UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-Q




(Mark
one)


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




For
the quarterly period ended March 31, 2008


OR


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





For
the transition period
from                 to


Commission
File No. 000-26271




FIRST
CAPITAL INTERNATIONAL, INC.


(Exact
name of registrant as specified in its Charter)




Delaware
            76-0582435(State
      or Other Jurisdiction of Incorporation or Organization)
            (I.R.S.
      Employer Identification No.)





5120
      WoodwaySuite
      9024Houston,
      Texas
            77056(Address
      of principal executive offices)
            (Zip
      Code)





(713)
      629-4866(Issuer’s
      Telephone Number, Including Area
Code)





Indicate
by check whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchanged 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
 No 





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 definition of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.





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




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yes oNo ý





SEC
      1296 (02-08)
            Potential persons who are to
      respond to the collection of information contained in this form are not
      required to respond unless the form displays a currently valid OMB control
      number.





Number of
shares outstanding as of the close of business on May 9, 2008:




TITLE
      OF CLASS
            
            NUMBER
      OF SHARES OUTSTANDINGCommon
      Stock, $0.001 par value.
            
            36,292,005












TABLE OF CONTENTS





PART I - FINANCIAL
      INFORMATIONItem 1. Unaudited Financial Statements
            F-1Item 2. Management's Discussion and Analysis of
      Financial Condition and Results of Operations
            1Item 4. Controls and Procedures
            7PART
      II - OTHER INFORMATIONItem 2. Unregistered Sales of Equity Securities and Use of
      Proceeds
            8Item 3. Default Upon Senior Securities
            8Item 6. Exhibits
            9SIGNATURES
            9


Table of Contents




FIRST
CAPITAL INTERNATIONAL, INC.


__________






UNAUDITEDCONSOLIDATED FINANCIAL STATEMENTS


F-1
 Table of Contents




FIRST
CAPITAL INTERNATIONAL, INC.


TABLE
OF CONTENTS


__________








PageUnaudited
      Consolidated Financial Statements:Consolidated
      Balance Sheets as of March 31, 2008 and December 31,
      2007
            F-3Unaudited
      Consolidated Statements of Operations for the three months ended
      March 31, 2008 and 2007
            F-4Unaudited
      Consolidated Statement of Stockholders’ Deficit for the three months ended
      March 31, 2008
            F-5Unaudited
      Consolidated Statements of Cash Flows for the three months ended
      March 31, 2008 and 2007
            F-6Notes
      to Unaudited Consolidated Financial Statements
            F-7  F-2
 Table of Contents




FIRST
CAPITAL INTERNATIONAL, INC.


CONSOLIDATED
BALANCE SHEETS


March
31, 2008 and December 31, 2007


__________





March 31,
            
            
            December 31,2008
            
            
            2007(Unaudited)ASSETSCurrent
      assets:Cash
      and cash equivalents
            
            $
            7,772
            
            
            $
            3,972Accounts
      receivable
            
            
            31,209
            
            
            
            54,823Employee
      receivables
            
            
            29,976
            
            
            
            25,978Due
      from related parties
            
            
            5,622
            
            
            
            3,892Total
      assets
            
            $
            74,579
            
            
            $
            88,665LIABILITIES AND
      STOCKHOLDERS’ DEFICITCurrent
      liabilities:Credit
      card obligations and line of credit
            
            $
            152,574
            
            
            $
            133,469Accounts
      payable and accrued liabilities
            
            
            72,323
            
            
            
            113,150Accrued
      interest payable to related parties
            
            
            131,775
            
            
            
            127,336Current
      portion of notes payable to related parties
            
            
            285,083
            
            
            
            274,600Convertible
      notes payable to related parties
            
            
            50,000
            
            
            
            50,000Convertible
      notes payable
            
            
            500,000
            
            
            
            500,000Deferred
      revenue
            
            
            152,587
            
            
            
            128,687Total
      current liabilities
            
            
            1,344,342
            
            
            
            1,327,242Notes
      payable to related parties, non-current
            
            
            545,000
            
            
            
            503,773Total
      liabilities
            
            
            1,889,342
            
            
            
            1,831,015Commitments
      and contingenciesStockholders’
      deficit:Preferred
      stock, $0.001 par value; 20,000,000 shares authorized; 4,500,000 shares
      issued and outstanding
            
            
            4,500
            
            
            
            4,500Common
      stock, $0.001 par value; 200,000,000 shares authorized; 36,262,005 and
      35,337,005 shares issued and outstanding at March 31, 2008 and
      December 31, 2007, respectively
            
            
            36,262
            
            
            
            35,337Additional
      paid-in capital
            
            
            9,395,801
            
            
            
            9,337,726Accumulated
      deficit
            
            
            (11,245,061
            )
            
            
            (11,113,648
            )Subscription
      receivable
            
            
            (6,265
            )
            
            
            (6,265
            )Total
      stockholders’ deficit
            
            
            (1,814,763
            )
            
            
            (1,742,350
            )Total
      liabilities and stockholders’ deficit
            
            $
            74,579
            
            
            $
            88,665




The
accompanying notes are an integral part of these


unaudited
consolidated financial statements.


