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SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-KSB

(Mark One)

|                                                                                 | 
|-------------------------------------------------------------------------------- | 
|xANNUAL
 REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal
year ended December 31, 2007


OR

|                                                                                     | 
|------------------------------------------------------------------------------------ | 
|oTRANSITION
 REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the
transition period from __________ to __________


Commission file number 000-27615

FIRST TRANSACTION MANAGEMENT, INC.(Name of small business issuer in its charter)



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|                                                                |                                  
|--------------------------------------------------------------- | ---------------------------------
|DELAWARE                                                        | 52-2158936                       
|(State or
 other jurisdiction ofincorporation
 or organization) | (IRS Employer Identification No.)



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381 SE Crystal Creek Circle, Issaquah, WA 98027
(Address of principal executive offices)

(206) 355-1467
(Issuers telephone number, including area code)



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| |                                                                 |                                         | 
| | --------------------------------------------------------------- | --------------------------------------- | 
| | Securities
 registered under Section 12(b) of the Exchange Act: | None                                   
| | Securities
 registered under Section 12(g) of the Exchange Act: |                                        
| |                                                                 | Common
 Stock, $.01 par value per share | 
| |                                                                 |                                         | 

Check whether
the issuer is not required to file reports pursuant to Section 13 or 15(d) of
the Exchange Act o

Check whether
the issuer: (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. Yes x No o

Check if there
is no disclosure of delinquent filers in response to Item 405 of Regulation S-B
contained in this form, and no disclosure will be contained, to be the best of
the registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KS. x

Check whether
the issuer is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes x No o

State issuers
revenues for its most recent fiscal year: $230,589.

State the
aggregate market value of the voting stock held by non-affiliates computed by
reference to the price at which the stock was sold, or the average bid and
asked prices of such stock, as of a specified date within the past 60 days.
(See definition of affiliate in Rule 12b-2 of the Exchange Act.) There is no
public trading market for the Registrants common stock, although such stock
was cleared for an unpriced quotation on the OTC Bulletin Board on January 18,
2008. Therefore, no estimate of the aggregate market value of the voting and
non-voting common equity held by non-affiliates may be made.

State the
number of shares outstanding of each of the issuers classes of common equity:
As of January 28, 2008, there were 7,258,704 shares of common stock, par value
$.01 per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

None

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FORWARD-LOOKING
STATEMENTS

Certain
statements made in this Annual Report on Form 10-KSB are forward-looking
statements (within the meaning of the Private Securities Litigation Reform Act
of 1995) regarding the plans and objectives of management for future
operations. Such statements involve known and unknown risks, uncertainties and
other factors that may cause actual results, performance or achievements of
First Transaction Management, Inc. (the Company) to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. The forward-looking statements included herein
are based on current expectations that involve numerous risks and
uncertainties. The Companys plans and objectives are based, in part, on
assumptions involving the continued expansion of business. Assumptions relating
to the foregoing involve judgments with respect to, among other things, future
economic, competitive and market conditions and future business decisions, all
of which are difficult or impossible to predict accurately and many of which
are beyond the control of the Company. Although the Company believes its
assumptions underlying the forward-looking statements are reasonable, any of
the assumptions could prove inaccurate and, therefore, there can be no
assurance the forward-looking statements included in this Report will prove to
be accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives and plans of the Company will be achieved.

2

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PART
I

ITEM 1. BUSINESS.

INTRODUCTION

First
Transaction Management, Inc. (the Company, we or us) was incorporated in
Delaware under the name Creative Products International, Inc. in March 1999.
Effective August 20, 2001, we changed our corporate name from Creative Products
International, Inc. to First Transaction Management, Inc. We maintain our
principal offices at 381 SE Crystal Creek Circle, Issaquah, WA 98027. Our
telephone number is (206) 355-1467.

We are
currently a shell company as defined by the Securities and Exchange
Commission to be a company with no or nominal operations, and with no or
nominal assets or assets consisting of solely cash and cash equivalents
pursuant to Rule 405 of the Securities Act of 1933, as amended (the Securities
Act), and Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the
Exchange Act).

HISTORICAL

We were
incorporated as a wholly owned subsidiary of Caring Products International,
Inc. On December 23, 1999, Caring Products International, Inc. spun-off all of
our stock pro rata to its then shareholders. The Company has had limited
operations to date and is in the development stage. The Company was organized
to commercialize certain products and services which either (i) are sold
through chain retail stores; (ii) serve manufacturers which sell products
through chain retail stores, or (iii)
assist chain retailers in the management and administration of certain retail
and product promotion programs. In 2001, the Company changed its name to
First Transaction Management, Inc. to reflect the Companys initial focus on
developing web-based promotion management and automated promotion transaction
processing services to consumer product manufacturers and large retailers.

To support
service development, the Company completed a private placement in late 2000 of
375,000 units, each unit consisting of one share of our common stock and a
warrant exercisable for five years from the date of first trading of our common
stock on a public exchange to purchase one share of our common stock at $1.50
per share. The Companys common stock became eligible for an unpriced quotation
on the OTC Bulletin Board on January 18, 2008. The expiration date of the
private placement warrants is January 18, 2013. The private placement resulted
in gross proceeds to the Company of $375,000, of which $100,000 was invested by
the Companys current sole director and executive officer, Susan Schreter.

From 2000
through 2002, the Companys then President and current sole director and executive
officer, Susan Schreter, loaned the Company an aggregate of $1,248,541. Such
loan is evidenced by a demand promissory note and a security agreement that
grants to Ms. Schreter a first lien upon all of the Companys assets, tangible
and intangible, and the right to purchase certain trademarks and intellectual
property acquired by the Company in connection with the spin-off that were
unrelated to the Companys web-based promotion services platform at the greater
of $5,000 or the net property value. The note provides for the payment of
interest at the rate of 8% per annum and, at the option of Ms. Schreter, is
convertible into shares of the Companys common stock on the basis of one share
for each $.08 of principal amount so converted. Ms. Schreter was also granted
warrants exercisable for a period of five years to purchase an aggregate of
270,000 shares of the Companys common stock at $1.00 per share. As of August
15, 2007, all warrants associated with Ms. Schreters loans to the Company
expired unexercised.

3

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On April 9,
2001, Ms. Schreter exercised her right under the security agreement to purchase
the unrelated trademarks and intellectual property for $5,000. On December 31,
2001, Ms. Schreter converted $375,000 of outstanding principal amount under the
Companys note into 4,687,500 shares of the Companys common stock as permitted
under and in accordance with the terms of such note.

Due to the
post dot.com era change in investor sentiment for development stage web-based
service businesses, the Company closed its administrative offices in December
2002. Since 2002, the Company has from time to time generated ancillary
revenues from various business consulting services.

The Companys
principal business objective for the next 12 months and beyond such time will
be to achieve long term growth potential through the acquisition of or merger
with a target company or business seeking the perceived advantages of being a
publicly-held corporation, rather than immediate, short-term earnings. The
Company will not restrict its potential candidate target company to any
specific business, industry or geographical location and, thus, may acquire or
merge with any type of business. Currently, the Company is not in any merger or
acquisition discussions with any business entity.

COMPETITION

The
competition for business combinations, joint ventures, alliances and
acquisitions is significant. We may not be able to develop alliances,
acquisitions or other business combinations on terms that are reasonable. In
addition, we will compete against much larger companies with brand recognition,
customers, technologies, profits, personnel and other resources that would put
our company at a disadvantage to secure a new business opportunity for the
Company.

Our ability to
identify new business relationships for the Company is critical to the
Companys future survival and success. In addition, as competition for
compelling business opportunities increases both domestically and
internationally, the terms at which we may be able to enter into new business
opportunities could harm our long-term operating results and financial
condition.

THE SHELL MARKET

Currently,
with our primary goal the acquisition of a target company or business seeking
the perceived advantages of being a publicly held corporation, the Company
faces significant competition from other shell companies with the same
objectives. The Company is in a highly competitive market for a small number of
business opportunities that could reduce the likelihood of consummating a successful
business combination. A large number of established and well-financed entities,
including small public companies and venture capital firms, are active in
mergers and acquisitions of companies that may be desirable target candidates
for us. Nearly all these entities have significantly greater financial
resources, technical expertise and managerial capabilities than we do;
consequently, we will be at a competitive disadvantage in identifying possible
business opportunities and successfully completing a business combination.
These competitive factors may reduce the likelihood of our identifying and
consummating a successful business combination.

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EMPLOYEES

The Company
does not currently have any full time or part-time employees other than its
sole officer and director, Susan Schreter, who serves in such capacities
without compensation. The Companys success will largely depend upon the
decisions made by Ms. Schreter, who devotes approximately 10% of her business
time to the Companys affairs.

As needed, the
Company has retained from time to time various consultants on an outsourced
basis to support the Companys occasional ancillary business consulting
services.

RISK FACTORS

An investment
in us is extremely risky. You should carefully consider the following risks, in
addition to the other information contained elsewhere in this Form 10-KSB,
before making any investment decision regarding our securities. If any of the
following risks actually materialize, our business and prospects could be
seriously harmed, the value of our securities could decline and you could lose
all or part of your investment.

Risks Relating to Our Operations

We May Be Unable To
Raise Sufficient Capital To Successfully Operate Or Carry Out Our Business
Plan.

Our current
business operations require expenditures to support ancillary consulting
services and continuing as a reporting company. Susan Schreter, our controlling
shareholder and sole officer and director, has been providing equity and debt
financing to the Company since 2000 and is owed approximately $773,541 and
approximately $242,741 in accrued but unpaid interest which is earned at the
rate of 8% per annum. If we cannot obtain additional capital, whether from Ms.
Schreter or elsewhere, we may have to delay potential mergers, acquisitions or
development expenditures that can be expected to harm our competitive growth
potential.

The SEC
recently promulgated regulations that impose certain restrictions upon the
resale of unregistered (restricted) securities issued by companies that are or
have been a shell company. Such regulations become effective February 15, 2008,
and may have a negative impact on the Companys ability to secure additional
capital.

We cannot be
sure that we will be able to secure additional financing on acceptable terms.
Any failure to obtain such financing, or obtaining financing on terms not
favorable to us, can be expected to have a material adverse effect on our
future business prospects.

