**UNITED STATES        SECURITIES AND EXCHANGE COMMISSION        Washington, D.C. 20549                  FORM 10-Q**

(Mark One)

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

For the quarterly period ended **March****31, 20****10**.

o     TRANSITION REPORT PURSUANT TO 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 registrant as specified in its charter)

| **Delaware**(State or other jurisdiction of                    incorporation or organization) | **23-2976562**(I.R.S. Employer

Identification No.) |
|-----------------------------------------------------------------------------------------------|-----------------------------------------------------|

**1140 McDermott Drive, West Chester, Pennsylvania 19380**

(Address of principal executive offices) (Zip Code)          

**(610) 436-8089**

(Registrant’s telephone number, including area code)

**n/a**

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

Indicate by check markwhether the registrant(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has        been subject to such filing requirements for the past 90 days. Yes þNo o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit        and post such files).Yes oNo þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.        Large accelerated filer oAccelerated filer oNon-accelerated filer oSmaller reporting company þ

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. The number of shares outstanding of the issuer’s common stock, $0.0001 par value (the only class of voting stock), at May 12, 2010, was        9,220,840.

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**TABLE OF CONTENTS**

**               
**PART I. - FINANCIAL INFORMATION**
     **ITEM 1.     FINANCIAL STATEMENTS**  3   Consolidated Balance Sheets as of March 31, 2010 (unaudited) and December 31, 2009   4   Unaudited Consolidated Statements of Operations for the three months ended March 31, 2010 and  2009, and the period since inception   5   Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2010 and  2009, and the period since inception  6   Notes to Unaudited Consolidated Financial Statements  7  **ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations**  11  **ITEM 3.    Quantitative and Qualitative Disclosures about Market Risk**  16  **ITEM 4T.  Controls and Procedures**  17                
**PART II. - OTHER INFORMATION**
     **ITEM 1.     Legal Proceedings**  17  **ITEM 1A.  Risk Factors**  18  **ITEM 2.     Unregistered Sales of Equity Securities and Use of Proceeds**  23  **ITEM 3.     Defaults upon Senior Securities**  24  **ITEM 4.     (Removed and Reserved)**  24  **ITEM 5.     Other Information**  24  **ITEM 6.     Exhibits**  24  **Signatures**  25 **Index to Exhibits**  26 **

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**PART I – FINANCIAL INFORMATION**

**ITEM 1.     FINANCIAL STATEMENTS**

As used herein, the terms “Company,” “we,” “our,” and “us” refer toComCamInternational, Inc., a Delawarecorporation, unless otherwise indicated. In the opinion of management, the accompanying unaudited        financial statements included in this Form 10-Qreflect 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.

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| COMCAM INTERNATIONAL, INC.                            |
|-------------------------------------------------------|
| CONSOLIDATED BALANCE SHEETS                           |
|                                                  |   |   |   |   |
|                                                  |   | March 31, |   | December 31, |
|                                                  |   | 2010 |   | 2009 |
| ASSETS                                                |   | (Unaudited) |   | (Audited) |
|                                                  |   |   |   |   |
| Current assets:                                       |   |   |   |   |
| Cash                                                  | $ | 378,949 |   | 217,783 |
| Accounts receivable                                   |   | 940,194 |   | 1,190,927 |
| Costs and estimated earnings in excess of billings on |   |   |   |   |
| uncompleted contracts                                 |   | 6,310 |   | 1,874 |
| Prepaid expenses                                      |   | 5,676 |   | 9,595 |
| Note receivable                                       |   | 36,667 |   | 36,667 |
|                                                  |   |   |   |   |
| Total current assets                                  |   | 1,367,796 |   | 1,456,846 |
|                                                  |   |   |   |   |
| Property and equipment, net                           |   | 106,931 |   | 110,842 |
| Intangible assets, net                                |   | 582,713 |   | 700,502 |
| Other assets                                          |   | 11,329 |   | 10,806 |
|                                                  |   |   |   |   |
| Total assets                                          | $ | 2,068,769 |   | 2,278,996 |
|                                                  |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' DEFICIT                 |   |   |   |   |
|                                                  |   |   |   |   |
| Current liabilities:                                  |   |   |   |   |
| Accounts payable                                      | $ | 568,031 |   | 711,734 |
| Accrued expenses                                      |   | 167,952 |   | 259,439 |
| Billings in excess of costs and estimatedearnings on  |   |   |   |   |
| uncompleted contracts                                 |   | 365,862 |   | 468,938 |
| Related party payables                                |   | 36,667 |   | 36,667 |
| Current portion of long-term debt                     |   | 1,206,006 |   | 1,766,568 |
|                                                  |   |   |   |   |
| Total current liabilities                             |   | 2,344,518 |   | 3,243,346 |
|                                                  |   |   |   |   |
| Long-term debt                                        |   | 465,000 |   | - |
|                                                  |   |   |   |   |
| Total liabilities                                     |   | 2,809,518 |   | 3,243,346 |
|                                                  |   |   |   |   |
| 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, 9,020,840 and 6,982,640 shares issued and |   |   |   |   |
| outstanding, respectively                             |   | 902 |   | 698 |
| Additional paid-in capital                            |   | 5,825,649 |   | 5,316,303 |
| Stock subscription receivable                         |   | (1,000) |   | (1,000) |
| Accumulated deficit                                   |   | (6,566,300) |   | (6,280,351) |
|                                                  |   |   |   |   |
| Total stockholders' deficit                           |   | (740,749) |   | (964,350) |
|                                                  |   |   |   |   |
| Total liabilities and stockholders' deficit           | $ | 2,068,769 |   | 2,278,996 |

