U.S.
Securities and Exchange Commission


Washington,
D.C. 20549


____________________


FORM
10-Q


____________________


(Mark
      One)T
            Quarterly
      Report Pursuant to Section 13 or 15(d) of


the
Securities Exchange Act of 1934





For the
quarterly period ended June 30, 2008.





£
            Transition
      Report Pursuant to Section 13 or 15(d)


of
the Securities Exchange Act





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


__________________





Commission
File No. 0-52556


____________________


Card
Activation Technologies, Inc.


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





Delaware
            20-5769015State
      of Incorporation
            IRS
      Employer Identification No.





53
      West Jackson Blvd., Suite 1618Chicago,
      Illinois 60604-3749(Address
      of principal executive offices)


(312)
972-1662


(Issuer’s
telephone number)


Securities
registered under Section 12(b) of the Exchange Act:


None


Securities
registered under Section 12(g) of the Exchange Act:


Common
Stock, $0.001 par value per share


(Title
of Class)





Indicate
by check mark whether the Registrant (1) has filed all reports required by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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   ̈





Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non–accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b–2 of the Exchange Act. (Check
one):


Large
      accelerated filer   ̈
            Accelerated
      filer   ̈
            Non–Accelerated
      filer   ̈
            Small
      Business Issuer  x





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





Transitional
Small Business Disclosure Format (check one): Yes  No x





Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.




Class
            
            Outstanding
      at  August 7, 2008Common
      stock, $0.001 par value
            
            169,143,289







1


CARD
ACTIVATION TECHNOLOGIES, INC.


INDEX
TO FORM 10-Q FILING


FOR
THE THREE AND NINE MONTHSENDED June 30, 2008





TABLE OF CONTENTS





PART
I


FINANCIAL
      INFORMATION
            PAGEPART
      I - FINANCIAL INFORMATIONItem 1.
            Condensed
      Financial Statements (unaudited)Condensed Balance Sheets
            3Condensed Statements of Operation
            4Condensed Statement of Cash Flows
            5Notes to Condensed Financial Statements
            6Item 2.
            Management Discussion & Analysis of Financial Condition
      & Results of  Operations
            10Item 3
            Quantitative and Qualitative Disclosures About Market
      Risk
            15Item 4.
            Controls and Procedures
            15PART
      II - OTHER INFORMATIONItem 1.
            Legal Proceedings
            16Item 1A
            Risk Factors
            17Item 2.
            Unregistered Sales of Equity Securities and Use of
      Proceeds
            18Item 3.
            Defaults Upon Senior Securities
            19Item 4.
            Submission of Matters to a Vote of Security
      Holders
            19Item 5.
            Other information
            19Item 6.
            Exhibits
            19CERTIFICATIONSExhibit
      31 – Management certification
            20-24Exhibit
      32 – Sarbanes-Oxley Act
            20-24


2
 Table of Contents




PART
I – FINANCIAL INFORMATION





ITEM
1 – FINANCIAL STATEMENTS





CARD
ACTIVATION TECHNOLOGIES, INC.


(A
Development Stage Company)


CONDENSED BALANCES SHEETS





ASSETS:June
      30, 2008
            
            
            September
      30, 2007(unaudited)
            
            
            (Audited)CURRENT
      ASSETSCash
            
            $
            16,076
            
            
            $
            13,699Prepaid
      expenses and other current assets
            
            
            20,000
            
            
            
            -Notes
      receivable - affiliate
            
            
            321,009
            
            
            
            -Total
      current assets
            
            
            357,085
            
            
            
            13,699TOTAL
      ASSETS
            
            $
            357,085
            
            
            $
            13,699LIABILITIES
      AND STOCKHOLDERS' DEFICIT:CURRENT
      LIABILITIES:Accounts
      payable
            
            $
            20,736
            
            
            $
            40,235Total
      current liabilities
            
            
            20,736
            
            
            
            40,235Notes
      payable - affiliates
            
            
            -
            
            
            
            165,142TOTAL
      LIABILITIES
            
            
            20,736
            
            
            
            205,377STOCKHOLDERS'
      DEFICIT:Preferred
      stock, $.001 par value, 1,000,000 shares authorized; zero shares issued
      and outstanding
            
            
            -
            
            
            
            -Common
      stock, $.0001 par value, 175,000,000 shares authorized; 169,143,289 and
      146,770,504 shares issued and outstanding as of June 30, 2008 and
      September 30, 2007
            
            
            16,914
            
            
            
            14,678Additional
      paid-in capital
            
            
            914,427
            
            
            
            -Accumulated
      deficit during the Development Stage
            
            
            (594,992
            )
            
            
            (206,356
            )Total
      stockholders' deficit
            
            
            336,349
            
            
            
            (191,678
            )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
            
            $
            357,085
            
            
            $
            13,699








The
accompanying notes are an integral part of these condensed financial
statements.


3
 Table of Contents


CARD
ACTIVATION TECHNOLOGIES INC.