We Have Sustained
Net Losses In Most Years Since Inception And May Never Become Consistently
Profitable.

We have
sustained losses in most years since inception. These losses were attributable
to our lack of a consistent, revenue-producing operating business and our
inability to obtain adequate financing to develop our core business and
maintain the Company as a reporting company.

We expect to
incur additional losses and negative operating cash flow for the foreseeable
future, and we may never achieve or maintain profitability. Even if we succeed
with our current business plan, we may never become profitable. We also expect
to experience negative cash flow for the foreseeable future, as we continue to
fund our operating losses and capital expenditures. We may not be able to
generate sufficient revenues or achieve profitability in the future. The
failure to generate sufficient revenues or achieve profitability will require
us to seek to raise additional capital and, if we are unable to do so, we may
have to curtail or delay our business plan.

5

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We Are Dependent
Upon Susan Schreter, Our Controlling Shareholder And Sole Officer And Director.

Our future
success depends on the continued services of Susan Schreter, our controlling
shareholder and sole officer and director, in part, because the Company lacks
sufficient resources to hire staff. Ms. Schreter has over 20 years of
experience in the banking and investment banking business and during such time
has also served as a business consultant to several small public and privately
held companies. As a result, she has critical industry experience and
relationships upon which we rely. The loss of Ms. Schreters services could
divert time and resources, delay the development of our current business and
negatively affect our ability to sell our services or execute our business
plan. Such problems might be expected to have a material adverse impact on our
future business prospects.

It May Be A Conflict
Of Interest For Susan Schreter To Serve As Our Sole Officer and Director While
Also Acting As An Independent Business Consultant.

As an officer
and director, Ms. Schreter has a fiduciary duty to our shareholders. However,
her position as an independent business consultant may compromise her ability
to make decisions in the best interests of our shareholders.

Ms. Schreter
devotes approximately 10% of her business time to the affairs of the Company. A
significant portion of the balance of her time is spent acting as an
independent business consultant. From time to time Ms. Schreter has referred to
the Company opportunities that arose in her individual capacity but she has no
agreement with the Company that requires her to do so.

We May Make
Acquisitions, Business Combinations Or Strategic Investments In One Or More
Companies In The Future And Such Transactions May Result In Dilutive Issuances
Of Equity Securities, Use Of Our Cash Resources, And Incurrence Of Debt And
Amortization Of Expenses Related to Intangible Assets.

Any merger,
acquisition, strategic investment or other form of business combination by us
will likely involve a number of risks, including :

| |   |                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------
| |  | The
 difficulty of assimilating the operations and personnel of acquired companies
 into our operations;                                  
| |   |                                                                                                                                           
| |  | Additional
 operating losses and expenses of the business or businesses we may acquire or
 in which we invest;                            
| |   |                                                                                                                                           
| |  | The difficulty
 of integrating acquired technology and rights into the Company and
 unanticipated expenses related to such integration;   
| |   |                                                                                                                                           
| |  | The failure
 to successfully further develop acquired technology resulting in the
 impairment of amounts capitalized as intangible assets;

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| |   |                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The
 potential for patent and trademark infringement claims against the acquired
 company;                                                                                                                                          
| |   |                                                                                                                                                                                                                                     
| |  | The
 impairment of relationships with customers and partners of the companies we
 may acquire or in which we may invest;                                                                                                            
| |   |                                                                                                                                                                                                                                     
| |  | The impact
 of known potential liabilities or unknown liabilities associated with the
 companies we may establish relationships with;                                                                                               
| |   |                                                                                                                                                                                                                                     
| |  | In the case
 of foreign acquisitions or business relationships, uncertainty regarding
 foreign laws and regulations and difficulty integrating operations and
 systems as a result of cultural, systems and operational differences;
| |   |                                                                                                                                                                                                                                     
| |  | Our lack of
 control or limitations on our control over the operations of our potential
 business partners; and                                                                                                                     
| |   |                                                                                                                                                                                                                                     
| |  | The
 difficulty of integrating the acquired companys accounting, management
 information, human resources and other administrative systems.                                                                                        

Our potential
failure to be successful in addressing these risks or other problems
encountered in connection with future acquisitions, mergers or strategic
investments could cause us to fail to realize the anticipated benefits of such
acquisitions or investments, incur unanticipated liabilities and harm our
business generally.

If We Raise
Additional Funds Through The Issuance of Equity Securities, Or Determine In The
Future To Issue Or Register Additional Shares Of Our Common Stock, Your
Percentage Ownership Will Be Reduced, You Will Experience Dilution That Could
Substantially Diminish The Value of Your Stock and Such Issuance May Convey
Rights, Preferences or Privileges Senior to Your Rights Which Could
Substantially Diminish Your Rights And The Value Of Your Stock.

We may issue
additional shares of our common stock for various reasons and may grant
additional stock options to new employees, consultants, officers, directors and
third parties. If we determine to register for sale to the public additional
shares of our common stock granted in any future financing or business
combination, a material amount of dilution can be expected to cause the value
of our common stock to decline.

In order for
us to obtain additional capital or complete a business combination, we may find
it necessary to issue securities, including but not limited to, any or all
shares of our common stock or preferred stock, in some cases conveying rights
senior to those of the current holders of our common stock. Those rights may
include voting rights, liquidation preferences and conversion rights. To the
extent we convey senior rights, the value of our common stock can be expected to
decline.

If
We Incur Indebtedness, We May Become Too Highly Leveraged And Would Be In Risk
of Default.

The Company currently owes a
total of $1,016,282 (including accrued but unpaid interest of $242,741) to
Susan Schreter, our controlling shareholder and sole officer and director. If
we incur indebtedness to unrelated parties whether through a merger,
acquisition or otherwise, we may become too highly leveraged and would be in
risk of default. There is no contractual or regulatory limit to the amount of debt
we can take on. Any debt incurred by the Company could adversely affect our
ability to meet our obligations and we would then be in risk of default, which
could have a material adverse effect on our financial condition, results of
operations, business prospects and long term future viability.

7

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We Currently Face
And Expect To Continue To Face Significant Competition That May Inhibit Our
Ability To Successfully Complete A Merger, Acquisition, Strategic Investment Or
Other Form Of Business Combination.

The Company is
in a highly competitive market for a small number of business opportunities
that could reduce the likelihood of consummating a successful business
combination. We are and will continue to be an insignificant participant in the
business of seeking mergers or joint ventures with or acquisitions of small
private and public entities. A large number of established and well-financed
entities, including small public companies and venture capital firms, are
active in mergers and acquisitions of companies that may be desirable target
candidates for us. Nearly all these entities have significantly greater
financial resources, technical expertise and managerial capabilities than we
do. Consequently, we may be at a competitive disadvantage in identifying possible
business opportunities and successfully completing a business combination.
These competitive factors may reduce the likelihood of our identifying and
consummating a successful business combination.

Our Future Success
Is Highly Dependent On The Ability of Management To Locate And Attract A
Suitable Merger, Acquisition, Strategic Investment Or Other Form Of Business
Combination.

The nature of
our operations is highly speculative and there is a consequent risk of loss of
your investment. The success of our plan of operation will depend to a great
extent on the operations, financial condition and management of the identified
business opportunity. While management intends to seek business combination(s)
with entities having established operating histories, we cannot assure you that
we will be successful in locating candidates meeting that criterion. If we
complete a business combination, the success of our operations may be dependent
upon management of the successor firm or venture partner firm, and numerous
other factors beyond our control.

The Company Has No
Existing Agreement For A Merger, Acquisition, Strategic Investment Or Other
Form Of Business Combination And May Be Unable To Effect Such A Transaction.

We are not
currently in any discussions regarding a possible transaction with respect to
engaging in a merger or joint venture with, or acquisition of, a private or
public entity. No assurances can be given that we will successfully identify
and evaluate suitable business opportunities or that we will conclude a
business combination. We cannot guarantee we will be able to negotiate a
business combination on favorable terms.

Risks Relating to Our Securities

Because One
Shareholder Owns a Large Percentage of Our Voting Stock, Other Shareholders
Voting Power May be Limited.

As of January
28, 2008, Susan Schreter, our sole officer and director, beneficially owned or
controlled approximately 74% (including shares issuable upon exercise of
warrants owned be her). Accordingly, Ms. Schreter has the ability to control
matters submitted to our shareholders for approval, including the election and
removal of directors and the approval of any merger or consolidation. As a
result, other shareholders may have little or no influence over matters
submitted for shareholder approval. In addition, the ownership of Ms. Schreter
could preclude any unsolicited acquisition of us, and consequently materially
adversely affect the value of our common stock. Ms. Schreter may make decisions
that are adverse to your interests.

8

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Our Organizational
Documents And Delaware Law Make It Harder For Us To Be Acquired Without The
Consent And Cooperation Of Our Board of Directors and Management.

Provisions of
our organizational documents and Delaware laws may deter or prevent a takeover
attempt. Under the terms of our Certificate of Incorporation, our board of
directors has the authority, without further action by the shareholders, to
issue shares of preferred stock in one or more series and to fix the rights,
preferences, privileges and restrictions of such shares. The ability to issue
shares of preferred stock could tend to discourage takeover or acquisition
proposals not supported by our current board of directors. In addition, we are
subject to Section 203 of the Delaware General Corporation Law, which restricts
business combinations with some shareholders once the shareholder acquires 15%
or more of our common stock.

No Active Trading
Market Currently Exists For Our Securities And None May Ever Develop Or Be
Maintained.

The Companys
common stock became eligible for an unpriced quotation on the OTC Bulletin
Board on January 18, 2008 under the symbol FTMG. There can be no assurance
that a priced quotation will be entered. Even if entered, there can be no
assurance that an active trading market in our securities will develop, and, if
developed, maintained. Furthermore, if a price is entered less than $5.00 per
share, then our common stock would be subject to the penny stock regulations
adopted by the SEC that impose additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally those with assets in excess
$1,000,000 or annual income exceeding $200,000 or $300,000 together with their
spouse).

