**SECURITIES AND        EXCHANGE COMMISSION        Washington, D.C. 20549**

**FORM        10-QSB**

*(Mark        One)*

[**X**        ]     Quarterly report under Section 13 or 15(d) of the Securities        Exchange Act of 1934 for the quarterly period ended **June 30, 2007**.

[  ]             Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the        transition period from                            to                    .

Commission file        number: **000-51763**

**COMCAM        INTERNATIONAL, INC.**        (Exact name of small business issuer as specified in its charter)

| **Delaware**                        (State or other jurisdiction of incorporation or organization) | **23-2976562**                        (IRS Employer Identification Number) |
|----------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------|

**1140 McDermott        Drive, Suite 200, West Chester, Pennsylvania 19380**        (Address of Principal Executive        Office)          (Postal Code)

**(610)        436-8089**(Issuer’s telephone number)

Check whether the registrant: (1)        filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during        the past 12 months (or for such shorter period that the registrant was required to file        such reports), and (2) has been subject to such filing requirements for the past 90        days.

Yes            **X**                     No                    

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

Yes                                 No            **X**        

The number of outstanding shares of        the registrant’s common stock, $0.0001 par value (the only class of voting stock), as        of August 14, 2007 was 5,770,980.

**            1        **

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**TABLE        OF CONTENTS**

 

**PART        I**

 

| ITEM 1. FINANCIAL STATEMENTS | 3 |
|------------------------------|---|

 

|   | Unaudited Balance Sheet as of June 30, 2007 | 4 |
|--------|---------------------------------------------|---|

         

Unaudited Statement of Operations for the three and six month periods        ended

|   | June 30, 2007 and 2006 and the period from inception to June                        30, 2007 | 5 |
|--------|----------------------------------------------------------------------------------------------|---|

         

Unaudited Statement of Cash Flows for the six months ended June        30,

|   | 2007 and 2006 and the period from inception to June 30,                        2007 | 6 |
|--------|-------------------------------------------------------------------------------------|---|

         

|   | Notes to the Unaudited Financial Statements | 7 |
|--------|---------------------------------------------|---|

 

| ITEM 2. Management’s Discussion and                        Analysis | 10 |
|---------------------------------------------------------------------------|----|

 

| ITEM 3. CONTROLS AND PROCEDURES | 24 |
|---------------------------------|----|

 

**PART        II**

 

| ITEM 1. LEGAL PROCEEDINGS | 24 |
|---------------------------|----|

 

| ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES | 24 |
|-------------------------------------------------|----|

 

| ITEM 3. DEFAULTS UPON SENIOR SECURITIES | 25 |
|-----------------------------------------|----|

 

| ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES                        HOLDERS | 25 |
|--------------------------------------------------------------------------------------|----|

 

| ITEM 5. OTHER INFORMATION | 25 |
|---------------------------|----|

 

| ITEM 6. EXHIBITS | 25 |
|------------------|----|

 

| SIGNATURES | 26 |
|------------|----|

 

| INDEX TO EXHIBITS | 27 |
|-------------------|----|

 

 

 

 

 

 

2

 

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**PART        I**

 

| **ITEM 1.** | **FINANCIAL STATEMENTS** |
|-------------|--------------------------|

 

As used        herein, the terms “International,” “we,” “our”, and        “us” refer to ComCam International, Inc., a Delaware corporation, unless        otherwise indicated. In the opinion of management, the accompanying unaudited financial        statements included in this Form 10-QSB reflect all adjustments (consisting only of normal        recurring accruals) necessary for a fair presentation of the results of operations for the        periods presented. The results of operations for the periods presented are not necessarily        indicative of the results to be expected for the full year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

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| COMCAM INTERNATIONAL, INC.                                                 |
|----------------------------------------------------------------------------|
| (A Development Stage Company)                                              |
| BALANCE SHEETS                                                             |
|                                                                       |   |   |   |   |
|                                                                       |   | June 30, |   | December 31, |
|                                                                       |   | 2007 |   | 2006 |
| ASSETS                                                                     |   | (Unaudited) |   | (Audited) |
| Current assets:                                                            |   |   |   |   |
| Cash and cash equivalents                                                  | $ | 27,930 |   | 5,697 |
| Accounts receivable, net                                                   |   | 4,109 |   | 6,861 |
| Inventories                                                                |   | 72,973 |   | 78,048 |
|                                                                       |   |   |   |   |
| Total current assets                                                       |   | 105,012 |   | 90,606 |
|                                                                       |   |   |   |   |
| Property and equipment, net                                                |   | 8,844 |   | 10,529 |
| Other assets                                                               |   | 4,106 |   | 4,106 |
|                                                                       |   |   |   |   |
| Total assets                                                               | $ | 117,962 |   | 105,241 |
|                                                                       |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' DEFICIT                                      |   |   |   |   |
| Current liabilities:                                                       |   |   |   |   |
| Accounts payable                                                           | $ | 347,121 |   | 318,538 |
| Accrued expenses                                                           |   | 238,073 |   | 147,187 |
| Advances payable to ComCam, Inc.                                           |   | 1,235,178 |   | 1,448,036 |
| Notes payable                                                              |   | 1,601,568 |   | 1,335,000 |
|                                                                       |   |   |   |   |
| Total current liabilities                                                  |   | 3,421,940 |   | 3,248,761 |
|                                                                       |   |   |   |   |
| Commitments and contingencies                                              |   |   |   |   |
|                                                                       |   |   |   |   |
| Stockholders' deficit:                                                     |   |   |   |   |
| Preferred stock, $.0001 par value; 2,000,000                               |   |   |   |   |
| shares authorized, no shares issued and                        outstanding |   | - |   | - |
| Common stock, $.0001 par value; 100,000,000                                |   |   |   |   |
| shares authorized, 5,770,980 shares issued and                             |   |   |   |   |
| outstanding                                                                |   | 577 |   | 577 |
| Additional paid-in capital                                                 |   | 1,811,292 |   | 1,811,292 |
| Deficit accumulated during the development stage                           |   | (5,115,847) |   | (4,955,389) |
| Total stockholder's deficit                                                |   | (3,303,978) |   | (3,143,520) |

 

| Total liabilities and stockholders' deficit | $ | 117,962 |   | 105,241 |
|---------------------------------------------|---|---------|--------|---------|

 

4

 

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| COMCAM INTERNATIONAL, INC.                    |
|-----------------------------------------------|
| (A Development Stage Company)                 |
| UNAUDITED STATEMENTS OF OPERATIONS            |
|                                          |   | Three Months Ended |   | Six Months Ended |   |   |
|                                          |   | June 30, |   | June 30, |   | Cumulative |
|                                          |   | 2007 |   | 2006 |   | 2007 |   | 2006 |   | Amounts |
| Revenues, net                                 | $ | 6,893 |   | 9,103 |   | 35,726 |   | 24,466 |   | 644,956 |
| Cost of revenues                              |   | 76 |   | 3,892 |   | 5,131 |   | 5,118 |   | 256,880 |
|                                          |   |   |   |   |   |   |   |   |   |   |
| Gross profit                                  |   | 6,817 |   | 5,211 |   | 30,595 |   | 19,348 |   | 388,076 |
|                                          |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                           |   |   |   |   |   |   |   |   |   |   |
| General and administrative expenses           |   | 72,103 |   | 145,592 |   | 129,990 |   | 303,152 |   | 2,855,542 |
| Research and development expenses             |   | 712 |   | 3,047 |   | 4,962 |   | 12,443 |   | 2,393,782 |
| Gain on cancellation of debt                  |   | - |   | - |   | - |   | (400) |   | (99,405) |
|                                          |   | 72,815 |   | 148,639 |   | 134,952 |   | 315,195 |   | 5,149,919 |
| Loss from operations                          |   | (65,998) |   | (143,428) |   | (104,357) |   | (295,847) |   | (4,761,843) |
|                                          |   |   |   |   |   |   |   |   |   |   |
| Other income (expense):                       |   |   |   |   |   |   |   |   |   |   |
| Interest income                               |   | 58 |   | 331 |   | 97 |   | 1,816 |   | 13,401 |
| Interest expense                              |   | (28,464) |   | (24,254) |   | (56,198) |   | (46,416) |   | (367,405) |
|                                          |   | (28,406) |   | (23,923) |   | (56,101) |   | (44,600) |   | (354,004) |
| Loss before provision for income taxes        |   | (94,404) |   | (167,351) |   | (160,458) |   | (340,447) |   | (5,115,847) |
|                                          |   |   |   |   |   |   |   |   |   |   |
| Provision for income taxes                    |   | - |   | - |   | - |   | - |   | - |
| Net loss                                      | $ | (94,404) |   | (167,351) |   | (160,458) |   | (340,447) |   | (5,115,847) |
| Net loss per common share - basic and diluted | $ | (0.02) |   | (0.03) |   | (0.03) |   | (0.06) |   |   |
| Weighted average common and common            |   |   |   |   |   |   |   |   |   |   |

