of common
stock
 
  F-10
    PRIVIAM,
INC.
 (Formerly
EncryptaKey, Inc.)
 (A
Development Stage Company)
 Notes
to Financial Statements
   NOTE
6.        WARRANTS
 
 The
following is a summary of the status of all of the Company’s stock warrants as
of December 31, 2008 and 2007 and changes during the years ended on those
dates:
 
 Number
                                                    Of
      Warrants
                                                  
                                                  
                                                  Weighted-Average
                                                    Exercise
      PriceOutstanding
      at December 31, 2006
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  $
                                                  0.00Granted
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  $
                                                  0.00Exercised
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  $
                                                  0.00Cancelled
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  $
                                                  0.00Outstanding
      at December 31, 2007
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  $
                                                  0.00Granted
                                                  
                                                  
                                                  2,225,000
                                                  
                                                  
                                                  $
                                                  0.01Exercised
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  $
                                                  0.00Cancelled
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  $
                                                  0.00Outstanding
      at December 31, 2008
                                                  
                                                  
                                                  2,225,000
                                                  
                                                  
                                                  $
                                                  0.01Warrants
      exercisable at December 31, 2007
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  $
                                                  0.00Warrants
      exercisable at December 31, 2008
                                                  
                                                  
                                                  2,225,000
                                                  
                                                  
                                                  $
                                                  0.01
 
 The
following tables summarize information about stock warrants outstanding and
exercisable at December 31, 2008:
 
 STOCK
      WARRANTS OUTSTANDINGExercise
      Price
                                                      
                                                      
                                                      Number
      of
                                                        Warrants
                                                        Outstanding
                                                      
                                                      
                                                      Weighted-Average
                                                        Remaining
                                                        Contractual
                                                        Life
      in Years
                                                      
                                                      
                                                      Weighted-
                                                        Average
                                                        Exercise
      Price$
                                                      0.01
                                                      
                                                      
                                                      
                                                      2,225,000
                                                      
                                                      
                                                      
                                                      4.50
                                                      
                                                      
                                                      $
                                                      0.012,225,000
                                                      
                                                      
                                                      
                                                      4.50
                                                      
                                                      
                                                      $
                                                      0.01
 
 
 
 STOCK
      WARRANTS EXERCISABLEExercise
      Prices
                                                      
                                                      
                                                      Number
      of
                                                        Shares
                                                        Exercisable
                                                      
                                                      
                                                      Weighted-
                                                        Average
                                                        Exercise
      Price$
                                                      0.01
                                                      
                                                      
                                                      
                                                      2,225,000
                                                      
                                                      
                                                      $
                                                      0.012,225,000
                                                      
                                                      
                                                      $
                                                      0.01
 
 The
assumptions used in computing fair value of warrants are as
follows:
 
 Expected
      stock price volatility
                                                  
                                                  86.00%Risk
      free interest rate
                                                  
                                                  3.33%Expected
      term (years)
                                                  
                                                  5.00Weighted
      average fair value of stock warrants granted
                                                  
                                                  $0.30
 
   F-11
  PRIVIAM,
INC.
 (Formerly
EncryptaKey, Inc.)
 (A
Development Stage Company)
 Notes
to Financial Statements
 
 NOTE
7.        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 as
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 required payment at
the rate of $25.00 per hour for actual hours incurred for research and
development.  The project involved the efforts of over 100 programmers
and technicians.  As of December 31, 2006 the Company had been
invoiced and paid $1,066,327 on this contract which had been expensed as
Research and Development costs.
 
 During
the year of 2007 the company was invoiced and paid an additional $1,501,459 on
this contract.  The agreement was terminated with the sale of assets
as described in note 7.
 
 Contingency
 
 On
September 20, 2006, an Officer of the Company entered into a settlement
agreement with an individual who was to be employed with the company as the
result of a planned merger that was cancelled.  The settlement
agreement stipulated the issue of 4,000,000 common shares in settlement of all
outstanding issues between the parties involved which included the
Company.  The Officer of the Company agreed to transfer shares from
his personal holdings in settlement of this contingency.
 
