UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC 20549





FORM
10-Q





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





For the
quarterly period ended March
31, 2009








Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule
12 b - 2 of the Exchange Act) Yes o    No
x








Commission
File Number: 0-26573








SMARTPAY EXPRESS, INC.


(Exact
name of Registrant as specified in its charter)








Nevada
              
              20-1204606(State
      or other jurisdiction of incorporation or organization)
              
              (IRS
      Employer Identification No.)








5th
Floor, Chigo Sales Center


Fenggang
Road, Lishui Town, Nanhai


Guangdong
Province, The People's Republic of China


(Address
of principal executive offices)








(011)
(852) 6873-0043


(Registrant's
telephone number)





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





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





Large
Accelerated Filer   o
   Accelerated Filer   o
   Non-accelerated Filer   o
   Smaller Reporting Company   x




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





State the
number of shares outstanding of each of the issuer's classes of common stock, as
of the latest practicable date: 1,292,166 shares outstanding as of March 31,
2009.













SMARTPAY
EXPRESS, INC.





Form
10-Q for the period ended March 31, 2009





TABLE
OF CONENTS





PART I - FINANCIAL INFORMATIONITEM
      1 - FINANCIAL STATEMENTSUnaudited
      Condensed Consolidated Statements of Operations for the three-month
      periods ended March 31, 2009 and 2008
              3Unaudited
      Condensed Consolidated Balance Sheet as of March 31, 2009 and
      Audited Condensed Consolidated Balance Sheet as of December 31,
      2008
              4Unaudited
      Condensed Consolidated Statements of Cash Flows for the three-month
      periods ended March 31, 2009 and 2008
              5Notes
      to the Unaudited Condensed Consolidated Financial
    Statements
              6 -
      10ITEM
      2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
    OPERATION
              11-15ITEM
      3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
    RISK
              16ITEM
      4 (A) - CONTROLS AND PROCEDURES
              16ITEM
      4 (A)T – INTERNAL CONTROL OVER FINANCIAL REPORTING
              16PART II - OTHER INFORMATIONITEM
      1 - LEGAL PROCEEDINGS
              17ITEM
      2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS
              17ITEM
      3 - DEFAULTS UPON SENIOR SECURITIES
              17ITEM
      4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
              17ITEM
      5 - OTHER INFORMATION
              17ITEM
      6 - EXHIBITS AND REPORTS ON FORM 8-K
              17SIGNATURES
              18











2







SMARTPAY
EXPRESS, INC.


UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS




Three
      months endedMarch
      31,2009
                                                                                                                                
                                                                                                                                
                                                                                                                                2008Note
                                                                                                                                
                                                                                                                                
                                                                                                                                US$
                                                                                                                                
                                                                                                                                
                                                                                                                                US$Continuing
      operationsOperating
      revenueService
      income
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                100,274
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                113,251Operating
      expensesSubcontracting
      and other charges
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                (50,001
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                (46,276
                                                                                                                                )Staff
      costs
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                (66,369
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                (67,696
                                                                                                                                )Depreciation
      of property, plant and equipment
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                (3,498
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                (2,836
                                                                                                                                )Amortization
      of intangible assets
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                (51,359
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                (47,841
                                                                                                                                )Other
      general and administrative expenses
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                (234,084
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                (110,448
                                                                                                                                )Loss
      from operations
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                (305,037
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                (161,846
                                                                                                                                )Non-operating
      income (expenses)Interest
      income
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                1,094
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                766Gain
      on disposal of partial interest in a subsidiary
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                -
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                259,837Amortization
      of loans from a related party
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                (12,314
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                (32,213
                                                                                                                                )Loss
      on partial settlement of loans from a related party
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                -
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                (24,717
                                                                                                                                )(Loss)
      Income before income tax
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                (316,257
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                41,827Income
      tax
                                                                                                                                
                                                                                                                                4
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                -
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                -(Loss)
      Income from continuing operations
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                (316,257
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                41,827Discontinued
      operationsLoss
      from discontinued operations
                                                                                                                                
                                                                                                                                5(a)
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                (40,916
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                (21,048
                                                                                                                                )Net
      (loss) income including noncontrolling interests
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                (357,173
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                20,779Less:
      net loss from continuing operations attributable to noncontrolling
      interests
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                16,228
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                6,402Less:
      net loss from discontinued operations attributable to noncontrolling
      interests
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                20,049
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                10,314Net
      (loss) income attributable to SPYE common
stockholders
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                (320,896
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                37,495Other
      comprehensive income-
      Foreign currency translation
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                15,669
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                87,231Total
      comprehensive (loss) income
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                (305,227
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                124,726Basic (loss) earnings per
      share(Loss) Earnings per share from continuing operations
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                (23.22)
      cents
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                4.77
      centsLoss per share from discontinued operations
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                (1.61)
      cents
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                (1.06)
      cents(24.83)
      cents
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                3.71
      centsWeighted average number of shares of common
      stock outstanding (Note)
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                1,292,166
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                1,010,549


Note :
              On
      October 16, 2008, the sole director and the holders of a majority of the
      common shares of SmartPay approved a one-for-fifty reverse stock split of
      common stock of SmartPay. The weighted average number of shares of common
      stock outstanding for the period from January 1, 2008 to March 31, 2008
      has been adjusted retrospectively for the effect of the reverse stock
      split for the purpose of calculation of loss/earnings per
      share.





The
financial statements should be read in conjunction with the accompanying
notes.







3










SMARTPAY
EXPRESS, INC.


CONDENSED
CONSOLIDATED BALANCE SHEETS







As
      ofMarch
      31, 2009
                                                              
                                                              
                                                              December
      31, 2008ASSETS
                                                              
                                                              Note
                                                              
                                                              US$
                                                              
                                                              
                                                              US$(Unaudited)Current
      assetsTrade
      receivables from third parties
                                                              
                                                              
                                                              
                                                              
                                                              18,204
                                                              
                                                              
                                                              
                                                              27,261Trade
      receivable from a related party
                                                              
                                                              6(b)(i)
                                                              
                                                              
                                                              6,445
                                                              
                                                              
                                                              
                                                              24,148Prepayments
      and deposits
                                                              
                                                              
                                                              
                                                              
                                                              267,769
                                                              
                                                              
                                                              
                                                              230,106Other
      debtors
                                                              
                                                              
                                                              
                                                              
                                                              98,254
                                                              
                                                              
                                                              
                                                              293,216Amounts
      due from related parties
                                                              
                                                              6(b)(ii)
                                                              
                                                              
                                                              29,412
                                                              
                                                              
                                                              
                                                              94,204Income
      tax recoverable
                                                              
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              3,774Inventories
                                                              
                                                              
                                                              
                                                              
                                                              47,137
                                                              
                                                              
                                                              
