UNITED
        STATES


SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C.
      20549





FORM
      10-KSB





x ANNUAL
      REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
      ACT OF 1934





For
      the Fiscal Year Ended September 30, 2007





OR


o TRANSITION
      REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
      ACT OF 1934





For
      the
      transition period from N/A to N/A


____________________





Commission
      File No. 0-52556


____________________





Card
      Activation
      Technologies, Inc.


(Name
      of
      small business issuer as specified in its charter)





Delaware
            
            20-5769015State
                of Incorporation
            
            IRS
                Employer Identification No.53
                West Jackson Blvd., Suite
                1618Chicago,
                Illinois
                60604-3749(Address
                of principal executive
                offices)(312)
                972-1662(Issuer’s
                telephone number)





Common
      Stock, $.0001 Par Value





Check
      whether the Registrant (1) has filed all reports required to be filed by Section
      13 or 15(d) of the Securities Exchange Act of 1934 during the 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
      disclosure of delinquent filers in response to Item 405 of Regulation S-B is
      not
      contained in this form, and no disclosure will be contained, to the best of
      the
      Registrant's knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-KSB or any amendment
      to
      this Form 10-KSB. x





Registrant’s
      revenues for the most recent fiscal year were: $45,000





The
      aggregate market value of the common stock held by non-affiliates computed
      based
      on the closing price of such stock on December 11, 2007, was approximately
      $11,500,000.














PART
      I





ITEM
      1.  DESCRIPTION OF BUSINESS.





Except
      for historical information contained herein, the following discussion contains
      forward-looking statements that involve risks and uncertainties.  Such
      forward-looking statements include, but are not limited to, statements regarding
      future events and the Company’s plans and expectations.  Actual
      results could differ materially from those discussed herein.  Factors
      that could cause or contribute to such differences include, but are not limited
      to, those discussed elsewhere in this Form 10-KSB or incorporated herein by
      reference, including those set forth in Management’s Discussion and Analysis
      or Plan of Operation.





Overview


Card
      Activation Technologies Inc.
      (“Company/ Card”) is a Delaware corporation headquartered in Chicago, Illinois
      that ownsa
      patented point-of-sale technology for the activation and processing of
      transactions related to debit styled cards, which include gift cards, phone
      cards and other stored value cards. The patent was transferred to
      the
      Company by MedCom USA, Incorporated (“MedCom”) on the formation of the Company
      and in exchange for 146,770,504 shares of Common Stock.  On October
      31, 2006, the MedCom board of directors declared a stock dividend to its
      shareholders of record at the end of business on December 15, 2006 of one share
      of Common Stock in the Company for every one share of common stock of MedCom
      owned by its shareholders, such stock being distributed on March 1, 2007. This
      was a dividend of 86,770,504 shares of our Common Stock.  MedCom
      retained the balance of 60,000,000 shares of Common Stock. MedCom is a publicly
      traded Delaware corporation, headquartered in Scottsdale, Arizona, that provides
      innovative healthcare and financial transaction solutions for electronically
      processing HIPAA compliant transactions within the healthcare industry
      (EMED.OB).  MedCom provides a web portalservicefor physicians, clinics and hospitals
      and dentists that include the following services: real-time transactions
      including; patient eligibility, patient easy pay, credit/debit cards, and check
      guarantee.





The
      Company was incorporated in August
      2006 in order to own and commercially develop the assigned patent which
      coverspoint-of-sale technology for the activation and processing of
      transactions related to debit styled cards, which include gift cards, phone
      cards and other stored value cardsMedComhas assigned its
      patent number 6,032,859 to the Company upon its formation. The MedCompoint-of-sale technologywas
      created by MedCom as part of its
      card building technology endeavors in the 1990’s. The patent coverspoint-of-sale technology for the activation and processing of
      transactions related to debit styled cards, which include gift cards, phone
      cards and other stored value cards. New View Technologies, which
      was
      acquired by MedCom, developed the patentand all patents were
      assigned by New
      View Technologies to MedCom.





Plan
      of Operations





We
      were incorporated in Delaware in
      August of 2006 as Card Activation Technologies, Inc.





We
      believe we have the following
      principal competitive strengths, which positions us to further grow and become
      a
      dominant player in our industry:





Ø
            Card
                is incorporated in Delaware
                with the focus on the licensing of the proprietary patented technology
                for
                processing debit and gift card
                transactions.





Ø
            We
                have identified hundreds of
                retail chains who the company believes are presently utilizing our
                patented technology in the use of debit cards, gift cards, phone
                cards,
                affinity cards and value
                cards.





2





Ø
            We
                intend to generate revenues
                primarily by charging licensing fees to the retailers who are utilizing
                our patented technology





Ø
            Under
                an administrative services
                agreement between the MedCom and us, we have agreed to share certain
                administrative functions and personnel until we can establish our
                own
                administrative operating systems and hire its own
                personnel.





Our
      Growth
      Strategies





Ø
            The
                Company was incorporated for the purpose of licensing its technology
                to
                the thousands of current users and believes that many retailers,
                supermarkets, convenience stores, phone companies and others specialty
                retailers.





Ø
            The
                Company is looking at
                expanding its market and looks for an acquisition that complements
                the
                Company and generates
                revenues.





Ø
            Once
                we begin receiving royalties,
                we expect the revenues of such royalties shall permit us to be
                self-funding.





Ø
            We
                intend to require, wherever our
                patents apply, reasonable royalties in exchange for licensing our
                intellectual property.





Ø
            By
                providing a licensing model, we
                expect to be able to convert many, if not all, of these providers
                to
                licensees for our patented
                system.





Competition





Competition
      in the technology industry
      is intense. The main competition is the entities that are using fully loaded
      cards with a predetermined value that are not activated. Also as technologies
      advances there is always a risk of new technology and more
      competition.  The overall market of the gift and affinity cards is
      very large and represents a large method of sales for companies.  The
      gift cards are sold at many companies to generate a way of generating a new
      revenue model for those companies that are selling our patent
      technology.





The
      company is actively seeking to license its technology to the thousands of
      current users and believes that many retailers, gas stations, phone companies
      and others that utilize those stored value cards, such as gift and debit,
      infringe its patent.





Marketing




In
      developing our marketing approach, in
      November, 2006, we secured the services of the law firm of Orem and Roth LLC
      to
      begin the negotiations concerning the licensing of the proprietary patented
      technology.As a result, the
      company is aggressively pursuing litigation against these infringersof our technology.




We
      intend to generate revenues primarily
      by charging licensing fees to the retailers who are utilizing our patented
      technology. We have identified hundreds of retail chains who the company
      believes are presently utilizing ourpatented point-of-sale technology
      for the activation and processing of transactions related to debit styled cards,
      which include gift cards, phone cards and other stored value cards





3





Patent
      Technology





In
      October 2006, MedCom transferred the
      patented technology to the company. Presently, the company has sent notice
      of
      our patented technology to numerous companies and initiatedsixlawsuits
      against companies that have
      infringed patent and will continue to pursue the litigation against those
      companies that have infringed the company’s patent. Once the company is
      successful in the pursuit of the patent infringers and in its licensing program,
      we anticipate receiving the appropriate royalties from the use of our technology
      by third parties by allowing licensing arrangements to our technology and
      anticipated royalties for the use of our patent.  The company
      received, through a spin off, the ownership of a patent of MedCom USA
      Incorporated.  MedCom has assigned its patent number 6,032,859 to the
      Company upon its formation





Description
      of the
      Industry





From
      the increased use of phone cards
      populated with value by retailers to the expansion of gift cards at major
      department stores and big box stores, to the creation of affinity cards by
      retailers building customer loyalty, and the sale of these cards in
      supermarkets, convenience stores, coffee shops and other outlets, the
      implementation of card activation for consumers has been expanding greatly
      throughout the United States. Many retailers every day are adding this product
      availability to its sales efforts.




The
      Retail industry has adopted the
      method of activating cards at the time of purchase in order to reduce theft
      and
      cost of holding cards with pre-loaded values included. The retailer benefits
      significantly because it receives revenue from the customer and provides an
      interest free float on those monies until the customer actually utilizes the
      card for purchasing. This creates a tremendous profit opportunity for the
      retailer which has resulted in their encouragement of consumers to acquire
      gift
      cards as a gift solution.





The
      retailer also benefits because a
      percentage of the cards are not fully utilized or used at all thereby providing
      a 100% profit to the retailer for the amount not used.





The
      retailer benefits thirdly from
      consumers who may not normally frequent the store, but do so because they have
      a
      gift card and then often increment the sale above the value of the gift card
      with additional purchases.





Lastly,
      the retailer accrues a benefit
      by reducing returns of merchandise from unsatisfied customers who received
      merchandise as gifts.





Additional
      Information





Card
      files reports and other materials with the Securities and Exchange
      Commission.  These documents may be inspected and copied at the
      Commission’s Public Reference Room at 100 F Street, N.E., Washington, D.C.,
      20549.  You can obtain information on the operation of the Public
      Reference Room by calling the Commission at 1-800-SEC-0330.  You can
      also get copies of documents that the Company files with the Commission through
      the Commission’s Internet site at www.sec.gov.





Employees





As
      of
      fiscal year end September 30, 2007, the Company had two executive officers, Mr.
      Williams,
      President and CEO and Mr. Michael Malet our Executive Vice President. These
      gentlemen are employees of MedCom and do not receive any compensation from
      us at
      this time. All of our executive officers will be providing as much time as
      needed to the Company. We have no full or part-time employees. Presently our
      business activities are focused on the lawyers that are overseeing the patent
      legal work. The accounting costs will continue to be allocated between MedCom
      and ourselves.  TheCompany
      is not operating only in the
      capacity of protecting the patented technology.