The OTC
Bulletin Board is an unorganized, inter-dealer, over the counter market that
provides significantly less liquidity that The Nasdaq Stock Market, and quotes
for stocks included on the OTC Bulletin are not listed in the financial
sections of newspapers as are those for The Nasdaq Stock Market. In addition,
the stock market in recent years has experienced extreme price and volume
fluctuations that have particularly affected the market prices of many smaller
companies. Accordingly, if a price is quoted for our securities, such price may
be expected to be subject to significant fluctuations in response to various
factors, including general economic and market conditions and perceived value
of shell corporations.

Based on the
foregoing, for the foreseeable future shareholders are likely to experience
illiquidity and may be required to hold our securities for an indefinite period
of time.

Our Board of
Directors Has The Authority, Without Further Shareholder Action, To Issue
Shares Of Preferred Stock That May Have Rights That Could Adversely Affect The
Voting Power Or Other Rights Of The Holders of Our Common Stock.

Our
Certificate of Incorporation authorizes the issuance of up to 1,000,000 shares
of Preferred Stock with designations, rights and preferences determined from
time to time by our Board of Directors. Accordingly, our Board of Directors is
empowered, without shareholder approval, to issue Preferred Stock with
dividend, liquidation, conversion, voting, or other rights that could adversely
affect the voting power or other rights of the holders of our common stock. In
the event of issuance, the Preferred Stock could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change in
control of the Company. Although we have no present intention to issue any
shares of our authorized Preferred Stock, there can be no assurance that the
Company will not do so in the future.

9

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Forward-looking
Statements Should Not Be Relied On Because They Are Inherently Uncertain.

Certain
statements and information contained in this Form 10-KSB regarding matters that
are not historical facts are forward-looking statements, as that term is
defined under applicable securities laws. These include statements concerning
the Companys future, proposed and anticipated activities, certain trends with
respect to its revenue, operating results, capital resources and liquidity, and
certain trends with respect to the markets in which the Company competes or its
industry in general. Forward-looking statements, by their very nature, include
risks and uncertainties, many of which are beyond the Companys control.
Accordingly, actual results may differ, perhaps materially, from those
anticipated in or implied by such forward-looking statements.

ITEM 2. PROPERTY.

Since January,
2003, the Company has operated from an office in Seattle, Washington, provided
at no charge by the Companys sole officer and director and principal
shareholder, Susan Schreter.

ITEM 3. LEGAL
PROCEEDINGS

As of the date
of this filing, there are no pending legal proceedings to which the Company is
a party or to which any of its properties is the subject and, to the best of
its knowledge, no such actions against the Company are contemplated or
threatened.

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

The Company did not submit any
matters to a vote of its security holders during the fiscal year ended December
31, 2007.

10

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PART
II

ITEM 5.
MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

There has been no public market for the Companys
common stock. On January 18, 2008, the Companys common stock was cleared for
unpriced quotation on the OTC Bulletin Board under the symbol FTMG. To date,
no priced quotation has been entered.

HOLDERS OF RECORD

As of the date of this filing, there were
approximately 130 holders of record of the Companys common stock.

DIVIDENDS

We have not paid any cash dividends on our common
stock to date, and do not anticipate declaring or paying any dividends in the
foreseeable future. We anticipate that for the foreseeable future we will
follow a policy of retaining earnings, if any, in order to finance the
expansion and development of our business. Payment of dividends is within the
discretion of our board of directors and will depend upon our earnings, capital
requirements, and operating and financial condition, among other factors.

PREFERRED STOCK

Our Certificate of Incorporation authorizes the
issuance of up to 1,000,000 shares of Preferred Stock with designations, rights
and preferences determined from time to time by the Board of Directors. As of
the date hereof, the Company has not created a series or class of Preferred
Stock, nor has it issued any Preferred Stock.

RECENT SALES OF UNREGISTERED SECURITIES

During 2007, we did not issue any securities that were
not registered under the Securities Act of 1933, as amended (the Securities
Act), except as previously included in a quarterly report on Form 10-QSB or a
Current Report on Form 8-K.

ITEM 6.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.

The following discussion and analysis of our financial
condition and results of operations should be read in conjunction with our
financial statements and notes thereto and the other financial information
included elsewhere in this annual report. This discussion of operations as well
as certain statements and information under Item 1 Business include certain
forward looking statements. When used in this report, the words expects,
intends, plans and anticipates and similar terms are intended to identify
forward looking statements that relate to the Companys future performance.
Such statements involve risks and uncertainties. The Companys actual results
may differ materially from the results discussed here.

11

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Overview

From 2000 to 2002, the Company was engaged in the
development of a web-based promotion distribution and transaction processing platform
for consumer product manufacturers and chain retailers. On December 31, 2002,
as a cost cutting measure, the Company ceased active development and
programming of is web-based promotion distribution and promotion transaction
processing platform, closed its offices and terminated its employees and
consultants.

During 2003 and 2004, the Company continued to explore
the potential of identifying funding or strategic partners for its web based
promotion technologies. Due the lack of financial market interest, the Company
ceased its efforts to commercialize its technology. As a result, the Company
subsequently wrote off all intangible assets associated with its promotion
management business.

From 2002 to 2007, the Company generated ancillary
revenues from general business consulting services to support its nominal
operations. These consulting services have been unrelated to the Companys
prior interests in promotion management services for consumer product
manufacturers and chain retailers. The Company is not under any service
contracts to provide business management consulting services to any customer.
In addition, the Company has devoted its efforts to seek other economic
opportunities, including but not limited to, the possibility of acquiring a new
line of business through a business combination. There is no assurance that the
Company will be able to secure additional customers for its ancillary
consulting services to generate interim working capital to support the
Companys efforts to identify new economic opportunities for the Company.

Critical Accounting Policies and Estimates

Managements discussion and analysis of the Companys
financial condition and results of operations are based on its financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the U.S. The preparation of these financial statements
requires the Company to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements, as well as the revenues
and expenses during the reporting periods. The Company evaluates its estimates
and judgments on an ongoing basis. The Company bases its estimates on
historical experience and on various other factors it believes are reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

Recovery of Long-Lived Assets (other than goodwill)

In accordance with Statement of Financial Accounting
Standards (SFAS) No.144, Accounting for the Impairment or Disposal of
Long-Lived Assets, the Company reviews these types of assets for impairment
whenever events or circumstances indicate that carrying amount may not be
recoverable over the remaining life of the assets or assets group. In order to
determine if the asset or asset group is recoverable, the Company determines if
the expected future cash flows directly related to the asset or asset group are
less than the carrying amount of the asset or asset group. If so, the Company
then determines if the carrying amount of the asset or asset group exceeds its
fair value. The Company determines fair value using estimated discounted cash
flows. On December 31, 2002, the Company discontinued its operations on all
revenue producing activities, which created a triggering event for a review
of its long-lived assets. As a result of this review, the Company wrote off
$13,049 and $133,934 at December 31, 2003 and December 31, 2004, respectively.

12

---



Revenue Recognition

The Company maintains its financial records on the
accrual basis of accounting. There was no revenue generated from the Companys
development stage promotion management services. Since December 31, 2002, the
Company has generated nominal revenues from various consulting services. These
services are primarily billed on a project completion basis and revenues are
reported when all goods and services have been performed or delivered, the
amounts are readily determinable and collection is reasonably assured. The
Company is not under contract to provide any additional business management
consulting services to any customer.

Income Taxes

Assessment of the appropriate amount and
classification of income taxes is dependent on several factors, including
estimates of the timing and probability of realization of deferred income taxes
and the timing of income tax payments. This process requires the Company to
estimate its actual current tax exposure together with an assessment of
temporary differences resulting from differing treatment of items, such as
depreciation on property, plant and equipment, for tax and accounting purposes.
These differences may result in deferred tax assets and liabilities, which are
included within our balance sheet. Since the Company has a net operating loss
carryforward of approximately $2.1 million at December 31, 2007, a valuation
allowance is provided on deferred tax assets if it is determined that it is
more likely than not the asset will not be realized, because the ultimate
realization of any deferred tax assets will be dependent on future taxable
income.

Results of Operations

As the Companys current focus and that for the next
12 months is on effecting a business combination, the Company does not believe
that quarter to quarter and year to year comparisons of its historical results
of operations is meaningful in predicting the Companys future financial
performance. All of the Companys revenues in Fiscal 2007, Fiscal 2006 and
Fiscal 2005 were generated from providing ancillary consulting services. The
Company does not have any contractual commitments to provide such services in
the future and no assurance can be given that the Company will obtain any such
contracts. Even if the Company is able to procure such contracts, the timing of
procurement, the length of the services and the completion date of such services
is generally beyond the Companys control. Accordingly, it is anticipated that
the Companys results of operations will fluctuate from quarter to quarter and
from fiscal year to fiscal year.

Comparison
of the Fiscal Year Ended December 31, 2007 to the Fiscal Year Ended December
31, 2006

Revenues from consulting services in the fiscal year
ended December 31, 2007 (Fiscal 2007) were $230,589 as compared to $6,483 in
the fiscal year ended December 31, 2006 (Fiscal 2006), representing a 3,457%
increase. This increase reflected an increase in client service activity in
Fiscal 2007. Total operating expenses before depreciation and amortization
increased from $31,091 for Fiscal 2006 to $132,004 during Fiscal 2007,
representing a 325% increase. This increase reflected increased costs
associated with increased client service activity plus higher administrative
and accounting costs related to recent public company filings. Amortization
increased from $5,337 in Fiscal 2006 to $8,588 in Fiscal 2007, representing a 61%
increase. Operating income improved from an operating loss of $29,946 in Fiscal
2006 to operating income of $89,997 in Fiscal 2007. Accrued interest expense
associated with loan advances provided to the Company by its controlling
shareholder and sole director and officer during Fiscal 2006 and Fiscal 2007
were $61,844 and $61,882, respectively.

13

---



As a result of the foregoing, the Company generated
net income of $28,115 in Fiscal 2007 as compared to a net loss of $91,829 for
Fiscal 2006. The weighted net loss per share for Fiscal 2006 was $.02 as
compared to the weighted net income per share that was not meaningful for
Fiscal 2007. For the reasons stated above, the Companys believes that its
results of operations will fluctuate from quarter to quarter and from fiscal
year to fiscal year and that comparisons of its historical results of
operations on a quarter to quarter or fiscal year to fiscal year basis is not
meaningful or indicative of its future financial performance.