                                                              33,207Cash
      and cash equivalents
                                                              
                                                              
                                                              
                                                              
                                                              49,508
                                                              
                                                              
                                                              
                                                              245,685Bank
      deposits, collateralized
                                                              
                                                              7
                                                              
                                                              
                                                              132,353
                                                              
                                                              
                                                              
                                                              130,435Assets
      held for sale
                                                              
                                                              5(b)
                                                              
                                                              
                                                              378,498
                                                              
                                                              
                                                              
                                                              -Total
      current assets
                                                              
                                                              
                                                              
                                                              
                                                              1,027,580
                                                              
                                                              
                                                              
                                                              1,082,036Property,
      plant and equipment, net
                                                              
                                                              
                                                              
                                                              
                                                              62,415
                                                              
                                                              
                                                              
                                                              87,732Intangible
      assets, net
                                                              
                                                              
                                                              
                                                              
                                                              1,476,727
                                                              
                                                              
                                                              
                                                              1,729,450Interest
      in an associate
                                                              
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              18,751Total
      assets
                                                              
                                                              
                                                              
                                                              
                                                              2,566,722
                                                              
                                                              
                                                              
                                                              2,917,969LIABILITIES
      AND STOCKHOLDERS' EQUITY


Current
      liabilitiesTrade
      payables
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            17,351
                                                                            
                                                                            
                                                                            
                                                                            40,718Accrued
      charges and other payables
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            527,374
                                                                            
                                                                            
                                                                            
                                                                            525,502Amounts
      due to related parties
                                                                            
                                                                            6(b)(iii)
                                                                            
                                                                            
                                                                            19,458
                                                                            
                                                                            
                                                                            
                                                                            19,177Temporary
      receipts
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            76,953
                                                                            
                                                                            
                                                                            
                                                                            94,345Loans
      from a related party
                                                                            
                                                                            6(b)(iv)
                                                                            
                                                                            
                                                                            677,224
                                                                            
                                                                            
                                                                            
                                                                            655,274Short-term
      bank loan
                                                                            
                                                                            7
                                                                            
                                                                            
                                                                            125,000
                                                                            
                                                                            
                                                                            
                                                                            123,188Current
      liabilities held for sale
                                                                            
                                                                            5(b)
                                                                            
                                                                            
                                                                            866
                                                                            
                                                                            
                                                                            
                                                                            -Total
      current liabilities
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            1,444,226
                                                                            
                                                                            
                                                                            
                                                                            1,458,204Commitments
      and contingenciesStockholders' equityPreferred
      stock, par value US$0.001 per share; authorized 5,000,000 shares; none
      issued and outstanding as of March 31, 2009 and December 31,
      2008Common
      stock, par value US$0.001 per share; authorized 300,000,000 shares; issued
      and outstanding 1,292,166 shares as of March 31, 2009 and December 31,
      2008
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            1,292
                                                                            
                                                                            
                                                                            
                                                                            1,292Additional
      paid in capital
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            2,009,454
                                                                            
                                                                            
                                                                            
                                                                            2,009,454Dedicated
      reserve
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            319
                                                                            
                                                                            
                                                                            
                                                                            319Accumulated
      losses
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            (1,218,580
                                                                            )
                                                                            
                                                                            
                                                                            (897,684
                                                                            )Accumulated
      other comprehensive income
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            74,053
                                                                            
                                                                            
                                                                            
                                                                            58,384Total SPYE
      stockholders' equity
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            866,538
                                                                            
                                                                            
                                                                            
                                                                            1,171,765Noncontrolling
      interests
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            255,958
                                                                            
                                                                            
                                                                            
                                                                            288,000Total
      stockholders' equity
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            1,122,496
                                                                            
                                                                            
                                                                            
                                                                            1,459,765Total
      liabilities and stockholders' equity
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            2,566,722
                                                                            
                                                                            
                                                                            
                                                                            2,917,969


The
financial statements should be read in conjunction with the accompanying
notes.






4








SMARTPAY
EXPRESS, INC.


UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS




Three
      months endedMarch
      31,2009
                        
                        
                        2008Note
                        
                        US$
                        
                        
                        US$Cash
      flows from operating activities:Net
      (loss) income including noncontrolling interests
                        
                        
                        
                        (357,173
                        )
                        
                        
                        20,779Adjustments
      to reconcile net income to net cash used in operating
      activities:Depreciation of property, plant
      and equipment
                        
                        
                        
                        3,766
                        
                        
                        
                        2,836Amortization
      of intangible assets
                        
                        
                        
                        59,365
                        
                        
                        
                        55,299Interest
      income
                        
                        
                        
                        (1,094
                        )
                        
                        
                        (1,040
                        )Gain
      on disposal of partial interest in a subsidiary
                        
                        
                        
                        -
                        
                        
                        
                        (259,837
                        )Amortization
      of loans from a related party
                        
                        
                        
                        12,314
                        
                        
                        
                        32,213Loss
      on partial settlement of loans from a related party
                        
                        
                        
                        -
                        
                        
                        
                        24,717Share of result of an
      associate
                        
                        
                        
                        10,803
                        
                        
                        
                        -Exchange
    difference
                        
                        
                        
                        -
                        
                        
                        
                        10,983Changes in working
      capital:Trade
    receivables
                        
                        
                        
                        27,515
                        
                        
                        
                        (11,860
                        )Prepayments and
      deposits
                        
                        
                        
                        6,408
                        
                        
                        
                        16,967Other debtors
                        
                        
                        
                        195,617
                        
                        
                        
                        (139,387
                        )Inventories
                        
                        
                        
                        (14,161
                        )
                        
                        
                        (19,981
                        )Trade payables
                        
                        
                        
                        (23,966
                        )
                        
                        
                        16,596Accrued charges and other
      payables
                        
                        
                        
                        (5,764
                        )
                        
                        
                        (396,270
                        )Temporary
    receipts
                        
                        
                        
                        (17,564
                        )
                        
                        
                        37,148Income tax
      recoverable/payable
                        
                        
                        
                        3,386
                        
                        
                        
                        (4,016
                        )Net
      cash used in operating activities
                        
                        
                        
                        (100,548
                        )
                        
                        
                        (614,853
                        )Cash
      flows from investing activities:Interest income
                        
                        
                        
                        1,094
                        
                        
                        
                        1,040Payments for purchase of
      property, plant and equipment
                        
                        
                        
                        (5,538
                        )
                        
                        
                        (6,222
                        )Payments for intangible
      assets
                        
                        
                        
                        (29,412
                        )
                        
                        
                        -Net advances to related
      parties
                        
                        
                        
                        -
                        
                        
                        
                        (14,059
                        )Net
      cash used in investing activities
                        
                        
                        
                        (33,856
                        )
                        
                        
                        (19,241
                        )Cash
      flows from financing activities:Repayments to related
      parties
                        
