Myecheck Inc. - FORM 10-K - April 15, 2010

Attached files

file	filename
EX-32.1 - Myecheck Inc.	v181132_ex32-1.htm
EX-31.2 - Myecheck Inc.	v181132_ex31-2.htm
EX-32.2 - Myecheck Inc.	v181132_ex32-2.htm
EX-31.1 - Myecheck Inc.	v181132_ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

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

For the Fiscal Period year ended December 31, 2009

o TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ___________________

Commission file number: 000 - 51977

MyECheck, Inc.

(Exact name of small business issuer as specified in its charter)

Nevada	20-1884354
(State or other jurisdiction of incorporation or organization)	(IRS Employer Number)

1190 Suncast Lane, Suite 5

El Dorado Hills, CA 95762

(Address of principal executive offices)

(916) 932-0900

(Issuer's telephone number)

Former Address: 916 West Broadway Street, Vancouver, British Columbia, V5Z 1K7

Former fiscal year: December 31

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.Yes o 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 o

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. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller reporting company x
		(Do not check if a
		smaller reporting company)

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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. (See definition of affiliate in Rule 12b-2 of the Exchange Act.)

Aggregate market value of the voting and non-voting common equity held by non-affiliates (29,448,521 shares) computed by reference as of April 14, 2010 is $4,122,793.

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.

As of April 15, 2010 there are 70,864,772 common shares outstanding.

MyECheck, Inc.

FORM 10-K

For the Fiscal Year ended December 31, 2009

Part I

Item 1.	Description of Business	4

Item 1A	Risk Factors

Item 2.	Description of Property	12

Item 3.	Legal Proceedings	12

Item 4.	Submission of Matters to a vote of Security Holders	12

Part II

Item 5.	Market for Common Equity and Related Stockholder Matters	12

Item 6	Selected Financial Data	13

Item 7.	Management's Discussion and Analysis or Plan of Operation	13

Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	15

Item 8.	Financial Statements	15

Item 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	15

Item 9A.	Controls and Procedures	15

Item 9B.	Other Information	16

Part III

Item 10.	Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Ac	16

Item 11.	Executive Compensation	18

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	20

Item 13.	Certain Relationships and Related Transactions	21

Item 14.	Principal Accountants Fees and Services	21

Item 15.	Exhibits	22

Signatures		23

FORWARD LOOKING STATEMENTS

CERTAIN STATEMENTS IN THIS ANNUAL REPORT ON FORM 10-K, OR THE "REPORT," ARE "FORWARD-LOOKING STATEMENTS." THESE FORWARD-LOOKING STATEMENTS INCLUDE, BUT ARE NOT LIMITED TO, STATEMENTS ABOUT THE PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS OF MYECHECK, INC., A NEVADA CORPORATION AND OTHER STATEMENTS CONTAINED IN THIS REPORT THAT ARE NOT HISTORICAL FACTS. FORWARD-LOOKING STATEMENTS IN THIS REPORT OR HEREAFTER INCLUDED IN OTHER PUBLICLY AVAILABLE DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, OR THE "COMMISSION," REPORTS TO OUR SHAREHOLDERS AND OTHER PUBLICLY AVAILABLE STATEMENTS ISSUED OR RELEASED BY US INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH COULD CAUSE OUR ACTUAL RESULTS, PERFORMANCE (FINANCIAL OR OPERATING) OR ACHIEVEMENTS TO DIFFER FROM THE FUTURE RESULTS, PERFORMANCE (FINANCIAL OR OPERATING) OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FUTURE RESULTS ARE BASED UPON MANAGEMENT'S BEST ESTIMATES BASED UPON CURRENT CONDITIONS AND THE MOST RECENT RESULTS OF OPERATIONS. WHEN USED IN THIS REPORT, THE WORDS "EXPECT," "ANTICIPATE," "INTEND," "PLAN," "BELIEVE," "SEEK," "ESTIMATE" AND SIMILAR EXPRESSIONS ARE GENERALLY INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, BECAUSE THESE FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES. THERE ARE IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS, INCLUDING OUR PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS AND OTHER FACTORS.

PART I

Item 1. Business

Business Summary

MyECheck, Inc. (“MyECheck” or the “Company”) is an early stage company engaged in the payment processing industry; specifically MyECheck provides electronic check image (“e-check”) services to merchants, payment services providers, banks and other businesses. MyECheck was founded and incorporated in Delaware in October 2004 to capitalize on opportunities created by the passing of The Check Clearing for the 21 st Century Act (“Check 21”). MyECheck has commenced formal business operations and is generating revenue.

MyECheck was created to satisfy the demand for an alternative payment solution to credit and debit cards for online commerce. MyECheck has developed and utilizes a proprietary method of creating and clearing Remotely Created Check (“RCC”) images on behalf of its e-commerce customers, having successfully implemented its proprietary RCC service that enables companies to accept real-time check payments from consumers and businesses online or over a telephone.

MyECheck provides additional services to support its RCC service including fraud loss prevention services. MyECheck also provides a number of services such as check remittance processing and remote deposit capture (“RDC”) services for brick and mortar companies, such as banks and retailers.

MyECheck entered into a merger agreement with Sekoya Holdings Ltd., a Nevada corporation in November 2007, amended and restated February 4, 2008. The merger was effective March 14, 2008. Shareholders of Sekoya at the time of the merger would own approximately 40% of the shares of the surviving company and shareholders of MyECheck would own approximately 60% of the surviving company, with all parties being diluted by additional financing to be completed following the Merger (excluding 2,000,000 shares held in escrow as remedies for breaches of the Merger Agreement).

Revenue is generated from transaction fees charged to companies that contract with MyECheck to utilize the Company’s services.

About Check 21

Check 21 was signed into law on October 28, 2003, and became effective on October 28, 2004. Check 21 is designed to foster innovation in the payments system and to enhance its efficiency by reducing some of the legal impediments to check truncation. The law facilitates check truncation by creating a new negotiable instrument called a substitute check, which permits banks to truncate original checks, to process check information electronically, and to deliver substitute checks to banks that want to continue receiving paper checks. A substitute check is the legal equivalent of the original check and includes all the information contained on the original check. The law does not require banks to accept checks in electronic form nor does it require banks to use the new authority granted by the Act to create substitute checks.

Summary History of MyECheck

During the period from March of 2006 through September 2007, MyECheck redesigned and developed its software platform to better suit the demands of its prospective customers and to ensure the accurate performance of the software.

MyECheck has been sponsored by First Regional Bank, and successfully completed approval and check image file (ANSI X9.37) testing with the Federal Reserve Bank in the second quarter of 2007.

Version two of its software platform was launched in September of 2007 and MyECheck has been steadily ramping up transaction volume on the system since then.

The Services of MyECheck

MyECheck offers comprehensive, easily implemented solutions that include real-time check authorization, payment guarantee, check image creation and clearing and complete online reporting. Set out below are services that MyECheck provides and intends to provide as part of its business plan.

Remotely Created Check Service

Internet merchants and other companies wishing to accept payments online or over a telephone (“Merchants”) can directly integrate with MyECheck’s payment engine. Payor check data is collected by the Merchant either at the Merchant’s website or over the telephone, and is transmitted in real-time to MyECheck for processing.

MyECheck uses patent pending technology to generate RCCs in accordance with the Federal Reserve Check 21 specification. RCC images are formatted and are transmitted in near real-time to banks, or more commonly directly to the Federal Reserve for clearing on behalf of MyECheck’s partner bank(s).

MyECheck believes that its RCC service overcomes many of the shortcomings of Automated Clearing House (“ACH”) based e-check systems and cost-effectively provides higher transaction success rates, faster funds clearing and fewer returned items.

MyECheck believes that it is positioned to capture a significant market share of the alternative payments industry with a viable alternative payment method for online payments. Compared to other online payment methods, MyECheck works with more consumers, with the ability to guarantee payments at rates lower than non-guaranteed card processing rates.

Check Authorization Service

MyECheck offers Check Authorization Service which enables merchants to verify consumer provided data, check the status of the customer’s bank account, provide evidence that the consumer has authorized the check and predict the likelihood of a check being returned unpaid. Businesses that accept payments online through MyECheck utilize this service to provide greater assurance that the check will clear. Transactions can be approved or declined based upon the results of the Check Authorization Service.

Check Guarantee Service

MyECheck co-markets with Check Guarantee Providers to offer Check Guarantee Service. The Check Guarantee Provider warranties all approved checks and reimburses the Payee for financial losses incurred as a result of returned checks. The Check Guarantee Provider buys the returned checks that have been warranted from merchants for the full face value of the returned checks. MyECheck merchants utilize Check Guarantee Service so that they can ship products or provide services immediately without having to wait for the check to clear. The Check Guarantee Service also eliminates the need for Merchants to collect on returned checks from their customers. The Check Guarantee Providers are independent third parties whose services are offered to Merchants separately from the MyECheck service. MyECheck is not compensated by, and does not compensate, Check Guarantee Providers. MyECheck may in the future enter into compensated arrangements with Check Guarantee Providers.

Remote Deposit Capture and Remittance Processing

MyECheck provides Remote Deposit Capture and Remittance Processing Solutions that enable companies to scan paper checks at the brick and mortar point of sale or back office, and remit check images to MyECheck for processing. MyECheck formats the check images in accordance with the Federal Reserve Check 21 specification (ANSI X9.37) and transmits the files in near real-time directly into the check clearing system, as it does with its RCC image files. RDC reduces Merchant handling and administrative costs, eliminates paper check transportation, speeds clearing by an average of 2+ days and improves Merchant cash flow.

International Payment Service

Through relationships with foreign financial services organizations, MyECheck is planning to add international bank transfer payment services that will allow MyECheck merchants to accept non-card associated bank transfers in local currencies from the world’s largest global markets.

The methodology expected to be employed with the international service would prevent consumer initiated repudiation and charge-backs, eliminating most types of international payments fraud. This service facilitates funds collection in over 50 countries and provides bank transfer remitting capabilities to bank accounts in over 120 countries. The system currently supports 21 currencies and will perform foreign exchange if required.

Merchant Reporting

Through our Merchant interface, MyECheck provides the following reports:

o	Detailed transaction history
o		Successful
o		Failed
o	MyECheck fees and settlement statements

In addition to the above, pertinent information is returned at the end of each transaction to facilitate reporting on the Merchant side.

