U.S.
      Securities and Exchange Commission


Washington,
      D.C. 20549





____________________




FORM
      10-QSB


____________________


(Mark
                One)x
              Quarterly
                  Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                  Act of
                  1934For
                  the quarterly period ended December 31, 2007.o
              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
      1618


Chicago,Illinois60604-3749


(Address
      of principal executive
      offices)





(312)972-1662


(Issuer’s
      telephone number)





Check
        whether the issuer (1) filed all
        reports required to be filed by Section 13 or 15(d) of the Exchange Act during
        the past 12 months (or for such shorter period that the registrant was required
        to file such reports), and (2) has been subject to such filing requirements
        for
        the past 90 days.
 Yes
              
              
              No
              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
 
 The
        number of shares of the issuer’s common equity outstanding as of Februay 8, 2008
        was 146,770,504shares
        ofcommon
        stock.
 
 Transitional
        Small Business Disclosure Format (check one):
 Yes
              
              
              No
              X





1





CARD
      ACTIVATION TECHNOLOGIES, INC.


INDEX
      TO FORM 10-QSB FILING


FOR
      THE THREE MONTHS ENDED December 31, 2007




TABLE
      OF CONTENTS





PART
                IFINANCIAL
                INFORMATION
            PAGEItem
                1. Financial StatementsCondensed
                Balance SheetAs
                of December 31, 2007
            3Condensed
                Statement of OperationsFor
                the Three months ended December 31, 2007 and
                2006And
                for the period August 29, 2006 (Inception) to December 31,
                2007
            4Condensed
                Statements of Cash FlowsFor
                the Three months ended December 31, 2007 and
                2006And
                for the period August 29, 2006 (Inception) to December 31,
                2007
            5Notes
                to Condensed Financial Statements
            6
                -
                7Item
                2. Management’s Discussion and Analysis of Financial
                Condition and Results of Operations
            7
                -
                11Item
                3. Control and Procedures.
            12PART
                IIOTHER
                INFORMATIONItem
                1.  Legal Proceedings
            12Item
                2.  Changes in Securities and Small Business Issuer
                Purchases of Equity Securities
            13Item
                3.  Defaults upon Senior
                Securities
            13Item
                4.  Submission of Matters to a Vote of Security
                Holders
            13Item
                5.  Other Information
            13Item
                6.  Exhibits
            13CERTIFICATIONSExhibit
                31 – Management certification
            15
                - 18Exhibit
                32 – Sarbanes-Oxley Act
            15
                - 18




2
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          of Contents


PART
      I – FINANCIAL INFORMATION





ITEM
      1 – FINANCIAL STATEMENTS





CARD
                ACTIVATION TECHNOLOGIES, INC.(A
                Development Stage Company)CONDENSED
                BALANCES SHEETAS
                OF DECEMBER 31, 2007ASSETS:December
                31, 2007(unaudited)CURRENT
                ASSETSCash
            
            $
            -Prepaid
                expenses and other current assets
            
            
            30,000Total
                current assets
            
            
            30,000TOTAL
                ASSETS
            
            $
            30,000LIABILITIES
                AND STOCKHOLDERS' DEFICIENCY:CURRENT
                LIABILITIES:Bank
                overdraft
            
            $
            3,430Accounts
                payable
            
            
            40,235Total
                current liabilities
            
            
            43,665Notes
                payable - affiliates
            
            
            250,142TOTAL
                LIABILITIES
            
            
            293,807STOCKHOLDERS'
                DEFICIENCY:Preferred
                stock, $.001 par value, 1,000,000 shares authorized; zero shares
                issued
                and outstanding
            
            
            -Common
                stock, $.0001 par value, 175,000,000 shares authorized; 164,414,717
                shares issued and outstanding
            
            
            16,441Additional
                paid in capital
            
            
            84,950Accumulated
                deficit during the Development Stage
            
            
            (365,198
            )Total
                stockholders' deficit
            
            
            (263,807
            )TOTAL
                LIABILITIES AND STOCKHOLDERS' DEFICIENCY
            
            $
            30,000


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


3
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          of Contents





CARD
                ACTIVATION TECHNOLOGIES INC.(A
                Development Stage Company)CONDENSED
                STATEMENT OF OPERATIONSFOR
                THE THREE MONTHS ENDED DECEMBER 31, 2007 AND 2006AND
                FOR THE PERIOD FROM AUGUST 29, 2006 (INCEPTION) TO DECEMBER 31,
                2007For
                the Periodfrom
                August 29, 2006(inception)
                to2007
            