The accompanying notes are an integral part of these financial statements

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| COMCAM INTERNATIONAL, INC.                      |
|-------------------------------------------------|
| UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS |
| Three Months Ended March 31, 2010 and 2009      |
|                                            |   |   |   |   |   |
|                                            |   |   |   |   |   |
|                                            |   | 2010 |   | 2009 |   |
|                                            |   |   |   |   |   |
| Revenues, net                                   | $ | 947,540 |   | 6,710 |   |
| Cost of revenues                                |   | 710,678 |   | - |   |
|                                            |   |   |   |   |   |
| Gross profit                                    |   | 236,862 |   | 6,710 |   |
|                                            |   |   |   |   |   |
| Operating expenses:                             |   |   |   |   |   |
| General and administrative expenses             |   | 492,471 |   | 52,161 |   |
| Research and development expenses               |   | 3,088 |   | - |   |
|                                            |   |   |   |   |   |
|                                            |   | 495,559 |   | 52,161 |   |
|                                            |   |   |   |   |   |
| Loss from operations                            |   | (258,697) |   | (45,451) |   |
|                                            |   |   |   |   |   |
| Other income (expense):                         |   |   |   |   |   |
| Interest income                                 |   | 419 |   | - |   |
| Interest expense                                |   | (27,671) |   | (21,710) |   |
|                                            |   |   |   |   |   |
|                                            |   | (27,252) |   | (21,710) |   |
|                                            |   |   |   |   |   |
| Loss before provision for income taxes          |   | (285,949) |   | (67,161) |   |
|                                            |   |   |   |   |   |
| Provision for income taxes                      |   | - |   | - |   |
|                                            |   |   |   |   |   |
| Net loss                                        | $ | (285,949) |   | (67,161) |   |
|                                            |   |   |   |   |   |
|                                            |   |   |   |   |   |
| Net loss per common share - basic and diluted   | $ | (0.04) |   | (0.02) |   |
|                                            |   |   |   |   |   |
| Weighted average common and common              |   |   |   |   |   |
| equivalent shares                               |   | 7,858,751 |   | 3,696,354 |   |

The accompanying notes are an integral part of these financial statements

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| COMCAM INTERNATIONAL, INC.                      |
|-------------------------------------------------|
| UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| Three Months Ended March 31, 2010 and 2009      |
|                                            |   |   |   |   |
|                                            |   |   |   |   |
|                                            |   | 2010 |   | 2009 |
| Cash flows from operating activities:           |   |   |   |   |
| Net loss                                        | $ | (285,949) |   | (67,161) |
| Adjustments to reconcile net loss to net        |   |   |   |   |
| cash used in operating activities:              |   |   |   |   |
| Depreciation and amortization                   |   | 126,258 |   | 3,171 |
| Loss on disposal of assets                      |   | 853 |   | - |
| (Increase) decrease in:                         |   |   |   |   |
| Accounts receivable                             |   | 250,733 |   | - |
| Prepaid expenses                                |   | 3,919 |   | - |
| Related party receivable                        |   | - |   | (8,470) |
| Costs and estimated earnings in excess of       |   |   |   |   |
| billings on uncompleted contracts               |   | (4,436) |   | - |
| Other assets                                    |   | (523) |   | - |
| Increase (decrease) in:                         |   |   |   |   |
| Accounts payable                                |   | (143,703) |   | 13,501 |
| Accrued expenses                                |   | 35,563 |   | 49,867 |
| Related party payables                          |   | - |   | (2,120) |
| Billings in excess of costs and estimated       |   |   |   |   |
| earnings on uncompleted contracts               |   | (103,076) |   | - |
|                                            |   |   |   |   |
| Net cash used in operating activities           |   | (120,361) |   | (11,212) |
|                                            |   |   |   |   |
| Cash flows from investing activities:           |   |   |   |   |
| Purchase of property and equipment              |   | (5,411) |   | - |
|                                            |   |   |   |   |
| Net cash used in investing activities           |   | (5,411) |   | - |
|                                            |   |   |   |   |
| Cash flows from financing activities:           |   |   |   |   |
| Payments on long-term debt                      |   | (95,562) |   | - |
| Issuance of common stock                        |   | 382,500 |   | 17,000 |
|                                            |   |   |   |   |
| Net cash provided by financing activities       |   | 286,938 |   | 17,000 |
|                                            |   |   |   |   |
| Net increase in cash                            |   | 161,166 |   | 5,788 |
|                                            |   |   |   |   |
| Cash, beginning of period                       |   | 217,783 |   | 1,024 |
|                                            |   |   |   |   |
| Cash, end of period                             | $ | 378,949 |   | 6,812 |

The accompanying notes are an integral part of these financial statements

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COMCAMINTERNATIONAL, INC.            NOTES TO UNAUDITED CONSOLIDATEDFINANCIAL STATEMENTS

March 31, 2010

**Note 1 – Organization and Summary of Significant Accounting Policies**

Organization          

The consolidated financial statements consist of Comcam International, Inc. (“Comcam”) and its wholly owned subsidiary Pinnacle Integrated Systems, Inc. (“Pinnacle”). Collectively, these entities are referred to as the “Company”.          

Comcamwas organized under the laws of the state of Delaware on September 19, 1998. The Company’s operations consist primarily of the research and development of advanced compact video systems that utilize built-in digital compression technology. Pinnacle is a security systems integrator focused on        correctional facilities across the United States, providing turnkey system design and installation, maintenance contracts, and field support technicians.

Basis of Presentation          

The accompanying unaudited consolidated financial statements have been prepared by management in accordance with the instructions in Form 10-Q 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-K for the year ended December        31, 2009, filed with the Securities and Exchange Commission. These statements do include all normal recurring adjustments which the Company believes necessary for a fair presentation of the statements. The interim operations are not necessarily indicative of the results to be expected for the full year ended December 31, 2010.

Additional Footnotes Included By Reference

Except as indicated in the following Notes, 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-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission. Therefore, those footnotes are included herein by        reference.