Company Competition

Other new alternative payment brands have emerged and have experienced tremendous success in recent months and years. Management believes that MyECheck services are in many ways more viable, and possess greater revenue potential than other alternative payment services that have emerged.

Most other alternative payment services enable consumers to pay with either payment cards or ACH based e-checks. One of the shortcomings of many of these payment brands is that the consumer is redirected off of the merchant’s site in order to complete the transaction.

The check is the largest non-cash payment method in the US, demonstrating that people often prefer to use checks over cards. In the past 5 years, the number of online check transactions per quarter has grown from 742,660 to 318,484,650, approximately a 428% growth rate. In spite of this, many online merchants and businesses offer no alternative to cards, resulting in lost sales due to many consumers’ inability or unwillingness to purchase cards.

MyECheck provides access to more US consumers than any other payment method because it can be used to clear checks from 100% of US checking accounts, including business accounts and accounts where ACH does not work. MyECheck facilitates faster funds clearing than cards or ACH providing same day or next day availability of funds to the merchant’s bank. MyECheck also offers fraud control tools including bank account verification, negative check-writer database queries and payment guarantee at lower rates.

Because MyECheck does not use the ACH network, transactions are not subject to National Automated Clearing House Association (“NACHA”) regulation, including their rules, fees and fines. MyECheck RCCs are governed by Uniform Commercial Code (State check laws), and Check 21 law, which is more favorable to the Payee than NACHA rules and facilitates higher returned item collection rates. The lower number of returns and higher return collection rates translates to fewer losses, lower fees for payment guarantee and higher profit margins for MyECheck Merchants.

E-commerce & Internet Industry

Worldwide, more than one billion people are using the Internet. The number of American homes and businesses with broadband access capabilities tops 50 million, and a plethora of new services, entertainment options and time-saving solutions have become widely available. The U.S. population is becoming more tech-savvy, with at least 72% of American adults surfing the net on a regular basis. Confidence in security for online transactions is on the rise, as is the ease of use of most retail web sites.

Online advertising, including paid search inclusion at sites like Google and Yahoo!, has ballooned into a $10 billion business in the U.S. alone, threatening traditional advertising venues of all types.

Management believes that new methods of taking advantage of efficiencies created by the Internet are becoming widely accepted as access to high-speed broadband Internet connections become commonplace. Users of the Internet (both business and consumer) are multiplying around the globe, and many companies are earning substantial profits in serving those users.

The migration to more efficient payment mechanisms is affected by innovations, incentives, and regulation. While advances in technology have yielded numerous payment method alternatives, many have not been widely adopted. Numerous payment innovations have not been widely adopted because many payment system participants lacked sufficient incentives to change consumer behavior.

Gaining market adoption is a major challenge in the migration to efficient payment mechanisms. This can be particularly difficult considering the deep emotional attachment of consumers to more traditional payment forms, e.g., checks, in the United States. There are incentives that make U.S. consumers and businesses more likely to adopt less efficient and less secure payment instruments, such as credit and signature-based debit cards.

Weak authentication procedures are a main factor driving fraud. The legal and regulatory framework protects consumers differently based on the payment instrument used to make purchases.

According to a survey published June 29, 2006, approximately 74% of consumers would be willing to spend about $960 more per year on music, games, subscriptions, and other digital content online if they could use a form of payment that’s safer and more convenient than a credit or debit card. Given current estimates of active consumers online, that adds up to $14.4 billion in forgone sales annually for Internet-based content sellers, according to Javelin Strategy & Research.

Aside from those who say they would buy more if given alternatives, some 72% of online consumers said they have abandoned a purchase when it came time to make payment. The major finding of the poll is that the availability of secure and convenient payment options beyond traditional credit and debit cards can drive significant incremental purchases, subscriptions, and transactions.

Although many new payment schemes exist today with many more on the horizon, the vast majority of these systems continue to be based upon the two fundamental payment methods, credit and debit.

Successful solutions such as PayPal and more recently BillMeLater offer a slight twist to the traditional payment mechanism of credit cards. PayPal for example, whose primary merchant customers are small retailers who typically are not large enough to qualify for their own merchant account at a bank, offers consumer payment options consisting of either credit cards or bank debit through the ACH network.

BillMeLater is a credit based system whereby the consumer applies for and, if approved, is granted a line of credit at the time of the transaction.

All other e-check (online electronic check) solutions are based upon the ACH (automated clearing house) system. ACH transactions are bank electronic funds transfers whereby the consumer’s bank account is debited and the recipients account is credited. ACH transactions work reasonably well in most instances, however the system does suffer from some shortcomings which have impacted adoption.

ACH transactions are governed by NACHA, (the National Automated Clearing House Association), which imposes a substantial number of rules and regulations upon the transactions and their users. Compliance with the many, and continuously updating, NACHA operating rules can be complicated for Merchants.

ACH transactions take several days to clear through the system. During the clearing period the recipient has no way to determine if the transaction is even going clear or if it will result in an administrative return. ACH has more than 60 reasons why a transaction can fail. Many times it is because the consumer’s bank has chosen not to participate in ACH, or hasn’t performed the correct system integration.

Checks continue to be the number one non-cash payment method in the US, with the value of checks processed annually around one hundred trillion dollars. Up to 45% of adults either have no payment cards or have no available credit on their cards, meaning that as many as 80 Million US adults have no ability to buy online at the many websites that only accept cards.

Many online merchants are dissatisfied with credit card and ACH solutions, and many online industries such as travel and brokerage have no check solution at all. Management believes this provides MyECheck with a significant market opening.

Employees and Contractors

As of January 1, 2010, MyECheck had 4 full time employees and 6 independent contractors.

Leases

The Company leases its corporate office under a non-cancelable rental agreement through December 2009. Monthly payments at the inception of the lease terms were $8,576 and increase 4% annually. During 2009, the Company extended the non-cancelable operating lease. This lease expires on February 28, 2012.

Regulation

MyECheck is not currently subject to direct federal, state or local regulation, and laws or regulations applicable to access to or commerce on the Internet, other than regulations applicable to businesses generally. MyECheck provides transaction processing services and does not conduct transactions or hold or transfer cash itself. However, there can be no assurances that MyECheck will not be subject to such regulation in the future.

Cost of Compliance with Environmental Regulation

MyECheck currently has no costs associated with compliance with environmental regulations. However, there can be no assurances that MyECheck will not incur such costs in the future.

Software Development

In April 2006, MyECheck entered into an open ended software development agreement with R Systems International Ltd., a software product development company, and that agreement continues to be in effect. MyECheck also develops some of its software in-house and utilizes an independent contractor. During the past four years, research and development costs associated with the development of the software have been approximately $183,000.

MyECheck own proprietary software and intellectual property, and licenses patented technology from the Company founder Edward R Starrs.

Business Partners

MyECheck has entered into a Processor Agreement with First Regional Bank. First Regional Bancorp (NASDAQ: FRGB) is a bank holding company headquartered in Century City, California. Its subsidiary, First Regional Bank, specializes in providing businesses and professionals with the management expertise of a major bank and the personalized service of an independent. First Regional Bank offers the latest technology combined with a higher level of service, responsiveness and cost savings not found at other institutions.

First Regional Bank has sponsored MyECheck at the Federal Reserve Bank, and MyECheck is permitted to use First Regional Bank’s FedLine account to electronically access the Federal Reserve check clearing system.

During 2008 and 2009, the Company expanded its relationships with larger customers and as a result of their banking requirements, the Company implemented processing of Check 21 files directly to the bank instead of entering into agreements to use their bank’s FedLine account to electronically access the Federal Reserve check clearing system. As more banks have implemented Check 21 clearing processes with the Federal Reserve, the need to use a bank’s FedLine to process transactions directly to the Federal Reserve has diminished.

On January 29, 2010, the Company’s sponsoring bank, First Regional Bank, was closed by the Federal Deposit Insurance Corporation (FDIC). The new bank acquiring the old bank from the FDIC obtained all rights to accept or reject former contracts. The new bank elected to reject the Company’s agreement with the old bank. The Company is in the process of moving its customers to one of its other processing banks.

MyECheck has entered into an Agreement with Cardinal Commerce Corporation, a global leader in enabling authenticated payments, secure transactions and alternative payment brands for both eCommerce and mobile commerce. CardinalCommerce enables payment brands such as Verified by Visa, MasterCard SecureCode, PayPal, eBillme, Bill Me Later, Google Checkout, MyECheck, and NetCash (with Western Union and NACHA Secure Vault Payments coming soon) to a network of over 30,000 merchants and thousands of Banks.

The Cardinal mobile platform leverages its merchant network, bank network and payment brands by linking them with end users’ mobile phones through an integrated mobile platform. Cardinal's proprietary and easily deployable technology provides consumers, merchants, card issuers, and processors the ability to conduct authenticated Internet, wireless and m obile transactions safely and securely. Headquartered in Cleveland, Ohio, with facilities in the United States, Europe and Africa, CardinalCommerce services a global customer base.

In 2009, MyECheck announced a partnership with Morse Data Corporation. Morse Data’s InOrder solution is a leading enterprise management system for multi-channel merchants, fulfillment service providers and publishers. Easily deployed as an off-the-shelf system, InOrder accommodates all sales channels, including web, phone, fax, EDI, POS and catalog sales in real time for immediate and accurate inventory and order processing.

MyECheck also announced that it had signed an agreement with Regal Entertainment Group, the world’s largest motion picture exhibitor. Regal patrons are able to purchase discount movie tickets and gift cards by securely entering their checking account details on the Regal website. The MyECheck service works with every checking account in the United States, including all business accounts, enabling more Regal patrons to purchase online.

Additionally, MyECheck announced it had entered into a definitive agreement with Simplifile, the leading provider of electronic recording services. The agreement facilitates the MyECheck Remotely Created Check solution into the Simplifile e-recording service which allows Simplifile customers to make payments for recording and submission fees using an online check imaging process.

MyECheck also announced several other new merchants during the course of 2009. MyECheck is substantially reliant on these agreements for its business. If MyECheck develops a broader base of customers and vendor relationships, that reliance may decrease, but there can be no assurances as to the timing or extent of such growth.

On November 17, 2008, the Company announced that it had signed the California State Teachers’ Retirement Fund (CalSTRS) as a customer. CalSTRS primary responsibility is to provide retirement related benefits and services to teachers in public schools and community colleges. It administers retirement, disability and survivor benefits for California's 813,000 public school educators and their families from the state's 1,400 school districts, county offices of education and community college districts.

