**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      DC 20549**





**FORM
      10-KSB**





(Mark
      One)





[X]  ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
      ACT OF 1934





For
      the
      fiscal year ended January 31, 2007.





[
      ]  TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT





For
      the
      transition period from _____________ to _____________





Commission
      file number: 0-50046





**KMA
      GLOBAL SOLUTIONS INTERNATIONAL, INC.**


----------------------------------------


(Name
      of
      Small Business Issuer in its Charter)





**NEVADA**
              *(State
                or other jurisdiction of*
              *incorporation
                or organization)*
            **88-0433489**
              *(I.R.S.
                Employer*
              *Identification
                No.)***5570A
                KENNEDY ROAD**
              **MISSISSAUGA
                ONTARIO, CANADA****L4Z2A9**
              *(Address
                of principal executive offices, zip code)***Issuer’s
                telephone number, including area code:****(905)
                568-5220****Securities
                registered pursuant to Section 12(b) of the Act:****Title
                of each class**
              
              None.
            **Name
                of the exchange on which registered**
              
              None.


**Securities
      registered pursuant to Section 12(g) of the Act:**




Common
      Stock, $0.001 par value per share


(Title
      of
      Class)




1




Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or 15(d) of the Act. Yes [ ] No [X]





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      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 if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K is not contained herein, and will not be contained, to the best
      of registrant’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-K or any amendment to
      this
      Form 10-K. [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]




Issuer’s
      revenue for its most recent fiscal year was $6,630,884.




The
      aggregate market value of the voting stock held by non-affiliates of the
      registrant, computed by reference to the closing price as of April 27, 2007,
      was
      approximately $44.5 million. The registrant has no non-voting common stock.
      For
      purposes of this disclosure only, the registrant has assumed that its directors,
      executive officers, and beneficial owners of greater than 10% of the
      registrant’s common stock are the “affiliates” of the registrant.




APPLICABLE
      ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE
      YEARS





Check
      whether the registrant filed all documents and reports required to be filed
      by
      Section 12, 13, or 15(d) of the Exchange Act after the distribution of
      securities under a plan confirmed by a court. Yes [ ] No [ ]





APPLICABLE
      ONLY TO CORPORATE REGISTRANTS





The
      registrant had 54,933,319 shares of common stock outstanding on April 27,
      2007.




DOCUMENTS
      INCORPORATED BY REFERENCE





None.





Transitional
      Small Business Disclosure Format (check one): Yes [ ] No [X]





2


**Table
      of Contents**




**Page**PART
                  I
              
              4Item
                  1. DESCRIPTION OF BUSINESS
              
              4Item
                  2. DESCRIPTION OF PROPERTY
              
              19Item
                  3. LEGAL PROCEEDINGS
              
              19Item
                  4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
              
              19PART
                  II
              
              20Item
                  5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL
                  BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
              
              20Item
                  6. MANAGEMENT’S DISCUSSION AND ANALYSIS
              
              23Item
                  7. FINANCIAL STATEMENTS
              
              31Item
                  8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                  AND
                  FINANCIAL DISCLOSURE
              
              53Item
                  8A. CONTROLS AND PROCEDURES
              
              53Item
                  8A(T). CONTROLS AND PROCEDURES
              
              53Item
                  8B. OTHER INFORMATION
              
              53PART
                  III
              
              54Item
                  9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
                  COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
              
              54Item
                  10. EXECUTIVE COMPENSATION
              
              57Item
                  11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
                  AND
                  RELATED STOCKHOLDER MATTERS
              
              59Item
                  12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
                  INDEPENDENCE
              
              60Item
                  13. EXHIBITS
              
              61Item
                  14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
              
              62




3


***CAUTIONARY
      STATEMENT REGARDING***


***FORWARD-LOOKING
      STATEMENTS***





Unless
      otherwise indicated or the context otherwise requires, all references to the
      "Company," "we," "us" or "our" and similar terms refer to KMA Global Solutions
      International, Inc. and its subsidiaries.





The
      information contained in this report on Form 10-KSB and in other public
      statements by the Company and Company officers or directors includes or may
      contain certain "forward-looking statements" within the meaning of Section
      27A
      of the Securities Act of 1933, as amended, and Section 21E of the Securities
      Exchange Act of 1934, as amended. All statements other than statements of
      historical facts included or incorporated by reference in this report,
      including, without limitation, statements regarding our future financial
      position, business strategy, budgets, projected revenues, projected costs and
      plans and objective of management for future operations, are forward-looking
      statements. Forward-looking statements generally can be identified by the use
      of
      forward-looking terminology such as "may," "will," "expect," "intend,"
      "project," "estimate," "anticipate," or "believe" or the negative thereof or
      any
      variation thereon or similar terminology.





Such
      forward-looking statements are made based on management's beliefs, as well
      as
      assumptions made by, and information currently available to, management pursuant
      to the "safe-harbor" provisions of the Private Securities Litigation Reform
      Act
      of 1995. Although we believe that the expectations reflected in such
      forward-looking statements are reasonable, we can give no assurance that such
      expectations will prove to have been correct. Such statements are not guarantees
      of future performance or events and are subject to known and unknown risks
      and
      uncertainties that could cause the Company's actual results, events or financial
      positions to differ materially from those included within the forward-looking
      statements. Readers are cautioned not to place undue reliance on these
      forward-looking statements, which speak only as of the date made. All subsequent
      written and oral forward-looking statements attributable to us, or persons
      acting on our behalf, are expressly qualified in their entirety by these
      cautionary statements. Except as required by law, we undertake no obligation
      to
      disclose any revision to these forward-looking statements to reflect events
      or
      circumstances after the date made, changes in internal estimates or
      expectations, or the occurrence of unanticipated events.







**PART
      I**






**ITEM
      1.    DESCRIPTION OF BUSINESS**


***History***





KMA
      Global Solutions International, Inc. (www.kmaglobalsolutions.com) is a
      corporation formed on March 9, 2006 under the laws of the State of Nevada.
      As
      described below, we entered into a merger transaction (described below) with
      Espo's Ltd. (“Espo's”), a non-SEC reporting corporation formed under the laws of
      the State of New York on September 7, 2001 and we were the surviving
      corporation. Espo's operated, since its inception, as a retail provider of
      sporting goods and athletic apparel, with a focus on aquatic sports products.
      The Company and its founders and shareholders had no relationship with Espo's
      and its founders prior to the merger. Espo's' shares of common stock traded
      on
      the Pink Sheets of the National Quotation Bureau under the symbol “EPOL.” The
      Pink Sheets is a quotation service, not a formal exchange, and does not have
      quotation standards. An unaffiliated third-party introduced us to Espo's in
      order to enable us to achieve a merger with an entity that had shares of stock
      which were traded on the U.S. public securities markets, thereby offering the
      Company the opportunity to raise capital on the U.S. public securities
      markets.






4




Prior
      to
      and in anticipation of the merger transaction described below, a Stock Purchase
      Agreement, effective as of March 7, 2006 (the “March 7th Agreement”), was
      entered into between Espo's, Jeffrey R. Esposito and Kenneth C. Dollmann, each
      holder of Espo's common stock, and 2095511 Ontario Limited. Mr. Esposito and
      Mr.
      Dollmann, respectively sold 4,065,427 and 160,000 shares Espo's common stock
      to
      the following entities identified in the March 7 th Agreement: Brant Fellowship Holdings, Inc.; Candas Enterprises Corp.; Carrick
      Mortgage Holdings, Inc.; Culross Forwarding Limited; Greenock Export Holdings
      AG; Bedford Place Investments Ltd.; Brican Holdings Limited (collectively,
      the
“Entities”). None of the Entities is a related person or affiliate of Espo's,
      Mr. Esposito, Mr. Dollmann, 2095511 Ontario Limited, or the Company, and none
      became a beneficial owner of greater than five percent of the Company's issued
      and outstanding Common Stock as result of the merger transaction and subsequent
      events described below.




It
      was
      the consensus of the Entities that, due to the logistics involved in
      coordinating their purchases of Espo's common stock and in order to capably
      process the documentation and secure the prompt execution of the March
      7 th Agreement, it would be most efficient to rely on a single, special purpose
      company as a vehicle to close the transaction on their behalf. At the request
      of
      the Entities, 2095511 Ontario Limited, a limited corporation formed by Jeffrey
      D. Reid, the President of the Company, under the laws of the Province of
      Ontario, Canada, served as agent for the Entities to facilitate the closing
      of
      the March 7 th Agreement.




The
      Entities' respective purchases of common stock that were held by Messrs.
      Esposito and Dollmann, totaled 4,225,427 out of the 4,920,250 issued and
      outstanding shares of Espo's common stock. Mr. Esposito continued to hold 8,823
      restricted shares of Espo's common stock which shares (and shares for which
      they
      would be exchanged in the merger transaction) are subject to a one-year escrow
      and “lock-up” that commenced on March 7, 2006. The Entities acquired their
      shares of Espo’s common stock in exchange for an aggregate payment of $209,830
      and their respective promises to provide, from time to time, advice to Espo's
      and its successors with respect to corporate and financial strategies and
      restructuring proposals, investor relations and shareholder communications
      services, and recommendations of potential funding sources, investment groups
      and strategic partners. Concurrent with the stock purchase transaction, and
      prior to the merger described below, Espo's transferred its assets and
      liabilities to other entities that were unaffiliated with the Company.




On
      March
      8, 2006, in order to facilitate the merger transaction described below, Espo's
      issued 2,014,400 shares of common stock to bring its total issued and
      outstanding amount of common stock to 6,934,650. In connection with the overall
      capital restructuring transactions of Espo's and the Company, and in accordance
      with their representations and in consideration of the promises and conditions
      under the March 7th Agreement, the Entities had their 4,225,427 shares of Espo's
      common stock retired to treasury and cancelled. This left 2,709,223 shares
      of
      Espo's common stock issued and outstanding. In a separate set of transactions
      and as consideration for introducing the Company and Espo’s, the Entities
      acquired 686,000 shares of Espo's common stock from various Espo’s holders.




On
      March
      10, 2006, we entered into an Agreement and Plan of Reincorporation - Merger
      with
      Espo's, whereby Espo's was merged with and into the Company, and in which the
      Company, a Nevada corporation, became the surviving entity (the
“Merger”).




In
      effecting the Merger, each of the 2,709,223 issued
      and outstanding shares of Espo's common stock, was converted into one share
      of
      our Common Stock, and Espo's ceased to exist. The Company’s Common Stock
      currently is traded on the Pink Sheets of the National Quotation Bureau under
      the symbol “KMAG.”




5




On
      March
      15, 2006, we entered into an acquisition agreement (the “Acquisition Agreement”)
      with KMA Global Solutions Inc., a corporation formed in April 1996 under the
      laws of the Province of Ontario, Canada (“KMA (Canada)”). KMA (Canada) is a
      provider of diversified electronic article surveillance (“EAS”) solutions for
      retail security applications in a variety of consumer industries, including
      apparel, multimedia, sporting goods, grocery and over-the-counter
      pharmaceuticals, and offers technology-driven integrated supply chain solutions
      to secure goods for retailers and consumer-product distributors worldwide.
      On
      March 1, 2006, the issued and outstanding common shares of KMA (Canada) were
      subject to a reverse stock split at a ratio of five (5) shares to one (1),
      reducing the number of its common shares outstanding from 10,072,000 to
      2,014,400.




Pursuant
      to the terms of the Acquisition Agreement, the Company acquired a majority
      of
      the outstanding shares of the capital stock of KMA (Canada) in exchange for
      2,014,400 shares of our Common Stock. Pursuant to the Acquisition Agreement,
      we
      purchased the remaining 314,400 shares of KMA (Canada) common shares from the
      minority shareholders of KMA (Canada) in exchange for an equal number of shares
      of our Common Stock.




In
      connection with the Acquisition Agreement, we formed KMA Global Solutions,
      LLC,
      a limited liability company formed under the laws of the State of Nevada (“KMA
      LLC”), with the Company as its single member. KMA LLC is a special purpose
      entity with the sole purpose of facilitating Canadian income tax efficiencies
      for existing shareholders of KMA (Canada). In connection with its formation,
      1,700,000 shares of the Company's Common Stock were issued to KMA LLC in
      exchange for 100% of its membership interests.




Contemporaneously
      with the issuance of 1,700,000 shares of Common Stock to KMA LLC, we entered
      into an Exchange and Support Agreement dated March 14, 2006 (the “Exchange
      Agreement”), by and among the Company, KMA LLC, KMA Acquisition Exchangeco,
      Inc., an Ontario corporation (“Exchangeco”), and certain shareholders of KMA
      (Canada) subject to Canadian taxation. These KMA (Canada) shareholders elected
      to receive securities (“Exchangeable Shares”) issued by Exchangeco (each a
“Holder”) in order to defer income recognition for Canadian tax purposes. The
      Exchange Agreement provides that the Company and KMA LLC grant each Holder
      the
      right to require the Company or KMA LLC to purchase from any of such Holder
      all
      or any part of the Exchangeable Shares held by such Holder, in consideration
      for
      some or all of the Company's 1,700,000 shares of Common Stock held by KMA LLC.
      KMA LLC is a wholly-owned subsidiary of the Company. Exchangeco is related
      to
      the Company only in that it has a contractual arrangement with KMA LLC to
      exchange the shares KMA LLC currently owns of the Company. Jeffrey D. Reid
      is an
      officer and director of Exchangeco. Mr. Reid indirectly owns 1,520,000 common
      shares of the Company, he is an indirect control person of KMA LLC by virtue
      of
      his control position in the Company, and he is an officer and a director of
      Exchangeco, which is related to the Company only in that it has a contractual
      arrangement with KMA LLC to exchange the shares of the Company that KMA LLC
      currently owns.




On
      March
      17, 2006, the Company effected a stock split in the form of a share dividend.
      This was accomplished by the issuance of seventeen shares of Common Stock for
      each share of issued and outstanding Common Stock on a pro rata basis and
      without consideration to the Company's stockholders. To provide consistent
      disclosure, the amounts of shares discussed hereafter will reflect the
      post-split amounts, unless specified otherwise. The 8,823 escrowed shares held
      by Jeffrey R. Esposito became 149,991 shares of Common Stock. The 686,000 shares
      held by the Entities became 11,662,000 shares of Common Stock on a post-split
      basis. The 314,400 shares of Common Stock held by the KMA (Canada) shareholders
      became 5,344,800 shares on a post-split basis. As per an agreement between
      the
      KMA (Canada) shareholders and the Company, these 5,344,800 shares of Common
      Stock were retired to treasury and cancelled and the KMA (Canada) shareholders
      received 1,179,000 post-split shares of Common Stock.




6




***Current
      Corporate Structure***




Our
      current structure is as follows. We have two affiliated companies: KMA LLC,
      of
      which we are the single member, and KMA (Canada), our Ontario, Canada operating
      company affiliate. The structure of our organization is set forth in the
      following diagram and its accompanying notes:

















(1)
            27,200,000
                shares of the Company's Common Stock are held by KMA LLC for the
                purpose of facilitating Canadian income tax efficiencies for existing
                shareholders of KMA (Canada) through the arrangement with
                Exchangeco.(2)
            314,400
                shares of the Company's Common Stock were exchanged for an equal
                number of
                shares of KMA (Canada) common stock. Exchangeco holds the balance
                of KMA
                (Canada) common shares.(3)
            The
                shareholders of Exchangeco have the right to require the Company
                or KMA
                LLC to purchase some or all their Exchangeable Shares for some or
                all of
                the Company's 27,200,000 shares of Common Stock held by KMA
                LLC. 25,840,000 shares of Exchangeco are owned by Jeffrey D. Reid,
                resulting in the beneficial ownership of 25,840,000 shares of KMA
                Global Solutions International,
                Inc.










7





***Strategic
      Corporate Structure***





We
      intend
      to operate as a holding company in a structure that includes several
      wholly-owned operating subsidiaries located in strategic manufacturing,
      packaging and distribution markets worldwide. Strategic expansion plans include
      the relocation of our headquarters from Mississauga, Ontario, Canada to the
      United States through the formation of KMA Global Solutions Inc. (US) as a
      wholly-owned subsidiary of the Company. KMA Global Solutions Inc. (Barbados)
      is
      intended to be established under the laws of Barbados as a wholly-owned
      subsidiary of KMA (Canada) with the purpose of overseeing the Company's
      operations outside of the United States and Canada and to hold all of the issued
      and outstanding shares of KMA Global Solutions Inc. (Hong Kong), a manufacturing
      entity to be formed under the laws of Hong Kong. We also intend to form
      additional overseas subsidiaries as our business grows.




***Electronic
      Article Surveillance (EAS) Industry***





Electronic
      Article Surveillance (EAS) is a technological method used primarily to prevent
      shoplifting from retail establishments by alerting the retailer to the
      unauthorized removal of merchandise. Special tags (like the products that KMA
      sells) are affixed to the product or to its packaging. The special tags are
      referred to as “active” or “live.”  At point of sale, the special tag is
      deactivated or “turned off.”  At the exits of stores, detection
      equipment sounds an alarm to alert staff when an active tag is
      detected.  The theory is that a properly purchased item will have a special
      tag that is deactivated or “turned off,” while the tag on a shoplifted
      product will still be active or “live.”




Using
      an
      EAS system enables the retailer to display and allow customer access to popular
      items. Products can be examined and handled, rather than kept in locked cases
      or
      behind the sales counter. The two leading technologies comprising most EAS
      systems are Acousto-Magnetic (“AM”) and Radio Frequency (“RF”), and each has
      specific benefits and disadvantages. These respective EAS systems operate on
      different principles and are not compatible with one another.




Industry
      sources estimate that the value of goods that are taken without being paid
      for,
      known as “shrink,” is an approximate $70 billion per year problem for the global
      retail industry. Shrink is caused primarily by shoplifting and employee theft.
      Electronic Article Surveillance (EAS) solutions are designed to act as a
      deterrent to control the problem of merchandise theft.




EAS
      system components typically include:




1)
            Labels
                or Hard Tags - electronic sensors attached to
                merchandise;


2)
            Deactivators
                or Detachers - used at the point of sale to electronically deactivate
                labels and detach reusable hard tags as items are purchased;
                and


3)
            Detectors
                - that create a detection area at exits or other sensitive
                locations.





As
      a
      provider of EAS solutions, including security source tagging for a variety
      of
      retail industries, our products are designed to consolidate discrete RF and
      AM
      technology requirements to improve efficiency, reduce costs, and provide
      value-added solutions for customers across many geographic markets in a variety
      of industries, including but not limited to apparel, food, over-the-counter
      pharmaceuticals, health and beauty aids, and sporting goods.




Our
      EAS
      solutions are comprised of a line of custom tags and labels, which contain
      sensors designed to provide a comprehensive, single-source solution for
      protection against retail merchandise theft. Our tags and labels are specialized
      for a variety of applications including, adhesive labels for use on product
      packaging or tags sewn directly onto retail apparel. The Company's proprietary,
      low cost solutions serve to reduce consumer and employee theft, prevent
      inventory shrink, and enable retailers to capitalize on consumer buying patterns
      and habits by openly displaying high-margin and high-cost items typically
      subjected to a high level of shoplifting and employee theft. We offer a wide
      variety of EAS solutions to meet the varied requirements of retail
      configurations for multiple market segments worldwide.




8




In
      addition, the Company is an authorized distributor of Sensormatic sensors in
      raw
      form. These sensors are the basic component of an EAS tag or label. Retail
      stores are responsible for outfitting their own premises with an EAS system,
      including sensor detection and deactivation equipment that corresponds to their
      EAS technology of choice, either RF of AM technology. The Company also sells
      equipment necessary to deactivate the EAS tags to manufacturers, suppliers,
      wholesalers and distributors that need to deactivate either the AM sensor or
      the
      RF sensor before shipping product tagged with Dual Tags to a particular retailer
      only using one of the two technologies in its stores. Sales of deactivation
      equipment represent a small fraction of the Company's revenues. The Company
      does
      not sell the equipment necessary to establish an EAS system to
      retailers.




RF
      systems are widely used in the United States. A label, basically a miniature,
      disposable electronic circuit and antenna, is attached to a product. The device
      responds to a specific frequency emitted by a transmitter antenna located at
      the
      entry/exit point. The response from the label is then picked up by an adjacent
      receiver antenna. This will trigger an alarm when it matches specific criteria.
      Operating frequencies for RF systems generally range from 2 to 10
      MHz.




The
      newer, AM systems have the ability to protect wide exits. AM systems use a
      transmitter to create a surveillance area where tags and labels are detected.
      The transmitter sends a pulsating acousto-magnetic frequency signal (of about
      58
      kHz) which energizes a tag in the surveillance zone. When the pulse ends, the
      tag responds, emitting a single frequency signal like a tuning fork that is
      detected by a receiver. A microcomputer checks the tag signal detected by the
      receiver to ensure it is at the right frequency and time-synchronizes the
      receiver to the transmitter, at the proper level and at the correct repetition
      rate. If all these criteria are properly met, the alarm is
      triggered.




Our
      Dual
      Tag TM employs
      both RF and AM technologies, which enables retailers or their suppliers to
      apply
      both technologies to the packaging or product in one single pass through the
      equipment that attaches the tag. This single pass application reduces the cost
      that would otherwise be incurred to attach each technology. Further, having
      both
      technologies attached to each item eliminates the need for manufacturers,
      wholesalers and distributors to carry multiple inventories and eliminates the
      risk of improperly shipping goods with RF tags to retailers requiring AM tags
      and vice versa.