 NOTE
8.        SALE OF ASSETS
 
 On
November 15, 2007 the Company sold all its assets to a related party for the
return of 1,888,037 common shares valued at $191,386 and ended its consulting
contract with Owen Consulting, LLC.  The shares are held in treasury
and have not been cancelled, pending the outcome of outstanding
litigation.
 
 NOTE
9.        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 $827,654 as of December 31, 2008 which is calculated by
multiplying a 22% estimated tax rate by the cumulative NOL of
$3,762,062.  The total valuation allowance is a comparable
$827,654.
 
 The
provision for income taxes for the period ended December 31, 2008 and 2007
follows:
  Year
      Ended December 31,
                                                          
                                                          2008
                                                          
                                                          
                                                          2007Deferred
      Tax Asset
                                                          
                                                          $
                                                          10,562
                                                          
                                                          
                                                          $
                                                          490,965Valuation
      Allowance
                                                          
                                                          
                                                          (10,562
                                                          )
                                                          
                                                          
                                                          (490,965
                                                          )Current
      Taxes Payable
                                                          
                                                          
                                                          0.00
                                                          
                                                          
                                                          
                                                          0.00Income
      Tax Expense
                                                          
                                                          $
                                                          0.00
                                                          
                                                          
                                                          $
                                                          0.00
 
  F-12
   PRIVIAM,
INC.
 (Formerly
EncryptaKey, Inc.)
 (A
Development Stage Company)
 Notes
to Financial Statements
   NOTE
9.        PROVISION FOR INCOME TAXES
(Continued)
 
 Below is
a chart showing the estimated federal net operating losses and the years in
which they will expire:
  Year
                                                                          
                                                                          Amount
                                                                          
                                                                          Expiration2003
                                                                          
                                                                          $
                                                                          152,649
                                                                          
                                                                          20232004
                                                                          
                                                                          
                                                                          183,297
                                                                          
                                                                          20242005
                                                                          
                                                                          
                                                                          87,334
                                                                          
                                                                          20252006
                                                                          
                                                                          
                                                                          1,054,117
                                                                          
                                                                          20262007
                                                                          
                                                                          
                                                                          2,231,656
                                                                          
                                                                          20272008
                                                                          
                                                                          
                                                                          53,009
                                                                          
                                                                          2028Total
                                                                          
                                                                          $
                                                                          3,762,062
   NOTE  10.     THE
EFFECT OF RECENTLY ISSUED ACCOUNTING  STANDARDS
 
 Below is
a listing of the most recent Statement of Financial Accounting Standards (SFAS)
issued by the Financial Accounting Standards Board (FASB) SFAS 157-163 and their
effect on the Company.
 
 Statement No. 141 (revised 2007) –Business
Combinations
 
 In
December 2007, the FASB revised SFAS No. 141 (revised 2007), Business
Combinations.This revision changes the way the minority
interest in a company is measured, recorded and reported in the parent companies
financial statements to the end that a statement user can better evaluate the
nature and financial effects of the business combination.  The Company
will adopt this statement beginning March 1, 2009.
 
 It is not
believed that this will have an impact on the Company’s consolidated financial
position, results of operations or cash flows.
 
 Statement No. 154– Accounting Changes and Error
Corrections
 
 In May
2005, the FASB issued Statement of Financial Accounting Standards No. 154 (SFAS
#154), “Accounting Changes and Error Corrections.”  SFAS #154 requires
retrospective application to prior-period financial statements of changes in
accounting principles, unless it is impracticable to determine either the
period-specific effects or the cumulative effect of the change.  SFAS
#154 also redefines “restatement” as the revising of previously issued financial
statements to reflect the correction of an error.  This statement is
effective for accounting changes and corrections of errors made in fiscal years
beginning after December 15, 2005.  The adoption of SFAS #154 is not
expected to have a material impact on the Company’s financial statements and
disclosures.
 