The Merger Agreement

MyECheck, Inc., a Delaware corporation (“MEC”) and Sekoya Holdings, Limited (a Nevada corporation) entered into a Merger Agreement in November 2007, which was amended and restated as of February 4, 2008, and was filed as an exhibit to the Report on Form 8-K filed on February 7, 2008 (the Report on Form 8-K and Merger Agreement are incorporated herein by reference). The merger was effective March 14, 2008.

A total of 2,000,000 shares otherwise issuable to MEC’s shareholders have been held back (the “Escrow Shares”) for purposes of compensating MEC and its officers, directors, employees, agents and affiliates should they sustain any loss due to a breach of Company’s representations, warranties, covenants or agreements contained in the Merger Agreement or any related document (a “Loss”).

Item 1A: Risk Factors

MYECHECK IS A HIGH RISK, START-UP COMPANY AND, AS SUCH, THERE IS UNCERTAINTY REGARDING WHETHER IT WILL SUCCESSFULLY EXECUTE OUR BUSINESS PLAN, GENERATE ENOUGH REVENUE TO SUPPORT OPERATIONS, RECEIVE ANY INVESTMENT, OR ENGAGE ANY NEW CUSTOMERS.

“Going concern” opinion by auditors

The report of the auditors accompany the Company’s financial statements included herein notes that the Company has a net loss of $983,793 and net cash used in operations of $53,944 for the year ended December 31, 2009, a working capital deficit of $672,276, an accumulated deficit of $3,354,113 and a stockholders’ deficit of $659,412 at December 31, 2009. As a result of these factors, the auditors noted that there was “substantial doubt” about the Company’s ability to continue as a going concern.

The ability of the Company to continue as a going concern is dependent on Management's plans, which include the raising of capital through debt and/or equity markets. The Company will require additional funding during the next twelve months to finance the growth of its current and expected operations and achieve strategic objectives. Additionally, the Company will need to continually generate revenues through its current business operations in order to generate enough cash flow to fund operations through 2010. The Company is also dependent on maintaining their positive approval status with the Federal Reserve. If the Company were to lose this approval, their ability to provide services would be affected negatively. The Company is also dependent on bank sponsorship when processing transactions directly with the Federal Reserve. If the Company were to lose bank sponsorship, their ability to provide services would be affected negatively. On January 29, 2010, the Company’s sponsoring bank was closed by the Federal Deposit Insurance Corporation (FDIC). The new bank acquiring the old bank from the FDIC obtained all rights to accept or reject former contracts. The new bank elected to reject the Company’s agreement with the old bank. The Company is in the process of moving its customers to one of its other processing banks.

Product Risk

There are no assurances that MyECheck will continue to be able to provide its services. Changes in laws or interpretation of existing laws may pose significant risk and may prevent MyECheck from providing its service. MyECheck is dependent on a bank relationship and there are assurances that MyECheck will be able to maintain its current bank relationships, or develop new bank relationships.

Market Risk

There are no assurances that the market demand for MyECheck’s services exist, or will continue to exist in the future. The Internet and high technology industries are rapidly evolving and changing, and new products or services may be introduced that may make MyECheck’s services less viable or obsolete.

Reliance on Key Employees

At least in its early stage, the Company's business depends to a large extent on retaining the services of its founder, Mr. Edward R Starrs (Chairman of the Board of Directors and Chief Executive Officer), as well as MyECheck’s Chief technical Officer Mr. R. Stephen Blandford and MyECheck’s Chief Financial Officer Mr. James R Heidinger. The Company's operations could be materially adversely affected if, for any reason, one or more of the above officers ceases to be active in MyECheck's management.

Financial Risk

There are no assurances that MyECheck will always have sufficient money to continue operations.

Competitive Risk

There are no assurances that MyECheck will be able to effectively compete against larger, better funded competitors. Although MyECheck is apparently first to market with its RCC service, competing services may be developed that may offer more advantages, cost less or may have higher sales and marketing success.

Dependence on the Internet

Because MyECheck’s products and services are provided directly over the Internet, the future success of MyECheck will depend in large part on whether the Internet proves to be a viable commercial marketplace. Whether because of inadequate development of the necessary infrastructure or as a result of fraud, or any other cause, if customers lack confidence in sourcing products over the Internet, MyECheck’s business, operating results and financial condition will be materially adversely affected.

Rapid Technologic Change; Dependence on New Product Development

The Internet market in which MyECheck intends to compete is characterized by rapid and significant technological developments, frequent new product introductions and enhancements, continually evolving business expectations and swift changes. To compete effectively in such markets, MyECheck must continually improve and enhance its products and services and develop new technologies and services that incorporate technological advances, satisfy increasing customer expectations and compete effectively on the basis of performance and price. MyECheck’s success will also depend substantially upon its ability to anticipate, and to adapt its products and services to its collaborative partner’s preferences. There can be no assurance that technological developments will not render some of MyECheck's products and services obsolete, or that MyECheck will be able to respond with improved or new products, services, and technology that satisfy evolving customers’ expectations. Failure by MyECheck to acquire, develop or introduce new products, services, and enhancements in a timely manner could have a material adverse effect on MyECheck’s business, financial condition and operations. Also, to the extent one or more of MyECheck's competitors introduces products and services that better address a customer’s needs, MyECheck’s business would be materially adversely affected.

Delays in New Product and Service Development and Introduction

The process of developing products and services such as those offered by MyECheck may prove to be extremely complex and it is highly likely that MyECheck will experience delays in developing and introducing new products and services in the future. If MyECheck is unable to develop and introduce new products, services or enhancements to existing products and services in a timely manner in response to changing market conditions or customer requirements, MyECheck's business, operating results and financial conditions would be materially adversely affected. Also, announcements of currently planned or other new products and services may cause customers to delay their subscription decisions in anticipation of such products and services, which could have a material adverse effect on MyECheck's business, operating results and financial condition, especially if the introduction of such products and services is delayed.

Flaws and Defects in Products and Services

Products and services as complex as those offered by MyECheck may contain undetected flaws or defects when first introduced or as new versions are released. Any inaccuracy or defects may result in adverse products and service reviews and a loss or delay in market acceptance. There can be no assurance that flaws or defects will not be found in MyECheck’s products and services. If found, flaws and defects would have a material adverse effect upon MyECheck’s business operations and financial condition.

Management of Potential Growth

MyECheck's ability to manage its future growth, if any, will require it to continue to implement and improve its operational, financial and management information systems and control and to hire and train new employees, including management and technical personnel, and also to motivate and manage its new employees and to integrate them into its overall operations and culture. Although the management team has successfully grown other companies, there can be no assurance that MyECheck will be able to perform such actions successfully. MyECheck's failure to manage growth effectively would have a material adverse effect on MyECheck’s results of operations and its ability to execute its business strategy.

Lack of a Public Market

There has not been a regular trading public market for MyECheck’s shares there are no assurances that a regular trading market will develop in the near term or that, if developed, it will be sustained. In the event a regular public trading market does not develop, any investment in MyECheck’s Common Stock would be highly illiquid. Accordingly, investors in MyECheck may not be able to readily sell their shares.

There are risks in trading in “microcap” stocks, including shares of the Company

The Securities and Exchange Commission has advised investors to use caution in investing in shares of “microcap” companies, which would include the Company. http://www.sec.gov/investor/pubs/microcapstock.htm. The Company encourages investors to consider the information provided by the SEC prior to making an investment in the Company’s stock.

Dividends

MyECheck has not paid any dividends or made distributions to its investors and is not likely to do so in the foreseeable future. MyECheck presently intends to retain earnings for use in its business. Additionally, MyECheck may fund a portion of its future expansion through debt financing, and a condition of such financing may prohibit the payment of dividends while the debt is outstanding. Therefore, management's goal is to build value by increasing the size of the business and not by paying dividends.

Competition

With the ever-growing popularity of the Internet and as computer hardware (i.e., servers) and creating/maintaining virtual private networks becomes more affordable, other on-line services may appear or are already established which will try to create an electronic link to provide similar products and services that MyECheck offers. Some of those businesses may have far greater financial and marketing resources, operating experience and name recognition than MyECheck. Potential competitors include PayPal, Google Checkout, BillMeLater and others. All these companies take different approaches to processing electronic transactions and to the best of MyECheck's knowledge, none of them currently offer services of the same type as MyECheck. Notwithstanding, these potential competitors, as well as the entry of more competitors offering similar services, could have a material adverse effect upon MyECheck's business, operating results and financial condition.

Reliance on license with affiliated party

The Company has entered into a memorandum of understanding with Ed Starrs, its founder and CEO, under which the Company will become the sole licensee of a newly granted patent for check processing technology. No royalties will be due for the patent for one year, and future royalties are subject to negotiation by the Company and Mr. Starrs. The Company believes that it will obtain a competitive advantage from the ability to access the patent. Failure to agree on future terms of the license could have a material adverse impact on the Company.

Item 1B. Unresolved Staff Comments.

Not applicable

Item 2: Description of Property

MyECheck’s operates its executive offices from approximately 3,300 square feet of Class A office space in a business park located in El Dorado Hills, CA. Certain contractors operate from their homes located in various regions throughout the country. MyECheck’s primary operational data center is located in a tier IV data center in Sacramento, CA. Our telephone number is (916) 932-0900.

Item 3: Legal Proceedings

MyECheck may from time to time be involved in various claims, lawsuits, and disputes with third parties, actions involving allegations of discrimination, intellectual property infringement, or breach of contract actions incidental to the operation of its business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business. MyECheck is currently not aware of any such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse affect on its business, financial condition or operating results.

During 2005, a lawsuit was filed against the Company in the State of California, claiming the Company was using the technology created by the plaintiff. On March 31, 2010, the Company settled the case with the plaintiff with a payment of 275,000 shares of the Company’s stock. The stock was valued at $46,750 ($0.17/share), based upon the quoted closing trading price. Since the potential loss on settlement existed at December 31, 2009, the Company accrued the settlement as the amount was known prior to the issuance of these financial statements.

Item 4: Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders during the fiscal period ended December 31, 2009.

PART II

Item 5: Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities

The Company's Common stock is presently listed on the OTC Bulletin Board under the symbol "MYEC". Our common stock has been listed on the OTC Bulletin Board since October 2006. There is currently no significant trading in our common stock and there has been little active trading since our common stock has been listed on the OTC Bulletin Board. Prior to the merger, any trading in the Company’s shares did not represent trading based on the current operations or business of the Company.

