UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-Q





(Mark
one)


ýQUARTERLY REPORT PURSUANT TO
SECTION13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934





For
the quarterly period ended September 30, 2008


OR


oTRANSITION REPORT PURSUANT TO
SECTION13 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
      Woodway
                Suite
      9024
                Houston,
      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 ý No 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 definition of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.





Large
      accelerated filer  o
              Accelerated
      filer  oNon-accelerated
      filer  o  (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 November 14,
2008:





TITLE
      OF CLASS
                    
                    NUMBER
      OF SHARES OUTSTANDINGCommon
      Stock, $0.001 par value.
                    
                    36,809,671












TABLE OF CONTENTS








PART
      I - FINANCIAL INFORMATIONItem
      1.
                  Unaudited Consolidated Financial Statements
                  F-1Item
      2.
                  Management's Discussion and Analysis of Financial Condition and
      Results of Operations
                  1Item
      3.
                  Quantitative and Qualitative Disclosure about Market
      Risk
                  7Item
      4.
                  Controls and Procedures
                  7PART
      II - OTHER INFORMATIONItem
      1.
                  Legal Proceedings
                  8Item
      2.
                  Unregistered Sales of Equity Securities and Use of
      Proceeds
                  8Item
      3.
                  Default Upon Senior Securities
                  8Item
      4.
                  Submission of Matters to a Vote of Security
      Holders
                  9Item
      5.
                  Other Information
                  9Item
      6.
                  Exhibits
                  10SIGNATURES
                  10




Table of Contents





FIRSTCAPITAL INTERNATIONAL, INC.


TABLE
OF CONTENTS


__________





PageUnaudited
      Consolidated Financial Statements:Unaudited
      Consolidated Balance Sheets as of September 30, 2008and
      December 31, 2007
                F-2Unaudited
      Consolidated Statements of Operations for the three months and nine months
      ended September 30, 2008 and 2007
                F-3Unaudited
      Consolidated Statement of Stockholders’ deficit for the nine months ended
      September 30, 2008
                F-4Unaudited
      Consolidated Statements of Cash Flows for the nine months ended September
      30, 2008 and 2007
                F-5Notes
      to Unaudited Consolidated Financial Statements
                F-6





F-1
 Table of Contents





FIRST
CAPITAL INTERNATIONAL, INC.


CONSOLIDATED
BALANCE SHEETS


September
30, 2008 and December 31, 2007





September
      30,
                    
                    
                    December
      31,2008
                    
                    
                    2007(Unaudited)ASSETSCurrent
      assets:Cash
      and cash equivalents
                    
                    $
                    2,102
                    
                    
                    $
                    3,972Accounts
      receivable
                    
                    
                    31,535
                    
                    
                    
                    54,823Employee
      receivables
                    
                    
                    40,499
                    
                    
                    
                    25,978Due
      from related parties
                    
                    
                    5,398
                    
                    
                    
                    3,892Total
      assets
                    
                    $
                    79,534
                    
                    
                    $
                    88,665LIABILITIES AND STOCKHOLDERS’
      DEFICITCurrent
      liabilities:Credit
      card obligations and line of credit
                    
                    $
                    152,631
                    
                    
                    $
                    133,469Bank
      overdraft
                    
                    
                    13,023
                    
                    
                    
                    -Accounts
      payable and accrued liabilities
                    
                    
                    169,888
                    
                    
                    
                    113,150Accrued
      interest payable to related parties
                    
                    
                    162,478
                    
                    
                    
                    127,336Current
      portion of notes payable to related parties
                    
                    
                    250,079
                    
                    
                    
                    274,600Convertible
      notes payable to related parties
                    
                    
                    50,000
                    
                    
                    
                    50,000Convertible
      notes payable
                    
                    
                    500,000
                    
                    
                    
                    500,000Deferred
      revenue
                    
                    
                    82,038
                    
                    
                    
                    128,687Total
      current liabilities
                    
                    
                    1,380,137
                    
                    
                    
                    1,327,242Notes
      payable to related parties, non-current
                    
                    
                    612,916
                    
                    
                    
                    503,773Total
      liabilities
                    
                    
                    1,993,053
                    
                    
                    