            
            2006
            
            
            December
                31, 2007(unaudited)
            
            
            (unaudited)REVENUELitigation
                revenue
            
            $
            -
            
            
            $
            -
            
            
            $
            45,000Total
            
            
            -
            
            
            
            -
            
            
            
            -OPERATING
                EXPENSES:General
                and Administrative
            
            
            138,007
            
            
            
            79,296
            
            
            
            387,087Sales
                and Marketing expenses
            
            
            20,836
            
            
            
            -
            
            
            
            23,111Total
                operating expenses
            
            
            158,843
            
            
            
            79,296
            
            
            
            410,198OPERATING
                LOSS
            
            
            (158,843
            )
            
            
            (79,296
            )
            
            
            (365,198
            )OTHER
                (INCOME) AND EXPENSESTotal
                other expense
            
            
            -
            
            
            
            -
            
            
            
            -LOSS
                BEFORE INCOME TAXES
            
            
            (158,843
            )
            
            
            (79,296
            )
            
            
            (365,198
            )INCOME
                TAX (BENEFIT) PROVISION
            
            
            -
            
            
            
            -
            
            
            
            -NET
                LOSS
            
            $
            (158,843
            )
            
            $
            (79,296
            )
            
            $
            (365,198
            )Weighted
                Average Common Share Outstanding:Basic
                and diluted:
            
            
            164,375,456
            
            
            
            14,677,504Net
                Loss Per ShareBasic
                and diluted:
            
            $
            (0.00
            )
            
            $
            (0.01
            )


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 FLOWSFOR
                THE THREE MONTHS ENDED DECEMBER 31, 2007 AND 2006AND
                FOR THE PERIOD FROM AUGUST 29, 2006 (INCEPTION) TO DECEMBER 31,
                2007For
                the Periodfrom
                August 29, 2006(inception)
                to2007
            
            
            2006
            
            
            December
                31, 2007(unaudited)
            
            
            (unaudited)CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                (loss)
            
            $
            (158,843
            )
            
            $
            (79,296
            )
            
            $
            (365,198
            )Adjustments
                to reconcile net income to net cash (used in) operating
                activities:Common
                stocks issued in spin off
            
            
            -
            
            
            
            14,677
            
            
            
            14,677Common
                stocks issued in conjunction with related party issuance
            
            
            1,764
            
            
            
            
            
            
            
            1,764Common
                stocks issued for services
            
            
            84,950
            
            
            
            
            
            
            
            84,950Changes
                in assets and liabilities:Prepaid
                expenses
            
            
            (30,000
            )
            
            
            -
            
            
            
            (30,000
            )Accounts
                Payable
            
            
            -
            
            
            
            21,977
            
            
            
            40,235Net
                cash used in operating activities
            
            
            (102,129
            )
            
            
            (42,642
            )
            
            
            (253,572
            )CASH
                FLOWS FROM INVESTING ACTIVITIES:-
            
            
            
            -
            
            
            
            -Net
                cash from investing activities
            
            
            -
            
            
            
            -
            
            
            
            -CASH
                FLOWS FROM FINANCING ACTIVITIES:Bank
              overdraft
            
            
            3,430
            
            
            
            -
            
            
            
            3,430Proceeds
                from affiliates loans
            
            
            85,000
            
            
            
            42,642
            
            
            
            250,142Net
                cash provided by financing activities
            
            
            88,430
            
            
            
            42,642
            
            
            
            253,572DECREASE
                IN CASH
            
            
            (13,699
            )
            
            
            -
            
            
            
            -CASH,
                BEGINNING OF YEAR
            
            
            13,699
            
            
            
            -
            
            
            
            -CASH,
                END OF YEAR
            
            
            -
            
            
            
            -
            
            
            
            -





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


5
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          of Contents




CARD
      ACTIVATION TECHNOLOGIES, INC.