As of December 31, 2009, the approximate number of holders of Common Stock of the Company is 54.

Since our inception date, our boards of directors have not declared any dividend payments to the shareholders. The declaration and payment of dividends to holders of our common stock by us, if any, are subject to the discretion of our board of directors. Our board of directors will take into account such matters as general economic and business conditions, our strategic plans, our financial results and condition, contractual, legal and regulatory restrictions on the payment of dividends by us, and such other factors as our board of directors may consider to be relevant.

The company has never issued securities for any equity compensation plan.

On March 14, 2008, as a result of the Merger, the former shareholders of MEC became shareholders of approximately 60% of the Company’s outstanding common stock. The transaction was exempt from registration under Section 4(1) of the Securities Act of 1933.

MyECheck has entered into subscription agreements with Youngal Group Ltd. and Anshan Finance Ltd. (together the “Investors”) who have agreed, in the aggregate, to purchase 4,000,000 shares of MyECheck’s common stock following the Effective Time of the Merger. The shares were issued in reliance upon an exemption from the registration requirements of the Securities Act of 1933 provided by Regulation S. A total of 4,000,000 shares have been issued under those subscription agreements, but the Investors did not fully perform.

Item 6: Selected Financial Data

Omitted per Item 301 (c) of Regulation S-K.

Item 7. Management's Discussion and Analysis or Plan of Operation

The following discussion contains certain forward-looking statements that are subject to business and economic risks and uncertainties, and MyECheck's actual results could differ materially from those forward-looking statements. The following discussion regarding the financial statements of MyECheck should be read in conjunction with the financial statements and notes thereto.

MyECheck's prior full fiscal year ending December 31, 2007 is not indicative of MyECheck's current business plan and operations. Incorporated in October 2004, MyECheck currently has limited revenues and is deemed an early stage Company. This plan of operation will focus on MyECheck's business plan and operations current. There can be no assurance that MyECheck will generate positive cash flow and there can be no assurances as to the level of revenues, if any, MyECheck may actually achieve from its operations.

Implementation Plan

Following is an outline of MyECheck's plan to build a widely used payment system. The success of MyECheck depends on a number of factors including the careful selection and active participation of qualified Value Added Resellers (“VARs”) and Payment Service Providers (“PSPs”). The VARs / PSPs commitment to MyECheck will depend on the commercial viability of MyECheck’s solutions and web-based services.

MyECheck targets internet payment gateways and payments software and service providers for partnership and reseller opportunities. Early emphasis has been on building sales channels through partnerships. MyECheck has experienced early success in partnerships with Cardinal Commerce and is in discussions and other major PSPs.

In addition to its in-house direct sales department, MyECheck has engaged a number of specialized independent sales agents such as Sheffield Resource Network and others, who leverage their existing contacts for direct sales.

MyECheck has an active PR program and issues press releases on a regular basis which generate in-bound leads and interest from industry press. Company management conducts interviews with national press. MyECheck attends and exhibits at industry trade shows, conferences and other networking events.

MyECheck in-house sales force and independent sales agents also use email and cold calling marketing techniques, focusing on the industry’s largest target companies. MyECheck is currently in discussion with large Independent Sales Organizations (ISOs) regarding partnership and representation opportunities.

In addition to the effective marketing and distribution of MyECheck’s services, MyECheck’s infrastructure must be able to support a significant increase in transaction volume. MyECheck plans to enhance its infrastructure by adding a new data center and new hardware in anticipation of increased transaction volume. MyECheck plans to continue to scale it’s infrastructure in advance of the need.

Critical Accounting Policies

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

Our significant accounting policies are summarized in Note 2 of our financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.

We believe the following critical accounting policies and procedures, among others, affect our more significant judgments and estimates used in the preparation of our consolidated financial statements:

Revenue recognition

The Company records revenue when all of the following have occurred; (1) persuasive evidence of an arrangement exists, (2) product delivery has occurred, (3) the sales price to the customer is fixed or determinable, and (4) collectibility is reasonably assured.

The Company earns revenue from services, which has included the following: electronic check processing, financial verification, identity verification and check guarantee services. The services are performed under the terms of a contract with a customer, which states the services to be utilized and the terms and fixed price for all services under contract. The price of these services may be a fixed fee per transaction and/or a percentage of the transaction processed depending on the service.

Revenue from electronic check processing is derived from fees collected from merchants to convert merchant customer check data into an electronic image of a paper draft, which allows the Company to deposit the funds to the merchant’s bank through image clearing with the Federal Reserve on behalf of the bank. The Company recognizes the revenue related to electronic check processing fees when the services are performed.

Revenue from financial verification is derived from fees collected from merchants to process requests to validate financial verifications to an outside service provider under contract with the Company. This revenue is recognized when the transaction is processed, since the Company has no further obligations.

Revenue from check guarantee services is derived from fees collected from merchants to process transaction to an outside service provider under contract with the Company. This revenue is recognized when the transaction is processed, since the Company has no further obligations.

Stock-based compensation

Generally, all forms of share-based payments, including stock option grants, restricted stock grants and stock appreciation rights are measured at their fair value on the awards’ grant date, based on the estimated number of awards that are ultimately expected to vest. Share-based compensation awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. The expense resulting from share-based payments are recorded in general and administrative expense in the consolidated statement of operations.

Derivative Financial Instruments

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model.

Income Taxes

The Company accounts for income taxes in accordance with accounting guidance now codified as FASB ASC Topic 740, “Income Taxes,” which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized.

Accounting guidance now codified as FASB ASC Topic 740-20, “Income Taxes – Intraperiod Tax Allocation,” clarifies the accounting for uncertainties in income taxes recognized in accordance with FASB ASC Topic 740-20 by prescribing guidance for the recognition, de-recognition and measurement in financial statements of income tax positions taken in previously filed tax returns or tax positions expected to be taken in tax returns, including a decision whether to file or not to file in a particular jurisdiction. FASB ASC Topic 740-20 requires that any liability created for unrecognized tax benefits is disclosed. The application of FASB ASC Topic 740-20 may also affect the tax bases of assets and liabilities and therefore may change or create deferred tax liabilities or assets. The Company would recognize interest and penalties related to unrecognized tax benefits in income tax expense. At December 31, 2009 and 2008, respectively, the Company did not record any liabilities for uncertain tax positions.

Earnings per Share

In accordance with accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share,” basic earnings (loss) per share is computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).

Operating Lease

The Company leased its corporate office under a non-cancelable rental agreement from May 2005 through December 2009. During 2009, the Company extended the non-cancelable operating lease. This lease expires on February 28, 2012.

Liquidity

As of December 31, 2009, MyECheck had cash on hand amounting to $7,255. MyECheck is currently operating cash flow negative and its operating expenses exceed its operating income.

There are currently no commitments for capital expenditures.

There are trends in sales that would have a material affect on MyECheck. In recent months there has been a marked increase in the number of applications for MyECheck’s services. Management expects this trend to continue throughout 2010, however there can be no assurances that the current trend will continue.

There are currently no guarantees or other off balance sheet arrangements.

Revenue from operations during the year ended December 31, 2009 was $725,331. During the year ended December 31, 2008, revenue from operations was $548,159.

MyECheck started processing transactions on version one of its software platform in July of 2005 and continued through March of 2006, after which it ceased processing in order to further develop and refine its service offerings. During the period from March of 2006 through September 2007, MyECheck redesigned and developed its software platform to better suit the demands of its prospective customers and to ensure the accurate performance of the software. MyECheck launched revenue generating operations on version two of its software platform in September 2007.

The Company’s auditors have issued a “going concern” qualification to their opinion on the Company’s financial statements. The Company expects to require additional capital infusions during 2010 and may not survive without such capital infusions.

Item 7A: Quantitative and Qualitative Disclosures About Market Risk

Omitted per Item 305(e) of Regulation S-K.

Item 8: Financial Statements

The consolidated financial statements required to be filed pursuant to this Item 8 begin on page F-1 of this report.

Item 9: Changes In Disagreements With Accountants on Accounting and Financial Disclosure

Berman & Company, P.A., the Company’s Independent Registered Public Accounting Firm (the “Firm”), have been the only auditor since inception and there have been no disagreements between MyECheck and the Firm.

Item 9A: Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer (the "Certifying Officers") are responsible for establishing and maintaining disclosure controls and procedures for the Company. The Certifying Officers have designed such disclosure controls and procedures to ensure that material information is made known to them, particularly during the period in which this report was prepared. The Certifying Officers have evaluated the effectiveness of the Company's disclosure controls and procedures within 90 days of the date of this report and believe that the Company's disclosure controls and procedures are effective based on the required evaluation. There have been no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of consolidated financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. There has been no change in the Company’s internal control over financial reporting during the year ended December 31, 2009 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Company’s management, including the Company’s CEO and CFO, does not expect that the Company’s disclosure controls and procedures or the Company’s internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of the controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the company’s internal control over financial reporting was effective as of December 31, 2009.

Berman & Company, P.A., the Company’s independent registered public accounting firm, has not issued an attestation report on the effectiveness of the Company’s internal controls over financial reporting since we are not yet required to comply with this provision of Section 404(B) of the Sarbanes-Oxley Act.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the year ended December 31, 2009, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B: Other Information

None

Item 10: Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act

There is no involvement by any of Director, Executive Officer or Control Person in bankruptcy, criminal proceeding, injunctions, or violation of securities law in the past 5 years.

The following table sets forth the names and ages of the current directors and executive officers of MyECheck, the principal offices and positions with MyECheck held by each person and the date such person became a director or executive officer of MyECheck. The executive officers of MyECheck are elected annually by the Board of Directors. The directors serve one year terms until their successors are elected. The executive officers serve terms of one year or until their death, resignation or removal by the Board of Directors. There are no family relationships between any of the directors and executive officers. In addition, there was no arrangement or understanding between any executive officer and any other person pursuant to which any person was selected as an executive officer.

The directors and executive officers of MyECheck are as follows:

Name	Age	Position(s)	Date Appointed

Edward Robert Starrs	49	President	October 29, 2004
		Chief Executive Officer
		Chairman of the Board
		Director

Robert Stephen Blandford	50	Vice President of Technology	October 29, 2004
		Chief Technology Officer
		Secretary
		Director

James Ronald Heidinger	53	Vice President of Finance	May 15, 2006
		Chief Financial Officer
		Treasurer
		Director

Edward R Starrs

Mr. Starrs has more than 20 years experience as an international business executive with management experience in multiple industries. He has been an officer and director of MyECheck since its formation in 2004. Previously, Mr. Starrs was President of Starnet Systems International, Inc., a wholly owned subsidiary of a public company that was processing more than $2 billion annually in Internet transactions.