                    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; 36,809,671 and
      35,337,005 shares issued and outstanding  at September 30, 2008
      and December 31, 2007, respectively
                    
                    
                    36,810
                    
                    
                    
                    35,337Additional
      paid-in capital
                    
                    
                    9,471,961
                    
                    
                    
                    9,337,726Accumulated
      deficit
                    
                    
                    (11,426,790
                    )
                    
                    
                    (11,113,648
                    )Subscription
      receivable
                    
                    
                    -
                    
                    
                    
                    (6,265
                    )Total
      stockholders’ deficit
                    
                    
                    (1,913,519
                    )
                    
                    
                    (1,742,350
                    )Total
      liabilities and stockholders’ deficit
                    
                    $
                    79,534
                    
                    
                    $
                    88,665








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





F-2
 Table of Contents





FIRST
CAPITAL INTERNATIONAL, INC.


UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS


For
the Three Months and Nine Months Ended September 30, 2008 and 2007


__________





Three
      Months Ended
                        
                        
                        Nine
      Months EndedSeptember
      30,
                        
                        
                        September
      30,2008
                        
                        
                        2007
                        
                        
                        2008
                        
                        
                        2007Revenue:System
      sales
                        
                        $
                        228,436
                        
                        
                        $
                        148,880
                        
                        
                        $
                        514,908
                        
                        
                        $
                        348,126Consulting
      services
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        14,000
                        
                        
                        
                        -Total
      revenue
                        
                        
                        228,436
                        
                        
                        
                        148,880
                        
                        
                        
                        528,908
                        
                        
                        
                        348,126Costs
      of sales:Cost
      of systems
                        
                        
                        76,647
                        
                        
                        
                        67,886
                        
                        
                        
                        257,721
                        
                        
                        
                        184,507Cost
      of consulting services
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        2,800
                        
                        
                        
                        -Total
      cost of sales
                        
                        
                        76,647
                        
                        
                        
                        67,886
                        
                        
                        
                        260,521
                        
                        
                        
                        184,507Gross
      Margin
                        
                        
                        151,789
                        
                        
                        
                        80,994
                        
                        
                        
                        268,387
                        
                        
                        
                        163,619Selling,
      general and administrative expenses
                        
                        
                        176,468
                        
                        
                        
                        212,059
                        
                        
                        
                        520,923
                        
                        
                        
                        747,887Loss
      from operations
                        
                        
                        (24,679
                        )
                        
                        
                        (131,065
                        )
                        
                        
                        (252,536
                        )
                        
                        
                        (584,268
                        )Other
      expense:Interest
      expense
                        
                        
                        (20,305
                        )
                        
                        
                        (18,110
                        )
                        
                        
                        (60,606
                        )
                        
                        
                        (49,562
                        )Net
      loss
                        
                        $
                        (44,984
                        )
                        
                        $
                        (149,175
                        )
                        
                        $
                        (313,142
                        )
                        
                        $
                        (633,830
                        )Basic
      and diluted net loss per common share
                        
                        $
                        (0.00
                        )
                        
                        $
                        (0.00
                        )
                        
                        $
                        (0.01
                        )
                        
                        $
                        (0.02
                        )Weighted
      average shares outstanding
                        
                        
                        36,775,617
                        
                        
                        
                        33,358,617
                        
                        
                        
                        36,207,212
                        
                        
                        
                        33,056,894








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





F-3
 Table of Contents








FIRST
CAPITAL INTERNATIONAL, INC.


UNAUDITED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT


For
the Nine Months Ended September 30, 2008


__________





Preferred
      Stock
                                                                
                                                                
                                                                Common
      Stock
                                                                
                                                                
                                                                Additional
                                                                
                                                                
                                                                Subscrip-
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                Total
      Stock-Shares
                                                                
                                                                
                                                                Amount
                                                                
                                                                
                                                                Shares
                                                                
                                                                
                                                                Amount
                                                                
                                                                
                                                                Paid-In
                                                                  Capital
                                                                
                                                                
                                                                tion
                                                                  Receivable
                                                                
                                                                
                                                                AccumulatedDeficit
                                                                
                                                                
                                                                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
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                447,666
                                                                
                                                                
                                                                
                                                                448
                                                                
                                                                
                                                                