4





ITEM
      2.  DESCRIPTION OF PROPERTY.




The
      Company has office space in Chicago under a monthly agreementon
      a
      month to month basis.At present, we require
      little dedicated
      office space. We believe that our existing facilities are adequate for our
      current needs and that additional space will be available as
      needed.





ITEM
      3.  LEGAL PROCEEDINGS





As
      of September 30, 2006, we had
      initiated lawsuits against McDonald’s Corporation, Walgreen Co. and Sears
      Holding Corporation,Barnes & Noble, Aeropostale, Inc. and OfficeMax
      Inc.  In addition more than 300 letters have been sent to other
      retailers for infringing its
      payment transaction patent but no responses had been filed in those actions
      by
      the defendants. As of the
      date herein, there are no pending or threatened legal proceedings against the
      Company.





Card
      Activation, through its attorneys,
      has sent letters to over300potential
      infringers of the patent,
      placing the infringers on notice of the patent and seeking a license agreement
      under the patent.





Card
      Activation has sued six parties and
      to date Card Activation has settled a lawsuit with one
      alleged infringer.  That alleged infringer, McDonald Corporation,
      has taken a license under the patent.





The
      intellectual property attorneys are
      pursuing these cases on a contingent fee basis, whereby they will receive 35%
      of
      amounts recovered, if successful.





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





The
      Company submitted no matters to a vote of its security holders during the fiscal
      year ended September 30, 2007.





PART
      II





ITEM
      5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS.





Card
      common stock is traded in the over-the-counter market, and quoted in the
      National Association of Securities Dealers Inter-dealer Quotation System
      (“Electronic Bulletin Board) and can be accessed on the Internet at www.otcbb.comunder
      the symbol “CDVT.”




At
      September 30, 2007, there were 146,000,000 shares of common stock of Card
      outstanding and there were approximately 681 shareholders of record of the
      Company’s common stock.





The
      following table sets forth for the periods indicated the high and low bid
      quotations for Card’s common stock.  These quotations represent
      inter-dealer quotations, without adjustment for retail markup, markdown or
      commission and may not represent actual transactions.





5








Periods
            
            High
            
            
            LowFiscal
                Year
                2007First
                Quarter (October – December
                2006)
            
            $
            .0
            
            
            $
            .0Second
                Quarter (January – March
                2007)
            
            $
            .0
            
            
            $
            .0Third
                Quarter (April –
                June  2007)
            
            $
            .0
            
            
            $
            .0Fourth
                Quarter (July – September
                2007)
            
            $
            .0
            
            
            $
            ..0Fiscal
                Year
                2006Fourth
                Quarter (July – September
                2006)
            
            $
            .0
            
            
            $
            .0





Card
      has
      never paid dividends on any of its common stock shares. Card does not anticipate
      paying dividends at any time in the foreseeable future and any profits will
      be
      reinvested in Card’s business.  Card’s Transfer Agent and Registrar
      for the common stock is Corporate Stock Transfer located in Denver,
      Colorado.





Sale
      of Unregistered Securities





The
      Company did not have any Sales of Unregistered Securities during the fiscal
      year
      ended September 30, 2007.





ITEM
      6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION.





Management’s
      discussion and analysis contains statements that are forward-looking and involve
      risks and uncertainties.  Several factors could cause actual results
      to differ materially from those described in such forward-looking
      statements.  This includes the Company’s ability to manage growth,
      involvement in litigation, ongoing contractual relationships, and dependence
      upon key personnel, changes in customer demand for product and services, and
      the
      adoption of new, or changes in, accounting policies, practices and estimates
      and
      the application of such policies, practices, and estimates, and federal and
      state governmental regulation.


The
      following financial data should be read in conjunction with the consolidated
      financial statements of Card and related notes and other financial information
      appearing elsewhere in this report.





Critical
      Accounting
      Policies





Stock
      Based
      Compensation





In
      December 2004, the FASB issued a
      revision of SFAS No. 123 ("SFAS No. 123(R)") that requires compensation costs
      related to share-based payment transactions to be recognized in the statement
      of
      operations. With limited exceptions, the amount of compensation cost will be
      measured based on the grant-date fair value of the equity or liability
      instruments issued. In addition, liability awards will be re-measured each
      reporting period. Compensation cost will be recognized over the period that
      an
      employee provides service in exchange for the award. SFAS No. 123(R) replaces
      SFAS No. 123 and is effective as of the beginning of January 1, 2006. Based
      on
      the number of shares and awards outstanding as of December 31, 2005 (and without
      giving effect to any awards which may be granted in 2006), we do not expect
      our
      adoption of SFAS No. 123(R) in January 2006 to have a material impact on the
      financial statements.





6





FSP
      FAS 123(R)-5 was issued on October
      10, 2006. The FSP provides that instruments that were originally issued as
      employee compensation and then modified, and that modification is made to the
      terms of the instrument solely to reflect an equity restructuring that occurs
      when the holders are no longer employees, then no change in the recognition
      or
      the measurement (due to a change in classification) of those instruments will
      result if both of the following conditions are met: (a). There is no increase
      in
      fair value of the award (or the ratio of intrinsic value to the exercise price
      of the award is preserved, that is, the holder is made whole), or the
      antidilution provision is not added to the terms of the award in contemplation
      of an equity restructuring; and (b). All holders of the same class of equity
      instruments (for example, stock options) are treated in the same manner. The
      provisions in this FSP shall be applied in the first reporting period beginning
      after the date the FSP is posted to the FASB website. The Company has adopted
      SP
      FAS 123(R)-5 but it did not have a material impact on its consolidated results
      of operations and financial condition.




Accounting
      Policies and
      Estimates





The
      preparation of our financial statements in conformity with accounting principles
      generally accepted in the United States of America requires our management
      to
      make certain estimates and assumptions that affect the reported amounts of
      assets and liabilities and disclosure of contingent assets and liabilities
      at
      the date of the financial statements and the reported amounts of revenues and
      expenses during the reporting period.  Our management periodically
      evaluates
      the estimates and judgments made. Management bases its estimates and judgments
      on historical experience and on various factors that are believed to be
      reasonable under the circumstances. Actual results may differ from these
      estimates as a result of different assumptions or
      conditions.


As
      such,
      in accordance with the use of accounting principles generally accepted in the
      United States of America, our actual realized results may differ from
      management’s initial estimates as reported.  A summary of significant
      accounting policies are detailed in notes to the financial statements which
      are
      an integral component of this filing.





Revenue
      Recognition





Revenue
      recognized the use of our patent
      technology by receiving royalties or licensing fees from the deployment of
      our
      technology. Revenue is recorded when sales are generated from third parties
      that
      have deployed our technology and generated sales from that
      technology.  Revenue is recognized from litigation and royalty
      payments from those companies that have violated our patented technology and
      entered into licensing agreements.  Revenue is recognized from the
      settlement of litigation and subsequent payment of royalties for the use of
      our
      patented technologies if any.  The Company recognizes revenue when a
      litigated matter is settled and a stipulated order has been entered into the
      court for the infringement of our patent.   We will recognize
      royalty revenue based on royalty reports received from settling parities that
      deploy our technology.  In accordance with contract terms, we will
      charge a royalty fee to patented users and each contract will be negotiated
      at
      the settlement of our law suits.  Although if parties chose to pay the
      entire life of the royalty we will deferred revenues amortized over the life
      of
      our patent.  We will recognize revenues as licensing revenue when our
      revenue recognition criteria have been met. Presently we do not have any
      licensing agreements executed that generate royalty
      payments.




Upon
      execution of our licensing
      agreement we will from time to time we exercise our right to conduct royalty
      audits pursuant to our contracts with customers. As a result of such audits
      we
      will recognize royalty revenue that relates to prior periods. Differences
      between amounts initially recognized and amounts subsequently audited or
      reported as an adjustment to those amounts are recognized in the period the
      adjustment is determined.





7





The
      Company has adopted the Securities
      and Exchange Commission’s Staff Accounting Bulletin (SAB) No. 104, which
      provides guidance on the recognition, presentation and disclosure of revenue
      in
      financial statements.








Statement
                of Operations DataYears
                Ended
              September
                30,
            
            
            Years
                Ended
              September
                30,2007
            
            
            2006Revenues
            
            $
            45,000
            
            
            $
            -Operating
                and Other Expenses
            
            
            235,598
            
            
            
            15,758Net
                Loss
            
            $
            (190,598
            )
            
            $
            15,758Balance
                Sheet Data:Years Ended
              September 30,
            
            
            Years Ended
              September 30,2007
            
            
            2006Current
                Assets
            
            $
            13,699
            
            
            $
            -Total
                Assets
            
            
            13,699
            
            
            
            -Current
                Liabilities
            
            
            40,235
            
            
            
            15,758Non
                Current Liabilities
            
            
            165,142
            
            
            
            -Total
                Liabilities
            
            
            205,377
            
            
            
            15,758Working
                Capital (Deficit)
            
            
            (26,536
            )
            
            
            (15,758
            )Shareholders'Equity
                (Deficit)
            
            $
            (191,678
            )
            
            $
            (15,758
            )








The
      Company has declared no common stock dividends since its inception.





RESULTS
      OF OPERATIONS





Fiscal
      Year End September 30, 2007, Compared to Fiscal Year End September 30,
      2006





We
      are a development stage company and
      have generated no revenues from the anticipated royalty income, except for
      a
      $45,000 settlement.