F-3
 Table of Contents




FIRST
CAPITAL INTERNATIONAL, INC.


UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS


For
the Three Months Ended March 31, 2008 and 2007


__________




March 31,
            
            
            March 31,2008
            
            
            2007Revenue:System
      sales
            
            $
            76,687
            
            
            $
            136,788Consulting
      Services
            
            
            14,000
            
            
            
            -Total
      revenue
            
            
            90,687
            
            
            
            136,788Costs
      of sales:Cost
      of systems
            
            
            37,548
            
            
            
            79,635Cost
      of consulting services
            
            
            2,800
            
            
            
            -Total
      cost of sales
            
            
            40,348
            
            
            
            79,635Gross
      Margin
            
            
            50,339
            
            
            
            57,153Selling,
      general and administrative expenses
            
            
            162,535
            
            
            
            355,409Loss
      from operations
            
            
            (112,196
            )
            
            
            (298,256
            )Other
      expense:Interest
      expense
            
            
            (19,217
            )
            
            
            (15,413
            )Net
      loss
            
            $
            (131,413
            )
            
            $
            (313,669
            )Basic
      and diluted net loss per common share
            
            $
            (0.00
            )
            
            $
            (0.01
            )Weighted
      average shares outstanding
            
            
            35,947,994
            
            
            
            32,863,115




The
accompanying notes are an integral part of these


unaudited
consolidated financial statements.


F-4
 Table of Contents




FIRST
CAPITAL INTERNATIONAL, INC.


UNAUDITED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT


For
the Three Months Ended March 31, 2008


__________








Preferred
      Stock
            
            
            Common
      Stock
            
            
            
            
            
            
            
            
            
            
            
            TotalShares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Additional
              Paid-In
              Capital
            
            
            Subscription
              Receivable
            
            
            Accumulated
              Deficit
            
            
            Stock-
              Holders’
              DeficitBalance
      at December 31, 2007
            
            
            4,500,000
            
            
            $
            4,500
            
            
            
            35,337,005
            
            
            $
            35,337
            
            
            $
            9,337,726
            
            
            $
            (6,265
            )
            
            $
            (11,113,648
            )
            
            $
            (1,742,350
            )Common
      stock issued for cash
            
            
            -
            
            
            
            -
            
            
            
            25,000
            
            
            
            25
            
            
            
            4,975
            
            
            
            -
            
            
            
            -
            
            
            
            5,000Common
      stock issued as repayment of loan
            
            
            -
            
            
            
            -
            
            
            
            900,000
            
            
            
            900
            
            
            
            53,100
            
            
            
            -
            
            
            
            -
            
            
            
            54,000Net
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (131,413
            )
            
            
            (131,413
            )Balance
      at March 31, 2008
            
            
            4,500,000
            
            
            $
            4,500
            
            
            
            36,262,005
            
            
            $
            36,262
            
            
            $
            9,395,801
            
            
            $
            (6,265
            )
            
            $
            (11,245,061
            )
            
            $
            (1,814,763
            )




The
accompanying notes are an integral part of these


unaudited
consolidated financial statements.


F-5
 Table of Contents




FIRST
CAPITAL INTERNATIONAL, INC.


UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS


For
the Three Months Ended March 31, 2008 and 2007


__________





March 31,
            
            
            March 31,2008
            
            
            2007Cash
      flows from operating activities:Net
      loss
            
            $
            (131,413
            )
            
            $
            (313,669
            )Adjustments
      to reconcile net loss to net cash used inoperating
      activities:Stock
      based compensation
            
            
            -
            
            
            
            213,824Changes
      in operating assets and liabilities:Accounts
      receivable
            
            
            23,614
            
            
            
            (32,102
            )Employee
      receivables
            
            
            (3,998
            )
            
            
            -Inventory
            
            
            -
            
            
            
            2,254Other
      current assets
            
            
            (1,730
            )
            
            
            -Accounts
      payable and accrued liabilities
            
            
            (7,073
            )
            
            
            28,827Deferred
      Income
            
            
            23,900
            
            
            
            -Net
      cash used in operating activities
            
            
            (96,700
            )
            
            
            (100,866
            )Cash
      flows from financing activities:Payments
      of notes payable and long-term debt to related party
            
            
            (7,000
            )
            
            
            -Proceeds
      from notes payable and long-term debt to related party
            
            
            102,500
            
            
            
            23,000Proceeds
      from sale of common stock
            
            
            5,000
            
            
            
            10,260Net
      cash provided by financing activities
            
            
            100,500
            
            
            
            33,260Net
      increase/(decrease) in cash and cash equivalents
            
            
            3,800
            
            
            
            (67,606
            )Cash
      and cash equivalents, beginning of period
            
            
            3,972
            
            
            
            95,138Cash
      and cash equivalents, end of period
            
            $
            7,772
            
            
            $
            27,532Supplemental
      disclosure of cash flow information:Cash
      paid for interest
            
            $
            14,779
            
            
            $
            3,473Cash
      paid for taxes
            
            $
            -
            
            
            $
            -Supplemental
      disclosure of non cash investing and financing activities:Cashless
      exercise of options
            
            $
            54,000
            
            
            $
            -Reduction
      of related party note in connection with option exercise
            
            $
            43,790
            
            
            $
            -Reduction
      of accrued interest in connection with option exercise
            
            $
            10,210
            
            
            $
            -





The
accompanying notes are an integral part of these


unaudited
consolidated financial statements.