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO CONDENSED FINANCIAL STATEMENTS


THREE
      MONTHS ENDED DECEMBER 31, 2007 and 2006


AND
      FOR
      THE PERIOD FROM AUGUST 29, 2006 (INCEPTION) TO DECEMBER 31,
      2007





1.  DESCRIPTION
      OF BUSINESS





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





Overview


Card
      Activation Technologies Inc.
      (“Company/CAT”)
      is aDelaware corporationheadquartered inChicago,Illinois
      thatowns proprietary patented
      payment
      transaction technology relating to debit and gift card
      transactions.





The
      patent was transferred to the
      Company by MedComUSA,
      Incorporated (“MedCom”) on the
      formation of the Company and in exchange for 146,770,504 shares of Common
      Stock.  OnOctober 31, 2006,
      the MedCom board of directors declared
      a stock dividend to its shareholders of record at the end of business onDecember 15, 2006
      ofone share of Common
      Stock in the Company for every one share of common stock of MedCom owned by
      its
      shareholders, such stock being distributed onMarch 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 tradedDelaware corporation,
      headquartered inScottsdale,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.





2.  BASIS
      OF PRESENTATION





Interim
      Financial Statements




The
      accompanying interim unaudited
      Condensed Consolidated financial information has been prepared pursuant to
      the
      rules and regulations of the Securities and Exchange Commission. Certain
      information and footnote disclosures normally included in financial statements
      prepared in accordance with accounting principles generally accepted in theUnited States of America
      havebeen condensed or
      omitted pursuant to such rules and regulations, although management believes
      that the disclosures are adequate to make the information presented not
      misleading. In the opinion of management, all adjustments, consisting only
      of
      normal recurring adjustments, necessary to present fairly the financial position
      of the Company as ofDecember 31, 2007and
      2006and the related operating
      results and
      cash flows for the interim period presented have been made. The results of
      operations of such interim period are not necessarily indicative of the results
      of the full fiscal year. For further information, refer to the financial
      statements and footnotes thereto included in the Company’s
      10-SB and Annual Report
      for the fiscal year endedSeptember 30,
      2007.





6
 Table
          of Contents




3.
      GOING
      CONCERN





The
        accompanying condensed financial statements have been prepared in conformity
        with accounting principles generally accepted in the United States of America
        which contemplate continuation of the Company as a going
        concern.  However, the Company has year end losses from operation and
        had minimal revenues from operations the three months ended December 31,
        2007.  For the three months ended December 31, 2007 the Company had a
        net loss of $158,843 and as of December 31, 2007 had an accumulated deficit
        of
        $365,198.  Further, the Company has inadequate working capital to
        maintain or develop its operations, and is dependent upon funds from private
        investors and the support of certain stockholders.
 
 These
        factors raise substantial doubt about the ability of the Company to continue
        as
        a going concern.  The financial statements do not include any
        adjustments that might result from the outcome of these
        uncertainties.  In this regard, Management is proposing to raise any
        necessary additional funds through loans and additional sales of its common
        stock.  There is no assurance that the Company will be successful in
        raising additional capital.


4.
        EQUITY
 
 During
        three months ended December 31, 2007 and 2006:
 
 Quarter
                    Ended
                
                Stock
                    issuedfor
                    ServicesDecember
                    31, 2006
                
                
                -Total
                    Issued
                
                
                -December
                    31, 2007
                
                
                17,644,213Total
                    Issued
                
                
                17,644,213
 The
        Company has issued shares of its common stock as consideration to shareholders
        as part of their investment in MedCom USA, Inc. and affiliate of Card for
        the
        fair value of the investment in the amount of 17,144,213 common
        shares.  The Company also issued shares of its common stock as
        consideration to consultants for the fair value of the services rendered
        in the
        amount of 500,000 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 year.


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-QSB, 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-SB for the year ended September 30, 2006, 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.





7
 Table
          of Contents




Overview




Plan
      of Operations





We
      were incorporated inDelawarein
      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
            CATis
                incorporated inDelaware withthe 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.





COMPETITION





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





The
      Company 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.





8
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          of Contents




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 three 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 onFebruary 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 andMcDonald’s
      Corporation was granted the Licensed
      Patents (.S. Patent No. 6,032,859)pursuant to aPatent License
      and
      Covenant Not to Sue. There were no
      other material provisions in the Settlement agreement orPatent 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.


