**UNITED        STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM        10-K**

 

*(Mark        One)*

þ         Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act        of 1934 for the fiscal year ended**December 31,        2007**.

o       Transition report pursuant to        Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period        from      to. 

 

Commission file number:**000-49838**

 

**TRUSTCASH HOLDINGS, INC.**

(Exact        name of registrant as specified in its charter)

 

|  

**Delaware**

(State or other jurisdiction of

incorporation or organization) | **94-3381088** 

(I.R.S. Employer

Identification No.) |
|---------------------------------------------------------------------------------------|-------------------------------------------------------------|

 

**400        Park Avenue, Suite 1420, New York, New York 10022** 

(Address        of principal executive offices) (Zip Code)

 

**(800) 975-5196**

(Issuer’s telephone number, including area code)

 

Securities registered under Section 12(b) of the Exchange Act:        none.

Securities registered under Section 12(g) of the Exchange Act: common stock        (title of class), $0.001 par value.

Indicate        by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of        the Securities Act of 1933: Yeso     Noþ

Indicate        by check mark if the registrant is not required to file reports pursuant to Section 13 or        Section 15(d) of the Exchange Act: Yeso     Noþ

Indicate        by check mark whether the registrant: (1) filed all reports required to be filed by Section        13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that        the registrant was required to file such reports), and (2) has been subject to such filing        requirements for the past 90 days: Yesþ     Noo

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

Indicate        by check mark whether the registrant is a large accelerated filer, an accelerated filer, a        non-accelerated filer, or a smaller reporting company as defined by Rule 12b-2 of the        Exchange Act: smaller reporting companyþ.

Indicate        by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the        Exchange Act): Yeso     Noþ

The        aggregate market value of the registrant’s common stock, $0.001 par value, held by        non-affiliates 53,796,799 shares) was approximately $2,071,176 based on the average closing        bid and asked prices ($0.0385) for the common stock on April 10, 2008.

At April        10, 2008, the number of shares outstanding of the registrant’s common stock, $0.001        par value (the only class of voting stock), was 77,699,138

 

1

 

----

 

 

**TABLE OF CONTENTS**

**           **Page**    
**PART I.**
     Item       1.                           Business  3  Item       1A.                         Risk Factors  12  Item       1B.                         Unresolved Staff Comments  18  Item       2.                           Properties  18  Item       3.                           Legal Proceedings  19  Item       4.                           Submission of Matters to a Vote of                    Security Holders  19 
**PART II.**
     Item       5.                           Market for Registrant's Common                    Equity, Related Stockholder Matters, and Issuer Purchases of Equity                    Securities  19  Item       6.                           Selected Financial Data  22  
Item       7.                               Management's Discussion and                        Analysis of Financial Condition and Results of Operations
  22  Item       7A.     Quantitative                    and Qualitative Disclosures about Market Risk  29  Item       8.                           Financial Statements and Supplementary Data  29  Item       9.                           Changes in and Disagreements with Accountants on Accounting and Financial                    Disclosure  30  Item       9A.     Controls                    and Procedures (Item 9A (T))  30  Item       9B.     Other                    Information  31 
**PART III.**
     Item     10.                         Directors, Executive Officers and Corporate                    Governance  31  Item     11.                         Executive Compensation  34  Item     12.                         Security Ownership of Certain Beneficial Owners                    and Management and Related Stockholder Matters  35  Item     13.                         Certain Relationships and Related Transactions,                    and Director Independence  36  Item     14.                         Principal Accountant Fees and Services  36  Item     15.                         Exhibits and Financial Statement                    Schedules  38                                            Signatures  39    **
**            2        **

 

----

 

**PART        I**

| **ITEM 1.** | **BUSINESS** |
|-------------|--------------|

 

***As        used herein the terms “Company,” “we,” “our,” and        “us” refer to Trustcash Holdings, Inc., and the term “Trustcash”        refers to Trustcash, LLC, unless context indicates otherwise.***

 

**Corporate History**

 

The Company        was incorporated under the name “Reservenet, Inc.” in the State of Delaware on        November 16, 2000, for the purpose of developing a web-based reservation system. Efforts to        implement our business plan were hampered by insufficient working capital which caused us        to abandon software development. On June 25, 2004, the Company entered into an agreement        with Gateway Entertainment Group, Inc., to develop a gaming lifestyle media business        offering gambling, entertainment, news and information. We changed our name to        “Casino Entertainment Television, Incorporated” on July 26, 2004. Despite our        efforts we decided to discontinue gaming operations in early 2005. We changed our name to        “Ouvo, Inc.” on March 7, 2005. 

 

On August        10, 2006, the Company entered into a Property Purchase Agreement with Madman Mining Co.        Ltd. (“Madman)” and Lloyd C. Brewer, pursuant to which the Company agreed to        purchase a 100% interest in the St. John Mineral Claim of approximately 314.6 acres located        in south-central British Columbia, Canada in exchange for $8,000. Madman conducted Phase 1A        of an exploration program which was completed prior to December 31, 2006. An evaluation of        the results of exploration efforts was relayed to us on April 8, 2007 in which Madman        detailed that sampling and testing results were unfavorable and that no further work was        recommended for the property.  Based on this recommendation, the Company decided        against any further exploration work on the claim and began to seek other potential        business opportunities On June 22, 2007 the claim was transferred to Madman for the        settlement of $3,810 of debt related to work completed during the Phase 1A        exploration.

 

On May 16,        2007 we changed our name to “Trustcash Holdings, Inc. and completed a 3 for 1 forward        split of our issued and outstanding common shares. On June 30, 2007 the Company acquired        Trustcash pursuant to the terms of a Purchase Agreement, between AP Systems, Inc. (our        wholly owned subsidiary), Trustcash, and the owners of Trustcash. Under the terms of the        Purchase Agreement, we acquired all of the issued and outstanding membership interests of        Trustcash, in exchange for 49,631,448 shares of our common stock and the satisfaction of        certain financing commitments. We also paid to LTGTTC, LLC, one of the former owners of        Trustcash, as partial consideration for its membership interest and to satisfy an        outstanding secured promissory note in the principal amount of $96,155, the sum of        $200,000, and a Secured Promissory Note in the principal amount of $700,000 that bears 5%        interest due on June 30, 2009. The Secured Promissory Note is secured by a first priority        security interest over all the assets of the Company payable in full at maturity subject to        mandatory prepayments equivalent to 25% of any future Company financing.

 

On December        20, 2007 the Company entered into an Agreement and Plan of Merger (the “Merger        Agreement”), as amended on February 5, 2008, with TCHH Acquisition Corp (a        wholly-owned subsidiary of the Company, “TCHH”), and Paivis Corp.,        (“Paivis”) whereby the Company intends to acquire 100% of Paivis’        outstanding common stock and preferred in exchange for a cash payment and common        stock.

 

The        Company’s principal place of business is located at 400 Park Avenue, Suite 1420, New        York, New York 10022, and our telephone number is (800) 975-5196.

 

The        Company’s Registered Agent is the Corporation Trust Company located at the        Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware, 19801. Their phone        number is (302)658-7581.

 

 

 

3

 

----

 

 

**The        Company**

 

***Business of the Company***

 

Through        Trustcash, the Company is a pioneer of anonymous payment systems for the internet.        Trustcash developed its business based on the sale of a stored value card (both virtual and        physical) that can be used by consumers to make secure and anonymous purchases on the        internet without disclosing their credit card or personal information. We provide our        customers with the*TrustcashTM*virtual payment card, which is sold in denominations ranging from $10 to        $200 online, through any of over 500 websites. Trustcash’s non-reloadable,        virtual*TrustcashTM*card is the        only “stored value card” that can be purchased where no personal data is stored        or available, providing a unique level of both security and privacy to the        purchaser.

 

The        Trustcash business began in 2003 upon the formation of Hooksafe, LLC, a Delaware limited        liability company. It began developing a technology platform focused on selling stored        value cards for use on the Internet.  In 2004 and 2005, it established a distribution        system for its cards primarily through a limited number of retail outlets, and began        initiating activities to contract websites for the use of its cards.  In 2006, it        changed its name to “Trustcash LLC”, and it began to integrate its technology        with several websites, primarily in the adult entertainment and dating services        industries.  It also upgraded its technology platform to allow the purchase of        “virtual” cards through either its own website, or through any of the websites        of its content providers.  Although Trustcash secured multi-year contracts with nearly        50 web content providers by the end of 2006, it has completed integration of only a few        sites to date, and its business revenues were nominal through 2007.  Trustcash        utilized initial capital of approximately $1.3 million to develop its technology and        recruit initial web and retail partners; we are now seeking additional sources of        investment capital to generate growth through marketing, technology, and business        development initiatives.

 

***Our******Product***

 

When        consumers purchase a virtual*TrustcashTM*card, they receive a unique 12 digit anonymous access code and can use it as        a payment option (just like a credit card) with any participating content provider        website.  The only payment information provided to the website content provider is the        unique card access code, which lasts only for the life of the card value. Purchases are        deducted from the remaining card balance, which can be used for as long as card value        remains.  The Company reimburses the website provider for each*TrustcashTM*purchase made, less a        processing fee equal to a percentage of the transaction value. As a result of the        anonymity*TrustcashTM*offers, to        date it has been accepted for payment primarily by Internet content providers whose        websites sell dating services or adult entertainment.  

 

***Our        Technology***

 

The        Company’s technology infrastructure uses a custom-built proprietary payment        transaction component that leverages Marketing Science Corp.’s patented        TrustCodesTM platform. TrustCodesTM are secure alphanumeric codes        that are guaranteed to be universally unique for the life of the code. These encrypted        TrustCodesTM are generated by the TrustCodesTM bank-grade standard        infrastructure and are instantly validated via the platform. We are the exclusive licensee        of the TrustCodesTM platform for anonymous payments in our target        markets.

 

The        Company’s technology infrastructure employs leading open source technologies, the        latest security protocols, and agile development processes. This safe and encrypted        infrastructure is based on clustered MySQL and Apache servers. The application is written        using the Ruby on Rails web application development framework. We employ government-grade        security measures and defensive coding techniques to protect against hackers using denial        of service, script injection, and other attack repellant techniques.

 

4

 

----

 

 

 

 

We have        also integrated our technology into the two leading affiliate program software platforms:        NATS and MPA3. The integration offers us direct access to the thousands of sites that use        these platforms and allows the*TrustcashTM*system to seamlessly work with these affiliate programs.

 

***Distribution***

 

The Company        distributes*TrustcashTM*cards via        an online channel. Our online distribution channel has both a direct-to-consumer component        through our website and an electronic retailer (“e-tailer”) component where        consumers can purchase our product through the websites of the online merchants with whom        the consumer intends to transact. We continue to work to sign up additional e-tailers that        intend to offer the*TrustcashTM*payment option on their websites.

 

***Paivis Corp.***

 

Agreement and Plan of Merger

 

Under the        Merger Agreement, the Company intends to acquire 100% of Paivis’ outstanding common        and preferred stock in exchange for a cash payment and common stock. Each issued and        outstanding share of Paivis will be exchanged for $0.10 and one share of our common        stock.

 

The        consummation of the Merger is subject to certain conditions, including:

         

|   | (i) | receipt of any necessary governmental approvals, |
|--------|-----|--------------------------------------------------|

|   | (ii) | approval of the Merger Agreement and the merger by the                        stockholders of the Company and Paivis, |
|--------|------|-----------------------------------------------------------------------------------------------------------------------|

|   | (iii) | absence of any law or order prohibiting the consummation of                        the merger, |
|--------|-------|------------------------------------------------------------------------------------------------|

|   | (iv) | certain exceptions, the accuracy of the representations and                        warranties made by Paivis, |
|--------|------|---------------------------------------------------------------------------------------------------------------|

|   | (v) | our execution of an agreement for, and subsequent                        advancement of an equity or debt financing to us of up to $10,000,000 but                        no less than $7,000,000 on terms agreeable to both us and Paivis,                        and |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (vi) | the delivery of audited financial statements of Paivis and                        its acquisition targets, AAAA Media Services, Inc, and Detroit Phone Cards,                        Inc. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

We        attempted to consummate the transaction by March 31, 2008 but were unable. We expect to        close as soon as is reasonably practicable. Being that the transactions were not        consummated by March 31, 2008, either party may terminate the Merger Agreement without any        further liability. There can be no assurances that the merger will be effected under the        terms of the Merger Agreement or at all.

 

On January        30, 2008, the Company entered into an agreement with Paivis and Mistral Holdings, Inc.        (“Mistral”) whereby Mistral agreed to finance, on a best efforts basis, a        minimum of $2,000,000 but no more than $7,000,000 towards the financing required by the        Company under the Merger Agreement. Mistral has further agreed to provide at least $150,000        in interim financing to us and Paivis to cover the costs of the merger and working        capital.

 

Paivis’ Business

 

Paivis is a        wholesale telecommunications carrier that sells prepaid “point-of-sale        activated” and live cards. Products are sold throughout many of the country’s        major retail outlets, including Duane Reade, 7-Eleven, and Chevron. Paivis        also provides VoIP termination to over 160 global destinations, with a strong focus on        Central & South America. Further, through a strategic partnership with O Mobile, Paivis        offers nationwide prepaid mobile service packages. Paivis intends to substantially expand        these operations through the acquisition of AAAA Media Services, Inc, and Detroit Phone        Cards, Inc.

 

 

5

 

----

 

 

 

*AAAA        Media Services, Inc.*

AAAA Media        Service (“A4”) is a leader in the wholesale and retail distribution of prepaid        wireless services. Headquartered in Atlanta Georgia, A4 has developed a nationwide        distribution network for three main lines: T-Mobile, Boost and AT&T that are sold to        telecommunications specialty and retail stores. A4 serves as a critical intermediary        between wireless carriers and independent retailers fast becoming one of the largest        wireless calling card distributors in the US.

*Detroit        Phone Card, Inc.*

Headquartered in Dearborn, Michigan, Detroit Phone Card, Inc.’s        (“DPC”) prepaid wireless and calling card products reach consumers through more        than 2,000 locations nationwide. DPC serves more than 30,000 wireless customers and        generates over 50 million network minutes per month employing a team of customer service        representatives Utilizing offices, infrastructure and master dealers throughout the United        States, DPC also facilitates the distribution of wireless products and services for        specific carriers and manufacturers such as Sprint Nextel, Verizon Wireless, Boost Mobile        and T-Mobile.

 

The Company        and Paivis have started to prepare a plan for integration, cost savings and other        operational aspects that will benefit the combined organization post-merger closing. One        project which will benefit from the merger is a pre-paid debit card Paivis has under        development. The assistance of the Company’s management will make this product        development more effective and will add value to the discussions underway with various        banking and distribution partners.

 

**Marketability**

 

***Our        Primary Markets***

 

The primary        markets for the*TrustcashTM*alternative payment system are online service providers and retailers, such        as online adult content providers, online dating services, and online retailers, where        smaller anonymous transactions are desired, or where the customer wishes to keep personal        information private. At present, online adult content providers and online dating services        have provided significant potential visibility for the*TrustcashTM*payment option,        providing brand awareness for future diversification into mainstream Internet        retailing. 

 

***Marketing***

 

We market        the*TrustcashTM*payment        option at the point of sale by requiring online to display our payment badge logo at        various locations on the merchants’ websites. This allows us to take advantage of the        advertising done by the merchants to attract customers to their own websites. A typical        mid-sized merchant advertising our product receives as many as 30,000 visitors per day,        each of which is exposed our payment badge logo. To date, we have marketed our product by        participating in direct business-to-business marketing to content providers, industry trade        shows and panels, point of purchase marketing at merchants, and by advertising in industry        trade publications. Additionally, we have advertised in mainstream media outlets such as        blogs, e-magazines, and print publications.

 

6

 

----

 

 

 

***Industry Overview***

 

Payment        processing service providers offer high-volume electronic transaction payment processing        and support services directly to merchants and their customers and others. Generally, the        payment processing market continues to transition from traditional financial institution        providers to independent entities that provide specific solutions to their customers.        Merchants are seeking more efficient distribution channels, as well as increased        technological capabilities required for the rapid and efficient creation, processing,        handling, storage, and retrieval of information, and we believe that we can provide such        products and services.

 

Online        alternative payment systems like the*TrustcashTM* payment option are driven        by three primary market forces:

|   | **•** | Internet security and privacy concerns; |
|--------|------------|-----------------------------------------|

|   | **•** | the growth of stored value cards as a new financial                        alternative; and |
|--------|------------|---------------------------------------------------------------------------------------------|

|   | **•** | general growth of Internet commerce. |
|--------|------------|--------------------------------------|

 

Consequently, they have largely replaced paper-based payment instruments and        related devices. Other online alternative payment options include site-specific prepaid        value cards, services tied directly to the “card” holder’s checking        account (e.g. eWallet), hybrid stored value/prepaid phone cards, and online merchant        transaction processing services.

 

*Security        and Privacy*

 

According        to the February 8, 2007 “Security and ID Theft - US” report from Mintel        International Group Ltd, most US consumers still think the Internet is a dangerous place to        shop.  Mintel’s survey of consumers across the country found that 68% of them        were either “very concerned” or “somewhat concerned” that their        credit or debit card information would be stolen if they shopped online. More than 13% of        Internet users report that they or a member of their family has been the victim of identity        theft. Over half of those consumers who do not shop online refrain from doing so because of        concerns over identity theft. Fully 80% of consumers report that secure and convenient        payment options are more important to them than price in making on online purchase        decision.  As a consequence of these concerns, 53% of surveyed consumers have stopped        providing personal information over the Internet. Over 50% of surveyed consumers have        either curtailed their online purchases or stopped buying products and services online        entirely. According to the “8th Annual Online Fraud Report,” released by        CyberSource, losses from online fraud in the US and Canada in 2006 totaled $3 billion, a 7%        increase over 2005.

 

*Growth        of Stored Value Cards*

 

Concurrently, gift or stored value cards are one of the most dynamic and        fastest growing products in the financial industry. More than 2000 programs are available,        and more than 20 million users are expected to more than double to 49 million users by        2008, creating over $72 billion in transactions. Experts put this industry in the        introductory or early growth stage of the life cycle, suggesting that there is substantial        growth potential. Additional driving forces include a growing market of the unbanked or        unbankable - those individuals who either cannot or do not want to obtain a credit card or        bank account. Early adopters of the Internet cash card concept have been concentrated in        the dating and adult entertainment industries where many Internet        innovations have been initiated. These industries are estimated to represent over $5        billion in annual revenue. In addition, 70 million different individuals per week view at        least one adult website on a global basis; the number of paying subscribers is on the order        of several million in the United States, and may be as high as 10 million. This industry        provides significant potential visibility for the*TrustcashTM*payment option,        providing brand awareness for future diversification into mainstream Internet        retailing.

 

 

7

 

----

 

*Internet        Commerce*

 

Internet        retail growth continues to surge.  US retail e-commerce sales (excluding travel) for        the fourth quarter of 2006 were the highest they have been in four years, according to the        US Census Bureau.