Note 2 – Going Concern

As of March 31, 2010, the Company has negative working capital, a stockholders’ deficit, and has incurred losses since inception. These factorstaken aloneraise substantial doubt about the Company’s ability to continue as a going concern. However, management is        in the process of procuring additional financing to expand marketing efforts and product developmentwhich actions,if successful,will enable the Company to continue as a going concern. Nevertheless, there can be no assurancethat sufficient financing will be available to the Companyto successfully        pursue itsmarketing and product development efforts.

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COMCAMINTERNATIONAL, INC.            NOTES TO UNAUDITED CONSOLIDATEDFINANCIAL STATEMENTS

March 31, 2010

**Note 3 – Long-Term Debt**

Long-term debt consists of the following:

|                                                                                   |   | March 31, 2010(Unaudited) |   | December31, 2009(Audited) |
|----------------------------------------------------------------------------------------|--------|---------------------------|--------|---------------------------|
| Note payable to Robert Betty, bearing interest at                                      |   |                      |   |                      |
| 3%, secured by the common stock and assets of                                          |   |                      |   |                      |
| Pinnacle, and due in five monthly installments of                                      |   |                      |   |                      |
| $200,000, beginning February 15, 2010. The                                             |   |                      |   |                      |
| Company is in default of the agreement.                                                | $      | 904,438                   |   | 1,000,000                 |
|                                                                                   |   |                      |   |                      |
| Notes payable to Paul Higbee, bearing interest                                         |   |                      |   |                      |
| at 8%, due March 2012, secured by the intellectual                                     |   |                      |   |                      |
| property of the Company.                                                               |   | 465,000                   |   | 465,000                   |
|                                                                                   |   |                      |   |                      |
| 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.                                                                      |   | 176,568                   |   | 176,568                   |
|                                                                                   |   |                      |   |                      |
| Convertible debenture to HNI, LLC of $125,000                                          |   |                      |   |                      |
| bearing interest at 12%, and due on demand.The Company is in default of the agreement. |   | 125,000                   |   | 125,000                   |
|                                                                                   |   | 1,671,006                 |   | 1,766,568                 |
| Less current portion                                                                   |   | (1,206,006)               |   | (1,766,568)               |
|                                                                                   | $      | 465,000                   |   | -                         |

Note 4 – Supplemental Cash Flow Information          

During the three months ended March 31, 2010, the Company issued 508,200 shares of common stock in exchange for $127,050 of accrued interest expense.

During the three months ended March 31, 2010 and March 31, 2009, cash paid for interest was $9,438 and $0, respectively.

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COMCAMINTERNATIONAL, INC.            NOTES TO UNAUDITED CONSOLIDATEDFINANCIAL STATEMENTS

March 31, 2010

Note 5 – Legal Matters

In October 2009, Park Valley Associates II, LP filed a Writ of Execution in the Court of Common Pleas of Delaware County, Pennsylvania, Case #08-016724 against the Company in order to garnish its bank accounts charging a balance due of $191,827 and costs of $9,591 in connection with the Company’s failure to pay rent. The Company is in        negotiations with counsel for Park Valley Associates II, LP to settle the outstanding amount due and has paid $54,000 since the writwas filed. The balance due is included in accrued expenses in the balance sheets.

Note 6 – Subsequent Events          

The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued. Other than the events noted below, the Company is not aware of any subsequent events which would require recognition or disclosure in the financial statements.

During the period since March 31, 2010, the Company issued 200,000shares ofcommon stock to fourindividualsfor $50,000at $0.25 per share.

Note 7 – Recent Accounting Pronouncements

In April 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2010-13, “Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades” (“ASU 2010-13”).        ASU 2010-13 addresses the classification of a share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. FASB Accounting Standards Codification (“ASC”) Topic 718 was amended to clarify that a share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trade shall not be considered to contain a        market, performance or service condition. Therefore, such an award is not to be classified as a liability if it otherwise qualifies for equity classification. The amendments in ASU 2010-13 are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010, with early application permitted. We do not anticipate that the adoption of this guidance will have a material impact on our financial position and results of operations.                   In February 2010, the FASB issued ASU No. 2010-09, “Amendments to Certain Recognition and Disclosure Requirements” (“ASU 2010-09”), which amends ASC Topic 855, “Subsequent Events.” The amendments to ASC Topic 855 do not change existing requirements to evaluate subsequent events, but: (i) defines a “SEC Filer,” which we are; (ii) removes the definition of a “Public Entity”; and (iii) for SEC Filers,        reverses the requirement to disclose the date through which subsequent events have been evaluated. ASU 2010-09 was effective for us upon issuance. This guidance did not have a material impact on our financial position and results of operations. 

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COMCAMINTERNATIONAL, INC.            NOTES TO UNAUDITED CONSOLIDATEDFINANCIAL STATEMENTS

March 31, 2010

Note 7 – Recent Accounting Pronouncements(continued)

In January 2010, the FASB issued ASU No. 2010-06, “Improving Disclosures about Fair Value Measurements” (“ASU 2010-06”). ASU 2010-06 requires new disclosures for (i) transfers of assets and liabilities in and out of levels one and two fair value measurements, including a description of the reasons for such        transfers and (ii) additional information in the reconciliation for fair value measurements using significant unobservable inputs (level three). This guidance also clarifies existing disclosure requirements including (i) the level of disaggregation used when providing fair value measurement disclosures for each class of assets and liabilities and (ii) the requirement to provide disclosures about the valuation techniques and inputs used to measure fair value for both        recurring and nonrecurring fair value measurements for level two and three assets and liabilities. ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about activity in the roll forward for level three fair value measurements, which is effective for fiscal years beginning after December 15, 2010. The adoption of this guidance has not had a material impact on our financial position and results of        operations.                   Management believes the impact of other recently issued standards and updates, which are not yet effective, will not have a material impact on the Company’s consolidated financial position, results of operations or cash flows upon adoption.