F-6
 Table of Contents




FIRST
CAPITAL INTERNATIONAL, INC.


NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


__________





1.
            Basis of Presentation
      and Critical Accounting
Policies





First
Capital International, Inc. (the “Company”), formerly Ranger/USA, Inc.,
incorporated as a Delaware Corporation on April 21, 1994 and assumed its current
name in August 1998 when new management took over the Company.





The
unaudited consolidated condensed financial statements included herein have been
prepared without audit pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted, pursuant to such rules and regulations. These unaudited
consolidated condensed financial statements should be read in conjunction with
the audited consolidated financial statements and notes thereto of First Capital
International, Inc. (the "Company") included in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 2007.





In the
opinion of management, the unaudited consolidated condensed financial
information included herein reflect all adjustments, consisting only of normal,
recurring adjustments, which are necessary for a fair presentation of the
Company's financial position, results of operations and cash flows for the
interim periods presented. The results of operations for the interim periods
presented herein are not necessarily indicative of the results to be expected
for a full year or any other interim period.




Use
Estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those estimates
and assumptions.





Principles of
Consolidation





The
consolidated condensed financial statements include the accounts of the Company
and its wholly owned subsidiary VIP Systems, Inc. after elimination of all
significant intercompany accounts and transactions.








2.
            Going
      Concern





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As shown in the accompanying financial
statements, the Company suffered losses of $131,413 for the three months ended
March 31, 2008, has an accumulated deficit of $11,245,061 and a working capital
deficit of $1,269,763 at March 31, 2008. These conditions raise substantial
doubt as to the Company's ability to continue as a going concern. The financial
statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern. Management intends to finance these
deficits by selling its common stock.








3.
            Convertible Note
      Payable





On March
24, 2006, the Company issued 2,500,000 restricted common shares at $0.20 per
share (or 833,334 shares of restricted common stock at $0.60 after a 1-for-3
reverse split) to a sophisticated investor as collateral for note payable
bearing 0% interest due on May 30, 2007. The agreement allowed the investor to
dispose of the shares, in part or full, prior to May 30, 2007.  The
proceeds from any such disposal would reduce the principal balance of $500,000.
The promissory note is also secured by all assets of the Company. In accordance
with APB Opinion 14, Accounting for Convertible Debt and Debt Issued with Stock
Purchase Warrants, this instrument is accounted for as a liability in the
financial statements.  The note expired on May 30, 2007.  We
are in default of this Note and an extension is under negotiation as of March
31, 2008.


F-7
 Table of Contents





4.
            Notes Payable to
      Related Parties




During
the three months ended March 31, 2008, the Company issued the following notes to
related parties:




During
2008, Alex Genin, our chief executive officer, made several loans to us under
four separate promissory notes for a total principal amount of $35,000 which
bear interest at the rate between 0% and 8% and which are due between January
2010 and February 2011.  No interest has been imputed due to the
immateriality of the amount. Three promissory notes originally due March 2008
bearing 7% interest for a total principal amount of $8,000 were extended three
years. Seven promissory notes due between February 2008 and October 2008 were
offset by an option Mr. Genin exercised in January 2008.  The total
principal and interest paid on these notes are $43,790 and $10,210
respectively.  A $9,000 note originally made in October 2007 was
partially paid.  The remaining balance on this note is
$2,000.  None of these notes were collateralized.





During
2008, Eastern Credit Limited, Inc., a company controlled by Alex Genin, our
chief executive officer, made a loan to us under an $18,000 promissory note
which bear interest at the rate of 7% and which is due February 2011. During the
same period, five notes maturing between January 2008 and March 2008 for a total
principal amount of $68,000 which bear interest at the rate ranging between 6%
and 7% were extended three years. None of these notes were
collateralized.





During
2008, ECL Trading Co, Inc., a company controlled by Alex Genin, our chief
executive officer, made a loan to us under a $14,500 promissory note bearing 8%
interest and which is due February 2011.  This note was not
collateralized.





During
2008, First National Energy Corporation, a company controlled by Alex Genin, our
chief executive officer, made a loan to us under a $20,000 promissory note
bearing 8% interest and which is due February 2010.  This note was not
collateralized.





During
2008, Pacific Commercial Credit, Ltd., a company controlled by Alex Genin, our
chief executive officer, made a loan to us under a $15,000 promissory note
bearing 8% interest and which is due March 2011.  The notes to Pacific
Commercial Credit were not collateralized.






5.
            Stock and Option
      Transactions




During
the three months ended March 31, 2008, the company sold 25,000 shares of
restricted common stock to an investor for $5,000 based on the trading value of
the stock on the date of sale. An option to purchase 900,000 shares was
exercised by one of its directors for the value of the stock on the date of
issue for proceeds of $54,000.  The proceeds were then used to pay
down the note payable and accrued interest to the director. The company did not
recognize any stock-based compensation and there were no options granted during
the same period.