 

Each of the        methods by which consumers can pay for goods and services (e.g. cash, debit cards, stored        value cards, prepaid cards, Automated Clearing House (ACH) payments, checks, and wire        transfers) serves multiple constituencies and represents a different value to a merchant.        Examples of the electronic payment methods now available to consumers include:

|   | **•** | Prepaid cards and accounts, which a customer funds and then                        uses to pay for goods and services in much the same manner as a debit card.                        The volume of transactions made using such cards is expected to surpass                        $100 billion annually by 2007 according to a report published by the Tower                        Group in January 2006 |
|--------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | ACH, which provides inter-bank clearing of electronic                        payments for ACH participating depository financial institutions. According                        to NACHA-The Electronic Payments Association, 14 billion ACH transactions                        were completed in 2005, representing an increase of 16.2% over 2004. The                        dollar value of those transactions was approximately $3.2                        trillion. |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | Stored value cash cards and accounts, which can be used to                        provide branded, highly personalized or anonymous retail and e-tail                        marketing programs. Stored-value cash cards and accounts are funded by the                        consumer and may be reloaded with additional funds multiple times.                        Stored-value cash cards are now being used instead of paper gift                        certificates at an increasing rate. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | Payroll cards, which are increasingly being used by                        employers to pay their employees. Value is electronically                        “loaded” by the employer onto the employee’s card and the                        card can then be used by the employee to purchase goods and services,                        typically through existing debit card networks. |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | Online transactions in which the purchaser’s identity                        is protected. |
|--------|------------|--------------------------------------------------------------------------------------------------|

|   | **•** | There are also untapped markets that provide opportunities                        for the introduction of new payment technologies. Large numbers of                        merchants are seeking access to the growing number of persons who are                        “un-banked” (that is, without banking relationships), including                        undocumented immigrants and individuals without access to bank accounts.                        These consumers currently have limited access to credit cards or payment                        methods other than cash Vendors of goods and services marketed to these                        demographics are actively seeking suppliers of cashless payment mechanisms                        for distribution to and use by those markets. Products such as the*TrustcashTM*stored value                        cards are ideally suited to those markets. |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

Today, the        networks for processing electronic payments are disparate. Each type of payment has        different processing requirements. However, the increasing size of the electronic payments        market is creating a growing demand for integrated processing solutions. In addition to        being able to process a variety of payment types, a successful integrated processing        network must be secure, quick and capable of providing vendors with business-enhancing        information, such as information useful in loyalty and incentive programs. The        Company’s plan is to provide integrated solutions that will meet all these needs, and        it currently satisfies some of them.

 

8

 

----

 

***Seasonality of Sales***

 

Given the        nature of the Company’s present market focus, management does not anticipate seasonal        fluctuations in the present level of transaction volumes and account sign-ups. However, as        our market begins to include more “traditional” retailers, any increase in our        sales volume due to such a development may be subject to seasonal fluctuations that are        typical of “traditional” retail markets.

 

**Research and Development**

 

Development        costs were $58,306 and $103,433 in 2007 and 2006, respectively. Development costs are        charged to expense as incurred and includes costs associated with maintaining and expanding        the functionality of the “back-end” software and internet.

 

**Competition**

 

The markets        for financial products and services including stored value cards and related services are        intensely competitive. The anonymous payment processing segment of the industry in which        the Company operates is relatively new and has few competitors today. We believe that our        competitive advantages over existing and potential competitors are:

 

|   | **•** | the security and privacy of a fixed value,                        non-reloadable*TrustcashTM*card, |
|--------|------------|----------------------------------------------------------------------------------------------------|

|   | **•** | the simplicity and easy integration of the technology                        platform, |
|--------|------------|----------------------------------------------------------------------------------------|

|   | **•** | the established relationships and multi-year contracts with                        web content providers, and |
|--------|------------|---------------------------------------------------------------------------------------------------------------|

|   | **•** | the breadth of the*TrustcashTM*card                        distribution system. |
|--------|------------|---------------------------------------------------------------------------------|

 

Our primary        competitor is Netcash, LLC. However, since barriers to entry are few, it is expected that        numerous other competitors will arise as the market grows.

 

Additionally, many established companies have the ability to compete        directly with Company. Such potential competitors include:

 

|   | **•** | Paypal; |
|--------|------------|---------|

|   | **•** | eBay Payments, aka Billpoint, a subsidiary of eBay,                        Inc.; |
|--------|------------|----------------------------------------------------------------------------------|

|   | **•** | Yahoo! PayDirect offered by Yahoo!; |
|--------|------------|-------------------------------------|

|   | **•** | C2it, offered by Citigroup; |
|--------|------------|-----------------------------|

|   | **•** | CheckFree email payment services, offered through the U.S.                        Postal Service; |
|--------|------------|---------------------------------------------------------------------------------------------------|

|   | **•** | MoneyZap and BidPay, offered by Western Union; |
|--------|------------|------------------------------------------------|

|   | **•** | Credit card merchant processors such as First Data, Concord                        EFS, Paymentech, VeriSign, and Authorize.net. |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------|

 

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

 

The Company        has filed a domestic trademark application for the*TrustcashTM*name and logo. We have a        U.S. patent pending for our proprietary technology (U.S. Patent Application 60/796,780        filed April 25, 2006). We currently rely on a combination of patent, trade secret,        copyright and trademark law, as well as non-disclosure agreements and invention assignment        agreements, to protect our technology and other proprietary information. We intend to        continue to rely on such patent, trademark, service mark, copyright and trade secret laws,        as applicable, and on restrictions on disclosure and transfer of title and other methods to        protect our interests.

 

9

 

----

 

The Company        is not a party to any licenses, franchises, concessions, royalty agreements and labor        contracts.

 

**Governmental Regulation**

 

Various        aspects of the Company’s business or planned businesses are subject to U.S. federal,        state and local regulation. Our failure to comply with applicable regulations may result in        the suspension or revocation of licenses or registrations, the limitation, suspension or        termination of service, and/or the imposition of civil and criminal penalties, including        fines. Certain of our services or planned services also are subject, indirectly through our        relationship with a payment processing provider, to rules promulgated by various payment        networks such as Visa and MasterCard and others may become subject to such rules in the        future, as more fully described below.

 

***Regulation of Internet Transactions***

 

Because the        Company is engaged in financial transactions involving the transfer of money, including        transfers over the Internet, new laws and regulations that will affect us may be adopted.        Such laws and regulations may cover issues such as: user privacy, pricing, content,        copyrights, distribution, and characteristics and quality of products and services that        could be applicable to our business. In addition, the growth of the Internet and electronic        commerce, coupled with publicity regarding Internet fraud, may lead to the enactment of        more stringent consumer protection laws. These laws may impose additional burdens on our        business. Congress is considering laws regarding Internet taxation. In addition, various        states are considering legislation directed to electronic commerce which if enacted could        affect our business. The applicability of many of these laws to our business is uncertain        and could expose us to substantial liability. Any new legislation or regulation, or the        application of existing laws and regulations to our business, could materially and        adversely affect us. If we were alleged to violate federal, state or foreign, civil or        criminal law, even if we could successfully defend such claims, we could be materially and        adversely affected.

 

***Money        Transmitter Regulation***

 

The laws of        a number of states require that persons engaged in the business of transmitting money        register or become licensed. We are not currently engaged in such business in any        jurisdiction that requires licensure, and therefore, we have not filed any registration or        licensing applications. However, the future growth of our business may cause us to become        subject to such licensure requirements. We intend to apply for and to become licensed as is        necessary to comply with the laws and regulations of the states in which we do business. We        are not aware of any factors relating to our business, our officers and directors or our        principal shareholders that would prevent us from becoming so licensed where necessary. We        do not expect any licensing requirements to have any material effect on our business or        operations.

 

***Regulation of Inactivity Fees***

 

One of the        possible components of the Company’s revenue is the possibility of charging a fee to        consumers if a*TrustcashTM*card or account is inactive for more than 90 days. Some states have enacted,        or are considering enacting, laws that will preclude us from charging, collecting or        retaining such fees. We are not currently charging an inactivity fee, but if we were to do        so in the future it may become subject to regulation in states that have such laws or        regulations, and there could be an adverse material effect on our income.

 

 

 

10

 

----

 

***Patriot Act Requirements***

 

The Patriot        Act was enacted into law in 2001. Among other things, the Patriot Act requires certain        persons (including businesses which are involved in cash transactions involving more than        $10,000) to file suspicious activity reports, to take certain special measures and satisfy        certain due diligence requirements to combat foreign money laundering. The Patriot Act also        establishes minimum new customer identification standards and recordkeeping requirements        and contains certain recommended methods for verification of the identity of foreign        customers. Certain information is required to be shared with law enforcement agencies.        Covered businesses are required to have certain training programs and internal policies,        procedures and controls in place. It is possible that certain of our activities will        require compliance with the Patriot Act, and we intend to so comply.

 

***Privacy and Information Security Regulations***

 

The Company        provides services that may be subject to various state and Federal privacy laws and        regulations. Relevant Federal privacy laws include the Gramm-Leach-Bliley Act, which        applies directly to a broad range of financial institutions and indirectly to companies        that provide services to financial institutions. Federal privacy laws restrict the        collection, processing, storage, use and disclosure of personal information, require notice        to individuals of privacy practices and provide individuals with certain rights to prevent        use and disclosure of protected information. These laws also impose requirements for        safeguarding personal information through the issuance of data security standards or        guidelines. Certain state laws impose similar privacy obligations, as well as, in certain        circumstances, obligations to provide notification to affected individuals, state officers        and consumer reporting agencies, as well as businesses and governmental agencies that own        data, of security breaches of computer databases that contain personal        information.

 

***Money        Laundering Regulations***

 

As a        money-services provider, the Company is subject to state and federal laws designed to        prevent the transmission of the proceeds of criminal activities or funds intended for use        in a criminal transaction. We are also subject to regulations of the U.S. Treasury        Department Financial Crimes Enforcement Network (“FinCEN”), requiring reporting        and recordkeeping of various transactions. FinCEN regulations require money services        providers such as us to register with the Treasury Department, to report suspicious        transactions, and to obtain and keep detailed records of senders and recipients in certain        circumstances. We believe that we have taken the appropriate action and that we have the        appropriate processes in place to comply with these regulations.

 

***Regulation of Environmental Matters***

 

Based on        our current operations, environmental protection requirements do not have a significant        financial and operational effect on the capital expenditures, earnings and competitive        position in the current financial year and are not expected to have a significant effect in        the reasonably foreseeable future.

 

**Employees**

 

Company        currently has no full-time employees. The interim chief executive officer devotes as much        time to the affairs of the Company as he deems appropriate. Management uses sales,        marketing, and website consultants, as well as attorneys and accountants, as        necessary.

 

11

 

----

 

 

**Reports to Security Holders**

 

The        Company’s annual report contains audited financial statements. We are not required to        deliver an annual report to security holders and will not automatically deliver a copy of        the annual report to our security holders unless a request is made for such delivery. We        file all of our required reports and other information with the Securities and Exchange        Commission (the “Commission”) The public may read and copy any materials that        are filed by the Company with the Commission at the Commission’s Public Reference        Room at 450 Fifth Street, N.W., Washington, D.C. 20549 The public may obtain information on        the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The        statements and forms filed by us with the Commission have also been filed electronically        and are available for viewing or copy on the Commission maintained Internet site that        contains reports, proxy and information statements, and other information regarding issuers        that file electronically with the Commission. The Internet address for this site can be        found at*http://www.sec.gov*.

 

| **ITEM 1A.** | **RISK FACTORS** |
|--------------|------------------|

 

The        Company’s operations and securities are subject to a number of risks. Below we have        identified and discussed the material risks that we are likely to face. Should any of the        following risks occur, they will adversely affect our operations, business, financial        condition and/or operating results as well as the future trading price and/or the value of        our securities.

 

**Risks        Related to the Company’s Business**

 

***The        Company’s Ability to Continue as a Going Concern is in Question***

 

The        Company’s auditors included an explanatory paragraph in their report of financial        statements for the years ended December 31, 2007 and 2006, stating that there are certain        factors which raise substantial doubt about the Company’s ability to continue as a        going concern. These factors include limited revenue generating activities in place and        losses since inception.

 

***Our        Operating Losses may Continue into the Future, Resulting in a Decrease in Share        Value***

 

Since        inception, we have incurred expenses without generating significant revenue, resulting in        continuing losses and an accumulated deficit of $2,681,074 at December 31, 2007. During the        twelve months ended December 31, 2007, we recorded a net loss of $1,128,703. Current        liabilities exceed current assets by approximately $600,000. We will continue to incur        operating losses until we enter into sales agreements with more significant content        providers; we can provide no assurance as to whether this will happen or if it will result        in profits Such continuing losses could result in a decrease in share value.

 

***Inability to Meet Cash Flow Requirements; Immediate Need for        Substantial Additional Capital***

 

To date,        Company’s operations have been primarily financed through debt and the sale of        equity. We do not have adequate cash flow from operations or financing activities to meet        our needs. If unanticipated expenses, problems, or unforeseen business difficulties arise,        we will not be able to continue to operate within our budget, and additional funds would be        necessary to sustain operations. Additional financing is now being sought. Such financings        likely would result in the dilution of current shareholder interests, which may be        detrimental to the business, image or reputation of the Company. We may not be able to        obtain additional funds on acceptable terms, or at all. We do not currently have any        established third-party bank credit arrangements. If we are unable to obtain        additional funds when needed, we could be required to cease all of our operations and        possibly file for bankruptcy.

 

 

12

 

----

 

***Dependence on Third Parties; Acceptance and Viability of        TrustcashTM Product***

 

The Company        is dependent upon entering into agreements with Internet content providers, or websites,        and traditional or Internet money services providers, the success of such third party        providers in attracting customers who seek anonymity in their purchase of the products or        services offered thereby.  Although our providers principally offer dating services        and adult entertainment, whose customers would be expected to seek anonymity in their        patronage of such websites, we have been unable to generate meaningful revenues, and it is        possible that the*TrustcashTM*product offered by the Company is not commercially accepted nor economically        viable. 

 

***Ability to Keep Up with Technological Change***

 

The Company        maintains a website which requires substantial development and maintenance efforts and        entails significant technical and business risks. To remain competitive, we must continue        to enhance and improve the responsiveness, functionality and features of our website, as        well as its presentation and placement on the websites of participating web content        providers.  The Internet and the e-commerce industry are characterized by rapid        technological change, the emergence of new industry standards and practices and changes in        customer requirements and preferences.  Therefore, we may be required to license        emerging technologies or develop new technology that addresses the needs of current and        prospective customers and web content providers, and adapt to technological advances and        emerging industry and regulatory standards and practices in a cost-effective and timely        manner.  The ability to remain technologically competitive will require substantial        expenditures and lead time, and our failure to do so may harm our business and results of        operations.

 

***Potential Liability for Online Content***

 

The Company        may face potential liability for claims based on the nature and content of the websites,        which principally provide adult entertainment and dating services, which        accept*TrustcashTM*as a form        of payment. Our general liability insurance may not cover any such liability or the        cost of defending any such claims.  Therefore, any such claims or imposition of        liability could have a material adverse effect on our reputation, financial condition and        results of operations.  There can be no assurance that contractual provisions        attempting to limit our liability in such areas would be successful or enforceable, or that        other parties would accept such contractual provisions as part of our agreements, any of        which could have a material adverse effect on our business, results of operations and        financial condition.

 

***Capacity Constraints and Vulnerability to System        Disruptions***

 

The        satisfactory performance, reliability and availability of our website and network        infrastructure are critical to establishing and maintaining relationships with our        participating web content providers and their consumers. System interruptions that result        in the unavailability of our website or slower response times for such providers or        consumers could reduce the attractiveness of our service to both consumers and web content        providers. Additionally, any substantial increase in traffic on our or such        providers’ websites could require us to expand and/or adapt our network        infrastructure. Our inability to add additional software and hardware to accommodate        increased traffic on our website or our providers’ websites may cause unanticipated        system disruptions and result in slower response times. There can be no assurance that we        will be able to expand our network infrastructure on a timely basis to meet any increased        demand. Any increase in system interruptions or slower response times        resulting from the foregoing factors could have a material adverse effect on the        Company’s business, financial condition and results of operations.

 

 

13

 

----

 

The        Company’s operations are vulnerable to interruption by fire, power loss,        telecommunications failure and other events beyond the Company’s control. In        addition, because we use an offsite host server that is run by a third party vendor, we and        the web content providers accepting*TrustcashTM*as a form of payment        could incur additional delays in the event there is a failure of the third party host        server compared to the failure of an onsite server.  Any such losses or damages to our        website and network infrastructure could have a material adverse effect on our business,        financial condition and results of operations.

 

***Susceptibility to Security Risks***

 

Programmers        or “hackers” may attempt to penetrate the Company’s network security. If        successful, such actions could have a material adverse effect on our business, financial        condition and results of operations. A party who is able to penetrate our network security        could misappropriate proprietary information or cause interruptions in our website. We        might be required to expend significant capital and resources to protect against the threat        of such security breaches or to alleviate problems caused by such breaches. Concerns over        the security of Internet transactions and the privacy of users may also inhibit the growth        of the Internet generally, particularly as a means of conducting commercial transactions.        Security breaches or the inadvertent transmission of computer viruses could expose us to a        risk of loss or litigation and possible liability. There can be no assurance that        contractual provisions attempting to limit our liability in such areas would be successful        or enforceable, or that other parties would accept such contractual provisions as part of        our agreements, any of which could have a material adverse effect on our business, results        of operations, and financial condition.

 

***Susceptibility to Risks Associated with Domain        Names***

 

The Company        currently holds the web domain name, “TrustCash.com.”  The regulation of        domain names in the United States and in foreign countries is subject to change. Governing        bodies may establish additional top-level domains, appoint additional domain name        registrars or modify the requirements for holding domain names. As a result, there can be        no assurance that we will be able to acquire or maintain relevant domain names in all        countries in which we conduct or wish to conduct business. In addition, although we have        filed a trademark application for “Trustcash”, the relationship between        regulations governing domain names and laws protecting trademarks and similar proprietary        rights is unclear. We, therefore, may be unable to prevent third parties from acquiring        domain names that are similar to, infringe upon, or otherwise decrease the value of our        proprietary rights. Any such inability could have a material adverse effect on the        Company’s business, financial condition, and results of operations.

 

***Dependence upon Few Customers***

 

The Company        has three content providers that individually exceeded 10% of total content provider        commissions. If we were to lose one or more of these website accounts, our business,        financial condition, and results of operations could be materially affected.

 

***Dependence upon Certain Personnel***

 

Our success        will depend in large part upon our ability to attract and retain qualified marketing and        sales personnel, and there can be no assurance that we will be successful in hiring or        retaining such personnel.