Liquidity, Capital Resources and Going Concern

As of December 31, 2007, the Company had 1,000,000
authorized but unissued shares of preferred stock and 15,000,000 authorized
shares of common stock, with 7,258,704 shares of common stock outstanding. The
Companys Board of Directors has the authority to issue all or any part of our
authorized and unissued capital stock to raise additional capital or finance
acquisitions, as well as the authority to fix the rights, privileges and
preferences of the preferred stock.

Since inception of the Company, it has been primarily
funded through loans provided by our controlling shareholder and current sole
officer and director, equity investments by her, a nominal private placement,
the initial capitalization provided at the time of spin off from its then parent
in 1999, and nominal cash flows provided by limited engagement consulting
activities. These funding sources became inadequate for the Company to support
its initial business plan in web based promotion services. As of December 31,
2007, the outstanding balance of the loan provided by the controlling
shareholder and current sole officer and director was $773,541 and continues to
accrue interest at the rate of 8% per annum. During Fiscal 2007, the Company
paid $33,444 in interest on this loan.

The Company intends to rely on ancillary consulting
services to fund its nominal operations until it can find a new business
opportunity or business combination for the Company. The Company may also issue
additional common or preferred shares to raise additional funds to finance new
business acquisitions or to pay for professional services or other costs
associated with such acquisitions. There is no assurance, however, that
additional working capital or financing from these sources can be obtained on
acceptable terms or that a business combination can be completed.

At December 31, 2007, the Company had approximately
$121,785 in cash and cash equivalents. The Company had current liabilities of
$55,000 in accrued expenses and $242,741 in accrued interest payable at December
31, 2007. The Company had total assets of $121,785 at December 31, 2007 and
long term liabilities on such date of $773,541 representing the loan to the
Company from its controlling shareholder and sole officer and director.

Management believes that the Companys existing
financial resources and anticipated revenues from ancillary consulting services
will not be sufficient to fund operations for the foreseeable future.
Therefore, the Company will have to seek additional loans or raise additional capital.
No assurances can be given that the Company will be able to obtain such loans
or raise additional capital. If the Company is unable to do so, it may have to
curtail its operations or defer any combination with another entity.

14

---



At December 31, 2007, the Company had a stockholders
deficiency of $2,325,229 and a working capital deficit of $175,956. Despite the
Companys generation of nominal net income of $28,115 in Fiscal 2007, the
Company has a history of generating net income losses. These conditions
indicate that the Company may be unable to continue as a going concern. Its
ability to do so is dependent on its finding economic opportunities that will
achieve profitable operations, obtaining necessary financing and finding a
suitable candidate for a business combination. No adjustments have been
provided in the Companys financial statements that might result form the
outcome of this uncertainty. Our auditors have referred to the substantial
doubt about our ability to continue as a going concern.

Comparison
of the Fiscal Year Ended December 31, 2006 to the Fiscal Year Ended December
31, 2005

Revenues from consulting services in the fiscal year
ended December 31, 2006 (Fiscal 2006) were $6,483 as compared to $141,251 in
the fiscal year ended December 31, 2005 (Fiscal 2005), representing a 95%
decrease. This decrease was due to a lack of client service activity in Fiscal
2006. Total operating expenses before depreciation and amortization decreased
to $31,091 for Fiscal 2006 from $46,332 during Fiscal 2005, representing a 33%
decrease. This decrease reflected the decrease in the costs associated with
reduced client service activity. Despite the reduction in consulting revenues
in fiscal 2006, however, the Company continued to incur general marketing and
administration costs in pursuit of new business opportunities for the Company.
Amortization increased from $4,349 in Fiscal 2005 to $5,337 in Fiscal 2006,
representing a 23% increase. Operating income declined sharply from $90,570 in
Fiscal 2005 to an operating loss of $29,946 in Fiscal 2006. Accrued interest
expense associated with loan advances provided to the Company by its
controlling shareholder and current sole director and officer during 2000 to
2002 for each of Fiscal 2006 and Fiscal 2005 was $61,884.

As a result of the foregoing, the Company generated a
net loss of $91,829 for Fiscal 2006, as compared to net income of $28,686 for
Fiscal 2005. The weighted net loss per share for Fiscal 2006 was $.02 as
compared to the weighted net income per share of $.01 for the Fiscal 2005. For
the reasons stated above, the Companys believes that its results of operations
will fluctuate from quarter to quarter and from fiscal year to fiscal year and
that comparisons of its historical results of operations on a quarter to
quarter or fiscal year to fiscal year basis is not meaningful or indicative of
its future financial performance.

ITEM 7.
FINANCIAL STATEMENTS

Our audited financial statements listed on the Index
to the Financial Statements are included beginning at F-1 following Item 14 of
this Report.

ITEM 8.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

Inapplicable.

15

---



ITEM 8A.
CONTROLS AND PROCEDURES

As of the end of the period covered by this Report,
with the participation of our Chief Executive and Chief Financial Officer,
referred to in this context as our certifying officer, we evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of
1934). Based upon that evaluation, our Chief Executive and Chief Financial
Officer concluded that as of the end of such period, our disclosure controls
and procedures were effective as of the end of the period covered by this
Report in timely alerting her to material information relating to First
Transaction Management, Inc. required to be disclosed in our periodic reports
with the Securities and Exchange Commission.

The certifying officer also has indicated that there
were no significant changes in our internal controls or other factors that
could significantly affect such controls subsequent to the date of her
evaluation, and there were no corrective actions with regard to significant
deficiencies and material weaknesses.

First Transaction Management, Inc. continues the
process to complete a thorough review of its internal controls as part of its
preparation for compliance with the requirements of Section 404 of the
Sarbanes-Oxley Act of 2002. Section 404 requires our management to report on,
and our external auditors to attest to, the effectiveness of our internal
control structure and procedures for financial reporting. As a non-accelerated
filer under Rule 12b-2 of the Exchange Act, our first report under Section 404
will be contained in our Form 10-KSB for the period ended December 31, 2009.

ITEM 8B.
OTHER INFORMATION

None

PART
III.

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS; COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT OF THE
REGISTRANT.

Our executive officers and directors are identified in
the table below:

|               |  |     |  |                  | 
|-------------- |  | --- |  | ---------------- | 
|NAME           |  | AGE |  | POSITION         | 
|               |  |     |  |                  | 
|Susan Schreter |  | 46  |  | Chairman and CEO

Susan Schreter has been president, CEO and Chairman of
the Board of First Transaction Management, Inc. since it inception in 1999.
Since, 2002 she also has provided general business consulting services to third
parties on a part-time basis. From January 1993 until 1999, Ms. Schreter served
as President and a director of Caring Products International, Inc., a public
company then engaged in the design and commercialization of absorbent material
and other retail related healthcare products. From July 1985 to December 1992,
she was president of Beta International Inc, a privately held firm providing
consulting services to growing companies, private business investors and
buy-out funds in the areas of acquisition due diligence, cash flow planning,
strategic business planning and capital investment.

16

---



There are no material proceedings known to us to which
our sole director and officer or affiliates, or any owner of record or
beneficially of more than 5% of any class of our voting securities, or any
affiliate of such persons is a party adverse to us or has a material interest
adverse to our interests. Our sole director has not received any additional
compensation for her services as a director. We do not know of any legal
proceedings that are material to the evaluation of the integrity of our sole
executive officer and director

There are no committees of the Board of Directors. The
Companys By-laws provide that the size of the Board of Directors may be
changed by resolution of the Board. Members of the Board serve until the next
annual meeting of shareholders and until their successors are elected and
qualified. Meetings of the Board are held when and as deemed necessary or
appropriate. Officers are appointed by and serve at the discretion of the
Board.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934
(the Exchange Act) requires the Companys executive officers and directors,
and persons who own more than ten percent of a registered class of the
Companys equity securities (collectively, the Reporting Persons) to file
reports and changes in ownership of such securities with the Securities and
Exchange Commission and the Company.

Based solely upon a review of (i) Forms 3 and 4 and
amendments thereto furnished to the Company pursuant to Rule 16a-3(e),
promulgated under the Exchange Act, during the Companys fiscal years ended
December 31, 2007, and (ii) Forms 5 and any amendments thereto and/or written
representations furnished to the Company by any Reporting Persons stating that
such person was not required to file a Form 5 during the Companys fiscal year
ended December 31, 2007, it has been determined that no Reporting Persons were
delinquent with respect to such persons reporting obligations set forth in
Section 16(a) of the Exchange Act.

ITEM 10
EXECUTIVE COMPENSATION

Summary Compensation Table

No annualized compensation was paid to our named
executive officer at the end of the fiscal years ended December 31, 2007, 2006
and 2005. The individual we refer to as our named executive officer is Susan
Schreter, our sole executive officer during the relevant periods.

Narrative Disclosure to Summary Compensation Table

On January 11, 2001 we entered into an employment
contract with our Chief Executive Officer, Susan Schreter, that provided for an
annual base salary of $150,000 plus a bonus to be determined by the Board of
Directors. As part of the compensation agreement, Ms. Schreter was granted an
option exercisable for a five year period to purchase 100,000 shares of our
common stock at a price of $.65 per share. The option expired unexercised on
December 4, 2005. Effective December 31, 2002, the employment agreement was
terminated due to lack of funds. During the period of the contract, Ms.
Schreters salary was accrued but unpaid.

Outstanding Equity Awards

No equity awards were provided to officers or
directors during the fiscal years ended December 31, 2005 to December 31, 2007.

17

---



Outstanding Equity Awards Narrative Disclosure

No equity awards were provided to officers or
directors during the fiscal years ended December 31, 2005 to December 31, 2007.

Incentive Program. No equity awards were provided to
officers or directors during the fiscal years ended December 31, 2005 to
December 31, 2007.

Our board of directors currently consists of one
member, Ms. Schreter. We are not currently providing any compensation to her
for serving in such capacity.