 

| equivalent shares |   | 5,771,000 |   | 5,771,000 |   | 5,771,000 |   | 5,771,000 |   |   |
|-------------------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|--------|

 

 

5

 

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| COMCAM INTERNATIONAL, INC.                  |
|---------------------------------------------|
| (A Development Stage Company)               |
| UNAUDITED STATEMENTS OF CASH FLOWS          |
|                                        |   |   |   |   |
|                                        |   | Six Months Ended |   |   |
|                                        |   | June 30, |   | Cumulative |
|                                        |   | 2007 |   | 2006 |   | Amounts |
| Cash Flows from operating activities:       |   |   |   |   |   |   |
| Net loss                                    | $ | (160,458) |   | (340,447) |   | (5,115,847) |
| Adjustments to reconcile net loss to net    |   |   |   |   |   |   |
| cash used in operating activities:          |   |   |   |   |   |   |
| Depreciation                                |   | 1,685 |   | 2,471 |   | 50,773 |
| Stock and warrant compensation expense      |   | - |   | - |   | 267,346 |
| Gain on cancellation of debt                |   | - |   | (400) |   | (99,405) |
| Provision for losses on accounts receivable |   | 2,000 |   | - |   | 9,000 |
| (Increase) decrease in:                     |   |   |   |   |   |   |
| Accounts receivable                         |   | 752 |   | 15,572 |   | (13,109) |
| Inventories                                 |   | 5,075 |   | (42,136) |   | (72,973) |
| Other assets                                |   | - |   | - |   | (4,106) |
| Increase (decrease) in:                     |   |   |   |   |   |   |
| Accounts payable                            |   | 28,583 |   | (14,284) |   | 708,399 |
| Accrued expenses                            |   | 54,596 |   | 47,257 |   | 201,783 |
| Net cash used in operating activities       |   | (67,767) |   | (331,967) |   | (4,068,139) |
|                                        |   |   |   |   |   |   |
| Cash flows from investing activities:       |   |   |   |   |   |   |
| Purchase of property and equipment          |   | - |   | - |   | (59,617) |
| Net cash used in investing activities       |   | - |   | - |   | (59,617) |
|                                        |   |   |   |   |   |   |
| Cash flows from financing activities:       |   |   |   |   |   |   |
| Increase in notes payable                   |   | 90,000 |   | 100,000 |   | 1,425,000 |
| Proceeds from issuance of common stock      |   | - |   | - |   | 1,544,523 |
| Change in advances from ComCam, Inc.        |   | - |   | - |   | 1,186,163 |
| Net cash provided by financing activities   |   | 90,000 |   | 100,000 |   | 4,155,686 |
|                                        |   |   |   |   |   |   |
| Net increase (decrease) in cash             |   | 22,233 |   | (231,967) |   | 27,930 |
|                                        |   |   |   |   |   |   |
| Cash, beginning of period                   |   | 5,697 |   | 255,937 |   | - |
| Cash, end of period                         | $ | 27,930 |   | 23,970 |   | 27,930 |

 

 

6

 

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COMCAM        INTERNATIONAL, INC.

(A        Development Stage Company)

NOTES        TO UNAUDITED FINANCIAL STATEMENTS

June 30,        2007

 

Note 1 -        Basis of Presentation

 

The        accompanying unaudited financial statements have been prepared by management in accordance        with the instructions in Form 10QSB and, therefore, do not include all information and        footnotes required by generally accepted accounting principles and should, therefore, be        read in conjunction with the Company’s Form 10-KSB. These statements do include all        normal recurring adjustments which the Company believes necessary for a fair presentation        of the statements. The interim results of operations are not necessarily indicative of the        results to be expected for the full year ended December 31, 2007.

 

Note 2 -        Additional Footnotes Included By Reference

 

Except as        indicated in the notes above, there have been no other material changes in the information        disclosed in the notes to the financial statements included in the Company’s Form        10-KSB. Therefore, those footnotes are included herein by reference.

 

Note 3 -        Going Concern

 

As of June        30, 2007, the Company’s revenue generating activities are not in place and the        Company has incurred losses since inception. These factors raise substantial doubt about        the Company’s ability to continue as a going concern.

 

Management        intends to seek additional equity and debt funding to expand marketing efforts and product        development. There can be no assurance that such funds will be available to the Company nor        that the marketing and product development efforts will be successful.

 

 

 

 

 

 

 

 

 

 

7

 

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COMCAM        INTERNATIONAL, INC.

(A        Development Stage Company)

NOTES        TO UNAUDITED FINANCIAL STATEMENTS

June 30,        2007

 

Note 4        – Notes Payable

 

Notes        payable consist of the following:

|   | June 30, | December 31, |
|--------|----------|--------------|

|   | 2007 | 2006 |
|--------|------|------|

|   | Convertible unsecured note payable to ACC |
|--------|-------------------------------------------|

|   | Investors, LLC, bearing interest at 8% and due on |
|--------|---------------------------------------------------|

|   | demand. The note may be converted to common |
|--------|---------------------------------------------|

|   | shares of the Company, at the option of the                        holder, |
|--------|----------------------------------------------------------------------------|

|   | based on certain terms related to outstanding                        shares |
|--------|-----------------------------------------------------------------------------|

|   | and per share prices. The note also includes                        warrants |
|--------|------------------------------------------------------------------------------|

|   | to purchase common stock of the Company, based |
|--------|------------------------------------------------|

|   | on certain terms related to the total number of                        shares |
|--------|-------------------------------------------------------------------------------|

|   | outstanding at the time the warrants are                        exercised. | $ | 1,100,000 | 1,100,000 |
|--------|----------------------------------------------------------------------------|---|-----------|-----------|

 

|   | Notes payable to Paul Higbee, bearing interest |
|--------|------------------------------------------------|

|   | at 8%, due on demand, secured by the intellectual |
|--------|---------------------------------------------------|

|   | property of the Company. | 300,000 | 210,000 |
|--------|--------------------------|---------|---------|

 

|   | Unsecured note payable to Global Megatrend, |
|--------|---------------------------------------------|

|   | bearing interest at 7.5% and due on demand. |
|--------|---------------------------------------------|

|   | The note may be converted to common shares of |
|--------|-----------------------------------------------|

|   | the Company, at the option of the holder, based |
|--------|-------------------------------------------------|

|   | on certain terms related to outstanding shares |
|--------|------------------------------------------------|

|   | and per share prices. The Company is in default |
|--------|-------------------------------------------------|

|   | of the agreement because it is insolvent. | 176,568 | 176,568 |
|--------|-------------------------------------------|---------|---------|

 

|   | Convertible unsecured note payable to Robert |
|--------|----------------------------------------------|

|   | Emmet, bearing interest at 6%, and due on demand |
|--------|--------------------------------------------------|

|   | The note may be converted into common shares of |
|--------|-------------------------------------------------|

|   | the Company at $.35 per share and contains a |
|--------|----------------------------------------------|

|   | provision which allows the Company to call for                        the |
|--------|---------------------------------------------------------------------------|

|   | conversion at anytime. | 25,000 | 25,000 |
|--------|------------------------|--------|--------|

 

|   | $ | 1,601,568 | 1,335,000 |
|--------|---|-----------|-----------|

 

 

Note 5        – Supplemental Cash Flow Information

 

During the        six months ended June 30, 2007, the Company transferred a note payable of $176,568 and        accrued interest of $36,290 to ComCam, Inc. in exchange for a reduction in the advance        payable to ComCam, Inc. of $212,858.

