UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-KSB/A





T


EXCHANGE
ACT OF 1934





For
the Fiscal Year Ended September 30, 2007





OR


£


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 1618


Chicago,
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 T           NO
£





Check if
disclosure of delinquent filers in response to Item 405 of Regulation S-B is not
contained in this form, and no disclosure will be contained, to the best of 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. T




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.





EXPLANATORY
NOTE: This Amended Annual Report on Form 10-KSB/A is being filed for the purpose
of amending the Consolidated Financial Statements and registration statement
disclosure to reflect the issuance of 17,144,213 although the effects of the
amendment is immaterial and reflects an overall change of $1,714.  In
all other material respects this Amended Annual Report on Form 10-KSB is
unchanged from the Annual Report on Form 10-KSB for the year ended December 31,
2007 filed by the Company on December 27, 2007.













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 owns a
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 portal service for 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 covers 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 MedCom has assigned
its patent number 6,032,859 to the Company upon its formation. The MedCom
point-of-sale technologywas
created by MedCom as part of its card building technology endeavors in the
1990’s. The patent covers 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. New View Technologies, which
was acquired by MedCom, developed the patent and 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 infringers of 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 our 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





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 initiated six lawsuits 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.  The Company 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 agreement on 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 over 300 potential
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 infringer. That 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.com under
the symbol “CDVT.”








At
September 30, 2007, there were 163,914,717 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 issued 17,644,213 in common stock for services rendered by employees,
consultant and professionals.  The company recorded that common stock
as an expense to the financial statements. The offer and sale of such shares of
our common stock were effected in reliance on the exemptions for sales of
securities not involving a public offering, as set forth in Rule 506 promulgated
under the Securities Act and in Section 4(2) of the Securities Act. A legend was
placed on the certificates representing each such security stating that it was
restricted and could only be transferred if subsequent registered under the
Securities Act or transferred in a transaction exempt from registration under
the Securities Act.





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.





7





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 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 September30,
                              
                              
                              Years Ended September30,2007
                              
                              
                              2006Revenues
                              
                              $
                              45,000
                              
                              
                              $
                              -Operating
      and Other Expenses
                              
                              
                              237,312
                              
                              
                              
                              15,758Net
      Loss
                              
                              $
                              (192,312
                              )
                              
                              $
                              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 the Company 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 and 2006
                          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.





As
further discussed in Note 9 to the accompanying financial statements, the
Company determined that it should effectuate the issuance of common stock in
lieu of compensation and fess, as of September 30, 2007, resulting in a
retroactive restatement.  This issuance did not materially affect the
financial statements previously filed.  The effect of the change was
$1,714 to the previously reported financial statements.











JEWETT,
SCHWARTZ, WOLFE & ASSOCIATES








Hollywood,
Florida


December
12, 2007 and December 20, 2008 with respect to note 9





200 South
Park Road, Suite 150  •  Hollywood,
Florida 33021 •  Main
954.922.5885  •  Fax
954.922.5957  •  www.jsw-cpa.com


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 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 Contingencies
                    
                    
                    -STOCKHOLDERS'
      DEFICIENCY:Preferred
      stock, $.001 par value, 1,000,000 shares authorized; no shares issued and
      outstanding
                    
                    
                    -Common
      stock, $.0001 par value, 175,000,000 shares authorized; 163,914,717 shares
      issued and outstanding
                    
                    
                    16,392Accumulated
      deficit
                    
                    
                    (208,070
                    )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
                
                
                235,036
                
                
                
                15,758
                
                
                
                250,794Sales
      and Marketing expenses
                
                
                2,276
                
                
                
                -
                
                
                
                2,276Total
      operating expenses
                
                
                237,312
                
                
                
                15,758
                
                
                
                253,070OPERATING
      LOSS
                
                
                (192,312
                )
                
                
                (15,758
                )
                
                
                (208,070
                )OTHER
      (INCOME) AND EXPENSESTotal
      other expense
                
                
                -
                
                
                
                -
                
                
                
                -LOSS
      BEFORE INCOME TAXES
                
                
                (192,312
                )
                
                
                (15,758
                )
                