Compensation Pursuant to Plans. In 1999, the Company
approved the1999 Incentive Program. The Program provides for the grant of
incentive stock options, nonqualified stock options, restricted stock grants,
including, but not limited to unrestricted stock grants, as approved by the
Board of Directors or a committee of the Board. Incentive stock options under
the Program are intended to qualify as incentive stock options within the
meaning of Section 422 of the internal Revenue Code of 1986, as amended.
Nonqualified stock options granted under the Program are intended not to
qualify as incentive stock options under the Internal Revenue code.

The total number of shares of the Companys common
stock that may be issued under the Program upon the exercise of all options
granted under the Program or the satisfaction by all recipients of all
conditions necessary for the receipt of restricted stock awards and/or
unrestricted stock awards may not exceed 1,000,000 shares of the Companys
common stock. At December 31, 2007, there were no awards issued or outstanding
under the Program.

During 2001, the Companys Board of Directors approved
the adoption of another stock option plan for technology and web related
employees and consultants. A maximum of 750,000 shares of the Companys common
stock is available for issuance under the plan. No stock options have ever been
issued under this plan.

Compensation of Directors Summary Table

For the fiscal periods ended December 31, 2005 to
2007, the amounts required to be calculated as pro forma amounts under the
Statement of Financial Accounting Standards No. 123 or as compensation expense
as revised by FAS 123R are not applicable to the financial statements.

|                              |  |      |      |                                       |  |                |  |               |   |                                            |  |                                                   |  |                            |   |       |  |   |  |  |   |  |  |   | 
|----------------------------- |  | ---- | ---- | ------------------------------------- |  | -------------- |  | ------------- | - | ------------------------------------------ |  | ------------------------------------------------- |  | -------------------------- | - | ----- |  | - |  |  | - |  |  | - | 
|Name and
  principal position |  | Year |      | Fees
  Earned
  or Paid in
  Cash ($) |  | Stock
  Awards |  | Option Awards |   | Non-Equity
  Incentive Plan
  Compensation |  | Nonqualified
  Deferred
  Compensation
  Earnings |  | All
  Other
  Compensation |   | Total | 
|                              |  |      |      |                                       |  |                |  |               |   |                                            |  |                                                   |  |                            |   |       | 
|Susan Schreter                |  |      |      |                                       |  |                |  |               |   |                                            |  |                                                   |  |                            |   |       |  |   |  |  |   |  |  |   | 
|Director                      |  |      |      |                                       |  |                |  |               |   |                                            |  |                                                   |  |                            |   |       |  |   |  |  |   |  |  |   | 
|                              |  |      | 2007 |                                       |  |               |  |               |  |                                            |  |                                                  |  |                            |  |       |  |  |  |  |  |  |  |  | 
|                              |  |      | 2006 |                                       |  |               |  |               |  |                                            |  |                                                  |  |                            |  |       |  |  |  |  |  |  |  |  | 
|                              |  |      | 2005 |                                       |  |               |  |               |  |                                            |  |                                                  |  |                            |  |       |  |  |  |  |  |  |  |  | 

18

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ITEM 11.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS

The following table sets forth certain information as
of December 31, 2007 regarding (i) each person known by the Company to be the
beneficial owner of more than 5% of the outstanding shares of common stock;
(ii) each director, nominee and executive officer of the Company; and (iii) all
officer and directors as a group.

|                                                       |  |                                             |  |                       |     |  |    |   | 
|------------------------------------------------------ |  | ------------------------------------------- |  | --------------------- | --- |  | -- | - | 
|Name                                                   |  | Amount and Nature of Beneficial
  Ownership |  | Percentage
  of Class |    
|                                                       |  |                                             |  |                       |     |  |   
|Susan Schreter                                         |  |                                             |  | 5,355,947             | (1) |  | 74 | % | 
|All directors
  and officers as a group (1 individual) |  |                                             |  | 5,355,947             | (1) |  | 74 | % | 

| |     |                                                                                                                                              
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Includes 100,000 shares of common stock issuable
  upon exercise of warrants at $1.50 per share. These warrants expire on
  January 23, 2013.

ITEM 12.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Except as set forth below, no transactions have
occurred since the beginning of the Companys last three fiscal years or are
proposed with respect to which a director, executive officer, security holder
owning of record or beneficially more than 5% of any class of our securities or
any member of the immediate families of the foregoing persons had or will have
a direct or indirect material interest:

The Companys Chief Executive Officer currently
provides an office rent free to the Company.

It is the policy of the Company with respect to insider
transactions, that all transactions between the Company, its officers,
directors, principal stockholders and their affiliates be on terms no less
favorable to the Company that could be obtained from unrelated third parties in
arms-length transactions, and that all such transactions shall be approved by a
majority of the disinterested members of the Board of Directors. The Company
believes that the transactions described above complied with such policy.

19

---



ITEM 13.
EXHIBITS, LISTS AND REPORTS ON FORM 8-K

(a) Exhibits

|                 |  |                                                                                                                                      |  |          
|---------------- |  | ------------------------------------------------------------------------------------------------------------------------------------ |  | ---------
|Exhibit
  Number |  | Description                                                                                                                          |  | Reference
|                 |  |                                                                                                                                      |  |          
|                 |  |                                                                                                                                      |  |          
|3.1              |  | Certificate of Incorporation of Registrant                                                                                           |  | *        
|                 |  |                                                                                                                                      |  |          
|3.2              |  | Certificate of Amendment to Certificate of
  Incorporation of Registrant                                                             |  | *        
|                 |  |                                                                                                                                      |  |          
|3.3              |  | Certificate of Amendment to Certificate of
  Incorporation of Registrant                                                             |  | **       
|                 |  |                                                                                                                                      |  |          
|3.4              |  | By-laws of Registrant                                                                                                                |  | *        
|                 |  |                                                                                                                                      |  |          
|4.1              |  | 1999 Incentive Program of Registrant                                                                                                 |  | ***      
|                 |  |                                                                                                                                      |  |          
|10.1             |  | Assignment of Intellectual Property dated June 30,
  1999 by and between Registrant and Caring Products International, Inc.          |  | *        
|                 |  |                                                                                                                                      |  |          
|10.3             |  | License Agreement dated as of June 30, 1999 by and
  between the Registrant and Caring Products International, Inc.                  |  | *        
|                 |  |                                                                                                                                      |  |          
|10.4             |  | Secured Promissory Note, dated July 12, 2000, issued
  by the Registrant to Susan Schreter                                           |  | **       
|                 |  |                                                                                                                                      |  |          
|10.5             |  | Security Agreement, dated as of July 12, 2000,
  between the Registrant and Susan Schreter                                           |  | **       
|                 |  |                                                                                                                                      |  |          
|10.6             |  | Assignment and Purchase of Intellectual Property
  Agreement, dated as of April 9, 2001, between the Registrant and Susan
  Schreter |  | **       
|                 |  |                                                                                                                                      |  |          
|10.7             |  | Employment Agreement, dated September 2, 1999,
  between the Registrant and Susan Schreter                                           |  | **       
|                 |  |                                                                                                                                      |  |          
|31.1             |  | Certification of the Chief Executive and Chief
  Financial Officer pursuant to Sarbanes-Oxley Act of 2002                            |  | ****     
|                 |  |                                                                                                                                      |  |          
|32.1             |  | Certification of Principal Executive and Principal
  Financial Officer Pursuant to 18 U.S.C. Section 1350                            |  | ****     
|                 |  |                                                                                                                                      |  |          
|                

|*    | Incorporated by reference to Registrants Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on October 13, 1999.                   
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|**   | Incorporated by reference to Registrants Form
10-KSB filed with the Securities and Exchange Commission on August 24, 2007                                              
|***  | Incorporated by reference to Registrants
Amendment No.1 to Registration Statement on Form 10-SB filed with the
Securities and Exchange Commission on November 24, 1999.
|**** | Filed herewith.                                                                                                                                                         

20

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|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) Reports on Form 8-K                          
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                  | None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                 
|ITEM 14. PRINCIPAL ACCOUNTANT FEES
  AND SERVICES
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(a) Audit Fees                                   
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                  | The aggregate fees billed for each of Fiscal 2007
  and Fiscal 2006 for professional services rendered by the principal
  accountant for the audit of the Companys annual financial statements and
  review of financial statements included in the Companys Form 10-QSB, if any,
  or services that are normally provided by the accountant in connection with
  statutory and regulatory filings or arrangements for those fiscal years was
  $10,000 and $35,000, respectively. There were no audit fees billed for Fiscal
  2005.
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(b) Audit-Related Fees                           
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                  | There were no aggregate fees billed in the fiscal
  years ended 2006 and 2005 for assurance and related services by the principal
  accountant that were reasonably related to the performance of audit or review
  of the Companys financial statements. During the fiscal year ended 2007, the
  aggregate fees billed for assurance and related services by the principal
  accountant that were reasonably related to the performance of audit or review
  of the Companys financial statements was $5,000.                      
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(c) Tax Fees                                     
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                  | The aggregate fees billed in each of Fiscal 2007,
  Fiscal 2006 and Fiscal 2005 for professional services rendered by the
  principal accountant for tax compliance, tax advice and tax planning was
  $1,000, $1,000 and $750, respectively.                                                                                                                                                                                                                                                                                          
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(d) All Other Fees                               
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                  | No fees were billed in each of fiscal years ended
  2007, 2006 and 2005 for products and services provided by the principal
  accountants.                                                                                                                                                                                                                                                                                                                                                                                             

21

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FIRST TRANSACTION
MANAGEMENT, INC.

FINANCIAL
STATEMENTS
December 31, 2007

|                                                   |     
|-------------------------------------------------- | ----
|                                                   | Page
|                                                   |     
|Reports of Independent Registered
 Accounting Firm | F-2 
|Balance Sheet                                      | F-3 
|Statement of Operations                            | F-4 
|Statement of Cash Flows                            | F-5 
|Statement of Stockholders Equity                  | F-6 
|Notes to the Financial Statements                  | F-7 

F-1

---



INDEPENDENT
AUDITORS REPORT

THE BOARD OF DIRECTORS
FIRST TRANSACTION MANAGEMENT, INC.

We have audited the accompanying balance sheets of
FIRST TRANSACTION MANAGEMENT, INC., (the Company) as of December 31, 2007, and
the related statements of operations, changes in stockholders equity 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 audit.