 

 

8

 

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COMCAM        INTERNATIONAL, INC.

(A        Development Stage Company)

NOTES        TO UNAUDITED FINANCIAL STATEMENTS

June 30,        2007

 

Note 6        – Recent Accounting Pronouncements

 

In        June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation        No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of        FASB Statement No. 109.” This statement clarifies the accounting for uncertainty        in income tax positions. The Company has filed income tax returns in the U.S. federal        jurisdiction and in certain states. The Company is no longer subject to U.S. federal, state        and local income tax examinations by tax authorities for years before 2002.

 

The Company        adopted the provisions of FIN 48 on January 1, 2007. The Company did not make any        adjustment to opening retained earnings as a result of the implementation. The Company        recognizes interest accrued related to unrecognized tax benefits along with penalties in        operating expenses. During the six month periods ended June 30, 2007 and 2006, the Company        did not recognize any interest and penalties relating to income taxes. The Company did not        have any accrual for the payment of interest and penalties at June 30, 2007.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

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| **ITEM 2.** | **Management's Discussion and Analysis** |
|-------------|------------------------------------------|

 

This        Management's Discussion and Analysis of our financial condition and results of operations        and other parts of this report contain forward-looking statements that involve risks and        uncertainties. Forward-looking statements can also be identified by words such as        "anticipates," "expects," "believes," "plans," "predicts," and similar terms.        Forward-looking statements are not guarantees of future performance and our actual results        may differ significantly from the results discussed in the forward-looking statements.        Factors that might cause such differences include, but are not limited to, those discussed        in the subsections entitled*"Forward-Looking Statements and        Factors That May Affect Future Results and Financial Condition"*below. The following discussion should be read in conjunction with our        financial statements and notes thereto included in this report. All information presented        herein is based on our period ended June 30, 2007. Our fiscal year end is December        31.

 

**General**

 

International is a wholly owned subsidiary of ComCam, Inc., engaged in the        ongoing development and sale of its*Internet Protocol*remote control platform cameras, micro-servers, associated software, and        unique end-to-end network solutions.

 

Internet        Protocol (“IP”) is the procedure for regulating the transmission of data over a        network, be that a local area network or the internet. ’s IP video products are        designed to work efficiently over a network, whether the network is connected by cable or        over a wireless connection, by breaking up data into small transmittable units which are        then reassembled on the receiving end.

 

**Discussion and Analysis**

 

International’s financial condition and results of operations depend        primarily on revenue generated from the sale of our products and our ability to realize        additional debt or equity financing in combination with stability in administrative        expenses. There can be no assurance that an increase in sales of our products or any other        sources of revenue will provide sufficient cash flows in the near term to sustain our        operations and we have no commitments for additional debt or equity financing. Since we do        not expect to generate sufficient cash flow in the short term, we are currently seeking        financing as a means to bridge the gap between operational losses and expenses.        International can provide no assurance that our efforts will be successful.

International’s business development strategy is prone to significant        risks and uncertainties which can have an immediate impact on efforts to realize net cash        flow and deter future prospects of revenue growth. International has a limited history of        generating revenue which cannot be viewed as an indication of continued growth and a        historical record of incurring losses. Should we be unable to consistently generate revenue        and reduce or stabilize expenses on a consolidated basis to the point where we can realize        net cash flow, such failure will have an immediate impact on our ability to continue our        business operations.

 

**Strategy**

 

International remains focused on numerous domestic and international sales        opportunities with businesses and organizations that have purchased our products in the        past, including the following:

|   | § | United States agencies: most of our units sold to U.S.                        agencies have been used for testing purposes, including: |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|

 

10

 

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|   | § |  

                          |
|--------|--------|----------------------------------------|

| (a) |   | the Coast Guard and Navy which funded the University of                        South Florida for remote underwater operating vehicles and purchased 10                        camera systems between 2002 and the present, |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | Naval Undersea Warfare Center who purchased 16 camera                        systems for classified purposes in 2003,                                                                                                      |

 

| (c) |   | the FBI through Photech, Inc., who purchased 4 camera                        systems for undisclosed surveillance monitoring in 2004, |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------|

 

| (d) |   | National Oceanic and Atmospheric Administration (Department                        of Commerce) and the Fish and Wildlife Service (Department of the Interior)                        who each purchased 1 camera system in October 2005, and |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| (e) |   | Department of Interior who purchased several camera systems                        in 2001 to secure certain historic buildings in Independence Park,                        Philadelphia; and State agencies: the Washington Fish and Wildlife Service                        purchased 1 camera system in October 2005; and |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § |  

                          |
|--------|--------|----------------------------------------|

|   | § | United States corporations: units sold to private US                        companies for both research purposes and for implementation,                        including: |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § |  

                          |
|--------|--------|----------------------------------------|

| (a) |   | DRS/Night Vision Systems for various purposes and purchased                        5 microserver systems between 2006 and the present, and provide engineering                        services; |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| (b) |   | Henry Brothers for installation at JFK Airport and purchased                        3 microserver systems; |
|-----|--------|------------------------------------------------------------------------------------------------------------|

 

| (c) |   | IBM for loss-prevention purpose at its corporate facility in                        Raleigh, NC, purchased 3 microserver systems. |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | § |  

                          |
|--------|--------|----------------------------------------|

|   | § | Various South America and North Africa integrators: port                        security and various wireless applications including two companies in                        Cartagena, Columbia, who purchased 11 professional lens camera systems                        since 2003 for testing in a port security project. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Additionally, International intends to pursue numerous new domestic and        international sales opportunities to generate increased revenue, including the        following:

|   | § | DRS/Night Vision Systems has provided engineering services                        for their Perceptor camera line and it has incorporated our microservers                        and software to support trials for the military projects. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | EG&G has included International in design bids for                        wireless configurations on military contracts. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------|

 

11

 

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|   | § | EG&G has included International in design bids for                        wireless configurations on military contracts. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------|

|   | § | OLogic has included International in design of robotic based                        command-and-control system. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------|

|   | § | Siemens Maintenance Services, LLC, has included                        International in design bids for wireless configurations to commercial                        airports, municipal transportation departments and other venues. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Symbol/Motorola has made us a strategic sales partner for                        command-and-control and video display on mobile enterprise                        devices. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | We have licensed our proprietary video compression utility                        to AMSEC, a business partnership between Science Applications International                        Corp. (SAIC) and Newport News Shipbuilding. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

Marketing        overtures through DRS/Night Vision, Siemans Maintenance Services, LLC, and Symbol/Motorola        have not resulted in sales to date. All of the above are examples of potential future        customers that may contribute to an increase in our revenues. Additionally, we plan to        implement an aggressive marketing and sales campaign to reach a broader market for our        products.

While        maintaining direct sales relations with many of its historic customers (e.g., United States        Navy), we have also focused our sales efforts on serving as an Original Equipment        Manufacturer (OEM) for strategic resellers, to serve as a research and development partner,        and to develop a network of dealers, resellers and system integrators with differing        targeted market expertise.