                
                (208,070
                )INCOME
      TAX (BENEFIT) PROVISION
                
                
                -
                
                
                
                -
                
                
                
                -NET
      LOSS
                
                $
                (192,312
                )
                
                $
                (15,758
                )
                
                $
                (208,070
                )Weighted
      Average Common Share Outstanding:Basic
      and diluted:
                
                
                155,389,289
                
                
                
                -Net
      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
                                
                                
                                146,770,504
                                
                                
                                $
                                14,678
                                
                                
                                
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                14,678Net
      loss
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (15,758
                                )
                                
                                
                                (15,758
                                )Balance
      as of September 30, 2006
                                
                                
                                146,770,504
                                
                                
                                $
                                14,678
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                $
                                (15,758
                                )
                                
                                $
                                (1,080
                                )Common
      stock issued from separation agreement
                                
                                
                                17,144,213
                                
                                
                                
                                1,714
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                1,714Net
      loss
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (192,312
                                )
                                
                                
                                (192,312
                                )Balance
      as of September 30, 2007
                                
                                
                                163,914,717
                                
                                
                                $
                                16,392
                                
                                
                                
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                (208,070
                                )
                                
                                $
                                (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)
                
                $
                (192,312
                )
                
                $
                (15,758
                )
                
                $
                (208,070
                )Adjustments
      to reconcile net income to net cash (used in) operating
      activities:Common
      stock issued for service
                
                
                1,714
                
                
                
                
                
                
                
                1,714Common
      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. (“Card or 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. Card is 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.





NOTE 2 -
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 going concern. 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, 2007 the Company incurred net loss approximately of
$208,070. 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.





NOTE 3 –
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.





Reclassification





Certain
prior period amounts have been reclassified to conform to current year
presentations.





Cash and Cash
Equivalents





The
Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents. At September 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





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 no events or changes in
circumstances that necessitated a review of impairment of 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 tax consequences 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 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.





In
October 10, 2006 FASB Staff Position issued Financial 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 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 does not expect the adoption of
FSP FAS No. 123(R)-5 to have a material impact on its results 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. Early adoption was permissible for fiscal year beginning after June 30,
2005.  The Company has elected to early adopt SFAS No.
154.  The implementation of SFAS No. 154 resulted in a retroactive
restatement impacting the financial statements for fiscal 2007 as noted in Note
9.





NOTE 4 –
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.





F-12





NOTE 5 -
INCOME TAXES





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





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.








NOTE 6 -
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.





NOTE 7 –
RELATED PARTY





Card
Activation is managed by its key officers and
directors William P. Williams and Mr. Michael Malet, as
of September 30, 2007.





F-13





In 2007,
the Company had corrections of $1,714 composed of the adjustment to the issuance
of common stock that had no trading value but were issued to employees,
professionals, consultants and the cost of raising in the amount of 17,144,213
in accordance with the separation agreement executed October 31,
2006.





NOTE 8 -
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.





NOTE 9 –
CORRECTION OF AN ERROR





In 2007,
the Company had corrections of $1,714 composed of the adjustment to the issuance
of common stock that had no trading value but were issued to employees,
professionals, consultants and the cost of raising in the amount of 17,144,213
in accordance with the separation agreement executed October 31,
2006.  Due to a timing error of when the shares were
issued.





The
affects of these error corrections on the financial statements although
immaterial in nature resulted in a retroactive restatement impacting the
financial statements for fiscal 2007 as follows:








Assets
                                                          
                                                          2007
      As Originally Reported
                                                          
                                                          
                                                          2007
      As Adjusted
                                                          
                                                          
                                                          2007
      Effect of ChangeStockholders' EquityAccumulated
      deficit
                                                          
                                                          $
                                                          (206,356
                                                          )
                                                          
                                                          $
                                                          (208,070
                                                          )
                                                          
                                                          $
                                                          1,714Operating
      expenses
                                                          
                                                          $
                                                          235,598
                                                          
                                                          
                                                          $
                                                          237,312
                                                          
                                                          
                                                          $
                                                          (1,714
                                                          )Net
      loss
                                                          
                                                          $
                                                          (190,598
                                                          )
                                                          
                                                          $
                                                          (192,312
                                                          )
                                                          