                                                                56,152
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                56,600Amortization
      of employee option compensation
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                13,108
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                13,108Common
      stock issued as repayment of loan
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                1,025,000
                                                                
                                                                
                                                                
                                                                1,025
                                                                
                                                                
                                                                
                                                                64,975
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                66,000Payment
      of subscription receivable
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                6,265
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                6,265Net
      loss
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (313,142
                                                                )
                                                                
                                                                
                                                                (313,142
                                                                )Balance
      at September 30, 2008
                                                                
                                                                
                                                                4,500,000
                                                                
                                                                
                                                                $
                                                                4,500
                                                                
                                                                
                                                                
                                                                36,809,671
                                                                
                                                                
                                                                $
                                                                36,810
                                                                
                                                                
                                                                $
                                                                9,471,961
                                                                
                                                                
                                                                $
                                                                -
                                                                
                                                                
                                                                $
                                                                (11,426,790
                                                                )
                                                                
                                                                $
                                                                (1,913,519
                                                                )





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





F-4
 Table of Contents








FIRST
CAPITAL INTERNATIONAL, INC.


UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS


For
the Nine Months Ended September 30,


2008
and 2007


September
      30,
                    
                    
                    September
      30,2008
                    
                    
                    2007Cash
      flows from operating activities:Net
      loss
                    
                    $
                    (313,142
                    )
                    
                    $
                    (633,830
                    )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Stock
      based compensation
                    
                    
                    13,108
                    
                    
                    
                    238,821Changes
      in operating assets and liabilities:Accounts
      and Employee receivable
                    
                    
                    8,767
                    
                    
                    
                    (19,572
                    )Inventory
                    
                    
                    -
                    
                    
                    
                    30,013Other
      current assets
                    
                    
                    (1,506
                    )
                    
                    
                    -Accounts
      payable, credit card payables, and accrued liabilities
                    
                    
                    134,275
                    
                    
                    
                    107,344Deferred
      income
                    
                    
                    (46,649
                    )
                    
                    
                    -Net
      cash used in operating activities
                    
                    
                    (205,147
                    )
                    
                    
                    (277,224
                    )Cash
      flows from financing activities:Payments
      of notes payable and long-term debt to related party
                    
                    
                    (84,933
                    )
                    
                    
                    (4,786
                    )Proceeds
      from notes payable and long-term debt to related party
                    
                    
                    225,345
                    
                    
                    
                    77,000Proceeds
      from sale of common stock
                    
                    
                    62,865
                    
                    
                    
                    118,160Net
      cash provided by financing activities
                    
                    
                    203,277
                    
                    
                    
                    190,374Net
      increase/(decrease) in cash and cash equivalents
                    
                    
                    (1,870
                    )
                    
                    
                    (86,850
                    )Cash
      and cash equivalents, beginning of period
                    
                    
                    3,972
                    
                    
                    
                    95,138Cash
      and cash equivalents, end of period
                    
                    $
                    2,102
                    
                    
                    $
                    8,288Supplemental
      disclosure of cash flow information:Cash
      paid for interest
                    
                    $
                    15,254
                    
                    
                    $
                    12,017Cash
      paid for taxes
                    
                    $
                    -
                    
                    
                    $
                    -Supplemental
      disclosure of non cash investingand
      financing activities:Cashless
      exercise of options
                    
                    $
                    54,000
                    
                    
                    $
                    -Cashless
      stock purchase
                    
                    
                    12,000
                    
                    
                    $
                    -Reduction
      of loan in connection with stock purchase
                    
                    $
                    16,765
                    
                    
                    $
                    -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-5
 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 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 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 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.





Principles of
Consolidation





The
consolidated 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 $313,142 for the nine months ended
September 30, 2008, has an accumulated deficit of $11,426,790 and a working
capital deficit of $1,300,603 at September 30, 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 and is in
default.  A lawsuit
had been filed regarding this transaction.  The company believes the
note effectively became null and void and that the note is no longer valid since
the sophisticated investor accepted and kept the shares in lieu of this
note.




This case
will be vigorously pursued.  We do not expect any losses from this
lawsuit except for the legal fees of approximately $20,000 we will incur
regarding this case.