Our inability to hire or retain qualified personnel could        have a material adverse effect on the Company’s business, financial condition or        results of operations. 

 

 

14

 

----

 

 

***Risks        of Rapid Growth***

 

Our        strategy contemplates significant growth in our business, which would place demands on our        management and limited resources. To manage any such growth, we would be required to        attract and train additional qualified personnel, and may be required to expand our        facilities.  If we are unable to effectively manage growth, our business, operating        results and financial condition could be adversely affected.

 

***The        Presence of Established Potential Competitors in the Market***

 

The        anonymous payment processing segment of the industry in which the Company operates is        relatively new and has few competitors today, including Netcash, LLC. However, since        barriers to entry are few, it is expected that numerous other competitors will arise as the        market grows. Additionally, many established companies have the ability to compete directly        with the Company (e.g. PayPal; eBay Payments,  Billpoint, a subsidiary of eBay, Inc.).        These potential competitors may have longer operating histories, a significantly greater        financial, technical, marketing, customer service, and other resources, greater name        recognition, and/or a larger, more well-established base of customers. They may respond to        new or changing technologies and changes in customer requirements more quickly and        effectively. They may devote greater resources to research and development, promotion, and        sales, and they may be able to offer lower prices for competitive products. They may offer        services for free to gain market share, and we may be required to lower our prices in order        to remain competitive. Potential competing services related to established banks and        financial institutions may offer greater liquidity, and may attract greater customer        confidence and loyalty. If these potential competitors acquire a significant share of our        target markets, we may not have the resources to compete effectively, and our business may        be adversely affected.

 

***Dependence on Intellectual Property Rights***

 

Our success        depends, in large part, on our ability to protect our current and future brands and        products and to defend our intellectual property rights. We cannot be sure that trademarks        will be issued with respect to any future trademark applications or that our competitors        will not challenge, invalidate or circumvent any existing or future trademarks issued to,        or licensed by us. Some of our competitors, many of whom are more established and have        greater financial and personnel resources, may be able to replicate our processes, brands,        flavors, or unique market segment products in a manner that could circumvent protective        safeguards. We can offer no absolute assurance that our proprietary business information        will remain confidential.

 

 

 

 

 

 

15

 

----

 

 

 

 

***Government Regulations***

 

There have        been increased governmental efforts to prevent money laundering and terrorist financing, as        well as public attention to concerns about consumer privacy and data protection.         These two policy goals -- the prevention of money laundering and terrorist financing and        the protection of consumer privacy -- may conflict, and the law in these areas is not        consistent or settled.  The legal, political and business environments in this area        are rapidly evolving, and subsequent legislation, regulation, litigation, court rulings or        other events could expose the Company to liability and reputational damage.  Although        there currently are laws and regulations directly applicable to the Internet and commercial        online services, it is possible that a number of new laws and regulations may be adopted        covering issues such as user privacy, pricing, content, copyrights, distribution, antitrust        and characteristics and quality of products and services.  Furthermore, the growth and        development of the market for online commerce may prompt calls for more stringent consumer        protection laws that may impose additional burdens on those companies conducting business        online.  The adoption of any such new laws or regulations may decrease the growth of        the Internet or commercial online service providers whose customers seek the security and        anonymity that are provided by our*TrustcashTM*payment service.         This could, in turn, decrease the demand for our services and increase the cost of doing        business.  Moreover, the applicability to the Internet and commercial online service        providers of existing laws in various jurisdictions governing issues such as adult        entertainment, dating services, sales and other taxes and personal privacy is uncertain.        Any such new legislation or regulations, the application of laws and regulations from        jurisdictions whose laws do not currently apply to our business, or the application of        existing laws and regulations to the Internet and commercial online services could have a        material adverse effect on our business, financial condition and results of        operations.

 

**Risks        Related to the Company’s Stock**

 

***Concentration of Ownership***

 

Our        directors and executive officers beneficially own approximately 10.7% of our common stock.        Accordingly, these persons, as a group, will be able to exert significant influence over        the direction of the Company’s affairs and business, including any determination with        respect to our acquisition or disposition of assets, future issuances of common stock or        other securities, and the election or removal of directors. Such a concentration of        ownership may also have the effect of delaying, deferring, or preventing a change in        control of the Company or cause the Company’s stock market price to decline.        Notwithstanding the exercise of their fiduciary duties by the directors and executive        officers and any duties that such other stockholder may have to other stockholders in        general, these persons may have interests different than the disinterested        stockholders.

 

***Potential Shareholder Dilution - Preferred Stock***

 

The Company        has approximately 270,000,000 shares of common stock unissued and not reserved for specific        issuances.  Under many circumstances, all of such shares could be issued without any        action or approval by the Company’s shareholders.  The Company also is        authorized to issue 50,000,000 shares of “blank check” Preferred Stock with        such designations, rights of conversion into common stock and other rights        and preferences as may be determined from time to time by the board of directors.         Accordingly, the our board of directors, without stockholder approval, may issue preferred        stock with dividend, liquidation, conversion, voting or other rights which could adversely        affect the voting power or other rights of the holders of common stock.  Any issuance        of such common or preferred stock would substantially dilute the percentage ownership of        the Company held by purchasers of the offered securities and could adversely affect        prevailing market prices, if any.  The preferred stock thus could be utilized, under        certain circumstances, as a method of discouraging, delaying or preventing a change in        control of the Company. 

 

 

16

 

----

 

***The        Market for our Stock is Limited and our Stock Price may be Volatile***

 

The market        for our common stock has been limited due to low trading volume and the small number of        brokerage firms acting as market makers. Because of the limitations of our market and        volatility of the market price of our stock, investors may face difficulties in selling        shares at attractive prices when they want to. The average daily trading volume for our        stock has varied significantly from week to week and from month to month, and the trading        volume often varies widely from day to day.

 

***Our        Internal Controls over Financial Reporting may not be Considered Effective in the Future,        which could result in a Loss of Investor Confidence in our Financial Reports and in turn        have an Adverse Effect on our Stock Price***

 

Pursuant to        Section 404 of the Sarbanes-Oxley Act of 2002 we are required to furnish a report by our        management on our internal controls over financial reporting. Such report must contain,        among other matters, an assessment of the effectiveness of our internal controls over        financial reporting as of the end of the year, including a statement as to whether or not        our internal controls over financial reporting are effective. This assessment must include        disclosure of any material weaknesses in our internal controls over financial reporting        identified by management. If we are unable to continue to assert that our internal controls        are effective, our investors could lose confidence in the accuracy and completeness of our        financial reports, which in turn could cause our stock price to decline.

 

***The        Company does not Pay Dividends***

 

The Company        does not pay dividends. We have not paid any dividends since inception and have no        intention of paying any dividends in the foreseeable future. Any future dividends would be        at the discretion of our board of directors and would depend on, among other things, future        earnings, our operating and financial condition, our capital requirements, and general        business conditions. Therefore, shareholders should not expect any type of cash flow        from their investment.

 

***The        Company will Require Additional Capital Funding***

 

We will        require additional funds, either through additional equity offerings or debt placements, in        order to expand our operations. Such additional capital may result in dilution to our        current shareholders. Further, our ability to meet short-term and long-term financial        commitments will depend on future cash. There can be no assurance that future income will        generate sufficient funds to enable us to meet our financial commitments.

 

***The        Company’s Shareholders may Face Significant Restrictions on their        Stock***

 

The        Company’s stock differs from many stocks in that it is a “penny stock.”        The Commission has adopted a number of rules to regulate “penny stocks”        including, but not limited to, those rules from the Securities Act as follows:

 

|   | 3a51-1 | which defines penny stock as, generally speaking, those                        securities which are not listed on either NASDAQ or a national securities                        exchange and are priced under $5, excluding securities of issuers that have                        net tangible assets greater than $2 million if they have been in operation                        at least three years, greater than $5 million if in operation less than                        three years, or average revenue of at least $6 million for the last three                        years; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 15g-1 | which outlines transactions by broker/dealers which are                        exempt from 15g-2 through 15g-6 as those whose commissions from traders are                        lower than 5% total commissions; |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 15g-2 | which details that brokers must disclose risks of penny                        stock on Schedule 15G; |
|--------|-------|-------------------------------------------------------------------------------------------------------|

         

17

 

----

 

         

         

|   | 15g-3 | which details that broker/dealers must disclose quotes and                        other information relating to the penny stock market; |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | 15g-4 | which explains that compensation of broker/dealers must be                        disclosed; |
|--------|-------|----------------------------------------------------------------------------------------------|

|   | 15g-5 | which explains that compensation of persons associated in                        connection with penny stock sales must be disclosed; |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------|

|   | 15g-6 | which outlines that broker/dealers must send out monthly                        account statements; and |
|--------|-------|---------------------------------------------------------------------------------------------------------|

|   | 15g-9 | which defines sales practice requirements. |
|--------|-------|--------------------------------------------|

Since the        Company’s securities constitute a “penny stock” within the meaning of the        rules, the rules would apply to us and our securities. Because these rules provide        regulatory burdens upon broker-dealers, they may affect the ability of shareholders to sell        their securities in any market that may develop; the rules themselves may limit the market        for penny stocks. Additionally, the market among dealers may not be active. Investors in        penny stock often are unable to sell stock back to the dealer that sold them the stock. The        mark-ups or commissions charged by the broker-dealers may be greater than any profit a        seller may make. Because of large dealer spreads, investors may be unable to sell the stock        immediately back to the dealer at the same price the dealer sold the stock to the investor.        In some cases, the stock may fall quickly in value. Investors may be unable to reap any        profit from any sale of the stock, if they can sell it at all.

 

Shareholders should be aware that, according to Commission Release No.        34-29093 dated April 17, 1991, the market for penny stocks has suffered from patterns        of fraud and abuse. These patterns include:

 

|   | **•** | control of the market for the security by one or a few                        broker-dealers that are often related to the promoter or issuer; |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | manipulation of prices through prearranged matching of                        purchases and sales and false and misleading press releases; |
|--------|------------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | “boiler room” practices involving high pressure                        sales tactics and unrealistic price projections by inexperienced sales                        persons; |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | excessive and undisclosed bid-ask differentials and markups                        by selling broker-dealers; and |
|--------|------------|-------------------------------------------------------------------------------------------------------------------|

|   | **•** | the wholesale dumping of the same securities by promoters                        and broker-dealers after prices have been manipulated to a desired level,                        along with the inevitable collapse of those prices with consequent investor                        losses. |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| **ITEM 1B.** | **UNRESOLVED STAFF                        COMMENTS** |
|--------------|------------------------------------------------------|

 

None

 

| **ITEM 2.** | **PROPERTIES** |
|-------------|----------------|

 

For the        year ended December 31, 2006 until June 30, 2007 (the close of the Purchase Agreement) the        Company maintained its offices at 325-3495 Cambie Street, Vancouver, British Columbia,        Canada, V5Z 4R3. We paid no rent for the use of this address.

 

Subsequent        to acquiring Trustcash, the Company maintained office facilities at 400 Park Avenue, Suite        1420, New York, New York, 10022. The rent payment was a minimum of $3,475 per month plus        additional charges for administrative costs, on a month to month basis. Rent expense for        the year ended December 31, 2007, amounted to $41,400 (including the rent paid by Trustcash        during the first two quarters of 2007).

 

The Company        currently maintains offices at at 400 Park Avenue, Suite 1420, New York, New York, 10022.        We believe that we have sufficient office space for the foreseeable future.

 

18

 

----

 

 

 

| **ITEM 3.** | **LEGAL PROCEEDINGS** |
|-------------|-----------------------|

 

Other than        as set forth in this section: (i) the Company knows of no material, active, or pending        legal proceedings against the Company; and (ii) the Company is not involved as a plaintiff        in any material proceeding or pending litigation:

 

On October        30, 2006, The Geek Factory, Inc. sued Gregory Moss the former President, CFO and director        of the Company and Trustcash in the Civil Court of the City, County of New York entitled        The Geek Factory, Inc. v. Gregory Moss, Hooksafe, LLC, Hooksafe, Inc., PPPCard,        Index No. 64773/2006 (the “Action”). An answer to the complaint with        counterclaims was filed on January 10, 2007. Plaintiff filed an answer to the counterclaims        on January 25, 2007. The Action seeks $25,000 as well as Plaintiff’s legal fees and        expenses purportedly incurred due to Trustcash’s alleged failure to pay for services        rendered relating to public relations and marketing under a service agreement between the        parties for $12,000. Causes of action asserted include: breach of contract, quantum meruit,        unjust enrichment, promissory estoppel, account stated and tortuous breach of implied        covenant of good faith and fair dealing. The Action is in its preliminary stages, discovery        has not yet been commenced. The Company denies the substance of the allegations; such        outcome of the action will not likely have a material adverse effect on our financial        position, results of operations, or cash flows.

 

In        September 2006, Charles Nunley and Steve Rosselli (the “Plaintiffs”) instituted        an action in the California Superior Court, Los Angeles County, against Trustcash, Gregory        Moss and others (the “Defendants”) alleging breach of contract and fraud, among        other things, and seeking an accounting and an unspecified amount of compensatory and        punitive damages resulting from Defendants’ alleged failure to pay to plaintiffs        sales commissions from the sale of Trustcash’s prepaid cards to certain accounts in        California and Michigan.  In June 2007, the plaintiffs and the defendants negotiated a        Settlement and Mutual Release Agreement.

 

In July        2006, the Company entered into a settlement agreement with a former legal counsel. Under        such agreement, the Company was required to pay $50,000 upon settlement and the remaining        $50,000 is payable in twenty-four monthly installments of $2,227, including interest of        6.5% per year, and is included in accounts payable and accrued expenses. Should the Company        default on such monthly payments, the Company would be responsible to pay the full        contested amount of approximately $161,000, plus accrued interest, less any settlement        payments made. Interest expense charged in for the year ended December 31, 2007 amounted to        $1,875

 

| **ITEM 4.** | **SUBMISSION OF MATTERS TO A VOTE OF SECURITY                        HOLDERS** |
|-------------|--------------------------------------------------------------------------------|

 

No matters        were submitted to a vote of the security holders, through the solicitation of proxies or        otherwise, during the fourth quarter ended December 31, 2007.

 

**PART        II**

 

| **ITEM 5.** | **MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND                        ISSUER PURCHASES OF EQUITY SECURITIES** |
|-------------|----------------------------------------------------------------------------------------------------------------------------|

 

The        Corporation’s common stock is quoted on the Over the Counter Bulletin Board, a        service maintained by the National Association of Securities Dealers, Inc. under the        symbol, “TCHH”. We received our quotation on February 5, 2007. There was no        public trading of our common stock until October 2007

 

19

 

----

 

 

 

Trading in        the common stock in the over-the-counter market has been limited and sporadic and the        quotations set forth below are not necessarily indicative of actual market conditions.        Further, these prices reflect inter-dealer prices without retail mark-up, mark-down, or        commission, and may not necessarily reflect actual transactions. The high and low bid        prices for the common stock for each quarter of the year ended December 31, 2007 is as        follows:

 

| ***Year***   | ***Quarter Ending*** | ***High*** | ***Low*** |
|--------------|----------------------|------------|-----------|
| 2007         | December 31          | 1.67       | 0.03      |
| September 30 | 0.03                 | 0.03       |
| June 30      | 0.03                 | 0.03       |
| March 31     | N/A                  | N/A        |

 

**Capital Stock**

 

The        following is a summary of the material terms of the Company’s capital stock. This        summary is subject to and qualified by our articles of incorporation and bylaws.

 

***Common Stock***

 

As of April        10, 2008, there were 61 shareholders of record holding a total of 77,699,138 shares of        fully paid and non-assessable common stock of the 350,000,000 shares of common stock, par        value $0.001, authorized. The board of directors believes that the number of beneficial        owners is greater than the number of record holders because a portion of our outstanding        common stock is held in broker “street names” for the benefit of individual        investors. The holders of the common stock are entitled to one vote for each share held of        record on all matters submitted to a vote of stockholders. Holders of the common stock have        no preemptive rights and no right to convert their common stock into any other securities.        There are no redemption or sinking fund provisions applicable to the common stock. On any        liquidation, dissolution or winding up of the Company, holders of shares of common stock        are entitled to receive pro rata on all of the assets of the Company available for        distribution to stockholders.

 

***Preferred Stock***

 

As of April        10, 2008, there were no shares of fully paid and non-assessable common stock of the        50,000,000 shares of preferred stock, par value $0.001, authorized.

 

The board        of directors has the option to issue one or more series of preferred stock with such        designations,

 

 

rights,        preferences, limitations and/or restrictions as it should determine by vote of a majority        of such directors. By way of illustration, preferred shares may have special rights and        preferences which may include special voting rights (or denial of voting rights), special        rights with respect to payment of dividends, conversion rights, rights of redemption,        sinking funds, and special rights in the event of liquidation, as the board may determine.        These rights and preferences may be determined by the board of directors at the time of        issue.

 

***Warrants***

 

As of April        10, 2008, the Company had no warrants outstanding.

 

20

 

----

 

***Stock        Options***

 

As of April        10, 2008, the Company had no outstanding stock options to purchase shares of our common        stock.

 

***Dividends***

 

The Company        has not declared any cash dividends since inception and does not anticipate paying any        dividends in the near future. The payment of dividends is within the discretion of the        board of directors and will depend on our earnings, capital requirements, financial        condition, and other relevant factors. There are no restrictions that currently limit the        Company’s ability to pay dividends on its common stock other than those generally        imposed by applicable state law.

 

***Convertible Loans***

 

On August        24, 2007, the Company entered into a loan agreement with one of the Company’s        stockholders for $250,000. The loan payable bears interest at the rate of 10% per annum and        shall become due and payable on August 31, 2008. The loan is collateralized by all the        assets of the Company. Upon default of the loan, the loan shall automatically convert to        equity in the authorized capital stock of the Company by the allotment and issuance of        Preferred Series A Convertible shares. Unpaid accrued interest amounted to $8,992 at        December 31, 2007.

 

***Registration Rights***

 

Except as        described herein and more fully described in the Registration Rights Agreement and in the        Piggyback Registration Rights Agreement, the Company is presently not obligated and has not        granted any rights to register under the Securities Act or to register or qualify under any        state securities law any of the Company’s presently outstanding securities or any        securities that may subsequently be issued.

 

The Company        entered into a Registration Rights Agreement with (i) Ludwig Holdings Limited        (“Ludwig”), which purchased 500,000 shares of common stock pursuant to the        private placement undertaken by the Company in connection with its acquisition of        Trustcash, LLC,. Pursuant to the Registration Rights Agreement, we have agreed, among other        things, to use our reasonable best efforts to (i) file a registration statement with the        Commission with respect to the resale of the 500,000 shares of common stock within 180 days        after the closing date of the Purchase Agreement, and (ii) have such registration statement        declared effective within 270 days after the closing date of the Purchase Agreement or 30        days after the Commission issues a “no review” letter. If the Company does not        comply with these obligations, subject to limitations set forth in such Agreement, the        Company will be required to issue penalty warrants entitling the

 

beneficiaries of such agreement to purchase additional shares of the        Company’s common stock equal to one-half of one percent (0.5%) of the number of        shares of common stock registrable under the registration statement, for each 30 day period        the Company is in default. Although we are currently in default of the terms of the        Registration Rights Agreement, Ludwig on full exercise of its warrant, would be considered        a non-affiliate that might freely trade their shares pursuant to the safe harbor provided        by Rule 144. Ludwig has not served notice on the Company of default under the Registration        Rights Agreement.