(A
Development Stage Company)


CONDENSED STATEMENT OF OPERATIONS


FOR
THE THREE AND NINE MONTHS ENDED JUNE 30, 2008 AND 2007


AND
FOR THE PERIOD FROM AUGUST 29, 2006 (INCEPTION) TO JUNE 30, 2008





For
      the Periodfrom
      August 29, 2006Three
      Months Ended
            
            
            Nine
      Months Ended
            
            
            (inception)
      to2008
            
            
            2007
            
            
            2008
            
            
            2007
            
            
            June
      30, 2008(unaudited)
            
            
            (unaudited)
            
            
            (unaudited)
            
            
            (unaudited)REVENUELitigation
      revenue
            
            $
            -
            
            
            $
            45,000
            
            
            $
            -
            
            
            $
            45,000
            
            
            $
            45,000Total
            
            
            -
            
            
            
            45,000
            
            
            
            -
            
            
            
            45,000
            
            
            
            45,000OPERATING
      EXPENSES:General
      and administrative
            
            
            190,150
            
            
            
            55,100
            
            
            
            328,992
            
            
            
            149,395
            
            
            
            578,072Sales
      and marketing expenses
            
            
            38,807
            
            
            
            -
            
            
            
            59,644
            
            
            
            -
            
            
            
            61,920Total
      operating expenses
            
            
            228,957
            
            
            
            55,100
            
            
            
            388,636
            
            
            
            149,395
            
            
            
            639,992OPERATING
      LOSS
            
            
            (228,957
            )
            
            
            (10,100
            )
            
            
            (388,636
            )
            
            
            (104,395
            )
            
            
            (594,992
            )OTHER
      (INCOME) AND EXPENSESTotal
      other expense
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -LOSS
      BEFORE INCOME TAXES
            
            
            (228,957
            )
            
            
            (10,100
            )
            
            
            (388,636
            )
            
            
            (104,395
            )
            
            
            (594,992
            )INCOME
      TAX (BENEFIT) PROVISION
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -NET
      LOSS
            
            $
            (228,957
            )
            
            $
            (10,100
            )
            
            $
            (388,636
            )
            
            $
            (104,395
            )
            
            $
            (594,992
            )Weighted
      Average Common Share Outstanding:Basic
      and diluted:
            
            
            160,162,234
            
            
            
            146,770,504
            
            
            
            163,049,926
            
            
            
            146,770,504Net
      Loss Per ShareBasic
      and diluted:
            
            $
            (0.00
            )
            
            $
            (0.00
            )
            
            $
            (0.00
            )
            
            $
            (0.00
            )








The
accompanying notes are an integral part of these condensed financial
statements.


4
 Table of Contents




CARD
ACTIVATION TECHNOLOGIES INC.


(A
Development Stage Company)


CONDENSED STATEMENT OF CASH FLOWS


FOR
THE NINE MONTHS ENDED JUNE 30, 2008 AND 2007


AND
FOR THE PERIOD FROM AUGUST 29, 2006 (INCEPTION) TO JUNE 30, 2008





For
      the Periodfrom
      August 29, 2006(inception)
      to2008
            
            
            2007
            
            
            June
      30, 2008(unaudited)
            
            
            (unaudited)CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      (loss)
            
            $
            (388,636
            )
            
            $
            (104,395
            )
            
            $
            (594,992
            )Adjustments
      to reconcile net income to net cash (used in) operating
      activities:Common
      stocks issued in spin off
            
            
            -
            
            
            
            14,677
            
            
            
            14,677Common
      stocks issued for services
            
            
            271,950
            
            
            
            -
            
            
            
            271,950Common
      stocks issued in conjuction with related party issuance
            
            
            1,764
            
            
            
            -
            
            
            
            1,764Changes
      in assets and liabilities:Prepaid
      expenses
            
            
            (20,000
            )
            
            
            -
            
            
            
            (20,000
            )Accounts
      payables
            
            
            (19,500
            )
            
            
            40,235
            
            
            
            20,736Net
      cash used in operating activities
            
            
            (154,422
            )
            
            
            (49,483
            )
            
            
            (305,865
            )CASH
      FLOWS FROM INVESTING ACTIVITIES:Loans
      to affiliates
            
            
            (321,009
            )
            
            
            -
            
            
            
            (321,009
            )Net
      cash from investing activities
            
            
            (321,009
            )
            
            
            -
            
            
            
            (321,009
            )CASH
      FLOWS FROM FINANCING ACTIVITIES:Bank
      overdraft
            
            
            -
            
            
            
            2,600
            
            
            
            -Repayment
      of notes from affiliate
            
            
            (261,142
            )
            
            
            -
            
            
            
            -Proceeds
      from the sale of common stock
            
            
            642,950
            
            
            
            -
            
            
            
            642,950Loans
      from affiliates
            
            
            96,000
            
            
            
            46,883
            
            
            
            -Net
      cash provided by financing activities
            
            
            477,808
            
            
            
            49,483
            
            
            
            642,950INCREASE
      IN CASH
            
            
            2,377
            
            
            
            -
            
            
            
            16,076CASH,
      BEGINNING OF YEAR
            
            
            13,699
            
            
            
            -
            
            
            
            -CASH,
      END OF YEAR
            
            
            16,076
            
            
            
            -
            
            
            
            16,076








The
accompanying notes are an integral part of these condensed financial
statements


5
 Table of Contents


CARD
ACTIVATION TECHNOLOGIES, INC.