                        
                        
                        (64,501
                        )
                        
                        
                        (40,577
                        )Settlement of loans from a
      related party
                        
                        
                        
                        -
                        
                        
                        
                        (238,989
                        )Repayment of short-term bank
      loan
                        
                        
                        
                        (125,000
                        )
                        
                        
                        -New short-term bank loan
      raised
                        
                        
                        
                        125,000
                        
                        
                        
                        -Net
      cash used in financing activities
                        
                        
                        
                        (64,501
                        )
                        
                        
                        (279,566
                        )
 Net
      decrease in cash and cash equivalents
                                                                                        
                                                                                        
                                                                                        
                                                                                        (198,905
                                                                                        )
                                                                                        
                                                                                        
                                                                                        (913,660
                                                                                        )Cash
      and cash equivalents at beginning of period
                                                                                        
                                                                                        
                                                                                        
                                                                                        245,685
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,373,085Effect
      on exchange rate changes
                                                                                        
                                                                                        
                                                                                        
                                                                                        3,576
                                                                                        
                                                                                        
                                                                                        
                                                                                        58,196Cash
      and cash equivalents at end of period,represented by cash and bank
      balances
                                                                                        
                                                                                        
                                                                                        
                                                                                        50,356
                                                                                        
                                                                                        
                                                                                        
                                                                                        517,621Cash
      and cash equivalentsHeld
      for continuing operations
                                                                                        
                                                                                        
                                                                                        
                                                                                        49,508
                                                                                        
                                                                                        
                                                                                        
                                                                                        517,621Held
      for sale
                                                                                        
                                                                                        
                                                                                        
                                                                                        848
                                                                                        
                                                                                        
                                                                                        
                                                                                        -50,356
                                                                                        
                                                                                        
                                                                                        
                                                                                        517,621




The
financial statements should be read in conjunction with the accompanying
notes.






5










SMARTPAY
EXPRESS, INC.


NOTES TO
THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Period
from January 1, 2009 to March 31, 2009






The
condensed consolidated balance sheet as of December 31, 2008, which has been
derived from the audited financial statements at that date, and the unaudited
condensed consolidated financial statements for period ended and as of March 31,
2009 have been prepared pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and note disclosures normally
included in annual financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to those
rules and regulations, although the Company believes that the disclosures made
are adequate to make the information not misleading.





It is
suggested that these condensed consolidated financial statements be read in
conjunction with the financial statements and the notes thereto included in the
Company's Form 10-K for the year ended December 31, 2008.





These
condensed consolidated financial statements reflect all adjustments that, in the
opinion of management, are necessary for a fair presentation for the period
presented, including normal recurring adjustments. Operating results for the
three-month period ended March 31, 2009 are not necessarily indicative of the
results that may be expected for the year ending December 31,
2009.





1.       ORGANIZATION





The
unaudited condensed consolidated financial statements include the accounts of
SmartPay Express, Inc. ("SPYE") (formerly known as Axiom III, Inc. ("AXIO")) and
its subsidiaries (collectively referred to as the "Company").





On
October 10, 2007, AXIO entered into a share exchange agreement with, among
others, the shareholders of Eastern Concept Development Limited ("Eastern
Concept") pursuant to which AXIO acquired 100% of the issued and outstanding
share capital of Eastern Concept in exchange for 35,351,667 shares of common
stock of AXIO, or 70.7% of the total 50,000,000 issued and outstanding shares of
common stock of AXIO after giving effect to the share exchange. On October 18,
2007, AXIO entered into a stock purchase agreement with Northeast Nominee Trust,
the then major shareholder of AXIO, to dispose of its 100% interest in Axiom
First Corporation, the only asset of AXIO just before the share exchange on
October 10, 2007, at a consideration of US$1. Since then, AXIO entirely ceased
its prior business operations.





For
financial reporting purposes, the acquisition of Eastern Concept by AXIO has
been treated as a reverse acquisition whereby Eastern Concept is considered as
the acquirer, i.e. the surviving entity. On this basis, the historical financial
information prior to October 10, 2007 represents that of Eastern
Concept.





SPYE has
five subsidiaries: Eastern Concept, Eastern Concept Corporate Consulting
(Shenzhen) Limited, Guangdong Wanzhi Electron S&T Company Limited (formerly
Foshan Wanzhi Electron S&T Company Limited) ("Wanzhi"), Foshan Information
Technology Company Limited ("Foshan Company") and Foshan JinCheng Information
Technology Company Limited ("JinCheng"). Except for Eastern Concept which is
incorporated in Hong Kong, all subsidiaries are established in the People's
Republic of China (the "PRC").





The
Company entered into an agreement with a third party individual on March
28, 2009 to dispose of its entire 51% equity interests in JinCheng (the
"Disposal") at a consideration of approximately US$370,000 (see note 5). Up to
the date of this report, the Disposal has not been completed.




The
Company is principally engaged in the provision of smartcard payment system and
other value-added services in Guangdong province, the PRC.
 2.       GOING
CONCERN CONSIDERATION
 The
Company had negative working capital as of March 31, 2009 of US$416,646, which
raises substantial doubt about its ability to continue as a going
concern.
 
 Continuation
of the Company as a going concern is dependent upon attaining profitable
operations in the future and obtaining adequate finance as and when required.
The financial statements do not include any adjustments that might result from
the outcome of these uncertainties.
 
 The
negative working capital position of the Company as of March 31, 2009 was mainly
because of the loans from a related party of US$677,224. That related party
and two major SPYE stockholders have undertaken to make available adequate funds
to the Company as and when required to maintain the Company as a going
concern.
 
 As a
result, management is confident that the Company will be able to continue as a
going concern.




6







SMARTPAY
EXPRESS, INC.
 NOTES TO
THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Period
from January 1, 2009 to March 31, 2009


3.       RECENTLY
ISSUED ACCOUNTING PRONOUNCEMENTS AND STANDARDS





Adoption of Recently Issued
Accounting Pronouncements





Effective
January 1, 2009, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 141 (revised 2007), "Business Combinations"which requires an
acquirer to measure the identifiable assets acquired, the liabilities assumed
and any noncontrolling interests in the acquiree at their fair values on the
acquisition date, with goodwill being the excess value over the net identifiable
assets acquired. This standard also requires the fair value measurement of
certain other assets and liabilities related to the acquisition such as
contingencies and research and development. The adoption of this Statement does
not have a material effect on the Company's financial statements.





Effective
January 1, 2009, the Company adopted Financial Accounting Standards Board,
referred to as FASB, Staff Position, referred to as FSP No. EITF 03-6-1,
"Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities". FSP No. EITF 03-6-1 addresses whether instruments
granted in share-based payment transactions are participating securities prior
to vesting and, therefore, need to be included in the earnings allocation in
computing earnings per share. The adoption of this Statement does not have a
material effect on the Company's financial statements.