 Statement No. 157 – Fair Value
Measurements
 
 In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, to
clarify how to measure fair value and to expand disclosures about fair value
measurements.  The expanded disclosures include the extent to which
companies measure assets and liabilities at fair value, the information used to
measure fair value, and the effect of fair value on earnings and is applicable
whenever other standards require (or permit) assets and liabilities to be
measured at fair value.  SFAS 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007 and interim
periods within those fiscal years.
 
 The
adoption of this new Statement has not had a material effect on the Company’s
current financial position, results or operations, or cash flows.
 
  F-13
    PRIVIAM,
INC.
 (Formerly
EncryptaKey, Inc.)
 (A
Development Stage Company)
 Notes
to Financial Statements
  NOTE  10.     THE
EFFECT OF RECENTLY ISSUED ACCOUNTING  STANDARDS
(Continued)
 
 Statement No. 159 –The Fair Value Option for Financial
Assets and Financial Liabilities—Including an amendment of FASB Statement No.
115
 
 In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities—Including an amendment of FASB Statement No.
115.This standard permits an entity to choose to measure many
financial instruments and certain other items at fair value. This option is
available to all entities. Most of the provisions in FAS 159 are elective;
however, an amendment to FAS 115 Accounting for Certain Investments in Debt and
Equity Securities applies to all entities with available for sale or trading
securities. Some requirements apply differently to entities that do not report
net income. SFAS No. 159 is effective as of the beginning of an entities first
fiscal year that begins after November 15, 2007. Early adoption is permitted as
of the beginning of the previous fiscal year provided that the entity makes that
choice in the first 120 days of that fiscal year and also elects to apply the
provisions of SFAS No. 157 Fair Value Measurements.
 
 Adoption
of this pronouncement has not had a material effect on the Company’s
consolidated financial statements.
 
 Statement No. 160 –Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB No. 51
 
 In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB No.
51.A noncontrolling interest, sometimes called a minority
interest, is the portion of equity in a subsidiary not attributable, directly or
indirectly, to a parent. The objective of this Statement is to improve the
relevance, comparability, and transparency of the financial information that a
reporting entity provides in its consolidated financial statements related to
the noncontrolling or minority interest.
 
 The
Company will adopt this statement beginning March 1, 2009. It is not believed
that this will have an impact on the Company’s consolidated financial position,
results of operations or cash flows.
 
 Statement No. 161 –Disclosures about Derivative
Instruments and Hedging Activities—an amendment to FASB No.
133
 
 In March
2008, the FASB, issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities—an amendment of FASB Statement No.
133.  This standard requires companies to provide enhanced
disclosures about (a) how and why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted for under
Statement 133 and its related interpretations, and (c) how derivative
instruments and related hedged items affect an entity’s financial position,
financial performance, and cash flows. This Statement is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008, with early application encouraged.
 
 The
Company has not yet adopted the provisions of SFAS No. 161, but does not expect
it to have a material impact on its consolidated financial position, results of
operations or cash flows.
 
 Statement No. 162 –The Hierarchy of Generally Accepted
Accounting Principles
 
 In May
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162,
The Hierarchy of Generally
Accepted Accounting Principles.  SFAS No. 162 sets forth the
level of authority to a given accounting pronouncement or document by category.
Where there might be conflicting guidance between two categories, the more
authoritative category will prevail. SFAS No. 162 will become effective 60 days
after the SEC approves the PCAOB’s amendments to AU Section 411 of the AICPA
Professional Standards.
 
 SFAS No.
162 has no effect on the Company’s financial position, statements of operations,
or cash flows at this time.
 