NOTES TO CONDENSED FINANCIAL STATEMENTS


FOR
THE THREE AND NINE MONTHS ENDED JUNE 30, 2008 AND 2007





NOTE
1.  DESCRIPTION OF BUSINESS





Overview





Card
Activation Technologies Inc. (“Company/ CAT”) is a Delaware corporation
headquartered in Chicago, Illinois that owns proprietary patented payment
transaction technology relating to debit and gift card
transactions.





The
patent was transferred to the Company by MedCom USA, Incorporated (“MedCom”) on
the formation of the Company and in exchange for 146,770,504 shares of Common
Stock.  On October 31, 2006, the MedCom board of directors declared a
stock dividend to its shareholders of record at the end of business on December
15, 2006 of one share of Common Stock in the Company for every one share of
common stock of MedCom owned by its shareholders, such stock being distributed
on March 1, 2007. This was a dividend of 86,770,504 shares of our Common
Stock.  MedCom retained the balance of 60,000,000 shares of Common
Stock. MedCom is a publicly traded Delaware corporation, headquartered in
Scottsdale, Arizona, that provides innovative healthcare and financial
transaction solutions for electronically processing HIPAA compliant transactions
within the healthcare industry (EMED.OB).  MedCom provides a terminal based
service package and a compatible web portal add-on for physicians, clinics and
hospitals and dentists that include the following services: real-time
transactions including; patient eligibility, referrals, claims status and
service authorizations, 100% paperless claims processing, patient easy pay,
credit/debit cards, and check guarantee.





The
Company is a development stage company that was incorporated in August 2006 in
order to own and commercially develop the assigned patent which
covers debit and gift card transactions. This process is utilized for debit
cards, prepaid phone cards, gift cards, and affinity cards, and other cards. As
of the date of this prospectus, we have never entered into any patent license
agreements.





NOTE
2.  BASIS OF PRESENTATION





Interim
Financial Statements




The
accompanying interim unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
8 of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In our opinion, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the nine months ended June 30, 2008 are not
necessarily indicative of the results that may be expected for the year ending
September 30, 2008. For further information, refer to the financial statements
and footnotes thereto included in our Form 10-KSB Report for the fiscal year
ended September 30, 2007.


6
 Table of Contents


NOTE
3.  GOING CONCERN





As
indicated in the accompanying financial statements, the Company has incurred
cumulative net operating losses of $(594,992) since inception.  The
Company’s activities to date have been funded by its affiliate company, MedCom
USA, Inc. and the existing business plans require $1.0 to $2.0 million over the
next several years to implement the acquisition and litigation of patent
infringements.  There is no assurance that additional funds of this
magnitude will be advanced by the affiliate company or that sufficient investor
interest will be developed to provide this level of funding. These matters raise
substantial doubt about the Company’s ability to continue as a going
concern.  However, the accompanying financial statements have been
prepared on a going concern basis, which contemplates the realization of assets
and satisfaction of liabilities in the normal course of
business.  These financial statements do not include any adjustments
relating to the recovery of the recorded assets or the classification of the
liabilities that might be necessary should the Company be unable to continue as
a going concern.





NOTE
4.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Recent Accounting
Pronouncements





Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities





In
June 2008, the FASB issued FSP Emerging Issues Task Force (“EITF”) Issue
No. 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment
Transactions Are Participating Securities.” The FSP 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 under the two-class method. The FSP
affects entities that accrue dividends on share-based payment awards during the
awards’ service period when the dividends do not need to be returned if the
employees forfeit the award. This FSP is effective for fiscal years beginning
after December 15, 2008. The Company is currently assessing the impact of
FSP EITF 03-6-1 on its financial position and results of
operations.





Determining
Whether an Instrument (or an Embedded Feature) Is Indexed to an entity's Own
Stock





In June
2008, the FASB ratified EITF Issue No. 07-5, "Determining Whether an Instrument
(or an Embedded Feature) Is Indexed to an Entity's Own Stock" (EITF
07-5).  EITF 07-5 provides that an entity should use a two step
approach to evaluate whether an equity-linked financial instrument (or embedded
feature) is indexed to its own stock, including evaluating the instrument's
contingent exercise and settlement provisions.  It also clarifies on
the impact of foreign currency denominated strike prices and market-based
employee stock option valuation instruments on the evaluation.  EITF
07-5 is effective for fiscal years beginning after December 15,
2008.  The Company is currently assessing the impact of EITF 07-5 on
its financial position and results of operations.





Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (
Including Partial Cash Settlement)





In
May 2008, the FASB issued FSP Accounting Principles Board (“APB”) Opinion
No. 14-1, “Accounting for Convertible Debt Instruments That May Be
Settled in Cash upon Conversion (Including Partial Cash Settlement).” The FSP
clarifies the accounting for convertible debt instruments that may be settled in
cash (including partial cash settlement) upon conversion.  The FSP
requires issuers to account separately for the liability and equity components
of certain convertible debt instruments in a manner that reflects the issuer's
nonconvertible debt (unsecured debt) borrowing rate when interest cost is
recognized.  The FSP requires bifurcation of a component of the debt,
classification of that component in equity and the accretion of the resulting
discount on the debt to be recognized as part of interest expense in our
consolidated statement of operations.  The FSP requires retrospective
application to the terms of instruments as they existed for all periods
presented.  The FSP is effective as of January 1, 2009 and early
adoption is not permitted.  The Company is currently evaluating the
potential impact of FSP APB 14-1 upon its financial statements.


7
 Table of Contents


The
Hierarchy of Generally Accepted Accounting Principles





In May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles" (FAS No.162).  SFAS No. 162 identifies the
sources of accounting principles and the framework for selecting the principles
used in the preparation of financial statements.  SFAS No. 162 is
effective 60 days following the SEC's approval of the Public Company Accounting
Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in
Conformity with Generally Accepted Accounting Principles".  The
implementation of this standard will not have a material impact on the Company's
financial position and results of operations.





Determination
of the Useful Life of Intangible Assets





In April
2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff
Position on Financial Accounting Standard (“FSP FAS”) No. 142-3, “Determination
of the Useful Life of Intangible Assets”, which amends the factors that should
be considered in developing renewal or extension assumptions used to determine
the useful life of intangible assets under SFAS No. 142 “Goodwill and Other
Intangible Assets”.  The intent of this FSP is to improve the consistency
between the useful life of a recognized intangible asset under SFAS No. 142 and
the period of the expected cash flows used to measure the fair value of the
asset under SFAS No. 141 (revised 2007) “Business Combinations” and other U.S.
generally accepted accounting principles.    The Company is
currently evaluating the potential impact of FSP FAS No. 142-3 on its financial
statements.





Disclosure
about Derivative Instruments and Hedging Activities





In March
2008, the FASB issued SFAS No. 161, “Disclosure about Derivative
Instruments and Hedging Activities, an amendment of SFAS No.
133”, and (SFAS 161). This statement requires that objectives for using
derivative instruments be disclosed in terms of underlying risk and accounting
designation. The Company is required to adopt SFAS No. 161 on January 1, 2009.
The Company is currently evaluating the potential impact of SFAS No. 161 on the
Company’s financial statements.





Delay
in Effective Date





In
February 2008, the FASB issued FSP FAS No. 157-2, “Effective Date of FASB
Statement No. 157”. This FSP delays the effective date of SFAS No. 157 for
all nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value on a recurring basis (at least annually)
to fiscal years beginning after November 15, 2008, and interim periods
within those fiscal years. The impact of adoption was not material to the
Company’s financial condition or results of operations.





Business
Combinations





In
December 2007, the FASB issued SFAS No. 141(R) “Business Combinations” (SFAS
141(R)).  This Statement replaces the original SFAS No.
141.  This Statement retains the fundamental requirements in SFAS
No. 141 that the acquisition method of accounting (which SFAS No. 141
called the purchase
method) be used for all business combinations and for an acquirer to be
identified for each business combination. The objective of SFAS No. 141(R) is to
improve the relevance, and comparability of the information that a reporting
entity provides in its financial reports about a business combination and its
effects. To accomplish that, SFAS No. 141(R) establishes principles and
requirements for how the acquirer:


8
 Table of Contents


a.
            Recognizes
      and measures in its financial statements the identifiable assets acquired,
      the liabilities assumed, and any noncontrolling interest in the
      acquiree.





b.
            Recognizes
      and measures the goodwill acquired in the business combination or a gain
      from a bargain purchase.





c.
            Determines
      what information to disclose to enable users of the financial statements
      to evaluate the nature and financial effects of the business
      combination.





This
Statement applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008 and may not be applied before
that date. The Company is unable at this time to determine the effect that its
adoption of SFAS No. 141(R) will have on its results of operations and financial
condition.





Noncontrolling
Interests in Consolidated Financial Statements—an amendment of ARB No.
51





In
December 2007, the FASB issued SFAS No. 160 “Noncontrolling Interests in
Consolidated Financial Statements – an amendment of ARB No. 51” (SFAS No.
160).  This Statement amends the original Accounting Review Board
(ARB) No. 51 “Consolidated Financial Statements” to establish accounting and
reporting standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in
a subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements. This Statement is
effective for fiscal years and interim periods within those fiscal years,
beginning on or after December 15, 2008 and may not be applied before that
date.  The Company is unable at this time to determine the effect that
its adoption of SFAS No. 160 will have on its results of operations and
financial condition.