4.         Notes Payable to Related
Parties




During
the nine months ended September 30, 2008, the Company issued the following notes
to related parties:




During
2008, Alex Genin, our chief executive officer, made several loans to us under
six separate promissory notes for a total principal amount of $44,000 which bear
interest at the rate between 0% and 8% and which are due between January 2010
and April 2011.  No interest has been imputed due to the immateriality
of the amount.





F-6
 Table of Contents





Five
promissory notes originally due in 2008 bearing interest between 6% and 7% for a
total principal amount of $111,200 were extended between three and five 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.  Four promissory notes with a total principal amount of
$36,000 were paid off.  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, eleven notes maturing between January 2008 and October 2008 for a
total principal amount of $100,500 which bear interest at the rate ranging
between 6% and 7% were extended between three and four years. Two promissory
notes originally made in October 2004 and August 2006 bearing 8% interest for a
total principal amount of $3,000 were paid off.  A promissory note
bearing 8% interest for a total principal amount of $18,000 to First National
Energy Corporation, a company controlled by Alex Genin, was re-assigned to
Eastern Credit Limited, Inc. in July 2008.  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.  A partial payment in the
amount of $6,500 was made on this note.  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.  A partial payment
in the amount of $2,000 was made on this note.  The remaining balance
of $18,000 on this note was re-assigned to Eastern Credit Limited, Inc., a
company controlled by Alex Genin.





During
2008, Pacific Commercial Credit, Ltd., a company controlled by Alex Genin, our
chief executive officer, made loans to us under five separate promissory notes
for a total principal amount of $41,500 bearing 8% interest and which are due
between March and May 2011.  These notes were not
collateralized.





During
2008, three promissory notes for a total principal amount of $9,300 to Stromberg
Development, a company owned by Alex Genin, our chief executive officer, were
paid off.





In May
2008, one other director made a short term loan to us for a total principal
amount of $18,000 bearing 6% interest and which is due in 2008.  This
loan was not collateralized.





5.
            Stock and Option
      Transactions





During
the nine months ended September 30, 2008, the company sold 447,666 shares of
restricted common stock for $56,600.  A $12,000 short term loan to the
company was used by an investor to purchase 125,000 restricted common
shares.  These transactions were within the stock’s trading range 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. Eleven options to purchase up to 345,000
shares expired.  The company granted eight options to purchase up to
1,130,000 shares at $0.06 per share to its employees during the same
period.  These options are exercisable effective May 1, 2010 through
July 1, 2010 contingent upon the employees still being employed at the exercise
date. For the nine months ended September 30, 2008, the Company had stock based
compensation expense of $13,108 related to the issuance of these options. The
fair market value of the eight options is $78,584. The stock based compensation
expense is calculated over the two year vesting period using a term of 2 years,
volatility of 379.94%, and risk-free rate of 2.40%.




6.       
Subsequent
Events





In
October 2008, the company and its CEO have been named as parties to a lawsuit by
an investor alleging impropriety and fraud in a recent stock transaction
involving the purchase of 376,000 shares of the company stock for
$47,000.  We consider this to be a meritless lawsuit and are planning
to go for the summary judgment to request to dismiss this legal
proceeding.





F-7
 Table of Contents





PART
I - FINANCIAL INFORMATION








Item
1.   UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


Please see financial statements
beginning on page F-1




Item2.   MANAGEMENT'S DISCUSSION 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.





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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
$9,831 stock-based compensation cost in the three months ended September 30,
2008 for the options and there were 0 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.





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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.





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





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’re currently conducting upsell marketing
efforts and have been able to secure upsell option for 40% of the
development.





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 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 started marketing the “Concierge” concept into
other regions and are working on several proposals.  This hi-rise
condo project will also be a good source for the company’s revenue through
upsell activities.





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





We are
considering launching our “Concierge” software platform
nationwide.  We have numerous discussions with integrators and hi-rise
management companies that showed interest in purchasing our concierge
platform.  As a result, we are developing strategies for selling and
marketing the “Concierge” platform nationwide.





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.





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.





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.





We are
working with a marketing company in Kuwait to become our representative in the
middle east in order to penetrate highly lucrative market in Dubai.