Mr. Starrs owned and operated several successful companies including, ERS Marketing, Inc., where he produced over $20 million in contracts for his clients, and Bay Distributing, Inc. a major distributor of over 800 product categories to Fortune 500 accounts.

From January, 2002 through October, 2004, Mr. Starrs was President of Digency, Inc., an online payment processing company engaged in credit card and eCheck transaction processing for Internet Merchants.

Starrs has also held senior management positions with Fortune 100 companies including McCaw Communications, Inc. (AT&T), and AMF, Inc., the world’s largest sporting goods conglomerate.

R Stephen Blandford

Mr. Blandford possesses more than 15 years experience as a Senior Information Technology Professional including serving as CTO for companies in the online entertainment and gaming industries.

Mr. Blandford’s professional experience includes i2 Corp, MXM Media, Maxum Entertainment Group, Perspective Technologies, WinStreak and others.

From January 2002 through October 2004, Mr. Blandford was Chief Technology Officer for Digency, Inc., an online payment processing company engaged in credit card and eCheck transaction processing for Internet Merchants.

Mr. Blandford has expertise in the design and implementation of Java streaming media solutions for multiple platforms, using Coldfusion, PHP, & SQL DBs. For more than a decade Blandford has architected systems featuring virtually every emerging technology.

James Heidinger, BS, CPA

During the period from 2000 through 2005, Mr. Heidinger served as Chief Financial Officer for ORBA Financial Management, an investment and insurance sales and marketing firm licensed in all 50 states. With over 450 independent registered representatives and premium and investment sales of over $750 million, ORBA is the top production leader for Western Reserve Life and InterSecurities, both subsidiaries of AEGON NV, the third largest international insurance firm in the world and a major investor in ORBA Financial Management.

Previously, Mr. Heidinger was recruited to create and implement a corporate accounting system, provide financial statements, perform a systems conversion and set up a cash management system for Cucina Holdings, Inc. a $50 million food and beverage manufacturer, wholesaler and retailer. Its branded names include Java City Coffee, Caravali Coffees and La Petite Boulangerie.

Audit Committee Financial Expert

We do not have an audit committee financial expert as we believe the cost related to retaining a financial expert at this time is prohibitive. Further, because we are only beginning our commercial operations, at the present time, we believe the services of a financial expert are not warranted.

Conflicts of Interest

The only conflict that we foresee is that our officers and directors devote time to projects that do not involve us.

SECTION 16(A) BENEFICIAL OWNER REPORTING COMPLIANCE

Section 16(a) of the Securities and Exchange Act of 1934 requires that the Company's directors, executive officers, and persons who own more than 10% of registered class of the Company's equity securities, or file with the Securities and Exchange Commission (SEC), initial reports of ownership and report of changes in ownership of common stock and other equity securities of the Company. Officers, directors, and greater than 10% beneficial owners are required by SEC regulation to furnish the Company with copies of all Section 16(a) reports they file.

Code of Ethics

The Company has adopted code of ethics for all of the employees, directors and officers.

Item 11: Executive Compensation

On January 1, 2007, MyECheck entered into a three year Employment Agreement with Mr. Edward R Starrs, MyECheck's President and Chief Executive Officer, whereby MyECheck will pay Mr. Starrs an annual salary of $240,000. The Agreement also requires MyECheck to provide, at its expense, complete health insurance coverage for Mr. Starrs and his children.

MyECheck pays. R Stephen Blandford, MyECheck's Vice President of Technology and Chief Technology Officer, an annual salary of $90,000 and provides health insurance coverage for Mr. Blandford .

MyECheck pays Mr. James R Heidinger, MyECheck's Vice President of Finance and Chief Financial Officer, an annual salary of $135,000 and provides complete health insurance coverage for Mr. Heidinger.

MyECheck does not provide compensation for its directors.

The following table sets forth the total compensation MyECheck pays its Officers.

	Annual Compensation				Long-Term Compensation
					Awards		Pay-outs
Name and Principal Position	Year	Salary($)	Bonus($)	Other Annual Compensation ($)	Restricted Stock Award(s) ($)	Securities Underlying Options/SARs (#)	LTIP Payouts	All Other Compensation ($)

Edward R Starrs	2009	240,000	0	19,317	128,356	0	0	0
(Chairman & CEO)

R Stephen Blandford	2009	90,000	0	6,816	99,960	0	0	0
(Chief Technology Officer, Director)

James R Heidinger	2009	135,000	0	9,268	99,960	0	0	0
(Chief Financial Officer, Director)

Option/SAR Grants

On April 7, 2009 the Company adopted the 2009 Equity Incentive Plan (the “Plan”) covering 10,000,000 stock rights including options, restricted stock and stock appreciation rights. Under the Plan, employees, and consultants receive initial grants of options, which vest immediately, and the remaining unvested portion of a grant vests ratably over a three-year period.

On May 11, 2009, the Company granted 7,300,000 non-qualified stock options to employees and non-employee consultants for services to be rendered over a three-year period. The options are exercisable over a 5 - 10 year term at $0.13 per share and vest 25% immediately while the remaining 75% vests monthly in equal increments over a three-year period. These options had a fair value of $871,828 using the Black-Scholes option-pricing model.

There are no retirement, pension, or profit sharing plans for the benefit of our officers and directors.

Long-Term Incentive Plan Awards

We do not have any long-term incentive plans.

Compensation of Directors

We do not have any plans to pay our directors any compensation for Board participation.

Indemnification

The Corporation Laws of the State of Nevada and MyECheck's Bylaws provide for indemnification of MyECheck's Directors for liabilities and expenses that they may incur in such capacities. In general, Directors and Officers are indemnified with respect to actions taken in good faith in a manner reasonably believed to be in, or not opposed to, the best interests of MyECheck, and with respect to any criminal action or proceeding, actions that the indemnitee had no reasonable cause to believe were unlawful. Furthermore, the personal liability of the Directors is limited as provided in MyECheck's Articles of Incorporation

Regarding indemnification for liabilities arising under the Securities Act of 1933, which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable.

Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth information with respect to MyECheck's equity securities owned of record or beneficially by (i) each Officer and Director of MyECheck; (ii) each person who owns beneficially more than 5% of each class of MyECheck's outstanding equity securities; and (iii) all Directors and Executive Officers as a group, after giving effect to Merger and to the financing and warrant transactions described herein.

Name and Address of Beneficial Owner	Common Stock		Percentage

Edward Robert Starrs		29,168,751		41.61	%
674 Platt Circle
El Dorado Hills, CA 95762

Robert Stephen Blandford		2,769,375		3.91	%
2624 Alana Ct
Cameron Park, CA 95682

James Ronald Heidinger		1,478,125		2.08	%
488 Lakeridge Court
El Dorado Hills, CA 95762

Anshan Finance Ltd *		4,000,000		5.65	%
Jasmine Court
35A Regent Street
Belize City, Belize

Youngal Group Ltd.*		4,000,000		5.65	%
Jasmine Court
35A Regent Street
Belize City, Belize

* Anshan Finance Ltd has agreed to purchase 2,000,000 shares from MyECheck for $1,000,000, and may be entitled to warrants from MyECheck to acquire an additional 2,000,000 shares from MyECheck at the price of $2.00 per share. Youngal Group Ltd. has agreed to purchase 2,000,000 shares from MyECheck for $1,000,000, and may be entitled to warrants from MyECheck to acquire an additional 2,000,000 shares from MyECheck at the price of $4.00 per share. Youngal Group Ltd. owes MyECheck $400,000 pursuant to a subscription receivable and the remaining investment has been received by MyECheck.

As of December 31, 2008, the Company determined that the balance due pursuant to a subscription receivable owed by Youngal Group Ltd was deemed uncollectible. The Company wrote off the balance due of $400,000 as a provision for uncollectible stock subscriptions at December 31, 2008.

Except as described above, there are currently no options, warrants, rights or other securities conversion privileges granted to our officers, directors or beneficial owners.

Securities Authorized for Issuance Under Equity Compensation Plans.

We have no equity compensation plans.

Item 13: Certain Relationships and Related Transactions

MyECheck has entered into subscription agreements with Youngal Group Ltd. and Anshan Finance Ltd. (together the “Investors”) who have agreed, in the aggregate, to purchase 4,000,000 shares of MyECheck’s common stock (the “Shares”) following the Effective Time of the Merger. The Shares will be issued in reliance upon an exemption from the registration requirements of the Securities Act of 1933 (the “Act”) provided by Regulation S and may only be transferred in accordance with the provisions of Regulation S, pursuant to an effective registration under the Act, or pursuant to an available exemption from registration under the Act

In connection with the sale of the Shares, MyECheck has entered into warrant agreements with Youngal Group Ltd. and Anshan Finance Ltd. (the “Warrants”). The terms of the Warrants provide the Investors the opportunity to purchase up to 4,000,000 additional shares of MyECheck’s common stock for a purchase price of $4.00 per share or $2.00 per share, respectively. The Warrants may only be exercised following the effective time of the proposed merger between MyECheck and Sekoya and the right to exercise the warrants terminates as of 5:00 p.m. local time in Vancouver, B.C. on the third anniversary of issuance. The Warrants were to be issued in reliance upon an exemption from the registration requirements of the Act provided by Regulation S and may only be transferred in accordance with the provisions of Regulation S, pursuant to an effective registration under the Act, or pursuant to an available exemption from registration under the Act.

The Investors are affiliates of Shirley Wong, a promoter of Sekoya.

MyECheck is not required as a Bulletin Board listed company to have independent directors and at the present time does not have any directors who are not also members of management.