As an        Original Equipment Manufacturer (OEM), we have established a strategic reseller alliance        with IBM, Raleigh, NC, for the distribution of an IBM-branded RFID Biometric Access        Systems. We have formed a research-and-development alliance with HCH Enterprises, LLC,        Providence, RI , to pursue opportunities with the U.S. Department of Defense and other        federal entities.

International has begun to offer a series of specialized        “solution” bundles to be sold into the marketplace by select        distributors.

 

|   | § | AAID Security Solutions, Peachtree City, GA — for the                        distribution of the RFID Biometric Access System. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Remote Eyes, Laurel, MD – distribution of the CCTV                        Upgrade Kit (Limited System). |
|--------|--------|---------------------------------------------------------------------------------------------------------------|

|   | § | ScanSource, Greenville, SC – distributor of the CCTV                        Wireless Upgrade Kit (Full System). |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | § | Susquehanna Computer Innovations, South Williamsport, PA                        – for distribution of the Integrated Command-&-Control                        Van. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Individual        dealers, resellers and system integrators have begun to offer company-based solutions to        their respective sales channels.

International’s marketing plan provides that we will:

|   | § | promote our products and services through our                        website; |
|--------|--------|-------------------------------------------------------------------------------|

|   | § | promote our accomplishments through regular press releases                        distributed by a PR Newswire that reaches both the financial press and the                        specialized industry-sector press. We maintain an online mailing list of                        three thousand names and each release is sent to contacts on the                        list; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | attend leading industry events, including trade conferences                        and seminars, often with a strategic partner; two recent events include                        FenceTech 2007 with AAID, to introduce its “RFID Biometric |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

         

Access System,” and CES 2007 with OLogic, to participate at        “Robotics TechZone” to demonstrate a video command-and-control        system.

|   | § | participate in invitation-only company presentations and                        seminars; e.g., invited to present at ESRI's "Survey and Engineering: GIS                        Summit" (June 2007). |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | support our strategic partners by participating in planning                        sessions and other events. |
|--------|--------|---------------------------------------------------------------------------------------------------------------|

 

 

12

 

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Further, we        intend to:

|   | § | retain a professional investor relations / public relations                        firm to launch an aggressive re-branding awareness campaign targeted to                        both our core sales channels (e.g., security surveillance, video                        networking) as well as the investor community (e.g., market makers and                        research analysts); o revise corporate identity (e.g., logo), website and                        print materials: in line with overall corporate repositioning, we will                        revise and refresh our core branding elements to maximize its positioning                        message as a technology leader not only in video surveillance but also                        toward wireless networking; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Through        these efforts, we will be able to manage sales growth as well as take advantage of new        opportunities including customized solutions that resellers bring to us.

 

**Results of Operations**

 

During the        six month period ended June 30, 2007, we were engaged in the ongoing development and sale        of our*Internet Protocol*remote control        platform cameras, micro servers, associated software, and unique end-to-end network        solutions.

 

***Revenue***

 

Revenue for        the three month period ended June 30, 2007 decreased to $6,893 from $9,103 for the three        month period ended June 30, 2006, a decrease of 24%. Revenue for the six month period ended        June 30, 2007 increased to $35,726 from $24,466 for the six month period ended June 30,        2006, an increase of 46%. The increase in revenue over the comparative six month periods        can be attributed to the availability of products and increased marketing efforts.        International expects revenue to continue to increase over the next twelve        months.

 

***Losses***

 

Net losses        for the three month period ended June 30, 2007 decreased to $94,404 from $167,351 for the        three month period ended June 30, 2006, a decrease of 44%. Net losses for the six month        period ended June 30, 2007 decreased to $160,458 from $340,447 for the six month period        ended June 30, 2006, a decrease of 53%. The decrease in losses over the comparative six        month periods is due to an increase in revenue and a decrease in general and administrative        expenses. International expects to continue to incur losses over the next twelve        months.

 

***Expenses***

 

Cost of        revenue for the three month period ended June 30, 2007 decreased to $76 from $3,892 for the        three month period ended June 30, 2006, a decrease of 98%. Cost of revenue for the six        month period ended June 30, 2007 increased to $5,131 from $5,118 for the six month period        ended June 30, 2006, an increase of less than 1%. The increase in the cost of revenue over        the comparative six month periods can

be        attributed to costs associated with the increase in revenue over the periods. International        expects the cost of revenue to grow as sales increase over the next twelve        months.

 

 

 

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General and        administrative expenses for the three month period ended June 30, 2007 decreased to $72,103        from $145,592 for the three month period ended June 30, 2006, a decrease of 50%. General        and administrative expenses for the six month period ended June 30, 2007 decreased to        $129,990 from $303,152 for the six month period ended June 30, 2006. The decrease in        general and administrative expenses over the comparative six month periods is attributable        to a decrease in personnel costs, and costs attendant to financing activities.        International expects that general and administrative expenses will remain relatively        consistent over the next twelve months.

 

Research        and development expenses for the three month period ended June 30, 2007 decreased to $712        from $3,047 for the three month period ended June 30, 2006, a decrease of 77%. Research and        development expenses for the six month period ended June 30, 2007 decreased to $4,962 from        $12,443 for the six month period ended June 30, 2006. The decrease in research and        development expenses over the comparative six month periods is due to insufficient        financial resources. International expects that research and development expenses will        increase over the next twelve months in the event that sufficient financial resources        become available for these purposes.

 

Depreciation and amortization expenses for the six month periods ended June        30, 2007 and 2006 were $1,685 and $2,471, respectively.

 

**Income Tax Expense (Benefit)**

 

International has an income tax benefit resulting from net operating losses        to offset any future operating profit. The net operating losses carry forwards at December        31, 2006, consisted of approximately $5,137,000 which will begin to expire in the year        2019. The amount of net operating loss carry forwards that can be used in any one year can        be limited by significant changes in the ownership of International and by the applicable        tax laws which are in effect at the time such carry forwards are utilized.

 

**Impact of Inflation** 

 

International believes that inflation has had a negligible effect on        operations over the past three years. We believe that we can offset inflationary increases        in the cost of materials and labor by increasing sales and improving operating        efficiencies.

 

**Capital Expenditures**

 

International made no significant capital expenditures on property or        equipment for the six month periods ended June 30, 2007 or 2006.

 

**Liquidity and Capital Resources** 

 

Cash flow        used in operations was $67,767 for the six month period ended June 30, 2007, as compared to        cash flow used in operations of $331,967 for the six months ended June 30, 2006. The        decrease in cash flows used in operating activities for the six month period ended June 30,        2007 can be primarily attributed

to the        reduction of losses incurred from operations and an increase in accrued expenses and        accounts payable. International expects to continue to use cash flow in operating        activities until such time as revenues increase.

 

Cash flows        used in investing activities was $0 for the six month periods ended June 30, 2007 and June        30, 2006. International expects to use cash flow in investing activities in future        periods.

 

 

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Cash flow        provided by financing activities was $90,000 for the six month period ended June 30, 2007,        as compared to $100,000 for the six months ended June 30, 2006. Cash flow provided by        financing activities for the six month period ended June 30, 2007 can be attributed to a        loan. Internationl expects to generate additional cash flow from financing activities in        future periods.

 

International received a loan from ACC Investors as part of a Securities        Purchase Agreement (“Agreement”) dated June 22, 2005 between ComCam, Inc.,        International and ACC Investors. In addition to the loan, the Agreement provides for a 100%        distribution of International common stock to our shareholders on a pro rata basis. The        loan is documented as a secured convertible promissory note, with warrants attached, that        bears interest at 8% per annum. The terms of the promissory note will cause ACC Investors        to convert the principal amount and 55% of the interest accrued over the term into        approximately 40% of our common shares on a fully diluted basis after the completion of the        share distribution. The conversion of the promissory note into our common shares will        entitle the holders to certain registration rights defined in a registration rights        agreement.