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;





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·
            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 $313,142 during the nine months ended September 30, 2008. We also
had negative cash flows from operations of $205,147 during the nine months ended
September 30, 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 $11,426,790 on September 30,
2008. Revenues for the nine months ended September 30, 2008 were $528,908
compared to revenues of $348,126 for the nine months ended September 30, 2007.
The increase in revenue is the result of our marketing efforts with real estate
developers and hotel chains.





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 cannot
give any assurances that we will be able to successfully compete in this
market.





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RESULTS
OF OPERATION FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2008 AS COMPARED TO THE
THREE MONTHS ENDED SEPTEMBER 30, 2007





During
the three months ended September 30, 2008, our revenues were $228,436 as
compared to $148,880 for the three months ended September 30, 2007 because of
our marketing efforts with real estate developers.





During
the three months ended September 30, 2008, selling, general and administrative
expenses decreased by $35,591 or 19% to $176,468 as compared to the three months
ended September 30, 2007. This was mainly attributable to decreases in materials
and personnel related expenses partially offset by an increase in contracted
services.





During
the three months ended September 30, 2008, we had a net loss of $44,984 as
compared to a net loss of $149,175 in the three months ended September 30,
2007.








RESULTS
OF OPERATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 AS COMPARED TO THE
NINE MONTHS ENDED SEPTEMBER 30, 2007





During
the nine months ended September 30, 2008, our revenues were $528,908 as compared
to $348,126 for the nine months ended September 30, 2007, due to our marketing
activities.





During
the nine months ended September 30, 2008, selling, general and administrative
expenses decreased by $226,964 or 31% to $520,923 as compared to the nine months
ended September 30, 2007. The net decrease was mainly attributable to decreased
issuance of options to employees and management which resulted in decreased
charges to compensation expense, decrease in materials charges, personnel
related expenses, travel and entertainment expenses partially offset by
increases in contracted services, professional fees and rent
expenses.





During
the nine months ended September 30, 2008, we had a net loss of $313,142 as
compared to a net loss of $633,830 in the nine months ended September 30,
2007.








LIQUIDITY
AND CAPITAL RESOURCES





As of
September 30, 2008, we had cash resources of $2,102. We estimate that during the
three months ending December 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 nine months ended September 30, 2008, we received $56,600 cash from the sale
of our securities and $6,265 in subscription receivables.   A
$12,000 short-term loan was subsequently converted into a stock purchase
transaction.





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 September 30, 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 September 30, 2008, the total
principal amount due on all notes to United Capital Group is
$198,983.





During
2008, Alex Genin, our chief executive officer, made several loans to us under
six separate promissory notes for a total principal amount of $44,000 which bear
interest at the rate between 0% and 8% and which are due between January 2010
and April 2011.  No interest has been imputed due to the immateriality
of the amount.Five
promissory notes originally due in 2008 bearing interest between 6% and 7% for a
total principal amount of $111,200 were extended between three and five 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 $63,469 and $10,210
respectively.  Four promissory notes with a total principal amount of
36,000 were paid off.  None of these notes were
collateralized.  As of September 30, 2008, the total principal amount
due on all notes to Alex Genin is $209,000.





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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, eleven notes maturing between January 2008 and October 2008 for a
total principal amount of $100,500 which bear interest at the rate ranging
between 6% and 7% were extended between three and four years.  Two
promissory notes originally made in October 2004 and August 2006 bearing 8%
interest for a total principal amount of $3,000 were paid off.  A
promissory note bearing 8% interest for a total principal amount of $18,000 to
First National Energy Corporation, a company controlled by Alex Genin, was
re-assigned to Eastern Credit Limited, Inc. in July 2008.  None of
these notes were collateralized. As of September 30, 2008, the total principal
amount due on all notes to Eastern Credit Limited is $245,300.





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.  A partial payment in the
amount of $6,500 was made on this note.  This note was not
collateralized.  As of September 30, 2008, the total principal amount
due on all notes to ECL Trading is $8,000.





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.  A partial payment
in the amount of $2,000 was made on this note.  The remaining balance
of $18,000 on this note was re-assigned to Eastern Credit Limited, Inc., a
company controlled by Alex Genin.