Retailers
      and manufacturers have become increasingly focused on protecting assets that
      move through the retail supply chain. Radio Frequency Identification tags
      (commonly referred to as “RFID”) can be used to track inventory from
      manufacturer to retailer (and ultimately to the consumer and through the waste
      processing stream), as well as for tracking products within a given retail
      location. To address this market opportunity, we have applied for and received
      patents incorporating RFID into our current solutions. We intend to continue
      to
      build infrastructure, add key personnel, develop proprietary label and tag
      manufacturing equipment, and open branch offices in strategic locations
      throughout the world, in order to prepare for and take advantage of the
      opportunity to be a major source for both EAS and RFID solutions
      worldwide.




9


***Principal
      Products***





Our
      EAS
      solutions are comprised of sensor tags and labels designed to provide a
      comprehensive, single-source solution for protection against retail merchandise
      theft. The Company's proprietary, low cost solutions, serve to reduce consumer
      and employee theft, prevent inventory shrink, and enable retailers to capitalize
      on consumer buying patterns and habits by openly displaying high-margin and
      high-cost items typically subjected to a high level of shoplifting and employee
      theft. We offer a wide variety of EAS solutions to meet the varied requirements
      of retail configurations for multiple market segments worldwide.




The
      following information describes our product lines, with their respective
      characteristics and uses:




Source
      Tagging Solutions - As its name implies, source tagging is the embedding of
      EAS
      security labels at either the point of manufacture or packaging to allow
      delivery of floor or display ready merchandise to the retail store. Under a
      source tagging program, tags are integrated into automated production processes
      and applied in primary packaging or within or on the product itself either
      under
      branding labels or prominently displayed.




o
            Dual
                TagTM - combines both AM and RF technologies in a high speed single-pass
                label. A single-pass label is a label that enables multiple different
                EAS
                technologies to be applied or attached to an item at the same time
                meaning
                that an item does not have to put through a process to attach EAS
                technology more than once. High speed application is the process
                of
                attaching one tag or label per item at a very rapid pace. We offer,
                in a
                single-pass high speed application, the only solution available on
                the
                market compatible with both AM and RF technologies, which eliminates
                the
                need for duplicate inventory. The ability to affix tags and labels
                quickly
                enables manufacturers, suppliers and distributors to deliver items
                tagged
                with EAS labels on a “just in time” basis and at a lower cost per unit
                than if the labels had to be applied manually or by multiple runs
                through
                the application equipment.o
            Triple
                TagTM - combines both AM and RF technologies, in addition to RFID
                technology, in a single-pass label. As a technology that incorporates
                the
                use of electromagnetic or electrostatic coupling in the radio frequency
                portion of the electromagnetic spectrum to uniquely identify an object,
                animal, or person, RFID is coming into increasing use as an alternative
                to
                the Universal Product Code (also referred to as “UPC” or “bar code”)
                as a means of product identification. The advantage of RFID is that
                it
                does not require direct contact or line-of-sight
                scanning.




Sew-On
      Source Tagging Solutions - we provide manufacturers of soft-goods with an
      affordable and effective EAS solution. Tested and certified by ADT Sensormatic
      Systems Inc. (“ **Sensormatic** TM”),
      for AM systems, and Checkpoint Systems, Inc., for RF systems, within
      retailer guidelines and located on the particular garment as approved, directed
      or specified by the retailers, our soft-goods source tagging solutions
      include:




o
            Original
                NEXTagTM- our original design and, we believe, the most popular sew-on tag
                in the industry. Available in a variety of colors, we consider it
                to be
                the best value for most garment and home fashion
                applications.o
            NEXTagTM
                Slimline - Tyvek® (an E. I. du Pont de Nemours and Company fabric) tag
                manufactured to a narrower width then the original design of the
                NEXTagTM;
                designed for intimate apparel, this product is appropriate for any
                application where size is a constraint.o
            NEXTagTM
                Jean - for the denim industry for tacking or stapling directly under
                the
                vendor tag that includes size, style number, bar code, retailer's
                variable
                data known as a “joker” tag (joker tags are usually sewn into a garment in
                the waist band, inside seam or bottom of a sleeve of a garment).
                The
                NEXTagTM Jean is “denim blue” in color and about twice the size of our
                original NEXTagTM.o
            NEXTagTM
                Woven - a premium EAS label of high quality woven fabric. This premium
                quality label is well suited for decoration with logos, slogans and
                other
                graphics required to enhance merchandising
                appeal.





10




Drop-in
      Source Tagging Solutions - this is an EAS tagging solution that is not affixed
      to the item or the packaging, but rather placed “loose” inside the product
      packaging or hidden in compartments, such as garment pockets or empty battery
      casings in items requiring batteries. This solution is an affordable,
      labor-saving hard goods EAS solution. Tested and certified by SensormaticTM and
      approved and specified by major retailers as a source tagging solution;
      includes:




o
            Original
                NEXTagTM- as described aboveo
            NEXTagTMTyvek®
                - as described above





Attachable
      Source Tagging Solutions -




o
            Wrap
                Tags - triple-reinforced vinyl tags are designed for easy application
                and
                deliver maximum tear resistance; and can be custom sized; applications
                include electrical cords, footwear, fishing rods, plumbing and other
                hard
                good items;o
            Luggage
                Tag - tear resistant vinyl tag designed for “swift-attached” applications;
                ando
            Logo
                Tag - printed paper hang tag that is plastic laminated, to significantly
                improve tear resistance; applications include branded apparel, children
                and infant apparel, footwear and
                sunglasses.





Adhesive
      Source Tagging Solutions -




o
            Meat
                Tag - specialized adhesive in a microwave-safe SensormaticTM label or in a
                moisture-proof, microwave safe RF version for packaged meat or frozen
                food
                applications;o
            Foamback
                Tag - able to maintain sensor function in metallic applications;
                flexibility of a foam backing also enables effective placement on
                concave
                or convex surfaces.




Custom
      Source Tagging Solutions - customized products designed to address unique source
      tagging requirements, such as limited size or space, concave surfaces or
      microwave environments.




Sensormatic TM Label
      Distributor - the Company is also an authorized distributor of SensormaticTM EAS
      labels. The Sensormatic EAS label is an AM label and can be found
      inside some of our products such as our DUAL TagTM. We also act as a distributor
      of Sensormatic's TM EAS
      labels in the non-installed or “raw” form so that our customers can affix the
      label directly onto their products before sending them to the retailer.
      Manufacturers, suppliers and distributors buy the raw SensormaticTM sensor from
      us and affix them to the inside of their packaging using our labels, thus making
      the merchandise source tagging compliant for the retail customer.




11





***Principal
      Markets***





We
      market
      our products to retailers that have a need to protect their merchandise from
      theft. Many of our customers such as Koramsa, a major denim apparel manufacturer
      located in Guatemala, Rey Corporation, a manufacturer and distributor of apparel
      hardware such as zippers located in Peru, and Li & Fung, one of the largest
      apparel buying agencies located in Hong Kong, are vendors to international
      retailers who have EAS systems installed throughout their stores in various
      countries throughout the world. Our current principal geographic markets include
      the United States, Canada, Mexico, Italy, Israel, Hong Kong, China, Vietnam,
      Thailand, Malaysia, Taiwan, South Korea, the Philippines, India, Indonesia,
      Pakistan, Sri Lanka, Turkey, Dubai, Peru, Guatemala, Costa Rica, and
      Brazil.




To
      initiate a source tagging program, the retailer must have EAS systems installed
      in most but not necessarily all of the stores that handle the targeted
      merchandise. This allows the merchandise to be accepted at the individual store
      and be ready for sale immediately. If a particular store does not have an EAS
      system in place, KMA has developed a bulk deactivation device which permits
      deactivation of case sized lots of source tagged merchandise at the distribution
      point prior to shipment to the unequipped retail store.




Suppliers
      to retailers become our primary customer once a particular retailer has approved
      or indicated a preference for the use of one or more of our solutions. In some
      cases, we enjoy exclusivity as our patents ensure that we are the only supplier
      of certain EAS solutions. We sell the actual approved solutions to the vendors
      to retailers in the particular country where the product is manufactured. The
      term “EAS source-tagging” is used where tags are applied at the source of
      manufacture. Source-tagging refers to the attachment of EAS tags at the source
      of production of the retail item where it is least expensive to do
      so.




We
      market
      EAS products primarily to worldwide retailers in the hard goods market
      (supermarkets, drug stores, mass merchandisers, and music/electronics), soft
      goods market (fashion and athletic apparel, sports merchandise), and other
      consumer product manufacturers through our source-tagging program.




***Business
      Strategy***





RFID
      Integrated Solutions




RFID
      technology incorporates the use of electromagnetic or electrostatic coupling
      in
      the radio frequency portion of the electromagnetic spectrum to uniquely identify
      an object, animal, or person. RFID is coming into increasing use in industry
      as
      an alternative to the bar code. The advantage of RFID is that it does not
      require direct contact or line-of-sight scanning. An RFID system consists of
      three components: an antenna, a transceiver (often combined with the antenna
      into one reader) and a transponder ( *i.e.* , the
      tag).




We
      anticipate that the use of RFID technology will see significant growth over
      the
      next five to ten years. As the technology continues to improve and the per
      unit
      cost of tags continues to decrease, RFID will begin to play a much larger role
      in supply chain management. In response to the demand of industry groups to
      introduce an RFID integrated tag to the retail supply chain, we have made the
      strategic decision to expand our EAS products to incorporate RFID
      technology.




RFID
      usage recently received a significant push when the United States Department
      of
      Defense and Wal-Mart Stores, Inc. separately issued mandates requiring their
      respective large suppliers to use Electronic Product Code open standard RFID
      tagging on pallets, cases, containers and parts, by January 2005. Each of these
      enormous organizations see significant benefits in the ability to uniquely
      identify products in their inventory, manage and track that inventory, realize
      lower costs and increase supply chain efficiencies. Through their vast buying
      power, each of these two very different organizations have a major influence
      on
      their respective suppliers.






12




According
      to a study released on January 11, 2005 by In-Stat (www.in-stat.com), a major
      technology research firm, worldwide revenues from RFID tags will jump from
      $300
      million in 2004 to $2.8 billion in 2009. During this period, the technology
      is
      expected to appear in many industries with significant impact on the efficiency
      of business processes. Another RFID industry research and consulting firm,
      IDTechEx, updated a report in May 2006 stating that the value of the total
      RFID
      market, including systems and services, is expected to increase to $26 billion
      by 2016.




Our
      ongoing strategy is to participate in the expanding RFID market as a core vendor
      to the pool of suppliers that sell to a particular retailer or chain of
      retailers (the so-called “vendor population”). KMA (Canada) currently delivers
      EAS solutions to this market and will develop RFID solutions that are specific
      to the needs of each vendor.




Presently,
      we have the ability to add RFID technology to our existing EAS product lines
      in
      a Triple Tag TM ,
      enabling high-volume, single-pass application of RFID-integrated EAS tags at
      the
      unit level. The Triple Tag TM employs
      both AM and RF technologies in addition to RFID technology which is applied
      to
      packaging simultaneously in a single run rather than in separate, duplicate
      production runs. We have the opportunity to evolve with the marketplace to
      become a leader in RFID tagging by leveraging existing retail relationships
      and
      knowledge of EAS technologies to assist retailers and manufacturers in the
      emerging RFID market. At the present time, the Company does not earn revenues
      from sales of RFID as the current high price of RFID tags makes use of the
      technology prohibitive for our customers. Further, we do not offer any discrete
      RFID technology to our customers. However, upon further development of this
      application of RFID resulting in a lower price per unit, we may incorporate
      this
      technology in our product line. If that does happen, we anticipate that we
      will
      source RFID tags from one of a number of high quality, low cost producers as
      and
      when our customers require. While we currently have the ability to add RFID
      technology by adding an RFID tag to our DUAL TagTM, our expertise at this time is
      not specifically in the manufacture of RFID tags. As part of our long term
      planning, we may consider the acquisition of a small RFID tag manufacturer
      if
      demand for Triple Tags TM reach
      such critical mass that it becomes cost effective to do so. There is no
      guarantee that we will seek to acquire a manufacturer of RFID tags or that
      a
      company will be available for purchase at a reasonable price, should we decide
      to do so.




Our
      business strategy focuses on providing comprehensive, single-source solutions
      in
      the prevention of retail merchandise theft. We believe that new RFID integrated
      solutions and expanded product offerings will provide significant opportunities
      to enhance the value of legacy products while expanding the product base in
      existing customer accounts. We intend to maintain our leadership position in
      the
      soft goods markets, expand our market share in certain key hard goods markets,
      and maximize our position in under-penetrated markets with customized solutions.
      We also intend to capitalize on our existing base of large global retailers
      to
      further promote source tagging opportunities.




To
      achieve these objectives, we plan to work to continually enhance and expand
      our
      technologies and products, and provide superior service to our customers. We
      are
      focused on providing our customers with a wide variety of EAS solutions
      characterized by superior quality, on time delivery, exceptional value, and
      enhanced merchandising opportunities for the retailer.




To
      improve profitability, we have initiated strategic expansion of our operations
      globally to further improve operating margins, shareholder value, and customer
      focus. Our development plans will include improvement of sales productivity
      and
      we intend to analyze and, where necessary, reconfigure our manufacturing and
      supply chain to better position ourselves in the market.




13




Marketing
      Strategy




We
      primarily promote our products to retailers by offering what we term the “lowest
      cost loss prevention” solution with on-time delivery, serving as a single point
      of contact for our client's EAS needs. In emphasizing source-tagging benefits
      as
      a cost and labor-efficient means of integrating EAS into the retail environment,
      we assist retailers in promoting source-tagging with vendors.




Our
      ongoing strategies to increase acceptance of source-tagging include partnering
      with major retail suppliers, worldwide, in our source-tagging programs. We
      offer
      customized EAS tag solutions to address needs of recognized branding and loss
      prevention, and continue to expand product applications to accommodate the
      needs
      of the packaging industry. Implementation using efficient high-speed production
      and high-volume capacity supports our reputation with retail suppliers for
      reliable on-time delivery and superior service.




We
      intend
      to continue this marketing strategy, expanding market opportunities to
      manufacturers and distributors, including. One of our objectives is to launch
      industry-wide programs to secure new retail accounts and expand existing
      accounts with innovative and customized products that will increase penetration
      with integrated value-added solutions. We plan to promote source-tagging around
      the world with extensive integration and automation using new EAS and RFID
      support capabilities.




***Distribution***





We
      have
      two branch offices located in Hong Kong and Taiwan, strategically positioning
      KMA near the source of production for many consumer goods companies. To improve
      our sales efficiency, future expansion plans include offices and distribution
      and/or manufacturing centers in India and Mexico, which will enable the Company
      to further reduce shipping costs and build on its strong reputation for
      guaranteed, on-time delivery.




Our
      expansion plan is structured to seize on the obvious advantages associated
      with
      being located close to the customer and, where possible, reducing costs
      associated with manufacturing and duties.




India
      has
      very high VAT taxes for importing products for use in manufacturing in India.
      The technology components of our products are manufactured in Puerto Rico,
      Japan
      and China. We currently assemble in Canada and incur a large amount of freight
      charges to deliver products to our customers overseas. Setting up manufacturing
      and assembly units in India will enable us to import the components not
      currently manufactured in India while reducing our freight and the value at
      which we are taxed.




In
      Hong
      Kong, we are able to import to and export from China tax-free, based on Hong
      Kong's status as an economic region of China. When manufacturing in Hong Kong
      and then importing to China, there is reduced and/or no import duty on our
      finished product. Currently, we warehouse our Canadian-made product in Hong
      Kong
      and ship to China with a 17% import tax paid by our customer. We can also reduce
      our overall freight cost as well as reduce some of our current overhead in
      inventory by manufacturing and delivering “just in time.”




Mexico
      is
      a major manufacturing center to North American retailers. We have considered
      setting up a subsidiary in either Mexico or another Central American location
      to
      be closer to our customer source. This once again will give us preferential
      duty
      rates into these growing supplier markets.




With
      respect to the United States, our plan is to produce our DUAL TagTM products
      closer to our customer base and reduce the costs associated with operating
      in
      Canada. Currently, labor rates, real estate expenses and taxes are lower in
      the
      U.S. as compared to Canada. Our long term plan is to move our head offices
      to
      the United States to take advantage of these cost efficiencies and to be closer
      to the head offices of large North American retailers. At the present time,
      no
      specific steps have been taken in pursuit of these expansion plans and we may
      not undertake any one of more of these planned changes.




14




We
      have
      not determined a definitive timeline for the expansion described above, but
      anticipate a move to the U.S. within one year. Any expansion will be subject
      to
      a number of factors, including location of our customers, the performance of
      the
      general economy and the health of the EAS industry, changes in tax legislation,
      international developments as well as other possible unforeseen circumstances.
      Also, decisions to proceed with our projected expansion and timelines to be
      determined will depend on funding made available either by retained earnings,
      the sale of securities in a private placement or public offering or debt
      financing provided we can secure favorable terms. Because of the wide range
      of
      factors to take into consideration, we are not able at this point to form an
      estimate of the costs of such a move.




***Research
      and Development***





Since
      the
      inception of our operating subsidiary, KMA (Canada), we have dedicated
      significant time and effort to the development of innovative products and
      production equipment to meet the needs of an evolving market. The financial
      statements illustrate a small portion of the incurred costs as research and
      development (R&D). We expended approximately $6,984 in R&D activities
      during fiscal year ended January 31, 2006, and no R&D expense was incurred
      during the preceding fiscal year. These R&D activities focus on the
      improvement of process performance, continued broadening of the product lines,
      cost reductions of the current product lines, and expansion of the markets
      and
      applications for our products. No R&D costs are borne directly by our
      customers. Our future growth in revenues will be dependent, in part, on the
      products and technologies that result from these R&D efforts.




In
      response to retail industry demand for a universal tagging solution compatible
      with both AM and RF technologies, we developed the DUAL TagTM. In the past,
      retailers would purchase EAS tags that were compatible with the type of EAS
      deactivators that were in place at the point of purchase and the system of
      EAS
      readers in place at entrances and exits. Manufacturers, wholesalers and
      distributors were required to keep duplicate inventories of their products
      for
      delivery to retailers having either AM or RF technology installed in their
      stores. The DUAL TagTM eliminates the need for duplicate supply chain inventories
      and is the only available EAS solution combining both leading EAS technologies
      in a high speed, single pass application.




We
      continue to review our product portfolio and rationalize our production
      facilities and global supply chain, anticipating opportunities for greater
      efficiency and cost reduction. Future development and expansion of our product
      lines is expected with improved high-speed production processes, customized
      tags
      and selection, and EAS-RFID integration.




***Competition***





Factors
      that we consider in evaluating our competition include (i) production capacity,
      (ii) delivery time, and (iii) proprietary patented and patent pending processes
      and products. Although we have no significant or direct competition in the
      EAS
      market, other providers may offer security solutions carrying exclusively RF
      or
      AM technology in the form of an adhesive or a hard security tag. Our principal
      competitor in the retail and apparel manufacturing industries is Paxar
      Corporation, which provides merchandising systems including woven labels and
      tags used to identify brand apparel or printed labels with bar
      codes.




15




Within
      the emerging RFID market, Sentry Technology Corporation, I.D. Systems, Inc.
      and
      Zebra Technologies Corporation use RFID technology to provide systems for in
      store surveillance, asset management and monitoring, inventory control and
      distribution management, and related software. These companies are not
      considered to be direct competition, however they do offer solutions related
      to
      security.




Sentry
      Technology Corporation engages in the design, sale, installation and servicing
      of radio frequency and electro-magnetic EAS systems, and closed circuit
      television solutions (CCTV) in the United States and Canada. Its EAS systems
      are
      used for radio frequency and ranger detection, as well as electromagnetic
      detection. The company also distributes EAS systems and provides access control
      readers, controllers, and software for card holders, as well as wireless
      electronic data collection system for library management, warehousing, parcel
      tracking, inventory control and asset protection.




Zebra
      Technologies Corporation engages in the design, manufacture, and support of
      a
      range of direct thermal and thermal-transfer label and receipt printers, RFID
      printer/encoders, dye sublimation card printers, and digital photo
      printers.




ID
      Systems Inc. provides wireless solutions for corporate asset management. It
      designs, develops and produces wireless monitoring and tracking products
      utilizing a radio-frequency-based system. Its Wireless Asset Net fleet
      management system provides wireless vehicle access control to restrict access
      of
      equipment to trained and authorized personnel; electronic vehicle inspection
      checklists; early detection of emerging vehicle safety issues; and impact
      sensing to assign responsibility for accidents, as well as automate and enforce
      preventative maintenance.




We
      address our competition by seeking to offer a more diverse range of EAS tagging
      solutions than our competitors, with a variety of low-cost EAS tags and labels,
      as well as customizable tags for complex non-standard product packaging. We
      protect our patents and licensing arrangements to forestall infringement. As
      a
      result, we seek to maintain a competitive advantage by marketing our products
      primarily on the basis of our versatility, exceptional affordability, and strong
      reputation among our customers for reliable, on-time delivery and ease of
      integration into operations with source tagging.