  F-14
   PRIVIAM,
INC.
 (Formerly
EncryptaKey, Inc.)
 (A
Development Stage Company)
 Notes
to Financial Statements
  NOTE  10.     THE
EFFECT OF RECENTLY ISSUED ACCOUNTING  STANDARDS
(Continued)
 
 Statement No. 163 –Accounting for Financial Guarantee
Insurance Contracts – and interpretation of FASB Statement No.
60
 
 In May
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163,
Accounting for Financial
Guarantee Insurance Contracts-and interpretation of FASB Statement No.
60.  SFAS No. 163 clarifies how Statement 60 applies to
financial guarantee insurance contracts, including the recognition and
measurement of premium revenue and claims liabilities. This statement also
requires expanded disclosures about financial guarantee insurance
contracts.  SFAS No. 163 is effective for fiscal years beginning on or
after December 15, 2008, and interim periods within those years.
 
 SFAS No.
163 has no effect on the Company’s financial position, statements of operations,
or cash flows at this time.
 
 Staff
Accounting Bulletin No. 110
 
 In
December 2007, the SEC issued SAB No. 110 regarding the use of a "simplified"
method, as discussed in SAB No. 107 (SAB 107), in developing an estimate of
expected term of "plain vanilla" share options in accordance with SFAS No. 123
(R), Share-Based Payment.  In particular, the staff indicated in SAB
107 that it will accept a company's election to use the simplified method,
regardless of whether the company has sufficient information to make more
refined estimates of expected term. At the time SAB 107 was issued, the staff
believed that more detailed external information about employee exercise
behavior (e.g., employee exercise patterns by industry and/or other categories
of companies) would, over time, become readily available to companies.
Therefore, the staff stated in SAB 107 that it would not expect a company to use
the simplified method for share option grants after December 31, 2007. The staff
understands that such detailed information about employee exercise behavior may
not be widely available by December 31, 2007. Accordingly, the staff will
continue to accept, under certain circumstances, the use of the simplified
method beyond December 31, 2007. The Company currently uses the simplified
method for “plain vanilla” share options and warrants, and will assess the
impact of SAB 110 for fiscal year 2009. It is not believed that this will have
an impact on the Company’s consolidated financial position, results of
operations or cash flows.
 
 EITF
03-6-1
 
 In
June 2008, the FASB issued FASB Staff Position EITF 03-6-1, Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities,
(“FSP EITF 03-6-1”). FSP EITF 03-6-1 addresses whether instruments granted in
share-based payment transactions are participating securities prior to vesting,
and therefore need to be included in the computation of earnings per share under
the two-class method as described in FASB Statement of Financial Accounting
Standards No. 128, “Earnings per Share.” FSP EITF 03-6-1 is effective for
financial statements issued for fiscal years beginning on or after
December 15, 2008 and earlier adoption is prohibited. We are not required
to adopt FSP EITF 03-6-1; neither do we believe that FSP EITF 03-6-1 would have
material effect on our consolidated financial positionand results of
operations if adopted.




F-15




Item
9.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure





Not
applicable.





Item
9A.  Controls and Procedures





Evaluation
and Conclusion of Disclosure Controls and Procedures




The
Company conducted an evaluation, under the supervision and with the
participation of the Company’s principal executive officer and principal
financial officer, of the effectiveness of the design and operation of the
Company’s disclosure controls and procedures (as defined in the Securities
Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e), as amended) as of
December 31, 2008.




Based
upon that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Company’s disclosure controls and procedures as of the end of
the period covered by this Report were not effective as a result of a material
weakness in internal control over financial reporting as of December 31, 2008 as
discussed below.




Management’s
Annual Report on Internal Control Over Financial Reporting




Management
is responsible for establishing and maintaining adequate internal control over
financial reporting (as defined in the Securities Exchange Act of 1934
Rules 13a-15(f) and 15d-15(f), as amended) of the Company. Internal
control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with accounting
principles generally accepted in the United States of America.




The
Company’s internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with accounting principles generally accepted
in the United States of America, and that receipts and expenditures of the
Company are being made only in accordance with authorizations of management and
directors of the Company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of the Company’s assets that could have a material effect on the financial
statements.