Fair
Value Option for Financial Assets and Financial Liabilities





In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities – Including an amendment of SFAS No.
115” (SFAS No. 159), which becomes effective for the Company on February 1,
2008, permits companies to choose to measure many financial instruments and
certain other items at fair value and report unrealized gains and losses in
earnings. Such accounting is optional and is generally to be applied instrument
by instrument. The Company does not anticipate that the election, of this
fair-value option will have a material effect on its financial condition,
results of operations, cash flows or disclosures.





Fair
Value Measurements





In
September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS
No. 157). SFAS No. 157 provides guidance for using fair value to measure assets
and liabilities. SFAS No. 157 addresses the requests from investors for expanded
disclosure about the extent to which companies’ measure assets and liabilities
at fair value, the information used to measure fair value and the effect of fair
value measurements on earnings. SFAS No. 157 applies whenever other standards
require (or permit) assets or liabilities to be measured at fair value, and does
not expand the use of fair value in any new circumstances. SFAS No. 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007 and will be adopted by the Company in the first quarter of
fiscal year 2008. The Company is unable at this time to determine the effect
that its adoption of SFAS No. 157 will have on its results of operations and
financial condition.





Accounting
Changes and Error Corrections





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


9
 Table of Contents


NOTE
5.  RELATED PARTY





The
Company anticipates MedCom USA Incorporated will continue to provide funds
through a revolving line of credit of $250,000 which funds will be drawn down on
and as needed basis until the Company begins to realize sufficient revenues from
royalty payments.





The
Company has financed operations for the raise of capital through a private
placement.  The Company repaid the line of credit and advanced funds
to its parent, MedCom USA Incorporated which total $321,009 through June 30,
2008.





ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS





Management’s
Discussion and Analysis contains various “forward looking statements” within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended,
regarding future events or the future financial performance of the Company that
involve risks and uncertainties. Certain statements included in this Form 10-Q,
including, without limitation, statements related to anticipated cash flow
sources and uses, and words including but not limited to “anticipates”,
“believes”, “plans”, “expects”, “future” and similar statements or expressions,
identify forward looking statements. Any forward-looking statements herein are
subject to certain risks and uncertainties in the Company’s business, including
but not limited to, reliance on key customers and competition in its markets,
market demand, product performance, technological developments, maintenance of
relationships with key suppliers, difficulties of hiring or retaining key
personnel and any changes in current accounting rules, all of which may be
beyond the control of the Company. The Company adopted at management’s
discretion, the most conservative recognition of revenue based on the most
astringent guidelines of the SEC in terms of recognition of software licenses
and recurring revenue. Management will elect additional changes to revenue
recognition to comply with the most conservative SEC recognition on a forward
going accrual basis as the model is replicated with other similar markets (i.e.
SBDC). The Company’s actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth therein.




Forward-looking
statements involve risks, uncertainties and other factors, which may cause our
actual results, performance or achievements to be materially different from
those expressed or implied by such forward-looking statements. Factors and risks
that could affect our results and achievements and cause them to materially
differ from those contained in the forward-looking statements include those
identified in the section titled “Risk Factors” in the Company’s Annual Report
on Form 10-KSB for the year ended September 30, 2007 as well as other factors
that we are currently unable to identify or quantify, but that may exist in the
future.




In
addition, the foregoing factors may affect generally our business, results of
operations and financial position. Forward-looking statements speak only as of
the date the statement was made. We do not undertake and specifically decline
any obligation to update any forward-looking statements.


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Overview





Plan
of Operations





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





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





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





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





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





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





Our
Growth Strategies





Ø
            The
      Company was incorporated for the sole purpose of financing and litigation
      patent infringements related to the unauthorized use of our patented
      technology for the processing of debit, gift and other
    cards.





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





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




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





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





Letter
of Intent





CAT has
entered into a letter of intent to purchase intellectual property of PayMed USA,
LLC a Nevada Limited Liability Company (“PayMed”).  Upon the closing
of the definitive agreement CAT will issue five million (5,000,000) common stock
in exchange for PayMed.  The aggregate consideration will be paid in
three tranches of (i) 3,000,000 common shares to be issued a closing; (ii)
1,000,000 common shares issued with in ten (10) equal monthly installments
commencing on the one-month anniversary of the closing date; and (iii) the
remaining 1,000,000 to be held back by CAT to satisfy the indemnification
obligations of PayMed’s members and released twelve (12) months after the
closing of the Transaction after adjustments to reflect any such
claims.  We are pursing this acquisition but can provide no assurances
that this acquisition will be consummated.