Liquidity
      and Capital
      Resources





The
      Company's operating requirements has
      been and will be funded primarily from its related party entity MedCom USA,
      Inc.
      The Company will use funds advanced MedCom. Currently, the Company costs are
      limited to professional fees and subject to a contingency fee from our patent
      litigation attorneys.We anticipate
      MedCom will continue to provide funds through a revolving
      line of credit of $250,000 which funds will be drawn down on an as needed basis
      until we begin to realize sufficient revenues from royalty
      payments.  Once we begin receiving royalties, we expect the revenues
      of such royalties shall permit us to be self-funding. In addition, the Company
      is looking at expanding its market and looks for an acquisition that complements
      theCompany
      and generates revenues, although
      no such prospective acquisition candidates have been
      ascertained.





8





Liabilities





We
      anticipate MedCom will continue to
      provide funds through a revolving line of credit of $250,000 which funds will
      be
      drawn down on an as needed basis until we begin to realize sufficient revenues
      from royalty payments.





We
      do not presently generate sufficient
      revenue to fund our operations and the planned development of our business.
      In
      order to sustain our current operations and develop our business plan, we will
      require funds for working capital.We
      are attempting to raise additional
      working capital through the sale of equity, debt or a combination of equity
      and
      debt. We do not presently have any firm commitments for additional working
      capital and there are no assurances that such capital will be available to
      us
      when needed or upon terms and conditions which are acceptable to us. If we
      are
      able to secure additional working capital through the sale of equity securities,
      the ownership interests of our current stockholders will be diluted. If we
      raise
      additional working capital through the issuance of debt or additional dividend
      paying securities our future interest and dividend expenses will increase.
      If we
      are unable to secure additional working capital as needed, our ability to grow
      our sales, meet our operating and financing obligations as they become due
      and
      continue our business and operations could be in jeopardy.





The
      Company has financed operations by
      advances from its parent, MedCom USA Incorporated,which
      total $165,141 to the Company
      through September 30, 2007.





Other
      Considerations





There
      are
      numerous factors that affect the business and the results of its
      operations.  Sources of these factors include general economic and
      business conditions, federal and state regulation of business activities, the
      level of demand for product services, and the ability to develop new services
      based on new or evolving technology and the market's acceptance of those new
      services, the Company’s ability to timely and effectively manage periodic
      product transitions, the services, and our ability to continue to improve our
      infrastructure including personnel and systems to keep pace with the Company’s
      anticipated rapid growth.





9





ITEM
      7.  FINANCIAL STATEMENTS





CARD
      ACTIVATION TECHNOLOGIES, INC.





TABLE
                OF
                CONTENTS
            PageINDEPENDENT
                REGISTERED PUBLIC ACCOUNTING FIRM:
            F-2Jewett
                Schwartz Wolfe & AssociatesFINANCIAL
                STATEMENTS:Balance
                Sheet at September 30, 2007
            F-3Statements
                of Operations for the years ended September 30, 2007 and
                2006
            F-4Statements
                of Stockholders’ Equity for the years ended September 30,
                2007
            F-5Statements
                of Cash Flows for the years ended September 30, 2007 and
                2006
            F-6NOTES
                TO FINANCIAL STATEMENTS
            F-7





F-1











REPORT
      OF INDEPENDENT REGISTERED PUBLIC
      ACCOUNTING FIRM







To
      the Board of Directors and
      Stockholders of


CARD
      ACTIVATION TECHNOLOGIES,
      INC.





We
      have audited the accompanying balance
      sheet of Card Activation Technologies, Inc. (A Development Stage Company) as
      of
      September 30, 2007 and the related statements of operations, changes in
      shareholders' deficit and cash flows for the years then ended September 30,
      2007
      and 2006 and for period from August 29, 2006 (inception) through September
      30,
      2007. These financial statements are the responsibility of the Company's
      management. Our responsibility is to express an opinion on these financial
      statements based on our audits.





We
      conducted our audit in accordance
      with 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. 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 provided a reasonable basis for our
      opinion.





In
      our opinion, the financial statements
      referred to above present fairly, in all material respects, the financial
      position of Card Activation Technologies, Inc. (A Development Stage Company)
      as
      of September 30, 2007, and the results of their operations and its cash flows
      for the periods then ended September 30, 2007 and from August 29, 2006
      (inception) through September 30, 2007 in conformity with accounting principles
      generally accepted in the United States of America.





These
      financial statements have been
      prepared assuming that the Company will continue as a going concern. As
      discussed in Note 2 to the financial statements, the Company has operating
      and
      liquidity concerns, has incurred in a net losses approximately $206,000 during
      the period August 29, 2006 (inception) through September 30,
      2007.  These factors raise substantial doubt about the ability of the
      Company to continue as a going concern. The financial statements do not include
      any adjustments that might result from the outcome of these
      uncertainties.  In this regard, Management is proposing to raise any
      necessary additional funds through loans and additional sales of its common
      stock.  There are no assurances that the Company will be successful in
      raising additional capital.








JEWETT,
      SCHWARTZ, WOLFE &
ASSOCIATES


Hollywood,
      Florida


December
      12, 2007





2514
      HOLLYWOOD BOULEVARD, SUITE 508 ● HOLLYWOOD, FLORIDA 33020 ● TELEPHONE (954)
      922-5885 ● FAX (954) 922-5957


MEMBER
      - AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS ● FLORIDA INSTITUTE OF
      CERTIFIED PUBLIC ACCOUNTANTS


PRIVATE
      COMPANIES PRACTICE SECTION OF THE AICPA ● REGISTERED WITH THE PUBLIC COMPANY
      ACCOUNTING OVERSIGHT BOARD OF THE SEC





F-2





CARD
        ACTIVATION TECHNOLOGIES INC.
 (A
        Development Stage Company)
 BALANCE
        SHEET
 
 September 30, 2007ASSETSCURRENT
                  ASSETSCash
              
              $
              13,699Total
                  current assets
              
              
              13,699TOTAL
                  ASSETS
              
              $
              13,699LIABILITIES
                  AND STOCKHOLDERS' DEFIENCY:CURRENT
                  LIABILITIES:Accounts
                  payable
              
              $
              40,235Total
                  current liabilities
              
              
              40,235Loans
                  payable - Affiliate
              
              
              165,142Total
                  liabilities
              
              
              205,377Commitments
                  and ContingenciesSTOCKHOLDERS'
                  DEFICIENCY:Preferred
                  stock, $.001 par value, 1,000,000 shares authorized; zero shares
                  issued
                  and outstanding
              
              
              -Common
                  stock, $.0001 par value, 175,000,000 shares authorized; 146,770,504
                  shares
                  issued and outstanding
              
              
              14,678Accumulated
                  deficit during the Development Stage
              
              
              (206,356
              )Total
                  stockholders' deficit
              
              
              (191,678
              )TOTAL
                  LIABILITIES AND STOCKHOLDERS' DEFICIENCY
              
              $
              13,699





The
      accompanying notes are an integral part of these financial
      statements





F-3




CARD
      ACTIVATION TECHNOLOGIES INC.


(A
      Development Stage Company)


STATEMENT
      OF OPERATIONS


FOR
      THE YEARS ENDED SEPTEMBER 30, 2007 AND 2006


AND
      FOR THE PERIOD FROM AUGUST 29, 2006 (INCEPTION) TO SEPTEMBER 30, 2007





2007
            
            
            2006
            
            
            For the Period
              from August 29, 2006
              (inception) to
              September 30, 2007REVENUELitigation
                revenue
            
            $
            45,000
            
            
            $
            -
            
            
            $
            45,000Total
            
            
            -
            
            
            
            -
            
            
            
            -OPERATING
                EXPENSES:General
                and Administrative
            
            
            233,322
            
            
            
            15,758
            
            
            
            249,080Sales
                and Marketing expenses
            
            
            2,276
            
            
            
            -
            
            
            
            2,276Total
                operating expenses
            
            
            235,598
            
            
            
            15,758
            
            
            
            251,356OPERATING
                LOSS
            
            
            (190,598
            )
            
            
            (15,758
            )
            
            
            (206,356
            )OTHER
                (INCOME) AND EXPENSESTotal
                other expense
            
            
            -
            
            
            
            -
            
            
            
            -LOSS
                BEFORE INCOME TAXES
            
            
            (190,598
            )
            
            
            (15,758
            )
            
            
            (206,356
            )INCOME
                TAX (BENEFIT) PROVISION
            
            
            -
            
            
            
            -
            
            
            
            -NET
                LOSS
            
            $
            (190,598
            )
            
            $
            (15,758
            )
            
            $
            (206,356
            )Weighted
                Average Common Share Outstanding:Basic
                and diluted:
            
            
            146,770,504
            
            
            
            146,770,504Net
                Loss Per ShareBasic
                and diluted:
            
            $
            -
            
            
            $
            -





The
      accompanying notes are an integral part of these financial
      statements





F-4




CARD
        ACTIVATION TECHNOLOGIES INC.
 (A
        Development Stage Company)
 STATEMENTS
        OF STOCKHOLDERS’ DEFICIENCY
 FOR
        THE YEARS ENDED SEPTEMBER 30, 2007 AND 2006
 AND
        FOR THE PERIOD FROM AUGUST 29, 2006 (INCEPTION) TO SEPTEMBER 30, 2007
  Common
                  Stock
              
              
              Preferred
                  Stock
              
              
              AccumulatedShares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Deficit
              
              
              TotalStock
                  Issued August 29, 2006
              
              
              14,677,504
              
              
              $
              14,678
              
              
              
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              14,678Net
                  loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (15,758
              )
              
              
              (15,758
              )Balance
                  as of September 30, 2006
              
              
              14,677,504
              
              
              $
              14,678
              
              
              