F-8
 Table of Contents





PART
I - FINANCIAL INFORMATION








Item
1. UNAUDITEDCONSOLIDATED FINANCIAL STATEMENTS


Please see financial
statements beginning on page F-1








Item
2. MANAGEMENT'SDISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS





FORWARD-LOOKING
STATEMENT AND INFORMATION





We are
including the following cautionary statement in this Form 10-Q to make
applicable and take advantage of the safe harbor provision of the Private
Securities Litigation Reform Act of 1995 for any forward-looking statements made
by, or on behalf of First Capital International, Inc. (the “Company”).
Forward-looking statements include statements concerning plans, objectives,
goals, strategies, expectations, future events or performance and underlying
assumptions and other statements which are other than statements of historical
facts. Certain statements contained herein are forward-looking statements and,
accordingly, involve risks and uncertainties which could cause actual results or
outcomes to differ materially from those expressed in the forward-looking
statements.





Our
expectations, beliefs and projections are expressed in good faith and we believe
that they have a reasonable basis, including without limitations, management's
examination of historical operating trends, data contained in our records and
other data available from third parties, but there can be no assurance that our
expectations, beliefs or projections will result or be achieved or accomplished.
In addition to other factors and matters discussed elsewhere herein, the
following are important factors that, in our view, could cause actual results to
differ materially from those discussed in the forward-looking statements: our
ability to operate on a global basis; our  ability to effectuate and
successfully operate acquisitions, and new operations; our ability to obtain
acceptable forms and amounts of financing to fund current operations and planned
acquisitions; the political, economic and military climate in nations where we
may have interests and operations; the ability to engage the services of
suitable consultants or employees in foreign countries; and competition and the
ever-changing nature of the technology industry. We have no obligation to update
or revise these forward-looking statements to reflect the occurrence of future
events or circumstances.





The
following discussion should be read in conjunction with our unaudited
consolidated interim financial statements and related notes thereto included in
this quarterly report and in our audited consolidated financial statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") contained in our Form 10-KSB for the year ended December
31, 2007. Certain statements in the following MD&A are forward looking
statements. Words such as "expects", "anticipates", "estimates" and similar
expressions are intended to identify forward looking statements. Such statements
are subject to risks and uncertainties that could cause actual results to differ
materially from those projected.





CRITICAL
ACCOUNTING POLICIES AND ESTIMATES





The
Company's discussion and analysis of its financial condition and results of
operations are based upon its consolidated financial statements, which have been
prepared in accordance with generally accepted accounting principles in the
United States.





The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenue and
expenses, and related disclosure of contingent assets and
liabilities.  On an ongoing basis, we evaluate our
estimates.  We base our estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances.  These estimates and assumptions provide a basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources.  Actual results may differ
from these estimates making it reasonably possible that a change in the
estimates could occur in the near term.





REVENUE
RECOGNITION





The
Company enters into two types of sales of VIP Systems: sales to end-users and
sales to resellers. Revenue on sales to end-users is recognized upon completion
of installation and testing of the system. Revenue on sales to resellers is
recognized either upon delivery of systems or for major long-term projects,
recognized upon completion of each phase of installation.





1
 Table of Contents








The
company entered into consulting services for power plant projects in Russia in
2007.  Revenue from these services are billed and recognized
monthly.





Payments
and advances received for future sales or installation of systems are deferred
until the delivery and/or installation is complete.  For major
long-term projects, revenue is recognized upon completion of each phase of
installation.





STOCK-BASED
COMPENSATION





Until
December 31, 2005, we accounted for employee stock options using the intrinsic
value method in accordance with Accounting Principles Board Opinion ("APB") No.
25, Accounting for Stock Issued to Employees, and had adopted the
disclosure-only alternative of SFAS No. 123, Accounting for Stock-Based
Compensation, as amended by SFAS No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure.  Under the intrinsic value
method, we only recorded stock-based compensation resulting from options granted
at below fair market value.  Effective January 1, 2006, we adopted
SFAS No. 123R, “Share Based Payments”, which requires that we measure the cost
of employee services received in exchange for an award of equity instruments
based on the grant-date fair value of the award, and recognize that cost over
the vesting period.





Valuation and Amortization Method— We estimate the fair value of stock options granted using the
Black-Scholes option-pricing formula and a single option award
approach.  This fair value is then amortized on a straight-line basis
over the requisite service periods of the awards, which is generally the vesting
period.





Expected Term— The expected
term represents the period that our stock-based awards are expected to be
outstanding and is determined based on historical experience of similar awards,
giving consideration to the contractual terms of the stock-based awards, vesting
schedules and expectations of future employee behavior as influenced by changes
to the terms of its stock-based awards.





Expected Volatility —Stock-based payments made prior to January 1, 2006 were accounted for
using the intrinsic value method under APB 25.  The fair value of
stock based payments made subsequent to December 31, 2005 is valued using the
Black-Scholes valuation method with a volatility factor based on our historical
stock trading history.





Risk-Free Interest Rate— We
base the risk-free interest rate used in the Black-Scholes valuation method on
the implied yield currently available on U.S. Treasury securities with an
equivalent term.