***Manufacturing,
      Raw Materials, and Inventory***





KMA
      (Canada), our current operating subsidiary, drives the design and development
      of
      products and processes involving our customers, manufacturing and marketing.
      We
      purchase raw materials and components from suppliers and complete the production
      process at our facilities in Ontario, Canada. KMA (Canada) relies primarily
      on
      two EAS sensor suppliers: Checkpoint Systems, Inc. for the RF component and
      ADT
      Sensormatic Systems Inc. for the AM component. We utilize sophisticated
      real-time inventory management and logistics at a level to keep inventories
      to a
      minimum.




Our
      manufacturing strategy for EAS products is to rely primarily on in-house
      capability and to vertically integrate manufacturing operations to the extent
      that is economically beneficial. Vertical integration refers to the case when
      two firms, one of which supplies a product to the other, merge into a single
      firm. Our existing in-house capability, together with the likelihood of future
      vertical integration, will provide significant control over costs, quality,
      and responsiveness to market demand which we believe results in a distinct
      competitive advantage.




16





***Dependence
      on Customers***





We
      are a
      preferred supplier of EAS solutions to customers around the world in a variety
      of industries involved in retail merchandising businesses. “Preferred supplier”
is an industry term meaning that retailers indicate a preference as to their
      suppliers and the company from which the supplier sources its EAS tagging
      solution. Our status as a “preferred supplier” is, however, informal as it has
      not been set forth in any binding agreement. In general, suppliers are free
      to
      choose to source EAS tags from other than a preferred EAS tagging
      supplier.




We
      do not
      have a standardized customer contract - each agreement is negotiated on a
      case-by-case basis. Most of our customer agreements have a term of twelve
      months, and are generally nonexclusive agreements, and they are typically
      subject to termination by either party upon a given notification period
      (generally thirty days). The payment terms are generally thirty-days
      net.




Our
      customers include Koramsa, a denim apparel manufacturer, Rey Corporation, a
      Peruvian manufacturer and distributor of apparel hardware and accessory items,
      and Li & Fung, a Hong Kong based buying agency, suppliers to retail apparel
      and sporting goods stores, some of the largest producers of electronic games
      supplied to multimedia retailers, the largest retail food chains in both the
      US
      and Canada, the largest “do-it-yourself” hardware and garden center chains, and
      major suppliers of nutriceutical and over-the-counter (OTC) pharmaceuticals.
      Apparel market customers have primarily been the largest discount retailers
      in
      North America and private label and designer retailers that use source-tagging
      on a portion or segment of their apparel line. We are dealing with major private
      label retailers with a focus on programs protecting a substantial percentage
      of
      their goods with source-tagging.




The
      Company continues to promote its solutions to retailers who need to reduce
      their
      shrink. In most instances, our typical customer is the supplier to the retailer
      and/or its associated packager or manufacturer. No one client of the Company
      contributes more than 5% of the company's revenues. It is difficult to predict
      the future importance of any one or more of our customers. With that in mind,
      we
      continually seek to build a customer base that is sufficiently diverse so that
      our business is not materially dependent on any one or few customers. Our
      customer base, especially in the apparel industry, typically establishes large
      private-label manufacturing programs for which we are frequently named as an
      “approved supplier” of EAS source tagging solutions. This private label
      manufacturing trend is generating the need for us to position distribution
      and/or manufacturing facilities in strategic countries to facilitate the supply
      of our products to the manufacturers at the lowest possible cost and meet demand
      for prompt delivery schedules.




The
      DUAL
      TagTM was originally concentrated in the multimedia marketplace. This market is
      experiencing some reduction at retail due to the trend of making purchases
      via
      the Internet.




Our
      current success has found that the OTC drug and food supplement market has
      a
      strong need to use our technology as well as our proposed new Triple
      Tag TM that
      includes RFID. This market demand stems from the major retailers in this segment
      having installed a roughly even split of both RF and AM technologies. We are
      promoting our solutions to the brand owners and their related packaging
      companies.




Other
      solutions, such as our Grocery Label, began via direct sales and in-store
      applications. Therefore, we had direct sales efforts with the individual store
      manager to promote the use of our solution. This has evolved as our solution
      becomes a commodity and is now sold via the retailer's distribution
      company.




17




***Technology;
      Intellectual Property***





As
      of
      April 27, 2007, KMA (Canada) owned or was the assignee of active patents issued
      by the U.S. Patent and Trademark Office (as well as corresponding foreign
      patents granted in Germany, Spain, France, Italy, Netherlands, United Kingdom
      and Mexico). These patents relate to a sew-on security label, which anticipates
      and incorporates RFID technology, and improvements and the manufacturing process
      thereof. KMA (Canada) also has patent applications pending in the U.S. (as
      well
      as corresponding foreign patent applications in Mexico, Germany, Spain, France,
      Italy, Netherlands, United Kingdom and Canada) relating to its dual technology
      EAS label and high speed process, which anticipates and incorporates RFID
      technology, and improvements thereof. There can be no assurance that any patents
      will be issued to KMA (Canada) on any of its pending applications.




The
      majority of our revenues are derived from products or technologies which are
      patented or patent-pending; however, there can be no assurance that a competitor
      could not develop products comparable to those of the Company. Although, the
      patent protection of our technologies is an important aspect of our business
      and
      future growth opportunities, the Company's distinct competitive advantage is
      based on our extensive manufacturing experience and know-how of current and
      developing EAS technology.




***Government
      Regulation; Need for Government Approvals***





The
      Company's products are compliant with all applicable FCC and DOC regulations
      in
      the United States and Canada governing radio frequencies, signal strengths,
      and
      conform to environmental regulations in all territories in which they operate.
      Our products are also compliant with applicable requirements published by ETSI
      in Europe. We carry the International Organization for Standardization (ISO)
      for
      ISO 9001:2000 certification and, at present, no government approvals for our
      products are required.




***Costs
      and Effects of Compliance with Environmental Laws***




There
      are
      no material costs or effects of compliance under any applicable environmental
      laws in the jurisdictions in which we operate.




***Employees***





As
      of
      April 27, 2007, the Company had three employees, Jeffrey D. Reid (Chief
      Executive Officer and President), Laura Wilkes (Executive Vice President) and
      William Randal Fisher (Secretary and Treasurer), and KMA (Canada) had sixteen
      full-time personnel.




Fourteen
      of the latter individuals are full-time employees located in Mississauga,
      Ontario, Canada, five of which hold executive management or sales/marketing
      positions. Two individuals are maintained on contract in Hong Kong, and one
      other is on contract in Taiwan.




Upon
      our
      establishment of U.S.-based operations and the relocation of our headquarters
      to
      the United States, the Company anticipates hiring additional employees in a
      variety of executive, management, sales and administrative roles, in a prudent
      approach, as business expands.




18





***Canadian
      Jurisdictional Issues***





The
      Company's operating subsidiary, KMA (Canada), is currently located in
      Mississauga, Ontario, Canada. Many of the Company's key executive officers
      and
      majority shareholders are citizens of and reside in Canada, and, as a result,
      it
      may not be possible for U.S. or other non-Canadian purchasers to effect service
      of process within the United States upon KMA (Canada) or such persons. All
      or a
      substantial portion of our assets and such persons may be located within Canada
      and, as a result, it may not be possible to satisfy a judgment against the
      issuer or such persons in Canada based upon the civil liability provisions
      of
      the U.S. federal securities laws or to enforce a judgment obtained in Canadian
      courts against KMA (Canada) or persons in Canada based upon the civil liability
      provisions of the U.S. federal securities laws. The ability of the Company's
      non-Canadian investors to effect service of process within the United States
      on
      KMA (Canada) or an officer or shareholder of KMA (Canada) located in Canada
      may
      also be limited.




ITEM
      2.   **DESCRIPTION
      OF PRO****PERTY**





The
      Company presently leases as its executive office, on premises of approximately
      11,530 square feet, located at 5570 Kennedy Road, Mississauga, Ontario, Canada.
      The three-year lease term, commenced November 1, 2005, imposes an approximate
      rent of $8,500 per month. The Company is given a right of renewal under the
      lease for an additional two years under the same terms and conditions (except
      for rights of renewal and the existing rental rate, which shall be renegotiated
      in accordance with contemporary market rates). The facility in Mississauga
      has
      adequate insurance coverage. Since March 2003, the Company has occupied sales
      office locations in Hong Kong and Taiwan as part of a sales consulting
      arrangement, and has paid an aggregate rent of $4,000 per month on a month
      to
      month basis only, for which no lease agreement has been formalized in
      writing.





On
      March
      15, 2007, the Company leased a 5467 square foot facility in Hong Kong for
      manufacturing. Monthly rent is approximately $6,800 per month.




ITEM
      3.   **LEGAL
      P****ROCEEDINGS**


The
      Company is unaware of any pending legal proceedings against it or any of its
      directors, officers, affiliates or beneficial owners of more than five percent
      (5%) of any class of voting securities.




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


None.











19





**PART
      II**




ITEM
      5.   **MARKET
      FOR COMMON EQUITY****,
      RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY
      SECURITIES**




Our
      Common Stock is quoted for trading on the Pink Sheets over the counter quotation
      service. Prior to the Company's merger with Espo's, Espo's common stock traded
      under the symbol “EPOL”. Effective on March 27, 2006, the symbol was changed to
“KMAG.”




The
      following tables set forth the quarterly high and low daily bids for our Common
      Stock as reported by Pink Sheets for the shares of Common Stock issued by the
      Company beginning with the quarter ended April 30, 2006. Historical information
      with respect to Espo's common stock prices is not relevant as to the Company's
      stock price due to the substantial change to the business of the Company
      post-merger. The bids reflect inter-dealer prices without adjustments for retail
      mark-ups, mark-downs or commissions and may not represent actual transactions.
      It should be noted that the prices listed for the Common Stock may not be a
      reliable indicator of their value due to the fact that the Pink Sheets have
      no
      listing standards and the volume of sales for shares of Common Stock has been
      inconsistent since they commenced trading.




**High**
            
            **Low**Quarter
                through April 27, 2007
            
            
            
            
            $
            1.05
            
            
            
            
            $
            0.37Quarter
                ended January 31, 2007
            
            
            
            
            $
            0.55
            
            
            
            
            $
            0.44Quarter
                ended October 31, 2006
            
            
            
            
            $
            0.16
            
            
            
            
            $
            0.16Quarter
                ended July 31, 2006
            
            
            
            
            $
            3.40
            
            
            
            
            $
            3.00Quarter
                ended April 30, 2006
            
            
            
            
            $
            5.50
            
            
            
            
            $
            3.75





Our
      stock
      price at the close of the market on April 27, 2007, was $0.81.





A
      broker/dealer and market maker registered with the SEC will, on behalf of the
      Company, apply for the quotation of the Common Stock on the OTC Bulletin Board,
      subject to the filing of information with and approval by NASD in connection
      with SEC Rule 15c2-11 and NASD Rule 6740.




***Holders***





As
      of
      April 27, 2007, there were 28 holders of record of Common Stock, of which
      certain holders of record are entities that hold on behalf of beneficial owners.
      No shares of Preferred Stock are issued or outstanding.




***Dividends***





No
      cash
      dividends have been declared on our Common Stock. The declaration of dividends,
      if any, will be contingent upon our revenues and earnings, if any, capital
      requirements and financial conditions. The payment of cash dividends, if any,
      will be within the discretion of our Board of Directors. We presently intend
      to
      retain all earnings, if any, for use in our business operations.




20


***Recent
      Sales of Unregistered Securities***




Espo's
      had sold securities from time to time in private placements since its inception
      pursuant to the exemptions for nonpublic offerings under Section 4(2) of the
      Securities Act.




The
      Company had issued securities in connection with its merger with Espo's and
      for
      various services rendered and to be rendered pursuant to the exemption for
      non-public offerings under Section 4(2) of the Securities Act, as described
      below. Neither the Company nor any person acting on its behalf offered or sold
      the securities by means of any form of general solicitation or general
      advertising. No underwriter or placement agent was engaged in these
      transactions.




1)
            After
                its formation, the Company entered into an Agreement and Plan of
                Reincorporation Merger as of March 10, 2006, with Espo's. Pursuant
                to the
                merger, in which the Company was the surviving entity, the Company
                issued
                4,920,250 shares of Common Stock. The consideration for the Company's
                shares was an equal number of Espo's shares of common stock, of which
                4,225,427 shares of Common Stock were cancelled, leaving a balance
                of
                694,823 shares of Common Stock. The Company relied upon Section 4(2)
                of
                1933 Act, which provides an exemption from the registration provisions
                of
                section 5 of the 1933 Act for “transactions by an issuer not involving any
                public offering.” The exchange of securities was made without advertising
                (or any other form of “general solicitation”) to a limited number of
                sophisticated persons, with full access to the information that would
                be
                included in a registration statement or other offering document.
                Each
                purchaser, either alone or with their purchaser representatives and
                professional advisors, was determined by the Company, based on their
                prior
                securities experience, to have such knowledge and experience in financial
                and business matters that they are capable of evaluating the merits
                and
                risks of the prospective
                investment.




2)
            On
                March 15, 2006, the Company entered into the Acquisition Agreement
                to
                acquire KMA (Canada) pursuant to which the Company issued 314,400
                shares
                of its common stock to the shareholders of KMA (Canada) in exchange
                for an
                equal amount of KMA (Canada) common stock. The Company relied upon
                Section
                4(2) of the 1933 Act. The exchange of securities was made without
                advertising (or any other form of “general solicitation”) to a limited
                number of sophisticated persons, with full access to the information
                that
                would be included in a registration statement or other offering document.
                Each purchaser, either alone or with their purchaser representatives,
                had
                such knowledge and experience in financial and business matters that
                they
                are capable of evaluating the merits and risks of the prospective
                investment. The consideration for the Company’s shares was an equal number
                of shares of KMA (Canada) common
                stock.




3)
            In
                connection with the March 15thAcquisition Agreement, the Company formed KMA LLC as a special purpose
                entity with the Company as its single member and the holder of all
                of KMA
                LLC's outstanding interests. The Company issued 1,700,000 shares
                of its
                common stock to KMA LLC. The Company relied upon Section 4(2) of
                the 1933
                Act. The exchange of securities was made without advertising (or
                any other
                form of “general solicitation”) to a limited number of sophisticated
                persons, with full access to the information that would be included
                in a
                registration statement or other offering document. Each purchaser,
                either
                alone or with their purchaser representatives, had such knowledge
                and
                experience in financial and business matters that they are capable
                of
                evaluating the merits and risks of the prospective investment. The
                consideration for the issuance of the Company's shares was not cash,
                but
                an equal number of shares of KMA (Canada) common stock. The transaction
                was undertaken to facilitate the deferral of income recognition for
                Canadian tax purposes for the shareholders of
                Exchangeco.






21




4)
            In
                order to enhance the liquidity of the Company's common stock, the
                Company
                effected a share dividend or “stock split” on March 17, 2006. This event
                was accomplished by the issuance of seventeen shares of Company common
                stock for each share of issued and outstanding Company common stock
                on a
                pro rata basis and without consideration to the Company's stockholders.
                As
                per an agreement between the KMA (Canada) shareholders and the Company,
                5,344,800 shares of the Company's common stock were retired to treasury
                and cancelled and the KMA (Canada) shareholders received 1,179,000
                post-split shares of Company common stock. As a result of these
                transactions, the total issued and outstanding shares of the Company’s
                common stock as of April 30, 2006 were 41,890,991. The forward stock
                split
                was exempt from registration with the Commission pursuant to Securities
                Act Section 3(a)(9).




In
      the
      following transactions, the Company relied upon Section 4(2) of 1933 Act, which
      provides an exemption from the registration provisions of section 5 of the 1933
      Act for “transactions by an issuer not involving any public offering”:





1.
            On
                June 16, 2006, the Company issued 25,000 shares of our common stock
                with a
                deemed value of Cdn $0.50 per share to ZA Consulting Inc. in exchange
                for
                investor relation services provided by a consulting company for
                KMA.





2.
            On
                October 20, 2006, the Company issued 150,000 shares of our common
                stock
                with a deemed value of USD $0.19 per share to Xnergy, LLC in exchange
                for
                consulting services.





3.
            On
                November 18, the Company issued 71,429 shares of our common stock
                with a
                deemed value of USD $0.14 per share to Xnergy, LLC in exchange for
                business and financial advisor services.





4.
            On
                December 12, 2006, the Company issued 360,000 shares of our common
                stock
                with a deemed value of USD $0.15 per share to Jeffrey Zeldin in exchange
                for consulting services.





5.
            On
                December 12, 2006, the Company issued 300,000 shares of our common
                stock
                with a deemed value of USD $0.15 per share to Stuart Vandersluis
                in
                exchange for technical consulting services.





6.
            On
                December 13, 2006 the Company issued 59,701 shares of our common
                stock
                with a deemed value of USD $0.1675 per share to Xnergy, LLC in exchange
                for business and financial advisor
                services.





7.
            On
                January 11, 2007, the Company issued 57,471 shares of our common
                stock
                with a deemed value of USD $0.174 per share to Xnergy, LLC in exchange
                for
                business and financial advisor
                services.





8.
            On
                January 19, 2007, the Company issued 1,000,000 shares of our common
                stock
                with a deemed value of USD $0.20 per share Corbitt Rockwell in exchange
                for consulting services.





9.
            On
                February 12, 2007, the Company issued 18,727 shares of our common
                stock
                with a deemed value of $0.534 per share to Xnergy, LLC in exchange
                for
                business and financial advisor services.







22




In
      addition, on January 31, 2007, the Company sold 10,000,000 shares of our common
      stock for a purchase price of $1,000,000 ($0.10 per share), payable $500,000
      on
      January 31, 2007 and $500,000 within thirty days after the effectiveness of
      this
      registration statement. The purchasers of the shares also received warrants
      to
      acquire an additional 10,000,000 shares of our common stock at an exercise
      price
      of $0.20 per share. Incendia Management Group Inc., as agent for the investors,
      received a fee of 10% of 1,000,000 shares of our common stock and warrants
      to
      acquire 1,000,000 shares of our common stock at an exercise price of $0.20
      per
      share. In connection with the sales, each of the Selling Stockholders
      represented and warranted to the Company that the Selling Stockholder: (1)
      is an
      "accredited investor" as that term is defined in Rule 501(a)(3) of Regulation
      D;
      and (2) is not a U.S. Person as defined in Rule 402 of Regulation S. As
      such, the sales of the shares of our common stock were exempt from registration
      under the 1933 Act pursuant to Regulation S.




ITEM
      6.   **MANAGEMENT’S
      DISCUSSION AND ANALYSIS**


The
      following Management's Discussion and Analysis is intended to help the reader
      understand our results of operations and financial condition. Management's
      Discussion and Analysis is provided as a supplement to, and should be read
      in
      conjunction with, our financial statements and the accompanying notes thereto.
      The revenue and operating income (loss) amounts in this Management's Discussion
      and Analysis are presented in accordance with United States generally accepted
      accounting principles.





**OVERVIEW**





KMA
      Global Solutions International, Inc., through our operating subsidiary, KMA
      (Canada), a corporation formed in April 1996 under the laws of the Province
      of
      Ontario, is an innovator and internationally recognized leader in the Electronic
      Article Surveillance ("EAS") market. We serve a diverse and geographically
      dispersed customer base consisting predominantly of retailer suppliers, branded
      apparel, multimedia and pharmaceutical companies and contract manufacturers,
      providing low cost and customized solutions to protect against retail
      merchandise theft. The retail industry generally refers to these losses as
      “inventory shrinkage” or “shrink”. On average, shrink represents nearly 2% of a
      retailer's revenue and can often be much more. Worldwide, retail losses due
      to
      shrinkage are a problem exceeding $70 billion. The Company has developed a
      suite
      of proprietary EAS products to address the specific needs of a changing
      marketplace, using patented processes to manufacture its tags at high speeds
      and
      deliver its products on a just in time basis. Our EAS solutions are designed
      to
      fit the needs of major suppliers to multinational retailers in the apparel,
      multimedia, sporting goods, food and over-the-counter (OTC) pharmaceutical
      and
      health supplement industries.





The
      Company is engaged in the supply of EAS solutions (including the Company's
      products, NEXTagTM and DUAL TagTM), focusing on providing customized solutions in
      the apparel, multi media, sporting goods, food and pharmaceutical industries.
      We
      will grow by concentrating on executing a strategy as a global operating
      company, while maintaining a continued focus on providing customers with
      innovative products and solutions, outstanding service, consistent quality,
      on-time delivery and competitively priced products. Together with continuing
      investments in new product development, state-of-the-art manufacturing
      equipment, and innovative sales and marketing initiatives, management believes
      the Company is well-positioned to compete successfully as a provider of EAS
      tagging solutions to the retail apparel, multimedia and pharmaceutical
      industries, worldwide. The capital needed to fund our growth has been generated
      to date through investment by the founding shareholders and through reinvestment
      of profits and private placements of securities.