              -
              
              
              
              -
              
              
              $
              (15,758
              )
              
              $
              (1,080
              )Net
                  loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (190,598
              )
              
              
              (190,598
              )Balance
                  as of September 30, 2007
              
              
              14,677,504
              
              
              $
              14,678
              
              
              
              -
              
              
              $
              -
              
              
              $
              (206,356
              )
              
              $
              (191,678
              )
 
 The
        accompanying notes are an integral part of these financial
        statements




F-5




CARD
        ACTIVATION TECHNOLOGIES INC.
 (A
        Development Stage Company)
 STATEMENT
        OF CASH FLOWS
 FOR
        THE YEARS ENDED SEPTEMBER 30, 2007 AND 2006
 AND
        FOR THE PERIOD FROM AUGUST 29, 2006 (INCEPTION) TO SEPTEMBER 30, 2007
 
 CASH
                  FLOWS FROM OPERATING ACTIVITIES:
              
              2007
              
              
              2006
              
              
              For the Period
                from August 29, 2006
                (inception) to
                September 30, 2007Net
                  (loss)
              
              $
              (190,598
              )
              
              $
              (15,758
              )
              
              $
              (206,356
              )Adjustments
                  to reconcile net income to net cash(used
                  in) operating activities:Common
                  stocks issued in spin off
              
              
              14,678
              
              
              
              -
              
              
              
              14,678Changes
                  in assets and liabilities:Accounts
                  payable
              
              
              40,235
              
              
              
              -
              
              
              
              40,235Net
                  cash used in operating activities
              
              
              (135,685
              )
              
              
              (15,758
              )
              
              
              (151,443
              )CASH
                  FLOWS FROM INVESTING ACTIVITIES:-
              
              
              
              -
              
              
              
              -Net
                  cash from investing activities
              
              
              -
              
              
              
              -
              
              
              
              -CASH
                  FLOWS FROM FINANCING ACTIVITIES:-
              
              
              
              -
              
              
              
              -Loans
                  from affiliates
              
              
              149,384
              
              
              
              15,758
              
              
              
              165,142Net
                  cash provided by financing activities
              
              
              149,384
              
              
              
              15,758
              
              
              
              165,142INCREASE
                  IN CASH
              
              
              13,699
              
              
              
              -
              
              
              
              13,699CASH,
                  BEGINNING OF YEAR
              
              
              -
              
              
              
              -
              
              
              
              -CASH,
                  END OF YEAR
              
              
              13,699
              
              
              
              -
              
              
              
              13,699
 
 The
        accompanying notes are an integral part of these financial
        statements


F-6





CARD
      ACTIVATION TECHNOLOGIES,
      INC.


(A
      Development Stage
      Company)


NOTES
      TO FINANCIAL
      STATEMENTS


FOR
      THE YEAR ENDED SEPTEMBER
      30,
      2007


AND
      FOR PERIOD FROM AUGUST 29, 2006
      (INCEPTION) TO SEPTEMBER
      30, 2007





NOTE
      1 – BACKGROUND





Card
      Activation Technologies, Inc.
      (“Cardor
      The Company”) was incorporated in the
      state of Delaware on August 29, 2006. The Company is a development stage company
      and is a wholly owned subsidiary of MedCom USA, Incorporated (EMED.OB). The
      company received, through a spin off, the ownership of a patent of MedCom USA
      Incorporated. The company has not begun the process of operating this business
      and is still in the process of reviewing the impact of the patent infringement
      costs, and future cash flow from successful litigation. The Company was
      incorporated for the sole purpose of financing and litigation patent
      infringements related to the unauthorized use of electronic activation of phone,
      gift and infinity cards.Cardis
      incorporated in Delaware with the
      focus on the licensing of the proprietary patented technology of electronic
      activation of phone, gift and affinity cards





The
      MedCom Management intends to spin
      off Card Activation Technology, Inc. into a separately traded company. Under
      the
      current plan, shareholders will receive one share in the new entity for each
      share of MedCom they own on the record date. The MedCom Renewable card system
      patent was created by MedCom as part of its card building technology endeavors
      in the 1990's. The patent covers the technology and process for taking a card
      with a magnetic strip or other data capture mechanism and activating the card
      by
      downloading a determined monetary value onto the card for use at a later date
      for different types of transactions. This process can be utilized for prepaid
      phone cards, gift cards, and affinity cards. New View Technologies, which was
      acquired by MedCom in December 1996, developed the patent and all patents were
      assigned by New View Technologies to MedCom.





NOTE2-
      GOING CONCERN





The
      accompanying financial statements
      have been prepared in conformity with accounting principles generally accepted
      in the United States of America which contemplate continuation of the Company
      as
      a goingconcern.  However,
      the Company
      has year end losses from operations and had no revenues from operations in
      2006.  During the period August 29, 2006 (Inception) through September
      30,
      2007the Company incurred
      net loss approximately
      of
      $206,356.  Further, the Company
      has
      inadequate working capital to maintain or develop its operations, and is
      dependent upon funds from private investors and the support of certain
      stockholders.




These
      factors raise substantial doubt
      about the ability of the Company to continue as a going concern.  The
      financial statements do not include any adjustments that might result from
      the
      outcome of these uncertainties.  In this regard, Management is
      proposing to raise any necessary additional funds through loans and additional
      sales of its common stock. There is no assurance that the Company will be
      successful in raising additional capital.





NOTE3–
SUMMARY
      OF SIGNIFICANT ACCOUNTING
      POLICIES





The
      Company prepares its financial
      statements in accordance with accounting principles generally accepted in the
      United States of America.  Significant accounting policies are as
      follows:





F-7





Basis
      of
      Presentation





The
      Company has produced minimal revenue
      from its principal business and is a development stage company as defined by
      the
      Statement of Financial Accounting Standards (SFAS) No. 7 “Accounting and
      Reporting by Development State Enterprises”.





Use
      of
      Estimates





The
      preparation of financial statements
      in conformity with accounting principles generally accepted in the United States
      of America requires management to make estimates and assumptions that affect
      the
      reported amounts of assets and liabilities and disclosure of contingent assets
      and liabilities at the date of the financial statements.  These
      estimates and assumptions also affect the reported amounts of revenues, costs
      and expenses during the reporting period.  Management evaluates these
      estimates and assumptions on a regular basis.  Actual results could
      differ from those estimates.





Revenue
      Recognition





Revenue
      recognized the use of our patent
      technology by receiving royalties or licensing fees from the deployment of
      our
      technology. Revenue is recorded when sales are generated from third parties
      that
      have deployed our technology and generated sales from that
      technology.  Revenue is recognized from litigation and royalty
      payments from those companies that have violated our patented technology and
      entered into licensing agreements.  Revenue is recognized from the
      settlement of litigation and subsequent payment of royalties for the use of
      our
      patented technologies if any.  The Company recognizes revenue when a
      litigated matter is settled and a stipulated order has been entered into the
      court for the infringement of our patent.   We will recognize
      royalty revenue based on royalty reports received from settling parities that
      deploy our technology.  In accordance with contract terms, we will
      charge a royalty fee to patented users and each contract will be negotiated
      at
      the settlement of our law suits.  Although if parties chose to pay the
      entire life of the royalty we will deferred revenues amortized over the life
      of
      our patent.  We will recognize revenues as licensing revenue when our
      revenue recognition criteria have been met. Presently we do not have any
      licensing agreements executed that generate royalty
      payments.




Upon
      execution of our licensing
      agreement we will from time to time we exercise our right to conduct royalty
      audits pursuant to our contracts with customers. As a result of such audits
      we
      will recognize royalty revenue that relates to prior periods. Differences
      between amounts initially recognized and amounts subsequently audited or
      reported as an adjustment to those amounts are recognized in the period the
      adjustment is determined.





The
      Company recognizes product revenue
      in accordance with Staff Accounting Bulletin (SAB) No. 104, “Revenue Recognition
      in Financial Statement” which established that revenue can be recognized when
      persuasive evidence of an arrangement exists, the product has been shipped,
      all
      significant contractual obligations have been satisfied and collection is
      reasonably assured.





Cash
      and
      Cash Equivalents





The
      Company considers all highly liquid
      investments with an original maturity of three months or less to be cash
      equivalents.  AtSeptember 30, 2007,
      cash and cash equivalents include cash
      on hand and cash in the bank.





F-8





Property
      and
      Equipment





Property
      and equipment is recorded at
      cost and depreciated over the estimated useful lives of the assets using
      principally the straight-line method. When items are retired or otherwise
      disposed of, income is charged or credited for the difference between net book
      value and proceeds realized thereon.  Ordinary maintenance and repairs
      are charged to expense as incurred, and replacements and betterments are
      capitalized.





The
      range of estimated useful lives used
      to calculated depreciation for principal items of property and equipment are
      as
      follow:





Asset
                Category
            
            Depreciation/
              Amortization
                PeriodFurniture
                  and
                  Fixture
            
            3
                  YearsOffice
                equipment
            
            3
                YearsLeasehold
                  improvements
            
            5
                  Years





Research
      and
      Development





Costs
      are expensed as
      incurred.  There was no Research and Development expense for
      the year ended September
      30, 2007.





Intangible
      Assets





The
      Company adopted Statement of
      Financial Accounting Standard (“SFAS”) No. 142, Goodwill and Other Intangible
      Assets, effective July 1, 2002. As a result, the Company discontinued
      amortization of goodwill, and instead annually evaluates the carrying value
      of
      goodwill for impairment, in accordance with the provisions of SFAS No. 142.
      The
      Company holds one asset the cost basis of the development of the patent
      infringement litigation. The Company owns the patent technology of the
      electronic activation of gift, Affinity, and phone cards the patent had a cost
      basis of $13,100 of legal costs related to the establishment of the patent.
      MedCom impaired the entire value of the patent cost because there were not
      yet
      any proven revenues related to the patent infringement
      litigation.