Estimated Forfeitures— When
estimating forfeitures, we consider voluntary termination behavior as well as
analysis of actual option forfeitures.





Compensation
expenses for Restricted Stocks issued to employees and others are calculated
based on the fair market value on the grant date.  We recognized $0
stock-based compensation cost in the three months ended March 31, 2008 for the
options and shares of restricted stock issued to employees and
others.





The
following description of our business, our financial position and results of
operations should be read in conjunction with our Unaudited Consolidated
Condensed Financial Statements and the Notes to Financial Statements contained
in this report on Form 10-Q.




RECENT
ACCOUNTING PRONOUNCEMENTS




The
Company does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on its results of operations,
financial position or cash flow.





INTRODUCTION





First
Capital International, Inc. (the “Company”), formerly Ranger/USA, Inc.,
incorporated as a Delaware Corporation on April 21, 1994, assumed its current
name in August 1998 when new management took over the Company.  At the
time new management assumed control, the Company had no existing operations, and
began implementation of a new business plan.  Beginning in 1998, the
Company’s original focus was the identification, acquisition and operation of
businesses serving or focused on Central and Eastern European
markets.  Since 2001, the Company has focused its operations on the
development of its “smart house” technology and markets for the Company’s new
home command center.





2
 Table of Contents




References
to First Capital International, Inc. in this Form 10-Q include First Capital
International, Inc. and our wholly-owned subsidiary VIP Systems, Inc., which is
a home automation and video surveillance solutions firm.





At the
annual meeting of the stockholders held on July 14, 2006, the stockholders
approved a 1-for-3 reverse split.  The effect of our reverse split is
reflected in all references to the price of our common stock and the audited
financial statements herein.





Our
principal executive offices are located at 5120 Woodway, Suite 9024, Houston,
Texas 77056; voice: (713) 629-4866 fax: (713) 629-4913. Our corporate web site
is at www.FirstCap.net.





We are
engaged in the design, production and sale of security system for homeland
security applications as well as home automation and video surveillance systems,
including highly sophisticated marine video surveillance
applications.  It is our intent to grow through the continued
development and marketing of this new and innovative technology.





Patents





In
October 2001, we filed a US patent application for our VIP Systems(TM) with
fully integrated software/hardware and began assembling units for Beta testing.
On September 30, 2003, we received Patent # US 6,628,510 for our VIP
Systems(TM).





We
developed an Industrial Security Solution (“Solution”) for complex industrial
projects including projects related to the oil and gas industry. This Solution
allows a client to monitor remote sites, record events on video and exercise
full control over any power units at the industrial site remotely. This system
can also be used as an anti-terrorist device to preclude unauthorized use of
important industrial equipments in case of a takeover attempt. We believe that
this Solution can be marketed through governmental agencies, as well as major
industrial companies. At the present time, we are looking into possible
alliances in order to market this product worldwide.





In
January 2004, we filed an application for a patent with the U.S. Patent Office
for use of our technology in a manner that addresses issues of the new Air Sea
Ground Defense System ("ASGDS") with Active Control Link. This new ASGDS
technology allows an air/sea and/or ground control center to actually see inside
an aircraft or ship when it is still in the air/open sea and allow the ground
center to take control of the respective aircraft/ship in the event of a
hijacking attempt or other terrorist attempts to take over an airplane/ship. In
cooperation with the US Coast Guard and the Port of Houston Authorities, we
successfully completed the pilot project and installed a Marine Security System
on one of the MARAD’s military vessels at the Port of Houston. The presentation
of this technology was held on October 12, 2004 at the Port of Houston
facilities.





Our
second demonstration of our ASGDS was on May 11, 2006. This event was hosted by
the Port of Houston Authority and US Department of Homeland Security. At this
event, we demonstrated our technology, fully integrated with the satellite
broadband service and the new DefendIR camera system, manufactured by ICX,
Inc.   In June 2006, we signed an exclusive two year contract to
market ICX cameras in the former Soviet Union countries.





In the
first and second quarters of 2006, we had several meetings with the
representatives of Russian Government regarding our ASGDS and believe that good
opportunities exist in Russia for our security solutions, due to rapidly growing
business of LNG export from Russia to USA.





During
2007, we were acting as a consultant for URS Washington Group International to
develop power energy business opportunities in the Russian
Federation.  Currently, we continue developing market strategies for
URS Washington Group International in this area.





PROJECTS





During
2005-2006, we completed several security installations at Marriott Hotel Group
properties in Texas, Florida and Louisiana.   Our marketing
efforts with the Marriott Hotels allowed us to secure contracts to install video
surveillance systems in several Marriott Hotels in Florida and
Texas.  We are now working on much larger proposals for their new
“under construction” hotels.





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Projects
in Florida





We are
also working with KOR Group Developers in Florida at their Tides Hotel
properties in Miami, Florida working on several security solutions including
structure wiring, video surveillance and sound systems.





In March
2005, we signed a contract with the Dinerstein Companies, a large real estate
developer, to provide basic home automation/security package for their mid-rise
project in Florida.  We have completed the installation of our home
automation equipment in the Dinerstein’s model condo unit in the second quarter
of 2005 and have started the first phase of the installation in the fourth
quarter of 2007 and will continue with second phase in the second quarter of
2008.