Item 14: Principal Accountant Fees and Services

1) Audit Fees

The aggregate fees billed for the last two fiscal years for professional services rendered by the principal accountant for the audit of the Company's annual financial statements and review of financial statements included in the Company's Form 10-Qs or services that are normally provided by the accountant in connection with statutory and regulatory engagements for those fiscal years was:

2009 - Berman & Company, P.A. $41,000

2008 - Berman & Company, P.A. $40,000

2) Audit - Related Fees

The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of the Company's financial statements and are not reported in the preceding paragraph:

2009 - Berman & Company, P.A. None

2008 - Berman & Company, P.A. None

3) Tax Fees - None

The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning was:

2009 - Berman & Company, P.A. - None

2008 - Berman & Company, P.A. - None

4) All Other Fees

The aggregate fees billed in each of the last two fiscal years for the products and services provided by the principal accountant, other than the services reported in paragraphs (1), (2), and (3) was:

2009 - Berman & Company, P.A. None

2008 - Berman & Company, P.A. None

Item 15: Exhibits

Exhibit No.		Description

31		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14 of the Securities and Exchange Act of 1934 as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32		Certification of the 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

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 15st day of April, 2010.

MyECheck, Inc.

(Registrant)

By: /s/ Ed Starrs

Ed Starrs

President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signature	Title	Date

/s/ Ed Starrs		April 15, 2010
Edward Robert Starrs	President, Chief Executive Officer,
	Chairman of the Board, Director

/s/ James Heidinger		April 15, 2010
James Ronald Heidinger	Vice President of Finance,
	Chief Financial Officer, Treasurer, Director

/s/ Robert Stephen Blandford		April 15, 2010
Robert Stephen Blandford	Vice President of Technology,
	Chief Technology Officer, Secretary, Director

MYECHECK, INC. AND SUBSIDIARY

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009 AND 2008

Contents

	Page

Report of Independent Registered Public Accounting Firm		F-1

Consolidated Balance Sheets as of December 31, 2009 and 2008		F-2

Consolidated Statements of Operations for the Years Ended December 31, 2009 and 2008		F-3

Consolidated Statement of Changes in Stockholders’ Deficit for the Years Ended December 31, 2009 and 2008		F-4

Consolidated Statements of Cash Flows for the Years Ended December 31, 2009 and 2008		F-5

Notes to Consolidated Financial Statements for the Years Ended December 31, 2009 and 2008		F-6 - F-23

F-1

MyECheck, Inc. and Subsidiary

Consolidated Balance Sheets

	December 31, 2009			December 31,2008

ASSETS

Current Assets
Cash	$	7,255		$	23,999
Accounts receivable		7,245			13,253
Prepaid expenses		3,112			-
Debt issue costs - net		1,358			-
Total Current Assets		18,970			37,252

Other Assets
Deposit		12,864			12,864

Total Assets	$	31,834		$	50,116

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
Accounts payable and accrued expenses	$	220,270		$	184,532
Accrued compensation - related parties		198,969			96,485
Accrued settlement payable		46,750			-
Loans payable - related parties		43,864			38,864
Loans payable - other		46,694			46,694
Derivative liabilities		116,672			-
Redeemable convertible note payable - net		18,027			-
Total Current Liabilities		691,246			366,575

Stockholders' Deficit
Common stock, $0.001 par value, 200,000,000 shares authorized
70,864,772 and 69,937,501 shares issued and outstanding		70,865			69,938
Additional paid in capital		2,623,835			1,983,923
Accumulated deficit		(3,354,113	)		(2,370,320	)
Total Stockholders' Deficit		(659,412	)		(316,459	)

Total Liabilities and Stockholders' Deficit	$	31,834		$	50,116

See accompanying notes to financial statements

F-2

MyECheck, Inc. and Subsidiary

Consolidated Statements of Operations

	For the Years Ended December 31,
	2009			2008

Processing Revenues	$	725,331		$	548,159

General and Administrative		1,506,974			1,592,908

Loss from Operations		(781,643	)		(1,044,749	)

Other (Income)/Expense
Change in fair value of derivative liabilities		2,628			-
Derivative expense		79,044			-
Interest expense		20,910			-
Loss on settlement of accounts payable		52,818			-
Settlement expense		46,750			-
Other income		-			(41,373	)
Total Other (Income)/Expense		202,150			(41,373	)

Net Loss	$	(983,793	)	$	(1,003,376	)

Net Loss Per Common Share - Basic and Diluted	$	(0.01	)	$	(0.02	)

Weighted average number of common shares outstanding
during the year - basic and diluted		70,386,965			59,687,159

See accompanying notes to financial statements

F-3

MyECheck, Inc. and Subsidiary

Consolidated Statements of Changes in Stockholders' Deficit

For the Years Ended December 31, 2009 and 2008

	Common Stock				Additional			Accumulated
	Shares		Amount		Paid -in Capital			Deficit			Total

Balance, December 31, 2007		26,375,000	$	26,375	$	73,896		$	(1,366,944	)	$	(1,266,673	)

Issuance of shares in reverse acquisition treated as a recapitalization		39,562,501		39,563		(85,973	)		-			(46,410	)

Stock issued for cash ($0.50/share)		4,000,000		4,000		1,996,000			-			2,000,000

Net loss, 2008		-		-		-			(1,003,376	)		(1,003,376	)

Balance, December 31, 2008		69,937,501		69,938		1,983,923			(2,370,320	)		(316,459	)

Stock issued to settle accounts payable ($0.23/share)		377,271		377		86,395			-			86,772

Stock based compensation		-		-		356,817			-			356,817

Stock issued for services ($0.16 and $0.17/share)		550,000		550		91,450			-			92,000

Warrants issued for services		-		-		105,250			-			105,250

Net Loss, 2009		-		-		-			(983,793	)		(983,793	)

Balance, December 31, 2009		70,864,772	$	70,865	$	2,623,835		$	(3,354,113	)	$	(659,412	)

See accompanying notes to financial statements

F-4

MyECheck, Inc. and Subsidiary

Consolidated Statements of Cash Flows

	For the Years Ended December 31,
	2009			2008
Cash Flows from Operating Activities:
Net loss	$	(983,793	)	$	(1,003,376	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount		18,027			-
Amortization of debt issue costs		1,442
Derivative expense		2,628			-
Change in fair value of derivative liabilities		79,044			-
Stock based compensation		356,817			-
Stock issued for services		92,000			-
Warrants issued for services		105,250			-
Loss on accounts payable settlement		52,818			-
Provision for uncollectible subscription receivable		-			400,000
Cash overdraft forgiven by bank		-			(41,373	)
Changes in operating assets and liabilities:
(Increase) Decrease in:
Accounts receivable		6,008			(13,253	)
Prepaid expenses		(3,111	)		-
Increase in:
Accounts payable and accrued expenses		69,692			90,243
Accrued settlement payable		46,750			-
Accrued compensation - related parties		102,484			96,485
Net Cash Provided by (Used in) Operating Activities		(53,944	)		(471,274	)

Cash Flows from Investing Activities:
Cash acquired in reverse acquisition		-			259
Net Cash Provided by Investing Activities		-			259

Cash Flows from Financing Activities:
Cash paid as debt issue costs		(2,800	)		-
Proceeds from loan payable - related parties		10,000			17,317
Repayments of loans payable - related party		(5,000	)		(22,000	)
Proceeds from loans payable - other		-			1,300
Repayments of loans payable - other		-			(335	)
Proceeds from convertible note payable		35,000			-
Proceeds from capital stock subscribed		-			400,000
Net Cash Provided by Financing Activities		37,200			396,282

Net Decrease in Cash		(16,744	)		(74,733	)

Cash at Beginning of Year		23,999			98,732

Cash at End of Year	$	7,255		$	23,999

Supplemental Disclosure of Cash Flow Information
Cash Paid for:
Taxes	$	-		$	1,651
Interest	$	-		$	-

Supplemental Disclosure of Non Cash Investing and Financing Activities

Derivative liability and debt discount arising in connection with issuance of convertible note	$	35,000		$	-
Stock issued to settle accounts payable	$	86,772		$	-
Issuance of common stock for prior common stock payable	$	-		$	1,200,000
Stock issued for subscription receivable	$	-		$	400,000

See accompanying notes to financial statements

F-5

MyECheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

December 31, 2009 and 2008

Note 1 Basis of Presentation, Organization and Nature of Operations

MyECheck, Inc. (“MEC”) (“the Company”) was incorporated in the state of Delaware on October 29, 2004. The Company’s office is located in El Dorado Hills, California.

Sekoya Holdings, Ltd. (“Sekoya”) was incorporated in Nevada on May 19, 2005, and was a development stage company that never achieved revenue.

Reverse Acquisition and Recapitalization

On March 14, 2008, Sekoya Holdings, Ltd. (“Sekoya”), a then shell corporation, merged with MEC and MEC became the surviving corporation. This transaction was accounted for as a reverse acquisition. Sekoya did not have any operations and majority-voting control was transferred to MEC. The transaction also requires a recapitalization of MEC. Since MEC acquired a controlling voting interest, it was deemed the accounting acquirer, while Sekoya was deemed the legal acquirer. The historical financial statements of the Company are those of MEC, and of the consolidated entities from the date of merger and subsequent.

Since the transaction is considered a reverse acquisition and recapitalization, presenting pro-forma financial information was not required.

Under the terms of the merger, Sekoya’s majority stockholder cancelled 125,000,000 shares of common stock and the Company issued 39,562,501 shares of common stock to MEC. Upon the closing of the reverse acquisition, MEC stockholders held 60% of the issued and outstanding shares of common stock.

In connection with the reverse acquisition and recapitalization, all share and per share amounts were retroactively restated.

Nature of Operations

The Company provides the following services:

(A) Electronic Check Processing

Provided to merchants who transact business over the internet allowing them to process checks electronically from their customers.

(B) Financial Verification

Provided to merchants to check the status of their customer’s bank account in order to provide greater assurance that the check will clear.

F-6

MyECheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

December 31, 2009 and 2008

Guarantee services provide the merchant with guaranteed payment on any returned items for a fee on all items processed as a means to insure guaranteed payment for products sold or services rendered.

Note 2 Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of MEC and Sekoya (collectively, the “Company”). All intercompany accounts have been eliminated in consolidation.

Risks and Uncertainties

The Company operates in an industry that is subject to intense competition and rapid technological change and is in a state of fluctuation as a result of the credit crisis occurring in the United States. The Company's operations are subject to significant risk and uncertainties including financial, operational, technological, and regulatory risks including the potential risk of business failure.

See Note 3 regarding going concern matters.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Such estimates and assumptions impact, among others, the following: the fair value of warrants granted, estimates of the probability and potential magnitude of contingent liabilities and the valuation allowance for deferred tax assets due to continuing operating losses.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from our estimates.

F-7

MyECheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

December 31, 2009 and 2008

Cash

The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. At December 31, 2009 and 2008, the Company had no cash equivalents.