COMPETITION





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


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 Table of Contents


The
Company believes that debit styled cards, which include gift cards, infringe the
patent when the gift card is activated, when the gift card is used for
purchasing items or when value is added to the gift card by the method disclosed
in the patent.  The method, in general terms, requires that the card
be processed through a counter-top terminal, and therefore processing a step
through a terminal other than a counter top terminal would not infringe the
patent.  As part of the due diligence involved in this matter, the
professionals studies specific examples of counter top processing systems and
conducted research into the magnitude of transactions involving the use of debit
styled cards, which include gift cards.





Patent
Technology





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





McDonald’s
Corporation and the Company settled the infringement suit on February 27, 2007,
pursuant to the terms and conditions of a settlement agreement between the
parties (the “Settlement Agreement”).”  Under the terms and conditions
of the Settlement Agreement, the Company received $45,000 and McDonald’s
Corporation was granted the Licensed Patents (.S. Patent No. 6,032,859) pursuant
to a Patent License and Covenant Not to Sue. There were no other material
provisions in the Settlement agreement or Patent License and Covenant Not to
Sue.





CAT has
filed several patent infringement actions, which are all pending in the Federal
District Court for the Northern District of Illinois.  On October 13,
2006 CAT filed an infringement action against Walgreen Co. On November 28, 2006
a patent infringement suit was filed against Sears Holding Corporation CAT filed
infringement suits against Barnes & Noble, Inc. and Aeropastale, Inc. on
March 2, 2007.  CAT also filed infringement actions against OfficeMax,
Inc. and TJX Companies, Inc. on May 1, 2007 and November 6, 2007,
respectively.





CAT won a
significant court ruling on March 20, 2008 in its lawsuit against major
retailers Barnes & Nobles and Aeropostale in Federal District Court which
further contributed to the validation of CAT’s patent and its
technology.





Results
of Operations





We are a
development stage company and have generated revenues consisting of a $45,000
settlement from McDonalds Corporation.





Liquidity
and Capital Resources





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


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In the
six months ended March 31, 2008 17,644,213 commons shares were issued for
services rendered from consultants and professionals, separation agreements and
shares to third parties.  The value of those shares was determined
based on the trading value of the stock at the dates on which the agreements
were entered into for the services for the and the value of those services
rendered.  The values of these common shares issued were
expensed.





During
three months ended June 30, 2008 the Company has issued 1,100,00 common shares
of its common stock as consideration to consultants, professionals and an
employee in a separation agreement for the fair value of the services for the
three months ended June 30, 2008 common shares.  The value of those
shares is determined based on the trading value of the stock at the dates on
which the agreements were entered into for the services and the value of
services rendered.   The values of these common shares issued
were expensed during the quarter.





During
the six month ended March 31, 2008 the Company issued 200,000 shares of its
common stock for $42,000.  The shares were issued to third parties in
a private placement of the Company’s common stock.  The shares were
sold between $.17 and $.21 per share.  During the three months ended
June 30, 2008, the Company issued 3,428,572 shares of its common stock for
$600,950.  The shares were issued to third parties in a private
placement of the Company’s common stock.  The shares were sold at $.18
per share.





Liabilities





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





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





The
Company has financed operations the raise of capital through a private
placement.  The Company repaid the line of credit and advanced funds
to its parent, MedCom USA Incorporated which total $321,009 through June 30,
2008.


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 Table of Contents


Critical
Accounting Policies





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





Stock Based
Compensation





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





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




Accounting Policies and
Estimates





The
preparation of our financial statements in conformity with accounting principles
generally accepted in the United States of America requires our management to
make certain estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period.  Our management periodically
evaluates the estimates and judgments made. Management bases its estimates and
judgments on historical experience and on various factors that are believed to
be reasonable under the circumstances. Actual results may differ from these
estimates as a result of different assumptions or conditions. As such,
in accordance with the use of accounting principles generally accepted in the
United States of America, our actual realized results may differ from
management’s initial estimates as reported.  A summary of significant
accounting policies are detailed in notes to the financial statements which are
an integral component of this filing.


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 Table of Contents


Revenue
Recognition





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




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





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





Additional
Information





CAT files
reports and other materials with the Securities and Exchange
Commission.  These documents may be inspected and copied at the
Commission’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.,
20549.  You can obtain information on the operation of the Public
Reference Room by calling the Commission at 1-800-SEC-0330.  You can
also get copies of documents that the Company files with the Commission through
the Commission’s Internet site at www.sec.gov.




ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK





We do not
hold any derivative instruments and do not engage in any hedging activities.
Most of our activity is the litigation of our patent technology that is still
under litigation.





ITEM 4.  CONTROLS AND PROCEDURES




(a)
Evaluation of Disclosure Controls and Procedures.Our management,
with the participation of our President, evaluated the effectiveness of our
disclosure controls and procedures as of the end of the period covered by this
report. Based on that evaluation, our President concluded that our disclosure
controls and procedures as of the end of the period covered by this report were
effective such that the information required to be disclosed by us in reports
filed under the Securities Exchange Act of 1934 is (i) recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and
forms and (ii) accumulated and communicated to our management, including
our President, as appropriate to allow timely decisions regarding disclosure. A
controls system cannot provide absolute assurance, however, that the objectives
of the controls system are met, and no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any,
within a company have been detected.