During
2007, we invested in our Florida operation and hired additional sales force in
Florida.   As a result, we have ongoing negotiations with several
hi-rise condo developers in Miami, Florida to market our technology solutions to
new hi-rise condo communities in Florida.  We also received contracts
to install home automation systems in high-end homes in the area and we will
continue to work on installation projects with several hotels in the
area.





We are
bidding on several hi-rise commercial building projects in Florida and believe
that our efforts will bring contracts to provide CCTV/automation solutions for
these projects.  We believe our Florida operations are positioned to
bring substantial revenue for the company.





Projects
in Texas





We are
bidding on several high-rise condominium projects in the Houston and Miami area.
As a result, we signed an initial contract in August 2007 with a new luxury
high-rise complex in Houston to install security solution as well as to design
for the owners a new state-of-the-art “Concierge” Digital Living Automation
software.  This has created new opportunities for our home automation
solutions.   We are currently working on the software design and
planning to invest in marketing the “Concierge” concept into other
regions.





We are
also actively involved in Houston hotels installation projects, predominantly
Marriott Hotels as well as upscale residential projects in Houston.





Projects
in Russia





In May
2007, we signed an agreement with a major Russian electronic defense contractor,
OAO Ruselectronics.  Under this agreement, we will develop a marketing
strategy to sell our products for the Russian market and Ruselectronics will
provide the resources to complete the developed projects in
Russia.   We believe this forthcoming demonstration and support
from Ruselectronics and the recent interest in this technology from the members
of the Russian Congress and Senate will give us opportunities to implement this
technology jointly with Ruselectronics in the Russian Federation.





Since
December 2006, we have been working with URS, Washington Group Division, a U.S.
construction/defense company, to bring them opportunities for large projects in
Russia.  Washington Group is in the final negotiation stage with First
National Energy Corporation to build two new power plants in St. Petersburg,
Russia as well as several other gas generation and electrical power plants in
the Moscow region.  In May 2007, we signed a teaming agreement with
URS, Washington Group Division specifying that, if such contracts are obtained,
we will have exclusive rights to provide the design and installation of video
security systems, fire security systems and IT systems for these
projects.





In
September 2007, we have signed a joint working agreement with Decisive Analytics
Corporation, a US defense system integrator.  We are working with them
on possibilities of implementing some of our technologies into their current
research product.  We are also working with them on possibilities on
designing complex security solutions for potential power plant projects in
Russia currently under development with URS, Washington Group
Division.





We are
also currently considering a teaming agreement with Worley Parsons Energy
Company, a leading Australian engineering construction conglomerate, to be
involved with our company in the construction and development of our potential
Russian power plant projects.





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Our
teaming agreement with OAO Ruselectronics to provide all the necessary manpower
and resources and the necessary permits for the above-referenced projects will
secure execution of these projects.





Other
International Projects





We are
currently bidding on a full security solution project in Equatorial Guinea for
Marathon Oil Company.  During 2007, we visited Equatorial Guinea and
surveyed a future job site.  As a result, we became very familiar with
the project and believe we can complete should we be awarded the
project.  We are also currently considering alliances with several
companies in the Middle East to capitalize on the rapid growth in the
region.


Trade
Shows





To build
awareness and demand for our VIP Systems, we have participated in a number of
key trade shows, including:





·
            International
      Security Conference in Brussels, Belgium in February
  2007;





·
            International
      Anti-Terrorist Security Conference in Moscow, Russia in November
      2006;





·
            Port
      of Houston Homeland Security Demonstration event using US Merchant Fleet
      ship – “New challenges for Port Security” in Houston, Texas in May
      2006;





·
            Houston
      Apartment Association Show in Houston, Texas in April
  2006;





·
            International
      Security Conference in Brussels, Belgium in February
  2006;





·
            US
      Department of Homeland Security Exhibit in Washington, DC in March
      2005;





·
            US
      Trade Mission and exhibit in Moscow, Russia in February
    2005;




GOING
CONCERN CONSIDERATION





Since we
began operations, we have been dependent on debt and equity raised from
individual investors and related parties to sustain our operations. We incurred
net losses of $131,413during the three months ended March 31, 2008. We also had
negative cash flows from operations of $106,910 during the three months ended
March 31, 2008. These factors and our history of recurring losses raise
substantial doubt about our ability to continue as a going concern. Our
long-term viability as a going concern is dependent upon three key factors as
follows:





·
            Our
      ability to obtain adequate sources of debt or equity funding to meet
      current commitments and fund the continuation of our business
      operations;





·
            Our
      ability to acquire or internally develop viable businesses;
      and





·
            Our
      ability to ultimately achieve profitability and cash flows from operations
      in amounts that would sustain our
operations.





As a
result of potential liquidity problems, our auditors have added an explanatory
paragraph in their opinion on our financial statements for the years ended
December 31, 2007 and 2006, indicating that substantial doubt exists concerning
our ability to continue as a going concern.