Impairment
      of Long-Lived Assets





In
      accordance with SFAS No. 144,
      long-lived assets, such as property, plant, and equipment, and purchased
      intangibles, are reviewed for impairment whenever events or changes in
      circumstances indicate that the carrying amount of an asset may not be
      recoverable. Goodwill and other intangible assets are tested for impairment
      annually. Recoverability of assets to be held and used is measured by a
      comparison of the carrying amount of an asset to estimated undiscounted future
      cash flows expected to be generated by the asset. If the carrying amount of
      an
      asset exceeds its estimated future cash flows, an impairment charge is
      recognized by the amount by which the carrying amount of the asset exceeds
      the
      fair value of the asset.There were noevents
      or changesin
      circumstances that necessitateda
      review of impairmentof long lived
      assets.





Income
      Taxes





Deferred
      income taxes are provided based
      on the provisions of SFAS No. 109, "Accounting for Income Taxes" ("SFAS 109"),
      to reflect the taxconsequences in future
      years of
      differences between the tax bases of assets and liabilities and their financial
      reporting amounts based on enacted tax laws and statutory tax rates applicable
      to the periods in which the differences are expected to affect taxable
      income.  Valuation allowances are established when necessary to reduce
      deferred tax assets to the amount expected to be realized.





F-9





Earnings
      Per
      Share




Basic
      earnings per share is computed by
      dividing net income (loss) available to common shareholders by the weighted
      average number of common shares outstanding during the reporting
      period.Diluted
      earnings per share reflects the
      potential dilution that could occur if stock options and other commitments
      to
      issue common stock were exercised or equity awards vest resulting in the
      issuance of common stock that could share in the earnings of the
      Company.  As of September 30, 2007,
      there were no potential dilutive
      instruments that could result in share dilution.





Fair
      Value
      of Financial Instruments




The
      fair value of a financial instrument
      is the amount at which the instrument could be exchanged in a current
      transaction between willing parties other than in a forced sale or
      liquidation.





The
      carrying amounts of the Company’s
      financial instruments, including cash, accounts payable and accrued liabilities,
      income tax payable and related party payable approximate fair value due to
      their
      most maturities.





Stock-Based
      Compensation




Statements
      of Financial Accounting Standards (“SFAS No.”) No. 123, Accounting for Stock-Based
      Compensation, (“SFAS No. 123”) established accounting and disclosure
      requirements using a fair-value based method of accounting for stock-based
      employee compensation. In accordance with SFAS No. 123, the Company has elected
      to continue accounting for stock based compensation using the intrinsic value
      method prescribed by Accounting Principles Board Opinion No. 25, "Accounting
      for
      Stock Issued to Employees."





The
      Company accounts for stock awards issued to nonemployees in accordance with
      the
      provisions of SFAS No. 123 and Emerging Issues Task Force (“EITF”) Issue No.
      96-18 Accounting for Equity
      Instruments that are Issued to Other Than Employees for Acquiring, or in
      Conjunction with Selling Goods or Services.  Under SFAS No. 123
      and EITF 96-18, stock awards to nonemployees are accounted for at their fair
      value as determined under Black-Scholes option pricing model.





In
      December 2004, the FASB issued a
      revision ofSFAS
      No.123 ("SFAS
      No.123(R)") that requires
      compensation
      costs related to share-based payment transactions to be recognized in the
      statement of operations. With limited exceptions, the amount of compensation
      cost will be measured based on the grant-date fair value of the equity or
      liability instruments issued. In addition, liability awards will be re-measured
      each reporting period. Compensation cost will be recognized over the period
      that
      an employee provides service in exchange for the award.SFAS No.123(R)
      replacesSFAS No.123
      and is effective as of the beginning
      of January 1, 2006. Based on the number of shares and awards outstanding as
      of
      December 31, 2005 (and without giving effect to any awards which may be granted
      in 2006), we do not expect our adoption ofSFAS No.123(R)
      in January 2006 to have a
      material impact on the financial statements.





In
      October 10, 2006 FASB Staff Position
      issuedFinancial Statement
      Position (“FSP”) FAS No. 123(R)-5“Amended of FASB Staff
      Position FAS
      123(R)-1 “Classification and Measurement of Freestanding Financial Instruments
      Originally issued in Exchange of Employee Services under FASB Statement No.
      123(R)”.  The FAS provides that instruments that were originally
      issued as employee compensation and then modified, and that modifications made
      to the terms of the instrument solelyto reflect an equity
      restructuring that
      occurs when the holders are no longer employees, then no change in the
      recognition or the measurement (due to a change in classification) of those
      instruments will result if both of the following conditions are met: (a). There
      is no increase in fair value of the award (or the ratio of intrinsic value
      to
      the exercise price of the award is preserved, that is, the holder is made
      whole), or the antidilution provision is not added to the terms of the award
      in
      contemplation of an equity restructuring; and (b). All holders of the same
      class
      of equity instruments (for example, stock options) are treated in the same
      manner. The provisions in this FSP shall be applied in the first reporting
      period beginning after the date the FSP is posted to the FASB website. The
      Companydoes not expect the
      adoption of FSPFAS No.
      123(R)-5to have a material
      impact on itsresults of
      operations and financial condition.





F-10





Concentration
      of Credit
      Risk





The
      Company maintains its operating cash balances in banks in Scottsdale,
      Arizona.  The Federal Depository Insurance Corporation (FDIC) insures
      accounts at each institution up to $100,000.





Recent
      Accounting
      Pronouncements




Recent
      accounting pronouncements that the Company has adopted or will be required
      to
      adopt in the future are summarized below.


In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option of Financial
      Assets and Financial Liabilities” (“SFAS 159”), which provides companies with an
      option to report selected financial assets and liabilities at fair value with
      the changes in fair value recognized in earnings at each subsequent reporting
      date.  SFAS 159 provides an opportunity to mitigate potential
      volatility in earnings caused by measuring related assets and liabilities
      differently, and it may reduce the need for applying complex hedge accounting
      provisions.  If elected, SFAS 159 is effective for fiscal years
      beginning after November 15, 2007.  Management is currently evaluating
      the impact that this statement may have on the Company results of operations
      and
      financial position, and has yet to make a decision on the elective adoption
      of
      SFAS 159.





In
      September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS
      No. 157). SFAS No. 157 provides guidance for using fair value to measure assets
      and liabilities. SFAS No. 157 addresses the requests from investors for expanded
      disclosure about the extent to which companies measure assets and liabilities
      at
      fair value, the information used to measure fair value and the effect of fair
      value measurements on earnings. SFAS No. 157 applies whenever other standards
      require (or permit) assets or liabilities to be measured at fair value, and
      does
      not expand the use of fair value in any new circumstances. SFAS No. 157 is
      effective for financial statements issued for fiscal years beginning after
      November 15, 2007 and will be adopted by the Company in the first quarter of
      fiscal year 2009. The Company is unable at this time to determine the effect
      that its adoption of SFAS No. 157 will have on its results of operations and
      financial condition.





In
      September 2006, the SEC issued Staff Accounting Bulletin No. 108, "Considering
      the Effects of Prior Year Misstatements when Quantifying Misstatements in
      Current Year Financial Statements" (SAB 108). SAB 108 provides guidance on
      the
      consideration of the effects of prior year misstatements in quantifying current
      year misstatements for the purpose of a materiality assessment. SAB 108
      establishes an approach that requires quantification of financial statement
      errors based on the effects of each on a company's balance sheet and statement
      of operations and the related financial statement disclosures. Early application
      of the guidance in SAB 108 is encouraged in any report for an interim period
      of
      the first fiscal year ending after November 15, 2006, and will be adopted by
      the
      Company in the first quarter of fiscal year 2007. The Company does not expect
      the adoption of SAB 108 to have a material impact on its results of operations
      and financial condition.





In
      July
      2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty
      in
      Income Taxes, an interpretation of FASB Statement No. 109" (FIN 48). FIN 48
      clarifies the accounting for uncertainty in income taxes by prescribing the
      recognition threshold a tax position is required to meet before being recognized
      in the financial statements. It also provides guidance on derecognition,
      classification, interest and penalties, accounting in interim periods,
      disclosure and transition. The cumulative effects, if any, of applying FIN
      48
      will be recorded as an adjustment to retained earnings as of the beginning
      of
      the period of adoption. FIN 48 is effective for fiscal years beginning after
      December 15, 2006, and the Company is required to adopt it in the first quarter
      of fiscal year 2008. The Company is currently evaluating the effect that the
      adoption of FIN 48 will have on its results of operations and financial
      condition and is not currently in a position to determine such effects, if
      any.





F-11





In
      June
      2006, the FASB ratified Emerging Issues Task Force (EITF) Issue No. 06−3 (EITF
      06-3), “How Taxes Collected from Customers and Remitted to Governmental
      Authorities Should Be Presented in the Income Statement (That Is, Gross versus
      Net Presentation).” EITF 06−3 applies to any tax assessed by a governmental
      authority that is directly imposed on a revenue producing transaction between
      a
      seller and a customer. EITF 06−3 allows companies to present taxes either gross
      within revenue and expense or net. If taxes subject to this issue are
      significant, a company is required to disclose its accounting policy for
      presenting taxes and the amount of such taxes that are recognized on a gross
      basis. The Company currently presents such taxes net. EITF 06−3 is required to
      be adopted during the first quarter of fiscal year 2008. The Company is a
      development stage and taxes are currently not material to the Company’s
      financial statements.