Effective
January 1, 2009, the Company adopted SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements.SFAS No. 160 establishes new
standards governing the accounting for and reporting of noncontrolling interests
(NCIs) in partially owned consolidated subsidiaries and the loss of control of
subsidiaries. Certain provisions of this standard indicate, among other things,
that NCIs (previously referred to as minority interests) be treated as a
separate component of equity, not as a liability; that increases and decreases
in the parent's ownership interest that leave control intact be treated as
equity transactions, rather than as step acquisitions or dilution gains or
losses; and that losses of a partially owned consolidated subsidiary be
allocated to the NCI even when such allocation might result in a deficit
balance. Consolidated net income should include the net income for both the
parent and the noncontrolling interests with disclosure of both amounts on the
consolidated statement of operations. SFAS No. 160 also requires that a
retained noncontrolling interest upon the deconsolidation of a subsidiary be
initially measured at its fair value. SFAS No. 160 is to be applied
prospectively as of the beginning of the fiscal year in which it is initially
adopted, except for the presentation and disclosure requirements which are to be
applied retrospectively for all periods presented. As a result, the condensed
consolidated balance sheets have been adjusted to reflect the reclassification
of noncontrolling interests to equity, the condensed consolidated statements of
operations have been adjusted to include the net income attributable to the
noncontrolling interests. Other than the change in presentation of
noncontrolling interests, the adoption of this Statement is not expected to have
a material effect on the Company's financial statements.
 
 Effective
January 1, 2009, the Company adopted SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities-an amendment of FASB Statement
No. 133". SFAS No. 161 seeks qualitative disclosures about the
objectives and strategies for using derivatives; quantitative data about the
fair value of, and gains and losses on, derivative contracts; and details of
credit-risk-related contingent features in hedged positions. SFAS No. 161
also seeks enhanced disclosure around derivative instruments in financial
statements, accounted for under SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", and how hedges affect an entity's
financial position, financial performance and cash flows. The adoption of this
Statement does not have a material effect on the Company's financial
statements.
  In
April 2009, the FASB issued the following new accounting
standards:
 
 -
              FASB
      Staff Position FAS 157-4 (FSP FAS 157-4), "Determining Whether a Market
      Is Not Active and a Transaction is Not Distressed". FSP FAS 157-4
      provides guidance for making fair value measurements more consistent with
      the principles presented in FAS 157. FSP 157-4 provides additional
      authoritative guidance in determining whether a market is active or
      inactive, and whether a transaction is distressed. FSP 157-4 is applicable
      to all assets and liabilities (i.e. financial and nonfinancial) and will
      require enhanced disclosures.
 
 -
              FASB
      Staff Position FAS 115-2, FAS 124-2, and EITF 99-20-2 (FSP FAS 115-2, FAS
      124-2, and EITF 99-20-2),"Recognition and Presentation
      of Other-Than-Temporary Impairments". FSP FAS 115-2, FAS 124-2, and
      EITF 99-20-2 provides additional guidance to provide greater clarity about
      the credit and noncredit component of an other-than-temporary impairment
      event and to more effectively communicate when an other-than-temporary
      impairment event has occurred. This FSP applies to debt
      securities.
 
 -
              FASB
      Staff Position FAS 107-1 and APB 28-1 (FSP FAS 107-1 and APB 28-1), "Interim Disclosures about
      Fair Value of Financial Instruments". FSP FAS 107-1 and APB 28-1
      amend SFAS No 107, Disclosures about Fair Value of Financial Instruments,
      to require disclosures about fair value of financial instruments in
      interim as well as in annual financial statements. This FSP also amends
      APB Opinion No. 28, "Interim Financial
      Reporting", to require those fair value disclosures in all interim
      financial statements.
 
 These
standards are effective for periods ending after June 15, 2009 with early
adoption permitted. The Company has not elected to early adopt these standards
and is evaluating the impact that these standards will have on the condensed
consolidated financial statements.




7







SMARTPAY
EXPRESS, INC.
 NOTES TO
THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Period
from January 1, 2009 to March 31, 2009


4.       TAXATION
 
 Entities
that carry on business and derive income in Hong Kong are subject to Hong Kong
profits tax at the rate of 16.5%. Entities that carry on business and derive
income in the PRC are subject to PRC enterprise income tax at the rate of
25%.
 
 No
provision for Hong Kong profits tax and PRC enterprise income tax has been made
as the subsidiaries in Hong Kong and the PRC incurred losses for taxation
purpose during the three-month periods ended March 31, 2009 and
2008.
  5.       DISCONTINUED
OPERATIONS AND ASSETS HELD FOR SALE
 
 As
mentioned in note 1 to the financial statements, the Company entered into an
agreement with a third party individual on March 28, 2009 to dispose of its
entire 51% equity interests in JinCheng at a consideration of approximately
US$370,000. The Disposal is expected to be completed within one year. The
Company concluded that the Disposal met the definition of a discontinued
operation as defined in SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets("SFAS No. 144"). Accordingly, the
results of operations of these businesses have been reclassified for all periods
presented.




(a) Discontinued
operations
 
 The
results of the discontinued operations for each of the three months ended March
31, 2009 and 2008 are summarized as follows:
 
 Three
      months endedMarch
      31,2009
                      
                      
                      2008US$
                      
                      
                      US$(Unaudited)
                      
                      
                      (Unaudited)Service
      income
                      
                      
                      13
                      
                      
                      
                      5,545Staff
      costs
                      
                      
                      (19,740
                      )
                      
                      
                      (11,573
                      )Depreciation
      of property, plant and equipment
                      
                      
                      (268
                      )
                      
                      
                      -Amortisation
      of intangible assets
                      
                      
                      (8,006
                      )
                      
                      
                      (7,458
                      )Other
      general and administrative expenses
                      
                      
                      (2,112
                      )
                      
                      
                      (7,836
                      )Interest
      income
                      
                      
                      -
                      
                      
                      
                      274Share
      of results of an associate
                      
                      
                      (10,803
                      )
                      
                      
                      -Loss
      before taxation
                      
                      
                      (40,916
                      )
                      
                      
                      (21,048
                      )Taxation
                      
                      
                      -
                      
                      
                      
                      -Loss
      from discontinued operations
                      
                      
                      (40,916
                      )
                      
                      
                      (21,048
                      )




(b)           Assets
and liabilities held for sale
 
 The
Company has also reclassified the major classes of assets and liabilities of
JinCheng as held for sale in the Condensed Consolidated Balance Sheet in
accordance with SFAS 144 as follows:
 
 As
      of March 31, 2009US$(Unaudited)Current
      assetsPrepayments
      and deposits
                      
                      
                      7,585Other
      debtors
                      
                      
                      3,657Amounts
      due from related parties
                      
                      
                      80,882Inventories
                      
                      
                      720Cash
      and cash equivalents
                      
                      
                      848Total
      current assets held for sale
                      
                      
                      93,692Non-current
      assetsProperty,
      plant and equipment, net
                      
                      
                      28,379Intangible
      assets, net
                      
                      
                      248,203Interest
      in an associate
                      
                      
                      8,224Total
      non-current assets held for sale
                      
                      
                      284,806Total
      assets held for sale
                      
                      
                      378,498Current
      liabilitiesAccrued
      charges and other payables
                      
                      
                      866Total
      current liabilities held for sale
                      
                      
                      866Total
      liabilities held for sale
                      
                      
                      866Net
      assets held for sale
                      
                      
                      377,632Less:
      Noncontrolling interests
                      
                      
                      (185,040
                      )192,592








8





SMARTPAY
EXPRESS, INC.