 

The Company        entered into the Piggyback Registration Rights Agreement with certain investors who        purchased Membership Interests in Trustcash prior to our June 30, 2007 acquisition thereof.        Pursuant to the Piggyback Registration Rights Agreement, we agreed that in the event the        Company files a registration statement under the Securities Act, we shall include therein        the 9,305,897 shares of common stock covered by this agreement. Upon the effectiveness of        such registration statement, such shares would be immediately eligible for resale in the        public market without restriction.

 

21

 

 

 

**Transfer Agent and Registrar**

 

Our        transfer agent is Signature Stock Transfer, located at 2632 Coachlight Court Plano, Texas        75093

and their        telephone number is (972) 612-4120.

 

**Purchases of Equity Securities made by the Issuer and Affiliated        Purchasers**

 

None.

 

**Recent        Sales of Unregistered Securities**

 

None.

 

**ITEM 6.**

**SELECTED FINANCIAL DATA**

 

Not        required.

 

**ITEM 7**

**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL                        CONDITION AND RESULTS OF OPERATIONS**

 

This*Management’s Discussion and Analysis of Financial Condition        and**Results of Operations*and other        parts of this current report contain forward-looking statements that involve risks and        uncertainties. Forward-looking statements can also be identified by words such as        “anticipates,” “expects,” “believes,”        “plans,” “predicts,” and similar terms. Forward-looking statements        are not guarantees of future performance and our actual results may differ significantly        from the results discussed in the forward-looking statements. Factors that might cause such        differences include but are not limited to those discussed in the subsection        entitled*Forward-Looking Statements and Factors That May Affect        Future Results and Financial Condition*below. The following        discussion should be read in conjunction with our financial statements and notes thereto        included in this current report. Our fiscal year end is December 31.

 

**Discussion and Analysis**

 

During the        year ended December 31, 2007, our operations were focused on (i) exploratory mining        operations, (ii) identifying a suitable business opportunity for acquisition (iii)        performing due diligence and entering into and closing the Purchase Agreement with        Trustcash, (iv) sales and marketing of the*TrustcashTM*product, and (v) satisfying        continuous public disclosure requirements.

 

Subsequent        to the year ended December 31, 2007, we entered into an agreement with Mistral Ventures,        Inc. and Paivis whereby Mistral has agreed to provide financing to the Company for the        Merger Agreement between Paivis and the Company.

 

The        Company’s operations will require a minimum of $7,000,000 in funding over the next 12        months to ensure its ability to close the acquisition of Paivis. This funding is not        currently available.

 

22

 

 

 

 

***Strategy***

 

While        several of the Company’s participating websites have an integrated*TrustcashTM*payment option, only 1% of        visitors to participating websites are selecting*TrustcashTM*as a payment option;        accordingly, the Company intends to test different presentation methods on these websites        to try to increase usage. The Company has an initial program established with a traditional        retailer whose goods are available through eBay and plans to extend this relationship into        additional mainstream Internet retailer partnerships, supporting a much broader consumer        market.

 

We plan to        concentrate our marketing efforts on search engine marketing, industry-oriented public        relations and activities such as co-marketing with retail partners, and by increasing        general consumer awareness of availability of an alternative payment option.

 

We consider        research and development as well as acquisition an important factor in our future growth        and development. Given the fact that our business is necessarily dependent on and sensitive        to new developments in technology, we will continue to invest in the development of our        technology platform to keep pace with the technological growth and development of the        industry. We are looking to Paivis as our first step in acquisition for an increased depth        and breadth of market penetration.

 

The Company        has generated insignificant revenues and substantial losses to date and may not generate        substantial revenues or achieve profitability in the near term, if at all. We have suffered        recurring losses from operations, and lacks sufficient liquidity to continue our        operations. Considering our anticipated cash on hand and cash flow, we can continue to fund        our operations for no more than two months.  Accordingly, we will necessarily require        and seek substantial additional financing to implement our business plan; and there can be        no assurance that such financing will be available on acceptable terms, if at        all.

 

**Results of Operations**

 

The        Company has been funded since inception primarily from public or private debt or equity        placements or by related parties in the form of loans. We do not expect to realize        sufficient revenues to cover expenses within the next twelve months or until such time as        we close the Merger Agreement with Paivis.

 

***Net        Revenues***

 

Net        revenues for the year ended December 31, 2007 increased to $123,738 from $41,524 for the        comparable period ended December 31, 2006, an increase of 198%. The increase in revenue was        the resultof the increased sales of our*TrustcashTM*product to $133,376 from        $44,031 over the comparative periods. The increased sales came with a corresponding        increase in processing and credit card fees to $9,638 from $2,507. We expect continued        growth in the marketplace and increased revenue in 2008.

 

***Gross Profit***

 

Gross        profit for the year ended December 31, 2007 changed to $40,962 from gross loss of $25,105        for the year ended December 31, 2006, an increase of 263%. This realization of profits is        due to an increase in net revenues. Further, while commissions and content partner fees        increased to $82,776 from $19,282 over the comparable periods,*TrustcashTM*card manufacturing costs        decreased to $0 due to a write off of production of physical cards from $47,347 over the        same periods. The Company expects direct costs to continue to rise in future periods with        the increase in net revenue but at a slower rate than net revenues.

 

 

 

23

 

 

***Expenses***

 

Operating        expenses for the year ended December 31, 2007 decreased to $1,066,503 from $1,170,439 for        the comparable period ended December 31, 2006, a decrease of 9%. The Company anticipates        that general and administrative expenses will decrease during 2008 following certain cost        cutting measures to our general and administrative expenses, although there can be no        assurance that our general and administrative and other operating expense will not increase        in future periods. Selling, general, and administrative expenses for the year ended        December 31, 2007 decreased to $991,403 from $1,052,327 for the year ended December 31,        2006. Development costs for the twelve month period ended December 31, 2007 decreased to        $58,306 from $103,433 for the year ended December 31, 2006. Depreciation and amortization        expenses for the annual periods ended December 31, 2007 and 2006 were $16,794 and $14,679,        respectively.

 

Major        components of selling, general, and administrative expenses by year were:

 

***Major components of selling, general, and                        administrative expenses***

                         

                         

**2007**

                         

**2006**

                         

                         

                         

                         

                         

Advertising

$

243,268

$

575,920

Salaries and taxes

                         

252,702

                         

190,579

Professional fees

                         

165,073

                         

83,440

Consulting fees

                         

115,333

                         

77,521

Management fees

                         

30,000

                         

-

Office and administrative

                         

42,370

                         

44,730

Travel and entertainment

                         

64,513

                         

36,725

Rent

                         

41,400

                         

33,082

Insurance

                         

34,719

                         

8,500

Bad debts

                         

2,025

                         

1,830

                         

                         

                         

                         

                         

                         

$

991,403

$

1,052,327

 

***Loss        from Operations***

 

Loss from        operations for the year ended December 31, 2007 decreased to $1,025,541 from $1,195,544 for        the year ended December 31, 2006, a decrease of 14%. The decrease was attributable to an        increase in gross revenues and a slight decrease in selling, general and administrative        expenses.

 

***Other        Expenses***

 

Other        expenses for the year ended December 31, 2007 increased to $101,926 from $2,405 for the        year ended December 31, 2006. The increase was attributable to an increase in interest        expense to $148,630 from $2,625 over the comparable periods that were not offset by an        increase in interest income and the realization of a gain on the forgiveness of debts and        other income.

 

 

 

24

 

 

***Net Loss***

 

After the        realization of a provision for income taxes of $1,236 in the current period, net loss for        the year ended December 31, 2007 decreased to $1,128,703 from $1,197,949 for the year ended        December 31, 2006, a decrease of 6%. This decrease is due to a decrease in losses from        operations that were not offset by an increase in other expenses.

         

***Income Tax Expense (Benefit)***

         

As at        December 31, 2007, the Company has an unused net operating loss carryforward balance of        approximately $956,000 that is available to offset future taxable income.

 

***Impact of Inflation***

 

The Company        believes that inflation has had a negligible effect on operations since inception We        believe that we can offset inflationary increases in the cost of materials and labor by        increasing sales and improving operating efficiencies.

 

*C**apital Expenditures***

 

The Company        expended $40,708 in computer equipment and software for the year ended December 31, 2007 as        compared to $17,136 for the year ended December 31, 2006

 

***Liquidity and Capital Resources***

 

Cash flow        used in operating activities was $986,877 for the year ended December 31, 2007 as compared        to $984,956 for the year ended December 31, 2006. Cash flow used in operating activities        over the twelve month periods can be primarily attributed to net losses in both        periods.

 

Cash flow        used by investing activities was $36,016 for year ended December 31, 2007 as compared to        $17,136 for the year ended December 31, 2006. Funds used by investing activities in the        current period are attributable to the acquisition of computer software and equipment        totaling $40,708 that were not offset by cash flows provided by investing        activities.

 

Cash flow        provided by financing activities was $1,030,858 for the year ended December 31, 2007 as        compared to $1,013,843 for the year ended December 31, 2006. Funds provided by financing        activities in the current period are attributable to proceeds of a bridge loan totaling        $125,000, a loan from stockholders totaling $350,000, Members (of Trustcash) contributions        of $502,227, and proceeds from a stock issuance and reorganization of $245,214, net of        costs. Which amounts were only partially offset from payments on the bridge loan of $76,155        and payments on related party loans of $125,000.

 

The        Company’s current assets are not sufficient to conduct our operations over the next        12 months. While we have commitments and arrangements with Mistral with respect to        sources of funding, such funding cannot be assured. Further, no assurances can be given        that any additional funding, if needed, will be available or available on acceptable terms.        Although, our major shareholders would be the most likely source of new funding in the form        of loans or equity placements, none have made any commitment for future investment and we        have no agreement formal or otherwise. Our inability to obtain funding will have a material        adverse affect on our future operations.

 

The Company        has no current plans for the purchase or sale of any plant or equipment.

 

25

 

 

The Company        has no current plans to make any changes in the number of employees.

 

***Off        Balance Sheet Arrangements***

 

As of        December 31, 2007, the Company has no significant off-balance sheet arrangements that have        or are reasonably likely to have a current or future effect on our financial condition,        changes in financial condition, revenues or expenses, results of operations, liquidity,        capital expenditures, or capital resources that is material to stockholders.

 

***Going        Concern***

 

The        Company’s auditors have expressed an opinion as to our ability to continue as a going        concern. Our ability to continue as a going concern is subject to the ability of the        Company to generate a profit and/or obtaining the necessary funding from outside sources.        Management’s plan to address the Company’s ability to continue as a going        concern, includes (i) acquiring Paivis; (ii) increasing revenues from the sale of        the*TrustcashTM*product (iii)        obtaining funding from private placement sources; (iv) obtaining additional funding from        the sale of the Company’s securities; (v) establishing revenues from a suitable        business opportunity; (vi) obtaining loans from various financial institutions where        possible Although management believes that it will be able to obtain the necessary funding        to allow the Company to remain a going concern through the methods discussed above, there        can be no assurances that such methods will prove successful. If funds are not obtained,        the Company may be forced to file for bankruptcy.

 

***Forward Looking Statements and Factors That May Affect Future Results        and Financial Condition***

 

The        statements contained in the section titled “*Results of        Operations”*and*“Description        of Business”*, with the exception of historical facts, are        forward looking statements. A safe-harbor provision may not be applicable to the forward        looking statements made in this current report Forward looking statements reflect our        current expectations and beliefs regarding our future results of operations, performance,        and achievements. These statements are subject to risks and uncertainties and are based        upon assumptions and beliefs that may or may not materialize. These statements include, but        are not limited to, statements concerning:

 

                         

**•**

our anticipated financial performance and business                        plan;

                         

**•**

the sufficiency of existing capital resources;

                         

**•**

our ability to raise additional capital to fund cash                        requirements for operations;

                         

**•**

uncertainties related to the Company’s business                        prospects;

                         

**•**

the ability of the Company to generate revenues to fund                        operations;

                         

**•**

the volatility of the stock market and; and

                         

**•**

general economic conditions.

 

We wish to        caution readers that our operating results are subject to various risks and uncertainties        that could cause our actual results to differ materially from those discussed or        anticipated, including the factors set forth in the section entitled        “*Risk Factors*” included        elsewhere in this report. We also wish to advise readers not to place any undue reliance on        the forward looking statements contained in this report, which reflect our beliefs and        expectations only as of the date of this report. We assume no obligation to update or        revise these forward looking statements to reflect new events or circumstances or any        changes in our beliefs or expectations, other than is required by law.

 

 

26

 

 

***Stock-Based Compensation***

 

On January        1, 2006, we adopted SFAS No. 123 (revised 2004) (SFAS No. 123R), Share-Based Payment, which        addresses the accounting for stock-based payment transactions in which an enterprise        receives employee services in exchange for (a) equity instruments of the enterprise or (b)        liabilities that are based on the fair value of the enterprise’s equity instruments        or that may be settled by the issuance of such equity instruments. In January 2005, the        Commission issued Staff Accounting Bulletin (SAB) No. 107, which provides supplemental        implementation guidance for SFAS No. 123R. SFAS No. 123R eliminates the ability to account        for stock-based compensation transactions using the intrinsic value method under Accounting        Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and        instead generally requires that such transactions be accounted for using a fair-value-based        method. We use the Black-Scholes-Merton (“BSM”) option-pricing model to        determine the fair-value of stock-based awards under SFAS No. 123R, consistent with that        used for pro forma disclosures under SFAS No. 123, Accounting for Stock-Based Compensation.        We have elected the modified prospective transition method as permitted by SFAS No. 123R        and accordingly prior periods have not been restated to reflect the impact of SFAS No.        123R. The modified prospective transition method requires that stock-based compensation        expense be recorded for all new and unvested stock options, restricted stock, restricted        stock units, and employee stock purchase plan shares that are ultimately expected to vest        as the requisite service is rendered beginning on January 1, 2006, the first day of our        fiscal year 2006. Stock-based compensation expense for awards granted prior to January 1,        2006 is based on the grant date fair-value as determined under the pro forma provisions of        SFAS No. 123.

 

Prior to        the adoption of SFAS No 123R, we measured compensation expense for our employee stock-based        compensation plans using the intrinsic value method prescribed by APB Opinion No. 25. We        applied the disclosure provisions of SFAS No. 123 as amended by SFAS No. 148, Accounting        for Stock-Based Compensation – Transition and Disclosure, as if the fair-value-based        method had been applied in measuring compensation expense. Under APB Opinion No. 25, when        the exercise price of our employee stock options was equal to the market price of the        underlying stock on the date of the grant, no compensation expense was        recognized.

 

We account        for equity instruments issued in exchange for the receipt of goods or services from other        than employees in accordance with SFAS No. 123 and the conclusions reached by the Emerging        Issues Task Force (“EITF”) in Issue No. 96-18. Costs are measured at the        estimated fair market value of the consideration received or the estimated fair value of        the equity instruments issued, whichever is more reliably measurable. The value of equity        instruments issued for consideration other than employee services is determined on the        earliest of a performance commitment or completion of performance by the provider of goods        or services as defined by EITF 96-18.

 

 

 

 

 

 

 

27

 

 

 

***Recent Accounting Pronouncements***

 

In March        2008, the FASB issued Statement of Financial Accounting Standard No. 161 (SFAS 161),        “Disclosures about Derivative Instruments and Hedging Activities—an amendment        of FASB Statement No. 133”, which is effective for fiscal years, and interim periods        within those fiscal years, beginning on or after November 15, 2008.  Early application        is encouraged.  SFAS 161 changes the disclosure requirements for derivative        instruments and hedging activities. Entities are required 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.  The        Statement requires that objectives for using derivative instruments be disclosed in terms        of underlying risk and accounting designation.  In addition, the standard requires        tabular disclosure of fair value of derivative instruments and their gains and loss,        requires disclosure regarding credit risk related contingent features of the        Company’s derivative instruments and requires cross referencing within the footnote        disclosures regarding information about derivative instruments.   The Company        does not expect that this pronouncement will have a significant impact on its financial        condition or results of operations.

 

In December        2007, the FASB issued SFAS 160, “Noncontrolling interests in Consolidated Financial        Statements – an amendment of ARB No. 51”. This Statement amends ARB 51 to        establish accounting and reporting standards for the noncontrolling interest in a        subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling        interest in a subsidiary is an ownership interest in the consolidated entity that should be        reported as equity in the consolidated financial statements. This Statement is effective        for fiscal years beginning on or after December 15, 2008. Early adoption is not permitted.        Management is currently evaluating the effects of this statement, but it is not expected to        have any impact on the Company’s financial statements.

         

In December        2007, the FASB issued SFAS No. 141R, “Business Combinations.” This Statement        replaces SFAS No. 141, Business Combinations. This Statement retains the fundamental        requirements in Statement 141 that the acquisition method of accounting (which Statement        141 called the purchase method) be used for all business combinations and for an acquirer        to be identified for each business combination. This Statement also establishes principles        and requirements for how acquirer to be identified for each business combination. This        Statement also establishes principles and requirements for how the acquirer: a) recognizes        and measures in its financial statements the identifiable assets acquired, the liabilities        assumed and any non-controlling interest in the acquire; b) recognizes and measure the        goodwill acquired in the business combination or a gain from a bargain purchase and c)        determines what information to disclose to enable users of the financial statements to        evaluate the nature and financial effect of the business combination. SFAS No. 141R will        apply prospectively to business combinations for which th acquisition date is on or after        the Company’s fiscal year beginning June 1, 2010. The Company currently is evaluating        the impact of SFAS 141R on its consolidated financial statements.

         

 

 

28

 

 

In        September 2006, the FASB issued Statement No. 157, “Fair Value Measurements”        (“SFAS 157”). SFAS 157, as amended by 157-1 and 157-2, defines fair value,        establishes a framework for measuring fair value under GAAP, and expands disclosures about        fair value measures. SFAS 157 is effective for fiscal years beginning after November 15,        2007, with early adoption encouraged. The provisions of SFAS 157 are to be applied on a        prospective basis, with the exception of certain financial instruments for which        retrospective application is required. The adoption of SFAS 157 is not expected to        materially affect the Company's financial position or results of operations.

         

**ITEM 7A.**

**QUANTITATIVE AND QUALITATIVE                        DISCLOSURES ABOUT MARKET RISK**

         

Not required.