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 Table of Contents




Management’s
Report on Internal Control over Financial Reporting.Our management is
responsible for establishing and maintaining adequate internal control over
financial reporting (as defined in Rule 13a-15(f) under the Exchange Act).
Our internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
accounting principles generally accepted in the United
States.




Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Therefore, even those systems determined to be
effective can provide only reasonable assurance of achieving their control
objectives. Furthermore, smaller reporting companies face additional
limitations.  Smaller reporting companies employ fewer individuals and find
it difficult to properly segregate duties.  Often, one or two individuals
control every aspect of the Company’s operation and are in a position to
override any system of internal control.  Additionally, smaller reporting
companies tend to utilize general accounting software packages that lack a
rigorous set of software controls.




Our
management, with the participation of the Chief Executive Officer, evaluated the
effectiveness of the Company’s internal control over financial reporting as of
June 30, 2008.  In making this assessment, our management used the criteria
set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control — Integrated Framework.  Based
on this evaluation, our management, with the participation of the President,
concluded that, as of June 30, 2008, our internal control over financial
reporting was effective.




(b)
 Changes in Internal
Control over Financial Reporting.  There were no changes in our
internal control over financial reporting, as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act, during our most recently completed fiscal
quarter that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.





PART
II – OTHER INFORMATION





ITEM 1.  LEGAL PROCEEDINGS





As of,
June 30, 2008, we had initiated lawsuits against McDonald’s Corporation,
Walgreen Co. and Sears Holding Corporation, Barnes & Noble, Aeropostale,
Inc., OfficeMax Inc.  In addition more than 600 letters have been sent
to other retailers for infringing its payment transaction patent.  As
of the date herein, there are no pending or threatened legal proceedings against
the Company.





CAT,
through its attorneys, has sent letters to over 600 potential infringers of the
patent, placing the infringers on notice of the patent and seeking a license
agreement under the patent.





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





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





On April
29, 2008, a suit was initiated in the District Court of Arizona against us and
another entity as nominal defendants, and our chief executive officer by an
employee of the Company.    The Company settled the case as
per the separation agreement with the employee for 1,000,000 common shares of
the Company.


16
 Table of Contents


ITEM 1A.  Risk Factors





I. Risk Factors That May
Affect Our Results of Operations and Financial Condition





You
should carefully consider the following risk factors before making an investment
decision. If any of the following risks actually occur, our business, financial
condition or results of operations could be materially adversely affected. In
such cases, the trading price of our common stock could decline and you may lose
all or a part of your investment.





Our
Common Stock Is Subject To Penny Stock Regulation





Our
shares are subject to the provisions of Section 15(g) and Rule 15g-9 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), commonly
referred to as the "penny stock" rule. Section 15(g) sets forth certain
requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates
the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act.
The Commission generally defines penny stock to be any equity security that has
a market price less than $5.00 per share, subject to certain exceptions. Rule 3a51-1
provides that any equity security is considered to be penny stock unless that
security is: registered and traded on a national securities exchange meeting
specified criteria set by the Commission; authorized for quotation on the NASDAQ
Stock Market; issued by a registered investment company; excluded from the
definition on the basis of price (at least $5.00 per share) or the registrant's
net tangible assets; or exempted from the definition by the Commission. Since
our shares are deemed to be "penny stock", trading in the shares will be subject
to additional sales practice requirements on broker/dealers who sell penny stock
to persons other than established customers and accredited
investors.





The
Liquidity Of Our Common Stock Is Seriously Limited And There Is A Limited Market
For Our Common Stock





Our stock
is currently being traded on the NASDAQ Over-The-Counter Bulletin Board, and the
liquidity of our common stock is limited. The Bulletin Board is a limited market
and subject to substantial restrictions and limitations in comparison to the
NASDAQ system. Any broker/dealer that makes a market in our stock or other
person that buys or sells our stock could have a significant influence over its
price at any given time.





II.  Risks
Associated with Our Current Stage of Business





Management
May Not Run the Company in a Profitable Manner and If It Does Not You May Lose
Your Entire Investment:




The
company has not been profitable since inception and is still a development stage
company under FASB 7.





We
May Not Have Access to Sufficient Capital to Pursue our litigation and therefore
Would Be Unable to Achieve Our Planned Future Growth:




We intend
to pursue a growth strategy that includes development of the CAT business and
technology.  Currently we have limited capital which is insufficient
to pursue our plans for development and growth.  Our ability to
implement our growth plans will depend primarily on our ability to obtain
additional private or public equity or debt financing.  We are
currently seeking additional capital.  Such financing may not be
available at all, or we may be unable to locate and secure additional capital on
terms and conditions that are acceptable to us.  Our failure to obtain
additional capital will have a material adverse effect on our
business.