NOTES TO
THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Period
from January 1, 2008 to September 30, 2008







6.       RELATED
PARTY TRANSACTIONS





In
addition to the transactions / information disclosed elsewhere in
these financial statements, the Company had the following transactions with
related parties.





(a)
                Name
      and relationship of related partiesName
                Existing relationships with the
      CompanyLi
      Xing Hao
                A
      director of Wanzhi and a major stockholder of SPYEGuangdong
      Chigo Air Conditioning CompanyLimited
      ("Chigo") *
                A
      company in which Li Xing Hao has control and beneficial
      interestTang
      Jin Cheng
                A
      director of JinChengFoshan
      JinCheng Technology Company Limited *
                Minority
      shareholder of JinChengFoshan
      Shancheng JiaXun Technology Services Centre *
                Minority
      shareholder of JiaXunFoshan
      KaiEr Information Technology Company Limited ("KaiEr") *
                An
      associate of JinCheng





*  The
official names are in Chinese and the English names are translation for
reference only.








(b)
            Balances
      with related parties




(i)        Trade
receivable from a related party




As
      ofMarch
      31, 2009
                    
                    
                    December
      31, 2008US$
                    
                    
                    US$(Unaudited)Chigo
                    
                    
                    6,445
                    
                    
                    
                    24,148




The
      amount due is unsecured, interest-free and has no fixed repayment
      term.





(ii)        Amounts
due from related parties





As
      ofMarch
      31, 2009
                
                
                December
      31, 2008US$
                
                
                US$(Unaudited)Tang
      Jin Cheng
                
                
                14,706
                
                
                
                14,493KaiEr
                
                
                14,706
                
                
                
                79,71129,412
                
                
                
                94,204






9




SMARTPAY
EXPRESS, INC.
 NOTES TO
THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Period
from January 1, 2008 to September 30, 2008


6.       RELATED
PARTY TRANSACTIONS (CONTINUED)


(b)
            Balances
      with related parties (Continued)





As
      of March 31, 2009 and December 31, 2008, the amounts due are unsecured,
      interest-free and have no fixed repayment term except for the amount due
      from Tang Jin Cheng which is interest-bearing at US$99 per month and
      repayable on October 31, 2009.




(iii) Amounts due
to related parties


As
      ofMarch
      31, 2009
                
                
                December
      31, 2008US$
                
                
                US$(Unaudited)Chigo
                
                
                3,706
                
                
                
                3,653Li
      Xing Hao
                
                
                15,752
                
                
                
                15,52419,458
                
                
                
                19,177





The
      amounts due are unsecured, interest-free and have no fixed repayment
      term.




(iv) Loans from a
related party





As
      ofMarch
      31, 2009
                
                
                December
      31, 2008US$
                
                
                US$(Unaudited)At
      beginning of period/year
                
                
                655,274
                
                
                
                883,562Exchange
      realignment
                
                
                9,636
                
                
                
                51,221Amortization
                
                
                12,314
                
                
                
                70,188Repayments
                
                
                -
                
                
                
                (349,697
                )At
      balance sheet date
                
                
                677,224
                
                
                
                655,274





The
      loans from Li Xing Hao are unsecured, interest-free and repayable within
      twelve months from the date of advances, i.e. September 2009. The loans
      were stated at fair value at inception, calculated using a discount rate
      of 7.56% per annum, and are subsequently stated at amortized
      cost.






(c)
              Summary
      of related party transactions





Three
      months endedMarch
      31,2009
                    
                    
                    2008US$
                    
                    
                    US$(Unaudited)
                    
                    
                    (Unaudited)Service
      income from Chigo
                    
                    
                    26,059
                    
                    
                    
                    16,019Service
      income from Foshan JinCheng Technology Company Limited
                    
                    
                    -
                    
                    
                    
                    5,545




7.       SHORT-TERM
BANK LOAN
 
 The bank
loan as of December 31, 2008 was collateralized by the Company's bank
deposit of US$130,435, interest-bearing at 6.3% per annum and fully repaid in
January 2009. During the three month ended March 31 2009, a new bank loan was
granted, which is collateralized by the Company's bank deposit of
US$132,353, interest-bearing at 5.84% per annum and repayable in January
2010.




10







ITEM
2 – MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION





PRELIMINARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
 This
discussion contains forward-looking statements. The reader should understand
that several factors govern whether any forward-looking statement contained
herein will be or can be achieved. Any one of those factors could cause actual
results to differ materially from those projected herein. These forward-looking
statements include plans and objectives of management for future operations,
including plans and objectives relating to the products and the future economic
performance of the company. Assumptions relating to the foregoing involve
judgments with respect to, among other things, future economic, competitive and
market conditions, future business decisions, and the time and money required to
successfully complete development projects, all of which are difficult or
impossible to predict accurately and many of which are beyond the control of the
company. Although the company believes that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of those
assumptions could prove inaccurate and, therefore, there can be no assurance
that the results contemplated in any of the forward-looking statements
contained herein will be realized. Based on actual experience and business
development, the company may alter its marketing, capital expenditure plans or
other budgets, which may in turn affect the company's results of operations. In
light of the significant uncertainties inherent in the forward-looking
statements included therein, the inclusion of any such statement should not be
regarded as a representation by the company or any other person that the
objectives or plans of the company will be achieved.
 
 OVERVIEW
 
 We were
incorporated in the State of Nevada in June 2004 to engage in any lawful
undertaking.  We were a development stage company indirectly owning
one apartment building in Chicopee, Massachusetts.  Pursuant to a
share exchange agreement, dated October 10, 2007, the shareholders of Eastern
Concept Development Limited exchanged all of its share capital for 35,351,667
shares of Common Stock of SPYE, or 70.7% of the total then 50,000,000 issued and
outstanding shares of common stock of SPYE after giving effect to the share
exchange.  Subsequently, on December 18, 2007, we filed and mailed a
Definitive Information Statement on Schedule 14C for the adoption of the
Company's name of SmartPay Express, Inc. and the increase of our authorized
capital to 300,000,000 shares of common stock, whereby the authorized capital
shares of preferred stock remained the same at 5,000,000 shares. On November 21,
2008, we completed the one-for-fifty reverse stock split. As a result of the
reverse stock split, the total number of our outstanding shares was reduced
from 64,607,460 to 1,292,166.
 