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**Item 2****.     ****MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

This *Management’s Discussion and Analysis of Financial Condition and**Results of Operations*and other parts of this quarterly reportcontain forward-looking statements that involve        risks and uncertainties. Forward-looking statements can 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 subsection 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. Our fiscal year end is December 31. All information presented herein is based on the threemonthperiod ended March 31, 2010. 

**Discussion and Analysis**

Our financial condition and results of operations depend primarily on revenue generated from the sale of our products and specialized services in addition to our ability to realize additional debt or equity financing. We can provideno assurance that revenue going forward will provide sufficient cash flows to        sustain our operations though revenue approximating that required to sustain operations is anticipatedthrough our fiscal year end. Further, althoughwe haveno commitments for financingwe remain in the process of procuring additional equity financing as we seek to redress any shortfall in cash flows to sustain operations while seeking to        expand our business.

 

***Summary***         

The Company is both a network solutions innovator and a provider of fusion technologies for security products and modern networks. Our proprietary digital wireless camera systems and security integrationsolutionsaddress complex command-and-control applications for rapid-deployment        military situations, borders, ports, airports, and detention facilities.          Our video fusion platform adds next generation, real-time, interactive command-and-control capabilities to legacy security systems for greater performance at lower cost. The platform seamlessly integrates a suite of analytics and third-party security solutions to improve real-time decision making for critical events over any wireless network. We accomplish thisthrough the sale or licensing of: i) intelligent camera        and micro-server devices, ii) a suite of software and software toolkits for command-and-control, mobile display, and storage/data management, and iii) specialized "Intelligent Video Analysis" software applications using biometrics, sensors, motion detection/tracking, access control, and other functions. 

The Company’s applications have been deployed with the Department of Defense (DOD), Federal Bureau of Investigation (FBI), Immigration & Customs Enforcement (ICE), and many other law enforcement and intelligence agencies in addition to businesses across a wide range of industries. On our own or working with prime government contractors like DRS,        Motorola, and Siemens, our products are deployed in such diverse locales as the John F. Kennedy International Airport, isolated sections of the Texas-Mexico border, and remote mountain passes in Afghanistan.          

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Werecently acquired Pinnacle, a security systems integrator ofcorrectional facilities across the United States. Pinnacle provides turnkey system design and installation, maintenance contracts, and field support technicians. As a systems integrator Pinnacle can take the role of the prime        contractor or can play a key support role to leading government integrators. Over thepast three years Pinnacle has completed more than 15 projects, with the largest topping $4.2 million, utilizing a skill set and the resources to successfully complete projects in the $10-$15 million range. 

**Results of Operations**

        During the three month periodended March31, 2010, we were engaged in (i) the ongoing development and sale of our *Internet Protocol*remote control platform cameras, micro servers, associated software, and unique end-to-end network solutions, (ii) providingturnkey system design and installation,        maintenance contracts, and field support techniciansthrough Pinnacle, (iii) an equity financing throughthesale ofour common stock, and (iv) satisfying continuous public disclosure requirements.

***Revenue***         Revenue for the three monthsended March31, 2010, increased to $947,540from $6,710for the three monthsended March31, 2009. The increase in revenue over the comparable periods isprimarilydue toPinnacle’s sales in the currentthree month period. We expect to increase revenues in future periodsthroughan increase in (i)Pinnacle’s sales to correction facilities and (ii) sales of our next generation video products.

 

Cost of revenue for the three monthsended March31, 2010,was $710,678compared to$0for the three monthsended March31, 2009.The realizationin the cost of revenue in the current periodcanbe primarily attributed to the costs of materials related to Pinnacle’s sales. We expectcosts of revenueto        increase in future periodswith acorresponding increase in sales of ourproducts.

Gross profit forthe three monthsended March31, 2010, increased to $236,862 from $6,710 for the three monthsended March31, 2009.The        increaseingross profit over the comparableperiods is primarily attributableto the operations ofPinnacle. We expect that gross profit will increase in the near term and thatgross profit as a percentageof revenue will remain        relatively constant in future periods.

***Expenses***

 

Operatingexpenses for the three monthsended March31, 2010,increased to $495,559from $52,161for the three monthsended March31, 2009. The increasein operating expenses over the comparative periods is primarily attributable toan increase ingeneral and administrative expensesto $492,471from $52,161, which increases are mainly due to the        operations of Pinnacleand an increase in research and development expenses to $3,088 from $0. We expectthat operating expenses willremain constant in the near term. 

Depreciation and amortization expenses for the three monthsended March31, 2010and 2009were $126,258and $3,171, respectively.         

***Other Income (Expense)         ***

Interest income for the three monthsended March31, 2010, was $419as compared to$0for the three monthsended March31, 2009. 

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Interest expensefor the three monthsended March31, 2010, increased to $27,671from $21,710 for the three monthsended March31, 2009. The        Company expects that losses from interestexpensewill decreaseover the future periodsas management strives to reduce debt.

***Net******Losses***

Net losses for the three monthsended March31, 2010, increased to $285,949from $67,161 for the three monthsended March31, 2009. The increase in losses over the comparative        periods is primarily due toan increase ingeneral and administrative expenses over the comparable periods that exceeded the increase in gross profitover the comparable periods. Weexpectto realize net profits in future periods asgross profitsexceed general and administrative expenses but may continue to operate at a net loss through the year ended December 31, 2010.

***Income Tax Expense (Benefit)*** 

The Company has an income tax benefit resulting from net operating losses to offset any future operating profit. The net operating loss carry forwards at March 31, 2010, was over $6,500,000. These 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 the Company and by the applicable tax laws which are in effect at the time such carry forwards are utilized.

***Impact of Inflation*** 

The Companybelieves 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***         The Company made no significant capital expenditures on property or equipment for thethreemonthsended March31, 2010 or 2009.