                                                          $
                                                          1,714Net
      loss per share
                                                          
                                                          $
                                                          -
                                                          
                                                          
                                                          $
                                                          -
                                                          
                                                          
                                                          $
                                                          -








NOTE 10 –
SPIN OFF





The
Company was incorporated in August 2006 in order to own and commercially develop
the assigned patent which covers 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 MedCom has assigned
its patent number 6,032,859 to the Company upon its formation. The MedCom
point-of-sale technologywas
created by MedCom as part of its card building technology endeavors in the
1990’s. The patent covers 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. New View Technologies, which
was acquired by MedCom, developed the patent and all patents were assigned by
New View Technologies to MedCom.





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.





F-14





Separation
Agreement:





The
separation agreement was executed on October 31, 2006 where as MedCom desired to
separate its several businesses comprised of its
healthcare  and  financial  transaction  solutions  business
and its proprietary
patented  payment  transaction  technology which
had been operating in  their respective businesses for substantially
more than five years,
into  independent  companies.  Such  separation
allowed the separate companies focus on their
separate  business  models  and  markets,  allow  management  to  focus
on their respective  businesses and enhance access to financing by
allowing banks and the
financial  community  to  focus  separately  on  the  respective
businesses.  MedCom spun off the patent technology into the
Company.  MedCom completed the spin off of the Company on December 15,
2006 and reserved 12,000,000 common shares to be distributed to employees and or
consultants of the company and will be registered and restricted common
shares





The
Separation agreement allowed for ancillary agreements such as tax sharing
agreement and administrative services agreement.





Administration
Agreement:





On
October 31, 2006 the Company executed an administration agreement by and between
MedCom and the Company each of them agrees, from and after the Spin-off date and
for a transition period of up to one year following the Spin-off date, to
provide the other on an "as needed" basis with the following
services:




(1) 
 Tax consultation and assistance with tax return preparation and audits.
Any taxes due shall be paid in accordance with that Tax Sharing Agreement of
even date herewith between the parties;




(2)  
Assistance with the preparation of (i) periodic filings under the Securities
Exchange Act of 1934 or with the National Association of Securities Dealers,
Inc., (ii) reports to stockholders, and (iii) other external financial
reports;




(3)  
Design and implementation of internal audit procedures;




(4)  
Coordination of independent audits by nonaffiliated auditors;




(5)  
Consultation on cash management, financing and other treasury
matters;




(6)  
Insurance and risk management services involving administration, placement of
insurance, and broker selection for past and future insurance and risk
management programs; and




(7)  
Such other services as may be mutually agreed upon between the
parties.




(b)   Each
party shall use its respective best efforts in providing the above services and,
except for gross negligence or willful misconduct, shall not be responsible for
the accuracy, completeness or timeliness of any advice or service or any return,
report, filing or other document which it provides, prepares or assists in
preparing.





F-15





Notwithstanding
the foregoing, neither party shall be obligated to provide the above services if
that party determines in its reasonable judgment that providing such services
would unreasonably interfere with the conduct of its own business activities.
The parties shall cooperate in planning the
scope  and  timing  of  services  to
be provided by each of them under this
agreement  so  as  to  lessen  or  eliminate  any  such  interference.





2.     REIMBURSEMENT.  The  parties  agree  to  reimburse  each  other  for
services  rendered  in  accordance with an hourly
fee schedule to be agreed upon from  time to time by the parties. The
hourly fee schedule may provide different rates for different categories of
personnel. In addition, each party agrees to
reimburse  the  other  for  all
out-of-pocket expenses incurred by the providing
party  in  connection  with  performing  such  services.
The parties shall, on a periodic basis to be agreed upon, but not less
frequently than quarterly, submit to and exchange with each other their
respective statements of fees and expenses for payment, accompanied by such
supporting detail as the recipient of the statement may reasonably
request.  Only the amount owed to one party for any period in excess
of the amount owed by that party for the same period need be
paid.  Payment  shall  be  due  30  days  after  date  of  the  statement.  As
of September 30, 2007 there were no outstanding reimbursed expenses between the
parties.