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 has determined that it 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 includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, based on our audit, the financial
statements referred to above present fairly, in all material respects, the
financial position of FIRST TRANSACTION MANAGEMENT, INC., as of December 31, 2007, and the results of its operations
and its statements of changes in stockholders equity and cash flows for the
years then ended in conformity with generally accepted accounting principles 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 7 to the financial
statements, the Company has experienced losses from operations during the
development state and has a net capital deficiency that raises substantial
doubt about its ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

COLABELLA
& COMPANY, LLP
January 25, 2008

F-2

---



FIRST TRANSACTION MANAGEMENT,
INC
(A Development Stage Company)BALANCE SHEET

|                                                                                                      |  |                                  |            |      |   |            |   |   |            |  
|----------------------------------------------------------------------------------------------------- |  | -------------------------------- | ---------- | ---- | - | ---------- | - | - | ---------- | -
|                                                                                                      |  | For the Year Ended
 December 31, |           
|                                                                                                      |  |                                  |           
|                                                                                                      |  | 2007                             |            | 2006 |   | 2005       |  
|                                                                                                      |  |                                  |            |      |   |            |  
|ASSETS                                                                                                |  |                                  |            |      |   |            |   |   |            |  
|Current Assets                                                                                        |  |                                  |            |      |   |            |   |   |            |  
|Cash                                                                                                  |  | $                                | 121,785    |      | $ | 11,644     |   | $ | 37,539     |  
|                                                                                                      |  |                                  |            |      |   |            |   |   |            |  
|Total current assets                                                                                  |  |                                  | 121,785    |      |   | 11,644     |   |   | 37,539     |  
|                                                                                                      |  |                                  |            |      |   |            |   |   |            |  
|                                                                                                      |  |                                  |            |      |   |            |   |   |            |  
|Long Term Assets                                                                                      |  |                                  |            |      |   |            |   |   |            |  
|Intangible & other assets, net                                                                        |  |                                  |           |      |   | 8,588      |   |   | 9,639      |  
|                                                                                                      |  |                                  |            |      |   |            |   |   |            |  
|TOTAL ASSETS                                                                                          |  | $                                | 121,785    |      | $ | 20,232     |   | $ | 47,178     |  
|                                                                                                      |  |                                  |            |      |   |            |   |   |            |  
|                                                                                                      |  |                                  |            |      |   |            |   |   |            |  
|LIABILITIES & EQUITY                                                                                  |  |                                  |            |      |   |            |   |   |            |  
|Liabilities                                                                                           |  |                                  |            |      |   |            |   |   |            |  
|Current Liabilities                                                                                   |  |                                  |            |      |   |            |   |   |            |  
|Accounts payable & accrued expenses                                                                   |  | $                                | 55,000     |      | $ | 10,000     |   | $ | 1,000      |  
|Interest payable                                                                                      |  |                                  | 242,741    |      |   | 214,303    |   |   | 158,420    |  
|                                                                                                      |  |                                  |            |      |   |            |   |   |            |  
|Total current liabilities                                                                             |  |                                  | 297,741    |      |   | 224,303    |   |   | 159,420    |  
|                                                                                                      |  |                                  |            |      |   |            |   |   |            |  
|                                                                                                      |  |                                  |            |      |   |            |   |   |            |  
|Long Term Liabilities                                                                                 |  |                                  |            |      |   |            |   |   |            |  
|Loan payable - stockholder                                                                            |  |                                  | 773,541    |      |   | 773,541    |   |   | 773,541    |  
|                                                                                                      |  |                                  |            |      |   |            |   |   |            |  
|Total liabilities                                                                                     |  |                                  | 1,071,282  |      |   | 997,844    |   |   | 932,961    |  
|                                                                                                      |  |                                  |            |      |   |            |   |   |            |  
|                                                                                                      |  |                                  |            |      |   |            |   |   |            |  
|Equity                                                                                                |  |                                  |            |      |   |            |   |   |            |  
|Common stock; 15,000,000 shares authorized; 7,258,704
shares issued and
 outstanding, par value $0.01 |  |                                  | 72,587     |      |   | 72,587     |   |   | 72,587     |  
|Additional paid in capital                                                                            |  |                                  | 1,303,145  |      |   | 1,303,145  |   |   | 1,303,145  |  
|Deficit accumulated during the development
stage                                                      |  |                                  | (2,325,229 | )    |   | (2,353,344 | ) |   | (2,261,515 | )
|                                                                                                      |  |                                  |            |      |   |            |   |   |            |  
|Total equity                                                                                          |  |                                  | (949,497   | )    |   | (977,612   | ) |   | (885,783   | )
|                                                                                                      |  |                                  |            |      |   |            |   |   |            |  
|                                                                                                      |  |                                  |            |      |   |            |   |   |            |  
|                                                                                                      |  |                                  |            |      |   |            |   |   |            |  
|TOTAL LIABILITIES &
 EQUITY                                                                           |  | $                                | 121,785    |      | $ | 20,232     |   | $ | 47,178     |  
|                                                                                                      |  |                                  |            |      |   |            |   |   |            |  

See
accompanying notes to financial statements.

F-3

---



FIRST TRANSACTION MANAGEMENT,
INC
(A Development Stage Company)STATEMENT OF OPERATIONS

|                                            |  |                                   |           |      |   |           |   |   |           | 
|------------------------------------------- |  | --------------------------------- | --------- | ---- | - | --------- | - | - | --------- | 
|                                            |  | For the Year Ended 
 December 31, |          
|                                            |  |                                   |          
|                                            |  | 2007                              |           | 2006 |   | 2005      |  
|                                            |  |                                   |           |      |   |           |  
|INCOME                                      |  |                                   |           |      |   |           |   |   |           | 
|Fees - consulting                           |  | $                                 | 230,589   |      | $ | 6,483     |   | $ | 141,251   | 
|                                            |  |                                   |           |      |   |           |   |   |           | 
|Total income                                |  |                                   | 230,589   |      |   | 6,483     |   |   | 141,251   | 
|                                            |  |                                   |           |      |   |           |   |   |           | 
|                                            |  |                                   |           |      |   |           |   |   |           | 
|EXPENSES                                    |  |                                   |           |      |   |           |   |   |           | 
|Operating expense                           |  |                                   | 132,004   |      |   | 31,091    |   |   | 46,332    | 
|Depreciation & Amortization                 |  |                                   | 8,588     |      |   | 5,337     |   |   | 4,349     | 
|                                            |  |                                   |           |      |   |           |   |   |           | 
|Total expenses                              |  |                                   | 140,592   |      |   | 36,428    |   |   | 50,681    | 
|                                            |  |                                   |           |      |   |           |   |   |           | 
|                                            |  |                                   |           |      |   |           |   |   |           | 
|                                            |  |                                   |           |      |   |           |   |   |           | 
|Net operating income                        |  |                                   | 89,997    |      |   | (29,945   | ) |   | 90,570    | 
|                                            |  |                                   |           |      |   |           |   |   |           | 
|                                            |  |                                   |           |      |   |           |   |   |           | 
|OTHER INCOME/EXPENSE                        |  |                                   |           |      |   |           |   |   |           | 
|Interest expense                            |  |                                   | 61,882    |      |   | 61,884    |   |   | 61,884    | 
|                                            |  |                                   |           |      |   |           |   |   |           | 
|Net other income/expense                    |  |                                   | 61,882    |      |   | 61,884    |   |   | 61,884    | 
|                                            |  |                                   |           |      |   |           |   |   |           | 
|                                            |  |                                   |           |      |   |           |   |   |           | 
|Net income before taxes                     |  |                                   | 28,115    |      |   | (91,829   | ) |   | 28,686    | 
|Provision for income taxes                  |  |                                   |          |      |   |          |   |   |          | 
|                                            |  |                                   |           |      |   |           |   |   |           | 
|NET INCOME (LOSS)                           |  | $                                 | 28,115    |      | $ | (91,829   | ) | $ | 28,686    | 
|                                            |  |                                   |           |      |   |           |   |   |           | 
|                                            |  |                                   |           |      |   |           |   |   |           | 
|WEIGHTED AVERAGE COMMON
 SHARES OUTSTANDING |  |                                   | 5,975,847 |      |   | 5,231,539 |   |   | 4,932,221 | 
|                                            |  |                                   |           |      |   |           |   |   |           | 
|                                            |  |                                   |           |      |   |           |   |   |           | 
|AVERAGE GAIN (LOSS) PER
 COMMON SHARE       |  | $                                 | 0.00      |      | $ | (0.02     | ) | $ | 0.01      | 
|                                            |  |                                   |           |      |   |           |   |   |           | 

See
accompanying notes to financial statements.

F-4

---



FIRST TRANSACTION MANAGEMENT, INC
(A Development Stage Company)