23


The
      Company was formed on March 9, 2006 under the laws of the State of Nevada,
      and
      is organized as a holding company structure, with KMA (Canada) and KMA LLC,
      a
      Nevada limited liability company, as wholly-owned subsidiaries. On March 10,
      2006, we entered into a merger agreement with Espo's, a corporation incorporated
      under the laws of the State of New York on September 7, 2001, in which the
      Company was the surviving corporation. Pursuant to the merger, the Company
      issued 1,700,000 shares of its common stock to KMA LLC.





On
      March
      15, 2006, we entered into an acquisition agreement with KMA (Canada) whereby
      we
      purchased from the remaining shareholders of KMA (Canada) an aggregate amount
      of
      314,400 common shares in exchange for 1,179,000 common shares of KMA
      International. Through these series of transactions, the Company acquired,
      directly or indirectly, 100% of the issued and outstanding shares of KMA
      (Canada).





The
      Company's expansion plan includes relocating the majority of our existing
      manufacturing capacity from our Canadian operations primarily to facilities
      in
      Hong Kong, India and Mexico, expanding our sales operation to include Europe
      and
      Asia, as well as relocating our headquarters from Ontario, Canada to a
      strategically located US city.





The
      use
      of EAS systems in the retail environment continues to generate significant
      cost
      savings for retailers. Our management believes that the extremely competitive
      retail environment, and the Company's low cost solutions relative to other
      EAS
      suppliers, places us in a favorable position for the future. The addition of
      new
      high-speed high volume equipment is expected to drive costs of production lower
      and may enable the Company to capture a larger share of the EAS market. With
      the
      completion of the implementation of new production equipment, we plan to open
      production facilities in high-demand locations, thus shortening supply lines
      on
      raw materials, and reducing operating costs through efficiencies, and shipping
      costs for finished goods. We anticipate increased demand for our products in
      international as well as North American markets. Management's ongoing strategy
      includes implementing process improvements to reduce costs in all of our
      manufacturing facilities, re-deploying assets to balance production capacity
      with customer demand, and seeking to expand our production in new and emerging
      markets to minimize labor costs and maximize operating performance
      efficiencies.





**RESULTS
      OF OPERATIONS**





The
      Company’s results of operations for the fiscal year ended January 31, 2007, 2006
      and 2005, in dollars and as a percent of sales, are presented
      below:





**Fiscal
                Years****2007**
            
            
            
            **2006**
            
            
            
            **2005**Sales
            
            
            6,630,884
            
            
            100
            %
            
            6,503,864
            
            
            100
            %
            
            6,621,275
            
            
            100
            %Cost
                of Sales
            
            
            5,342,579
            
            
            81
            %
            
            5,088,708
            
            
            78
            %
            
            5,282,340
            
            
            80
            %Gross
                Profit
            
            
            1,288,305
            
            
            19
            %
            
            1,415,156
            
            
            22
            %
            
            1,338,935
            
            
            20
            %Selling
                General &
                Administrative Expenses
            
            
            2,460,796
            
            
            37
            %
            
            1,305,298
            
            
            20
            %
            
            1,239,503
            
            
            19
            %Income
                Before Income Taxes
            
            
            (1,172,491
            )
            
            (18
            %)
            
            109,858
            
            
            2
            %
            
            99,432
            
            
            2
            %Net
                Income
            
            
            (784,267
            )
            
            (12
            %)
            
            95,182
            
            
            1
            %
            
            74,324
            
            
            1
            %







24




**Sales**





The
      Company's sales increased $127,020 or 2.0% to $6,630,884, for the twelve months
      ended January 31, 2007, compared to $6,503,864 for the twelve months ending
      January 31, 2006 and $6,621,275 for the twelve months ending January 31, 2005.
      There was significant growth of the apparel EAS label market, which we believe
      will continue to grow in the future. This growth, however, was substantially
      offset by a drop in demand for the DualTag product in the DVD and Electronic
      Games segment of the multimedia market, primarily due to the malaise affecting
      that retail segment.





Domestic
      sales, principally comprising revenues generated in and for North America
      amounted to $3,759,747, a 7% decrease over the previous year. Offshore sales,
      which for the most part consist of those generated from our Asian offices,
      consisted of $2,871,137, representing a 19% change from a year
      earlier.




We
      are
      positioned to move forward with larger apparel programs that we anticipate
      will
      deliver increased sales revenue. These programs have just started and we
      anticipate increased sales in this category in the next fiscal year. With the
      addition of new management, we expect to have greater ability to manage our
      anticipated growth and implement our global strategy of cutting costs by placing
      manufacturing facilities in the countries of demand.





Sales
      of
      the Company’s patented NEXTag® sew-in EAS label grew by more than 76% to
      $3,695,245 for the year ended January 31, 2007 as compared to $2,091,536 for
      the
      year ended January 31, 2006 and $2,763,503 in the year ended January 31, 2005,
      as a number of new, branded retail programs were initiated during the fiscal
      year and a number of generic programs continued to expand internationally.
      During the past fiscal year we introduced a number of new feature sets to the
      NEXTagTM product line, including the use of new materials, greater printing
      capability, and precisely matching material and ink colors in order to
      faithfully recreate brand images and logos. We believe these added value items
      will continue to permit the Company to win additional business as more and
      more
      specialty retailers and design groups throughout the world initiate EAS source
      tagging programs using custom branded solutions. We have also completed the
      necessary advance planning that will allow the incorporation of RFID into the
      NEXTag product as specialty retailers begin to incorporate item-level RFID
      into
      their operations.





Although
      largely driven by North American retail accounts, a significant portion of
      our
      NEXTagTM business has migrated to offshore fulfillment, as the majority of
      apparel manufacturing now takes place in overseas markets. In an effort to
      better serve these markets, the Company has, for a number of years now,
      maintained sales offices in both Hong Kong and in Taiwan, but has continued
      to
      manufacture the majority of its products in Canada. We believe that providing
      local representation has been key in helping to fuel growth in this segment,
      and
      as every indication suggests that this sector will continue to expand at a
      significant rate, we have taken steps to establish a manufacturing facility
      in
      Hong Kong, to better serve this important growth market. The new Hong Kong
      facility is scheduled to initiate production by the end of May 2007, and is
      planned to be in full production by the end of June 2007.





Once
      the
      new Hong Kong facility is fully operational, we plan to turn our attention
      to
      another key apparel market by establishing a similar production facility in
      one
      of the principal garment manufacturing centers in India. Current plans are
      to
      bring the new Indian facility into full production during the autumn of
      2007.







25




Once
      fully on line, these two facilities will allow us to realize certain economies,
      by not only physically locating production in the geographical centers where
      most of our finished goods are used, but will permit significant savings in
      raw
      materials, freight and labor costs, positioning our NEXTag product much more
      competitively than it is currently.





The
      Company’s DualTagTM business is based in supplying the only patent pending,
      dual-technology, self-adhesive label in the industry, containing the base
      elements of the two most popular EAS technologies in use today. By providing
      both technologies on a single label, the Company enables manufacturers to tag
      their entire production with a single device, permitting them to maintain a
      single inventory of each product, regardless of what EAS technology is in use
      at
      the store to which the product unit is eventually shipped. Without DualTag,
      manufacturers traditionally find it necessary to maintain multiple inventories
      by label technology, in order to comply with their retail customers’
requirements. We have also completed the necessary advance planning that will
      allow the incorporation of RFID into the DualTag product as specialty retailers
      begin to incorporate item-level RFID into their operations and begin to demand
      its inclusion in their suppliers products.





During
      fiscal 2007, our DualTag business achieved both encouraging gains as
      breakthroughs were realized in new areas such as the nutriceutical and
      pharmaceutical over-the-counter (OTC) markets, but also sustained a difficult
      setback as cost-cutting measures put in place by customers in the weakening
      DVD
      and Electronic games sector had an impact on the Company’s product sales into
      that segment. The loss of this significant channel resulted in an overall drop
      in DualTag sales versus the previous year, with revenues for the year ended
      January 31, 2007 of $1,924,717, versus $3,270,692 for the same period ended
      January 31, 2006, and $2,002,751 in the year ended January 31, 2005, as the
      newly opened segments were not mature enough to offset the sudden and unexpected
      loss represented by what had been our largest DualTag market.





The
      balance of our DualTag business (net of multi media) showed significant growth,
      a trend that we expect to continue as new markets come on line. We feel that
      this is encouraging evidence of the viability of the DualTag as a growth engine,
      bolstering confidence that it will continue to help to propel the Company’s
      future.





**Gross
      Profit**





Gross
      profit was $1,288,305 or 19.4% of sales for the year ended January 31, 2007,
      compared with $1,415,156 or 21.7% for the year ended January 31, 2006 and
      $1,338,935 or 20.2% for the year ended January 31, 2005. The gross profit for
      the twelve months ended January 31, 2007 as compared to the previous year was
      lower, primarily due to i) The differences in exchange rates, and ii)
      T he
      significant shift in product mix in favor of the NEXTag apparel product, coupled
      with the challenges associated with ramping up manufacturing to meet the
      dramatic increase in demand, resulted in higher damage rates due to new
      manufacturing techniques.





Management's
      ongoing strategy to achieve and improve profits includes implementing process
      and purchasing improvements to reduce costs in manufacturing and transferring
      the majority of existing manufacturing capacity from the Company's Canadian
      operations primarily to Hong Kong and India, in order to minimize labor, raw
      materials, and freight.







26





**Selling,
      General and Administrative (SG&A) Expenses**





SG&A
      expenses were $2,385,405 in the year ended January 31, 2007, compared with
      $1,305,298 for the previous year, which ended January 31, 2006 and $1,239,503
      for the year ended January 31, 2005. SG&A expenses, expressed as a percent
      of sales, were 36.0% compared to 20.1% for the twelve months ended January
      31,
      2006 and 18.7% for the twelve months ended January 31, 2005.





The
      increase in the ratio of SG&A expenses to sales is primarily due to: (i) an
      increase in accounting, audit, legal, and consulting fees associated with the
      transition from a private to public corporation, a portion of which management
      does not expect to recur; (ii) increases in wages and benefits. We have hired
      experienced executives to assist in the implementation of our growth plan,
      including: a Vice President of Sales with over 15 years of experience selling
      EAS systems to major retailers in North America; a Vice President of Operations,
      with over 30 years of operations experience, to lead our Global Operations
      requirements; and a Vice President of Business Development with 25 years of
      leadership experience running the leading provider of EAS systems in Canada;
      and
      (iii) higher automobile and travel expenses both as a result of increased
      international travel and additional management. These higher expenses were
      offset to some degree through (i) lower factor fees, and (ii) a research and
      development investment tax credit (per Note 10 of the Financial Statements)





**Operating
      Income (Loss)**





Operating
      loss before taxes was $1,097,100 or 16.5% for the year ended January 31, 2007,
      compared with an operating profit before taxes of $109,858 or 1.7% the previous
      year that ended January 31, 2006, and $99,432 or 1.5% for the year ended January
      31, 2005.





**Taxes
      on Income**





The
      Company experienced an operating loss for the year and therefore recognized
      a
      future tax benefit of $360,697 for the year ended January 31, 2007 versus a
      payable of $14,676 in 2006 and a payable of $25,108 in 2005. The effective
      income tax rates of the future tax provisions for the year ended January 31,
      2007 was 33%. For the years ended January 31, 2006 and 2005, the effective
      rates
      were 13% and 25% respectively . The statutory income tax rate going forward
      for
      the Company, with all of its operating activities taxed in Canada, is
      approximately 36% as a result of applicable combined federal and provincial
      tax
      rates.























27


**Liquidity
      and Capital Resources**





The
      table
      below represents summary cash flow information for the year ended January 31,
      2007, 2006 and 2005 as indicated:




**Fiscal
                  Years****2007**
              
              **2006**
              
              **2005**Net
                  cash from operating activities
              
              
              (622,804
              )
              
              103,673
              
              
              383,381Net
                  cash from investing activities
              
              
              (35,102
              )
              
              74,993
              
              
              (317,506
              )Net
                  cash from financing activities
              
              
              526,221
              
              
              (58,918
              )
              
              (20,834
              )Effect
                  of currency translation adjustments
              
              
              27,688
              
              
              (34,906
              )
              
              (31,072
              )Total
                  change in cash and cash equivalents
              
              
              (104,017
              )
              
              84,842
              
              
              13,969
  ***Overview*** .
      The
      Company had, for the year ended January 31, 2007, current liabilities of
      $1,118,101 and current assets of $953,738. Management believes that the Company
      will generate sufficient cash from its operating activities for the foreseeable
      future, supplemented by an anticipated infusion of capital, to fund its working
      capital needs, strengthen its balance sheet and support its growth strategy
      of
      expanding its geographic distribution and product offerings. The infusion of
      capital is expected to come from the sale of treasury stock and/or newly issued
      shares of common stock to investors in the public capital markets.





***Operating
      Activities*** .
      Cash
      flow from operating activities for the year ended January 31, 2007 resulted
      in a
      negative cash flow of $622,804, as compared to the years ended January 31,
      2006
      and 2005, which saw positive cash flows of $103,673 and $383,381. In the year
      ended January 31, 2007, the net loss, as adjusted for amortization, shares
      issued for services provided and future income taxes, resulted in a negative
      cash flow of $855,348 and offset by changes in non-cash working capital of
      $232,544. Our cash flows from operating activities decreased by $622,804. During
      the years ended January 31, 2006 and 2005, cash flows from operating activities
      increased $103,673 and $383,381. The variances in cash flow from operations
      between years ended January 31, 2007 and January 31, 2006 are primarily the
      result of changes in income/loss before taxes, future income taxes, accounts
      receivable and accounts payable. Future income taxes decrease by $360,697 for
      the year ended January 31, 2007 compared to an increase of future income taxes
      for the year ended January 31, 2006 of $14,676. This is the result of the net
      loss for year ended January 31, 2007. Accounts receivable for the company
      increased $223,134 through the year ended January 31, 2007 as compared to an
      decrease of $58,131 for the year ended January 31, 2006. This difference is
      a
      result of timing of sales. Accounts payable and accrued liabilities for the
      Company decreased $328,819 through the year ended January 31, 2006 as compared
      to Accounts payable and an accrued liabilities increase of $268,700 in the
      year
      ended January 31, 2007. This increase in accounts payable and accrued
      liabilities was primarily the result of timing.





***Financing
      Activities*** .
      The
      Company's cash flow from financing activities for the year ended January 31,
      2007 amounted to $526,221, as a result of the shares to be issued of $487,485,
      an increase in advances from shareholders of $90,202, and a decrease in its
      capital lease obligation of $51,466. By comparison, in the year ended January
      31, 2006 the Company experienced a decrease in its capital lease obligation
      of
      $54,583 and a decrease in advances from shareholders of $4,335, resulting in
      a
      decrease in net cash flow from financing activities of $58,918. Cash flow
      provided by financing activities in 2005 decreased by $20,834.







28




***Investing
      Activities*** .
      In the
      year ended January 31, 2007, the Company experienced a decrease in cash flow
      from investing activities of $35,102. This was due to a decrease in purchases
      of
      equipment and patents of $259,247 offset by deposits on equipment and patents
      of
      $173,084 and advances to shareholders of $51,061. By comparison, in the year
      ended January 31, 2006, the Company experienced an increase in cash flow from
      investing activities of $74,993, in large part due to a decrease in promissory
      notes receivable of $265,325, offset by deposits on equipment and patents that
      amounted to $82,025, the purchase of equipment and patents which amounted to
      $60,202 and advances to shareholders of $48,105. Cash flow used for investing
      activities in 2005 decreased by $317,506.





***Off-Balance
      Sheet Arrangements*** .
      The
      Company has no material transactions, arrangements, obligations (including
      contingent obligations), or other relationships with unconsolidated entities
      or
      other persons that have or are reasonably likely to have a material current
      or
      future impact on its financial condition, changes in financial condition,
      results of operations, liquidity, capital expenditures, capital resources,
      or
      significant components of revenues or expenses.





***Market
      Risk*** .
      In the
      normal course of its business, the Company is exposed to foreign currency
      exchange rate and interest rate risks that could impact its results of
      operations.





We
      sell
      our products worldwide, and a substantial portion of our net sales, cost of
      sales and operating expenses are denominated in foreign currencies. This exposes
      the Company to risks associated with changes in foreign currency exchange rates
      that can adversely impact revenues, net income and cash flow. In addition,
      the
      Company is potentially subject to concentrations of credit risk, principally
      in
      accounts receivable. The Company performs ongoing credit evaluations of its
      customers and generally does not require collateral. Our major customers are
      retailers, branded apparel companies and contract manufacturers that have
      historically paid their balances with the Company.





There
      were no significant changes in the Company's exposure to market risk in the
      past
      three years.





**CRITICAL
      ACCOUNTING POLICIES AND ESTIMATES**





Management
      has identified the following policies and estimates as critical to the Company's
      business operations and the understanding of the Company's results of
      operations. Note that the preparation of this Form 10-KSB requires management
      to
      make estimates and assumptions that affect the reported amounts of assets and
      liabilities, disclosure of contingent assets and liabilities at the date of
      the
      Company's financial statements, and the reported amounts of revenue and expenses
      during the reporting period. Actual results could differ from those estimates,
      and the differences could be material.





**Revenue
      Recognition**





SAB
      No.
      104 requires that four basic criteria be met before revenue can be recognized:
      (1) persuasive evidence of an arrangement exists; (2) delivery has occurred
      or
      services have been rendered; (3) the fee is fixed or determinable; and (4)
      collectibility is reasonably assured. Should changes in conditions cause
      management to determine that these criteria are not met for certain future
      transactions, revenue recognized for a reporting period could be adversely
      affected.







29




**Sales
      Returns and Allowances**





Management
      must make estimates of potential future product returns, billing adjustments
      and
      allowances related to current period product revenues. In establishing a
      provision for sales returns and allowances, management relies principally on
      the
      Company's history of product return rates which is regularly analyzed.
      Management also considers: (1) current economic trends; (2) changes in customer
      demand for the Company's products; and (3) acceptance of the Company's products
      in the marketplace when evaluating the adequacy of the Company's provision
      for
      sales returns and allowances. Historically, the Company has not experienced
      a
      significant change in its product return rates resulting from these factors.
      For
      the twelve months ended January 31, 2007 and 2006, the provision for sales
      returns and allowances accounted for as a reduction to gross sales was not
      material.





**Allowance
      for Doubtful Accounts**





Management
      makes judgments, based on its established aging policy, historical experience
      and future expectations, as to the ability to collect the Company's accounts
      receivable. An allowance for doubtful accounts has been established. The
      allowance for doubtful accounts is used to reduce gross trade receivables to
      their estimated net realizable value. When evaluating the adequacy of the
      allowance for doubtful accounts, management analyzes customer-specific
      allowances, amounts based upon an aging schedule, historical bad debt
      experience, customer concentrations, customer creditworthiness and current
      trends. The Company's accounts receivable at January 31, 2007 was $287,701,
      net
      of an allowance of $0.





**Inventories**





Inventories
      are stated at the lower of cost or market value, and are categorized as raw
      materials, work-in-process or finished goods. The value of inventories
      determined using the first-in, first-out method at January 31, 2007 was $117,702
      for finished goods and $185,415 for raw materials.





On
      an
      ongoing basis, we evaluate the composition of its inventories and the adequacy
      of our allowance for slow-turning and obsolete products. The market value of
      aged inventory is determined based on historical sales trends, current market
      conditions, changes in customer demand, acceptance of the Company's products,
      and current sales activities for this type of inventory.





**Goodwill**





The
      Company did not attribute any value to goodwill as of January 31,
      2007.





**Accounting
      for Income Taxes**





As
      part
      of the process of preparing the consolidated financial statements, management
      is
      required to estimate the income taxes in each jurisdiction in which the Company
      operates. This process involves estimating the actual current tax liabilities,
      together with assessing temporary differences resulting from the different
      treatment of items for tax and accounting purposes. These differences result
      in
      deferred tax assets and liabilities, which are included in the consolidated
      balance sheet. Management must then assess the likelihood that the deferred
      tax
      assets will be recovered and, to the extent that management believes that
      recovery is not more than likely, the Company establishes a valuation allowance.
      If a valuation allowance is established or increased during any period, the
      Company records this amount as an expense within the tax provision in the
      consolidated statement of income. Significant management judgment is required
      in
      determining the Company's provision for income taxes, deferred tax assets and
      liabilities, and any valuation allowance recognized against net deferred tax
      assets. Valuation allowances are based on management's estimates of the taxable
      income in the jurisdictions in which the Company operates and the period over
      which the deferred tax assets will be recoverable.







30


ITEM 7.   FINANCIAL
        STATEMENTS
   **KMA
          GLOBAL SOLUTIONS INTERNATIONAL, INC.**
  CONSOLIDATED
          FINANCIAL
          STATEMENTS
  **FOR
          THE YEARS ENDED JANUARY 31, 2007 AND 2006**
  (expressed
          in U.S.
          dollars)


**INDEX**
            
            **PAGE**Report
              of Independent Registered Public Accounting Firm
            
            32Consolidated
              Balance Sheets
            
            33Consolidated
              Statements of Income and Deficit
            
            35Schedule
              to Consolidated Statements of Income and Deficit
            
            36Consolidated Statements of Cash
              Flows
            
            37Notes to the Consolidated Financial
              Statements
            
            39






31


**REPORT
      OF INDEPENDENT REGISTERED ACCOUNTING FIRM**























To
      the
      Shareholders of


**KMA
      Global Solutions International, Inc.**





We
      have
      audited the accompanying consolidated balance sheets of KMA Global Solutions
      International, Inc. (the “Company”) as at January 31, 2007 and 2006 and the
      consolidated statements of income and deficit and cash flows for each of the
      years in the three-year period ended January 31, 2007. These consolidated
      financial statements are the responsibility of the Company's management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audits provide a
      reasonable basis for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the consolidated financial position of KMA Global Solutions
      International, Inc. as of January 31, 2007 and 2006 and the consolidated results
      of its operations and its cash flows for each of the years in the three-year
      period ended January 31, 2007, in conformity with U.S. generally accepted
      accounting principles.