The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. At December 31, 2009 and 2008, there were no balances that exceeded the federally insured limit.

At December 31, 2008, the Company’s bank forgave a liability recorded on the books as a cash overdraft in the amount of $41,373. The Company recorded the forgiveness as other income.

Accounts Receivable

Accounts receivable represents obligations from customers that are subject to normal collection terms. The Company periodically evaluates the collectability of its accounts receivable and considers the need to adjust an allowance for doubtful accounts based upon historical collection experience and specific customer information. Actual amounts could vary from the recorded estimates.

Concentrations

The following are concentrations associated with the Company’s operations:

(A)	Accounts Receivable

Customer	December 31, 2009			December 31, 2008
A		85	%		97	%
B		12	%		-	%

(B)

Revenues

Customer	December 31, 2009			December 31, 2008
A		79	%		96	%
B		16	%		-	%

F-8

MyECheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

December 31, 2009 and 2008

Fair Value of Financial Instruments

The carrying amounts of the Company’s short-term financial instruments, including accounts payable and accrued expenses, accrued compensation – related parties, loans payable – related parties and loans payable - other, approximate fair value due to the relatively short period to maturity for these instruments.

Debt Issue Costs and Debt Discount

The Company has paid debt issue costs in connection with raising funds through the issuance of convertible debt. These costs are amortized over the life of the debt to interest expense (see Note 4).

Beneficial Conversion Feature

For convertible debt issued in 2009, the convertible feature (See Note 4) indicated a rate of conversion that was below market value, however, the Company did not record a "beneficial conversion feature" ("BCF"), since this instrument was determined to be a derivative financial instrument.

If the Company were to record a beneficial conversion feature, the relative fair value of the beneficial conversion feature would be recorded as a discount from the face amount of the respective debt instrument. The discount would be amortized to interest expense over the life of the debt.

Derivative Financial Instruments

F-9

MyECheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

December 31, 2009 and 2008

Revenue Recognition

Earnings per Share

The Company had the following potential common stock equivalents at December 31, 2009:

Convertible debt – face amount of $35,000, conversion price of $0.066			530,303
Common stock warrants			750,000
Common stock options			7,300,000
Total common stock equivalents			8,580,303

F-10

MyECheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

December 31, 2009 and 2008

The Company had no common stock equivalents at December 31, 2008

Since the Company reflected a net loss in 2009 and 2008, respectively, the effect of considering any common stock equivalents, if outstanding, would have been anti-dilutive. A separate computation of diluted earnings (loss) per share is not presented.

Income Taxes

Advertising

Advertising is expensed as incurred. For 2009 and 2008, advertising expense was $3,853 and $41,457, respectively.

Share-based payments

Generally, all forms of share-based payments, including stock option grants, restricted stock grants and stock appreciation rights are measured at their fair value on the awards’ grant date, based on the estimated number of awards that are ultimately expected to vest. Share-based compensation awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. The expense resulting from share-based payments are recorded in cost of goods sold or general and administrative expense in the consolidated statement of operations, depending on the nature of the services provided.

F-11

MyECheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

December 31, 2009 and 2008

Segment Information

For 2009 and 2008, respectively, the Company only operated in one segment; therefore, segment information has not been presented.

Reclassification

Certain amounts in the year 2008 financial statements have been reclassified to conform to the year 2009 presentation. The results of these reclassifications did not materially affect financial position, results of operations or cash flows.

Recent Accounting Pronouncements

In April 2009, the FASB issued guidance now codified as FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” which amends previous guidance to require disclosures about fair value of financial instruments in interim as well as annual financial statements in the current economic environment. This pronouncement was effective for periods ending after June 15, 2009. The adoption of this pronouncement did not have a material impact on the Company’s business, financial condition or results of operations; however, these provisions of FASB ASC Topic 820 resulted in additional disclosures with respect to the fair value of the Company’s financial instruments.

In May 2009, the FASB issued guidance now codified as FASB ASC Topic 855, “Subsequent Events,” which establishes general standards of accounting for, and disclosures of, events that occur after the balance sheet date but before financial statements are issued or are available to be issued. This pronouncement was effective for interim or fiscal periods ending after June 15, 2009. The adoption of this pronouncement did not have a material impact on the Company’s business, results of operations or financial position; however, the provisions of FASB ASC Topic 855 resulted in additional disclosures with respect to subsequent events.

In June 2009, the Financial Accounting Standards Board (FASB) issued guidance now codified as FASB Accounting Standards Codification (ASC) Topic 105, “Generally Accepted Accounting Principles,” as the single source of authoritative non-governmental U.S. GAAP. FASB ASC Topic 105 does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all authoritative literature related to a particular topic in one place. All existing accounting standard documents will be superseded and all other accounting literature not included in the FASB Codification will be considered non-authoritative. These provisions of FASB ASC Topic 105 were effective for interim and annual periods ending after September 15, 2009 and, accordingly, were effective for the Company for the current fiscal reporting period. The adoption of this pronouncement did not have an impact on the Company’s business, financial condition or results of operations, but will impact the Company’s financial reporting process by eliminating all references to pre-codification standards. On the effective date of FASB ASC Topic 105, the Codification superseded all then-existing non-SEC accounting and reporting standards, and all other non-grandfathered non-SEC accounting literature not included in the Codification became non-authoritative.

F-12

MyECheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

December 31, 2009 and 2008

In January 2010, the Financial Accounting Standards Board ("FASB") issued updated guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. This update requires new disclosures on significant transfers of assets and liabilities between Level 1 and Level 2 of the fair value hierarchy (including the reasons for these transfers) and the reasons for any transfers in or out of Level 3. This update also requires a reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. In addition to these new disclosure requirements, this update clarifies certain existing disclosure requirements. For example, this update clarifies that reporting entities are required to provide fair value measurement disclosures for each class of assets and liabilities rather than each major category of assets and liabilities. This update also clarifies the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. This update will become effective for the Company with the interim and annual reporting period beginning January 1, 2010, except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will become effective for the Company with the interim and annual reporting period beginning January 1, 2011. The Company will not be required to provide the amended disclosures for any previous periods presented for comparative purposes. Other than requiring additional disclosures, adoption of this update will not have a material effect on the Company's consolidated financial statements.

Note 3 Going Concern

As reflected in the accompanying financial statements, the Company has a net loss of $983,793 and net cash used in operations of $53,944 for the year ended December 31, 2009, a working capital deficit of $672,276 and a stockholders’ deficit of $659,412 at December 31, 2009.

F-13

MyECheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

December 31, 2009 and 2008

The Company believes its current available cash, along with anticipated revenues, may be insufficient to meet its cash needs for the near future. There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

Note 4 Convertible Debt, Debt Discount. Debt Issue Costs and Fair Value Measurement of Derivative Financial Instruments

Terms

On June 26, 2009, the Company issued redeemable convertible debt totaling $35,000. The Company paid $2,800 in debt issue costs and received net proceeds of $32,200. The note has a term of one year and bears interest at 8%.

Conversion

(1)

The debt is convertible based upon 60% of the average of the three lowest closing bid prices within the prior fifteen trading day period. The conversion option may be exercised in the event of default or in whole or part at the option of the holder of the note prior to the debt’s maturity. If any portion of the principal and/or interest are not paid within 10 days of when it is due (beginning June 26, 2010), the discount multiplier used to determine the conversion price decreases 1% for each period of 10 business days that any portion of the amount due remains unpaid by the Company for all conversions thereafter.

(2)

If the average price per share (as computed above based upon a 60% discount) of the Company’s stock is below $0.10, the Company has the right to prepay the portion of the Debenture that the Holder elected to convert, plus any unpaid interest, at 150% of such amount. The Company has the option with written notice to the Holder to prepay the note at 150% of the principal amount and accrued interest to the date of payment.

F-14

MyECheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

December 31, 2009 and 2008

(3)

If conversion is held up by a third party or the Company cannot convert the note into common stock, all amounts are accelerated for payment and redeemable in cash at a price of 175% of principal plus all unpaid accrued interest to date.

(4)

If the note goes into default, the holder may elect to cancel any outstanding conversion notice and declare all amounts due and payable in cash at a price of 150% of principal plus all unpaid accrued interest to date.

On or before the 4th business day following the receipt of debt proceeds, June 30, 2009, the Company was required to file a Form 8-K announcing this debt transaction. Since the Company did not file an 8-K within this time period, the discount multiplier used to determine the conversion price decreases by 1% for each period of 5 business days that the 8-K is not filed by the Company following the June 30th due date. The Company did not file an 8-K by June 30, 2009 and sought a waiver from the Holder for this penalty. On November 9, 2009, the debt holder waived the condition to file the 8-K. As result, the Company remeasured the derivative financial instrument using a fixed discount multiplier of 60%.

Derivative Financial Instruments

The $35,000 convertible debt instrument was determined to have three separate derivative liability instruments requiring bifurcation and the computation of fair value. These features are:

(1)

Variability of the conversion price at 60% discount.

(2)

Debt is redeemable in cash at 175% of face amount, due to clause allowing for acceleration of payment. Since there is a contingent put option (exercisable by the holder in event of default), the put option is not clearly and closely related to the debt host contract. Additionally, the contingent put option was indexed to an extraneous factor, the event of default, rather than interest rates or credit risk.

(3)

In the event of default, holder can cancel any outstanding conversion notice and redeem outstanding amount at 150%.

The Company has computed the commitment date fair value based upon the following management assumptions:

Expected dividends		0	%
Expected volatility		247.45	%
Expected term	1 year
Risk free interest rate		0.45	%

F-15

MyECheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

December 31, 2009 and 2008

The fair value of these three embedded conversion options at the commitment date was $114,044. Of the total, $35,000 was assigned to debt discount and $79,044 was recorded as a derivative expense.

Mark to Market Adjustment

The Company has marked to market these derivative financial instruments at December 31, 2009, based upon the following management assumptions:

Expected dividends		0	%
Expected volatility		297.77	%
Expected term	0.48 years
Risk free interest rate		0.47	%

The Company recorded a change in fair value associated with its derivative liabilities of $2,628 for the year ended December 31, 2009.

Debt Discount

In connection with the issuance of the secured convertible note, the Company recorded a debt discount of $35,000. These debt issue costs are being amortized to interest expense through June 26, 2010. For 2009, the Company recorded amortization of $18,027. At December 31, 2009, debt discount is presented net totaling $16,973. At December 31, 2009, redeemable convertible debt, net of debt discount, is $18,027.