STATEMENTS OF CASH FLOWSFor the Years Ended

|                                                                      |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|--------------------------------------------------------------------- |  | ------------------ | ------- | ------------------ | - | ------------------ | - | ----------------------------------------------------------------------------- | ------- | - | - | ---------- | -
|                                                                      |  | December 31
  2007 |         | December 31
  2006 |   | December 31
  2005 |   | Cummulative from
  March 25, 1999
  Date of inception 
  to December 31, 2007 |        
|                                                                      |  |                    |         |                    |   |                    |   |                                                                               |        
|CASH FLOWS
  FROM OPERATING ACTIVITIES                                |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|Net income/(loss)                                                     |  | $                  | 28,115  |                    | $ | (91,829            | ) | $                                                                             | 28,686  |   | $ | (2,325,229 | )
|Adjustments to reconcile net loss to net
  cash flows from operations |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|Depreciation/amortization                                             |  |                    | 8,588   |                    |   | 5,337              |   |                                                                               | 4,349   |   |   | 424,160    |  
|Change in other operating assets and
  liabilities                    |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|Accounts payable and accrued expenses                                 |  |                    | 45,000  |                    |   | 9,000              |   |                                                                               |         |   |   | 55,000     |  
|Interest payable                                                      |  |                    | 28,438  |                    |   | 55,883             |   |                                                                               | (48,119 | ) |   | 242,741    |  
|                                                                      |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|Net cash flows used in operating
activities                           |  |                    | 110,141 |                    |   | (21,609            | ) |                                                                               | (15,084 | ) |   | (1,603,328 | )
|                                                                      |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|                                                                      |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|CASH FLOWS
  FROM INVESTING ACTIVITIES                                |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|Purchase of intangible assets and
equipment                           |  |                    |        |                    |   | (4,286             | ) |                                                                               | 3,012   |   |   | (904,139   | )
|                                                                      |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|Net cash flows used in investing
activities                           |  |                    |        |                    |   | (4,286             | ) |                                                                               | 3,012   |   |   | (904,139   | )
|                                                                      |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|                                                                      |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|CASH FLOWS
  FROM FINANCING ACTIVITIES                                |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|Debt Conversion to Equity                                             |  |                    |        |                    |   |                   |   |                                                                               |         |   |   | (34,264    | )
|Proceeds from the issuance of common
stock                            |  |                    |        |                    |   |                   |   |                                                                               |        |   |   | 792,425    |  
|Share issued in lieu of compensation                                  |  |                    |        |                    |   |                   |   |                                                                               |        |   |   | 47,680     |  
|Proceeds from stockholder note                                        |  |                    |        |                    |   |                   |   |                                                                               |        |   |   | 1,177,780  |  
|                                                                      |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|                                                                      |  |                    |        |                    |   |                   |   |                                                                               |        |   |   | 1,983,621  |  
|                                                                      |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|                                                                      |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|Net increase (decrease) in cash                                       |  |                    | 110,141 |                    |   | (25,895            | ) |                                                                               | (12,072 | ) |   | (523,846   | )
|                                                                      |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|Cash and
  cash equivalents, beginning of period                      |  |                    | 11,644  |                    |   | 37,539             |   |                                                                               | 49,611  |   |   |           |  
|                                                                      |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|                                                                      |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|Cash and
  cash equivalents, end of period                            |  | $                  | 121,785 |                    | $ | 11,644             |   | $                                                                             | 37,539  |   | $ | (523,846   | )
|                                                                      |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|                                                                      |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|Supplemental
  Disclosure                                             |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|Cash paid
  for interest                                              |  | $                  | 33,444  |                    | $ | 6,000              |   | $                                                                             | 110,000 |   | $ | 183,444    |  
|                                                                      |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|No Cash Paid
  for income taxes                                       |  | $                  |        |                    | $ |                   |   | $                                                                             |        |   | $ |           |  
|                                                                      |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|                                                                      |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|Non-cash flow disclosures:                                            |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  
|Common stock
  issued in lieu of compensation                         |  | $                  |        |                    | $ |                   |   | $                                                                             |        |   | $ | 47,680     |  
|                                                                      |  |                    |         |                    |   |                    |   |                                                                               |         |   |   |            |  

See accompanying notes to financial
statements.

F-5

---



FIRST TRANSACTION MANAGEMENT, INC
(A Development Stage Company)

STATEMENTS OF STOCKHOLDERS
EQUITY
For the Years Ended December 31, 2007 and December 31, 2006

|                           |  |                     |           |              |   |                                |                                                          |   |           |  |   |            |   |   |          |  
|-------------------------- |  | ------------------- | --------- | ------------ | - | ------------------------------ | -------------------------------------------------------- | - | --------- |  | - | ---------- | - | - | -------- | -
|                           |  | Common Stock        |           |              |   |                                | Deficit
  Accumulated
  During the
  Development
  Stage |   |           | 
|                           |  |                     |           |              |   |                                |                                                          |   |          
|Date of
  Transaction      |  | Number 
  of Shares |           | Par 
  Value |   | Additional
  Paid-in
  Capital |                                                          |   | Total     | 
|                           |  |                     |           |              |   |                                |                                                          |   |           |  |  
|                           |  |                     |           |              |   |                                |                                                          |   |           |  |   |            |   |   |          |  
|Balance, January 1, 2005   |  |                     | 7,258,704 |              | $ | 72,587                         |                                                          | $ | 1,303,145 |  | $ | (2,290,201 | ) | $ | (914,469 | )
|Net income/(loss) for 2005 |  |                     |          |              |   |                               |                                                          |   |          |  |   | 28,686     |   |   | 28,686   |  
|                           |  |                     |           |              |   |                                |                                                          |   |           |  |   |            |   |   |          |  
|Balance December 31, 2005  |  |                     | 7,258,704 |              | $ | 72,587                         |                                                          | $ | 1,303,145 |  | $ | (2,261,515 | ) | $ | (885,783 | )
|                           |  |                     |           |              |   |                                |                                                          |   |           |  |   |            |   |   |          |  
|                           |  |                     |           |              |   |                                |                                                          |   |           |  |   |            |   |   |          |  
|Balance, January 1, 2006   |  |                     | 7,258,704 |              | $ | 72,587                         |                                                          | $ | 1,303,145 |  | $ | (2,261,515 | ) | $ | (885,783 | )
|Net income/(loss) for 2006 |  |                     |           |              |   |                                |                                                          |   |           |  |   | (91,829    | ) |   | (91,829  | )
|                           |  |                     |           |              |   |                                |                                                          |   |           |  |   |            |   |   |          |  
|Balance, December 31, 2006 |  |                     | 7,258,704 |              | $ | 72,587                         |                                                          | $ | 1,303,145 |  | $ | (2,353,344 | ) | $ | (977,612 | )
|                           |  |                     |           |              |   |                                |                                                          |   |           |  |   |            |   |   |          |  
|                           |  |                     |           |              |   |                                |                                                          |   |           |  |   |            |   |   |          |  
|Balance, January 1, 2007   |  |                     | 5,975,847 |              | $ | 72,587                         |                                                          | $ | 1,303,145 |  | $ | (2,353,344 | ) | $ | (977,612 | )
|Net income/(loss) for 2007 |  |                     |          |              |   |                               |                                                          |   |          |  |   | 28,115     |   |   | 28,115   |  
|                           |  |                     |           |              |   |                                |                                                          |   |           |  |   |            |   |   |          |  
|Balance, December 31, 2007 |  |                     | 5,975,847 |              | $ | 72,587                         |                                                          | $ | 1,303,145 |  | $ | (2,325,229 | ) | $ | (949,497 | )
|                           |  |                     |           |              |   |                                |                                                          |   |           |  |   |            |   |   |          |  

See accompanying notes to financial
statements.

F-6

---



FIRST TRANSACTION MANAGEMENT, INC.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2007 and 2006

|       |                                         
|------ | ----------------------------------------
|NOTE 1 | ORGANIZATION AND DESCRIPTION OF BUSINESS

First Transaction Management, Inc. (the Company), a development stage
company, was incorporated in the state of Delaware on March 25, 1999 as
Creative Products International, Inc. The Company was a subsidiary of another
corporation until December 23, 1999, when it was spun-off. In 2002, the Company
elected to change its name to First Transaction Management, Inc. to more
directly reflect its business interests in web based promotion and transaction
processing management services. The Company ceased active production of certain
web-related promotion management services on December 31, 2002 due to lack of
funding. Effective December 31, 2004, the Company discontinued its business
efforts related to web based promotion management services and is currently
seeking new economic opportunities, including a merger transaction. The Company
does limited consulting work to cover its ongoing overhead costs.

|       |                                           
|------ | ------------------------------------------
|NOTE 2 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash

The Company considers all highly liquid debt instruments purchased with
maturity of three months or less to be cash equivalents.

Use of accounting estimates in preparation of
financial statements

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

Property, plant and
equipment

Property and equipment are recorded at cost and are depreciated over
the estimated useful lives. Expenditures for routine maintenance and repairs
are charged to expenses as incurred. Trademarks and copyrights are recorded at
cost and are amortized over their legal lives or their estimated useful lives,
whichever is shorter, using the straight-line method. They are reviewed
annually to assess recoverability; impairment will be recognized in results of
operations when intangible assets are deemed unrecoverable. Assets are reviewed
annually to determine their estimated remaining useful life. Assets that are
considered obsolete are written off.

F-7

---



Capitalization of
software

FASB EITF Issue No. 00-2, Accounting
for Web Site Development Costs, states that the identification of
software needed for a company shall be expensed as incurred. Such software
includes web applications needed for the web sites functionalities, and those
required for development purposes. However, if the company chooses to acquire
or develop software, AICPA Statement of Position 98-1, Accounting for the Costs of Computer Software
Developed or Obtained for Internal Useallows capitalization. The
method of software capitalization depends on the intended use. Costs incurred
in the purchasing or development of software can be capitalized unless they are
used in research and development and do not have alternative future uses or
represent a pilot project. Costs of acquiring or developing software for
general web site operations require capitalization of external direct costs of
materials and services used in the acquisition or development. Costs of
acquired or developed software for the integration of distributed applications
into web applications are capitalized. During the 2005 and 2006 period, the
Company capitalized certain software development costs in accordance with the
aforementioned standards. In 2007, there were no costs to capitalize.

Amortization is recorded using the straight-line method over the
estimated useful lives of the assets which do not exceed ten years. The Company
periodically reviews intangible assets to assess recoverability. Impairment
will be recognized in results of operations when intangible assets are deemed
unrecoverable.

Research and development

Research and development costs are expensed during the period incurred,
in keeping with Statement of Financial Accounting Standard (SFAS) No. 2, Accounting
for Research and Development Costs. There were no research and
development costs to capitalize in 2007.

Revenue recognition

The Company
recognizes revenue at the time of service or as contractual terms are
satisfied.

Earnings per share

Basic earnings per share is computed by dividing income available to
common shareholders by the weighted average number of common shares outstanding
in the period. Diluted earnings per share takes into consideration common
shares outstanding (computed under basic earnings per share) and potentially
dilutive common shares; however, there are no dilutive securities.

The weighted
average number of shares outstanding for the fiscal years ended December 31 are
as follows:

|     |          
|---- | ---------
|2005 | 4,932,221
|2006 | 5,231,539
|2007 | 5,975,847

F-8

---



Stock based compensation

The Company adopted a stock-based compensation plan in 1999. The plan
provides for options to be granted to officers, directors, consultants and
employees to acquire a maximum of 1,000,000 shares of the Companys stock.
Compensation cost for stock options was measured as the excess, if any, of the
value of the Companys stock at the date of the grant over the amount an
employee is required to pay for the stock. During 2001, the Companys Board
of Directors approved the organization of another stock option plan for
technology and web related employees and consultants. A maximum of 750,000
shares of the Companys common stock was available for issuance under the plan.
No stock options were issued during the fiscal years ended December 31, 2005,
2006 or 2007 and all stock options issued to former employees, consultants and
directors have expired.