**McGOVERN,
      HURLEY, CUNNINGHAM, LLP**









**Chartered
      Accountants**





TORONTO,
      Canada


April
      10,
      2007

























KMA
      GLOBAL SOLUTIONS INTERNATIONAL, INC.


**CONSOLIDATED
      BALANCE SHEETS**


AS
      AT
      JANUARY 31,


(expressed
      in U.S. dollars)




**2007**
              **$**
            
            **2006**
              **$****ASSETS****CURRENT**Cash
            
            
            22,710
            
            
            126,727Accounts
                receivable
            
            
            287,701
            
            
            74,773Inventories
                (Note 3)
            
            
            303,117
            
            
            452,055Advances
                to shareholders (Note 4)
            
            
            -
            
            
            50,922Prepaid
                expenses
            
            
            340,210
            
            
            104,980**TOTAL
                CURRENT ASSETS**
            
            
            **953,738**
            
            
            **809,457****DEPOSITS
                ON EQUIPMENT AND PATENTS**
            
            
            57,342
            
            
            231,867**EQUIPMENT
                AND PATENTS**(Note
                5)
            
            
            641,178
            
            
            498,917**FUTURE
                INCOME TAXES**(Note 6)
            
            
            335,958
            
            
            -**DEFERRED
                COSTS**
            
            
            212,404
            
            
            -**2,200,620**
            
            
            **1,540,241**














APPROVED
      ON BEHALF OF THE BOARD:





/s/
      Jeffrey D. Reid ,
      Director





/s/
      Michael McBride ,
      Director


























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







33


KMA
      GLOBAL SOLUTIONS INTERNATIONAL, INC.


**CONSOLIDATED
      BALANCE SHEETS**


AS
      AT
      JANUARY 31,


(expressed
      in U.S. dollars)




**2007**
              **$**
            
            **2006**
              **$****LIABILITIES****CURRENT**Accounts
                payable and accrued liabilities
            
            
            1,062,297
            
            
            829,769Current
                portion of capital lease obligation (Note 7)
            
            
            55,804
            
            
            52,419**TOTAL
                CURRENT LIABILITIES**
            
            
            **1,118,101**
            
            
            **882,188****ADVANCES****FROM
                SHAREHOLDERS**(Note 4)
            
            
            87,053
            
            
            -**CAPITAL
                LEASE OBLIGATION**(Note
                7)
            
            
            207
            
            
            56,787**FUTURE
                INCOME TAXES**(Note 6)
            
            
            -
            
            
            12,836**1,205,361**
            
            
            **951,811****SHAREHOLDERS'
                EQUITY****CAPITAL
                STOCK**(Note
                8)Preferred
                stock, $0.001 par value, 25,000,000 shares authorized and
              none issued and outstandingCommon
                stock, $0.001 par value, 175,000,000 shares authorized,
              42,065,991 shares issued and outstanding and 6,742,175 shares to
                be
              issued
            
            
            42,066
            
            
            461,901**ADDITIONAL
                PAID-IN CAPITAL**(Note
                8)
            
            
            729,098
            
            
            -**SHARES
                TO BE ISSUED**(Note
                8)
            
            
            826,485
            
            
            -**ACCUMULATED
                COMPREHENSIVE INCOME**(Note 8)
            
            
            51,031
            
            
            43,547**(DEFICIT)
                RETAINED EARNINGS**(Note
                8)
            
            
            (653,421
            )
            
            82,982**995,259**
            
            
            **588,430****2,200,620**
            
            
            **1,540,241**

















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








34


KMA
      GLOBAL SOLUTIONS INTERNATIONAL, INC.


**CONSOLIDATED
      STATEMENTS OF INCOME AND DEFICIT**


FOR
      THE
      YEARS ENDED JANUARY 31,


(expressed
      in U.S. dollars)




**2007**
              **$**
            
            **2006**
              **$**
            
            **2005**
              **$****SALES**
            
            
            **6,630,884**
            
            
            **6,503,864**
            
            
            **6,621,275****COST
                OF SALES******Inventories,
                beginning of year
            
            
            452,055
            
            
            616,157
            
            
            338,261Purchases
            
            
            5,193,641
            
            
            4,924,606
            
            
            5,560,236**5,645,696**
            
            
            **5,540,763**
            
            
            **5,898,497**Less:
                Inventories, end of year
            
            
            303,117
            
            
            452,055
            
            
            616,157**5,342,579**
            
            
            **5,088,708**
            
            
            **5,282,340****GROSS
                MARGIN**
            
            
            **1,288,305**
            
            
            **1,415,156**
            
            
            **1,338,935****SELLING,
                GENERAL AND ADMINISTRATIVE**
              **EXPENSES**(Schedule)
            
            
            **2,385,405**
            
            
            **1,305,298**
            
            
            **1,239,503**(Loss)
                income before income taxes
            
            
            (1,097,100
            )
            
            109,858
            
            
            99,432Income
                taxes - future (Note 6)
            
            
            (360,697
            )
            
            14,676
            
            
            25,108**NET
                (LOSS) INCOME FOR THE YEAR**
            
            
            **(736,403**
            **)**
            
            **95,182**
            
            
            **74,324****RETAINED
                EARNINGS (DEFICIT),**
              beginning
                of year (note 8)
            
            
            82,982
            
            
            (12,200
            )
            
            (86,524
            )**(DEFICIT)
                RETAINED EARNINGS,**
              end
                of year (Note 8)
            
            
            **(653,421**
            **)**
            
            **82,982**
            
            
            **(12,200**
            **)****(LOSS)
                EARNINGS PER SHARE**Basic
            
            
            (0.02
            )
            
            0.003
            
            
            0.002Diluted
            
            
            (0.02
            )
            
            0.003
            
            
            0.002Weighted
                average number of common shares
            
            
            40,423,345
            
            
            32,136,800
            
            
            32,009,300









35


KMA
      GLOBAL SOLUTIONS INTERNATIONAL, INC.


**SCHEDULE
      TO CONSOLIDATED STATEMENTS OF INCOME AND DEFICIT**


FOR
      THE
      YEARS ENDED JANUARY 31,


( expressed
      in U.S. dollars)







SELLING
      GENERAL & ADMINISTRATIVE
      EXPENSES


Wages
                  and benefits
              
              
              711,803
              
              
              347,027
              
              
              281,562Outside
                  services and sales commissions
              
              
              416,175
              
              
              108,535
              
              
              184,954Professional
                  fees
              
              
              282,546
              
              
              45,064
              
              
              15,862Travel
                  and automotive
              
              
              213,021
              
              
              174,344
              
              
              154,504Occupancy
                  costs
              
              
              173,723
              
              
              133,587
              
              
              110,113General
              
              
              137,091
              
              
              44,269
              
              
              76,410Factor
                  fees
              
              
              105,066
              
              
              172,739
              
              
              129,375Marketing
                  and promotion
              
              
              94,441
              
              
              46,327
              
              
              77,753Production
                  and warehouse costs
              
              
              84,602
              
              
              55,965
              
              
              46,332Delivery
                  and freight
              
              
              57,381
              
              
              41,281
              
              
              59,776Bank
                  charges and interest
              
              
              42,996
              
              
              24,959
              
              
              21,247Telephone
              
              
              41,403
              
              
              26,867
              
              
              20,456Bad
                  debts
              
              
              (3,498
              )
              
              2,878
              
              
              4,600Recovery
                  of research and development costs
              
              
              (66,434
              )
              
              6,984
              
              
              -Amortization
              
              
              95,089
              
              
              74,472
              
              
              56,5592,385,405
              
              
              1,305,298
              
              
              1,239,503






























T he
      accompanying notes are an integral part of these financial
      statements.








36


KMA
      GLOBAL SOLUTIONS INTERNATIONAL, INC.


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


FOR
      THE
      YEARS ENDED JANUARY 31,


(expressed
      in U.S. dollars)




**2007**
                **$**
              
              **2006**
                **$**
              
              **2005**
                **$****CASH
                  FLOWS FROM OPERATING ACTIVITIES**Net
                  (loss) income for the period
              
              
              (736,403
              )
              
              95,182
              
              
              74,324Adjustments
                  for:Amortization
              
              
              95,089
              
              
              74,472
              
              
              56,559Shares
                  issued for services provided
              
              
              146,663
              
              
              -
              
              
              -Future
                  income taxes
              
              
              (360,697
              )
              
              14,676
              
              
              25,108**(855,348**
              **)**
              
              **184,330**
              
              
              **155,991**Changes
                  in non-cash working capital:(Increase)
                  decrease in accounts receivable
              
              
              (223,134
              )
              
              58,131
              
              
              414,898Decrease
                  (increase) in inventories
              
              
              139,204
              
              
              207,251
              
              
              (244,439
              )Decrease
                  (increase) in prepaid expenses
              
              
              47,774
              
              
              (17,220
              )
              
              93,322Increase
                  (decrease) in accounts payable and accrued liabilities
              
              
              268,700
              
              
              (328,819
              )
              
              (36,391
              )**232,544**
              
              
              **(80,657**
              **)**
              
              **227,390**Cash
                  flows from operating activities
              
              
              **(622,804**
              **)**
              
              **103,673**
              
              
              **383,381****CASH
                  FLOWS FROM INVESTING ACTIVITIES**Decrease
                  in promissory note receivable
              
              
              -
              
              
              265,325
              
              
              (246,952
              )Decrease
                  in advances to shareholders
              
              
              51,061
              
              
              (48,105
              )
              
              87,828Purchase
                  of equipment and patents
              
              
              (259,247
              )
              
              (60,202
              )
              
              (30,855
              )Deposits
                  on equipment and patents
              
              
              173,084
              
              
              (82,025
              )
              
              (127,527
              )Cash
                  flows from investing activities
              
              
              **(35,102**
              **)**
              
              **74,993**
              
              
              **(317,506**
              **)****CASH
                  FLOWS FROM FINANCING ACTIVITIES**Shares
                  to be issued
              
              
              487,485
              
              
              -
              
              
              4,190(Decrease)
                  in bank loan
              
              
              -
              
              
              -
              
              
              (17,480
              )(Decrease)
                  in capital lease obligation
              
              
              (51,466
              )
              
              (54,583
              )
              
              -Increase
                  (decrease) in advances to shareholders
              
              
              90,202
              
              
              (4,335
              )
              
              (7,544
              )Cash
                  flows from financing activities
              
              
              **526,221**
              
              
              **(58,918**
              **)**
              
              **(20,834**
              **)****EFFECT
                  OF CUMULATIVE CURRENCY**
                **TRANSLATION
                  ADJUSTMENTS**
              
              
              **27,668**
              
              
              **(34,906**
              **)**
              
              **(31,072**
              **)**(Decrease)
                  increase in cash
              
              
              (104,017
              )
              
              84,842
              
              
              13,969Cash,
                  beginning of year
              
              
              126,727
              
              
              41,885
              
              
              27,916Cash,
                  end of year
              
              
              **22,710**
              
              
              **126,727**
              
              
              **41,885**






37


KMA
      GLOBAL SOLUTIONS INTERNATIONAL, INC.


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


FOR
      THE
      YEARS ENDED JANUARY 31,


(expressed
      in U.S. dollars)





**SUPPLEMENTAL
                INFORMATION:**Interest
                paid
            
            
            16,319
            
            
            24,959
            
            
            21,247Income
                taxes paid
            
            
            -
            
            
            -
            
            
            -Equipment
                acquired by capital lease
            
            
            -
            
            
            166,985
            
            
            -Shares
                issued as deferred costs
            
            
            217,391
            
            
            -
            
            
            -













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



















38


KMA
      GLOBAL SOLUTIONS INTERNATIONAL, INC.


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


JANUARY
      31, 2007


(expressed
      in U.S. dollars)








**1.**  **DESCRIPTION
      OF THE BUSINESS**


KMA
        Global Solutions International, Inc. (“KMA International” or the “Company”) is
        engaged in the supply of Electronic Article Surveillance (“EAS”) solutions,
        focusing on providing customized solutions in the apparel, multi media, sporting
        goods, food and pharmaceutical industries.




**2.**  **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**





**Basis
      of Presentation**





The
      financial statements have been prepared by management in accordance with
      generally accepted accounting principles in the United States (“U.S. GAAP”). The
      basis of application of accounting principles is consistent with that of the
      previous year. Outlined below are those policies considered particularly
      significant.





**Cash
      and Cash Equivalents**


Cash
      and
      cash equivalents consist of cash and short-term investments with original
      maturities at time of purchase of less than 90 days that are readily convertible
      to known amounts of cash and that are subject to an insignificant risk of a
      material change in value.





**Inventories**


Inventories
      are valued at the lower of cost and net realizable value, with cost being
      determined substantially on the first-in, first-out basis.





**Equipment
      and Amortization**


Equipment
      is stated at acquisition cost. Amortization is provided over the assets'
      estimated useful lives on a straight-line basis over the following
      periods:





Equipment
            5 to 10 yearsComputer equipment
            2 yearsOffice furniture
            5 to 10 yearsEquipment under capital lease
            10
              years





**Patents**


Patents
      are stated at acquisition cost. Amortization is provided on a straight-line
      basis over the term of each patent. Intangible assets are reviewed for valuation
      on an annual basis. When events and circumstances indicate that carrying amounts
      may not be recoverable, a writedown to fair value is charged to income in the
      period that such a determination is made.


39


KMA
      GLOBAL SOLUTIONS INC.


**NOTES
      TO THE FINANCIAL STATEMENTS**


JANUARY
      31, 2007


(expressed
      in U.S. dollars)





**2.**  **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES** (Continued)





**Patents**


Patents
      are stated at acquisition cost. Amortization is provided on a straight-line
      basis over the term of each patent. Intangible assets are reviewed for valuation
      on an annual basis. When events and circumstances indicate that carrying amounts
      may not be recoverable, a writedown to fair value is charged to income in the
      period that such a determination is made.





**Impairment
      of Long-lived Assets**


The
      Company recognizes an impairment loss on long-lived assets when their carrying
      value exceeds the total expected undiscounted cash flows from their use or
      disposition. The Company’s long-lived assets are tested for impairment when an
      event or change in circumstances indicates that their carrying value may not
      be
      recoverable.





**Research
      and Development Costs**


All
      research and development costs, including costs of developing new products,
      changing existing products and production costs, are expensed when incurred.
      Investment tax credits earned on research and development activities are
      recorded as a reduction in the related expenses when there is reasonable
      assurance that the costs qualify and that collection is reasonably assured.





**Leases**


Leases
      have been classified as either capital or operating. A lease which transfers
      substantially all of the benefits and risks incidental to the ownership of
      property is accounted for as if it were an acquisition of an asset and the
      incurrence of an obligation at the inception of the lease. All other leases
      are
      accounted for as operating leases wherein rental payments are charged to
      earnings as incurred. Assets recorded under the capital leases are amortized
      on
      a diminishing balance basis over their estimated useful lives.





**Income
      Taxes**


The
      Company uses the liability method of tax allocation to account for income taxes.
      Future income taxes reflect the net tax effects of temporary differences between
      the carrying amount of assets and liabilities for financial reporting purposes
      and the amounts used for income tax purposes and are measured using tax rates
      substantially enacted at the balance sheet date. The effect of changes in income
      tax rates on future income tax assets and liabilities is recognized in income
      in
      the period that the change becomes substantially enacted. When the future
      realization of income taxes does not meet the test of being more likely than
      not
      to occur, a valuation allowance in the amount of the potential future benefit
      is
      taken and no asset is recognized.













40


KMA
      GLOBAL SOLUTIONS INC.


**NOTES
      TO THE FINANCIAL STATEMENTS**


JANUARY
      31, 2007


(expressed
      in U.S. dollars)





**2.**  **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES** (Continued)





**Revenue
      Recognition**


Revenue
      on products sold is recognized when all significant risks and rewards of
      ownership have passed to the customer which generally occurs at the time of
      shipment and collectibility is reasonably assured.





**Advertising
      Costs**


Advertising
      costs are expensed as incurred.





**Earnings
      per Share**


Basic
      earnings per share is based on the weighted average number of common shares
      outstanding for the year. Diluted earnings per share is computed in accordance
      with the treasury stock method and based on the weighted average number of
      common shares and dilutive common share equivalents. As at January 31, 2007
      and
      2006, there were no dilutive common share equivalents outstanding.





**Accounting
      Estimates and Measurement Uncertainty**


The
      preparation of financial statements in accordance with generally accepted
      accounting principles in the United States requires management to make estimates
      and assumptions that affect the reported amounts of assets and liabilities
      and
      the reported amounts of revenues and expenses during the reporting periods.
      By
      their nature these estimates are subject to measurement uncertainty. The effect
      on the financial statements of changes in such estimates in future periods
      could
      be material and would be accounted for in the period the change
      occurs.





**Foreign
      Exchange**





Foreign
      Currency Transactions


Monetary
      assets and monetary liabilities in foreign currencies have been translated
      at
      exchange rates in effect at January 31, 2007 and 2006; income and expenses
      at
      average exchange rates during the period. Exchange gains or losses from such
      translation practices are reflected in the income statement.





Basis
      of Presentation


The
      Company’s functional currency is the Canadian dollar. These financial
      statements, however, are presented in U.S. dollars with assets and liabilities
      translated using the year end rate of exchange and revenue and expenses
      translated using the average rate of exchange for the year. The related foreign
      exchange gains and losses arising on translation are included as other
      comprehensive income.




41




KMA
        GLOBAL SOLUTIONS INC.
 **NOTES
        TO THE FINANCIAL STATEMENTS**
 JANUARY
        31, 2007
 (expressed
        in U.S. dollars)







2.  
**SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**(Continued)


**Recently
      Issued Accounting Pronouncements**





In
      February 2006, the FASB issued SFAS No. 155 “Accounting for Certain Hybrid
      Financial Instruments: an amendment of FASB Statement No. 133 and 140”. SFAS No.
      155 simplifies the accounting for certain derivatives embedded in other
      financial instruments by allowing them to be accounted for as a whole if the
      holder elects to account for the whole instrument on a fair value basis. SFAS
      No. 155 also clarifies and amends certain other provisions of SFAS No. 133
      and
      SFAS No. 140. SFAS No. 155 is effective for all financial instruments acquired,
      issued or subject to a remeasurement event occurring in fiscal years beginning
      after September 15, 2006. Earlier adoption is permitted, provided the entity
      has
      not yet issued financial statements, including for interim periods, for that
      fiscal year. The Company does not expect the adoption of SFAS No. 155 to have
      a
      material impact on its financial statements, as it currently has no financial
      instruments within the scope of SFAS No. 155.





In
      March
      2006, the FASB released SFAS No. 156 “Accounting for Servicing of Financial
      Assets: an amendment of FASB Statement No. 140” to simplify accounting for
      separately recognized servicing assets and servicing liabilities. SFAS No.
      156
      permits an entity to choose either the amortization method or the fair value
      measurement method for measuring each class of separately recognized servicing
      assets and servicing liabilities after they have been initially measured at
      fair
      value. SFAS No. 156 applies to all separately recognized servicing assets and
      liabilities acquired or issued after the beginning of an entity’s fiscal year
      that begins after September 15, 2006. The Company does not anticipate the
      adoption of SFAS No. 156 will have a material impact on its financial
      statements.





In
      July
      2006, the FASB issued FIN 48 “Accounting for Uncertainty in Income Taxes”. This
      interpretation requires that the entity recognizes in its financial statements
      the impact of a tax provision if that position is more likely than not of being
      sustained on audit, based on the technical merits of the position. The
      provisions of FIN 48 is effective for fiscal years beginning after December
      15,
      2006, with the cumulative effect of the change in accounting principle recorded
      as an adjustment to opening retained earnings. The Company is currently
      evaluating the impact of adopting FIN 48 on its financial
      statements.





In
      September 2006, the FASB issued SFAS No. 157 “Fair Value Measurement”. SFAS No.
      157 defines fair value, establishes a framework for measuring fair value, and
      expands disclosures about fair value measurements. This Statement shall be
      effective for financial statements issued for fiscal years beginning after
      November 15, 2007, and interim periods within those fiscal years. Earlier
      application is encouraged, provided that the reporting entity has not yet issued
      financial statements for that fiscal year, including any financial statements
      for an interim period within that fiscal year. The provisions of this statement should
      be
      applied prospectively as of the beginning of the fiscal year in which this
      statement is initially applied, except in some circumstance where the statement
      shall be applied retrospectively. The Company is currently evaluating the impact
      of adopting SFAS No. 157 on its financial statements.