Debt Issue Costs

In connection with the issuance of the secured convertible note, the Company paid debt-offering costs of $2,800. These debt issue costs are being amortized to interest expense through June 26, 2010. For the year ended December 31, 2009, the Company recorded amortization of $1,442. Debt issue costs are presented net totaling $1,358.

Note 5 Loans Payable – Related Parties and Other

(A)	Related Parties

During 2009, the Company received an advance from its Chief Executive Officer of $10,000. This advance is non-interest bearing, unsecured and due on demand.

During 2009, the Company repaid $5,000 to the Company’s Chief Technical Officer.

F-16

MyECheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

December 31, 2009 and 2008

During the year ended December 31, 2008, Company received working capital advances from certain of its officers aggregating $17,317. During the year ended December 31, 2008 the Company repaid $22,000 in loans to these officers.

(B)

Other

During the year ended December 31, 2008, the Company received working capital advances from a third party aggregating $1,300. These loans were non-interest bearing, unsecured and due on demand. During the year ended December 31, 2008, the Company repaid $335 in loans to a third party.

During the year ended December 31, 2008, the Company assumed a loan of $46,694 as a result of the reverse acquisition with Sekoya. The loan is non-interest bearing, unsecured, and due on demand.

Note 6 Capital Stock Subscribed and Related Stock Issuance

In connection with the March 14, 2008 merger, the Company agreed to sell 4,000,000 units of common stock at $0.50/unit for $2,000,000 to third parties. Each unit consisted of one share of common stock and one warrant. The Company agreed to issue 2,000,000 warrants exercisable at $2/share and 2,000,000 warrants exercisable at $4/share. The warrants would expire two years from the grant date. At December 31, 2007, the Company had received $1,200,000, and during the year ended December 31, 2008, the Company received an additional $400,000 for aggregate consideration of $1,600,000 at December 31, 2008.

On July 24, 2008, the Company issued the 4,000,000 shares, which included a subscription receivable of $400,000. In addition, the previously recorded stock subscription liability, of $1,200,000 received during 2007, was reclassified to equity, as the stock was issued. On December 31, 2008, the Company deemed the subscription receivable to be uncollectible and recognized a provision for uncollectible subscription receivable of $400,000. The Company reflects this provision as a component of general and administrative expense. At December 31, 2009, the warrants have not been issued, and additional funds from this investor will not be accepted.

Note 7 Stockholders’ Deficit

(A) Stock Issuances

On May 22, 2009, the Company issued 400,000 shares of common stock to a consultant for services rendered, having a fair value of $68,000 ($0.17/share), based upon the quoted closing trading price.

F-17

MyECheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

December 31, 2009 and 2008

On June 25, 2009, the Company issued 377,271 shares of common stock in settlement of accounts payable totaling $33,954. The fair value of the shares issued was $86,772, based upon the quoted closing trading price ($0.23/share). The Company recorded a loss on settlement of $52,818.

On November 16, 2009, the Company issued 150,000 shares of common stock to a consultant for services rendered, having a fair value of $24,000 ($0.16/share), based upon the quoted closing trading price.

(B) Stock Option Grants

The fair value of these options was estimated on the date of grant using the following management weighted average assumptions:

Risk-free interest rate		1.44	%
Expected dividend yield		0	%
Expected volatility		223.25	%
Expected term	5-10 years
Expected forfeitures		0	%

For the year ended December 31, 2009, the Company recognized $356,817 in stock based compensation expense related to 7,300,000 options granted during 2009.

F-18

MyECheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

December 31, 2009 and 2008

The following is a summary of the Company’s stock option activity:

	Options		Weighted Average Exercise Price
Outstanding – December 31, 2007
Granted		-	$	-
Exercised		-	$	-
Forfeited		-	$	-
Outstanding – December 31, 2008		-	$	-
Granted		7,300,000	$	0.13
Exercised		-	$	-
Forfeited		-	$	-
Outstanding – December 31, 2009		7,300,000	$	0.13
Exercisable – December 31, 2009		3,041,667	$	0.13

Weighted average fair value of options granted during the year ended December 31, 2009	$	871,828	$	0.12

Weighted average fair value of options exercisable at December 31, 2009	$	363,362	$	0.12

Options Outstanding
Range of exercise price		Number Outstanding		Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price
$	0.13		7,300,000	8.64 years	$	0.13

Options Exercisable
Range of exercise price		Number Exercisable		Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price
$	0.13		3,041,667	8.64 years	$	0.13

At December 31, 2009, the total intrinsic value of options outstanding and exercisable was $0 and $0, respectively.

F-19

MyECheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

December 31, 2009 and 2008

The following summarizes the activity of the Company’s stock options that have not vested for the year ended December 31, 2009:

	Options			Weighted Average Grant Date Fair Value
Outstanding – December 31, 2007
Granted		-			-
Vested		-			-
Cancelled or forfeited		-			-
Outstanding – December 31, 2008		-			-
Granted		7,300,000		$	0.12
Vested		(3,041,667	)		0.12
Cancelled or forfeited		-			-
Outstanding – December 31, 2009		4,258,333		$	0.12

Total unrecognized share-based compensation expense from non-vested stock options at December 31, 2009 was $508,566 which is expected to be recognized over a weighted average period of 2.36 years.

Note 8 Commitments and Contingencies

(A) Litigations, claims and assessments

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business. The Company is currently not aware of any such legal proceedings or claims, other than disclosed below; that they believe will have, individually or in the aggregate, a material adverse affect on its business, financial condition or operating results.

(B) Accrued Rent

Effective May 1, 2007, the Company executed a payment plan for $104,969 in rent that had been in default. The Company agreed to pay the outstanding balance within twenty-four months plus 9% interest for total payment of $115,092 ($4,796/month). The Company has $11,687 of scheduled payments remaining at December 31, 2009, and remains in default under the terms of the original payment plan. During 2009, the Company paid $10,298 of the accrued rent.

F-20

MyECheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

December 31, 2009 and 2008

The Company leased its corporate office under a non-cancelable rental agreement from May 2005 through December 2009. Monthly payments at the inception of the lease terms were $ 8,576 and increase 4% annually.

Total rent expense amounted to approximately $116,958 and $114,449 for the years ended December 31, 2009 and 2008, respectively.

During 2009, the Company extended the non-cancelable operating lease. This lease expires on February 28, 2012.

The following are the approximate committed amounts for future minimal rental payments for the years ending December 31,:

2010	$	59,000
2011		73,000
2012		12,000
Total	$	144,000

(D) Investor Relations Agreement and Warrants

On August 3, 2009, the Company entered into a consulting agreement with a third party to provide investor relations services over a six month period. The consultant will be paid $10,000 per month and will receive three tranches of three year, 250,000 cashless warrants on September 3, 2009, October 3, 2009 and November 2, 2009 with exercise prices of $0.25, $0.35 and $0.45, respectively.

On September 3, 2009 the Company applied the Black-Scholes model to determine the fair value of the first tranche of warrants. The Company has used the following weighted average assumptions to compute the fair value of these warrants:

Expected dividends		0	%
Expected volatility		275.10	%
Expected term	3 years
Risk free interest rate		1.42	%
Expected forfeiture		0	%

On October 3, 2009 the Company applied the Black-Scholes model to determine the fair value of the second tranche of warrants. The Company has used the following weighted average assumptions to compute the fair value of these warrants:

F-21

MyECheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

December 31, 2009 and 2008

Expected dividends		0	%
Expected volatility		284.72	%
Expected term	3 years
Risk free interest rate		1.38	%
Expected forfeiture		0	%

On November 2, 2009 the Company applied the Black-Scholes model to determine the fair value of the third tranche of warrants. The Company has used the following weighted average assumptions to compute the fair value of these warrants:

Expected dividends		0	%
Expected volatility		290.19	%
Expected term	3 years
Risk free interest rate		1.44	%
Expected forfeiture		0	%

The Company recognized the grant date fair value of these warrants totaling $105,250. All warrants outstanding are considered exercisable, and the intrinsic value is $0.

The Company has accrued $30,000 for payments required under the terms of the contract that remain unpaid at December 31, 2009.

The Company is disputing the delivery of all three tranches of warrants and monthly fees due to nonperformance. The Company intends to pursue remedies in resolving this matter.

Note 9 Income Taxes

The Company recognized deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carryforwards. The Company will establish a valuation allowance to reflect the likelihood of realization of deferred tax assets.

The Company has net operating loss carryforwards for tax purposes totaling approximately $2,126,000 at December 31, 2009, expiring through 2029. There is a limitation on the amount of taxable income that can be offset by carryforwards after a change in control (generally greater than a 50% change in ownership).

F-22

MyECheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

December 31, 2009 and 2008

Significant deferred tax assets (temporary differences) at December 31, 2009 and 2008 are approximately as follows:

	2009			2008
Gross deferred tax assets:
Accrued salaries	$	(142,000	)	$	(98,000	)
Net operating loss carryforwards		(803,000	)		(640,000	)
Total deferred tax assets		(945,000	)		(738,000	)
Less: valuation allowance		945,000			738,000
Deferred tax asset – net	$	-		$	-

The valuation allowance at December 31, 2008 was approximately $738,000. The net change in valuation allowance during the year ended December 31, 2009 was an increase of approximately $207,000. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on consideration of these items, management has determined that enough uncertainty exists relative to the realization of the deferred income tax asset balances to warrant the application of a full valuation allowance as of December 31, 2009.

The actual tax benefit differs from the expected tax benefit for the years ended December 31, 2009 and 2008 (computed by applying the U.S. Federal corporate tax rate of 34% to income before taxes and 8.84% for California state taxes, a blended rate of 39.83%) as follows:

	2009			2008

Expected tax expense (benefit) – Federal	$	(305,000	)	$	(311,000	)
Expected tax expense (benefit) - State		(87,000	)		(89,000	)
Non-deductible stock based compensation		185,000			-
Provision for uncollectible subscription receivable		-			159,000
Meals and entertainment		-			1,000
Change in valuation allowance		207,000			240,000
Actual tax expense (benefit)	$	-		$	-

Note 10 Subsequent Events

The Company has evaluated for subsequent events between the balance sheet date of December 31, 2009 and April 15, 2010, the date the financial statements were issued.

F-23

Attached files

Myecheck Inc. Reports

Also read