TAX
SHARING AGREEMENT





The
Company executed October 31, 2006, by  and  between MedCom
USA, Incorporated, a Delaware corporation ("MEDCOM") and
Card  Activation  Technologies  Inc., a Delaware
corporation ("CAT") which as of
the  date  of  this  agreement  is  a  wholly  owned  subsidiary  of  MedCom.


Therefore,
in consideration of the mutual covenants and subject to the terms and conditions
contained in this agreement, the parties agree as follows:





1.
LIABILITIES ATTRIBUTABLE TO PRE-SPIN-OFF PERIODS.




(a)
RETURNS. MedCom, on a consolidated basis with CAT has timely filed (or has
obtained or will obtain valid extensions of time for filing and will file) all
federal and state income tax returns which are required to be filed for periods
up to and including the Spin-off Date.




(b) TAX
LIABILITIES. Reasonable estimates of federal and state income taxes of CAT for
all pre-Spin-off periods (and taxes deemed to be attributable to pre-Spin-off
periods, pursuant to Section 3) have been or will
be reflected in the pre-Spin-off financial statements of CAT in accordance with
MedCom's tax allocation and settlements policy, subject to adjustments to be
made upon filing the final MedCom consolidated federal income tax return in
which CAT are included.




(c) TAX
CARRYFORWARDS. The parties agree that none of MedCom's accrued consolidated
federal net operating loss, investment tax credit and other federal tax
carryforwards "CARRYFORWARDS"), if any, are attributable to CAT's operations and
no portion of the same will be allocated to CAT.




(d)
SETTLEMENT OF TAX LIABILITY. Prior to, or concurrent with, the Spin-off, CAT
will settle with MedCom, its current income tax liability and intercompany tax
note accounts (as determined in Section 1(b), before the return adjustments
noted in such section). Such settlement shall be effected by payments and/or
adjustments to shareholder's equity of CAT, as mutually agreed by the parties.
The company has not outstanding tax sharing obligations outstanding as of
September 30, 2007





*  *  *  *  *  *





10





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 ended September 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.





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.





11





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.





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.





12





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





WilliamP.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





MichaelMalet, 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.





13





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.





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, 2006 through September 30, 2008. Currently,
William P. Williams is the Chairman, Chief Executive Officer,
President and Principle Financial Officer and Michael Malet Executive Vice
President.





2007
and 2006 SUMMARY COMPENSATION TABLE





Name and Principal Position
                    
                    Year
                    
                    Salary ($)
                    
                    
                    Bonus ($)
                    
                    
                    Restricted StockAwards($)
                    
                    
                    Securities Underlying
      OptionAwards($)
                    
                    
                    Non-EquityIncentive PlanCompensation($)
                    
                    
                    Change inPensionValue andNonqualifiedDeferredCompensationEarnings($)
                    
                    
                    All OtherCompensation($)
                    
                    
                    Total($)William
      P Williams and
                    
                    2007
                    
                    
                    0.
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0William
      P Williams
                    
                    2006
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0Michael
      Malet
                    
                    2007
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0Michael
      Malet
                    
                    2006
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0





14




OPTION
EXERCISES AND STOCK VESTED TABLE





Option Awards
                        
                        
                        Stock AwardsName
                        
                        NumberofShares AcquiredonExercise (#)
                        
                        
                        ValueRealized on Exercise ($)
                        
                        
                        NumberofShares AcquiredonVesting (#)
                        
                        
                        ValueRealized on Vesting ($)William
      P. Williams
                        
                        
                        0
                        
                        
                        
                        0
                        
                        
                        
                        5000000
                        
                        
                        
                        0William
      P. Williams
                        
                        
                        0
                        
                        
                        
                        0
                        
                        
                        
                        0
                        
                        
                        
                        0Michael
      Malet
                        
                        
                        0
                        
                        
                        
                        0
                        
                        
                        
                        5000000
                        
                        
                        
                        0Michael
      Malet
                        
                        
                        0
                        
                        
                        
                        0
                        
                        
                        
                        0
                        
                        
                        
                        0








PENSION
BENEFITS TABLE





Name
                
                Plan Name
                
                
                Number of YearsCredited Service(#)
                
                
                Present Valueof AccumulatedBenefit($)
                
