**UNITED        STATES SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM        10-KSB**

 

*(Mark        One)*

þ         Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act        of 1934 for the fiscal year ended**December 31,        2007**.

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:**001-15165**

 

**COMCAM, INC.**

(Exact        name of registrant as specified in its charter)

| **Delaware**

(State or other jurisdiction of

incorporation or organization) | **98-0208402** 

(I.R.S. Employer

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

 

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

(Address        of principal executive offices) (Zip Code)

 

**(610) 436-8089**

(Issuer’s telephone number, including area code)

 

Securities registered pursuant to Section 12(g) of the Exchange        Act:

 

Title        of Each Class

Common        Stock ($0.0001 par value)

 

Check        whether the registrant: (1) has filed all reports required to be filed by Section 13 or        15(d) of the Exchange Act of 1934 during the past 12 months (or for such shorter period        that the issuer was required to file such reports), and (2) has been subject to such filing        requirement for the past 90 days.

|   | Yesþ | Noo |
|--------|------------|-----|

 

Check if        there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B        contained in this form, and that no disclosure will be contained, to the best of        registrant's knowledge, in definitive proxy or information statements incorporated by        reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.o

 

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

 

The        aggregate market value of the registrant's common stock, $0.0001 par value, held by        non-affiliates (25,246,929 shares) was approximately $151,482 based on the average closing        bid and asked prices ($0.006) for the common stock on April 11, 2008.

 

At April        14, 2008, the number of shares outstanding of the registrant's common stock, $0.0001 par        value (the only class of voting stock), was 39,990,134.

 

1

 

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**TABLE        OF CONTENTS**

 

**PART        I**

| Item 1. | Description of Business | 3 |
|---------|-------------------------|---|

         

| Item 2. | Description of Property | 10 |
|---------|-------------------------|----|

         

| Item 3. | Legal Proceedings | 10 |
|---------|-------------------|----|

         

| Item 4. | Submission of Matters to a Vote of                        Security-Holders | 11 |
|---------|----------------------------------------------------------------------------|----|

         

         

**PART II**

         

| Item 5. | Market for Common Equity and Related Stockholder Matters and                        Small |
|---------|-------------------------------------------------------------------------------------------|

|   | Business Issuer Purchases of Equity Securities | 11 |
|--------|------------------------------------------------|----|

         

| Item 6. | Management's Plan of Operation | 13 |
|---------|--------------------------------|----|

         

| Item 7. | Financial Statements | 17 |
|---------|----------------------|----|

         

| Item 8. | Changes in and Disagreements with Accountants on Accounting                        and |
|---------|----------------------------------------------------------------------------------------|

|   | Financial Disclosure | 18 |
|--------|----------------------|----|

         

| Item 8A. | Controls and Procedures (Item 8A(T)) | 18 |
|----------|--------------------------------------|----|

         

| Item 8B. | Other Information | 18 |
|----------|-------------------|----|

         

         

**PART III**

         

| Item 9. | Directors, Executive Officers, Promoters, Control Persons                        and Corporate |
|---------|------------------------------------------------------------------------------------------------|

|   | Governance; Compliance with Section 16(a) of the Exchange                        Act | 19 |
|--------|--------------------------------------------------------------------------------------|----|

         

| Item 10. | Executive Compensation | 22 |
|----------|------------------------|----|

         

| Item 11. | Security Ownership of Certain Beneficial Owners and                        Management and |
|----------|-------------------------------------------------------------------------------------------|

|   | Related Stockholder Matters | 23 |
|--------|-----------------------------|----|

         

| Item 12. | Certain Relationships and Related Transactions, and Director                        Independence | 23 |
|----------|--------------------------------------------------------------------------------------------------|----|

         

| Item 13. | Exhibits | 23 |
|----------|----------|----|

         

| Item 14. | Principal Accountant Fees and Services | 24 |
|----------|----------------------------------------|----|

         

|   | Signatures | 25 |
|--------|------------|----|

 

 

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**PART        I**

 

| **ITEM 1.** | **DESCRIPTION OF BUSINESS** |
|-------------|-----------------------------|

 

***As        used herein the terms “Company,” “we,” “our,” and        “us” refer to ComCam, Inc., and its predecessor, unless context indicates        otherwise. The term “ComCam International” refers to ComCam International,        Inc., our subsidiary, until distributed to our shareholders as of December 28,        2007.***

 

**Corporate History**

 

The Company        was incorporated as “Innovin Development Corporation” on December 18, 1997, in        the State of Delaware. On March 5, 1998 we changed our name to “Anglo-Sierra        Resources Corp.” and on March 15, 1999 to “Bullet Environmental Technologies,        Inc.” to reflect a focus on divergent business operations. We changed our name to        “ComCam, Inc.” on June 3, 2002 as the result of our acquisition of ComCam        International.

 

On January        10, 2005, the Company elected to be regulated as a Business Development Company        (“BDC”) as outlined in the Investment Company Act of 1940 by filing a Form        NT-54A with the Securities and Exchange Commission (“Commission”). On December        28, 2006, the holders of a majority of the outstanding shares of our common stock entitled        to vote executed a written consent that approved the withdrawal of our BDC election. On        March 9, 2007, we filed a notice of our withdrawal on Form NT-54C with the        Commission.