***Liquidity and Capital Resources*** 

The Company had a working capital deficit of$976,722as of March 31, 2010 and$1,786,500as of December 31, 2009. The Company had current assets of $1,367,796and total assets of        $2,068,769as of March 31, 2010. Current assets consisted primarily of cash totaling $378,949and accounts receivable of $940,194. In additional to current assets, total assets also consisted primarily of intangible assetsof $582,713andproperty and equipmentof        $106,931. The Company had current liabilities of $2,344,518 and total liabilities of $2,809,518 as of March 31, 2010. Liabilities consisted primarily of accounts payable, accrued expenses, excess billings, the current portion of long-term debt, and long-term debt. 

Cash flowsused in operations were$120,361 for the three months ended March 31, 2010, as compared to $11,212for the three months ended March 31, 2009. The increase in cash flows used in operations over the comparative periods can be primarily        attributed to the increase innet losses and decreasesin bothaccounts receivableand excess billingsin the current periodthat were only partially offset by a decrease in accounts receivable. We expectto continue to use cash        flow in operating activities over the near term. 

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Cash flowsused ininvesting activities were $5,411for the three months ended March 31, 2010, as compared to $0for the three months ended March 31, 2009. Cash flows used ininvesting activities in the current period are fromthe purchase of property and equipment. The Company expects tocontinue touse cash flowsin investing activities in future periods.

Cash flowsprovided by financing activities were$286,938for the three months ended March 31, 2010, as compared to $17,000for the three months ended March 31, 2009. Cash flowsprovided by financing activities forthe current period are attributabletothe issuance of common stock for cash which was partially offset by a payment on long-term debt.We may continue toprovide cash flow from financing activities.

We maynot have sufficient current assets oroperational cash flow to meet our obligations or satisfy cash needs through 2010.Sources for other prospective financingsmay consist of loans from        shareholders, the sale of equity, or loans from other sources. Although we have funded ourcash needs from inception from revenue, sales of our equity, and a series of debt transactions we can provide no assurance that wewill be able to obtain sufficient financing. If we areunable to increase ourcash flows from operating activities or        obtain sufficient financing, wemay not be able to continue operations.

The Company hasno lines of credit or other bank financing arrangements.          The Company has no commitments for future capital expenditures that were material at March 31, 2010.          

The Companyhasan employee benefit planregistered under Form S-8 pursuant to which it couldissue or option shares of its common stockto employees, directors,        officers, consultants or advisors on the terms and conditions set forth therein. As of March 31, 2010,50,000 sharesremainedavailable for issuanceor grantunder this plan.

The Companyhas no current plans for the purchase or sale of any plant or equipment. 

The Companyhas no current plans to make any changes in the number of employees. 

The Company does not expect to pay cash dividends in the foreseeable future.

***Off-******Balance Sheet Arrangements*** 

As of March 31, 2010, the Company hasno 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.

***Going Concern***         The Company’s auditors have expressed an opinion as to our ability to continue as a going concern as a result of an accumulated deficit of $6,280,351as of December 31, 2009 which has increased to $6,566,300as of March 31, 2010. Our ability to continue as a going concern is subject to the ability of the Company to obtain a profit and/or obtaining the necessary funding from outside sources.        Management’s plan to address the Company’s abilityto continue as a going concernincludes (i) increases inrevenue; (ii)decreases in general and administrative costs; (iii) financingfrom private placement sources; and (iv) converting outstanding debt to equity. Although the Companybelievesthat it will be able to remain a going concern,through the methods discussed above, there can be no assurances that such methods will prove successful.

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***Critical Accounting Policies***

In Note 1 to the audited financial statements for the years ended December 31, 2009 and 2008, included in our Form 10-K, the Company discussed those accounting policies that are considered to be significant in determining the results of operations and its financial position. The Company believes that the accounting principles utilized by it conform to accounting principles        generally accepted in the United States. The preparation of financial statements requires Company 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, the Company evaluates estimates. The Company 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.

***Revenue Recognition***

The Company generates revenues from product sales, consulting, installation of security systems, and support and maintenance contracts. The Company’s revenue recognition policy is as follows:

|  | ·      | Development and Delivery of Security Systems - Profits on long-term contracts are recorded primarily using the percentage of completion method for individual contracts. Estimated percentage of completion is determined on the basis of total costs expended as a percentage of total estimated costs. As the Company's long-term contracts extend over one or more years, revisions in cost and profit estimates                    are reflected in the accounting period that the revisions become known. Because of inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change within the near term. |
|--|----------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | o      | Contract costs include all direct materials, labor, and other costs. General and administrative costs are charged to expense as incurred. At the time a loss on a contract is expected, the entire amount of the estimated loss is recognized. |
|--|---------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | o      | The asset, "Costs and estimated earnings in excess of billings on uncompleted contracts," represents revenues earned in excess of amounts billed. The liability, "Billings in excess of costs and estimated earnings on uncompleted contracts," represents billings in excess of revenues earned. |
|--|---------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | Support and Maintenance Revenue – Revenue from support and maintenance agreements is recognized ratably over the term of the agreement, which in most instances is one year. |
|--|----------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | Service Revenue – Revenue from system upgrades is recognized as the services are performed. Revenue from training and development services is recognized as the services are performed. |
|--|----------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | Product Sales Revenue –Revenue from product sales is recognized at the time the product is shipped and invoiced and collectibility is reasonably assured. The Company believes that revenue should be recognized at the time of shipment as title passes to the customer at the time of shipment. |
|--|----------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | Consulting Revenue –Revenues from consulting services are recognized when a consulting agreement is executed that establishes the amount and scope of service to be provided, the consulting services have been performed, and the Company has no additional rescission, refund, or customer satisfaction requirements, and                    collectibility of the amount billed is reasonably assured. |
|--|----------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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***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 of Financial Condition and**Results of Operations*and elsewhere in this current report,with the        exception of historical facts, are forward-looking statements. 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:          

|  | ·      | our anticipated financial performance; |
|--|----------------------------------------|----------------------------------------|

|  | ·      | the sufficiency of existing capital resources; |
|--|----------------------------------------|------------------------------------------------|

|  | ·      | our ability to raise additional capital to fund cash requirements; |
|--|----------------------------------------|--------------------------------------------------------------------|

|  | ·      | uncertainties related to our business; |
|--|----------------------------------------|----------------------------------------|

|  | ·      | increases in revenues; |
|--|----------------------------------------|------------------------|

|  | ·      | the volatility of the stock market and; |
|--|----------------------------------------|-----------------------------------------|

|  | ·      | general economic conditions. |
|--|----------------------------------------|------------------------------|