For the periods ended December 31, 2007, the amounts required to be
calculated by as pro forma amounts under the Statement of Financial Accounting
Standards No. 123 or as compensation expense as revised by FAS 123R are not
applicable to these financial statements.

Following is a summary of stock option plan activity for the years
ended December 31, 2007 and 2006

|                                   |  |  |                   |  |   |                                           | 
|---------------------------------- |  |  | ----------------- |  | - | ----------------------------------------- | 
|                                   |  |  | Number of
Options |  |   | Weighted
Average
Exercise Price
Per Share | 
|                                   |  |  |                   |  |   |                                           | 
|                                   |  |  |                   |  |   |                                           | 
|Outstanding
  at December 31, 2004 |  |  | 530,000           |  | $ | 1.23                                      | 
|Granted during 2005                |  |  | 0                 |  |   |                                           | 
|Exercised during 2005              |  |  | 0                 |  |   |                                           | 
|Forfeited during 2005              |  |  | 320,000           |  |   |                                           | 
|                                   |  |  |                   |  |   |                                           | 
|Outstanding
  at Beginning of year |  |  | 210,000           |  | $ | 1.51                                      | 
|Granted during 2006                |  |  | 0                 |  |   |                                           | 
|Exercised during 2006              |  |  | 0                 |  |   |                                           | 
|Forfeited during 2006              |  |  | 210,000           |  |   |                                           | 
|Outstanding
  at December 31, 2006 |  |  | 0                 |  |   |                                          | 
|Granted during 2007                |  |  | 0                 |  |   |                                           | 
|Exercised during 2007              |  |  | 0                 |  |   |                                           | 
|Forfeited during 2007              |  |  | 0                 |  |   |                                           | 
|Outstanding
  at December 31, 2007 |  |  | 0                 |  |   |                                          | 

These options and the warrants discussed in Note 4 were not included in the computation
of earnings per share because they are anti-dilutive.

F-9

---



Income Taxes

In keeping with SFAS No. 109, Accounting for IncomeTaxes, income taxes
are accounted for using the asset and liability approach. This requires
recognition of deferred tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Deferred income taxes will be provided for the temporary
differences between the financial reporting basis and the tax basis of the
Companys assets and liabilities. A valuation allowance will be recognized for
deferred tax assets not likely to be realized. Deferred taxes are to be
measured by the provisions of currently enacted tax laws. There were no
material temporary differences at December 31, 2005, 2006 or 2007.

Comprehensive income

Reporting comprehensive income falls under SFAS No. 130, Reporting
Comprehensive Income. The Company had no elements of comprehensive
income for the period ended December 31, 2005, 2006 or 2007. Further,
there are no other new financial accounting standards which would have an
effect on these financial statements.

|       |                             
|------ | ----------------------------
|NOTE 3 | CONCENTRATION OF CREDIT RISK

As of December 31, 2007, cash balances in company bank accounts
exceeded the insured limit covered by the Federal Deposit Insurance Corporation
(FDIC) by $20,652

|       |                  
|------ | -----------------
|NOTE 4 | CAPITAL STRUCTURE

At December 31, 2007, 2006 and 2005, the Company had 7,258,704 shares
of $.01 par value common stock issued and outstanding, 72.4% of which were held
by the Companys CEO and the remainder by approximately 130 other parties.
Common shares are voting and dividends are paid at the discretion of the Board
of Directors. The Company has never paid a dividend on its common stock, and it
is the present policy of the Company not to pay cash dividends on the common
stock.

The Company has authorized 1,000,000 shares of preferred stock at a par
value of $.01 per share. No preferred shares have been issued as of December
31, 2007, 2006 and 2005.

|       |         
|------ | --------
|NOTE 5 | WARRANTS

Pursuant to a private placement, from inception the Company issued, in
the aggregate, warrants to purchase 375,000 shares of the Companys common
stock at $1.50 per share. These warrants expire January 18, 2013. No warrants
have been exercised from the date of grant. The Companys CEO received 100,000
warrants pursuant to an investment in the private placement.

|       |                               
|------ | ------------------------------
|NOTE 6 | WRITE OFF OF INTANGIBLE ASSETS

Pursuant to SFAS No. 142, Goodwill and Other Intangible Assets, From
inception to 2007, the Company wrote off an aggregate of $146,983 of intangible
assets related to its web based promotion distribution and transaction
processing services.

F-10

---



|       |              
|------ | -------------
|NOTE 7 | GOING CONCERN

The Company incurred net losses since
inception of $2,353,344 and has incurred substantial liabilities in excess of
assets. This raises concerns about the Companys ability to continue as a going
concern. The Companys ability to continue as a going concern is contingent
upon its ability to achieve positive cash flow from operating and financing
activities high enough to repay its liabilities and conduct a viable business.
There is no assurance that the Company will be successful in its efforts to
significantly improve its financial and operating condition, attract new
investors or develop the strategic partnerships necessary to meet the Companys
business and financial objectives.

|       |             
|------ | ------------
|NOTE 8 | INCOME TAXES

SFAS No. 109, Accounting for IncomeTaxes. As of
December 31, 2007, the Company earned $26,982 in income. There is no provision
for federal, or state and local income taxes as the Company has sustained losses
for the years ended December 31, 2006, 2005, 2004, 2003, 2002 and 2001. As of
December 31, 2007, the Company had accumulated approximately $2.1 million of
net operating loss carryforwards for federal income tax purposes that begin to
expire in 2019. These net operating loss carryforwards will negate any taxes
for the income earned in 2007.

Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. The
difference between the tax loss carryforward and the Companys financial
statement losses is due to differences in amortization rates on intangible
assets and certain accrued expenses which are deductible for income tax
purposes only when paid.

In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all of the
deferred tax assets will be realized. The ultimate realization of deferred tax assets
is dependent upon the generation of future taxable income during the period in
which the net operating loss carryforwards can be utilized. Since the Company
is in the development stage and it is uncertain when the Company will begin
generating future taxable income, the Company has provided a full valuation
allowance for deferred tax assets at December 31, 2007.

|                                             |  |   |           |  
|-------------------------------------------- |  | - | --------- | -
|Deferred tax
 asset as of December 31, 2007: |  |   |           |  
|Net operating loss carry forwards            |  | $ | 2,077,275 |  
|                                             |  |   |           |  
|Total deferred tax asset                     |  |   | 638,380   |  
|Valuation allowance                          |  |   | (638,380  | )
|                                             |  |   |           |  
|Net deferred tax asset                       |  | $ |          |  
|                                             |  |   |           |  

The reconciliation of income tax on income computed at the federal
statutory rates to income tax expense is as follows:

|                               |  |      |        |      |   |         |   |   |        |  
|------------------------------ |  | ---- | ------ | ---- | - | ------- | - | - | ------ | -
|                               |  | 2007 |        | 2006 |   | 2005    |  
|                               |  |      |        |      |   |         |  
|                               |  |      |        |      |   |         |   |   |        |  
|Tax at
 statutory rates        |  | $    | 9,304  |      | $ | (31,594 | ) | $ | 9,570  |  
|Change in
 valuation allowance |  |      | (9,304 | )    |   | 31,594  |   |   | (9,570 | )
|                               |  |      |        |      |   |         |   |   |        |  
|Income tax
 expense            |  | $    |       |      | $ |        |   | $ |       |  
|                               |  |      |        |      |   |         |   |   |        |  

F-11

---



|       |                           
|------ | --------------------------
|NOTE 9 | RELATED PARTY TRANSACTIONS

On July 12, 2000, the Company entered into a loan agreement with an
officer and director, which provided for the repayment of the outstanding
balance plus accrued simple interest at 8 percent per annum on the loan
balance. The note and accompanying security agreement provides a first lien
over all of the Companys assets, including equipment, intellectual property
and liquid assets. The note holder is entitled to convert some or the entire
outstanding obligation, plus accrued but unpaid interest into shares of the Companys
common stock at the rate of $.08 per share. From inception through December 31,
2007, the lender advanced $1,248,541 of which $475,000 of this amount had been
converted into common stock equity.

Pursuant to a loan agreement with the Company, the officer and director
exercised her right in 2001 to purchase certain trademarks and intellectual
property unrelated to the Companys current Internet business operations at the
greater of $5,000 or the net property value. The purchase price of the intellectual
property was $5,000.

As of December 31, 2007, a total of 270,000 warrants have been provided
to the officer and director, pursuant to loan agreement terms. All lender
warrants have expired, and the outstanding balance of the note payable is
$773,541.

It is the policy of the Company with respect to insider transactions,
that all transactions between the Company, its officers, directors, principal
stockholders and their affiliates be on terms no less favorable to the Company
than could be obtained from unrelated third parties in arms-length transactions,
and that all such transactions shall be approved by a majority of the
disinterested members of the Board of Directors. The Company believes the
transactions described above complied with such policy.

|        |                  
|------- | -----------------
|NOTE 10 | SUBSEQUENT EVENTS

On January 18, 2008, the Companys common stock was cleared for
unpriced quotation on the OTC Bulletin Board.

F-12

---



SIGNATURES

In
accordance with the requirements of Section 13 or 15(d) of the Exchange Act,
the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

| |  |                                    |                                             | 
| |  | ---------------------------------- | ------------------------------------------- | 
| |  | FIRST
 TRANSACTION MANAGEMENT, INC
| |  |                                    |                                            
| |  | By:                                | /s/ Susan
 Schreter                        
| |  |                                    |                                             | 
| |  |                                    | Susan A.
 Schreter, Chief Executive Officer
| |  |                                    |                                            
| |  | Date:                              | February 4,
 2008                          

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

|                        |  |     |                                                          | 
|----------------------- |  | --- | -------------------------------------------------------- | 
|Date:
 February 4, 2008 |  | By: | /s/ Susan A.
 Schreter                                  
|                        |  |     |                                                          | 
|                        |  |     | Susan A.
 Schreter, Chairman and Chief Executive Officer

---