 

The        Agreement also requires that we file a registration statement with the Commission in        anticipation of the share distribution and the conversion of the promissory note. The share        distribution will be affected after the International registration statement is considered        “effective” by the Commission. The conversion of the promissory note will be        affected after the share distribution of our common shares to ComCam, Inc.’s        shareholders. The Agreement anticipates the completion of the registration statement and        the share distribution by June 30, 2007.

 

International has funded its cash needs from inception through June 30, 2007        through revenues and a series of debt and equity transactions, including several private        placements. Until such time as we can increase revenues and decrease expenses, we expect        that we will require new debt or equity transactions to satisfy cash needs over the next        twelve months.

 

International had no formal long term lines or credit or other bank        financing arrangements as of June 30, 2007.

 

Since        earnings, if any, will be reinvested in operations, International does not expect to pay        cash dividends in the foreseeable future.

 

International has no current plans for the purchase or sale of any plant or        equipment.

 

International has no current plans to make any changes in the number of        employees.

 

**Off        Balance Sheet Arrangements** 

 

As of June        30, 2007, International has no significant off-balance sheet arrangements that have or are        reasonably likely to have a current or future effect on our financial condition, changes in        financial condition, revenues or expenses, results of operations, liquidity, capital        expenditures, or capital resources that is material to stockholders.

 

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**Going        Concern**

 

International’s auditors have expressed an opinion as to our ability        to continue as a going concern as a result of an accumulated deficit of $4,995,389 as of        December 31, 2006 which increased to $5,115,847 as of June 30, 2007. Our ability to        continue as a going concern is subject to the ability of International to obtain a profit        and/or obtaining the necessary funding from outside sources. Management’s plan to        address International’s ability to continue as a going concern, includes (i)        realization of increased revenues from International’s sales (ii) obtaining funding        from private placement sources; (iii) obtaining additional funding from the sale of        International’s securities; (iv) obtaining loans from shareholders as necessary, and        (v) converting outstanding debt to equity. Although management believes that it will be        able to obtain the necessary funding to allow International to remain a going concern        through the methods discussed above, there can be no assurances that such methods will        prove successful.

 

**Forward Looking Statements and Factors That May Affect Future Results        and Financial Condition**

 

The        statements contained in the section titled*Management’s        Discussion and Analysis*, with the exception of historical facts,        are forward looking statements within the meaning of Section 27A of the Securities Act. A        safe-harbor provision may not be applicable to the forward looking statements made in this        prospectus because of certain exclusions under Section 27A (b). Forward looking statements        reflect our current expectations and beliefs regarding our future results of operations,        performance, and achievements. These statements are subject to risks and uncertainties and        are based upon assumptions and beliefs that may or may not materialize. These statements        include, but are not limited to, statements concerning:

 

|   | **•** | the sufficiency of existing capital resources; |
|--------|------------|------------------------------------------------|

|   | **•** | our ability to raise additional capital to fund cash                        requirements for future operations; |
|--------|------------|-----------------------------------------------------------------------------------------------------------------|

|   | **•** | uncertainties involved in the rate of growth of                        International’s business and acceptance of products and                        services; |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | the ability of International to achieve and maintain an                        adequate customer base to have sufficient revenues to fund and maintain                        operations; and |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | general economic conditions. |
|--------|------------|------------------------------|

         

We wish to        caution readers that International’s operating results are subject to various risks        and uncertainties that could cause our actual results to differ materially from those        discussed or anticipated, including the factors set forth in the section entitled        “*Risk Factors*” included        elsewhere in this report. We also wish to advise readers not to place any undue reliance on        the forward looking statements contained in this report, which reflect our beliefs and        expectations only as of the date of this report. We assume no obligation to update or        revise these forward looking statements to reflect new events or circumstances or any        changes in our beliefs or expectations, other that is required by law.

 

**Critical Accounting Policies**

 

In Note 1        to the audited consolidated financial statements for the years ended December 31, 2006 and        2005, International discusses those accounting policies that are considered to be        significant in determining the results of operations and its financial position.        International believes that the accounting principles utilized by us conform to accounting        principles generally accepted in the United States of America.

 

 

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The        preparation of financial statements requires management to make significant estimates and        judgments that affect the reported amounts of assets, liabilities, revenues and expenses.        By their nature, these judgments are subject to an inherent degree of uncertainty. On an        on-going basis, we evaluate our estimates, including those related to bad debts,        inventories, intangible assets, warranty obligations, product liability, revenue, and        income taxes. International bases its estimates on historical experience and other facts        and circumstances that are believed to be reasonable, and the results form the basis for        making judgments about the carrying value of assets and liabilities. The actual results may        differ from these estimates under different assumptions or conditions. With respect to        revenue recognition, International applies the following critical accounting policies in        the preparation of its financial statements.

 

***Revenue Recognition***

 

We generate        revenue through the sale of our products to the private, commercial, industrial and        governmental sectors of the security industry. Revenue from product sales is recognized at        the time the product is shipped and invoiced and collectibility is reasonably assured.        International believes that revenue should be recognized at the time of shipment as title        passes to the customer at the time of shipment.

 

***Recent Accounting Pronouncements***

 

In February        2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments-an        amendment of FASB Statements No. 133 and 140", to simplify and make more consistent the        accounting for certain financial instruments. SFAS No. 155 amends SFAS No. 133, "Accounting        for Derivative Instruments and Hedging Activities", to permit fair value re-measurement for        any hybrid financial instrument with an embedded derivative that otherwise would require        bifurcation, provided that the whole instrument is accounted for on a fair value basis.        SFAS No. 155 amends SFAS No. 140, "Accounting for the Impairment or Disposal of Long-Lived        Assets", to allow a qualifying special-purpose entity to hold a derivative financial        instrument that pertains to a beneficial interest other than another derivative financial        instrument. SFAS No. 155 applies to all financial instruments acquired or issued after the        beginning of an entity's first fiscal year that begins after September 15, 2006, with        earlier application allowed. The adoption of this statement is not expected to have a        material effect on International's future reported financial position or results of        operations.

 

In March        2006, the FASB issued SFAS No. 156, "*Accounting for Servicing of        Financial Assets, an amendment of FASB Statement No. 140, Accounting for Transfers and        Servicing of Financial Assets and Extinguishments of        Liabilities*". This statement requires all separately recognized        servicing assets and servicing liabilities be initially measured at fair value, if        practicable, and permits for subsequent measurement using either fair value measurement        with changes in fair value reflected in earnings or the amortization and impairment        requirements of Statement No. 140. The subsequent measurement of separately recognized        servicing assets and servicing liabilities at fair value eliminates the necessity for        entities that manage the risks inherent in servicing assets and servicing liabilities with        derivatives to qualify for hedge accounting treatment and eliminates the characterization        of declines in fair value as impairments or direct write-downs. SFAS No. 156 is effective        for an entity's first fiscal year beginning

after        September 15, 2006. The adoption of this statement is not expected to have a material        effect on International's future reported financial position or results of        operations.

 

 

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In June        2006, the Financial Accounting Standards Board (FSAB) issued FASB Interpretation No. 48,        “Accounting for Uncertainty in Income Taxes – an interpretation of FASB        Statement No. 109.” This statement clarifies the accounting for uncertainty in income        tax positions. International has filed income tax returns in the U.S. federal jurisdiction        and in certain states. International is no longer subject to U.S. federal, state and local        income tax examinations by tax authorities for years before 2002. International adopted the        provisions of FIN 48 on January 1, 2007.

 

In        September 2006, the FASB issued SFAS No. 157, “*Fair Value        Measurements*”. The objective of SFAS 157 is to increase        consistency and comparability in fair value measurements and to expand disclosures about        fair value measurements. SFAS 157 defines fair value, establishes a framework for measuring        fair value in generally accepted accounting principles, and expands disclosures about fair        value measurements. SFAS 157 applies under other accounting pronouncements that require or        permit fair value measurements and does not require any new fair value measurements. The        provisions of SFAS No. 157 are effective for fair value measurements made in fiscal years        beginning after November 15, 2007. The adoption of this statement is not expected to have a        material effect on International's future reported financial position or results of        operations.