42


KMA
          GLOBAL SOLUTIONS INC.
 **NOTES
          TO THE FINANCIAL STATEMENTS**
 JANUARY
          31, 2007
 (expressed
          in U.S. dollars)





The
      FASB
      released SFAS No. 158 “Employers” Accounting for Defined Benefit Pension and
      Other Post-retirement Plans: an amendment of FASB Statements No. 87, 88, 106
      and
      132(R) “which requires an employer to recognize the over funded or under funded
      status of defined benefit and other postretirement plans as an asset or
      liability in its statement of financial position and to recognize changes in
      that funded status in the year in which the changes occur through an adjustment
      to comprehensive income. This statement is effective for fiscal year ending
      after December 15, 2006. The Company does not expect the adoption of SFAS No.
      158 to have a material impact on its financial statements, as it currently
      has
      no Defined Benefit Pension and Other Postretirement Plans within the scope
      of
      SFAS No. 158.




On
      December 16, 2004, the Financial Accounting Standards Board (“FASB”) issued FASB
      Statement No. 123 (revised 2004), *Share-Based
      Payment (SFAS 123(R)* ),
      which
      is a revision of FASB Statement No. 123, *Accounting
      for Stock-Based Compensation* .
      SFAS
      123(R) supersedes APB Opinion No. 24, *Accounting
      for Stock Issued to Employees* ,
      and
      amends FASB Statement No. 95, Statement of Cash Flows. Generally, the approach
      in SFAS 123(R) requires all share based payments to employees, including grants
      of employee stock options, to be recognized in the income statement based on
      their fair values. Pro forma disclosure is no longer an alternative. This
      statement will be effective for fiscal periods beginning after June 15, 2005,
      on
      a modified prospective basis.





In
      February 2007, the FASB issued SFAS No.159, the *Fair
      Value Option for Financial Assets and Financial Liabilities* -
      including an amendment to FAS 115. This standard permits a company to choose
      to
      measure certain financial assets, financial liabilities and firm commitments
      at
      fair value. The standard is effective for fiscal years beginning after November
      15, 2007. The Company is currently evaluating the impact SFAS No.159 will have
      on its financial condition and results of operations.





In
      March
      2007, the FASB met to discuss the SEC’s interpretation of SFAS 133, *Accounting
      for Derivative Instruments and Hedging Activities* .
      The
      FASB agreed with the SEC’s interpretation that warrants with an exercise price
      denominated in a currency other than the issuer's functional currency are
      required to treat the fair value of the warrants as a liability and to mark
      to
      market those warrants on a current basis with a corresponding gain or loss
      recorded in loss from operations. The FASB decided that the SEC’s interpretation
      could be adopted prospectively. The Company's functional currency is Canadian
      dollars. The Company expects the adoption of this guidance will not have a
      material impact on its results of operations.









43


KMA
      GLOBAL SOLUTIONS INTERNATIONAL, INC.


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


JANUARY
      31, 2007


(expressed
      in U.S. dollars)








**3.**  **INVENTORIES**




2007
            
            2006$
            
            $Finished
                goods
            
            
            117,702
            
            
            206,654Raw
                materials
            
            
            185,415
            
            
            245,401303,117
            
            
            452,055




**4.**  **ADVANCES
      TO (FROM) SHAREHOLDERS**





Advances
      to (from) shareholders are non-interest bearing, are unsecured and have no
      fixed
      terms of repayment.





**5.**  **EQUIPMENT
      AND PATENTS**




Accumulated
            
            2007Cost
            
            Amortization
            
            Net$
            
            $
            
            $Equipment
            
            
            892,915
            
            
            460,364
            
            
            432,551Equipment
                under capital lease
            
            
            161,594
            
            
            29,626
            
            
            131,968Patents
            
            
            81,166
            
            
            19,049
            
            
            62,117Computer
                equipment
            
            
            36,379
            
            
            24,549
            
            
            11,830Office
                furniture
            
            
            4,720
            
            
            2,008
            
            
            2,7121,176,774
            
            
            535,596
            
            
            641,178





**5.**  **EQUIPMENT
      AND PATENTS** (Continued)





Accumulated
            
            2006Cost
            
            Amortization
            
            Net$
            
            $
            
            $Equipment
            
            
            684,211
            
            
            414,623
            
            
            269,588Equipment
                under capital lease
            
            
            166,985
            
            
            13,916
            
            
            153,069Patents
            
            
            79,303
            
            
            14,676
            
            
            64,627Computer
                equipment
            
            
            22,779
            
            
            12,375
            
            
            10,404Office
                furniture
            
            
            4,214
            
            
            2,985
            
            
            1,229957,492
            
            
            458,575
            
            
            498,917





44


KMA
      GLOBAL SOLUTIONS INTERNATIONAL, INC.


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


JANUARY
      31, 2007


(expressed
      in U.S. dollars)








**6.**  **INCOME
      TAXES**




The
      reconciliation of the income tax provision calculated using the combined
      Canadian federal and provincial statutory income tax rate with the income tax
      provision in the consolidated financial statements is as follows:




2007
            
            2006$
            
            $Income
                tax provision at combined Canadian federal and
              provincial statutory rate of 36.12% (2006-18.62%)
            
            
            (395,977
            )
            
            20,456Adjustments
                to benefit resulting from:
              Change in effective tax rate
            
            
            11,674
            
            
            -Equipment
                and patents
            
            
            13,648
            
            
            -Other
            
            
            9,958
            
            
            (5,780
            )(360,697
            )
            
            14,676





Significant
      components of the Company’s future income tax assets and liabilities are as
      follows:




2007
            
            2006$
            
            $Future
                income tax assets:
              Losses carried forward
            
            
            411,800
            
            
            19,908Future
                income tax liabilities:
              Equipment and patents
            
            
            (75,842
            )
            
            (32,744
            )Future
                tax asset (liability)
            
            
            335,958
            
            
            (12,836
            )


45


KMA
      GLOBAL SOLUTIONS INTERNATIONAL, INC.


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


JANUARY
      31, 2007


(expressed
      in U.S. dollars)





6.  
**INCOME
      TAXES**(Continued)





The
      Company has net operating loss carry-forwards of $1,149,366 which expire through
      January 31, 2027 as follows:




2009
            
            2027$
            
            $Net
                operating loss carry-forward
            
            
            52,266
            
            
            1,097,100





**7.**  **OBLIGATIONS
      UNDER CAPITAL LEASE**





The
      Company has entered into a leasing agreement for equipment dated March 15,
      2005.
      The lease bears an effective rate of interest of 13.8% per annum, requires
      monthly payments of $5,007, and is secured by the equipment.





The
      following is a summary of future minimum lease payments under this capital
      lease
      expiring February 15, 2008, together with the present balance of the
      obligations:




2007$Periods
                ending:January
                31, 2008
            
            
            55,804January 31, 2009
            
            
            20756,011




**8.**  **SHAREHOLDERS’
      EQUITY**





Continuity
      of Shareholders’ Equity - KMA Global Solutions Inc. (“ KMA Canada”) prior to
      reverse merger




**Additional****Common**
            
            **Par
                Value**
            
            **Paid-In**
            
            **Shares
                to**
            
            **Comp.**
            
            **Accum.****Shares**
            
            **@
                $0.001**
            
            **Capital**
            
            **be
                issued**
            
            **Income**
            
            **Earnings**January
                31, 2006
            
            
            32,136,800
            
            
            -
            
            
            461,901
            
            
            -
            
            
            43,547
            
            
            82,982Issuance
                of shares for
              consulting services
            
            
            408,000
            
            
            -
            
            
            52,173
            
            
            -
            
            
            -
            
            
            -Issuance
                of shares for
              finders fees
            
            
            1,700,000
            
            
            -
            
            
            217,391
            
            
            -
            
            
            -
            
            
            -March
                15, 2006
            
            
            34,244,800
            
            
            -
            
            
            731,465
            
            
            -
            
            
            43,547
            
            
            82,982


46


KMA
      GLOBAL SOLUTIONS INTERNATIONAL, INC.


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


JANUARY
      31, 2007


(expressed
      in U.S. dollars)








**8.**  **SHAREHOLDERS’
      EQUITY** (Continued)





**Continuity
      of Shareholders’ Equity - KMA Global Solutions International,
      Inc**





**Additional****Common**
            
            **Par
                Value**
            
            **Paid-In**
            
            **Shares
                to**
            
            **Comp.**
            
            **Accum.****Shares**
            
            **@
                $0.001**
            
            **Capital**
            
            **be
                issued**
            
            **Income**
            
            **Earnings**January
                31, 2006
            
            4,920,250
            
            
            4,920
            
            
            166,421
            
            
            -
            
            
            -
            
            
            (171,341
            )Retired
                to treasury
            
            (4,225,427
            )
            
            (4,225
            )
            
            4,225
            
            
            -
            
            
            -
            
            
            -17:1
                share split
            
            11,117,168
            
            
            11,117
            
            
            (11,117
            )
            
            -
            
            
            -
            
            
            -Issuance
                of shares in
              reverse merger
            
            34,244,800
            
            
            34,245
            
            
            525,878
            
            
            -
            
            
            43,547
            
            
            82,982Accumulated
                deficit
              acquired in
              reverse merger (d)
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            171,341Retirement
                of shares
            
            (5,344,800
            )
            
            (5,345
            )
            
            5,345
            
            
            -
            
            
            -
            
            
            -Issuance
                of
              replacement
              shares (d)
            
            1,179,000
            
            
            1,179
            
            
            (1,179
            )
            
            -
            
            
            -
            
            
            -Currency
                translation
              adjustment
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            4,601
            
            
            -Issuance
                of shares
              for investor
              relations services
              (e)
            
            25,000
            
            
            25
            
            
            11,025
            
            
            -
            
            
            -
            
            
            -Issuance
                of shares
              for consulting
              services (f)
            
            150,000
            
            
            150
            
            
            28,500
            
            
            -
            
            
            -
            
            
            -Shares
                to be issued
            
            6,742,175
            
            
            -
            
            
            -
            
            
            826,485
            
            
            2,883
            
            
            -Net
                loss
            
            -
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (736,403
            )January
                31,2007
            
            **48,808,166**
            
            **42,066**
            
            
            **729,098**
            
            
            **826,485**
            
            
            **51,031**
            
            
            **(653,421**
            **)**





47


KMA
      GLOBAL SOLUTIONS INTERNATIONAL, INC.


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


JANUARY
      31, 2007


(expressed
      in U.S. dollars)











**8.**  **SHAREHOLDERS’
      EQUITY** (Continued)





During
      the period ended January 31, 2007, the following transactions
      occurred:





(a)
            On
                February 15, 2006, KMA Canada issued 120,000 common shares (408,000
                post
                split reorganization common shares) with a deemed value of Cdn $0.50
                per
                share in exchange for services rendered by a group of consultants
                of KMA
                Canada.





(b)
            On
                February 28, 2006, KMA Canada issued 500,000 common shares (1,700,000
                post
                split reorganization common shares) with a deemed value of Cdn $0.50
                per
                share as an advance on finders fees in relation to a planned equity
                financing. The advance has been reflected as a deferred cost until
                such
                time as the planned equity financing is
                completed.





(c)
            On
                March 1, 2006, pursuant to a resolution of the Board of Directors,
                the
                issued and outstanding common shares of KMA Canada were subject to
                a
                reverse stock split at a ratio of five (5) shares to one (1), reducing
                the
                number of shares outstanding from 10,072,000 to 2,014,400 (34,244,800
                post
                split reorganization common
                shares).





(d)
            KMA
                Canada and KMA International, a corporation organized under the laws
                of
                the State of Nevada entered into an acquisition agreement dated March
                15,
                2006. Pursuant to the terms of the agreement and upon the completion
                of
                satisfactory due diligence and receipt of applicable regulatory and
                shareholder approvals, KMA International acquired 100% of the outstanding
                shares of the capital stock of KMA Canada in exchange for 34,244,800
                post
                split reorganization common shares.





























48


KMA
      GLOBAL SOLUTIONS INTERNATIONAL, INC.


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


JANUARY
      31, 2007


(expressed
      in U.S. dollars)








**8.**  **SHAREHOLDERS’
      EQUITY** (Continued)





(34,244,800
      post split reorganization shares being the aggregate of 28,900,000 owned by
      KMA
      LLC and 5,344,800 owned by KMA Canada shareholders.) Pursuant to an agreement
      between the KMA Canada shareholders and KMA International, the shares in KMA
      International owned by the KMA Canada shareholders were retired to treasury
      and
      cancelled and the KMA Canada shareholders received 1,179,000 post split
      reorganization shares.




KMA
      International is the surviving corporation as a result of a merger transaction
      with Espo’s, Ltd., a corporation formed under the laws of the State of New York.
      The merger occurred March 15, 2006. At the time of the merger transaction,
      Espo’s, Ltd. was a non-SEC reporting corporation. As a result of the merger and
      acquisition transactions the former shareholders of Espo’s, Ltd. hold 11,811,991
      or 28.2% of the post split reorganization common shares of KMA International.
      Pursuant to the merger agreement, the remaining 71,832,259 post split
      reorganization shares (4,225,427 pre split reorganization shares), held by
      individuals that were former shareholders of Espo’s, were retired to treasury
      effective March 15, 2006 and cancelled on May 19, 2006.




The
      terms
      of the merger transaction and the acquisition agreement provided that the mind
      and management of KMA International would be replaced by the officers and
      directors of KMA Canada and having had no significant business activity for
      a
      number of years, upon the effective time of the acquisition, KMA International
      adopted the business plan of KMA Canada. The transaction was therefore accounted
      for as a reverse acquisition with KMA Canada as the acquiring party and KMA
      International as the acquired party, in substance, a reorganization of KMA
      Canada. Generally accepted accounting principles in the United States of America
      require, among other considerations, that a company whose stockholders retain
      a
      majority interest in a business combination be treated as the acquirer for
      accounting purposes. Accordingly, the results of operations for the periods
      prior to the combination are those of KMA Canada.







(e)
            On
                June 16, 2006, KMA International issued 25,000 common shares with
                a deemed
                value of Cdn $0.50 per share in exchange for investor relation services
                provided by a consulting company for KMA
                International.





(f)
            On
                October 20, 2006, KMA International issued 150,000 common shares
                with a
                deemed value of USD $0.19 per share in exchange for consulting services
                .





(g)
            On
                January 31, 2007, a group of investors agreed to purchase 10,000,000
                shares of the company’s common stock at a price of USD $0.10 per share.
                The total












49


KMA
      GLOBAL SOLUTIONS INTERNATIONAL, INC.


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


JANUARY
      31, 2007


(expressed
      in U.S. dollars)








**8.**  **SHAREHOLDERS’
      EQUITY** (Continued)





(h)
            purchase
                price of USD $1,000,000 shall be paid to KMA International as follows:
                (i)
                $500,000 payable upon Closing and (ii) $500,000 payable within 30
                days of
                the effective date of the Registration Statement. The agreement includes
                10,000,000 Warrants issued to the investors, which shall be exercisable
                only within 2 years of the effective date of the Registration Statement,
                at an exercise price of USD $0.20 per share. Upon closing, the Agent
                received 1,000,000 common shares, together with Warrants exercisable
                for 2
                years from the effective date of the Registration Statement, at an
                exercise price of USD $ 0.20 per share. As of January 31, 2007 KMA
                International received $487,485. A registration statement for these
                shares
                was filed on March 12, 2007.





(i)
            On
                January 19, 2007, KMA International agreed to issue 1,000,000 common
                shares at USD $0.20 per share with piggyback registration rights
                in
                exchange for consulting services





(j)
            On
                December 12, 2006, KMA International agreed to issue 360,000 common
                shares
                at USD $0.15 per share with piggyback registration rights in exchange
                for
                consulting services.





(k)
            On
                December 12, 2006, KMA International agreed to issue 300,000 common
                shares
                at USD $0.15 per share with piggyback registration rights in exchange
                for
                consulting services.





(l)
            On
                January 31, 2007, KMA International agreed to issue 207,328 common
                shares
                for consulting services. The shares were valued as follows; 71,429
                common
                shares at USD $0.14 per share, 59,701 common shares at USD $0 .17
                per
                share , 57,471 common shares at USD $0.17 per share and 18,727 common
                shares at USD $0.53 per share.





**9.**  **COMMITMENTS**





a)
            The
                Company is committed to minimum annual rentals under a long-term
                lease for
                premises which expires October 31, 2008. Minimum rental commitments
                remaining under this lease approximate $171,432 including $97,961
                due
                within one year and $73,471 due in 2009. The Company is also responsible
                for common area costs.





b)
            The
                Company has entered into various vehicle leases and has accounted
                for them
                as operating leases. Obligations due approximate $75,300 including
                $52,852
                within one year, $18,149 due in 2009 and $4,299 due in fiscal
                2010.







50


KMA GLOBAL SOLUTIONS INTERNATIONAL, INC.


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


JANUARY
      31, 2007


(expressed
      in U.S. dollars)








**10.
      RESEARCH AND DEVELOPMENT COSTS**





As
      of
      January 31, 2004, the Company had a research and development program which
      was
      eligible for investment tax credits of $65,507. The investment tax credits
      earned are generally subject to audit by Canada Revenue Agency ("CRA") before
      refund or reduction of income taxes payable is allowed. Due to the technical
      nature of the development undertaken by the Company and CRA's changing
      interpretation of qualifying activities, there is no certainty that the projects
      claimed will qualify. During the period ended January 31, 2007, the Company
      received a refund of $66,434 plus interest. The refund has been accounted for
      as
      a reduction in selling, general and administrative expenses.





**11.**  **FINANCIAL
      INSTRUMENTS**





**Fair
      Value**





Generally
      accepted accounting principles in the United States require that the Company
      disclose information about the fair value of its financial assets and
      liabilities. Fair value estimates are made at the balance sheet date, based
      on
      relevant market information and information about the financial instrument.
      These estimates are subjective in nature and involve uncertainties in
      significant matters of judgment and therefore cannot be determined with
      precision. Changes in assumptions could significantly affect these
      estimates.





The
      carrying amounts for cash, accounts receivable and accounts payable and accrued
      liabilities on the balance sheet approximate fair value because of the limited
      term of these instruments.





**Foreign
      Exchange Risk**





Certain
      of the Company's sales and expenses are incurred in United States currency
      and
      are therefore subject to gains and losses due to fluctuations in that
      currency.





**Credit
      Risk**





The
      Company is exposed, in its normal course of business, to credit risk from its
      customers. No one single party accounts for a significant balance of accounts
      receivable.





**Interest
      Rate Risk**





The
      Company has interest-bearing borrowings for which general rate fluctuations
      apply.







51




KMA
      GLOBAL SOLUTIONS INTERNATIONAL, INC.


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


JANUARY
      31, 2007


(expressed
      in U.S. dollars)








12.  
**SUBSEQUENT
      EVENTS**




See
      Note
      8(g).













































52


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


None.





ITEM
      8A.   **CONTROLS
      AND PROCEDURES**


Evaluation
      of Disclosure Controls and Procedures





Management,
      including our Chief Executive Officer and Chief Financial Officer, has evaluated
      the effectiveness of our disclosure controls and procedures (as defined in
      Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered
      by this report, and takes note that the filing with the Securities and Exchange
      Commission of our first Form 10-QSB was delayed and the second Form 10-QSB
      was
      filed on time.





Based
      upon its evaluation, management concluded that our disclosure controls and
      procedures were inadequate and not fully effective. Management has revised
      and
      enhanced our accounting review and scheduling procedures as well as instituted
      new training and other support measures for its accounting personnel to ensure
      that material information relating to periodic Exchange Act reports, including
      information from our consolidated subsidiaries, will be made known to them
      by
      the staff and officers of those entities, particularly during the periods in
      which the preparation of our Quarterly or Annual Reports shall
      occur.





Changes
      in Internal Controls





With
      the
      exception of our revised accounting review and scheduling procedures, which
      are
      intended to eliminate any delays in the filing of our periodic financial
      reports, there have been no changes in our internal controls over financial
      reporting or in other factors identified in connection with the evaluation
      that
      occurred during our last fiscal year that have materially affected, or are
      reasonably likely to materially affect, our internal controls over financial
      reporting. Accordingly, the only corrective actions required or undertaken
      were
      for new and enhanced procedures for the review and filing of our periodic
      financial reports.




**ITEM
      8A(T).**  **CONTROLS
      AND PROCEDURES**





Not
      applicable.





ITEM
      8B.   **OTHER
      INFORMATION**




None.







53




**PART
      III**


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




***Executive
      Officers and Directors***





Our
      executive officers and directors are as follows:




**Name**
            **Age**
            **Position**
            **Period
                of Service as a Director**Jeffrey
                D. Reid
            48
            Chief
                Executive Officer, President and
              Chairman
                of the Board of Directors
            March
                2006 to PresentWilliam
                Randal Fisher
            46
            Secretary/Treasurer
            N/ALaura
                Wilkes
            48
            Executive
                Vice Presidentfor
                KMA (Canada)
            N/ANorm
                Nowlan
            51
            Vice
                President of Operations for KMA (Canada)
            N/AScott
                Dixon
            49
            Vice
                President, Business Development (Canada)
            N/AMichael
                McBride
            50
            Director
            March
                2006 to PresentMichael
                J. Riley
            52
            Director
            March
                2006 to Present




The
      business experience during the past five years of each of the persons presently
      listed above as an Officer or Director of the Company is as
      follows:




**Jeffrey
      D. Reid** , has
      been the President and Chief Executive Officer of KMA (Canada) since its
      inception in 1996. Mr. Reid became President, Chief Executive Officer and
      Chairman of the Board of the Company in March 2006. Mr. Reid has over 20 years
      of experience in manufacturing in China and North America, and marketing and
      sales in the North American and European markets. Prior to joining KMA (Canada),
      he owned and operated Lux Trading Company Limited prior to which he was General
      Manager of Avon Sportswear. Mr. Reid holds a Bachelor of Commerce from the
      University of Windsor, Ontario.