         

**ITEM 8.**

**FINANCIAL STATEMENTS AND SUPPLEMENTARY                        DATA**

 

Our        audited financial statements for the years ended December 31, 2007 and 2006 are attached        hereto as F-1 through F-21.

29

 

 

**TRUSTCASH HOLDINGS, INC. AND SUBSIDIARIES**

**INDEX        TO FINANCIAL STATEMENTS**

**December 31, 2007 and 2006**

 

 

                         

*Page*

         

                         

Report of Independent Registered Public Accounting                        Firm

F-2

         

                         

Consolidated Balance Sheets

F-3

         

                         

Consolidated Statements of Operations

F-4

         

                         

Consolidated Statements of Stockholders’                        Equity

F-5

         

                         

Consolidated Statements of Cash Flows

F-6

         

                         

Notes to Financial Statements

F-7

         

                                                                                                                                                                   

 

 

 

F-1

 

 

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING        FIRM**

 

To the        Stockholders

Trustcash        Holdings Inc and Subsidiaries

New York,        New York

 

We have        audited the accompanying balance sheets of Trustcash Holdings Inc and Subsidiaries        (formerly Ouvo, Inc.) (the “Company”), as of December 31, 2007 and 2006,        and the related statements of operations and changes in stockholders' deficit, and cash        flows for the years then ended. These financial statements are the responsibility of the        Company’s management. Our responsibility is to express an opinion on these financial        statements based on our audits.

 

We        conducted our audits in accordance with the standards of the Public Company Accounting        Oversight Board (United States). Those standards require that we plan and perform the audit        to obtain reasonable assurance about whether the financial statements are free of material        misstatement. The Company is not required to have, nor were we engaged to perform, an audit        of its internal control over financial reporting. Our audit included consideration of        internal control over financial reporting as a basis for designing audit procedures that        are appropriate in the circumstances, but not for the purpose of expressing an opinion on        the effectiveness of the Company’s internal control over financial reporting.        Accordingly, we express no such opinion. An audit also includes examining, on a test basis,        evidence supporting the amounts and 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 Trustcash Holdings Inc and Subsidiaries at        December 31, 2007 and 2006 and the results of its operations and its cash flows for        the years then ended 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 2 to the financial statements, the        Company has suffered recurring losses from operations; the Company has experienced a        deficiency of cash from operations and lacks sufficient liquidity to continue its        operations. These matters raise substantial doubt as to the Company’s ability to        continue as a going concern. Management’s plans in regard to these matters are also        discussed in Note 2. The financial statements do not include any adjustments that might        result from the outcome of these uncertainties.

 

                         

/s/ Sobel & Co., LLC

 

                         

Certified Public Accountants

April 14,        2008

Livingston,        New Jersey

 

 

F-2

 

**TRUSTCASH        HOLDINGS, INC. AND SUBSIDIARIES**

**(FORMERLY        OUVO, INC.)**

**CONSOLIDATED BALANCE SHEETS**

**DECEMBER        31, 2007 AND 2006**

 

                         

**2007**

                         

**2006**

**Assets**

                         

                         

                         

Current assets

                         

                         

                         

Cash

$ 19,716

$

11,751

Accounts receivable, net of allowance for doubtful                        accounts

                         

                         

                         

                         

1,043

                         

6,173

Loans receivable

125,000

                         

-

Prepaid expenses and other current assets

1,960

                         

-

Total current assets

147,719

                         

17,924

                         

                         

                         

                         

Computer equipment, net

6,374

                         

7,117

Other assets

                         

                         

                         

Computer software, net

70,762

                         

46,105

Security deposits

3,000

                         

3,000

Total other assets

73,762

                         

49,105

                         

                         

                         

                         

                         

$ 227,855

$

74,146

**Liabilities and Stockholders' Deficit**

                         

                         

                         

Current liabilities

                         

                         

                         

Accounts payable and accrued expenses

$ 248,660

$

348,148

Income taxes payable

1,236

                         

-

Stockholders loans payable

375,000

                         

76,155

Bridge loan payable, related party

100,000

                         

-

Deferred revenue

22,451

                         

6,449

Total current liabilities

747,347

                         

430,752

                         

                         

                         

                         

Note payable, stockholder

700,000

                         

-

                         

                         

                         

                         

Commitments and contingencies

-

                         

-

                         

                         

                         

                         

Stockholders' deficit

                         

                         

                         

Preferred stock, 50,000,000 shares authorized, $.001 par                        value,

                         

                         

                         

none issued and outstanding

-

                         

-

Common stock, 350,000,000 shares authorized, $.001 par                        value,

                         

                         

                         

77,699,138 and 37,727,870 shares issued and outstanding,                        at

                         

                         

                         

December 31, 2007 and 2006

77,699

                         

1,355

Additional paid-in capital

1,383,883

                         

1,194,410

Accumulated deficit

(2,681,074)

                         

(1,552,371)

                         

(1,219,492)

                         

(356,606)

                         

$ 227,855

$

74,146

 

See report of        independent registered public accounting firm and the accompany notes to the financial        statements

 

F-3

 

 

 

                         

**TRUSTCASH HOLDINGS, INC. AND SUBSIDIARIES**

**(FORMERLY OUVO, INC.)**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

**FOR THE YEARS ENDED DECEMBER 31, 2007 AND                        2006**

                         

                         

                         

                         

                         

                         

**2007**

                         

**2006**

Revenues

                         

                         

                         

                         

                         

                         

                         

Gross revenue

                         

                         

                         

                         

$ 133,376

                         

$ 44,031

Processing and credit card fees

                         

                         

                         

                         

(9,638)

                         

(2,507)

Net revenues

                         

                         

                         

                         

123,738

                         

41,524

                         

                         

                         

                         

                         

                         

                         

                         

Cost of revenues

                         

                         

                         

                         

                         

                         

                         

Commissions and content partner fees

                         

                         

                         

                         

82,776

                         

19,282

Card manufacturing costs

                         

                         

                         

                         

-

                         

47,347

Total cost of revenues

                         

                         

                         

                         

82,776

                         

66,629

                         

                         

                         

                         

                         

                         

                         

                         

Gross profit (loss)

                         

                         

                         

                         

40,962

                         

(25,105)

                         

                         

                         

                         

                         

                         

                         

                         

Operating expenses

                         

                         

                         

                         

                         

                         

                         

Selling, general and administrative

                         

                         

                         

                         

991,403

                         

1,052,327

Development costs

                         

                         

                         

                         

58,306

                         

103,433

Depreciation and amortization expense

                         

                         

                         

                         

16,794

                         

14,679

Total operating expenses

                         

                         

                         

                         

1,066,503

                         

1,170,439

                         

                         

                         

                         

                         

                         

                         

                         

Loss from operations

                         

                         

                         

                         

(1,025,541)

                         

(1,195,544)

                         

                         

                         

                         

                         

                         

                         

                         

Other income (expense)

                         

                         

                         

                         

                         

                         

                         

Interest expense

                         

                         

                         

                         

(148,630)

                         

(2,625)

Interest income

                         

                         

                         

                         

1,960

                         

220

Gain on forgiveness of debts

                         

                         

                         

                         

44,512

                         

-

Other income

                         

                         

                         

                         

232

                         

-

Total other expense, net

                         

                         

                         

                         

(101,926)

                         

(2,405)

                         

                         

                         

                         

                         

                         

                         

                         

Loss before income taxes

                         

                         

                         

                         

(1,127,467)

                         

(1,197,949)

                         

                         

                         

                         

                         

                         

                         

                         

Provision for income taxes

                         

                         

                         

                         

1,236

                         

-

                         

                         

                         

                         

                         

                         

                         

                         

Net loss

                         

                         

                         

                         

$ (1,128,703)

                         

$ (1,197,949)

                         

                         

                         

                         

                         

                         

                         

                         

Basic and diluted loss per common share

                         

                         

                         

                         

$ (0.02)

                         

$ (0.04)

                         

                         

                         

                         

                         

                         

                         

                         

Weighted average number of common shares

                         

                         

                         

                         

58,313,878

                         

34,156,951

                         

                         

                         

                         

                         

                         

                         

                         

 

See        report of independent registered public accounting firm and the accompany notes to the        financial statements

 

 

 

F-4

 

 

 

 

 

**TRUSTCASH HOLDINGS, INC. AND SUBSIDIARIES**

**(FORMERLY OUVO, INC.)**

**CONSOLIDATED STATEMENTS OF STOCKHOLDERS'                        EQUITY**

**FOR THE YEARS ENDED DECEMBER 31, 2007 AND                        2006**

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

**Members'**

                         

                         

                         

                         

                         

**Additional**

                         

                         

                         

**Total**

                         

**Equity**

                         

**Common Stock**

                         

**Paid-in**

                         

**Accumulated**

                         

**Stockholders'**

                         

**(Deficiency)**

                         

**Shares**

                         

**Par Value**

                         

**Capital**

                         

**Deficit**

                         

**Deficit**

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

Balance, January 1, 2006

$ (164,344)

                         

-

                         

$ -

                         

$ -

                         

$ -

                         

$ (164,344)

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

Issuance of stock for effect of recapitalization

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

and reverse merger

164,344

                         

5,997,192

                         

190

                         

189,888

                         

(354,422)

                         

-

Adjusted balances as of Janaury 1, 2006 after

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

effect of recapitalization and reverse merger

-

                         

5,997,192

                         

190

                         

189,888

                         

(354,422)

                         

(164,344)

Capital contributions

-

                         

30,565,239

                         

1,003

                         

1,002,185

                         

-

                         

1,003,188

Capital issued for services

-

                         

1,165,439

                         

162

                         

162,337

                         

-

                         

162,499

Fees incurred in raising capital

-

                         

-

                         

-

                         

(160,000)

                         

-

                         

(160,000)

Net loss

-

                         

-

                         

-

                         

-

                         

(1,197,949)

                         

(1,197,949)

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

Balance, December 31, 2006

-

                         

37,727,870

                         

1,355

                         

1,194,410

                         

(1,552,371)

                         

(356,606)

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

Capital contributions

-

                         

70,265

                         

2

                         

2,225

                         

-

                         

2,227

Capital contributions through private placement

-

                         

4,078,399

                         

500

                         

499,500

                         

-

                         

500,000

Capital issued for services

-

                         

7,754,914

                         

9

                         

9,591

                         

-

                         

9,600

Fees incurred in raising capital

-

                         

-

                         

-

                         

(134,549)

                         

-

                         

(134,549)

Reverse public merger effect

-

                         

27,417,690

                         

75,183

                         

(836,644)

                         

-

                         

(761,461)

Stock issuance through private placement

                         

                         

500,000

                         

500

                         

499,500

                         

-

                         

500,000

Issuance of common stock for services

-

                         

150,000

                         

150

                         

149,850

                         

-

                         

150,000

Net loss

-

                         

-

                         

-

                         

-

                         

(1,128,703)

                         

(1,128,703)

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

                         

Balance, December 31, 2007

$ -

                         

77,699,138

                         

$ 77,699

                         

$ 1,383,883

                         

$ (2,681,074)

                         

$ (1,219,492)

 

See        report of independent registered public accounting firm and the accompany notes to the        financial statements

 

F-5

 

 

 

 

**TRUSTCASH        HOLDINGS, INC. AND SUBSIDIARIES**

**(FORMERLY        OUVO, INC.)**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**FOR THE        YEARS ENDED DECEMBER 31, 2007 AND 2006**

 

 

                         

**2007**

                         

**2006**

Cash flows from operating activities

                         

                         

                         

Net loss

$ (1,128,703)

                         

$ (1,197,949)

Adjustments to reconcile net loss to net cash

                         

                         

                         

provided by operating activities

                         

                         

                         

Depreciation and amortization

16,794

                         

14,679

Allowance for doubtful accounts

3,039

                         

1,830

Gain on forgiveness of debts

(44,512)

                         

-

Stock/capital issued for services

159,600

                         

-

Changes in certain assets and liabilities

                         

                         

                         

Accounts receivable

2,091

                         

(8,003)

Prepaid expenses and other current assets

(1,960)

                         

-

Due from member

-

                         

9,000

Security deposits

-

                         

(3,000)

Accounts payable and accrued expenses

(10,464)

                         

192,038

Income taxes payable

1,236

                         

-

Deferred revenue

16,002

                         

6,449

Net cash used by operating activities

(986,877)

                         

(984,956)

                         

                         

                         

                         

Cash flows from investing activities

                         

                         

                         

Acquisition of computer equipment

(1,059)

                         

(8,216)

Acquisition of computer software

(39,649)

                         

(8,920)

Cash received in merger

4,692

                         

-

Net cash used by investing activities

(36,016)

                         

(17,136)

                         

                         

                         

                         

Cash flows from financing activities

                         

                         

                         

Proceeds from bridge loan payable

125,000

                         

76,155

Payments for bridge loan payable

(76,155)

                         

(68,000)

Proceeds from stockholders loan payable

350,000

                         

-

Payments for loans receivable, related party

(125,000)

                         

-

Members contributions, net of costs

502,227

                         

1,005,688

Net effect of reverse public merger

(245,214)

                         

-

Issuance of stock through private placement

500,000

                         

-

Net cash provided by financing activities

1,030,858

                         

1,013,843

                         

                         

                         

                         

Net increase in cash

7,965

                         

11,751

                         

                         

                         

                         

Cash

                         

                         

                         

Beginning of year

11,751

                         

-

End of year

$ 19,716

                         

$ 11,751

 

See        report of independent registered public accounting firm and the accompany notes to the        financial statements

F-6

 

 

 

**TRUSTCASH HOLDINGS, INC. AND SUBSIDIARIES**

**(FORMERLY OUVO, INC.)**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2007 AND        2006**               

 

**1.**

**Nature of Business and Basis of                        Presentation**

         

**Basis of Presentation**

The accompanying consolidated financial statements have been prepared in        conformity with accounting principles generally accepted in the United States of America        and includes the results of Trustcash Holdings, Inc. (the “Trustcash        Holdings”), formerly known as Ouvo Inc., and AP Systems, Inc. (the “AP        Systems”) and Trustcash, LLC (the “Trustcash”), its wholly-owned        subsidiaries (the “Subsidiaries”), which are collectively referred to as        (“the Company”).

         

On June 30, 2007, Trustcash Holdings entered into and simultaneously closed        a Purchase Agreement (the “Agreement”) with the owners of 100% of the        Membership Interest in Trustcash, LLC, and Trustcash Holdings, through its newly formed        wholly-owned subsidiary, AP Systems, became the sole member of Trustcash, LLC. Trustcash        Holdings is a Delaware corporation and AP Systems is a Delaware corporation. The companies        now operate under the name “Trustcash Holdings, Inc.”

         

Pursuant to the Agreement AP Systems, Inc. became the sole member of        Trustcash, and as partial consideration for the membership interest, Trustcash Holdings        issued to the former members of Trustcash 49,631,448 shares of common stock The Company        also paid to one of the former Trustcash owners, as partial consideration for its        membership interests and in cancellation of its Trustcash secured promissory note, the sum        of $200,000, in cash, including interest and issued its 5% note in the principal amount of        $700,000 (See Note 9).

         

For accounting purposes the acquisition was considered a reverse        acquisition, an acquisition transaction where the acquired company, Trustcash, is        considered the acquirer for accounting purposes, notwithstanding the form of the        transaction. The primary reason the transaction was treated as a recapitalization by        Trustcash Holdings rather than a purchase of Trustcash by Trustcash Holdings was because        Trustcash Holdings was a shell company. As reported in its Form 10-QSB for the quarter        ended March 31, 2007, Trustcash Holdings had cash of approximately $59,000, other        assets of approximately $177,000 and liabilities of approximately $479,000.

 

No additional goodwill or intangible assets were recognized on completion of        the transaction. The capital structure, including the number and type of shares issued,        appearing in the consolidated balance sheet reflects that of the legal parent, Trustcash        Holdings, including the stock issued to affect the reverse acquisition for the period after        the consummation of the Agreement.

 

**Nature of Business**

The Company provides a technology platform portal to facilitate the sale of        its proprietary Trustcash TM brand of “payment” or “stored value        cards”, an alternative payment system that enables customers to make purchases in an        anonymous capacity on the internet without using a credit card or writing a check, thereby        withholding the customers’ personal information from the website whose goods or        services are being purchased.

         

         

         

         

 

F-7

 

 

**TRUSTCASH HOLDINGS, INC. AND SUBSIDIARIES**

**(FORMERLY OUVO, INC.)**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2007 AND        2006**               

 

**2.**

**Going Concern**

         

The accompanying financial statements have been prepared assuming the        Company is a going concern, which assumption contemplates the realization of assets and        satisfaction of liabilities in the normal course of business. The Company has suffered        recurring losses from operations; the Company experienced a deficiency of cash from        operations and lacks sufficient liquidity to continue its operations. Currently, the        Company does not have significant cash or other material assets, nor does it have        operations or a source of revenue which is adequate to cover its administrative costs for a        period in excess of one year and allow it to continue as going concern. As of December 31,        2007, the Company has accumulated deficit of approximately $2,681,000 and current        liabilities exceed current assets by approximately $600,000. When its operations require        additional financing, if the Company is unable to obtain it on reasonable terms, the        Company will be forced to restructure, file for bankruptcy or cease operations.

         

These factors raise substantial doubt about the Company’s ability to        continue as a going concern. These consolidated financial statements do not include any        adjustments relating to the recoverability and classification of recorded asset amounts or        the amount of liabilities that might be necessary should the Company be unable to continue        in existence. Continuation of the Company as a going concern is dependent upon achieving        profitable operations, obtain financing or complete a cohesive merger plan.        Management’s plans to achieve profitability include entering into arrangements with        more significant content partners which management has determined will assist in attracting        new customers, and increasing sales to existing customers. Management is seeking to raise        additional capital through equity issuance, debt financing and acquisitions (Note        15).

 

**3.**

**Significant Accounting Policies**

 

**Principles of Consolidation**

The consolidated financial statements include the operations of Trustcash        Holdings, Inc. (Parent) and its wholly owned subsidiary, AP Systems, Inc. (Sub) and        Trustcash, LLC (LLC) a subsidiary of AP Systems, Inc. All significant accounts and        transactions have been eliminated in consolidation.

 

**Accounts Receivable**

Accounts receivable are uncollateralized customer obligations arisen from a        distributor. The Company carries its accounts receivable at cost billed to the customer        less an allowance for doubtful accounts of $4,869 and $1,830 at December 31, 2007 and 2006        respectively. Interest is not billed or accrued.

         

Payments to accounts receivable are allocated to specific invoices        identified on the customer invoice or if unspecified, are applied to the oldest invoice. On        a periodic basis, the Company evaluates its accounts receivable and establishes an        allowance for doubtful accounts.

         

**Computer Equipment**

Computer equipment is recorded at cost and is being depreciated by the        straight-line method over estimated useful lives of five years. Maintenance and repairs are        charged to operations as incurred.