 Through
its indirectly wholly-owned subsidiary, Guangdong Wanzhi Electron S&T
Co., Ltd. ("Foshan"), SPYE is principally engaged in providing smart card
payment systems and related value-added services mainly in the
Guangdong Province of the People's Republic of China.  We are an
operator of All-in-One Municipal Service Cards ("AIOMS Card").  The
AIOMS Card has a built-in microchip containing an electronic purse and other
applications which can accurately record the holder's transaction
details.  Examples of the usages of AIOMS Cards include, but are not
limited to, the following:  VIP shopping cards, prepaid phone cards,
municipal travel cards, student cards, corporate employee cards and lottery
sales cards. We have opened a branch in the city of Foshan, in
Guangdong Province, and have signed contracts to open additional branches
in other major cities in China. The Company currently has 20 card
equipment and software development staff members, 5 industrial service
integration and management personnel, 20 business and customer service
personnel, and 40 technical representatives.




11





RESULTS
OF OPERATIONS





The
following table shows the financial data of the condensed consolidated
statements of operations of the Company and its subsidiaries for the three-month
period ended March 31, 2009.  The data should be read in conjunction
with the consolidated financial statements of the Company and related notes
thereto.




Three
      months endedMarch
      31,2009
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                2008US$
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                US$Continuing
      operationsOperating
      revenueService
      income
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                100,274
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                113,251Operating
      expensesSubcontracting
      and other charges
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (50,001
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (46,276
                                                                                                                                                )Staff
      costs
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (66,369
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (67,696
                                                                                                                                                )Depreciation
      of property, plant and equipment
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (3,498
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (2,836
                                                                                                                                                )Amortization
      of intangible assets
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (51,359
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (47,841
                                                                                                                                                )Other
      general and administrative expenses
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (234,084
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (110,448
                                                                                                                                                )Loss
      from operations
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (305,037
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (161,846
                                                                                                                                                )Non-operating
      income (expenses)Interest
      income
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                1,094
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                766Gain
      on disposal of partial interest in a subsidiary
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                -
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                259,837Amortization
      of loans from a related party
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (12,314
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (32,213
                                                                                                                                                )Loss
      on partial settlement of loans from a related party
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                -
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (24,717
                                                                                                                                                )(Loss)
      Income before income tax
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (316,257
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                41,827Income
      tax
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                -
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                -(Loss)
      Income from continuing operations
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (316,257
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                41,827Discontinued
      operationsLoss
      from discontinued operations
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (40,916
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (21,048
                                                                                                                                                )Net
      (loss) income including noncontrolling interests
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (357,173
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                20,779Less:
      net loss from continuing operations attributable to noncontrolling
      interests
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                16,228
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                6,402Less:
      net loss from discontinued operations attributable to noncontrolling
      interests
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                20,049
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                10,314Net
      (loss) income attributable to SPYE common
stockholders
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (320,896
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                37,495Other
      comprehensive income-
      Foreign currency translation
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                15,669
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                87,231Total
      comprehensive (loss) income
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (305,227
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                124,726Basic (loss) earnings per
      share(Loss) Earnings per share from continuing operations
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (23.22)
      cents
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                4.77
      centsLoss per share from discontinued operations
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (1.61)
      cents
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (1.06)
      cents(24.83)
      cents
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                3.71
      cemtsWeighted average number of shares of common
      stock outstanding (Note)
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                1,292,166
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                1,010,549
 Note :
              On
      October 16, 2008, the sole director and the holders of a majority of the
      common shares of SmartPay approved a one-for-fifty reverse stock split of
      common stock of SmartPay. The weighted average number of shares of common
      stock outstanding for the period from January 1, 2008 to March 31, 2008
      has been adjusted retrospectively for the effect of the reverse stock
      split for the purpose of calculation of loss/earnings per
      share.


12







THREE-MONTH PERIOD ENDED MARCH 31,
2009 COMPARED TO THREE-MONTH PERIOD ENDED MARCH 31, 2008.




OPERATING
REVENUE





Since
inception in June 2007, the Company has been engaged in the provision of
smartcard payment system and related value-added services primarily in Guangdong
province, the PRC.  The Company generated a total of approximately
$100,274 service income as operating revenue for the three-months
ended March 31, 2009, as compared to approximately $113,251 for the period
ended March 31, 2008, a decrease of 11%. Approximately 64% was generated from
the Nanhai project for the period ended March 31, 2009, as compared to
72% for the period ended March 31, 2008. At present, there are
approximately 30,000 students in Nanhai city who are using our services. We
anticipate that more operating revenues would be generated as we expand our
services to students in other cities including Shenzhen, Chaozhou, Maoming and
Qingyuan within Guangdong province.





SUBCONTRACTING
AND OTHER CHARGES


Subcontracting
and other charges increased 8% to approximately $50,001 for the period
ended March 31, 2009, as compared to approximately $46,276 for the period ended
March 31, 2008.
 
 The
significant portion of these charges, approximately 95% and 88% for the period
ended March 31, 2009 and 2008, respectively, was related to the Nanhai
project. The increase was a result of the change of method of rebate to students
participating in the Nanhai project.





STAFF
COSTS


The total
staff costs for the period ended March 31, 2009 approximated $66,369 as compared
to $67,696 for the period end March 31, 2008, a decrease of 2%. Currently, the Company
employs20 card equipment and software development staff members, 5
industrial service integration and management personnel, 20 business and
customer service personnel, and 40 technical representatives.





DEPRECIATION
EXPENSES





Depreciation
expenses for the period ended March 31, 2009 amounted to $3,498, as
compared to $2,836 for the period ended March 31, 2008, an increase of
23%.  These expenses were related to the depreciation charged on
office equipment and computers.





AMORTIZATION
OF INTANGIBLE ASSETS





Amortization
charges of intangible assets for the year ended March 31, 2009 approximated
$51,359, as compared to $47,841 for the period ended March 31, 2008, an increase
of 7%.  These amortization charges were resulted from the operating
rights of the Nanhai project, in addition to computer software relating to the
Nanhai project. As of March 31, 2009, the carrying value of the
operating right of the Nanhai project was approximately $1,151,946 and the
carrying value of the intangible asset of the computer software was
approximately $295,369.