**William
      Randal Fisher** ,
      Secretary and Treasurer for the Company since March 2006, brings extensive
      knowledge and experience in retail manufacturing and packaging, including
      expertise in customer order management, shipping and computer related interface.
      Prior to joining the Company, Mr. Fisher managed a team of nearly 400 people
      as
      the Packaging, Warehouse & Distribution Manager for Panasonic Disc Services
      Corporation. Operating in the DVD & Game Entertainment area, Mr. Fisher was
      responsible for implementation of ISO 9002/1401 certification as well as
      integration of WMS & RF technology into supply chain processes.




**Laura
      Wilkes,** Executive Vice President, is responsible for leadership of the KMA Canada
      operations team in Mississauga and the distributor network in both Asia and
      the
      America’s, including strategic planning, business development, and ongoing
      improvement of operations. She also currently acts as the senior financial
      manager coordinating all internal finance functions and leading all external
      liaison with vendors. Mrs. Wilkes has over 25 years of varied operational
      experience to the company, including her role as a Plant Controller with Kellogg
      Canada.











54




**Norm
      Nowlan** ,
      Vice
      President of Operations, joined the KMA executive team as Vice President,
      Operations in May of 2006. Norm comes directly to KMA from the Canadian discount
      icon, SAAN Stores Ltd, where he gained more than 30 years of retail experience,
      much of it spent in the executive ranks leading such functional departments
      as
      Operations and Business Development. His experience and broad knowledge of
      the
      retail landscape throughout North American will prove invaluable to KMA as
      we
      execute our strategic plans for growth.




**Scott
      Dixon** ,
      has
      been the Vice President of Business Development for KMA since April of 2006.
      He
      has a history of leading subsidiary operations of multinational corporations
      into new markets and brings to KMA more than 25 years of EAS expertise
      specializing in retail loss prevention and source-tagging to prevent theft
      and
      inventory loss. From 2004 until 2005, he was Vice President and General Manager
      of Novar Controls Ltd., where he led the launch of a new division: Novar
      Integrated Security Services. Novar Controls was subsequently acquired by
      Honeywell. Prior to his term at Novar, Mr. Dixon was Vice President and General
      Manager of ADT Security Services Canada Ltd., following the acquisition of
      Sensormatic Canada by Tyco Fire and Security, the continuation of a role that
      began in 1990 as President & Managing Director of Sensormatic Canada
      Inc.





**Michael
      J. Riley** was
      elected a director of the Company in March 2006. Mr. Riley is a founding
      shareholder and has held the position of Managing Director of Capital
      Underwriters Corporation and Capital Underwriters Inc. for each of the past
      five
      years. He holds a Bachelor of Arts and a Bachelor of Commerce (Honors) from
      the
      University of Manitoba.




**Michael
      McBride** was
      elected Director of the Company in March 2006. Mr. McBride is a member in good
      standing of the Law Society of Upper Canada and has practiced in the area of
      general corporate and real estate law as a partner in the law firm McBride
      Wallace Laurent & Cord LLP since 1982.




No
      director, officer or affiliate of the Company has, within the past five years,
      filed any bankruptcy petition, been convicted in or been the subject of any
      pending criminal proceedings, or is any such person the subject or any order,
      judgment, or decree involving the violation of any state or federal securities
      laws.




The
      Company has not compensated any director for service on the Board of Directors
      or any committee thereof. The Company currently does not have any standing
      committees.




Currently,
      there is no arrangement, agreement or understanding between management and
      non-management stockholders under which non-management stockholders may directly
      or indirectly participate in or influence the management of the affairs of
      the
      Company. Present management openly accepts and appreciates any input or
      suggestions from stockholders. However, the Board is elected by the stockholders
      who have the ultimate say, by virtue of their voting rights, in who represents
      them on the Board. There are no agreements or understandings for any officer
      or
      Director to resign at the request of another person and none of the current
      offers or Directors are acting on behalf of, or will act at the direction of
      any
      other person.




55




Although
      the Company’s securities are not quoted on NASDAQ, the Company has elected to
      apply the NASDAQ Marketplace Rules regarding the definition of “independence”
for the members of the Board of Directors. Under the NASDAQ Marketplace Rules,
      directors Michael J. Riley and Michael McBride qualify as “independent.” Based
      upon current NASDAQ Marketplace Rules, Michael J. Riley currently qualifies
      as
      an “audit committee financial expert” for purposes of SEC rules, adopted
      pursuant to the Sarbanes-Oxley Act of 2002.




***Section
      16(a) Beneficial Owner Reporting Compliance***





Section 16(a)
      of the Securities Exchange Act of 1934 requires that our directors and executive
      officers and the beneficial owners of more than 10% of the Company’s registered
      equity securities (the reporting persons) file with the Securities and Exchange
      Commission (SEC) initial reports of, and subsequent reports of changes in,
      their
      beneficial ownership of the Company’s equity securities. The reporting persons
      are required to furnish us with copies of all such Section 16(a) reports.
      Based solely on our review of the copies of such Section 16(a) reports and
      written representations from certain reporting persons furnished to us, we
      believe that the reporting persons complied with all applicable
      Section 16(a) filing requirements during fiscal year 2006.




***Code
      of Ethics***




T he
      Company has a Code of Ethics that applies to all Company employees, including
      its Chief Executive Officer, Chief Financial Officer, as well as members of
      the
      Board of Directors. The Code of Ethics is attached hereto as Exhibit
      14.




***Director
      Nominations***




The
      Board
      of Directors will consider all potential candidates for nomination by the Board
      of Directors for election as directors who are recommended by the Company’s
      stockholders, directors, officers, and employees. All director recommendations
      should be sent to the Board of Directors, c/o William Randal Fisher, KMA
      Global Solutions International, Inc., 5570A
      Kennedy Road Mississauga, Ontario, Canada L4Z2A9 .
      The
      Board of Directors will screen all potential director candidates, regardless
      of
      the source of their recommendation. The Board of Director’s review will be based
      on the written materials provided with respect to a potential director
      candidate. The Board of Director will evaluate and determine whether a potential
      candidate meets our qualifications and posses qualities and skills commensurate
      with the role of director and whether requesting additional information or
      an
      interview is appropriate.













56





***Compensation
      of Directors***





Directors
      serve without compensation and there are no standard or other arrangements
      for
      their compensation.




Pursuant
      to the employment contract between the Company and Jeffrey D. Reid (President
      and Chief Executive Officer), Mr. Reid is entitled to a severance payment in
      the
      amount equal to two years' salary in the event of his termination for any cause.
      There are no other employment contracts, compensatory plans or arrangements,
      including payments to be received from the Company with respect to any Director
      or executive officer, that would result in payments to such person because
      of
      his or her resignation, retirement or other termination of employment with
      the
      Company, or its subsidiaries, any change in control, or a change in the person's
      responsibilities following a change in control of the Company.




There
      are
      no agreements or understandings for any Director or executive officer to resign
      at the request of another person. None of our Directors or executive officers
      acts or will act on behalf of or at the direction of any other
      person.




***Compensation
      of Officers***





Jeffrey
      D. Reid entered into an employment agreement as Chief Executive Officer
      reporting to the Board of Directors of the Company as of March 9, 2006. Mr.
      Reid's contract is a renewable three year contract and provides for annual
      remuneration of $200,000, exclusive of bonuses, benefits and other compensation.
      Mr. Reid will be entitled to earn up to 100,000 options per year subject to
      meeting certain objectives and milestones to be determined once a company stock
      option plan has been established. The milestones required for Mr. Reid to
      receive cash bonuses revolve around Company top-line revenue targets. Mr. Reid
      will be entitled to a $50,000 cash bonus if sales of $25 million are achieved
      in
      any year, a $100,000 cash bonus if sales of $40 million are achieved in any
      year, and $150,000 cash bonus if sales of $65 million are achieved in any year.
      Benefits specifically refer to a package which includes medical and life
      insurance. Other compensation refers to the use of a Company vehicle as well
      as
      stock options if applicable. Mr. Reid has entered into a non-competition
      agreement and non-solicitation agreement which extend for a period of one year
      following the termination of his employment with the Company. Mr. Reid is
      subject to termination provisions commensurate with his position which includes
      a severance of not less than two years' salary upon termination of his
      employment with the company.




Mr.
      Reid's contract does not contemplate “change in control” benefits. All other
      employees of the Company, including our executive officers, are employed at
      will
      and have not yet entered into an employment agreement with the
      Company.










57




William
      Randal Fisher and Laura Wilkes are currently the only other officers/employees
      of the Company. They are employed at will and have not yet entered into an
      employment agreement with the Company.




As
      of
      February 13, 2007, we have not issued or granted as deferred compensation or
      long-term incentive plan warrants to purchase shares of Company Common
      Stock.




The
      following Summary Compensation Table presents, for the last completed fiscal
      year, certain information regarding the compensation arrangements with respect
      to the Company’s Named Executive Officers.




**SUMMARY
                COMPENSATION TABLE****Name
                and Principal Position**
            **Year**
            **Salary**
              **($)**
            **Bonus**
              **($)**
            **Stock
                Awards**
              **($)**
            **Option
                Awards**
              **($)**
            **Non-**
              **Equity**
              **Incentive**
              **Plan**
              **Compen-**
              **sation**
              **($)**
            **Change
                in Pension Value and**
              **Nonquali-**
              **fied**
              **Deferred**
              **Compensa-**
              **tion**
              **Earnings**
              **($)**
            **All**
              **Other**
              **Compen-sation**
              **($)**
            **Total**
              **($)**Jeffrey
                D. Reid, Chief Executive Officer and President
            February
                1,2006 - January 31, 2007
            105,811
            
            
            
            
            
            9,415
                (1)
            115,226Laura
                Wilkes, Executive Vice President
            February
                1,2006 - January 31, 2007
            105,811
            
            
            
            
            
            8,459
                (2)
            114,270Norm
                Nolan, Vice President of Operations for KMA (Canada)
            February
                1,2006 - January 31, 2007
            96,993
            
            
            
            
            
            10,009
                (1)
            107,002Robert
                Miller, Vice President of Sales for KMA (Canada)
            February
                1,2006 - January 31, 2007
            224,378
            
            
            
            
            
            6,878
                (3)
            231,256Scott
                Dixon, Vice President of Business Development (Canada)
            February
                1,2006 - January 31, 2007
            107,465
            
            
            
            
            
            
            107,465


(1)
            This
                amount is comprised of leased automobile and insurance
                payments.


(2)
            This
                amount is comprised of a leased
                automobile.


(3)
            This
                amount is comprised of an automobile
                allowance.









58




ITEM 11.   **SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
      MATTERS**


***Security
      Ownership of Certain Beneficial Owners and Management.*** The
      following table shows the amount of our common stock beneficially owned by
      those
      who, as of April 27, 2007, were known by us to beneficially own more than 5%
      of
      our common stock. Unless otherwise noted, these persons have sole voting and
      investment power over the shares listed. Percentage computations are based
      on
      54,933,319 shares of our stock outstanding as of April 27, 2007.




Title
                of Class
            Name
                and Address of Beneficial Owner
            Amount
                & Nature of
              Beneficial Ownership
            Percent
              of ClassCommon
                Stock
            KMA
                Global Solutions, LLC (“KMA LLC”)
              c/o
                KMA Global Solutions, Inc.
              5570A
                Kennedy Road
              Mississauga,
                Ontario, L4Z 2A9 Canada
            27,200,000
                - Direct (1)
            49.51%


________________


(1)
            Jeffrey
                D. Reid indirectly controls these shares of Common Stock held by
                KMA LLC
                by virtue of his beneficial ownership of 25,840,000 Exchangeable
                Shares,
                being a majority of the total amount of 27,200,000 Exchangeable Shares
                of
                Exchangeco, pursuant to the Exchange Agreement between the Company
                and KMA
                LLC.




The
      following table shows the amount of our common stock beneficially owned, as
      of
      April 27, 2007, by our directors and named executive officers individually
      and
      by our directors and all of our executive officers as a group, calculated in
      accordance with Rule 13d-3 of the Exchange Act under which a person generally
      is
      deemed to beneficially own a security if he has or shares voting or investment
      power over the security, or if he has the right to acquire beneficial ownership
      within 60 days. Unless
      otherwise noted, these persons may be contacted at our executive offices, and
      they have sole voting and investment power over the shares indicated. Percentage
      computations are based on 54,933,319 shares of our stock outstanding as of
      April
      27, 2007.





Title
                of Class
            Name
                and Address
              of
                Beneficial Owner (1)
            Amount
                & Nature of
              Beneficial
                Ownership
            Percent
              of
                ClassCommon
                Stock
            Jeffrey
                D. Reid
            27,200,000
                - Indirect (2)
            49.51%Common
                Stock
            Laura
                Wilkes
            0
            0Common
                Stock
            Norm
                Nowlan
            0
            0Common
                Stock
            Scott
                Dixon
            8,000
            0.02%Common
                Stock
            Michael
                McBride
            67,500(3)
            0.15%Common
                Stock
            Michael
                J. Riley
            0
            0Common
                Stock
            All
                directors and officers as a group
              (6
                individuals)
            27,275,500
                - jointly
            49.68%


________________


(1)
            The
                address of each beneficial owner is c/o the Company at 5570A Kennedy
                Road
                Mississauga, Ontario, L4Z 2A9,
                Canada.




(2)
            Jeffrey
                D. Reid indirectly controls these shares of Common Stock held by
                KMA LLC
                by virtue of his beneficial ownership of 25,840,000 Exchangeable
                Shares,
                being a majority of the total amount of 27,200,000 Exchangeable Shares
                of
                Exchangeco, pursuant to the Exchange Agreement between the Company
                and KMA
                LLC.




(3)
            Includes
                30,000 shares held by Kim McBride, Mr. Michael McBride’s
                spouse.







59




***Securities
      Authorized for Issuance Under Equity Compensation
      Plans***




The
      Company does not have any equity compensation plans and no shares of our capital
      stock are reserved for issuance pursuant to any equity compensation
      arrangement.


ITEM
      12.   **CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE**




Espo's,
      the corporation with which we merged, operated a retail store from a premises
      located at 57 Main Street, East Hampton, New York, under lease from a
      corporation that is controlled by the former President and principal stockholder
      of Espo's. The lease payment was $2,000 per month, plus insurance and all
      utilities and it was terminated with respect to the Company effective March
      7,
      2006.




Espo's
      was indebted to an officer/stockholder for cash loans made to Espo's in the
      amount of $42,252, as of October 31, 2004. There were no specific repayment
      terms on the amount due to that officer/stockholder, and all obligations under
      the loan were transferred from the Company on or before March 7,
      2006.




In
      fiscal
      year ended January 31, 2006, the Company loaned money to Jeffrey D. Reid, its
      founder and major shareholder. The loan was a demand loan bearing an annual
      interest rate of 2% that was fully repaid on March 9, 2006 **.**
























60






**Exhibit
                No.**
            **Exhibit
                Description****3.1
                ***
            Certificate
                of Incorporation of KMA Global Solutions International, Inc. filed
                March
                9, 2006.**3.2
                ***
            Amended
                and Restated Certificate of Incorporation of KMA Global Solutions
                International, Inc. filed March 27, 2006.**3.3
                ***
            By-Laws
                of KMA Global Solutions International, Inc.**4.1#**
            Form
                of Warrant dated as of January 31, 2007, by and between KMA Global
                Solutions, Inc. and the selling stockholders**10.1
                ***
            Agreement
                and Plan of Reincorporation and Merger dated as of March 10, 2006
                between
                Espo's, Ltd., and KMA Global Solutions International,
                Inc.**10.2
                ***
            Stock
                Purchase Agreement as of March 7, 2006, by and between Jeffrey R.
                Esposito, Kenneth C. Dollmann, certain shareholders of Espo's, Ltd.,
                Jeffrey R. Esposito being designated under as their representative,
                Espo's, Ltd., and 2095511 Ontario Limited., as representative of
                and agent
                under a power of attorney for the certain transferees of Espo's,
                Ltd.
                Common Stock.**10.3
                ***
            Acquisition
                Agreement dated as of March 15, 2006 by, between and among KMA Global
                Solutions International, Inc., KMA Global Solutions, Inc., and 2095511
                Ontario Limited., as representative of and agent under a power of
                attorney
                for certain stockholders of KMA Global Solutions, Inc.**10.4
                ***
            Operating
                Agreement of March 9, 2006, by and among KMA Global Solutions, LLC
                and KMA
                Global Solutions International, Inc.**10.5
                ***
            Exchange
                and Support Agreement dated March 14, 2006 among KMA Global Solutions
                International, Inc., KMA Global Solutions, LLC, KMA Acquisition Exchangeco
                Inc., and certain registered holders from time to time of Exchangeable
                Shares issued by KMA Acquisition Exchangeco Inc.**10.6
                *^**
            Employment
                Agreement between Jeffrey D. Reid and KMA Global Solutions International,
                Inc.**10.7
                ***
            Offer
                to Lease between KMA Global Solutions, Inc. and Civic Investments
                Ltd.
                Dated October 6, 2005 for 5570A Kennedy Road, Mississauga,
                Ontario**10.8
                ***
            Equipment
                Lease (Contract No. 20491) dated March 18, 2005 between KMA Global
                Solutions, Inc. and Capital Underwriters Inc.**10.9#**
            Form
                of Securities Purchase Agreement, dated January 31, 2007, by and
                between
                KMA Global Solutions, Inc. and the selling stockholders**10.10#**
            Form
                of Registration Rights Agreement dated January 31, 2007, by and between
                KMA Global Solutions, Inc. and the selling stockholders**14##**
            Code
                of Ethics**21##**
            Subsidiaries
                of the Registrant**24##**
            Power
                of Attorney (included on signature page)**31##**
            Certifications
                of Chief Executive Officer and Chief Financial Officer under Exchange
                Act
                Rule 13a-14(a)**32##**
            Certifications
                of Chief Executive Officer and Chief Financial Officer under 18 U.S.C.
                1350.*****
            Filedwith
                the Company's Amendment No. 1 to Form 10-SB with the Securities and
                Exchange Commission on April 18, 2006.**#**
            Filedwith
                the Company's Registration Statement on Form SB-2 with the Securities
                and
                Exchange Commission on March 12, 2007.**##**
            Filed
                herewith.**^**
            Management
                Contract or Compensatory Plan









61




**ITEM
        14.**  **PRINCIPAL
        ACCOUNTANT FEES AND SERVICES**
 
 The
        following table sets forth the aggregate fees billed to us by McGovern,
        Hurley, Cunningham, LLP in
        connection with various audit and other services provided to us throughout
        fiscal years 2007 and 2006:
  **Service**
                **2007
                    Fees Billed ($)**
                **2006
                    Fees Billed ($)**Audit
                    Fees
                $45,000
                $26,950Audit-Related
                    Fees(1)
                $46,500
                $0Tax
                    Fees(2)
                $2,500
                $2,000All
                    Other Fees(3)
                $0
                $0
  
 (1)
              Audit-Related
                  Feesrepresent
                  amounts billed in connection with (i) thereview
                  of financial statements included in the Company’s Forms 10-QSB, and (ii)
                  theForm
                  SB-2 Registration Statement filed by the Company with the SEC on
                  March 12,
                  2007.
 (2)
              Tax
                  Fees represent amounts billed for tax services during 2007 and
                  2006.
 (3)
              All
                  Other Fees represent amounts billed for all other services performed.
                  No
                  All Other Fees were billed during 2007 or
                  2006.
 
 The
        Board
        of Directors pre-approves all audit and permissible non-audit services provided
        by our independent auditors. Where feasible, the Board considers and, when
        appropriate, pre-approves services at regularly scheduled meetings after
        disclosure by management and the auditors of the nature of the proposed
        services, the estimated fees (when available), and their opinions that the
        services will not impair the auditors’ independence. The Board has authorized
        its Chairman (or any committee member in the Chairman’s absence) to pre-approve
        (when appropriate) audit and permissible non-audit services when pre-approval
        is
        necessary prior to the next committee meeting, and such person must report
        to
        the Board at its next meeting with respect to all services so pre-approved
        by
        him or her.

















62





**SIGNATURES**







In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.







**KMA
      GLOBAL SOLUTIONS INTERNATIONAL, INC.**








May
      1,
      2007  B y: /s/
      Jeffrey D. Reid


Name: Jeffrey
      D. Reid


Title: Chief
      Executive Officer and President


(Principal
      Executive Officer and Principal Financial


Officer)








We,
      the
      undersigned directors and officers of the Registrant, hereby severally
      constitute Jeffrey D. Reid and Laura Wilkes, and each of them singly, our true
      and lawful attorneys with full power to them and each of them to sign for us,
      and in our names in the capacities indicated below, any and all amendments
      to
      this Annual Report on Form 10-KSB filed with the Securities and Exchange
      Commission.