 

 

 

 

F-8

 

 

**TRUSTCASH HOLDINGS, INC. AND SUBSIDIARIES**

**(FORMERLY OUVO, INC.)**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2007 AND        2006**               

 

**3.**

**Significant Accounting Policies                        (continued)**

 

**Computer Software**

In accordance with Statement of Position 98-1        “*Accounting for the Costs of Computer Software Developed or        Obtained for Internal Use*”, the Company capitalized        software costs related to the design of the technology platform, the        “back-end”, to facilitate the electronic payment service for processing of        revenue up to the point when the software was operating. The Company also capitalizes any        costs associated with enhancing the back end for new products or content offered by the        Company. Computer software is being amortized by the straight-line method over the        estimated useful lives of five years. Subsequent maintenance and modification costs are        charged to operations as incurred.

         

**Deferred Revenue and Revenue Recognition**

The Company takes receipt of funds upon prepayment for card or activation of        an on-line account. Such funds are classified as deferred revenue until the holder utilizes        any portion of the balance. Upon such utilization, the Company will recognize revenue for        that amount and a corresponding charge for the amount owed to the “content        partners”.

         

**Advertising**

Advertising costs are expensed as incurred and amounted to $243,268 and        $575,920 for the years ended December 31, 2007 and 2006, respectively.

         

**Development Costs**

Development costs are charged to expense as incurred and includes costs        associated with maintaining and expanding the functionality of the “back-end”        software and internet.

         

**Income Taxes**

Deferred income taxes are reported for timing difference between items of        income or expense reported in the financial statements and those reported for income tax        purposes in accordance with SFAS No. 109, “*Accounting for        Income Taxes*”, which requires the use of the        asset/liability method of accounting for income taxes. Deferred income taxes and tax        benefits are recognized for the future tax consequences attributable to differences between        the financial statement carrying amounts of existing assets and liabilities and their        respective tax bases, and for tax loss and credit carry-forwards.

 

Deferred tax assets and liabilities are measured using enacted tax rates        expected to apply to taxable income in the years in which those temporary differences are        expected to be recovered or settled. The Company provides for deferred taxes for the        estimated future tax effects attributable to temporary differences and carry-forwards when        realization is more likely than not.

         

The Company files taxes in the state of New York and is taxed as a regular        corporation in that state.

         

In July 2006, the FASB issued FIN 48, “Accounting for Uncertainty in        Income Taxes (an interpretation of FASB Statement No. 109)”(“FIN 48”)        which is effective for fiscal years beginning after December 15, 2006. This interpretation        was issued to clarify the accounting for uncertainty in income taxes recognized in the        financial statements by prescribing a recognition threshold and measurement attribute for        the financial statement recognition and measurement of a tax position taken or expected to        be taken in a tax return. Based on our evaluation, we have concluded that there are no        significant uncertain tax positions requiring recognition in our financial statements to        our deferred tax assets and related valuation allowance.

 

F-9

 

 

**TRUSTCASH HOLDINGS, INC. AND SUBSIDIARIES**

**(FORMERLY OUVO, INC.)**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2007 AND        2006**               

 

**3.**

**Significant Accounting Policies                        (continued)**

         

**Long-Lived Assets**

In accordance with SFAS No. 144, “*Accounting        for Impairment or Disposal of Long-Lived Assets*”, the        carrying value of long-lived assets is reviewed on a regular basis for the existence of        facts or circumstance that may suggest impairment. The Company recognizes an impairment        when the sum of the expected undiscounted future cash flows is less than the carrying        amount of the asset. Impairment losses, if any, are measured as the excess of the carrying        amount of the asset over its estimated fair value.

 

**Fair Value of Financial Instruments**

The carrying value of cash, accounts receivable, accounts payable,        stockholders loans payable because of the short term nature of these instruments and        bridge loan payable approximate fair value because of the terms of these items available to        the Company.

 

**Basic and Diluted Net Loss Per Share**

The Company computes net loss per share in accordance with 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 loss available to common shareholders (numerator) by the weighted average number of        shares outstanding (denominator) during the period. Diluted EPS gives effect to all        potentially dilutive common shares outstanding during the period using the treasury stock        method and convertible preferred stock using the if-converted method. In computing diluted        EPS, the average stock price for the period is used in determining the number of shares        assumed to be purchased from the exercise of stock options or warrants. Diluted EPS        excludes all potentially dilutive shares if their effect is anti-dilutive.

 

                         

**Concentrations of Risk**

The Company maintains cash balances at a financial institution located in        New York which, at times, amounts may exceed the Federal Deposit Insurance Corporation        insured limits.

 

The Company has one customer which accounts for 19% of the total        revenue.

         

The Company is dependent upon entering into agreements with internet content        providers or websites and traditional or internet money services providers. The success of        such third party providers in attracting customers is paramount to our business. The        Company’s providers principally offer dating services and adult entertainment, whose        customers would be expected to seek anonymity in their patronage of such        websites.

         

The Company has three content providers that individually exceeded 10% of        total content provider commissions.

         

At December 31, 2007, the directors and executive officers of the Company        beneficially own approximately 31% of the common stock.

 

**Use of Estimates**

The preparation of consolidated 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 amounts of assets and        liabilities and disclosures of contingent assets and liabilities at the date of the        consolidated financial statements and the reported amounts of revenues and expenditures        during the reporting period. Actual results could differ from these estimates.

 

F-10

 

 

         

**TRUSTCASH HOLDINGS, INC. AND SUBSIDIARIES**

**(FORMERLY OUVO, INC.)**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2007 AND        2006**               

 

**3.**

**Significant Accounting Policies                        (continued)**

 

**Stock-Based Compensation**

Effective January 1, 2006, the Company adopted the provisions of SFAS No.        123(R), “Share-Based Payment”, which establishes accounting for equity        instruments exchanged for employee services. Under the provisions of SFAS 123(R),        stock-based compensation cost is measured at the grant date, based on the calculated fair        value of the award, and is recognized as an expense over the employees’ requisite        service period (generally the vesting period of the equity grant).

         

Before January 1, 2006, the Company accounted for stock-based compensation        to employees in accordance with Accounting Principles Board Opinion No. 25,        “Accounting for Stock Issued to Employees,” and complied with the disclosure        requirements of SFAS No. 123, “Accounting for Stock-Based        Compensation”.

         

The Company adopted FAS 123(R) using the modified prospective method, which        requires the Company to record compensation expense over the vesting period for all awards        granted after the date of adoption, and for the unvested portion of previously granted        awards that remain outstanding at the date of adoption. Accordingly, financial statements        for the periods prior to January 1, 2006 have not been restated to reflect the fair value        method of expensing share-based compensation. Adoption of SFAS No. 123(R) does not change        the way the Company accounts for share-based payments to non-employees, with guidance        provided by SFAS 123 (as originally issued) and Emerging Issues Task Force Issue No. 96-18,        “Accounting for Equity Instruments That Are Issued to Other Than Employees for        Acquiring, or in Conjunction with Selling, Goods or Services”.

         

**Recent accounting Pronouncements**

In February 2007, the Financial Accounting Standards Board (the        “FASB”) issued SFAS No. 159, “*The Fair Value        Option for Financial Assets and Financial Liabilities*”        (SFAS 159).  SFAS 159 allows the company to choose to measure many financial assets        and financial liabilities at fair value.  Unrealized gains and losses on items for        which the fair value option has been elected are reported in earnings.  SFAS 159 is        effective for fiscal years beginning after November 15, 2007.  The Company        does not anticipate to be significantly impacted by SFAS 159.

         

In September 2006, the FASB issued SFAS No. 158,        “*Employers’ Accounting for Defined Benefit Pension and        Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106 and        132(R)*” (SFAS 158”). SFAS 158 requires an employer        that sponsors one or more single-employer defined benefit plans to (a) recognize the        overfunded or underfunded status of a benefit plan in its statement of financial position,        (b) recognize as a component of other comprehensive income, net of tax, the gains or losses        and prior service costs or credits that arise during the period but are not recognized as        components of net periodic benefit cost pursuant to SFAS 87, “Employers’        Accounting for Pensions”, or SFAS 106, “Employers’ Accounting for        Postretirement Benefits Other Than Pensions”, (c) measure defined benefit plan assets        and obligations as of the date of the employer’s fiscal year-end, and (d) disclose in        the notes to financial statements additional information about certain effects on net        periodic benefit cost for the next fiscal year that arise from delayed recognition of the        gains or losses, prior service costs or credits, and transition asset or obligation. SFAS        158 is effective for the Company’s fiscal year ending December 31, 2007. The Company        is not impacted on this statement.

 

 

F-11

 

 

**TRUSTCASH HOLDINGS, INC. AND SUBSIDIARIES**

**(FORMERLY OUVO, INC.)**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2007 AND        2006**               

 

**3.**

**Significant Accounting Policies                        (continued)**

 

**Recent accounting Pronouncements (continued)**

         

In September 2006, the FASB issued SFAS No. 157,        “*Fair Value Measurement*”        ("SFAS 157"). as amended by 157-1 and 157-2.  The Statement provides guidance for        using fair value to measure assets and liabilities. The Statement also expands disclosures        about 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 measurement on        earnings. This Statement applies under other accounting pronouncements that require or        permit fair value measurements. This Statement does not expand the use of fair value        measurements in any new circumstances.

         

Under this Statement, fair value refers to the price that would be received        to sell an asset or paid to transfer a liability in an orderly transaction between market        participants in the market in which the entity transacts. SFAS 157 is effective for the        Company for fair value measurements and disclosures made by the Company in its fiscal year        beginning on January 1, 2008. The Company is currently reviewing the impact of this        statement.

         

In March 2006, the Financial Accounting Standards Board (the        “FASB”)issued Statements of Financial Accounting Standards (“SFAS”)        No. 156, “*Accounting for Servicing of Financial        Assets*”, which amends SFAS No. 140. SFAS No. 156 may be        adopted as early as January 1, 2006, for calendar year-end entities, provided that no        interim financial statements have been issued. Those not choosing to early adopt are        required to apply the provisions as of the beginning of the first fiscal year that begins        after September 15, 2006 (e.g. January 1, 2007, for calendar year-end entities).  The        intention of the new statement is to simplify accounting for separately recognized        servicing assets and liabilities, such as those common with mortgage securitization        activities, as well as to simplify efforts to obtain hedge-like        accounting. 

         

Specifically, the FASB said SFAS No. 156 permits a servicer using derivative        financial instruments to report both the derivative financial instrument and related        servicing asset or liability by using a consistent measurement attribute, or fair        value.  The adoption of SFAS No. 156 is does not have a material impact on the        Company’s financial position, results of operations or cash flows.

         

In December 2007, the FASB issued SFAS 160, “Noncontrolling        Interests in Consolidated Financial Statements – an amendment of ARB No. 51        (Consolidated Financial Statements).” SFAS 160 establishes accounting and reporting        standards for a noncontrolling interest in a subsidiary and for the deconsolidation of a        subsidiary. In addition, SFAS 160 requires certain consolidation procedures for consistency        with the requirements of SFAS 141, “Business Combinations.” SFAS 160 is        effective for fiscal years, and interim periods within those fiscal years, beginning on or        after December 15, 2008 with earlier adoption prohibited.

         

The Company is evaluating the effect, if any, that the adoption of SFAS 160        will have on its results of operations, financial position, and the related        disclosures.

 

 

 

 

F-12

 

 

**TRUSTCASH HOLDINGS, INC. AND SUBSIDIARIES**

**(FORMERLY OUVO, INC.)**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2007 AND        2006**               

 

**3.**

**Significant Accounting Policies                        (continued)**

 

**Recent accounting Pronouncements (continued)**

         

In December 2007, the FASB issued SFAS No. 141R, “Business        Combinations.” This Statement replaces SFAS No. 141, Business Combinations. This        Statement retains the fundamental requirements in Statement 141 that the acquisition method        of accounting (which Statement 141 called the purchase method) be used for all business        combinations and for an acquirer to be identified for each business combination. This        Statement also establishes principles and requirements for how acquirer to be identified        for each business combination. This Statement also establishes principles and requirements        for how the acquirer: a) recognizes and measures in its financial statements the        identifiable assets acquired, the liabilities assumed and any non-controlling interest in        the acquire; b) recognizes and measure the goodwill acquired in the business combination or        a gain from a bargain purchase and c) determines what information to disclose to enable        users of the financial statements to evaluate the nature and financial effect of the        business combination. SFAS No. 141R will apply prospectively to business combinations for        which th acquisition date is on or after the Company’s fiscal year beginning June 1,        2010. The Company currently is evaluating the impact of SFAS 141R on its consolidated        financial statements.

         

         

In February        2007, the FASB issued SFAS 159, “The Fair Value Option for Financial Assets and        Financial Liabilities. SFAS 159 creates a fair value option allowing an entity to        irrevocably elect fair value as the initial and subsequent measurement attribute for        certain financial assets and financial liabilities, with changes in fair value recognized        in earnings as they occur. SFAS 159 also requires an entity to report those financial        assets and financial liabilities measured at fair value in a manner that separates those        reported fair values from the carrying amounts of assets and liabilities measured using        another measurement attribute on the face of the statement of financial position. Lastly,        SFAS 159 requires an entity to provide information that would allow users to understand the        effect on earnings of changes in the fair value on those instrumentsselected for the fair value election. SFAS 159 is effective for fiscal years        beginning after November 15, 2007 with early adoption permitted. The Company does not        anticipate to be significantly impacted by SFAS 159.

         

         

         

         

F-13

 

 

**TRUSTCASH HOLDINGS, INC. AND SUBSIDIARIES**

**(FORMERLY OUVO, INC.)**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2007 AND        2006**               

 

         

**3.**

**Significant Accounting Policies                        (continued)**

 

**Recent accounting Pronouncements (continued)**

         

In March 2008, the FASB issued Statement of Financial Accounting Standard        No. 161 (SFAS 161), “Disclosures about Derivative Instruments and Hedging        Activities—an amendment of FASB Statement No. 133”, which is effective for        fiscal years, and interim periods within those fiscal years, beginning on or after November        15, 2008.  Early application is encouraged.  SFAS 161 changes the disclosure        requirements for derivative instruments and hedging activities. Entities are required 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.  The Statement requires that objectives for using derivative instruments be        disclosed in terms of underlying risk and accounting designation.  In addition, the        standard requires tabular disclosure of fair value of derivative instruments and their        gains and loss, requires disclosure regarding credit risk related contingent features of        the Company’s derivative instruments and requires cross referencing within the        footnote disclosures regarding information about derivative instruments.   The        Company does not expect that this pronouncement will have a significant impact on its        financial condition or results of operations.

         

**4.**

**Loans Receivable**

         

On November 21, 2007, the Company entered into an agreement for a loan        receivable with, Paivis (Note 15). The loan bears interest at a rate of 10% per annum on        any unpaid principle balance, is secured by a lien on the assets of the Company and is due        and payable on November 21, 2008. The purpose of providing the related party with funds is        to complete financial and due diligence on the potential merger agreement between the        parties.

         

As of December 31, 2007, the balance of the loans receivable, related party        is $125,000. Unpaid accrued interest amounted to $1,960 at December 31, 2007.

 

**5.**

**Computer Equipment**

 

                         

Computer equipment at December 31, 2007 and 2006 is as                        follows:

 

                         

Computer equipment

$

9,275

$

8,216

                         

Less accumulated depreciation

                         

(2,901)

                         

(1,099)

 

                         

$

6,374

$

7,117

         

Depreciation expense amounted to $1,802 and $1,099, for the years ended        December 31, 2007 and 2006, respectively.

         

         

         

 

F-14

 

 

**TRUSTCASH HOLDINGS, INC. AND SUBSIDIARIES**

**(FORMERLY OUVO, INC.)**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2007 AND        2006**               

 

         

**6.**

**Computer Software**

 

                         

Computer software at December 31, 2007 and 2006 is as                        follows:

 

                         

Computer software

$ 108,294

$

68,645

                         

Less accumulated amortization

                         

(37,532)

                         

(22,540)

 

                         

$

70,762

$

46,105

         

Amortization expense amounted to $14,992 and $13,580, for the years ended        December 31, 2007 and 2006, respectively.

         

**7.**

**Stockholders Loans Payable**

                         

**2007**

**2006**

On August 24, 2007, the Company entered into a loan                        agreement with one of the Company’s stockholders for $250,000. The                        loan bears interest at the rate of 10% per annum and shall become due and                        payable on August 31, 2008. The loan is collateralized by all the assets of                        the Company. Upon default of the loan, the loan shall automatically convert                        to equity in the authorized capital stock of the Company by the allotment                        and issuance of Preferred Series A Convertible shares. Unpaid accrued                        interest amounted to $8,992 at December 31, 2007.

$ 250,000

                         

$ -

                         

                         

                         

                         

On November 21, 2007, the Company entered into a loan                        agreement with one of the Company’s stockholders for $125,000. The                        loan bears interest at the rate of 10% per annum and shall become due and                        payable on November 21, 2008. The loan is collateralized by all the assets                        of the Company. Unpaid accrued interest amounted to $1,960 at December 31,                        2007.

125,000

                         

-

                         

                         

                         

                         

At December 31, 2006, the Company had a note payable with a                        stockholder of the Company for $96,155, of which $76,155 had been drawn                        down. The remaining $20,000 was received in January 2007. The loan bears                        interest at 8% per year and was due February 15, 2007. The loan was paid in                        full in February 2007.

-

                         

76,155

                         

$ 375,000

                         

$ 76,155

         

**8.**

**Bridge Loan Payable, Related Party**

         

On November 16, 2007, the Company entered into a loan agreement with one of        the Company’s related party, Mistral (Note 15) for $100,000. The loan payable bears        interest at the rate of 10% per annum and shall become due and payable on November 16,        2008. The loan is collateralized by all the assets of the Company.

         

As of December 31, 2007, the balance of the note payable is $100,000. Unpaid        accrued interest amounted to $1,240 at December 31, 2007.

         

F-15

         

         

**TRUSTCASH HOLDINGS, INC. AND SUBSIDIARIES**

**(FORMERLY OUVO, INC.)**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2007 AND        2006**               

 

**9.**

**Note Payable, Stockholder**

 

In connection with the Agreement (Note 1), the Company paid one of the        former members of Trustcash as partial consideration for its membership interests and in        cancellation of its defaulted Trustcash secured promissory note in the principal amount of        $96,155 due February 15, 2007, the sum of $200,000 in cash and issued a 5% promissory note        in the principal amount of $700,000 due June 30, 2009. The note is secured by a priority        security interest in all the assets of the Company and all its subsidiaries. The note is        payable in full at maturity, subject to mandatory prepayments of 25% of all monies raised        by the Company from future issuance of new debt or equity securities.

         

As of December 31, 2007, the balance of the note payable is $700,000. Unpaid        accrued interest amounted to $18,118 at December 31, 2007.