Our
ability to achieve profitability depends on our ability to successfully develop
and market home automation and video security technology. We can give no
assurance that we will be able to achieve commercial success. We are subject to
all risks inherent in a growing venture, including the need to develop marketing
expertise and produce significant revenue. We may incur losses for the
foreseeable future due to the significant costs associated with home automation
and video security technology operations.





Recurring
losses have resulted in an accumulated deficit of $11,245,061 on March 31, 2008.
Revenues for the three months ended March 31, 2008 were $90,687 compared to
revenues of $136,788 for the three months ended March 31, 2007. The decrease in
revenue is mainly because at the end of the quarter, we were not able to
recognize revenues on uncompleted major long term projects.





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Our
losses were attributable primarily to the developmental stage of our business.
Our new focus has resulted in our further development of VIP Systems(TM) that
we feel will improve our operating results.  Although we believe that
our revenues will increase, and that we will ultimately be profitable, we can
provide no assurance that profitability will occur.




COMPETITION





There are
presently several major competitors in the home automation industry. Many of our
competitors are more established companies with substantially greater capital
resources and substantially greater marketing capabilities than us. We can not
give any assurances that we will be able to successfully compete in this
market.




THE
THREE MONTHS ENDED MARCH 31, 2008 AS COMPARED TO THE THREE MONTHS ENDED MARCH
31, 2007





During
the three months ended March 31, 2008, our revenues were $90,687 as compared to
$136,788 for the three months ended March 31, 2007 because we were unable to
recognize revenues on uncompleted major long term projects.





During
the three months ended March 31, 2008, selling, general and administrative
expenses decreased by $192,874 or 54% to $162,535 as compared to the three
months ended March 31, 2007. This decrease was mainly attributable to decreased
issuance of stock options which resulted in decreased charges to stock and
option compensation expense, a decrease in travel and entertainment expense
partially offset by an increase in rent and personnel related
expenses.





During
the three months ended March 31, 2008, we had a net loss of $131,413 as compared
to a net loss of $313,669 in the three months ended March 31, 2007.




LIQUIDITY
AND CAPITAL RESOURCES





As of
March 31, 2008, we had cash resources of $7,772. We estimate that during the
three months ending June 30, 2008, our cash requirements will be approximately
$180,000 (or approximately $60,000 per month). We believe that our
revenue-producing operations will expand. Such an expansion of operations will
require funding for pending contracts.  We anticipate raising
additional capital through the sale of our stock or through
borrowing.  Although we plan to obtain additional financing through
the sale of our common stock and by obtaining debt financing, there is no
assurance that capital will be available from any source, or, if available, upon
terms and conditions acceptable to us.





We
currently have no material commitments for capital expenditures for our U.S.
operations. We anticipate that the following expenditures will be made in 2008
if funds are available: $100,000 for continued development of our home
automation and video security business and $250,000 for marketing
expenses.





During
the three months ended March 31, 2008, we received $5,000 cash from the sale of
our securities and $54,000 on exercise of option to purchase 900,000 shares
offset by reduction of principal and interest on promissory notes to Mr. Genin,
our chief executive officer.





During
2008, we obtained loans from Alex Genin, our Chief Executive Officer and Acting
Chief Financial Officer and companies controlled or related to
him.  Mr. Genin is a significant stockholder of the
company.  The following is a summary of all the loan transactions
through March 31, 2008





United
Capital Group, a company controlled by Alex Genin, our chief executive officer
has several loans outstanding under 14 separate promissory notes bearing 8%
interest rate and maturing between March 2009 and December 2010.  None
of these notes were collateralized. As of March 31, 2008, the total principal
amount due on all notes to United Capital Group is $198,983.





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During
2008, Alex Genin, our chief executive officer, made several loans to us under
four separate promissory notes for a total principal amount of $35,000 which
bear interest at the rate between 0% and 8% and which are due between January
2010 and February 2011.  No interest has been imputed due to the
immateriality of the amount.Three
promissory notes originally due March 2008 bearing 7% interest for a total
principal amount of $8,000 were extended three years. Seven promissory notes due
between February 2008 and October 2008 were offset by an option Mr. Genin
exercised in January 2008.  The total principal and interest paid on
these notes are $43,790 and $10,210 respectively.  A $9,000 note
originally made in October 2007 was partially paid.  The remaining
balance on this note is $2,000.  None of these notes were
collateralized.  As of March 31, 2008, the total principal amount due
on all notes to Alex Genin is $248,600.





During
2008, Eastern Credit Limited, Inc., a company controlled by Alex Genin, our
chief executive officer, made a loan to us under an $18,000 promissory note
which bear interest at the rate of 7% and which is due February 2011. During the
same period, five notes maturing between January 2008 and March 2008 for a total
principal amount of $68,000 which bear interest at the rate ranging between 6%
and 7% were extended three years. None of these notes were collateralized. As of
March 31, 2008, the total principal amount due on all notes to Eastern Credit
Limited is $230,300.





During
2008, ECL Trading Co, Inc., a company controlled by Alex Genin, our chief
executive officer, made a loan to us under a $14,500 promissory note bearing 8%
interest and which is due February 2011.  This note was not
collateralized.  As of March 31, 2008, the total principal amount due
on all notes to ECL Trading is $14,500.