Management
conducted an evaluation of the effectiveness of internal control over financial
reporting based on the framework in Internal Control—Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission. Based
on this evaluation, management concluded that the Company’s internal control
over financial reporting was not effective as of December 31, 2008. Management’s
assessment identified the following material weakness in internal control over
financial reporting:





Management
determined there was an insufficient number of personnel with appropriate
technical accounting and SEC reporting expertise to adhere to certain control
disciplines, and to evaluate and properly record certain non-routine and complex
transactions.




Based on
this evaluation, management concluded that the Company’s internal control over
financial reporting was not effective as of December 31, 2008 because of the
material weakness described in the preceding paragraph. A material weakness in
internal control over financial reporting is a deficiency, or combination of
deficiencies, in internal control over financial reporting such that there is a
reasonable possibility that a material misstatement of the annual or interim
financial statements would not be prevented or detected on a timely
basis.  Management’s report was not subject to attestation by our
registered public accounting firm pursuant to temporary rules of the SEC that
permit us to provide only management’s report in this Annual
Report.




Item
9B.  Other Information.





None.







22







PART III





Item 10. Directors, Executive Officers and Corporate
Governance




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


Our executive officers and directors and their
respective ages as of December 31, 2008 are as follows:





Name
                                  
                                  Age
                                  
                                  Position(s)
      and Office(s) HeldLouis
      Jack Musetti
                                  
                                  52
                                  
                                  President,
      Chief Executive Officer and DirectorTommy
      Stianson
                                  
                                  32
                                  
                                  Chief
      Technology Officer and DirectorDaniel
      Urrea
                                  
                                  37
                                  
                                  Chief
      Financial Officer and DirectorVal
      Horvatich
                                  
                                  50
                                  
                                  DirectorRichard
      Urrea
                                  
                                  44
                                  
                                  Director





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





Jack
Musetti, President,
Chief Executive Officer and Director





Louis
Jack Musetti is Chairman of the Board of Directors, President and Chief
Executive Officer of Priviam, Inc. since June 2008.  Mr. Musetti has
extensive executive level experience in business development and risk management
combined with strong P&L, general management and strategic planning ability
in both commercial and defense technology industries.  Prior to
joining Priviam, Mr. Musetti was CEO of Nanopower Technologies, a developer and
manufacture of Radio Frequency Identification (RFID) Integrated Circuits,
NASA/JPL MEMS Silicon Microgyro microelectronics and advanced CMOS design
libraries.





Daniel
Urrea, Chief Financial Officer and Director





Daniel
Urrea is the Chief Financial Officer and Director of Priviam, Inc. He has held
the top financial positions in both Sycom international, Inc. and Klaire
International, Inc. In 1995 Mr. Urrea earned his Bachelor’s degree in Business
Administration with a concentration in Finance from the Robert O. Anderson
School of Business at the University of New Mexico.





Tommy
Stiansen, Chief Technical Officer and Director





Tommy
Stiansen is the Chief Technical Officer and Director of Priviam, Inc. He founded
Pluto Communications in 2002.  Tommy has help previous positions a
Director of Research and Development at Combined Networks, AS, and in the
technical project management at SAS. He has participated in several development
environments within Unix and Linux. For the last four years he has specialized
in development for billing and management solutions for telecom systems and in
specialized network security.




Val
Horvatich, Director





Val
Horvatich is a Director of Priviam. He has extensive experience in the high tech
sectors of defense and aerospace industries, covering ground vehicles, aviation
and soldier related systems and electronics. He has held executive level
positions in General Management, Operations and Engineering for BAE Systems,
Inc., Armor Holdings, Inc. and United Defense Industries, and has successfully
established and led startup businesses for three separate organizations. Mr.
Horvatich also supported Mr. Musetti as an operations consultant during the
successful start up and establishment of Mobile Dynamics, a developer of secured
high-speed communications solutions for DoD.  Recently, as Vice
President and General Manager of Firetrace Aerospace, Mr. Horvatich established
a firm industry lead position for this startup., taking sales to $15M/yr in
eighteen months. Mr. Horvatich holds a B.S. in Engineering, Industrial
Management from the California State University-San Jose.