We wish to caution readers that our 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 than as required by law.

***Stock-Based Compensation***

**We have adopted Accounting Standards Codification Topic (“ASC”) 718, (formerly SFAS No.123) (revised 2004) (SFAS No. 123R), Share-Based-Payment, which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a) equity        instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments.**

We account for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with ASC 505. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more        reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services.

***Recent Accounting Pronouncements***

Please see Note 7to our consolidated financial statements for recent accounting pronouncements.

**ITEM 3.     ****QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

Not required.

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**ITEM 4T.     CONTROLS AND PROCEDURES**

***Evaluation of Disclosure Controls and Procedures***

        In connection with the preparation of this report on Form 10-Q, an evaluation was carried out by the Company’s management, with the participation of the chief executive officer and the chief financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)). Disclosure controls and procedures are designed to ensure that information        required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.          

Based on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’s        rules and forms, and that such information was accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.

***Changes in Internal Control over Financial Reporting***

 

There have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during theperiodendedMarch 31, 2010that materially affected, or are        reasonably likely to materially affect, the Company’s internal control over financial reporting.

**PART II****– OTHER INFORMATION**

**ITEM 1.     LEGAL PROCEEDINGS         **

In October 2009, Park Valley Associates II, LP filed a Writ of Execution in the Court of Common Pleas of Delaware County, Pennsylvania, Case #08-016724 against the Company in order to garnish its bank accounts charging a balance due of $191,827 and costs of $9,591 in connection with the Company’s failure to pay rent. The Company is in negotiations with        counsel for Park Valley Associates II, LP to settle the outstanding amount due and has paid $54,000 since thewritwas filed. The balance due is included in accrued expenses in the balance sheets.

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**ITEM 1****A****.****     RISK FACTORS         **

The Company’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 business, financial condition, and/or results of operations as well as the future trading price and/or the        value of our securities.

**Risks Related t****o****the Company****’s Business**

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

The Company’s auditors included anexplanatory statement in their report on ourconsolidated financial statements for the years ended December 31, 2009 and 2008, stating that there are certain factors which raise substantial doubt about the Company’s ability to        continue as a going concern. These factors include limited revenue generating activities in place, and losses since inception.

*THE COMPANY HAS A HISTORY OF LOSSES AND MAY INCUR LOSSES FOR THE FORESEEABLE FUTURE*

The Company had an accumulated deficit ofover$6,500,000 as of March 31, 2010. 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 THE COMPANY 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 EFFECTIVELY CONTINUE OPERATIONS*

As of March 31, 2010, the Company had a working capital deficit of $976,722. We do not expect to generate sufficient cash flow from operations to cover our expenditures until the end of 2010. Until the point at which cash flow from operations match expenditures we will have to obtain additional working capital from debt or equity placements to        effectively continue our operations. However, we have no commitment for the provision of additional working capital. Should we be unable to secure additional capital to cover our short fall in cash flow, such condition would cause us to reduce expenditures which could have a material adverse effect on our business.          

*THE COMPANY MAY NOT BE SUCCESSFUL IN INTEGRATING THE BUSINESS OPERATIONS OF PINNACLE INTO OUR BUSINESS OPERATIONS, STIFLING GROWTH AND DISRUPTING OUR BUSINESS.*

The Company’s recentacquisition of Pinnacle involves the integration of companies that have previously operated independently.  Successful integration will depend on our ability to consolidate operations and procedures and to integrate Pinnacle’s management team with our own. If we are        unable to do so, we maynot realize the anticipated potential benefits of the acquisition, our businessdevelopment could be stifled,and results of operations may suffer.  Difficulties could include the loss of key employees, the disruption of Pinnacle’songoing businesses,and possible        inconsistencies in standards, controls, procedures and policies.  

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*THE COMPANY 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, the Company’s ability to develop or enhance products and services or otherwise respond to competitive pressures would be significantly limited.          

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

Evolving technology, updated industry standards, and frequent new product and service introductions characterize the video surveillance systemsand security integration servicesmarkets; 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 the Company’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 THE COMPANY’S PRODUCTS IS CRITICAL TO THE COMPANY’S GROWTH*

The Company generates revenue from the design and sale of video surveillance systemsand security integration services; 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. 

*THE COMPANY COMPETES WITH LARGER AND BETTER-FINANCED CORPORATIONS*

Competition within the international market for video surveillance systemsand security integration servicesis intense. While the Company’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.          

*THE COMPANY IS LARGELY DEPENDENT UPON**FEW**CUSTOME**RS*We have in the past, and may in the future, lose our customers or a substantial portion of our business with one or more major customers. If we do not sell products to our existing customersin the quantities anticipated, or if our customers reduce or terminate theirrelationshipswith us, market perception of our products and technology, growth        prospects, and financial condition and results of operations could be harmed. Any termination of our relationship withour largest customers or any othercustomerscould materially reduce our revenue.