In
      March
      2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial
      Assets-an amendment of FASB Statement No. 140” (SFAS 156”).  SFAS 156
      requires an entity to recognize a servicing asset or servicing liability each
      time it undertakes an obligation to service a financial asset by entering into
      a
      servicing contract in specific situations.  Additionally, the
      servicing asset or servicing liability is initially measured by fair value;
      however, an entity may elect the “amortization method” or “fair value method”
for subsequent reporting periods.  SFAS 156 is effective beginning
      Fiscal year 2008.  The Company does not expect the adoption of SFAS
      156 to have a material effect on its results of operations and financial
      condition.





In
      May
      2005, the Financial Accounting Standards Board (FASB) issued SFAS No. No. 154,
      "Accounting Changes and Error Corrections" (SFAS No. 154), which replaces
      Accounting Principles Board (APB) Opinion No. 20, "Accounting Changes," and
      SFAS
      No. 3, "Reporting Accounting Changes in Interim Financial Statements - An
      Amendment of APB Opinion No. 28." SFAS No. 154 provides guidance on the
      accounting for and reporting of accounting changes and error corrections, and
      it
      establishes retrospective application, or the latest practicable date, as the
      required method for reporting a change in accounting principle and the reporting
      of a correction of an error. SFAS No. 154 is effective for accounting changes
      and corrections of errors made in fiscal years beginning after December 15,
      2005.  The Company has adopted SFAS 154 in the first quarter of fiscal
      year 2007 and does not expect it to have a material impact on its consolidated
      results of operations and financial condition.





NOTE4–
SHARE
      CAPITAL





On
      August 29, 2006, the Company
      authorized 175,000,000 shares of common stock, at $.0001 par value and no shares
      were issued to its shareholders. The company authorized 1,000,000 of preferred
      shares at a par value of .001 and no shares were issued to its shareholders as of September
      30,
      2007.




NOTE5-
      INCOME TAXES





The
      provision (benefit) for income taxes from continued operations for the years
      ended September 30, 2007 and 2006 consist of the following:





F-12








2007
            
            
            2006Current:Federal
            
            $
            
            
            
            $StateDeferred:Federal
            
            $
            150,890
            
            
            $
            11.888State
            
            
            40,110
            
            
            
            3,112191,000
            
            
            
            15,000Benefit
                from the operating loss carryforward
            
            
            (191,000
            )
            
            
            (15,000
            )(Benefit)
                provision for income taxes, net
            
            $
            -
            
            
            $
            -





The
      difference between income tax expense computed by applying the federal statutory
      corporate tax rate and actual income tax expense is as follows:





September
                30,2007
            
            
            2006Statutory
                federal income tax rate
            
            
            34.0
            %
            
            
            34.0
            %State
                income taxes and other
            
            
            8.9
            %
            
            
            8.9
            %Effective
                tax rate
            
            
            42.9
            %
            
            
            42.9
            %





Deferred
      income taxes result from temporary differences in the recognition of income
      and
      expenses for the financial reporting purposes and for tax purposes. The tax
      effect of these temporary differences representing deferred tax asset and
      liabilities result principally from the
      following:





September
                30,2007
            
            
            2006Net
                operating loss carryforward
            
            
            191,000
            
            
            
            15,000Valuation
                allowance
            
            
            (191,000
            )
            
            
            (15,000
            )Deferred
                income tax asset
            
            $
            -
            
            
            $
            -





The
      Company has a net operating loss carryforward of approximately $206,356
      available to offset future taxable income through 2028.




NOTE6-
      COMMITMENTS AND
      CONTIGENCIES





The
      Company has entered into various
      consulting agreements with outside consultants.  However, certain of
      these agreements included additional compensation on the basis of
      performance.  The consulting agreements are the key shareholders that
      are instrumental to the success of the company and its development of it
      product.





NOTE7–
RELATED
      PARTY





Card
      Activation is managed by its key
      officersand
      directorsWilliam
      P. Williamsand Mr. Michael Malet,asof
      September 30, 2007. Mr. Williams is the
      single largest
      shareholder, sole officer, and director of MedCom.





F-13





NOTE8-
      NET LOSS PER SHARE





Restricted
      shares and warrants are not
      included in the computation of the weighted average number of shares outstanding
      during the periods. There are no restricted shares or warrants issued in the
      Capital of Card Activation. The net loss per common share is calculated by
      dividing the consolidated loss by the weighted average number of shares
      outstanding during the periods.





NOTE9–
SUBSEQUENT
      EVENT





The
      company’s management consisted of William P. Williams CEO and Michael Malet
      Executive Vice President.  The company received a patented technology
      that litigation of patent infringement will ensue. The Company has sent out
      notice of patent infringements to over 300 very large retailers and unauthorized
      users of the company’s patent technology. The company is related to MedCom and
      the key officer and Directors will be the key to success to this development
      stage company.





In
      October 2007, Card issued 10,000,000
      common shares in accordance with the separation agreement terms and
      conditions.





*  *  *  *  *  *








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


In
      August 13, 2007 our prior auditor resigned and the Company engaged the firm
      of
      Jewett, Schwartz, Wolfe & Associates.





We
      have had no disagreements on any
      matter of accounting principles or practices, financial statement disclosure,
      or
      auditing scope or procedures with any of our accountants for the year endedSeptember 30,
      2006.




We
      have not had any other changes in nor
      have we had any disagreements, whether or not resolved, with our accountants
      on
      accounting and financial disclosures during our recent interim
      periods December 31, 2006,
      and March 31, 2007.




On
      August
      13, 2007, Jewett, Schwartz, Wolfe & Associates ("JSW") was appointed as the
      independent auditor for the Card Activation Technologies, Inc. Inc. (the
      "Company") commencing with their review of the interim period ended June 30,
      2007 and year ending September 30, 2007, and SE Clark & Company P.C.
      ("Clark") were dismissed as the independent auditors for the Company as of
      August 13, 2007. The decision to change auditors was approved by the audit
      committee of the Company's Board of Directors on August 13, 2007.




The
      report of Clark on the financial statements for either of the one most recent
      completed fiscal years did not contain any adverse opinion or disclaimer of
      opinion or was qualified or modified as to uncertainty, audit scope or
      accounting principles, except for the following:




“The  accompanying  financial  statements  have  been  prepared
      assuming that the
      Company  will  continue  as  a  going  concern.  As
      discussed in Note 1 to the financial statements, the accumulation of losses
      and
      shortage of capital raise substantial doubt about its ability to continue as
      a
      going concern. Management's plans concerning these matters are also described
      in
      Note1.  The financial
      statements  do  not  include  any
      adjustments relating to the recoverability and
      classification  of  asset  carrying  amounts
      or the amount and classification of
      liabilities  that  might  result  should  the
      Company be unable to continue as a going  concern.





10





During
      the Company's one most recent annual report September 30, 2006, two prior
      interim quarters, March 31, 2007, and December 31, 2006, there were no
      disagreements with Clark on any matter of accounting principles or practices,
      financial statement disclosure, or auditing scope or procedure, which
      disagreement, if not resolved to the satisfaction of Clark, would have caused
      it
      to make reference to the subject matter of the disagreements in connection
      with
      its report with respect to the financial statements of the Company.




During
      the Company's one most recent annual report September 30, 2006, two prior
      interim quarters March 31, 2007, and December 31, 2006, there were no
      "reportable events" as such term is described in Item 304(a)(1)(v) of Regulation
      S-B under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
      with respect to the Company and we did not consult with JSW through any
      subsequent interim period proceeding such resignation, declination or dismissal
      with the former accountant, Clark.




During
      the Company's one most recent annual report September 30, 2006, two prior
      interim quarters March 31, 2007, and December 31, 2006, the Company did not
      consult with JSW through any subsequent interim periods proceeding such
      resignation, declination or dismissal with the form accountant Clark and with
      respect to the Company regarding (i) the application of accounting principles
      to
      a specified transaction, either completed or proposed, or the type of audit
      opinion that might be rendered on the Company’s financial statements, (ii) any
      matter that was either the subject of a disagreement (as defined in Item
      304(a)(1)(iv) of Regulation S-B under the Exchange Act and the related
      instructions to Item 304 of Regulation S-B) or a "reportable event" (as such
      term is described in Item 304(a)(1)(v) of Regulation S-B), or (iii) any of
      the
      matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation
      S-B.




We
      have
      engaged JSW as our independent registered public accounting firm. The Company’s financial statements are
      required to be performed in accordance with the procedures required by
      professional standards established by the Public Company Accounting Oversight
      Board of the Commission and auditing standards generally accepted in the United
      States.  These standards and qualifications do not vary from state to state
      and, accordingly, we believe that the selection of this independent registered
      accounting firm satisfies the requirements of the Commission. Rule SX 2-01
      which
      requires that an accountant be licensed and in good standing under the laws
      of
      the place of the accountant’s residence or principal office.




The
      Company has furnished a copy of this Report to Clark and requested them to
      furnish the Company with a letter addressed to the Securities and Exchange
      Commission stating whether it agrees with the statements made by the Company
      herein in response to Item 304(a) of Regulation S-K and, if not, stating the
      respects in which it does not agree. Clark has not responded within the time
      frames required to make this filing. The letter from Clark will be submitted
      when received with an amended filing.