During
2008, First National Energy Corporation, a company controlled by Alex Genin, our
chief executive officer, made a loan to us under a $20,000 promissory note
bearing 8% interest and which is due February 2010.  This note was not
collateralized.  As of March 31, 2008, the total principal amount due
on all notes to First National Energy Corporation is $20,000.





First
National Petroleum, Inc., a company controlled by Alex Genin, our chief
executive officer, has two outstanding promissory notes which bear interest at
the rate of 8% and are due April 2009 and June 2010. None of these notes were
collateralized.  As of March 31, 2008, the total principal amount due
on all notes to First National Petroleum is $14,500.





During
2008, Pacific Commercial Credit, Ltd., a company controlled by Alex Genin, our
chief executive officer, made a loan to us under a $15,000 promissory note
bearing 8% interest and which is due March 2011.  The notes to Pacific
Commercial Credit were not collateralized.  As of March 31, 2008, the
total principal amount due on all notes to Pacific Commercial Credit, Ltd. is
$60,900.





Stromberg
Development, Inc., a company owned by Alex Genin, our chief executive officer,
has eight outstanding promissory notes made during 2007 which bear interest at
the rate of 8% and are due in three years between April 2010 and September 2010.
None of these notes were collateralized. As of March 31, 2008, the total
principal amount due on all notes to Stromberg Development, Inc. is
$42,300.








Item
4. CONTROLSAND PROCEDURES





Evaluation
of Disclosure Controls and Procedures




As of the
end of the period covered by this report on Form 10-Q, our Chief Executive
Officer and our Chief Financial Officer performed an evaluation of the
effectiveness of our disclosure controls and procedures as defined in Rule
13a-15(e) or Rule 15d-15(e) under the Exchange Act. Based on that evaluation,
our Chief Executive Officer and our Chief Financial Officer concluded that as of
the end of the period covered by this report on Form 10-Q, our disclosure
controls and procedures were effective in timely recording, processing,
summarizing and reporting material information required to be included in our
Exchange Act filings.




Changes
in Internal Control Over Financial Reporting




There
were no changes in the Company’s internal control over financial reporting that
occurred during the most recent fiscal quarter that have materially affected, or
are reasonably likely to materially affect, its internal control over financial
reporting for that period.





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PART
II - OTHER INFORMATION





Item
2. UNREGISTEREDSALES OF EQUITY SECURITIES AND USE OF
PROCEEDS





During
the three months ended March 31, 2008, we effected the following transactions in
reliance upon exemptions from registration under the Securities Act of 1933 as
amended as provided in Section 4(2) thereof. Each certificate issued for
unregistered securities contained a legend stating that the securities have not
been registered under the Act and setting forth the restrictions on the
transferability and the sale of the securities. No underwriter participated in,
nor did we pay any commissions or fees to any underwriter in connection with any
of these transactions. None of the transactions involved a public offering. We
believe that each of these persons had knowledge and experience in financial and
business matters which allowed them to evaluate the merits and risk of the
purchase or receipt of these securities of the Company.  We believe
that each of these persons was knowledgeable about our operations and financial
condition.





1.  During
the three months ended March 31, 2008, we received $5,000 cash from an investor
for a total sale of 25,000 shares of our restricted common stock.  An
option to buy 900,000 shares was exercised by Alex Genin, our chief executive
officer, at $0.06 for a total of $54,000.  This was applied towards
principal and interest, $43,790 and $10,210 respectively, on notes to Mr.
Genin.  The market value of these issuances ranged from $0.18 to $0.20
per share.





2.  During
the three months ended March 31, 2008, we did not grant any options to purchase
shares of common stock to employees.  An option to purchase up to
20,000 shares expired in the same period,








Item
3. DEFAULTUPON SENIOR SECURITIES





On March
24, 2006, we issued 2,500,000 restricted common shares at $0.20 per share (or
833,334 shares of restricted common stock at $0.60 after a 1-for-3 reverse
split) to a sophisticated investor as a collateral for a note payable bearing
interest of 0% and due on May 30, 2007. The agreement allows the disposal of the
shares by the investor, in part or full, prior to May 30, 2007; and the proceeds
from such disposal would reduce the principal balance of $500,000. The
promissory note is also secured by all assets of the Company. In accordance with
APB Opinion 14, Accounting for Convertible Debt and Debt Issued with Stock
Purchase Warrants, this instrument is accounted for as a liability in the
financial statements.  The note expired on May 30, 2007.  We
are in default of this Note and an extension is under negotiation as of March
31, 2008.





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Item
6. EXHIBITS








Exhibit 31.1 - Certification of Chief Executive Officer
and Acting Chief Financial Officer of First Capital International, Inc. required
by Rule 13a - 14(1) or Rule 15d - 14(a) of the Securities Exchange Act of 1934,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.





Exhibit 32.1 - Certification of Chief Executive Officer
and Acting Chief Financial Officer of First Capital International, Inc. pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C.
63.





SIGNATURES





Pursuant
to the requirements 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.








First
      Capital International, Inc.Date:  May
      20 2008
            By:
      /s/ Alex GeninAlex
      GeninChief
      Executive Officer andActing
      Chief Financial Officer




9