 

**10.**

**Stockholders’ Equity (Deficit)**

         

The authorized capital stock of the Company as of December 31, 2007 consists        of 400,000,000 shares of authorized capital stock, which have been divided into 50,000,000        shares of Preferred Stock, par value $.001 per share, of which no shares of Preferred Stock        are issued and outstanding, and 350,000,000 shares of Common Stock, par value $.001 per        share, of which 77,699,138 shares are issued and outstanding.

         

Prior to the Agreement, the number of shares outstanding was        27,417,690.

 

On June 30, 2007, the Company completed a private placement raising $500,000        consisting of 500,000 shares of the Company’s stock offered at a purchase price of        $1.00 per share.

         

On June 30, 2007, the Company issued 49,631,448 shares of Common Stock to        the former owners of Trustcash.

 

On November 6, 2007, the Company issued 150,000 shares of restricted stock        for the services rendered by the investor communications consultant. The number of shares        represents 75,000 shares per quarter for the third and fourth quarter. The stock is valued        at $25,000 per month, $75,000 per quarter and $150,000 per the agreement.

 

**11.**

**Leases**

 

The Company leases its office facilities under the terms of an operating        lease that expired in February 2007 and continues month to month which can be terminated by        either party with notice as prescribed in the agreement. The agreement requires minimum        rent of $3,475 per month and additional charges for administrative costs.

 

Rent expense for the years ended December 31, 2007 and 2006, amounted to        $41,400 and $33,082.

 

 

 

 

F-16

 

 

**TRUSTCASH HOLDINGS, INC. AND SUBSIDIARIES**

**(FORMERLY OUVO, INC.)**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2007 AND        2006**               

 

 

**12.**

**Income Taxes**

 

The Company has losses carried forward for income tax purposes to December        31, 2007 There are no current or deferred tax expenses for the period ended December 31,        2007 due to the Company’s loss position. The Company has fully reserved for any        benefits of these losses. The deferred tax consequences of temporary differences in        reporting items for financial statement and income tax purposes are recognized, as        appropriate.

 

Realization of the future tax benefits related to the deferred tax assets is        dependent on many factors, including the Company’s ability to generate taxable income        within the net operating loss carryforward period. Management has considered these factors        in reaching its conclusion as to the valuation allowance for financial reporting        purposes.

         

The provision for refundable federal income tax consists of the        following:

         

                         

Deferred tax asset attributable to:

                         

                         

                         

                         

Current operations

                         

                         

110,004

                         

Less: Change in valuation allowance

                         

                         

(110,004)

                         

                         

                         

                         

                         

                         

Net refundable amount

                         

                         

$ -

                         

         

The composition of the Company’s deferred tax assets as at December        31, 2007 is as follows:

         

                         

Net income tax operating loss carryforward

                         

$ 955,942

                         

                         

                         

                         

                         

Statutory federal income tax rate

                         

34%

                         

Change in valuation allowance

                         

(34%)

                         

Effective income tax rate

                         

0%

                         

                         

                         

                         

                         

Deferred tax asset

                         

                         

                         

Tax loss carryforward

                         

325,020

                         

Less: Valuation allowance

                         

(325,020)

                         

                         

                         

                         

                         

Net deferred tax asset

                         

$ -

                         

         

         

In 2006, Trustcash LLC was taxed as a partnership. All income and losses        were reflected on the members' tax returns. Accordingly, the Company does not have a        current or deferred tax impact.

         

The potential income tax benefit of these losses has been offset by a full        valuation allowance.

As at December 31, 2007, the Company has an unused net operating loss        carryforward balance of approximately $956,000 that is available to offset future taxable        income. Such carryforwards expire at various times through 2028 and may be limited to        ownership changes.

         

The current income tax provision represents the minimum tax due in the State        of New York and the City of New York. The amount at December 31, 2007 amounted to        $1,236.

 

F-17

 

 

**TRUSTCASH HOLDINGS, INC. AND SUBSIDIARIES**

**(FORMERLY OUVO, INC.)**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2007 AND        2006**               

 

 

**13.**

**Commitments**

 

**Employment**

Effective January 2007, the Company entered into an agreement with an        individual to act as Chairman of the Board Company (the “Chairman”). The        agreement, which can be cancelled by either party with twenty days notice, requires        compensation of $8,000 per month, commencing on February 1, 2007, and provides an equity        signing bonus. For the year ended December 31, 2007, the Chairman received $97,600 in        compensation.

 

The Company granted the Chairman of the Board 10% ownership interest or        shares of common stock upon the closing of the Agreement. Management estimated this value        to be $9,600, based on the fair value of Trustcash LLC, prior to merger, which was charged        to operations. These shares can be reaquired in the event the Chairman causes the        termination of his employment on or prior to June 30, 2008, or if he is terminated for        cause.

         

Effective January 31, 2006, the Company employed its President and CEO        through January 30, 2009, at a salary of not less that $175,000 per year. The agreement        automatically renews annually unless either party provides ninety days notice to terminate.        The President received compensation for the years ended December 31, 2007 and 2006,        amounted to $187,092 and $161,512 See (Note 15) regarding subsequent events relating to the        Company’s President and CEO.

         

**Consultants**

In 2006, the Company entered into agreements with certain consultants        wherein the consultants agreed to defer collection for certain charges until the earlier of        a) receipt of debt or equity funding in excess of prescribed thresholds, b) revenue in        excess of prescribed amounts or c) January 2008. Since the Company is attempting to raise        debt and equity funding in the near term; the deferred charges have been classified as a        current liability included in accounts payable and accrued expenses. The deferred charges        amounted to approximately $45,000 at December 31, 2007.

 

The Company has an agreement with an advertising consultant for a minimum        charge of $2,500 per month. The agreement expired in January 2007. At December 31, 2007,        $15,000 remains outstanding and is included in accounts payable and accrued        expenses.

 

Effective July 1, 2007, the Company entered into a consultant agreement with        a director of the Company for a fee of $5,000 per month. This agreement has a term of        twelve months and any termination given hereunder will be given in writing and will be        delivered at least thirty days prior. For the year ended December 31, 2007, the director        received $30,000 in consulting fees.

         

The Company entered into an agreement for the retention of an investor        communications consultant effective June 23, 2007 until December 31, 2007. The Company will        pay $6,000 per month for six months at the beginning of each month and 25,000 shares of        restricted stock per month paid quarterly. In addition, the Company will be responsible for        all reasonable and necessary disbursements. For the year ended December 31, 2007, the        communications consultant expenses amounted to $37,655. On November 6, 2007, the Company        issued 150,000 shares valued at $150,000 of restricted stock for the services rendered by        the investor communications consultant.

 

 

F-18

 

 

**TRUSTCASH HOLDINGS, INC. AND SUBSIDIARIES**

**(FORMERLY OUVO, INC.)**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2007 AND        2006**               

 

 

**13.**

**Commitments (continued)**

         

**Consultants (continued)**

Effective September 6, 2007, the Company entered into a marketing consultant        agreement which will provide services of public relations, marketing, promotion and        strategic planning. The Company will pay $5,000 per month with payment terms of $2,500 to        be issued every two weeks. This agreement has a term of twelve months and after the twelve        months shall continue on a month to month basis. Either party may cancel the contract with        fifteen days written notice. For the year ended December 31, 2007, the consultant received        $15,000 in consulting fees.

 

The Company entered into an agreement for consulting services effective June        28, 2007, for ninety days, to provide services required to assist in the procurement of        merchants and in providing general business strategic consulting and management advisory        services for one merchant. The Company agrees to pay fifteen percent (15%) commission on        net sales derived from the merchant only if the consultant is responsible for the        introduction. In addition, the Company agrees to pay the consultant a $5,000 signing bonus        upon the successful integration of the merchant. Either party may terminate this agreement        upon material breach with thirty days written notice. For the year ended December 31, 2007,        the Company paid the consultant $0.

         

**Consultants**

Effective September 12, 2007, the Company entered into a consulting        agreement to provide services for a website effectiveness or usability test/study. The        Company agreed to pay $24,500 plus an additional $100 per user utilized in the testing        process and procedures, with the initial payment of $12,500 to be paid upon a signed        proposal. In addition, once the recommendations are implemented, the Company agrees to pay        the consultant incentive payments for incremental increase in sales for the following three        months. As of December 31, 2007 the test was not completed and the Company anticipates        completion of the study by the end of the first quarter 2008. For the year ended December        31, 2007, the Company accrued the consultant costs of $12,500 in accounts payable and        accrued expenses.

 

                         

**Content Partners**

The Company has entered into merchant agreements with various content        providers (generally web sites), wherein the Company will pay said content providers a        certain percent of each transaction where a Trustcash card or account is utilized. The        percentage is negotiated with each content provider and can range from one to three years        at varying percentage rates. Some agreements also have provisions that the rates adjust        based on sales volume.

         

                         

**Litigation**

In July 2006, the Company entered into a settlement agreement with a former        legal counsel. Under such agreement, the Company was required to pay $50,000 upon        settlement and the remaining $50,000 is payable in twenty-four monthly installments of        $2,227, including interest of 6.5% per year, and is included in accounts payable and        accrued expenses. Should the Company default on such monthly payments, the Company would be        responsible to pay the full contested amount of approximately $161,000, plus accrued        interest, less any settlement payments made. Interest expense charged in for the year ended        December 31, 2007 amounted to $1,875 As of December 31, 2007 and 2006, the Company was in        compliance with the agreement.

         

F-19

 

 

**TRUSTCASH HOLDINGS, INC. AND SUBSIDIARIES**

**(FORMERLY OUVO, INC.)**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2007 AND        2006**               

 

         

**13.**

**Commitments (continued)**

 

                         

**Litigation (continued)**

In September 2006, a plaintiff instituted an action against the Company        alleging breach of contract and fraud and seeking an unspecified amount of compensatory and        punitive damages for the alleged failure to pay plaintiffs sales commissions from the sale        of certain accounts. In June 2007, the plaintiffs and the Company negotiated a settlement        in terms and a mutual release to pay sales commissions on certain accounts.

         

In October 2006, action was brought against the Company and seeks monies        arising from the Companies alleged failure to pay for services rendered relating to public        relations and marketing under a service agreement between the parties. The action is in its        preliminary stages and discovery has yet been commenced. The Company denies the substance        of the allegations and, in its opinion, such outcome of the action will not have a material        adverse effect on the Company’s financial position, results of operations or cash        flows.

 

**14.**

**Supplemental Disclosures with Respect to Cash                        Flows**

         

                         

Supplemental disclosure of cash flow information:

                         

**2007**

**2006**

 

                         

Cash paid during the period for taxes

$

-

$

-

                         

Cash paid during the period for interest

$110,383

$

277

         

**15**

**Subsequent Events**

 

On December 20, 2007, the Company entered into an Agreement and Plan of        Merger (the “Merger Agreement”) with TCHH Acquisition Corp, a wholly-owned        subsidiary of the Company (“TCHH”), and Paivis Corp., (“Paivis”)        whereby the Company intended to acquire all of the issued and outstanding common shares of        Paivis on a share for share exchange basis. The Merger Agreement was filed on Form 8-K with        the Securities and Exchange Commission on December 28, 2007. On February 5, 2008, the        parties to the Agreement and Plan of Merger agreed to amended the terms and conditions of        the original agreement with the execution of an Amended and Restated Agreement and Plan of        Merger (the “Amended Agreement”) which principal amendments are as        follows:

 

                         

**•**

The Company is to acquire 100% of Paivis’ outstanding                        and preferred stock in exchange for a cash payment and common stock. Each                        issued and outstanding share of Paivis to be exchanged for the right to                        receive $0.10 and one (1) share of the Company’s common                        stock.

 

                         

**•**

The parties have agreed to use their best efforts to                        consummate the transaction on or before March 31, 2008 or as soon                        thereafter as is reasonably practicable.

 

                         

**•**

The Amended Agreement remains subject to the satisfaction of                        certain conditions precedent most importantly to the realization of a                        minimum level of financing by the Company, the completion of respective                        audited financial statements, shareholder approvals, and the satisfaction                        of respective due diligence inquiries.

 

 

F-20

 

 

**TRUSTCASH HOLDINGS, INC. AND SUBSIDIARIES**

**(FORMERLY OUVO, INC.)**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2007 AND        2006**               

 

 

 

**15**

**Subsequent Events (continued)**

 

On January 30, 2008, Paivis and Mistral Ventures, Inc. ("Mistral") jointly        announced their execution of a Binding Term Sheet with Mistral Ventures, Inc. ("Term        Sheet") whereby Mistral has agreed to finance on a best efforts basis a minimum of        $2,000,000 but no more than $7,000,000 towards the financing required by Trustcash under        the Definitive Agreement and Plan of Merger Agreement between Trustcash and        Paivis.

 

Mistral further agreed in the Term Sheet to provide interim financing to        both Paivis and Trustcash to cover the costs of the Merger and miscellaneous working        capital at a combined minimum level of $150,000.

 

Effective February 12, 2008, the board of directors of the Company accepted        the resignation of the Company’s president, chief executive officer, chief financial        officer, and principal accounting officer. Effective March 27, 2008, the board of directors        of the Company accepted the resignation of former Company’s president and member of        the board of directors.

         

Effective February 12, 2008, the board of directors of the Company appointed        an interim president, chief executive officer, chief financial officer, and principal        accounting officer of the Company.

         

On April 4, 2008, the Company entered into a loan agreement with one of the        Company’s stockholders, Ludwig Holdings. Inc. for $75,000. The loan payable bears        interest at the rate of 10% per annum and shall become due and payable on April 8, 2009.        The loan is collateralized by all the assets of the Company.

         

On April 10, 2008, the Company entered into a loan agreement with one of the        Company’s related party, Tyee Capital, Inc. (A company owned by the CEO) for $80,000.        The loan payable bears interest at the rate of 10% per annum and shall become due and        payable on November 10, 2009. The loan is collateralized by all the assets of the        Company.

         

On April 10, 2008, the Company purchased 150,000 shares of Paivis stock at        $.016. The Company plans to continue to accumulate Paivis common shares in the open market        prior to closing the Merger Agreement. Management believes that this action could        ultimately reduce the cost of the merger.

         

On April 10, 2008, the Company entered into an agreement for a loan        receivable with, Paivis. The loan bears interest at a rate of 10% per annum on any unpaid        principle balance, is secured by a lien on the assets of the Company and is due and payable        on April 10, 2009. The purpose of providing the related party with funds is to complete        financial and due diligence on the Merger Agreement between the parties.

         

         

 

F-21

 

 

**ITEM 9.**

**CHANGES IN AND DISAGREEMENTS WITH                        ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE**

 

None.

 

**ITEM 9A.**

**CONTROLS AND PROCEDURES (ITEM 9A (T))**

 

**Management’s Annual Report on Internal Control over Financial        Reporting**

 

The        Company’s management, including our chief executive officer and chief financial        officer, is responsible for establishing and maintaining adequate internal control over our        financial reporting. Internal control over financial reporting is a process designed by, or        under the supervision of, our chief executive and chief financial officers and implemented        by our board of directors, management and other personnel, to provide reasonable assurance        regarding the reliability of financial reporting and the preparation of financial        statements for external purposes in accordance with generally accepted accounting        principles and 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 our assets; (ii) provide reasonable assurance that        transactions are recorded as necessary to permit preparation of financial statements in        accordance with generally accepted accounting principles, and that our receipts and        expenditures are being made only in accordance with authorizations of our management and        directors; and (iii) provide reasonable assurance regarding prevention or timely        detection of unauthorized acquisition, use or disposition of our assets that could have a        material effect on the financial statements.

 

Because of        their inherent limitations, internal control over financial reporting may not prevent or        detect misstatements. Also, projections of any evaluation of effectiveness to future        periods are subject to the risk that controls may become inadequate because of changes in        conditions, or that the degree of compliance with the policies or procedures may        deteriorate.

 

Under the        supervision and with the participation of our management, including our principal executive        officer and principal financial officer, we conducted an evaluation of the effectiveness of        our internal control over financial reporting based on the framework in*Internal Control* *— Integrated Framework*issued by the        Committee of Sponsoring Organizations of the Treadway Commission.

 

During        management’s evaluation of internal controls over financial reporting, the following        material weaknesses in internal control over financial reporting procedures were        found:

 

                         

**•**

There is no formal Audit Committee in place as required by                        the Sarbanes-Oxley Act of 2002.

                         

**•**

There is no Whistleblower Policy adopted and communicated to                        all staff and management.

                         

**•**

There is no disaster recovery plan in place.

                         

**•**

There are no controls in place to ensure complete and                        accurate recording of all trade payables, accrued liabilities and equity                        transactions.

                         

**•**

There is no independent review by company management to                        ensure required certifications and filings are completed with the SEC on a                        timely basis.

                         

**•**

There is no formal accounting policies and procedures                        documented.

                         

**•**

There is no formal human resource policies and practices                        documented.

                         

**•**

There is no oversight and monitoring of IT structure and                        security by management.

 

 

 

30

 

 

Based on        the material weaknesses noted above, management concludes that the internal controls over        financial reporting are not effective. Management will be undertaking remediation efforts        on a cost-effective basis to remediate material weaknesses during the next fiscal year.        Internal controls over financial reporting are expected remain ineffective until revenues        from operations are sufficient to support additional internal controls and the formation of        an audit committee or the Merger Agreement is closed.

 

This annual        report does not include an attestation report of our registered public accounting firm        regarding internal control over financial reporting. Management’s report was not        subject to attestation by our registered public accounting firm pursuant to temporary rules        of the Commission that permit us to provide only the management’s report in this Form        10-K

 

**Changes in Internal Controls over Financial Reporting**

 

During the        period ended December 31, 2007, there has been no change in internal control over financial        reporting that has materially affected, or is reasonably likely to materially affect our        internal control over financial reporting.

 

**9B.**

**OTHER INFORMATION**

 

None.

 

**PART        III**

 

**ITEM 10**

**DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE                        GOVERNANCE**

 

**Officers and Directors**

 

The        following table sets forth the name, age and position of each director and executive        officer of the Company at April 10, 2008:

 

***Name***

***Age***

***Positions Held***

Kent Carasquero

41

 

CEO, CFO, PAO,                        and director

                         

Dennis Shafer

62

director

 

***Kent        Carasquero***has served as interim chief executive officer,        chief financial officer, and principal accounting officer of the Company since February 12,        2008, and has served as our director since January 21, 2005. He served as our sole        executive officer from January 21, 2005 until June 30, 2007.

 

Since 2002,        Mr. Carasquero has been the president of Tyee Capital Consultants, Inc., a private company        involved in assisting publicly and privately held corporations in all major industry groups        with structuring, marketing, investor communications, equity, and debt raising activities.        Mr. Carasquero holds an Advanced BA in Economics from the University of        Manitoba.

 

Mr.        Carasquero has been the chief financial officer, principal accounting officer and director        of the Mistral since March 28, 2007. Mr. Carasquero served as an officer and director of        Intrepid Global 3D Imaging, Inc. from April of 2004 until September of 2004 (formerly        “Delta Capital Technologies, Inc.”) and American Unity Investments, Inc. from        February of 2004 until March of 2005 (formerly “Capital Hill Gold,        Inc.”).