23







Richard
Urrea, Director





Richard
Urrea is a Director of Priviam, Inc. Rick was the President of the oil-industry
data communications firm Sycom International, Inc (1997-1999). While there he
led the Company from the startup to the roll out of its national marketing plan
and to the implementation of its manufacturing plan. In addition, he served as
President of Klaire international, Ltd., a distributor of automotive parts in
Latin America.  Mr. Urrea received his Bachelor’s of Business
Administration in Marketing and Business Broadcasting from Baylor University’s
Hankhammer School of Business in 1989.





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.




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





Other
than as noted below, 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. Daniel Urrea and Richard Urrea, two of the
Company's directors, are brothers.





Employment
Agreements





On August
28, 2008, the Company entered into an employment agreement with Tommy Stianson,
pursuant to which Mr. Stianson agreed to serve as the Company’s Chief Technology
Officer.  Pursuant to his employment agreement, Mr. Stianson is
entitled to a base salary of $120,000, payment of which shall commence upon the
Company completing a financing which results in gross proceeds of $500,000 to
the Company.  In addition, pursuant to his employment agreement, Mr.
Stainson was issued an aggregate of 4,000,000 shares of the Company’s common
stock.  He is also entitled to an annual discretionary
bonus.  The term of his employment agreement is 3 years.  In
the event Mr. Stainson’s employment agreement is terminated, other than for
cause and other than in a change of control transaction in which he is offered
employment byu the successor company, Mr. Stianson shall be entitled to receive
all compensation due to him for the remaining term of the
agreement.




On August
28, 2008, the Company entered into an employment agreement with Daniel Urrea,
pursuant to which Mr. Urrea agreed to serve as the Company’s Chief Financial
Officer.  Pursuant to his employment agreement, Mr. Urrea is entitled
to a base salary of $60,000, payment of which shall commence upon the Company
completing a financing which results in gross proceeds of $500,000 to the
Company.  In addition, pursuant to his employment agreement, Mr. Urrea
was issued an aggregate of 4,000,000 shares of the Company’s common
stock.  He is also entitled to an annual discretionary
bonus.  The term of his employment agreement is 3 years.  In
the event Mr. Urrea’s employment agreement is terminated, other than for cause
and other than in a change of control transaction in which he is offered
employment byu the successor company, Mr. Urrea shall be entitled to receive all
compensation due to him for the remaining term of the agreement.





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.





24









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. .





Nominating
Committee





We do not
have a nominating committee. The board of directors acts as the nominating
committee and members of the board participate in the discussions. We believe
that, with a board currently composed of one individual, a separate nominating
committee is not necessary. If the size of the board expands, the board will
reconsider the need or desirability of a nominating committee.





Compensation
Committee





We do not
have a compensation committee. We believe that, with a board currently composed
of one individual, a separate compensation is not necessary. If the size of the
board expands, the board will reconsider the need or desirability of a
compensation committee.





For the
fiscal year ending December 31, 2008, the board of directors:





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, 2008 to be included in this Annual Report on Form
10-K and filed with the Securities and Exchange Commission.





Compliance
with Section 16(a) of the Exchange Act





Section 16(a)
of the Securities Exchange Act of 1934, as amended, requires our directors and
executive officers and persons who own more than 10% of the issued and
outstanding shares of Priviam common stock to file reports of initial ownership
of common stock and other equity securities and subsequent changes in that
ownership with the SEC. Officers, directors and greater than ten percent
stockholders are required by SEC regulation to furnish us with copies of all
Section 16(a) forms they file. To our knowledge, based solely on a review
of the copies of such reports furnished to us and written representations that
no reports were required, during the fiscal year ended December 31, 2008 all
Section 16(a) filing requirements applicable to our officers, directors and
greater than 10% beneficial owners were complied with.