Results
      of
      Operations





We
      are a development stage company and
      have generatedrevenues
      consisting ofa $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.
      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.





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.





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          of Contents




The
      Company has financed operations by
      advancesfrom its parent,
      MedCom USA Incorporated which total $250,141 throughDecember 31, 2007.








Critical
      Accounting
      Policies





We
      prepare our consolidated financial
      statements in accordance with accounting principles generally accepted in theUnited 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 ofJanuary 1, 2006.
      Based on the number of shares and
      awards outstanding as ofDecember 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 onOctober 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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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.





Common
      Stock




During
        three months ended December 31, 2007 and 2006:




The
      Company has issued shares of its common stock as consideration to shareholders
      as well as considered to consultant for the fair value of the investment in
      the
      amount of 17,644,213 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 year.





Additional
      Information





Card
      files reports and other materials with the Securities and Exchange
      Commission.  These documents may be inspected and copied at the
      Commission’s Public Reference Room at 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.





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ITEM
      3.  CONTROLS AND PROCEDURES








Evaluation
      of Disclosure Controls and Procedures





a.
            Evaluation
                of Disclosure Controls and
                Procedures.




Under
      the
      supervision and with the participation of our management, including our Chief
      Executive Officer and Principal Financial Officer, we evaluated the
      effectiveness of the design and operation of our disclosure controls and
      procedures (as such term is defined in Rule 13a-15(e) under the Securities
      Exchange Act of 1934 (the “Exchange Act”). Disclosure controls and procedures
      are the controls and other procedures that we designed to ensure that we record,
      process, summarize and report in a timely manner the information we must
      disclose in reports that we file with or submit to the Securities and Exchange
      Commission under the Exchange Act. Based on this evaluation, our Chief Executive
      Officer and our Principal Financial Officer concluded that our disclosure
      controls and procedures were effective as of the end of the period covered
      by
      this report.





Disclosure
      controls and procedures are controls and procedures that are designed to ensure
      that information required to be disclosed in our reports filed or submitted
      under the Securities Exchange Act is recorded, processed, summarized and
      reported, within the time periods specified in the Securities and Exchange
      Commission’s rules and forms. Disclosure controls and procedures include,
      without limitation, controls and procedures designed to ensure that information
      required to be disclosed in our reports filed under the Exchange Act is
      accumulated and communicated to management, including our principal executive
      officer and our principal financial officer, as appropriate, to allow timely
      decisions regarding required disclosure.





b.
            Changes
                in Internal Control over Financial
                Reporting




During
      the Quarter ended December 31, 2007, there was no change in our internal control
      over financial reporting (as such term is defined in Rule 13a-15(f) under the
      Exchange Act) that has materially affected, or is reasonably likely to
      materially affect, our internal control over financial reporting.





PART
      II – OTHER INFORMATION





ITEM
      1. LEGAL PROCEEDINGS





As
          of
          December 31, 2007, we had initiated lawsuits against McDonald’s Corporation,
          Walgreen Co. and Sears Holding Corporation, Barnes & Noble, Aeropostale,
          Inc., OfficeMax Inc  In addition more than 500 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.
 
 Card
          Activation, through its attorneys, has sent letters to over 500 potential
          infringers of the patent, placing the infringers on notice of the patent
          and
          seeking a license agreement under the patent.
 
 Card
          Activation has sued seven parties and to date Card Activation 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.





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ITEM
      2.  CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES
      OF EQUITY SECURITIES





There
      were no changes in securities and small business issuer purchase of equity
      securities during the period ended December 31, 2007.  The Company
      issued 17,644,213 in common stock for services rendered by consultant and
      professionals.  The company recorded those common stock as an expense
      to the financial statements.





ITEM
      3.  DEFAULTS UPON SENIOR SECURITIES





There
      were no defaults upon senior securities during the period ended December 31,
      2007.





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 December 31, 2007.





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.  13
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            of Contents




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: 
                February
                12, 2008
            By:
                /s/ William P. WilliamsWilliam
                P. WilliamsChairman,
                President Chief Executive Officer (Principle Executive
                Officer)




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