                
                Payments During
      LastFiscal Year($)William
      P. Williams
                
                
                (1
                )
                
                
                0
                
                
                
                0
                
                
                
                0William
      P. Williams
                
                
                (1
                )
                
                
                0
                
                
                
                0
                
                
                
                0Michael
      Malet
                
                
                (1
                )
                
                
                0
                
                
                
                0
                
                
                
                0Michael
      Malet
                
                
                (1
                )
                
                
                0
                
                
                
                0
                
                
                
                0








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





15




Name
                
                Fees Earned or Paid in Cash ($)
                
                
                Stock Awards ($)
                
                
                Option Awards ($)
                
                
                Non-Equity Incentive Plan
      Compensation ($)
                
                
                Change in Pension Value and Nonqualified Deferred
      Compensation Earnings ($)
                
                
                All Other Compensation ($)
                
                
                Total ($)William
      P. Williams
                
                $
                0-
                
                
                $
                0
                
                
                $
                0-
                
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                $
                500-William
      P. Williams
                
                $
                0-
                
                
                $
                0
                
                
                $
                0-
                
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                $
                0Michael
      Malet
                
                $
                0-
                
                
                $
                0
                
                
                $
                0-
                
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                $
                500Michael
      Malet
                
                $
                0-
                
                
                $
                0
                
                
                $
                0-
                
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                $
                0-








Name
                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
                2007
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                
                0William
      P. Williams
                2006
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                
                0Michael
      Malet
                2007
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                
                0Michael
      Malet
                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
                  2007
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  0William
      P. Williams
                  2006
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  0Michael
      Malet
                  2007
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  0Michael
      Malet
                  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
                      Severance
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0William
      P. Williams
                      Severance
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0Michael
      Malet
                      Severance
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0Michael
      Malet
                      Severance
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0





16





Compensation
of Directors


,


Mr.
Williams is the 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 ofSeptember 30, 2007. The information includes beneficial
ownership by (i) holders of more than 5% of our Common Stock, (ii) each
oftwo 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 Stock
beneficially 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
                4.3%
                4.3%Michael Malet
                  2102
      Business Center Drive
                  Suite
      G115
                  Irvine,
      CA 92612
                Common
      Stock
                5,792,001
                3.5%
                3.5%All
      Officers and Directors
                  As
      a Group (2 persons)
                Common
      Stock
                12,771,834
                7.8%
                7.8%American
      Nortel Communications, Inc.
                  7975
      N. Hayden Rd., Suite D333
                  Scottsdale,
      AZ 85258
                Common
      Stock
                21,505,469
                13.1%
                13.1%MedCom
      USA, Incorporated
                  7975
      N. Hayden Rd., Suite D333
                  Scottsdale,
      AZ 85258
                Common
      Stock
                60,000,000
                36.6%
                36.6%





(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.





17





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 of September 30, 2007, the
Company had 163,914,717 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.





18





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 $165,141 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.





In 2007,
the Company had corrections of $1,714 composed of the adjustment to the issuance
of common stock that had no trading value but were issued to employees,
professionals, consultants and the cost of raising in the amount of 17,144,213
in accordance with the separation agreement executed October 31,
2006.





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





19





ITEM
14.PRINCIPAL ACCOUNTANT FEESANDSERVICES





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





Audit-Related
Fees.  The aggregate fees billed by S. E. Clark & Company,
PC and Jewett, Schwartz, Wolfe & Associates for 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 years ended September 30,
2007 and 2006, and that are not disclosed in the paragraph captioned “Audit
Fees” above, were $0 and $0, respectively.





Tax Fees.The
aggregate fees billed by S.E. Clark & Company and Jewett Schwartz Wolfe
& Associates for professional services rendered for tax compliance, tax
advice and tax planning for the fiscal year ended September 30, 2007 and 2006
were $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 ended September 30, 2007 and 2006 approximated $6,000.





20





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 24, 2008
                By: /s/ William P.
  WilliamsWilliam
      P. WilliamsChairman,
      President Chief Executive Officer (Principle Executive
      Officer)Date:
      December 24, 2008
                By: /s/ William P.
  WilliamsWilliam
      P. WilliamsPrinciple
      Financial Officer






21