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.






25








Item 11. 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 2008, 2007 and
2006.





SUMMARY
      COMPENSATION TABLENameandprincipal
                                        position
                                      
                                      Year
                                      
                                      
                                      Salary
      
      ($)
                                      
                                      
                                      Bonus
                                        ($)
                                      
                                      
                                      Stock
                                        Awards
                                        ($)
                                      
                                      
                                      Option
                                        Awards
                                        ($)
                                      
                                      
                                      Non-Equity
                                        Incentive
      Plan
                                        Compensation
                                        ($)
                                      
                                      
                                      Nonqualified
                                        Deferred
                                        Compensation
                                        Earnings
      ($)
                                      
                                      
                                      All
      Other
                                        Compensation
                                        ($)
                                      
                                      
                                      Total
                                        ($)Louis
      Jack Musetti
                                      
                                      2008
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      600
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      600-Daniel
      Urrea
                                      
                                      2008
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      400
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      400Tommy
      Stianson
                                      
                                      2008
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      400
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      400Alan
      Shinderman (1)
                                      
                                      2007
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0Kelly
      Owen (2)
                                      
                                      2006
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0Francisco
      Schipperheijin (3)
                                      
                                      2006
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      02005
                                      
                                      
                                      (3,160)
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      0
                                      
                                      
                                      
                                      (3,160)








(1)
            Mr.
      Shinderman resigned as our Chief Executive Officer and Chief Financial
      Officer on June 6, 2008. The information provided in the summary
      compensation table includes all compensation paid to Mr. Shinderman for
      the full fiscal year ended December 31,
2007.





(2)
            Mr.
      Owen resigned as our Chief Executive Officer and Chief Financial Officer
      on November 27, 2007. The information provided in the summary compensation
      table includes all compensation paid to Mr. Owen for the full fiscal year
      ended December 31, 2006.




(3)
            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 year 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, 2008 or 2007.





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 Priviam 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.”




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
“Priviam 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.”







26






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.





Compensation
of Directors





During
the year ended December 31, 2008, members of the Company's board of directors
were granted shares of the Company's common stock as compensation for serving in
the board. The shares granted to directors were as fallows:




Daniel
      Urrea
              4,000,000
      sharesTommy
      Stianson
              4,000,000
      sharesRichard
      Urrea
              4,000,000
      sharesVal
      Horvatich
              2,000,000
      shares





Item 12. Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters





The
following table identifies, as of April 15, 2009, the number and percentage of
outstanding shares of Common Stock owned by (i) each person known to the Company
who owns more than five percent of the outstanding Common Stock, (ii) each named
executive officer and director, and (iii) and all executive officers and
directors of the Company as a group:





Name and Address of Beneficial Owner
      (1)
                          
                          Common
      Stock Beneficially Owned
                          
                          
                          Percentage
      of Common StockLouis
      Jack Musetti (2)
                          
                          
                          6,000,000
                          
                          
                          
                          13.6
                          %Tommy
      Stianson
                          
                          
                          4,000,000
                          
                          
                          
                          9.1
                          %Daniel
      Urrea
                          
                          
                          4,000,000
                          
                          
                          
                          9.1
                          %Richard
      Urrea
                          
                          
                          4,000,000
                          
                          
                          
                          9.1
                          %Val
      Horvatich
                          
                          
                          2,000,000
                          
                          
                          
                          4.5
                          %All
      executive officers and directors as a group (consisting of 5
      individuals)
                          
                          
                          20,000,000
                          
                          
                          