ITEM
      8A. CONTROLS AND
      PROCEDURES





Evaluation
      of Disclosure Controls and Procedures





Disclosure
      controls and procedures are designed with an objective of ensuring that
      information required to be disclosed in our periodic reports filed with the
      Securities and Exchange Commission, such as this Annual Report on Form 10-KSB,
      is recorded, processed, summarized and reported within the time periods
      specified by the Securities and Exchange Commission. Disclosure controls are
      also designed with an objective of ensuring that such information is accumulated
      and communicated to our management, including our chief executive officer,
      in
      order to allow timely consideration regarding required disclosures.





11





The
      evaluation of our disclosure controls by our principal executive officer
      included a review of the controls’ objectives and design, the operation of the
      controls, and the effect of the controls on the information presented in this
      Annual Report. Our management, including our chief executive officer, does
      not
      expect that disclosure controls can or will prevent or detect all errors and
      all
      fraud, if any. A control system, no matter how well designed and operated,
      can
      provide only reasonable, not absolute, assurance that the objectives of the
      control system are met. Also, projections of any evaluation of the disclosure
      controls and procedures to future periods are subject to the risk that the
      disclosure controls and procedures may become inadequate because of changes
      in
      conditions, or that the degree of compliance with the policies or procedures
      may
      deteriorate.




As
      of the
      end of the period covered by this report, we carried out an evaluation, under
      the supervision and with the participation of our management, including our
      Chief Executive Officer and Principle Financial Officer, of the effectiveness
      of
      our disclosure controls and procedures, as defined in Rules 13a-15(e) and
      15d-15(e) of the Securities Exchange Act of 1934 as of the end of the period
      covered by this report. Based on that evaluation, our Chief Executive
      Officer and Principle Financial Officer have concluded that our disclosure
      controls and procedures as of September 30, 2007 were effective to ensure that
      information required to be disclosed by us in reports that we file or submit
      under the Securities Exchange Act of 1934 is recorded, processed, summarized
      and
      reported within the time periods specified in the Securities and Exchange
      Commission’s rules and forms.  There have been no material changes in
      our internal controls over financial reporting or in other factors that could
      materially affect, or are reasonably likely to affect, our internal controls
      over financial reporting during the year ended September 30, 2007. There have
      not been any significant changes in the Company’s critical accounting policies
      identified since the Company filed its Form 10-KSB as of September 30,
      2007.





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.





Director
      and Executive Officer





Set
      forth below is information regarding
      the Company’s current directors and executive officers. There are no family
      relationships between any of our directors or executive officers. The directors
      are elected annually by stockholders. The executive officers serve at the
      pleasure of the Board of Directors.





Name
            
            Age
            
            TitleWilliam
                  P.
                  Williams
            
            54
            
            President
                  and Chief Executive
                  Officer, Director, Principle Accounting
                  OfficerMichael
                  Malet
            
            60
            
            Executive
                  Vice
                  President





William
      P.
      Williams, President and Chief Executive Officer, Principle Accounting Officer,
      Director





William
      P. Williams has been the
      Chairman, Chief Executive Officer of the Company since inception and has held
      the same positions with MedCom since August 2001. He is also currently Chief
      Executive Officer and Chairman of the Board for American Nortel Communications,
      Inc., a publicly traded company located in Scottsdale, Arizona, which is in
      the
      business of long-distance telephone service domestically, as well as
      internationally. From 1983 to 1995, he was President and Chairman of the Board
      of Shelton Financial, Inc., a financial factoring firm headquartered in San
      Antonio, Texas. Mr. Williams has a Bachelor of Arts and a Master of Business
      Administration in Finance from Baylor University





12





Michael
      Malet, Executive Vice President





Mr.
      Malet has served as Executive Vice
      President of MedCom since 2001. From 1998 to 2001 he was the chief operating
      office of MedCom. From 1995 to 1997 he was President of New View Technologies
      Inc. which manufactured on-line phone card vending machines and produced
      software for point-of-sale terminals for the activation of debit transactions
      and phone card/gift card activation. New View Technologies was purchased by
      MedCom in 1998. From 1986 to 1994 he was President of Keyosk Corporation, a
      manufacturer of on-line intelligent vending machines.





Audit
      Committee Financial
      Expert





The
      Company does not have an audit
      committee or a compensation committee of its board of directors. In addition,
      the Company’s board of directors has determined that the Company does not have
      an audit committee financial expert serving on the board. When the Company
      develops its operations, it will create an audit and a compensation committee
      and will seek an audit committee financial expert for its board and audit
      committee.





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





The
      Company is aware that all filings of Form 4 and 5 required of Section 16(a)
      of
      the Exchange Act of Directors, Officers or holders of 10% of the Company's
      shares have not been timely and the Company has instituted procedures to ensure
      compliance in the future.





ITEM
      10.  EXECUTIVE COMPENSATION





At
      the present time, none of the
      company’s officers receive any compensation from the company. It is anticipated
      that once the company begins to generate revenues, the company’s Officers, will
      begin receiving compensation from the company, but the amount has yet to be
      determined. In addition, it is anticipated that the Company will provide the
      officers with normal and customary benefits, including health, vacation, expense
      reimbursement, and retirement plan contributions.





There
      is currently no arrangement with
      any of the officers to provide compensation for their executive services to
      the
      Company.





Non-Employee
      Director
      Compensation




The
      Company has no formal plan for
      Director Compensation, but anticipates that it will reimburse the reasonable
      and
      customary expenses of any future non-employee directors associated with their
      service on the board, including travel expenses and standard fees for attending
      board meetings. In addition, the Company has established the 2006 Stock Option
      Plan (the “Plan”) for employees, directors and consultants and reserved
      1,000,000 shares for issuance under the Plan. At the date hereof, no options
      have been issued under this Plan.





13





Summary
      Compensation
      Table





The
      following table sets forth the cash
      compensation paid by the Company to its Chief Executive Officer and to all
      other
      executive officers for services rendered from August
      26,
      2006throughSeptember
      30, 2007. Currently,William
      P. Williamsis the Chairman,Chief
      Executive Officer,President
      andPrinciple Financial
      Officer.




2007and
                2006SUMMARY
                COMPENSATION
                TABLEName
                and
              Principal
              Position
            
            Year
            
            Salary
              ($)
            
            
            Bonus
              ($)
            
            
            Restricted
              Stock
              Awards
              ($)
            
            
            Securities
                Underlying
                Option
              Awards
              ($)
            
            
            Non-
              Equity
              Incentive
              Plan
              Compensation
              ($)
            
            
            Change
                in
              Pension
              Value
                and
              Nonqualified
              Deferred
              Compensation
              Earnings
              ($)
            
            
            All
                Other
              Compensation
              ($)
            
            
            Total
              ($)William
                P Williams
                and
            
            2007
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0Michael
                Malet
            
            2006
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0






OPTION
        EXERCISES AND STOCK VESTED
        TABLE
 Option
                  Awards
              
              
              Stock
                  AwardsName
              
              Number ofSharesAcquired onExercise
                (#)
              
              
              Value
                  Realizedon
                  Exercise
                ($)
              
              
              Number ofSharesAcquired onVesting
                (#)
              
              
              Value
                  Realizedon
                Vesting
                ($)William
                  P. Williams and Michael
                  Malet
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0








PENSION
                BENEFITS
                TABLEName
            
            Plan Name
            
            
            Number
                of
                Years
              CreditedService
              (#)
            
            
            Present
                ValueofAccumulatedBenefit
              ($)
            
            
            Payments
                During
              LastFiscal
                Year
              ($)William
                P. Williams and Michael
                Malet
            
            
            (1
            )
            
            
            0
            
            
            
            0
            
            
            
            0








Name
            
            Executive
                Contributions
              in
                LastFiscalYear
              ($)
            
            
            Registrant
              Contributions
              inLastFiscalYear
              ($)
            
            
            Aggregate
              Earnings
                in Last Fiscal
              Year
              ($)
            
            
            Aggregate
                Withdrawals /
              Distributions
              ($)
            
            
            AggregateBalanceatLastFiscalYear-End
              ($)William
                P. Williams and Michael
                Malet
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0




14




Name
            
            FeesEarnedorPaid
                inCash
              ($)
            
            
            StockAwards
              ($)
            
            
            OptionAwards
              ($)
            
            
            Non-EquityIncentivePlanCompensation
              ($)
            
            
            ChangeinPensionValueandNonqualifiedDeferred
                Compensation
                Earnings
              ($)
            
            
            All
                OtherCompensation
              ($)
            
            
            Total
              ($)William
                P. Williams and Michael
                Malet
            
            $
            0-
            
            
            
            0
            
            
            $
            0-
            
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            $
            0-






Name
              
              Year
              
              
              Perquisites
                  and Other Personal
                  Benefits
                ($)
              
              
              Tax
                  Reimbursements
                ($)
              
              
              Insurance
                  Premiums
                ($)
              
              
              Company
                  Contributions to
                  Retirement and 401(k) Plans
                ($)
              
              
              Severance
                  Payments /
                  Accruals
                ($)
              
              
              Change
                  in Control Payments /
                  Accruals
                ($)
              
              
              Total
                ($)William
                  P. Williams and Michael
                  Malet
              
              2007
&
                2006
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0






Name
              
              Year
              
              Personal
                  Use of Company
                  Car/Parking
              
              
              Financial
                  Planning/ Legal
                  Fees
              
              
              Club
                  Dues
              
              
              Executive
                  Relocation
              
              
              Total
                  Perquisites and Other
                  Personal BenefitsWilliam
                  P. Williams and Michael
                  Malet
              
              2007
&
                  2006
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0






Name
              
              Benefit
              
              Before
                  Charge in Control
                  Termination w/o Cause or for Good Reason
              
              After
                  Change in Control
                  Termination w/o Cause or for Good Reason
              
              
              Voluntary
                  Termination
              
              
              Death
              
              
              Disability
              
              
              Change
                  in
                  ControlWilliam
                  P. Williams And Michael
                  Malet
              
              Severance
              
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0




15





Compensation
      of
      Directors





Mr.
      Williamsisthe
      sole directors of the Company and
      are not being compensated for those services.