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 September 30, 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 loans to us under five separate promissory notes
for a total principal amount of 41,500 bearing 8% interest and which are due
between March and May 2011.  These notes were not
collateralized.  As of September 30, 2008, the total principal amount
due on all notes to Pacific Commercial Credit, Ltd. is $87,400.





Stromberg
Development, Inc., a company owned by Alex Genin, our chief executive officer,
had 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.  During 2008, three promissory notes for a total principal
amount of $9,300 were paid off.  None of these notes were
collateralized. As of September 30, 2008, the total principal amount due on all
notes to Stromberg Development, Inc. is $35,000.





In May
2008, one other director made a short term loan to us for a total principal
amount of $18,000 bearing 6% interest and which is due in 2008.  This
loan was not collateralized.





Item3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





Not
applicable.





Item4. CONTROLS AND PROCEDURES





Evaluation
of Disclosure Controls and Procedures





An
evaluation was carried out under the supervision and with the participation of
the Company's management, including the Chief Executive Officer ("CEO") and
Chief Financial Officer ("CFO") (in this case the same person), of the
effectiveness of the Company's disclosure controls and procedures as of
September 30, 2008. Based on that evaluation, the CEO/CFO has concluded that the
Company's disclosure controls and procedures are not effective to provide
reasonable assurance that: (i) information required to be disclosed by the
Company in reports that it files or submits under the Securities Exchange Act of
1934 is accumulated and communicated to the Company's management, including the
CEO/CFO, as appropriate to allow timely decisions regarding required disclosure
by the Company; and (ii) information required to be disclosed by the Company in
reports that it files or submits under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms. We have identified the
following material weakness.





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As of
September 30, 2008, we did not maintain effective controls over bank
reconciliations and accrued liabilities.  Specifically, controls were
not designed and in place to ensure that bank accounts were properly reconciled
and liabilities were properly reflected. Accordingly, management has determined
that this control deficiency constitutes a material weakness.





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.








PART
II - OTHER INFORMATION





Item1.    LEGAL PROCEEDINGS





On May
27, 2008, a lawsuit was filed against us by Virage Consulting at the US Southern
District Court of New York.  The issue arises from a promissory note
with an option to purchase 2,500,000 shares (or 833,334 shares after a 1-for-3
reverse split) of our company for $500,000 by Virage Consulting in 2006 to
expire in May, 2007.  However, Virage Consulting decided to exercise
its option to convert and purchased the shares.  The shares were
issued and delivered to Virage Consulting at their request.  The
agreement allowed the investor to dispose of the shares, in part or in full
prior to May, 2007.  The proceeds from any such disposal would have
reduced the principal balance of $500,000.  We believe the note
effectively became null and void when Virage Consulting accepted the shares in
April 2006. We are currently still in negotiations with Vintage Consulting’s
attorneys.





On
October 8, 2008 an investor named the company and Alex Genin, our chief
executive officer, parties to a lawsuit filed in the 295th
Judicial District Court of Harris County, Texas alleging impropriety and fraud
in a recent stock purchase. We
consider this to be a meritless lawsuit and are planning to go for the summary
judgment to request to dismiss this legal proceeding.





Item2.    UNREGISTERED SALES OF EQUITY SECURITIES
AND USE OF PROCEEDS





During
the nine months ended September 30, 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 nine months ended September 30, 2008, we received $56,600 cash from an
investor for a total sale of 447,666 shares of our restricted common stock and
$6,265 in subscription receivables.  The market value of these
issuances ranged from $0.06 to $0.125 per share.  A $12,000 short term
loan to the company was used by an investor to purchase 125,000 restricted
common shares.





2.  During
the nine months ended September 30, 2008, we granted eight options to purchase
up to 1,130,000 shares of common stock to employees.  Eleven options
to purchase up to 345,000 shares expired in the same period,





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Item3.    DEFAULT UPON 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 allowed 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.  A
formal lawsuit had been filed by Virage Consulting as described above in Item
1.





Item4.    SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS





None





Item5.    OTHER INFORMATION





None





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Item6.    EXHIBITS





Exhibit 31.1 and 31.2 - 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 and 32.2 - 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:  November
      14, 2008
                  By:
      /s/ Alex GeninAlex
      GeninChief
      Executive Officer andActing
      Chief Financial Officer andPrincipal
      Financial Officer
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