                          45.3
                          %(1)
      Beneficial Ownership is determined in accordance with the rules of the
      Securities and Exchange Commission and generally includes voting or
      investment power with respect to securities. Shares of Common Stock
      subject to options, warrants, or convertible debt currently exercisable or
      convertible, or exercisable or convertible within 60 days of April 15,
      2009 are deemed outstanding for computing the percentage of the person
      holding such option or warrant but are not deemed outstanding for
      computing the percentage of any other person. Percentages are based on a
      total of 44,193,528 shares of Common Stock outstanding on April 15, 2009,
      and the shares issuable upon the exercise of options, warrants
      exercisable, and debt convertible on or within 60 days of April 15,
      2009. Except as otherwise indicated, the address of each person named
      in this table is c/o Priviam, Inc., 19200 Von Karman Ave., Ste. 500,
      Irvine, CA 92612.(2)
      Louis Jack Musetti holds voting and
      dispositive power over the shares held by Musetti & Associates,
      LLC.




Securities Authorized for Issuance
Under Equity Compensation Plans .





None.








27







Item
13. Certain Relationships and Related Transactions, and Director
Independence





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 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 PriviCom 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, our
former Chief Executive Officer and former Chief Financial Officer.





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 Priviam 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.





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.





Director
Independence





Louis
Jack Musetti is not considered to be independent under the listing standards of
the Rules of NASDAQ, as set forth in the NASDAQ Manual.




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, 2008 and December 31, 2007
were approximately $13,500 and $10,500 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, 2008 and 2007.





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, 2007 and 2006 were $0 and $0 respectively.








28





Item
15. Exhibits, Financial Statement Schedules.





ExhibitNumber
                                                              
                                                              Description3.1
                                                              
                                                              Articles
      of Incorporation, as amended on March 12, 2007. (1)3.2
                                                              
                                                              By-laws,
      as amended. (2)3.3
                                                              
                                                              Restated
      Certificate of Incorporation of Priviam, Inc. (f/k/a EncryptaKey, Inc.),
      dated August 1, 2008 (5)10.1
                                                              
                                                              Asset
      Purchase Agreement with Owen Consulting, LLC, dated September 28, 2006.
      (2)10.2
                                                              
                                                              Asset
      Purchase Agreement with Owen Consulting, Inc. dated February 5, 2007.
      (3)10.3
                                                              
                                                              Technology
      Asset Purchase Agreement by and Between the Company and Nexicon, Inc.
      (3)10.4
                                                              
                                                              Employment
      Agreement of Tommy Stianson (4)10.5
                                                              
                                                              Employment
      Agreement of Daniel Urrea (4)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 2002.31.2
                                                              
                                                              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 2002.32.1
                                                              
                                                              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 2002.32.2
                                                              
                                                              Certification
      of 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 Annual report on Form 10-KSB filed on April 17,
      2007.(2)
            Incorporated
      by reference to Current report on Form 8-K filed on October 4,
      2006.(3)
            Incorporated
      by reference to Current report on Form 8-K filed on February 9,
      2007.(4)
            Incorporated
      by reference to Quarterly Report on Form 10-Q filed November 19,
      2008.(5)
            incorporated
      by reference to Current Report on Form 8-K filed on August 7,
      2008










29






SIGNATURES
 
 Pursuant
to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, as
amended, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
   PRIVIAM,
      INC.May
      12, 2009
                  By:
                  /s/
      Louis Jack MusettiLouis
      Jack MusettiPresident,
      Chief Executive Officer and Director
 
 Pursuant
to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
  May
      12, 2009
                      By:
                      /s/ Louis
      Jack MusettiLouis
      Jack MusettiPresident,
      Chief Executive Officer  and DirectorMay
      12, 2009
                      By:
                      /s/
      Daniel UrreaDaniel
      UrreaChief
      Financial Officer and DirectorMay
      12, 2009
                      By:Tommy
      StiansonChief
      Technology Officer and DirectorMay
      12, 2009
                      By:Val
      HoratichDirectorMay
      12, 2009
                      By:
                      /s/
      Richard UrreaRichard
      UrreaDirector