In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant and in their capacities and on
      the
      dates indicated.





**SIGNATURE**
            
            **TITLE**
            
            **DATE**/s/Jeffrey
                D. ReidJeffrey
                D. Reid
            
            Chief
                Executive Officer, President and Chairman of the Board of
                Directors
            
            May
                1, 2007/s/Michael
                McBrideMichael
                McBride
            
            Director
            
            May
                1, 2007/s/Michael J. RileyMichael
                J. Riley
            
            Director
            
            May
                1, 2007












63


**EXHIBIT
      INDEX**


**Exhibit
                No.**
            **Exhibit
                Description****3.1
                ***
            Certificate
                of Incorporation of KMA Global Solutions International, Inc. filed
                March
                9, 2006.**3.2
                ***
            Amended
                and Restated Certificate of Incorporation of KMA Global Solutions
                International, Inc. filed March 27, 2006.**3.3
                ***
            By-Laws
                of KMA Global Solutions International, Inc.**4.1#**
            Form
                of Warrant dated as of January 31, 2007, by and between KMA Global
                Solutions, Inc. and the selling stockholders**10.1
                ***
            Agreement
                and Plan of Reincorporation and Merger dated as of March 10, 2006
                between
                Espo's, Ltd., and KMA Global Solutions International,
                Inc.**10.2
                ***
            Stock
                Purchase Agreement as of March 7, 2006, by and between Jeffrey R.
                Esposito, Kenneth C. Dollmann, certain shareholders of Espo's, Ltd.,
                Jeffrey R. Esposito being designated under as their representative,
                Espo's, Ltd., and 2095511 Ontario Limited., as representative of
                and agent
                under a power of attorney for the certain transferees of Espo's,
                Ltd.
                Common Stock.**10.3
                ***
            Acquisition
                Agreement dated as of March 15, 2006 by, between and among KMA Global
                Solutions International, Inc., KMA Global Solutions, Inc., and 2095511
                Ontario Limited., as representative of and agent under a power of
                attorney
                for certain stockholders of KMA Global Solutions, Inc.**10.4
                ***
            Operating
                Agreement of March 9, 2006, by and among KMA Global Solutions, LLC
                and KMA
                Global Solutions International, Inc.**10.5
                ***
            Exchange
                and Support Agreement dated March 14, 2006 among KMA Global Solutions
                International, Inc., KMA Global Solutions, LLC, KMA Acquisition Exchangeco
                Inc., and certain registered holders from time to time of Exchangeable
                Shares issued by KMA Acquisition Exchangeco Inc.**10.6
                *^**
            Employment
                Agreement between Jeffrey D. Reid and KMA Global Solutions International,
                Inc.**10.7
                ***
            Offer
                to Lease between KMA Global Solutions, Inc. and Civic Investments
                Ltd.
                Dated October 6, 2005 for 5570A Kennedy Road, Mississauga,
                Ontario**10.8
                ***
            Equipment
                Lease (Contract No. 20491) dated March 18, 2005 between KMA Global
                Solutions, Inc. and Capital Underwriters Inc.**10.9#**
            Form
                of Securities Purchase Agreement, dated January 31, 2007, by and
                between
                KMA Global Solutions, Inc. and the selling stockholders**10.10#**
            Form
                of Registration Rights Agreement dated January 31, 2007, by and between
                KMA Global Solutions, Inc. and the selling stockholders**14##**
            Code
                of Ethics**21##**
            Subsidiaries
                of the Registrant**24##**
            Power
                of Attorney (included on signature page)**31##**
            Certifications
                of Chief Executive Officer and Chief Financial Officer under Exchange
                Act
                Rule 13a-14(a)**32##**
            Certifications
                of Chief Executive Officer and Chief Financial Officer under 18 U.S.C.
                1350.*****
            Filedwith
                the Company's Amendment No. 1 to Form 10-SB with the Securities and
                Exchange Commission on April 18, 2006.**#**
            Filedwith
                the Company's Registration Statement on Form SB-2 with the Securities
                and
                Exchange Commission on March 12, 2007.**##**
            Filed
                herewith.**^**
            Management
                Contract or Compensatory Plan











**Exhibit
      14**







**KMA
      GLOBAL SOLUTIONS INTERNATIONAL, INC.**




**CODE
      OF BUSINESS CONDUCT AND ETHICS**




**Introduction**




This
      Code
      of Business Conduct and Ethics covers a wide range of business practices and
      procedures. It does not cover every issue that may arise, but it sets out basic
      principles to guide all employees of KMA Global Solutions International, Inc.
      (the "Company"). All of our employees must conduct themselves accordingly and
      seek to avoid even the appearance of improper behavior. This Code should also
      be
      provided to and followed by the Company’s agents and representatives, including
      consultants.




If
      a law
      conflicts with a policy in this Code, you must comply with the law; however,
      if
      a local custom or policy conflicts with this Code, you must comply with the
      Code. If you have any questions about these conflicts, you should ask your
      supervisor how to handle the situation.




Those
      who
      violate the standards in this Code will be subject to disciplinary action. *If
      you are in a situation which you believe may violate or lead to a violation
      of
      this Code, follow the guidelines described in Section 16 of this
      Code* .




**1.**  **Compliance
      with Laws, Rules and Regulations**




Obeying
      the law, both in letter and in spirit, is the foundation on which the Company’s
      ethical standards are built. All employees must respect and obey the laws,
      rules
      and regulations of the cities, states and countries in which we operate.
      Although not all employees are expected to know the details of these laws,
      it is
      important to know enough to determine when to seek advice from supervisors,
      managers or other appropriate personnel.




The
      Company holds information and training sessions to promote compliance with
      laws,
      rules and regulations, including insider trading laws.




**2.**  **Conflicts
      of Interest**




A
      “conflict of interest” exists when a person’s private interest interferes in any
      way with the interests of the Company. A conflict situation can arise when
      an
      employee, officer or director takes actions or has interests that may make
      it
      difficult to perform his or her Company work objectively and effectively.
      Conflicts of interest may also arise when an employee, officer or director,
      or
      members of his or her family, receives improper personal benefits as a result
      of
      his or her position in the Company. Loans to, or guarantees of obligations
      of,
      employees and their family members may create conflicts of
      interest.




It
      is
      almost always a conflict of interest for a Company employee to work
      simultaneously for a competitor, customer or supplier. You are not allowed
      to
      work for a competitor as a consultant or board member. You should avoid any
      direct or indirect business connection with our customers, suppliers or
      competitors, except on our behalf. Under no circumstances is an employee to
      deal
      directly or indirectly with the Company except with the prior approval of the
      Company's Secretary given after full disclosure of all the
      circumstances.











Conflicts
      of interest are prohibited as a matter of Company policy, except under
      guidelines approved by the Board of Directors. Conflicts of interest may not
      always be clear-cut, so if you have a question, you should consult with higher
      levels of management. Any employee, officer or director who becomes aware of
      a
      conflict or potential conflict should bring it to the attention of the Company's
      Secretary and consult the procedures described in Section 16 of this
      Code.




Officers
      and certain other employees of the Company may be required to submit an annual
      statement disclosing actual and potential conflicts of interest.




**3.**  **Insider
      Trading**




Employees
      who have access to confidential information are not permitted to use or share
      that information for stock trading purposes or for any other purpose except
      the
      conduct of our business. All non-public information about the Company should
      be
      considered confidential information. To use non-public information for personal
      financial benefit or to “tip” others who might make an investment decision on
      the basis of this information is not only unethical but also illegal. If you
      have any questions, please consult the Company’s Secretary.




**4.**  **Corporate
      Opportunities**




Employees,
      officers and directors are prohibited from taking for themselves personally
      opportunities that are discovered through the use of corporate property,
      information or position without the consent of the Board of Directors. No
      employee may use corporate property, information, or position for improper
      personal gain, and no employee may compete with the Company directly or
      indirectly. Employees, officers and directors owe a duty to the Company to
      advance its legitimate interests when the opportunity to do so
      arises.




Without
      limiting the generality of the foregoing, employees, officers and directors
      should avoid speculation or dealing in any kind of service or real or personal
      property in a market or during a period that the Company may be purchasing
      or
      dealing in services or property of the same or a similar kind.




**5.**  **Competition
      and Fair Dealing**




We
      seek
      to outperform our competition fairly and honestly. We seek competitive
      advantages through superior performance, never through unethical or illegal
      business practices. Stealing proprietary information, possessing trade secret
      information that was obtained without the owner’s consent, or inducing such
      disclosures by past or present employees of other companies is prohibited.
      Each
      employee should endeavor to respect the rights of and deal fairly with the
      Company’s customers, suppliers, competitors and employees. No employee should
      take unfair advantage of anyone through manipulation, concealment, abuse of
      privileged information, misrepresentation of material facts, or any other
      intentional unfair-dealing practice.











To
      maintain the Company’s valuable reputation, compliance with our quality
      processes and safety requirements is essential. In the context of ethics,
      quality requires that our products and services be designed and manufactured
      to
      meet our obligations to customers. All inspection and testing documents must
      be
      handled in accordance with all applicable regulations.




The
      purpose of business entertainment and gifts in a commercial setting is to create
      good will and sound working relationships, not to gain unfair advantage with
      customers. No gift or entertainment should ever be offered, given, provided
      or
      accepted by any Company employee, family member of an employee or agent unless
      it: (1) is not a cash gift, (2) is consistent with customary business practices,
      (3) is not excessive in value, (4) cannot be construed as a bribe or payoff
      and
      (5) does not violate any laws or regulations. Please discuss with your
      supervisor any gifts or proposed gifts which you are not certain are
      appropriate.




**6.**  **Employment
      Relationship**




The
      diversity of the Company’s employees is a tremendous asset. We are firmly
      committed to providing equal opportunity in all aspects of employment and will
      not tolerate any illegal discrimination or harassment of any kind. Examples
      include derogatory comments based on racial or ethnic characteristics and
      unwelcome sexual advances.




Supervisors
      must be particularly sensitive to the maintenance of totally professional
      relations with subordinates. Undue pressures, no matter how subtle, which result
      in less than professional relations must be avoided. Evidence of violation
      of
      the letter or spirit of this policy will result in appropriate disciplinary
      measures.




The
      Company is entitled to the full working time and energy of each of its full-time
      employees. Accordingly, working in any capacity (including self-employment)
      in
      or for any business activity outside the Company is prohibited, except with
      the
      prior approval of your supervisor given after full disclosure of all the
      circumstances. Special attention should be given to avoiding the conduct of
      any
      outside business during Company working hours, on Company premises, or in a
      manner that involves fellow employees during their Company working hours, and
      the solicitation of fellow employees (particularly subordinates, who could
      be
      especially vulnerable to what might be perceived as pressure from a supervisor)
      to participate in or with such business in any way, whether as a customer,
      employee, independent contractor, or otherwise.




**7.**  **Health
      and Safety**




The
      Company strives to provide each employee with a safe and healthful work
      environment. Each employee has responsibility for maintaining a safe and healthy
      workplace for all employees by following safety and health rules and practices
      and reporting accidents, injuries and unsafe equipment, practices or
      conditions.









Violence
      and threatening behavior are not permitted. Employees should report to work
      in
      condition to perform their duties, free from the influence of illegal drugs
      or
      alcohol. The use of illegal drugs in the workplace will not be
      tolerated.




**8.**  **Record-Keeping**




The
      Company requires honest and accurate recording and reporting of information
      in
      order to be able to make responsible business decisions and to be able to make
      full, fair, accurate, timely and understandable disclosure in the reports and
      documents the Company files with, or submits to, the Securities and Exchange
      Commission and in its other public communications. It is the Company's policy
      to
      make responsible business decisions and to make such disclosure.




All
      of
      the Company’s books, records, accounts and financial statements must be
      maintained in reasonable detail, must appropriately reflect the Company’s
      transactions and must conform both to applicable legal requirements and to
      the
      Company’s system of internal controls. Unrecorded or “off the books” funds or
      assets should not be maintained unless permitted by applicable law or
      regulation.




Many
      employees regularly use business expense accounts, which must be documented
      and
      recorded accurately. If you are not sure whether a certain expense is
      legitimate, ask your supervisor or your controller. Rules and guidelines are
      available from the Accounting Department.




Business
      records and communications often become public, and we should avoid
      exaggeration, derogatory remarks, guesswork, or inappropriate characterizations
      of people and companies that can be misunderstood. This applies equally to
      e-mail, internal memos, and formal reports. Records should always be retained
      or
      destroyed according to the Company’s record retention policies.




**9.**  **Confidentiality**




Employees
      must maintain the confidentiality of confidential information entrusted to
      them
      by the Company or its customers, except when disclosure is authorized by Company
      Management or required by laws or regulations. Confidential information includes
      all non-public information that might be of use to competitors, or harmful
      to
      the Company or its customers, if disclosed. It also includes information that
      suppliers and customers have entrusted to us. The obligation to preserve
      confidential information continues even after employment ends.




**10.**  **Protection
      and Proper Use of Company Assets**




All
      employees should endeavor to protect the Company’s assets and ensure their
      efficient use. Theft, carelessness, and waste have a direct impact on the
      Company’s profitability. Any suspected incident of fraud or theft should be
      immediately reported for investigation. Company equipment should not be used
      for
      non-Company business, though incidental personal use may be
      permitted.




The
      obligation of employees to protect the Company’s assets includes its proprietary
      information. Proprietary information includes intellectual property such as
      trade secrets, patents, trademarks, and copyrights, as well as business,
      marketing and service plans, engineering and manufacturing ideas, designs,
      databases, records, salary information and any unpublished financial data and
      reports. Unauthorized use or distribution of this information would violate
      Company policy. It could also be illegal and result in civil or even criminal
      penalties.









**11.**  **Political
      Contributions**




Contributions
      by the Company, directly or indirectly, to or on behalf of candidates for
      federal office are not permitted. Other political contributions are allowed
      only
      if permissible under applicable laws, rules and regulations, as determined
      by
      the Company's Secretary after consultation with legal counsel, and only if
      approved in writing by the Company's President.




**12.**  **Payments
      to Government Personnel**




The
      U.S.
      Foreign Corrupt Practices Act prohibits giving anything of value, directly
      or
      indirectly, to officials of foreign governments or foreign political candidates
      in order to obtain or retain business. It is strictly prohibited to make illegal
      payments to government officials of any country.




In
      addition, the U.S. government has a number of laws and regulations regarding
      business gratuities which may be accepted by U.S. government personnel. The
      promise, offer or delivery to an official or employee of the U.S. government
      of
      a gift, favor or other gratuity in violation of these rules would not only
      violate Company policy but could also be a criminal offense. State and local
      governments, as well as foreign governments, may have similar rules. The
      Company’s Secretary can provide guidance to you in this area.




**13.**  **Waivers
      of the Code of Business Conduct and Ethics**




Any
      waiver of this Code for executive officers or directors may be made only by
      the
      Board or a Board committee and will be promptly disclosed as required by
      applicable law, rule or regulation, including stock exchange
      regulation.




**14.**  **Reporting
      any Illegal or Unethical Behavior**




Employees
      are encouraged to talk to supervisors, managers or other appropriate personnel about
      observed illegal or unethical behavior and when
      in
      doubt about the best course of action in a particular situation. Violations
      of
      this Code should be reported promptly to Secretary. It is the policy of the
      Company not to allow retaliation for reports of misconduct by others made in
      good faith by employees. Employees are expected to cooperate in internal
      investigations of misconduct.




Additionally,
      the Company's senior management should always be informed of matters which
      might
      appear to risk damage to the Company's reputation, as well as its financial
      condition or profitability.









**15.**  **Annual
      Statement**




Officers
      and certain other employees of the Company may be required to submit an annual
      statement disclosing actual and potential conflicts of interest and including
      the following affirmation:




"I
      have
      examined and understand the Company's Code of Business Conduct and Ethics (the
      "Code"). I undertake to report promptly, in accordance with the Code, any
      circumstances in the Company's business or operations that may involve a
      violation of any applicable law, rule or regulation and any other circumstances
      that may involve a violation of the Code. I confirm that I do not know of any
      such circumstances not previously reported."




**16.**  **Compliance
      Procedures**




We
      must
      all work to ensure prompt and consistent action against violations of this
      Code.
      However, in some situations it is difficult to know right from wrong. Since
      we
      cannot anticipate every situation that will arise, it is important that we
      have
      a way to approach a new question or problem. These are the steps to keep in
      mind:




·
            Make
                sure you have all the facts.In
                order to reach the right solutions, we must be as fully informed
                as
                possible.




·
            Ask
                yourself: What specifically am I being asked to do? Does it seem
                unethical
                or improper?This will enable you to focus on the specific question you are faced
                with,
                and the alternatives you have. Use your judgment and common sense;
                if
                something seems unethical or improper, it probably
                is.




·
            Clarify
                your responsibility and role.In
                most situations, there is shared responsibility. Are your colleagues
                informed? It may help to get others involved and discuss the
                problem.




·
            Discuss
                the problem with your supervisor.This is the basic guidance for all situations. In many cases, your
                supervisor will be more knowledgeable about the question, and will
                appreciate being brought into the decision-making process. Remember
                that
                it is your supervisor’s responsibility to help solve
                problems.




·
            You
                may report ethical violations in confidence and without fear of
                retaliation.If
                your situation requires that your identity be kept secret, your anonymity
                will be protected. The Company does not permit retaliation of any
                kind
                against employees for good faith reports of ethical
                violations.




·
            Always
                ask first, act later.If
                you are unsure of what to do in any situation, seek guidancebefore
                you act.









**Exhibit
      21**





**SUBSIDIARIES
      OF THE REGISTRANT**








KMA
      Global Solutions Inc.





KMA
      Global Solutions, LLC










































**Exhibit
      31**





CERTIFICATION
      OF CHIEF EXECUTIVE OFFICER AND CHIEF


FINANCIAL
      OFFICER UNDER
      EXCHANGE ACT RULE 13A-14(A)





I,
      Jeffrey D. Reid, certify that:





1.  I
      have
      reviewed this Annual Report on Form 10-KSB for the fiscal year ended January
      31,
      2007, as filed with the Securities and Exchange Commission, of KMA Global
      Solutions International, Inc. (the "Company");





2.  Based
      on
      my knowledge, this report does not contain any untrue statement of a material
      fact or omit to state a material fact necessary to make the statements made,
      in
      light of the circumstances under which such statements were made, not misleading
      with respect to the period covered by this report;





3.  Based
      on
      my knowledge, the financial statements, and other financial information included
      in this report, fairly present in all material respects the financial condition,
      results of operations and cash flows of the Company as of, and for, the periods
      presented in this report;





4.  I
      am
      responsible for establishing and maintaining disclosure controls and procedures
      (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company
      and
      have:





(a)  Designed
      such disclosure controls and procedures, or caused such disclosure controls
      and
      procedures to be designed under our supervision, to ensure that material
      information relating to the Company, including its consolidated subsidiaries,
      is
      made known to us by others within those entities, particularly during the period
      in which this report is being prepared;





(b)  Evaluated
      the effectiveness of the Company's disclosure controls and procedures and
      presented in this report our conclusions about the effectiveness of the
      disclosure controls and procedures, as of the end of the period covered by
      this
      report based on such evaluation; and





(c)  Disclosed
      in this report any change in the Company's internal control over financial
      reporting that occurred during the Company's most recent fiscal quarter (the
      Company's fourth fiscal quarter in the case of an annual report) that has
      materially affected, or is reasonably likely to materially affect, the Company's
      internal control over financial reporting; and





5.  I
      have
      disclosed, based on my most recent evaluation of internal control over financial
      reporting, to the Company's auditors and the audit committee of the Company's
      board of directors (or persons performing the equivalent
      functions):








(a)  All
      significant deficiencies and material weaknesses in the design or operation
      of
      internal control over financial reporting which are reasonably likely to
      adversely affect the Company's ability to record, process, summarize and report
      financial information; and





(b)  Any
      fraud, whether or not material, that involves management or other employees
      who
      have a significant role in the Company's internal control over financial
      reporting.








Dated:
      May 1, 2007  /s/
      Jeffrey D. Reid


Jeffrey
      D. Reid


Chief
      Executive Officer and Chief


Financial
      Officer




































**Exhibit
      32**





CERTIFICATION
      OF CHIEF EXECUTIVE OFFICER


AND
      CHIEF
      FINANCIAL OFFICER


PURSUANT
      TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO


SECTION
      906 OF THE SARBANES-OXLEY ACT OF 2002





In
      connection with the Annual Report (the "report") of KMA Global Solutions
      International, Inc. (the "Company") on Form 10-KSB for the fiscal year ended
      January 31, 2007, as filed with the Securities and Exchange Commission, Jeffrey
      D. Reid, Chief Executive Officer and Chief Financial Officer of the Company,
      hereby certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
      (18
      U.S.C. ss. 1350), that to his knowledge:





(1)  The
      report fully complies with the requirements of Section 13(a) or 15(d) of the
      Securities Exchange Act of 1934; and





(2)  The
      information contained in the report fairly presents, in all material respects,
      the financial condition and results of operations of the Company.








Date:
      May
      1, 2007  /s/
      Jeffrey D. Reid


Jeffrey
      D. Reid


Chief
      Executive Officer and Chief


Financial
      Officer