ITEM
      11.  SECURITY OWNERSHIP
      OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.


The
      following table
      lists stock ownership of our Common Stock as of August 1, 2007. The information
      includes beneficial ownership by (i) holders of more than 5% of our Common
      Stock, (ii) each of two directors and executive officers and (iii) all of
      our directors and executive officers as a group. Except as noted below, to
      our
      knowledge, each person named in the table has sole voting and investment power
      with respect to all shares of our Common Stockbeneficially owned by
      them.





Name
                and Address of
                Owner
            Title
                of
                Class
            
            Number
              of
                Shares
              Owned
                (1)
            
            
            Percentage
              of
                Class
            
            
            Percentage
                of
              Class
                After
              OfferingWilliam
                  P.
                  Williams
              7975
                  N. Hayden Rd., Suite
                  D333
              Scottsdale,
                  AZ
                  85258
            Common
                  Stock
            
            
            6,979,833
            
            
            
            4.8%
            
            
            
            4.8%Michael
                  Malet
              2102
                  Business Center
                  Drive
              Suite
                  G115
              Irvine,
                  CA
                  92612
            Common
                  Stock
            
            
            792,001
            
            
            
            0.5%
            
            
            
            0.5%All
                Officers and
                Directors
              As
                a Group (3
                persons)
            Common
                Stock
            
            
            7,771,834
            
            
            
            5.0%
            
            
            
            5.0%American
                  Nortel Communications,
                  Inc.
              7975
                  N. Hayden Rd., Suite
                  D333
              Scottsdale,
                  AZ
                  85258
            Common
                  Stock
            
            
            21,505,469
            
            
            
            14.6%
            
            
            
            14.6%MedCom
                USA,
                Incorporated
              7975
                N. Hayden Rd., Suite
                D333
              Scottsdale,
                AZ
                85258
            Common
                Stock
            
            
            60,000,000
            
            
            
            40.9%
            
            
            
            40.9%





(1)
      Beneficial ownership is determined
      in accordance with the rules of the Securities and Exchange Commission and
      generally includes voting or investment power with respect to
      securities.





Securities
      Authorized for Issuance Under
      Equity Compensation Plans





The
      Company has adopted an employee
      stock option plan, which acts as an incentive stock option plan, under which
      the
      Company’s officers, directors, consultants, and employees will be eligible to
      receive, in relevant part, either securities or stock options exercisable for
      the Company’s securities at exercise prices that may be equal to or lower than
      the offering price. The Company has reserved 1,000,000 shares of Common Stock
      for issuance under this plan. No options have been issued under this
      plan.





Changes
      in Control




We
      are not aware of any arrangements
      that may result in a change in control of the Company.





16





DESCRIPTION
      OF
      SECURITIES




General




The
      Company has authorized a total of
      176,000,000 shares, consisting of 175,000,000 shares of Common Stock, par value
      $0.001 per share, and 1,000,000 shares of Preferred Stock, par value $0.001
      per
      share. As ofSeptember 30,
      2007, the Company had
      146,770,504 shares of Common Stock issued and outstanding and no shares of
      Preferred Stock issued and outstanding.





Common
      Stock





Voting
      Rights





Each
      holder of Common Stock is entitled
      to one vote for each share of Common Stock held on all matters submitted to
      a
      vote of stockholders.





Dividends





Subject
      to preferences that may be
      applicable to any then-outstanding shares of Preferred Stock, if any, and any
      other restrictions, holders of Common Stock are entitled to receive ratably
      those dividends, if any, as may be declared from time to time by the Company’s
      board of directors out of legally available funds. The Company and its
      predecessors have not declared any dividends in the past. Further, the Company
      does not presently contemplate that there will be any future payment of any
      dividends on Common Stock.





Preferred
      Stock





Our
      board of directors has the authority
      to issue 1,000,000 shares of preferred stock in one or more series and to
      determine all of the rights, preferences, privileges and restrictions of the
      preferred stock. As of the date of this prospectus, the Company does not have
      any preferred stock issued or outstanding. If we issue any preferred stock
      in
      the future, it may have the effect of delaying or preventing a change in control
      without further action by our stockholders and may adversely affect the voting,
      dividend and other rights of the holders of our common stock. In addition,
      the
      issuance of preferred stock with voting and/or conversion rights may adversely
      affect the voting power of the holders of our common stock, including the loss
      of voting control to others.





Options





The
      Company has established a 2006 Stock
      Option Plan (the “Plan”) for employees, directors and consultants and reserved
      1,000,000 shares for issuance under the Plan. At the time of this Offering,
      no
      options have been issued under this Plan.




Convertible
      Securities





At
      September 30, 2007, we have no
      convertible securities.




Amendment
      of our
      Bylaws




Our
      bylaws may be adopted, amended or
      repealed by the affirmative vote of a majority of our outstanding shares.
      Subject to applicable law, our bylaws also may be adopted, amended or repealed
      by our board of directors.





17





Transfer
      Agent





On
      September 30, 2007, the Company engaged Corporate Stock Transfer to serve in
      the
      capacity of transfer agent. Their mailing address and telephone number Corporate
      Stock Transfer, 3200 Cherry Creek Drive South, Suite 430. Denver,
      CO  80209 - Phone is (303) 282-4800.





ITEM
      12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDPENDENCE.





During
      the year ended September 30, 2007, MedCom USA, Inc. advanced $165,142 to the
      Company.   The advances are generally short term in nature with
      an interest rate of 9% based on a revolving line of credit approved by MedCom
      to
      fund the Company’s operations.





The
      affiliated entity has previously advances funds to the Company and is also
      a
      significant shareholder of the Company.





ITEM
      13.  EXHIBITS AND REPORTS.




Exhibits




3.1
            
            Certificate
                of Incorporation of Card Activation Technologies Inc., filed with
                the
                Secretary of State of Delaware August 29, 2006(1)3.2
            
            Bylaws
                of Card Activation Technologies Inc. (1)5.1
            
            Opinion
                of Joseph I. Emas, Attorney at Law(1)5.2
            
            Tax
                Opinion of David Kozak, Esq. of Mohr Hackett, Pederson, Blakely,
                and
                Randolph, P.C. (1)10.1
            
            The
                Company 2006 Stock Option Plan(1)10.2
            
            Separation
                Agreement with MedCom(1)10.3
            
            Tax
                Sharing Agreement with MedCom(1)10.4
            
            Administrative
                Services Agreement with MedCom(1)10.5
            
            Revolving
                Line of Credit with Medcom USA Incorporated(1)10.6
            
            Settlement
                Agreement(1)10.7
            
            Licensing
                Agreement(1)


__________________________________________________





(1).
      Incorporated by reference to the same exhibit filed with the Company’s
      Registration Statement on Form SB-2 Commission File No. 333-439677)





Reports
      on Form
      8-K





8-K
      filed
      for change in principle auditor in August 13, 2007





ITEM
      14.PRINCIPAL
      ACCOUNTANT FEES AND SERVICES




Audit
      Fees.The
      aggregate fees billed byS.E. Clark & Company, PC.for
      professional services rendered for
      the audit of the Company’s
      annual financial statements
      for the fiscal
      years endedSeptember 30,
      2006approximated
      $15,000.The
      aggregate fees billed by Jewett,
      Schwartz, Wolfe & Associates for professional services rendered for the
      audit of the Company’s
      annual financial statements forfiscal years endedSeptember
      30,
      2006and 2007 approximated
      $22,500.  The
      aggregate fees billed
      by Jewett, Schwartz, Wolfe & Associates for the review of the financialstatementsincluded
      in the Company’s
      Forms 10-QSB for fiscal year 2007
      approximated $4,500.





18





Audit-Related
      Fees.The
      aggregate fees billed byS.
      E. Clark & Company, PC andJewett, Schwartz, Wolfe
&
Associatesfor
      assurance and
      related services that are reasonably related to the performance of the audit
      or
      review of the Company’s
      financial statements for the fiscal
      yearsendedSeptember
      30, 2007and 2006,
      and that are not disclosed in the
      paragraph captioned “Audit
      Fees”above, were $0 and $0,
      respectively.





Tax
      Fees.The
      aggregate fees billed byS.E. Clark & Company andJewett
      Schwartz
      Wolfe&
Associatesfor
      professional services rendered for
      tax compliance, tax advice and tax planning for the fiscal year endedSeptember 30,
      2007and 2006were
      $0.





All
      Other
      Fees.The
      aggregate fees billed by S.E. Clark & Company and Jewett Schwartz Wolfe
&Associates for
      products and services, other than the services described in the paragraphs
      “Audit Fees,”“Audit-Related
      Fees,”and “Tax
      Fees”above for the fiscal
      years endedSeptember 30,
      2007and 2006 approximated
      $6,000.





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ITEM
      15: SIGNATURES





SIGNATURES





In
      accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
      the
      Registrant has duly caused this report to be signed on its behalf by the
      undersigned, there unto duly authorized.





Registrant
            Card
                USA IncorporatedDate:
                December 26, 2007
            By:
                /s/ William P. WilliamsWilliam
                P. WilliamsChairman,
                President Chief Executive Officer (Principle Executive
                Officer)







Date:
                December 26, 2007
            By:
                /s/ William P. WilliamsWilliam
                P. WilliamsPrinciple
                Financial Officer






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