 

In        September 2006, the FASB issued SFAS No. 158,        “*Employers’ Accounting for Defined Benefit Pension and        Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106, and        132(R)*”. This statement requires employers to recognize        the overfunded or underfunded status of a defined benefit postretirement plan (other than a        multiemployer plan) as an asset or liability in its statement of financial position and to        recognize changes in that funded status in the year in which the changes occur through        comprehensive income of a business entity or changes in unrestricted net assets of a        not-for-profit organization. This statement also requires an employer to measure the funded        status of a plan as of the date of its year-end statement of financial position, with        limited exceptions. The provisions of SFAS No. 158 are effective for employers with        publicly traded equity securities as of the end of the fiscal year ending after December        15, 2006. The adoption of this statement is not expected to have a material effect on        International's future reported financial position or results of operations.

 

In        September 2006, the Commission issued Staff Accounting Bulletin        (“SAB”) No. 108, “Considering the Effects of Prior Year        Misstatements when Quantifying Misstatements in Current Year Financial Statements.”        SAB No. 108 addresses how the effects of prior year uncorrected misstatements should        be considered when quantifying misstatements in current year financial statements. SAB        No. 108 requires companies to quantify misstatements using a balance sheet and income        statement approach and to evaluate whether either approach results in quantifying an error        that is material in light of relevant quantitative and qualitative factors. SAB No. 108 is        effective for periods ending after November 15, 2006. International is currently        evaluating the impact of adopting SAB No. 108 but does not expect that it will have a        material effect on its financial position and results of operations.

 

In February        2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and        Financial Liabilities”. This Statement permits entities to choose to measure many        financial assets and financial liabilities at fair value. Unrealized gains and losses on        items for which the fair value option has been elected are reported in earnings. SFAS No.        159 is effective for fiscal years beginning after

November 15, 2007. International is currently assessing the impact of        SFAS No. 159 on its financial position and results of operations.

 

 

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**Risks        Factors**

 

International’s operations and securities are subject to a number of        risks. Below we have identified and discussed the material risks that we are likely to        face. Should any of the following risks occur, they will adversely affect our operations,        business, financial condition and/or operating results as well as the future trading price        and/or the value of our securities.

 

***Risks        Related to the International’s Business***

 

*INTERNATIONAL’S ABILITY TO CONTINUE AS A GOING CONCERN IS IN        QUESTION*

 

International’s auditors included an explanatory statement in Note 2        of their report of financial statements for the years ended December 31, 2006 and 2005,        stating that there are certain factors which raise substantial doubt about        International’s ability to continue as a going concern. These factors include limited        revenue generating activities in place, and losses since inception.

 

*INTERNATIONAL HAS A HISTORY OF LOSSES*

 

International had an accumulated deficit of $4,955,389 as of December 31,        2006, which increased to $5,115,847 as of June 30, 2007. We do not expect to achieve        profitability in the next twelve months and can provide no assurances that we will ever        achieve profitability or in the event that we do achieve profitability that we will be able        to sustain that profitability over time.

 

*IF        INTERNATIONAL DOES NOT GENERATE SUFFICIENT CASH FLOW FROM OPERATIONS AND IS UNABLE TO        OBTAIN ADDITIONAL CAPITAL TO OPERATE ITS BUSINESS, WE MAY NOT BE ABLE TO CONTINUE        OPERATIONS*

 

International currently had a working capital deficit of $3,316,928 at June        30, 2007 which deficit is primarily attributable the note payable to ACC Investors.        Although we intend to expand operations through the calendar year ending December 31, 2007,        the funding of such operations and beyond cannot be assured. Our revenues are insufficient        to sustain operations and our working capital deficit remains significant. Should we be        unable to generate sufficient cash flow from revenues to sustain our business and fail to        obtain additional funds through additional debt or equity funding, we may be forced to        curtail or cease operations.

 

*INTERNATIONAL MAY NOT BE ABLE TO DEVELOP NEW PRODUCTS*

 

We have        historically had difficulty producing our products because of cash flow shortages. Though        we have recently resumed the production of our products, our future success depends in a        significant part on our ability to evolve our hardware and software and to develop and        introduce new products and technologies in response to market demands. If adequate funds        are not available, International’s ability to develop or enhance products and        services or otherwise respond to competitive pressures would be significantly        limited.

 

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*THE        VIDEO MONITORING SURVEILLANCE INDUSTRY IS SUBJECT TO RAPID TECHNOLOGICAL CHANGE AND        INTERNATIONAL'S PRODUCTS COULD BECOME OBSOLETE AT ANY TIME*

 

Evolving        technology, updated industry standards, and frequent new product and service introductions        characterize the video surveillance market; our products could become obsolete at any time.        Competitors could develop products similar to or better than our own, finish development of        new technologies in advance of International’s research and development, or be more        successful at marketing new products, any of which factors may hurt our prospects for        success.

 

*THE        MARKET ACCEPTANCE OF INTERNATIONAL’S PRODUCTS IS CRITICAL TO ITS        GROWTH*

 

International generates revenue from the design and sale of video        surveillance systems; therefore, market acceptance of our products is critical. If our        customers do not accept or purchase our products, then our revenue, cash flow and/or        operating results will be negatively impacted.

 

*INTERNATIONAL COMPETES WITH LARGER AND BETTER-FINANCED        CORPORATIONS*

 

Competition        within the international market for fixed and mobile commercial video cameras and other        equipment communication systems is intense. While International’s products are        distinguished by next-generation innovations that are more sophisticated, flexible and cost        effective than many competitive products currently in the market place, a number of        entities offer video surveillance systems, and new competitors may enter the market in the        future. Some of our existing and potential competitors have longer operating histories,        greater name recognition, larger customer bases and significantly greater financial,        technical and marketing resources than we do, including well known multi-national        corporations like Sony and JVC.

 

*WE        DEPEND ON ONE MANUFACTURER AND LIMITED SOURCE SUPPLIERS*

 

International relies on Pennsylvania-based Strategic Manufacturing        Technologies, Inc., to procure components and to manufacture our video surveillance        systems. Our components are purchased for us from such source suppliers as Motorola, Inc.,        and Analog Devices, Inc. We anticipate that we will continue to depend upon one or few        manufacturers as well as a limited number of source suppliers which reliance reduces the        level of control we have and exposes us to significant risks such as inadequate capacity,        late delivery, substandard quality and higher prices, all of which could adversely affect        our business. We currently have no agreement with Strategic Manufacturing Technologies,        Inc. for the manufacture of our video surveillance systems.

 

If our        suppliers were unable to provide parts in the volumes needed or at an acceptable price, our        manufacturer and International would have to identify and qualify acceptable replacements        from alternative sources of supply. If we are unable to obtain these components in a timely        fashion, it would likely not be able to meet demand. Any disruption of either component        procurement or manufacturing delays could adversely affect our results of        operations.

 

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*OUR        CHIEF EXECUTIVE OFFICER MAY NOT BE ABLE TO OFFER HIS UNDIVIDED ATTENTION TO INTERNATIONAL        FOLLOWING THE ANTICIPATED DISTRIBUTION*

 

We        anticipate the distribution of our shares to the shareholders of ComCam, Inc., at which        time Don Gilbreath will continue to serve as our the chief executive officer and as the        chief executive officer of ComCam, Inc. Mr. Gilbreath’s dual responsibilities will        cause him to divide his time between two corporations with disparate interests. Currently,        Mr. Gilbreath devotes significant time to the marketing of our products and services.        However, subsequent to the distribution ComCam, Inc. will seek out unrelated business        opportunities in the technology sector, which pursuit will reduce the amount of time Mr.        Gilbreath currently spends on the development of our business.