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*THE COMPANY DEPENDS UPON ONE MANUFACTURER AND LIMITED SOURCE SUPPLIERS*

Pennsylvania-based Strategic Manufacturing Technologies, Inc., currently procuresour components and manufacturesour video surveillance systems. Our components are purchased for us from such source suppliers as Motorola, Inc., and Analog Devices, Inc. We anticipate that        the Company will continue to depend upon one or few manufacturers,as well as a limited number of source suppliers, which dependence, 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 the Company’s 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 the Company would have to identify and qualify acceptable replacements from alternative sources of supply. If the Company was 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 the Company’s results of operations.

*THE COMPANY’S SUCCESS DEPENDS ON THE COMPANY’S ABILITY TO ATTRACT AND RETAIN KEY PERSONNEL*

The Company’s future success will depend substantially on the continued serviceand performance of Don Gilbreath, Robert Betty and other key personnel. We have relatively few senior personnel, and so the loss of Don Gilbreath, Robert Betty or any other key employees could have a material adverse effect        on the Company’s businessprospects, financial condition and results of operations. Our future success also depends on the Company’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 THE COMPANY'S FINANCIAL CONDITION*

The Company's success depends significantly on protecting proprietary technology. Despite the Company'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 the Company's 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 the Company fails or is unable to develop non-infringing technology or license the infringed or        similar technology on a timely basis, the Company's business and results of operations could be seriously harmed. 

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*THE COMPANY’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. The Company'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. Further, climate change legislation and greenhouse gas regulation is becoming increasingly ubiquitous. Although the Company 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.

*THE COMPANY’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, the Company 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.

**Risks Related to the Company’s Stock**

*THE COMPANY**MAY**NEED TO RAISE ADDITIONAL CAPITAL TO FUND OPERATIONS WHICH COULD ADVERSELY AFFECT OUR SHAREHOLDERS*

The Company mayneed to raise additional capital to fund operations until such time as our revenues match our expenditures. We expect that revenue will match expenditures by or before2011. Until the point at which cash flow from operations can match expenditures we        mayhave to realizeup to $1,000,000 additional capital for operations. Capital realized would be used for research and development expenses, marketing costs and general and administrative expenses. We have no commitment from any sourcesof financing to provide us with any needed capitalrequirements. Anyequity financing willobligate us to issue additional shares of the Company’s common stock which will result in dilution to existing shareholders.If we are unable to obtain sufficientcapital, then we will need to restrict or even cease operations, which actionswould adversely affect our        shareholders.

*We**incur significant expenses as a result of being**REGISTERED WITH THE COMMISSION**, which**EXPENSES**negatively impact our financial performance.*

We incur significant legal, accounting and other expenses as a result of the Sarbanes-Oxley Act of 2002, as well as related rules implemented by the Commission, which control the corporate governance practices of public companies. 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, hassubstantially increased our expenses, including legal and accounting costs, and madesome activities more time-consuming and costly. Further, expenses related to our compliance may increase in the future, as legislation affecting smaller reporting companies comes into effect that may negatively impact our financial performance to the        point of having a material adverse effect on our results of operations and financial condition.

*TH**E COMPANY’S STOCK PRICE IS**VOLATILE*

Themarket price for our common stock is subject to significant volatility and trading volumes arelow.Factors affectingthe Company’s market price couldinclude: 

|  | ·      | the Company’s perceived prospects; |
|--|----------------------------------------|------------------------------------------|

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

|  | ·      | limited trading volume in shares of the Company’s common stock in the public market; |
|--|----------------------------------------|--------------------------------------------------------------------------------------------|

|  | ·      | sales or purchases of large blocks of our stock; |
|--|----------------------------------------|--------------------------------------------------|

|  | ·      | changes in, or the Company’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 by the Company or our competitors; |
|--|----------------------------------------|-------------------------------------------------------------------|

|  | ·      | announcements of legal claims against us; |
|--|----------------------------------------|-------------------------------------------|

|  | ·      | market reaction to any acquisitions, joint ventures or strategic investments announced by us or our competitors; |
|--|----------------------------------------|------------------------------------------------------------------------------------------------------------------|

|  | ·      | developments in the financial markets; |
|--|----------------------------------------|----------------------------------------|

|  | ·      | general economic, political or stock market conditions. |
|--|----------------------------------------|---------------------------------------------------------|

In addition, our 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 the Company’s common stock are beyond our control. The market price of the Company’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.           

*THE COMPANY’S STOCK IS A PENNY STOCK AND, THEREFORE, THE COMPANY’S SHAREHOLDERS MAY FACE SIGNIFICANT RESTRICTIONS ON THEIR STOCK*

The Company’s stock differs from many stocks in that it is a "penny stock." The Commission defines a penny stock in Rule 3a51-1 of the Exchange Act as,generally speaking,those securities which are not listed on either NASDAQ or a national securities exchange and are        priced under $5, excluding securities of issuers that (a) have net tangible assets greater than $2 million if they have been in operation at least three years, (b) have net tangible assets greater than $5 million if in operation less than three years, or (c) average revenue of at least $6 million for the last three years. OTCBB securities are considered penny stocks unless they qualify for one of the exclusions.

The Commission has adopted a number of rules to regulate penny stocks. These rules include, but are not limited to, Rules 3a5l-l, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6 and 15g-9 under the Exchange Act. Since our securities constitute a "penny stock" within the meaning of the rules, the rules would apply to us and our securities. The rules may        further affect the ability of owners of shares to sell their securities in any market that may develop for them. There may be a limited market for penny stocks, due to the regulatory burdens on broker-dealers. The market among dealers may not be active. Investors in penny stock often are unable to sell stock back to the dealer that sold them the stock. The mark-ups or commissions charged by the broker-dealers may be greater than any profit a seller may make. Because of large dealer        spreads, investors may be unable to sell the stock immediately back to the dealer at the same price the dealer sold the stock to the investor. In some cases, the stock may fall quickly in value. Investors may be unable to reap any profit from any sale of the stock, if they can sell it at all. 