 

31

 

 

***Dennis Shafer***has served as director        since July 28, 2007.

 

Since        February 1, 2007, he has served as Chairman of the Board of Trustcash, LLC through a        consulting agreement with his company, Venture Resource Group LLC, which he founded in 2000        and where he serves as its President. Mr. Shafer is active in providing advisory and        management services to private equity firms engaged in leveraged buyouts, as well as        startups and early growth ventures in technology and consumer products and services. He        provided financing and business development for a pioneer in the Internet video streaming        business during the emergence of Internet retailing, managed the merger of a NASDAQ company        with a private business, led the sale of a large private company to a NYSE corporation, and        has provided business strategy and financing services to a variety of other innovative        consumer businesses. Previously, he was President and CEO of Benetton Sportsystem, the        former sports subsidiary of the Italian-based Benetton Group (NYSE-BNG). The Benetton        Sportsystem included Rollerblade, the founder of in-line skating; Prince, the inventor of        oversized and wide body tennis racquets; and Nordica, a world-wide leader in ski products        for over 50 years. Prior to joining Rollerblade, Shafer held the position of President of        Carlisle Plastics Home and Institutional Products, a division of one of the world’s        largest manufacturers of plastic products. He has also held senior management positions        with other consumer goods manufacturers, was founder of two startup businesses, and has        acted as strategic consultant to a variety of Fortune 500 corporations and investment        companies.

 

No other        persons are expected to make any significant contributions to the Company’s executive        decisions who are not executive officers or directors of the Company.

 

***Term        of Office***

 

Our        directors are appointed for a one (1) 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.

 

***Family Relationships***

 

There are        no family relationships between or among the directors or executive officers

 

***Director Independence***

 

The OTC        Bulletin Board inter-dealer quotation system does not have director independence        requirements. However, for purposes of determining director independence, we have applied        the definitions set out in NASDAQ Rule 4200(a)(15). NASDAQ Rule 4200(a)(15) states that a        director is not considered to be independent if he or she is also an executive officer or        employee of the corporation. Accordingly, we do not have any independent        directors.

 

 

 

 

 

 

 

32

 

 

***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 or former director, executive officer, or employee: (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 offences); (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 Commission 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.

 

***Compliance with Section 16(A) of the Exchange Act***

 

Based        solely upon a review of Forms 3, 4 and 5 furnished to the Company, we are not aware of any        persons who, during the period ended December 31, 2007, failed to file, on a timely basis,        reports required by Section 16(a) of the Securities Exchange Act of 1934.

 

***Code        of Ethics***

 

The Company        has adopted a Code of Ethics within the meaning of Item 406(b) of Regulation S-B of the        Securities Exchange Act of 1934. The Code of Ethics applies to directors and senior        officers, such as the principal executive officer, principal financial officer, controller,        and persons performing similar functions. The Company has incorporated a copy of its Code        of Ethics as Exhibit 14 to this form 10-K. Further, our Code of Ethics is available in        print, at no charge, to any security holder who requests such information by contacting        us.

 

***Board        of Directors Committees***

 

The board        of directors has not established an audit committee. An audit committee typically reviews,        acts on and reports to the board of directors with respect to various auditing and        accounting matters, including the recommendations and performance of independent auditors,        the scope of the annual audits, fees to be paid to the independent auditors, and internal        accounting and financial control policies and procedures. Certain stock exchanges currently        require companies to adopt a formal written charter that establishes an audit committee        that specifies the scope of an audit committee’s responsibilities and the means by        which it carries out those responsibilities. In order to be listed on any of these        exchanges, the Company will be required to establish an audit committee. Accordingly, the        board of directors acts in the capacity of an audit committee.

 

The board        of directors has not established a compensation committee.

***Director Compensation***

 

Directors        currently are not reimbursed for out-of-pocket costs incurred in attending meetings nor are        they typically compensated for their service as directors. However, Trustcash had a        pre-existing employment and consulting agreement with Mr. Shafer and Venture Resource Group        LLC for the rendition of services pertinent to our operation in addition to his entitlement        to shares of our common stock in connection with the acquisition of Trustcash (see        the*Summary Compensation Table,*below).        The Company may adopt a provision for compensating directors for their services in the        future.

 

33

 

 

The        following table provides summary information for the year 2007 concerning cash and non-cash        compensation paid or accrued by the Company to or on behalf of our directors.

 

***Summary Compensation Table***

                         

Name

                         

Fees earned or paid in cash

($)

                         

Stock awards

($)

                         

Option

Awards

($)

                         

Non-equity incentive plan compensation

($)

                         

Nonqualified deferred compensation

($)

                         

All other compensation

($)

                         

                         

Total

($)

Dennis Shafer1

                         

88,000

                         

9,600

                         

-

                         

                         

-

                         

                         

-

                         

                         

-

                         

                         

97,600

         
 
1

Mr. Shafer was compensated with 7,754,914 shares of the                        Company’s common stock on the acquisition of Trustcash on June 30,                        2007.
 
         
 
 

**ITEM 11**

**EXECUTIVE COMPENSATION**

 

**Compensation Discussion and Analysis**

 

The        objective of the Company’s compensation program is to provide compensation for        services rendered by our executive officer and for services provided by the chairman of our        board of directors. Salaries are generally the only type of compensation we utilize in our        executive compensation program however we have used a stock compensation award to further        incentivize the chairman of our board of directors. We have utilized these forms of        compensation because we feel that same are adequate to retain and motivate our executive        officer and chairman The amounts we deem appropriate to compensate our executive officer        and chairman are determined in accordance with market forces; we have no specific formula        to determine compensatory amounts at this time. While we have deemed that our current        compensatory program and the decisions regarding compensation are easy to administer and        are appropriately suited for our objectives, we may expand our compensation program to any        additional future employees to include options and other compensatory elements.

**Tables**

 

The        following table provides summary information for the years 2007, and 2006 concerning cash        and non-cash compensation paid or accrued by the Company to or on behalf of (i) the chief        executive officer and (ii) any other employee to receive compensation in excess of        $100,000.

 

 

 

 

 

 

 

 

 

34

 

 

 

***Summary Compensation Table***

Name and Principal Position

Year

Salary

($)

Bonus

($)

Stock Awards

($)

Option

Awards

($)

Non-Equity Incentive Plan Compensation

($)

Change in Pension Value and Nonqualified Deferred                        Compensation

($)

All Other Compensation

($)

                         

Total

($)

Kent Carasquero1 CEO, CFO, PAO and                        director

2007

2006

                         

                         

60,000

60,000

                         

                         

-

-

                         

-

-

                         

                         

-

-

                         

-

-

                         

-

-

                         

-

-

                         

60,000

60,000

                         

                         

Gregory Moss, former2

CEO, CFO, PAO and director

2007

187,092

-

-

-

-

-

-

187,092

 
 
1

Mr. Carasquero was CEO, CFO, and PAO from January 21, 2005                        until June 30, 2007 and became CEO, CFO, and PAO on February 12, 2008; he                        was paid $5,000 per month per consulting contracts.
  
2

Mr. Moss was CEO, CFO and PAO from June 30, 2007 to February                        12, 2008 and director from June 30, 2007 to March 27, 2008; Trustcash had a                        pre-existing employment and consulting agreement with Mr. Moss.
 
 

We have no        “Grants of Plan-Based Awards”, “Outstanding Equity Awards at Fiscal        Year-End”, “Option Exercises and Stock Vested”, “Pension        Benefits”, or “Nonqualified Deferred Compensation”. Nor do we have any        “Post Employment Payments” to report.

         

**ITEM 12**

**SECURITY OWNERSHIP OF CERTAIN                        BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER                        MATTERS**

 

The        following table sets forth certain information concerning the ownership of the        Company’s 77,549,138 shares of common stock issued and outstanding as of April 10,        2008, with respect to: (i) all directors; (ii) each person known by us to be the beneficial        owner of more than five percent of our common stock; and (iii) our directors and executive        officers as a group.

 

***Names and Addresses of Managers and Beneficial                        Owners***

***Title of Class***

***Number of Shares***

***Percent of***

***Class***

Kent Carasquero

CEO, CFO, PAO, and Director325-3495 Cambie StreetVancouver, British Columbia V5Z 4R3

Common

559,680

0.7%

Dennis Shafer

Chairman of the Board of Directors400 Park Avenue, Suite 1420New York, New York 10022

Common

7,754,914

10.0%

Greg Moss

42 West 26th Street,

Bronx, New York 10471

Common

15,587,745

20.1%

Officer and Directors as a Group (2)

Common

8,314,594

10.7%

         

         

 

35

 

 

**ITEM 13**

**CERTAIN RELATIONSHIPS AND RELATED                        TRANSACTIONS AND DIRECTOR INDEPENDENCE**

 

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, except those listed below.

 

On November        21, 2007, the Company entered into an agreement for a loan receivable with Paivis to        complete financial and due diligence on potential merger candidates The loan bears interest        at a rate of 10% per annum on any unpaid principle balance, is secured by a securitization        on the assets of the Company and is due and payable on November 21, 2008. As of December        31, 2007, the balance of the loans receivable is $125,000. Unpaid accrued interest amounted        to $1,960 at December 31, 2007.

 

On November        16, 2007, the Company entered into a loan agreement with Mistral for $100,000. The loan        payable bears interest at the rate of 10% per annum and shall become due and payable on        November 16, 2008. The loan is collateralized by all the assets of the Company. As of        December 31, 2007, the balance of the note payable is $100,000. Unpaid accrued interest        amounted to $1,240 at December 31, 2007.

 

Effective        July 1, 2007, the Company entered into a consultant agreement with Kent Carasquero for a        fee of $5,000 per month. This agreement has a term of twelve months and any terminate given        hereunder will be given in writing and will be delivered at least thirty days prior. For        the year ended December 31, 2007, the director received $30,000 in consulting        fees.

 

In        connection with the Purchase Agreement, the Company paid one of the former members of        Trustcash, LTGTTC, LLC, as partial consideration for its membership interests and in        cancellation of its defaulted Trustcash secured promissory note in the principal amount of        $96,155 due February 15, 2007, the sum of $200,000 in cash and issued a 5% promissory note        in the principal amount of $700,000 due June 30, 2009. The note is secured by a priority        security interest in all the assets of the Company and all the Company’s        subsidiaries. The note is payable in full at maturity, subject to mandatory prepayments of        25% of all monies raised by the Company from future issuance of new debt or equity        securities. As of December 31, 2007, the balance of the note payable is $700,000. Accrued        interest amounted to $18,118 at December 31, 2007.

 

As of the        June 30, 2007 closing of the Purchase Agreement, the Company issued 49,631,448 shares of        our common stock to the former members of Trustcash as partial consideration for their        Membership Interests of which 15,587,745 share were issued to Gregory Moss and 7,754,914        shares were issued to Dennis Shafer, each a former Trustcash member who were then appointed        as officers and directors of Company.

 

On May 1,        2007, the Company agreed to issue 116,560 (shares valued at $0.50 a share for debt        settlement of $58,280) to Tyee Capital Consultants Inc. Mr. Carasquero is the president and        sole director of Tyee Capital Consultants Inc.

 

 

 

 

36

 

 

Effective        February 1, 2007, Trustcash contracted with Venture Resource Group LLC for the month to        month services of Dennis Shafer as Chairman of the Board in exchange for a fee of $8,000        per month. Trustcash also granted to Shafer a signing bonus equal to a 10% membership        interest in Trustcash that was exchanged for a 10% ownership interest in the Company, or        7,754,914 shares of the Company’s common stock, at the June 30, 2007 closing of the        acquisition of Trustcash These shares can be reacquired in the event Mr. Shafer causes the        termination of his employment on or prior to June 30, 2008, or if he isterminated for        cause. For the year ended December 31, 2007, the Chairman received cash compensation of        $97,600 and stock compensation valued at $9,600.

 

Effective        January 31, 2006, Trustcash employed its president and CEO, Gregory Moss, through January        30, 2009, at salary of not less than $175,000 per year, pursuant to an employment agreement        between Mr. Moss and Trustcash. Mr. Moss received compensation for the year ended December        31, 2007 of $187,092.

 

On February        1, 2005, Kent Carasquero entered into an employment agreement with the Company. The        employment agreement entitled Mr. Carasquero to a base salary of $5,000 per month. This        agreement was terminated on June 30, 2007.

 

**ITEM 14.**

**PRINCIPAL ACCOUNTANT FEES AND                        SERVICES**

 

***Fees        and Services***

 

Sobel &        Co., LLC (“Sobel”), audited our annual financial statements and reviewed our        quarterly financial statements for fiscal 2007 and 2006.

 

The        following is an aggregate of fees billed for each of the last fiscal years for professional        services rendered by our principal accountants:

 

***Auditors’ Fees and Services***

                         

                         

**2007**

**2006**

                         

Audit fees - auditing of our annual financial statements and                        preparation of auditors’ report.

                         

$35,000

$0

Audit-related fees - review of each of the quarterly                        financial statements.

                         

$14,488

$0

Tax fees - preparation and filing of three major tax-related                        forms and tax planning.

                         

$0

$0

All other fees - other services provided by our principal                        accountants.

                         

$0

$0

Total fees paid or accrued to our principal                        accountants

                         

$49,488

$0

 

***Audit        Committee Pre-Approval***

 

The Company        does not have a standing audit committee. Therefore, all services provided to the Company        by Sobel, as detailed above, were pre-approved by the Company’s board of directors.        Sobel performed all work only with their permanent full time employees.

 

 

37

 

 

**ITEM 15.**

**EXHIBITS AND FINANCIAL STATEMENT                        SCHEDULES**

 

***(a)        Consolidated Financial Statements***

 

The        following documents are filed under “*Item 8. Financial        Statements and Supplementary Data,*” pages F-1 through F-21,        and are included as part of this Form 10-K:

         

                         

Financial Statements of The Company for the years ended                        December 31, 2007 and 2006:

Report of Independent Registered Public Accounting Firm

ConsolidatedBalance Sheets

ConsolidatedStatements of Income

Consolidated Statementsof Stockholders’ Equity

ConsolidatedStatements of Cash Flows

Notes to Consolidated Financial Statements

         

***(b)        Exhibits***

         

The        exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to        Exhibits on page 40 of this Form 10-K, and are incorporated herein by this        reference.

         

***(c)        Financial Statement Schedules***

 

We are not        filing any financial statement schedules as part of this Form 10-K because such schedules        are either not applicable or the required information is included in the financial        statements or notes thereto.

 

 

 

38

 

 

 

 

 

 

**SIGNATURES**

 

In        accordance with the requirements of the Securities Exchange Act of 1934, the registrant        caused this report to be signed on its behalf by the undersigned thereunto duly authorized        this 14th day of April, 2008.

 

**TRUSTCASH HOLDINGS, INC.**

 

/s/ Kent Carasquero

Kent Carasquero

Chief Executive Officer, Chief Financial Officer and Principal Accounting        Officer

 

 

In        accordance with the Exchange Act, this report has been signed below by the following        persons on behalf of the registrant and in the capacities and on the dates        indicated.

 

                         

***Signature***

***Title***

***Date***

         

         

                         

/s/ Kent Carasquero

Director

April 14, 2008

Kent Carasquero

         

                         

/s/ Dennis Shafer

Director

April 14, 2008

Dennis Shafer

         

 

39

 

 

**INDEX        TO EXHIBITS**

 

***Exhibit***

***Description***

         

3(i)(a)*

Articles of Incorporation dated October 31,2000                        (incorporated by reference from Form SB2 filed with the Commission on                        August 24, 2001)

3(i)(b)*

Amended Articles of Incorporation dated July 26, 2004                        (incorporated by reference from Form 10-QSB filed with the Commission on                        February 8, 2006)

3(i)(c)*

Amended Articles of Incorporation dated April 12, 2005                        (incorporated by reference from Form 10-QSB filed with the Commission on                        February 8, 2006)

3(i)(d)*

Amended Articles of Incorporation dated May 30, 2007                        (incorporated by reference from Form 8-K filed with the Commission on June                        12, 2007)

3(i)(e)*

Amended Articles of Incorporation dated June 6, 2007                        (incorporated by reference from Form 8-K filed with the Commission on June                        12, 2007)

3(ii)*

Bylaws (incorporated by reference from Form 8-K filed with                        the Commission on June 12, 2007)

10(i)*

Employment Agreement with Gregory Moss (incorporated by                        reference from Form 8-K/A filed with the Commission on July 17,                        2007)

10(ii)*

Consulting Agreement with Venture Resource Group, LLC                        (incorporated by reference from Form 8-K/A filed with the Commission on                        July 17, 2007)

10(iii)*

Purchase Agreement with the members of Trustcash, LLC                        (incorporated by reference from Form 8-K/A filed with the Commission on                        July 17, 2007)

10(iv)(a)*

$700,000 Promissory Note to LTGTTC, LLC (incorporated by                        reference from Form 8-K/A filed with the Commission on July 17,                        2007)

10(iv)(b)*

Security Agreement with LTGTTC, LLC (incorporated by                        reference from Form 8-K/A filed with the Commission on July 17,                        2007)

10(iv)(c)*

Guaranty Agreement with LTGTTC, LLC (incorporated by                        reference from Form 8-K/A filed with the Commission on July 17,                        2007)

10(v)(a)*

Ludwig Holdings Subscription Agreement for Common Stock                        (incorporated by reference from Form 8-K/A filed with the Commission on                        July 17, 2007)

10(v)(b)*

Brennecke Partners LLC Warrant (incorporated by reference                        from Form 8-K/A filed with the Commission on July 17, 2007)

10(v)(c)*

Registration Rights Agreement (incorporated by reference                        from Form 8-K/A filed with the Commission on July 17, 2007)

10(vi)*

Piggyback Registration Rights Agreement (incorporated by                        reference from Form 8-K/A filed with the Commission on July 17,                        2007)

10(vii)*

Employment agreement with Kent Carasquero, dated February 1,                        2005 (incorporated by reference from Form 10-KSB filed with the Commission                        on August 29, 2006)

10(viii)

Consulting agreement with Kent Carasquero, dated June 30,                        2007.

14*

Code of Ethics (incorporated by reference from the Form                        10-QSB filed with the Commission on February 8, 2006)

21*

Subsidiaries of the Company (incorporated by reference from                        Form 8-K/A filed with the Commission on July 17, 2007)

31

Certification of the Chief Executive                        Officer and Chief Financial Officer pursuant to Rule 13a-14 of the                        Securities and Exchange Act of 1934, as amended, as adopted pursuant to                        Section 302 of the Sarbanes-Oxley Act of 2002.

32

Certification of the Chief Executive                        Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as                        adopted pursuant to Section 906 of the Sarbanes-Oxley Act of                        2002.

 

*

Incorporated by reference to previous filings of the                        Company.

 

40