OTHER
GENERAL AND ADMINISTRATIVE EXPENSES





Other
general and administrative expenses for the period end March 31, 2009 were
$234,084, as compared to $110,448 for the period ended March 31, 2008, an
increase of 112%. The significant increase in other general and administrative
expenses was mainly due to additional consulting
and professional fees that we paid for in connection with our filing
obligations as a reporting company which have
negatively impacted our ability to attain profitable
operations.


INTEREST
INCOME




Interest
income for the period end March 31, 2009 was $1,094, as compared to $766 for the
period ended March 31, 2008, an increase of 43%. This income was the
interest earned on cash in bank deposit.


AMORIZATION
OF LOANS FROM A RELATED PARTY


INCOME
TAXES
 
 The
Company is subject to PRC Enterprise Income Taxes ("EIT") on an entity basis on
income arising in and derived from the PRC. The applicable EIT rate is 25% in
year 2009 and 2008.
 
 Since the
Company's PRC established subsidiaries incurred a loss for the period ended
March 31, 2009, no provision for EIT has been made.
 
 NET
LOSS
 
 The
Company incurred a net loss of $357,153 for the period ended March 31,
2009, as compared to a net income of $20,779 for the same period in 2008. The increase in net loss
was primarily due to additional consulting and professional fees that were
incurred in connection with our filing obligations as a reporting company, which
have negatively impacted our ability to attain profitable
operations.
 
 LIQUIDITY AND CAPITAL RESOURCES
 
 As
of March 31, 2009, cash and cash equivalents totaled
$50,356.  This cash position was the result of a combination of net
cash used in financing activities in the amount of $64,501, net cash used in
operating activities in the amount of $100,548, and net cash used in investing
activities of $33,856. The cash used in financing activities was primarily
due to the settlement of amounts due to a related party. The net cash used
in operating activities was mainly due to the loss incurred during the
period. The net cash used in investing activities was the cash used in the
payments
for intangible assets andpurchase of property, plant and
equipment.




13







CRITICAL
ACCOUNTING POLICIES


In
response to the SEC's Release No. 33-8040, "Cautionary Advice Regarding
Disclosure About Critical Accounting Policy," the Company identified the most
critical accounting principals upon which its financial status depends. The
Company determined that those critical accounting principles are related to the
use of estimates, revenue recognition, income tax and impairment of intangibles
and other long-lived assets. The Company presents these accounting policies in
the relevant sections in this management's discussion and analysis, including
the Recently Issued Accounting Pronouncements discussed below.
 
 In
presenting our financial statements in conformity with generally accepted
accounting principles, we are required to make estimates and assumptions that
affect the amounts reported therein. Several of the estimates and assumptions we
are required to make relate to matters that are inherently uncertain as they
pertain to future events. However, events that are outside of our control cannot
be predicted and, as such, they cannot be contemplated in evaluating such
estimates and assumptions. If there is a significant unfavourable change to
current conditions, it could result in a material adverse impact to our
consolidated results of operations, financial position and liquidity. We believe
that the estimates and assumptions we used when preparing our financial
statements were the most appropriate at that time. Presented below are those
accounting policies that we believe require subjective and complex judgments
that could potentially affect reported results. However, the majority of our
businesses operate in environments where we pay a fee for a service
performed, and therefore the results of the majority of our recurring operations
are recorded in our financial statements using accounting policies that are not
particularly subjective, nor complex.
  Valuation
of Long-Lived Assets
 
 We review
our long-lived assets for impairment, including property, plant and equipment,
and identifiable intangibles with definite lives, whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be fully
recoverable. To determine recoverability of our long-lived assets, we evaluate
the probability that future undiscounted net cash flows will be greater than the
carrying amount of our assets. Impairment is measured based on the
difference between the carrying amount of our assets and their estimated fair
value.
 
 Allowance
for Doubtful Accounts
 
 We
perform ongoing credit evaluations of our customers and adjust credit limits
based upon customer payment history and current creditworthiness. We
continuously monitor collections and payments from our customers and maintain a
provision for estimated credit losses based upon our historical experience and
any specific customer collection issues that have been identified. While such
credit losses have historically been within our expectations and the
provisions established, we cannot guarantee that we will continue to experience
credit loss rates similar to those we have experienced in the past. Measurement
of such losses requires consideration of historical loss experience, including
the need to adjust for current conditions, and judgments about the probable
effects of relevant observable data, including present economic conditions such
as delinquency rates and financial health of specific customers.
  Off-Balance
Sheet Arrangements
 
 The
Company has not entered into any financial guarantees or other commitments to
guarantee the payment obligations of any third parties. The Company has not
entered into any derivative contracts that are indexed to the Company's shares
and classified as shareholder's equity or that are not reflected in the
Company's financial statements. Furthermore, the Company does not have any
retained or contingent interest in assets transferred to an unconsolidated
entity that serves as credit, liquidity or market risk support to such entity.
The Company does not have any variable interest in any unconsolidated entity
that provides financing, liquidity, market risk or credit support to the Company
or engages in leasing, hedging or research and development services with the
Company.
 
 Inflation
 
 The
Company believes that inflation has not had a material effect on its operations
to date.
 
 Income
Taxes
 
 Provision
for income and other taxes has been made in accordance with the tax rates and
laws in effect in the PRC.
  Income
tax is computed on the basis of pre-tax income. Deferred taxes are provided
using the liability method for all significant temporary differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and net operating loss carry forwards. The
tax consequences of those differences are classified as current or
non-current based on the classification of the related assets or liabilities in
the financial statements.




14







Revenue
Recognition





The
Company generally recognizes service revenues when persuasive evidence of an
arrangement exists, services are rendered, the fee is fixed or determinable, and
collectibility is probable. Service revenues are recognized net of
discounts.





Adoption of Recently Issued
Accounting Pronouncements
 
 Effective
January 1, 2009, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 141 (revised 2007), "Business Combinations"which requires an
acquirer to measure the identifiable assets acquired, the liabilities assumed
and any noncontrolling interests in the acquiree at their fair values on the
acquisition date, with goodwill being the excess value over the net identifiable
assets acquired. This standard also requires the fair value measurement of
certain other assets and liabilities related to the acquisition such as
contingencies and research and development. The adoption of this Statement does
not have a material effect on the Company's financial statements.
 