Shareholders should be aware that, according to the Commission Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. These patterns include:           

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|  | ·      | control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; |
|--|----------------------------------------|-------------------------------------------------------------------------------------------------------------------------|

|  | ·      | manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; |
|--|----------------------------------------|---------------------------------------------------------------------------------------------------------------------|

|  | ·      | "boiler room" practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons; |
|--|----------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and |
|--|----------------------------------------|--------------------------------------------------------------------------------------------|

|  | ·      | the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses. |
|--|----------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Our internal controls over financial reporting may not be considered effective in the future, 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 we arerequired to furnish a report by our management on our internal controls over financial reporting. Such report must 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 continue to assert that our internal controls are effective, our shareholderscould lose confidence in the accuracy and completeness of our financial reports, which in turn could cause our stock price to decline.

**ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES****AND USE OF PROCEEDS**         

During the quarter endedMarch 31, 2010 the Company authorized the issuance of508,200 shares of common stockto Paul Higbeein exchange forthe extinguishment of an accrued        interest obligation of $127,050valued at$0.25 per sharedue on certain promissory notes,pursuant toexemption provided by Section 4(2)of the Securities Actof 1933, as amended (“Securities Act”). No commission was        paid in connection with this offering.

The Companycomplied with the exemption requirements of Section 4(2) of the Securities Actbased on the following factors: (1) the issuancewas an isolated private transaction thatdid not involve a public        offering;(2) there was one offeree;(3) the offereestated an intention not to resell the stock; (4) there have beenno subsequent or contemporaneous public offerings of the stock; (5) the stock was not broken down into smaller denominations; and (6)the discussionsthat lead to the issuance of the stock took place directly between the offeree and the Company.         During the quarterended March31, 2010and to the issue date of this current report, the Company authorized the issuance of 1,730,000 shares of common stockto 20persons or entitiesin exchange for valued at$0.25 per share,pursuant to the exemption provided by Rule 506 of Regulation D of the Securities Act. No commission was paid in connection with this offering to the following individualsand entities:                            

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| ***Investor***                        | ***Shares*** | ***Consideration*** |
|---------------------------------------|--------------|---------------------|
| Barbaro, Michael                      | 100,000      | $25,000             |
| Besson, Mike                          | 100,000      | $25,000             |
| Bozek, Michal                         | 40,000       | $10,000             |
| Buckley, Michael                      | 80,000       | $20,000             |
| Carey, Michael                        | 20,000       | $5,000              |
| Carter, Donald Jr.                    | 100,000      | $25,000             |
| Crowther, James B. Jr.                | 120,000      | $30,000             |
| Gallagher, Hugh Jeffrey               | 40,000       | $10,000             |
| Hart, John                            | 40,000       | $10,000             |
| Hart Roofing & Remodeling         | 100,000      | $25,000             |
| Hoggard, Gene                         | 30,000       | $7,500              |
| Maurer, Stephen K.                    | 100,000      | $25,000             |
| Rose, Louis C.                        | 410,000      | $102,500            |
| Schay,David                           | 100,000      | $25,000             |
| Spinella, Charles                     | 50,000       | $12,500             |
| Strange Trust                         | 60,000       | $15,000             |
| Struzik,Tony                          | 20,000       | $5,000              |
| Sztamenits Limited Family Partnership | 100,000      | $25,000             |
| Traxler, Dan                          | 60,000       | $15,000             |
| Visosky, Mark                         | 60,000       | $15,000             |
| ***Total***                           |         |                |

The Corporation complied with the requirements of Rule 506 of Regulation D of the Securities Act by: (i) foregoing any general solicitation or advertising to market the securities; (ii) selling only to accredited investors; (iii) having not violated antifraud prohibitions with the information provided to the investors; (iv) being available to answer questions by        the investors;and (v) issuing restricted securities to the investors.

**ITEM 3.     DEFAULTS ON SENIOR SECURITIES**

None.          

**ITEM 4.     (REMOVED AND RESERVED)         **

Removed and reserved.

**ITEM 5.     OTHER INFORMATION         **

None.

**ITEM 6.     EXHIBITS**

Exhibitsrequired to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page 26of this Form 10-Q, and are incorporated herein by this reference.

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**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.         

| ***ComCam International******, Inc.****          *                               | ***Date***   |
|------------------------------------------------------------------------------------------------------------------------------------|--------------|
| /s/ Don Gilbreath

By: Don Gilbreath

Chief Executive Officer, Chief Financial Officer, Principal 

Accounting Officerand Director | May 12, 2010 |

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**EXHIBITS**

***Exhibit     Description***

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

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

10 (i)*          Employment Agreement between the Company, 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).

10 (ii)*          Joinder, Amendment and Consent Agreement between ComCam, Inc., the Company and HNI, LLC dated September 28, 2007 (incorporated by reference to the Form 10-QSB filed with the Commission on November 14, 2007).

10 (iii)*          Amendment Agreement dated February 14, 2008 (incorporated by reference to the Form 10-K filed with the Commission on April 14, 2008).

10 (iv)*          Amended and Restated Debenture between the Company and HNI dated July 10, 2009 (incorporated by reference to the Form 10-Q filed with the Commission on January 27, 2010).

10(v)*     Share Purchase Agreement between the Company, Pinnacle Integrated Systems, Inc., Robert Betty and Feng Brown dated December 30, 2009 (incorporated by reference to the Form 8-K filed with the Commission on December 31, 2009).

14*     Code of Ethics adopted March 24, 2008 (incorporated by reference to the Form 10-K filed with the Commission on April 14, 2008).

21*     Subsidiaries (incorporated by reference to the Form 10-K filed with the Commission on April 16, 2010).

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

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

      *     Incorporated by reference to previous filings of the Company.

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