 

*INTERNATIONAL’S SUCCESS DEPENDS ON OUR ABILITY TO ATTRACT AND        RETAIN KEY PERSONNEL*

 

International’s future success will depend substantially on the        continued services and performance of Don Gilbreath and other key personnel. We have        relatively few senior personnel, and so the loss of the services of Don Gilbreath or any        other key employees could have a material adverse effect on our business prospects,        financial condition and results of operations. Our future success also depends on        International’s ability to identify, attract, hire, train, retain and motivate        technical, managerial and sales personnel. Competition for such personnel is intense, and        we cannot assure that we will succeed in attracting and retaining such personnel. Our        failure to attract and retain the necessary technical, managerial and sales personnel could        have a material adverse effect on our business prospects, financial condition and results        of operations.

 

*MISAPPROPRIATION OF PROPRIETARY RIGHTS OR CLAIMS OF INFRINGEMENT OR LEGAL        ACTIONS RELATED TO INTELLECTUAL PROPERTY COULD ADVERSELY IMPACT OUR FINANCIAL        CONDITION*

 

Our success        depends significantly on protecting proprietary technology. Despite International's efforts        to protect its proprietary rights, unauthorized parties may attempt to copy or otherwise        obtain and use our technology or products. Monitoring unauthorized use of our technology is        difficult, and we cannot be certain that the steps we have taken will prevent        misappropriation of our technology, particularly in foreign countries where the laws may        not protect our proprietary rights as fully as in the United States.

 

In        addition, from time to time, third parties may assert patent, copyright, trademark and        other intellectual property rights claims against us with respect to existing or future        products or technology. If there is a successful claim of infringement and International        fails or is unable to develop non-infringing technology or license the infringed or similar        technology on a timely basis, our business and results of operations could be seriously        harmed.

 

*INTERNATIONAL’S BUSINESS IS SUBJECT TO GOVERNMENTAL        REGULATIONS*

 

International, national and local standards set by governmental regulatory        authorities set the regulations by which communications are transmitted within and across        respective territories. International’s fixed and mobile digital video cameras and        communication systems are subject to such regulation in addition to national, state and        local taxation. Our products may be required to meet Federal Communications Commission        approval, specifically for Classes A & B of Part 15 for the telephone related        applications of our hardware products. Although we successfully operates within current        governmental regulations, it is possible that regulatory changes could negatively impact        our operations and cause us to diminish or cease operations.

 

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*INTERNATIONAL’S PRODUCTS ARE SUBJECT TO ENVIRONMENTAL        LAWS*

 

New        hazardous materials restrictions have been and are being sought in numerous jurisdictions        worldwide. As these restrictions take effect, International may need to change the        components it uses in certain key products. These components may be difficult to procure or        more expensive than the components we currently use. As such, current and future        environmental regulations could negatively impact our operations.

 

**Future        Risks Related to International’s Stock**

 

*INTERNATIONAL WILL NEED TO RAISE ADDITIONAL CAPITAL TO FUND OPERATIONS        WHICH COULD ADVERSELY AFFECT OUR SHAREHOLDERS*

 

International will need to raise additional capital to fund operations until        such time as our revenues match our expenditures. We expect that revenue will match        expenditures in 2008. Until the point at which cash flow from operations matches        expenditures, we will have to realize up to $3,000,000 in additional capital for        operations. Capital realized would be used for research and development expenses, marketing        costs and general and administrative expenses. However, we have no commitment from any        source of financing to provide us with this necessary additional capital. Should we secure        a commitment to provide us with capital, such commitment may obligate us to issue        additional shares of our common stock or warrants or other rights to acquire common stock        which will result in dilution to existing shareholders. Nonetheless, if we are unable to        obtain additional capital, then we will need to restrict or even cease operations, which        action would adversely affect our shareholders.

 

*INTERNATIONAL HAS SECURED FINANCING WHICH COULD NEGATIVELY IMPACT OUR        SHAREHOLDERS*

         

In June of        2005, we procured a loan from ACC Investors. The loan was secured by a convertible        promissory note (“Note”) for a total of $1,100,000 at an interest rate of 8%        per annum. The terms of the Note allow ACC Investors to convert the principal amount into        33% of the common shares of International, taking into account the conversion and 55% of        the interest of the Note into International’s common shares after the completion of        the share distribution of our common stock. Additionally, the agreement with ACC Investors        includes warrants to purchase shares of common stock up to 22% of the shares outstanding        immediately prior to the conversion of the Note. If the Note is converted into shares, the        conversion will dilute existing shareholders. If the loan is paid in cash, the repayment        will deplete funds intended for our marketing plan and research and development        goals.

 

If ACC        Investors exercises all of its warrants and converts the principle of the Note into shares        of our stock, ACC Investors will own 4,112,039 or 47.74% of the issued and outstanding        shares, 1,269,616 of which are 22% of the current 5,770,980 outstanding shares, and        2,842,423 of which are 33% of the 8,613,403 post-Note conversion shares. Additionally, ACC        Investors may convert up to 55% of the accrued interest into shares of our stock. This        ownership would give ACC Investors significant influence

over        International’s policies and affairs and may put ACC Investors in a position to        determine the outcome of corporate actions requiring stockholder approval. These actions        may include, for example, the election of directors, the adoption of amendments to our        corporate documents and the approval of mergers and sales of our assets.

 

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*INTERNATIONAL MAY ATTEMPT TO QUOTE ITS STOCK ON THE OTCBB*

 

International has no public trading market for its shares, and we cannot        represent to you that a market will ever develop. Nonetheless, we do intend to seek a        quotation on the OTCBB. However, there can be no assurance that we will obtain a quotation        on the OTCBB or that obtaining a quotation will generate a public trading market for our        shares.

 

Further, if        we obtain a quotation on the OTCBB, this may limit our ability to raise money in an equity        financing since many institutional investors do not consider OTCBB stocks for their        portfolios. Therefore, an investor’s ability to trade our stock might be restricted        as only a limited number of market makers quote OTCBB stock. Trading volumes in OTCBB        stocks are historically lower, and stock prices for OTCBB stocks tend to be more volatile        than stocks traded on an exchange or the NASDAQ Stock Market. We may never qualify for        trading on an exchange or the NASDAQ Stock Market.

 

*OUR        STOCK PRICE COULD BE VOLATILE*

 

Should a        public market for our shares develop, the future market price could be subject to        significant volatility and trading volumes could be low. Factors affecting our market price        will include:

| **•** | International’s perceived prospects; |
|------------|--------------------------------------------|

| **•** | negative variances in our operating results, and achievement                        of key business targets; |
|------------|--------------------------------------------------------------------------------------------------------------|

| **•** | limited trading volume in shares of our common stock in the                        public market; |
|------------|---------------------------------------------------------------------------------------------------|

| **•** | sales or purchases of large blocks of our stock; |
|------------|--------------------------------------------------|

| **•** | changes in, or International’s failure to meet,                        earnings estimates; |
|------------|--------------------------------------------------------------------------------------------------|

| **•** | changes in securities analysts’ buy/sell                        recommendations; |
|------------|----------------------------------------------------------------------------------------|

| **•** | differences between our reported results and those expected                        by investors and securities analysts; |
|------------|--------------------------------------------------------------------------------------------------------------------------|

| **•** | announcements of new contracts involving International or                        our competitors; |
|------------|---------------------------------------------------------------------------------------------------|

| **•** | announcements of legal claims against us; |
|------------|-------------------------------------------|

| **•** | market reaction to acquisitions, joint ventures or                        investments announced by us or our competitors; |
|------------|---------------------------------------------------------------------------------------------------------------------------|

| **•** | developments in the financial markets; |
|------------|----------------------------------------|

| **•** | general economic, political or stock market                        conditions. |
|------------|--------------------------------------------------------------------------------|

 

In        addition, our future stock price may fluctuate in ways unrelated or disproportionate to our        operating performance. The general economic, political and stock market conditions that may        affect the market price of our common stock are beyond our control. The market price of the        International’s common stock at any particular time may not remain the market price        in the future. In the past, securities class action litigation has been instituted against        companies following periods of volatility in the market price of their securities. Any such        litigation, if instituted against us, could result in substantial costs and a diversion of        management’s attention and resources.