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 Table of Contents


We
Depend Upon Key Management Personnel and the Loss of Any of Them Would Seriously
Disrupt Our Operations:




Two of
our directors have full time employment outside the Company and are available to
participate in management decisions, meetings, and conferences in person and
telephonically with council. The directors also attend settlement conferences,
trade shows and investor conferences to promote the company.  None of
our directors have entered into written employment agreements with us and none
is expected to do so in the foreseeable future.  In the event of
competing demands for their time, these two outside directors may grant priority
to their full time positions rather than to us.





Our
Lack of Diversification In Our Business Subjects Investors to a Greater Risk of
Losses:




Since the
spin off of CAT, all of our efforts are focused on the development and growth of
that business and its technology in an unproven area.  Although the
patent litigation is substantial, we can make no assurances that the marketplace
will accept the litigation settlements.





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





There
were no changes in securities and small business issuer purchase of equity
securities during the nine months ended June 30, 2008, except as
follows:





In the
six months ended March 31, 2008 17,644,213 commons shares were issued for
services rendered from consultants and professionals, employees based upon
separation agreement and shares to third parties.  The value of those
shares was determined based on the trading value of the stock at the dates on
which the agreements were entered into for the services for the value of those
services rendered.  The values of these common shares issued were
expensed.  We recorded that common stock as an expense to the
financial statements. The issuance of such shares of our common stock were
effected in reliance on the exemptions for sales of securities not involving a
public offering, as set forth in Rule 506 promulgated under the Securities Act
and in Section 4(2) of the Securities Act. A legend was placed on the
certificates representing each such security stating that it was restricted and
could only be transferred if subsequent registered under the Securities Act or
transferred in a transaction exempt from registration under the Securities
Act.





During
three months ended June 30, 2008 the Company has issued 1,100,000 common shares
as consideration to consultants, professionals and an employee in a separation
agreement for the fair value of the services for the three months ended June 30,
2008.  The value of those shares is determined based on the trading
value of the stock at the dates on which the agreements were entered into for
the services and the value of services rendered.   The values of
these common shares issued were expensed during the quarter. We recorded that
common stock as an expense to the financial statements. The issuance of such
shares of our common stock were effected in reliance on the exemptions for sales
of securities not involving a public offering, as set forth in Rule 506
promulgated under the Securities Act and in Section 4(2) of the Securities
Act. A legend was placed on the certificates representing each such security
stating that it was restricted and could only be transferred if subsequent
registered under the Securities Act or transferred in a transaction exempt from
registration under the Securities Act.


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 Table of Contents


During
the six month ended March 31, 2008 the Company issued 200,000 shares of its
common stock for $42,000.  The shares were issued to third parties in
a private placement of the Company’s common stock.  The shares were
sold between $.17 and $.21 per share.  During the three months ended
June 30, 2008, the Company issued 3,428,572 shares of its common stock for
$600,950.  The shares were issued to third parties in a private
placement of the Company’s common stock.  The shares were sold at $.18
per share.  .  The offer and sale of such shares of our
common stock were effected in reliance on the exemptions for sales of securities
not involving a public offering, as set forth in Rule 506 promulgated under the
Securities Act and in Section 4(2) of the Securities Act, based on the
following: (a) the investors confirmed to us that they were “accredited
investors,” as defined in Rule 501 of Regulation D promulgated under the
Securities Act and had such background, education and experience in financial
and business matters as to be able to evaluate the merits and risks of an
investment in the securities; (b) there was no public offering or general
solicitation with respect to the offering; (c) the investors were provided
with certain disclosure materials and all other information requested with
respect to our company; (d) the investors acknowledged that all securities
being purchased were “restricted securities” for purposes of the Securities Act,
and agreed to transfer such securities only in a transaction registered under
the Securities Act or exempt from registration under the Securities Act; and
(e) a legend was placed on the certificates representing each such security
stating that it was restricted and could only be transferred if subsequent
registered under the Securities Act or transferred in a transaction exempt from
registration under the Securities Act.





ITEM 3.  DEFAULTS UPON SENIOR SECURITIES





There
were no defaults upon senior securities during the period ended June 30,
2008.





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





There
were no matters submitted to the vote of securities holders during the period
ended June 30, 2008.





ITEM 5.  OTHER INFORMATION





None.





ITEM 6.  EXHIBITS





31.1
            Certification
      of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act





31.2
            Certification
      of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act.





32.1
            Certification
      of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
      Act.





32.2
            Certification
      of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
      Act.





SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934 the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.





Registrant
            Card
      Activation Technologies, Inc.Date:
            By:
      /s/ William P. WilliamsAugust
      14, 2008William
      P. WilliamsChairman,
      President Chief Executive Officer (Principle Executive
      Officer)






19