 Effective
January 1, 2009, the Company adopted Financial Accounting Standards Board,
referred to as FASB, Staff Position, referred to as FSP No. EITF 03-6-1,
"Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities". FSP No. EITF 03-6-1 addresses whether instruments
granted in share-based payment transactions are participating securities prior
to vesting and, therefore, need to be included in the earnings allocation in
computing earnings per share. The adoption of this Statement does not have a
material effect on the Company's financial statements.
 Effective
January 1, 2009, the Company adopted SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements.SFAS No. 160 establishes new
standards governing the accounting for and reporting of noncontrolling interests
(NCIs) in partially owned consolidated subsidiaries and the loss of control of
subsidiaries. Certain provisions of this standard indicate, among other things,
that NCIs (previously referred to as minority interests) be treated as a
separate component of equity, not as a liability; that increases and decreases
in the parent's ownership interest that leave control intact be treated as
equity transactions, rather than as step acquisitions or dilution gains or
losses; and that losses of a partially owned consolidated subsidiary be
allocated to the NCI even when such allocation might result in a deficit
balance. Consolidated net income should include the net income for both the
parent and the noncontrolling interests with disclosure of both amounts on the
consolidated statement of operations. SFAS No. 160 also requires that a
retained noncontrolling interest upon the deconsolidation of a subsidiary be
initially measured at its fair value. SFAS No. 160 is to be applied
prospectively as of the beginning of the fiscal year in which it is initially
adopted, except for the presentation and disclosure requirements which are to be
applied retrospectively for all periods presented. As a result, the condensed
consolidated balance sheets have been adjusted to reflect the reclassification
of noncontrolling interests to equity, the condensed consolidated statements of
operations have been adjusted to include the net income attributable to the
noncontrolling interests. Other than the change in presentation of
noncontrolling interests, the adoption of this Statement is not expected to have
a material effect on the Company's financial statements.
 
 Effective
January 1, 2009, the Company adopted SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities-an amendment of FASB Statement
No. 133". SFAS No. 161 seeks qualitative disclosures about the
objectives and strategies for using derivatives; quantitative data about the
fair value of, and gains and losses on, derivative contracts; and details of
credit-risk-related contingent features in hedged positions. SFAS No. 161
also seeks enhanced disclosure around derivative instruments in financial
statements, accounted for under SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", and how hedges affect an entity's
financial position, financial performance and cash flows. The adoption of this
Statement does not have a material effect on the Company's financial
statements.
  In
April 2009, the FASB issued the following new accounting
standards:
 
 -
                FASB
      Staff Position FAS 157-4 (FSP FAS 157-4), "Determining Whether a Market
      Is Not Active and a Transaction is Not Distressed". FSP FAS 157-4
      provides guidance for making fair value measurements more consistent with
      the principles presented in FAS 157. FSP 157-4 provides additional
      authoritative guidance in determining whether a market is active or
      inactive, and whether a transaction is distressed. FSP 157-4 is applicable
      to all assets and liabilities (i.e. financial and nonfinancial) and will
      require enhanced disclosures.
 
 -
                FASB
      Staff Position FAS 115-2, FAS 124-2, and EITF 99-20-2 (FSP FAS 115-2, FAS
      124-2, and EITF 99-20-2),"Recognition and Presentation
      of Other-Than-Temporary Impairments". FSP FAS 115-2, FAS 124-2, and
      EITF 99-20-2 provides additional guidance to provide greater clarity about
      the credit and noncredit component of an other-than-temporary impairment
      event and to more effectively communicate when an other-than-temporary
      impairment event has occurred. This FSP applies to debt
      securities.
 
 -
                FASB
      Staff Position FAS 107-1 and APB 28-1 (FSP FAS 107-1 and APB 28-1), "Interim Disclosures about
      Fair Value of Financial Instruments". FSP FAS 107-1 and APB 28-1
      amend SFAS No 107, Disclosures about Fair Value of Financial Instruments,
      to require disclosures about fair value of financial instruments in
      interim as well as in annual financial statements. This FSP also amends
      APB Opinion No. 28, "Interim Financial
      Reporting", to require those fair value disclosures in all interim
      financial statements.
 
 These
standards are effective for periods ending after June 15, 2009 with early
adoption permitted. The Company has not elected to early adopt these standards
and is evaluating the impact that these standards will have on the condensed
consolidated financial statements.






15








ITEM
3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





In the
normal course of business, operations of the Company are exposed to fluctuations
in interest rates. These fluctuations can vary the costs of financing and
investing yields. In view of the financing arrangements
during the first three months of 2009, the Company is not currently subject
to significant market risk.





ITEM
4(A) - CONTROLS AND PROCEDURES





The Chief
Executive Officer and Chief Financial Officer (the principal executive officer
and principal financial officer, respectively) of the Company have concluded,
based on their evaluation as of March 31, 2009, that the design and
operation of the Company's "disclosure controls and procedures" (as defined in
Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange
Act")) are effective to ensure that information required to be disclosed in the
reports filed or submitted by the Company under the Exchange Act is accumulated,
recorded, processed, summarized and reported to the management, including the
Chief Executive Officer and Chief Financial Officer, as appropriate to allow
timely decisions regarding whether or not disclosure is required.





During
the quarter ended March 31, 2009, there were no changes in the internal controls
of the Company over financial reporting (as defined in Rule 13a-15(f) under the
Exchange Act) that have materially affected, or are reasonably likely to
materially affect, the internal controls of the Company over financial
reporting.





ITEM
4(A)T – INTERNAL CONTROL OVER FINANCIAL REPORTING





(a)       The
Company's management is responsible for establishing and maintaining adequate
internal control over financial reporting (as defined in Rule 13a-15(f) under
the Securities Exchange Act of 1934, as amended). Management conducted an
evaluation of the effectiveness of the Company's internal control over financial
reporting based on the criteria set forth in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Based on this evaluation, management has concluded that the
Company's internal control over financial reporting was effective as of March
31, 2009.





(b)       This
quarterly report does not include an attestation report of the company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the company to provide only management's
report in this annual report.





(c)        There
were no changes in the Company's internal controls over financial reporting,
known to the chief executive officer or the chief financial officer that
occurred during the period covered by this report that has materially affected,
or is reasonably likely to materially affect, the Company's internal control
over financial reporting.






16





PART
II - OTHER INFORMATION





ITEM
1 - LEGAL PROCEEDINGS





None.





ITEM
2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS









ITEM
3 - DEFAULTS UPON SENIOR SECURITIES





None.





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





None.





ITEM
5 - OTHER INFORMATION





None.





ITEM
6 - EXHIBITS





31.1
                      Certification
      of the Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule
      15d-14(a) of the Securities Exchange Act of 193431.2
                      Certification
      of the Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule
      15d-14(a) of the Securities Exchange Act of 193432.1
                      Certification
      of the Company's Chief Executive Officer Pursuant to 18 U.S.C. SS. 1350
      Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
      200232.2
                      Certification
      of the Company's Chief Financial Officer Pursuant to 18 U.S.C. SS. 1350
      Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002







17







SIGNATURES





In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.





May
      19, 2009
            Smartpay
      Express, Inc.By:
            /s/
      Ping TangPing
      TangChairman
      and Chief Executive Officer






May
      19, 2009
              Smartpay
      Express, Inc.By:
              /s/
      Zheng WangZheng
      WangInterim Chief
      Financial Officer


18