 

*WE MAY        INCUR SIGNIFICANT EXPENSES AS A RESULT OF BEING REGISTERED WITH THE COMMISSION, WHICH MAY        NEGATIVELY IMPACT OUR FINANCIAL PERFORMANCE*

 

We incur        significant legal, accounting and other expenses as a result of being registered with the        Commission. The Sarbanes-Oxley Act of 2002, as well as related rules implemented by the        Commission has required changes in corporate governance practices of public companies. We        expect that compliance with these laws, rules and regulations, including compliance with        Section 404 of the Sarbanes-Oxley Act of 2002 as discussed in the following risk factor,        may substantially increase our expenses, including our legal and accounting costs, and make        some activities more time-consuming and costly. As a result, there may be a substantial        increase in legal, accounting and certain other expenses in the future, which would        negatively impact our financial performance and could have a material adverse effect on our        results of operations and financial condition.

 

 

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*OUR        INTERNAL CONTROLS OVER FINANCIAL REPORTING MAY NOT BE CONSIDERED EFFECTIVE, WHICH COULD        RESULT IN A LOSS OF INVESTOR CONFIDENCE IN OUR FINANCIAL REPORTS AND IN TURN HAVE AN        ADVERSE EFFECT ON OUR STOCK PRICE*.

 

Pursuant to        Section 404 of the Sarbanes-Oxley Act of 2002, beginning with our annual report for the        year ending December 31, 2007, we may be required to furnish a report by our management on        our internal controls over financial reporting. Such report will contain, among other        matters, an assessment of the effectiveness of our internal controls over financial        reporting as of the end of the year, including a statement as to whether or not our        internal controls over financial reporting are effective. This assessment must include        disclosure of any material weaknesses in our internal controls over financial reporting        identified by management. If we are unable to assert that our internal controls are        effective as of December 31, 2007, investors could lose confidence in the accuracy and        completeness of our financial reports, which in turn could cause our stock price to        decline.

 

| **ITEM 3.** | **CONTROLS AND PROCEDURES** |
|-------------|-----------------------------|

 

International’s president acts both as our chief executive officer and        chief financial officer and is responsible for establishing and maintaining disclosure        controls and procedures for us.

 

***(a)        Evaluation of Disclosure Controls and Procedures***

 

Under the        supervision and with the participation of our management, including our principal executive        officer and principal financial officer, we evaluated the effectiveness of the design and        operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and        15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”), as of        June 30, 2007. Based on this evaluation, our principal executive officer and our principal        financial officer concluded that, as of the end of the period covered by this report, our        disclosure controls and procedures were effective and adequately designed to ensure that        the information required to be disclosed by us in the reports we submit under the Exchange        Act is recorded, processed, summarized and reported within the time periods specified in        the applicable rules and forms and that such information was accumulated and communicated        to our chief executive officer and chief financial officer, in a manner that allowed for        timely decisions regarding required disclosure.

 

***(b)        Changes in Internal Controls***

 

During the        period ended June 30, 2007, there has been no change in internal control over financial        reporting that has materially affected, or is reasonably likely to materially affect our        internal control over financial reporting.

 

**PART        II**

| **ITEM 1.** | **LEGAL PROCEEDINGS** |
|-------------|-----------------------|

 

None.

 

| **ITEM 2.** | **UNREGISTERED SALES OF EQUITY SECURITIES** |
|-------------|---------------------------------------------|

 

None.

 

 

24

 

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| **ITEM 3.** | **DEFAULTS UPON SENIOR SECURITIES** |
|-------------|-------------------------------------|

 

None.

 

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

 

None.

 

| **ITEM 5.** | **OTHER INFORMATION** |
|-------------|-----------------------|

 

None.

 

| **ITEM 6.** | **EXHIBITS** |
|-------------|--------------|

 

Exhibits        required to be attached by Item 601 of Regulation S-B are listed in the Index to Exhibits        on page 27 this Form 10-QSB, and are incorporated herein by this reference.

         

         

         

         

         

         

         

         

         

         

         

         

         

 

25

 

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**SIGNATURES**

 

In        accordance with the requirements of the Securities Exchange Act, the registrant caused this        report to be signed on its behalf by the undersigned, hereunto duly authorized, this        13th day of August, 2007.

 

| **ComCam International, Inc.** |
|--------------------------------|

 

 

/s/ Don Gilbreath

| Don Gilbreath |
|---------------|

Chief        Executive Officer, Chief Financial Officer, and Principal Accounting Officer

 

 

 

 

26

 

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**INDEX        TO EXHIBITS**

 

| ***Exhibit*** | ***Page*** |
|---------------|------------|

| ***No.*** | ***No.*** | ***Description*** |
|-----------|-----------|-------------------|

         

| 3 (i) | *                  Amended                        and Restated Certificate of Incorporation of International (incorporated by                        reference to the Form 10-SB/A filed with the Commission on June 26,                        2006). |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 (ii) | *                  Bylaws                        of International (incorporated by reference to the Form 10-SB/A filed with                        the Commission on June 26, 2006). |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10 (i) | *                  Stock                        Exchange Agreement between ComCam and International dated May 8, 2002                        (incorporated by reference to the Form 10-SB/A filed with the Commission on                        June 6, 2006). |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10 (ii)(a) | *                  Securities                        Purchase Agreement between International, ComCam, Inc. and ACC Investors,                        LLC dated June 22, 2005 (incorporated by reference to the Form 10-SB/A                        filed with the Commission on June 26, 2006). |
|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10 (ii)(b) | *                  Convertible                        Secured Promissory Note between International, ComCam, Inc. and ACC                        Investors, LLC. dated June 22, 2005 (incorporated by reference to the Form                        10-SB/A filed with the Commission on June 26, 2006). |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10 (ii)(c) | *                  Warrant                        to Purchase Common Stock between International and ACC Investors, LLC.                        dated June 22, 2005 (incorporated by reference to the Form 10-SB/A filed                        with the Commission on June 26, 2006). |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10 (ii)(d) | *                  Warrant                        to Purchase Common Stock between International and ACC Investors, LLC.                        dated June 22, 2005 (incorporated by reference to the Form 10-SB/A filed                        with the Commission on June 26, 2006). |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10 (ii)(e) | *                  Registration                        Rights Agreement between International and ACC Investors, LLC. dated June                        22, 2005 (incorporated by reference to the Form 10-SB/A filed with the                        Commission on June 26, 2006). |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10 (ii)(f) | *                  Shareholders                        Agreement between Don Gilbreath and ACC Investors, LLC. Dated June 22,                        2005. (incorporated by reference to the Form 10-SB/A2 filed with the                        Commission on October 31, 2006). |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10 (ii)(g) | *                  Employment                        Agreement between International, ComCam, Inc. and Don Gilbreath dated June                        22, 2005 (incorporated by reference to the Form 10-SB/A filed with the                        Commission on June 26, 2006). |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31 | 28                Certification                        of the Chief Executive Officer and Chief Financial Officer pursuant to                        Section 302 of the Sarbanes-Oxley Act of 2002. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32 | 29                Certification                        of the Chief Executive Officer and Chief Financial Officer pursuant to 18                        U.S.C. Section 1350 as adopted pursuant to Section 906 of the                        Sarbanes-Oxley Act of 2002. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

         

|   | * | Incorporated by reference to prior filings with the                        Commission. |
|--------|---|----------------------------------------------------------------------------------------|