 

We operated        ComCam International as a wholly owned subsidiary from June 3, 2002 until December 28, 2007        when we completed a 100% dividend of ComCam International’s shares to our        shareholders on a pro rata basis of one share of ComCam International’s common stock        for every twenty shares of our common stock held as of the dividend record date. Our board        of directors decided to “spin-off” ComCam International in order to separately        focus the attention of the financial community on ComCam International’s business,        with the intention of improving its access to financing while enabling the Company to seek        out other technology based business opportunities in the development stage.

 

ComCam        International is subject to the informational requirements of the Securities Exchange Act        of 1934, as amended and as such files reports, proxy statements and other information with        the Commission. Filings can be viewed on the Internet at www.sec.gov.

 

The        Company’s principal place of business is located at 1140 McDermott Drive, Suite 200,        West Chester, Pennsylvania, 19380, and our telephone number is (610) 436-8089.

 

Our        registered statutory office is located at the Company Corporation, 400-2711 Centerville        Road, Wilmington, Delaware, 19808.

 

**The        Company**

 

***Summary of Current Operations***

 

The Company        intends to function as a business incubator, either through merger or acquisition, for        development stage technology assets and emerging businesses that management believes are        well positioned for future growth. We intend to fund the process of driving emerging        technologies towards commercial applications through debt or equity offerings tied to our        common stock. Although our focus may be on convergent internet protocol technologies in the        security, medical, transportation, and entertainment sectors, we do not intend to restrict        considerations to internet related applications rather we

intend to consider business opportunities in any business or        industry segment that involves proprietary assets tied to technological        advances.

 

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Since the        distribution of ComCam International to our shareholders, the Company has substantially        decreased its day to day operations. Our sole executive officer and board of directors        currently devote limited time and attention to the affairs of the Company.

 

***Summary of Operations during the Year Ended December 31,        2007***

 

During the        year ended December 31, 2007, our mission, through the Company’s formerly wholly        owned subsidiary, ComCam International, was to become a leader in the digital video camera        and software industry. ComCam International has long been a pioneering developer and        provider of*Internet Protocol*wired and        wireless video products and 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. ComCam International’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.

 

ComCam        International was responsible for introducing the world’s first wireless camera        networking system using the current wireless standard, as well as developing the        world’s smallest IP network recording device.

 

Since        that time ComCam International has directed ComCam International’s efforts toward an        integrated camera system utilizing IP technology, which allows for video monitoring and        remote control of the camera over the internet. Basically, ComCam International has        developed a high-tech camera and recorder that can be accessed from almost anywhere. ComCam        International’s core technology is based on a computing platform complete with an        operating system, firmware (which is software embedded into hardware), software        applications, and development tools.

 

ComCam        International’s video networking system is comprised of proprietary hardware (namely        ComCam International’s “ComCam Series 10” cameras and micro-servers) and        software (including the “C3” and “Pocket C3”), and other components        that are programmable and can be reconfigured to integrate a wide variety of complementary        applications. ComCam International’s competitive features include:

 

|   | **•** | high performance with low-power consumption; |
|--------|------------|----------------------------------------------|

|   | **•** | proprietary, low bandwidth compression; |
|--------|------------|-----------------------------------------|

|   | **•** | frame-by-frame encryption; |
|--------|------------|----------------------------|

|   | **•** | motion-detection, access-control and other software                        capabilities; and |
|--------|------------|----------------------------------------------------------------------------------------------|

|   | **•** | multiple input/output ports. |
|--------|------------|------------------------------|

 

All of        ComCam International’s products use flexible viewer/recorder software that runs on        PCs, handheld personal digital assistants (“PDAs”), and cell phones. The        operating platform is a hardware and software solution which can integrate old-style analog        systems with next-generation IP surveillance/security applications.

 

The        target for ComCam International’s next-generation video products, solutions, and        services is the growing global market for fixed and mobile security applications over a        wide range of uses. Applications include telemedicine, transportation monitoring,        process-control and customized solutions in high-margin specialty and mass-market sectors        within corporate, government, and residential markets.

 

4

 

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During        2007, ComCam International sold a limited quantity of units which were primarily used for        testing purposes. ComCam International’s customers have included certain United        States Governmental agencies as well as private firms. ComCam International’s        marketing goal is to procure government contracts, expand ComCam International’s        commercial business and, in the future, penetrate the retail market.

 

The        Company distributed ComCam International to its shareholders as of December 28,        2007.

 

***Selection of New Business Opportunities***

 

The Company        intends to function as a business incubator, either through merger or acquisition, for        development stage technology assets and emerging businesses that management believes are        well positioned for future growth. Although our focus may be on convergent internet        protocol technologies in the security, medical, transportation, and entertainment sectors,        we do not intend to restrict considerations to internet related applications rather we        intend to consider business opportunities in any business or industry segment that involves        proprietary assets tied to technological advances. Management is seeking opportunities that        it considers to be of exceptional quality which policy may cause us to wait some time        before consummating a suitable transaction.

 

The        decision to participate in a specific business opportunity will be made based on        management’s analysis of the quality of the other firm’s management and        personnel, the anticipated acceptability of new products or marketing concepts, the merit        of technological changes and numerous other factors which are difficult, if not impossible,        to analyze through the application of any objective criteria. In many instances, it is        anticipated that the historical operations of a specific venture may not necessarily be        indicative of the potential for the future because of the necessity to substantially shift        a marketing approach, expand operations, change product emphasis, change or substantially        augment management, or make other changes.

 

The Company        will not acquire or merge with any company for which audited financial statements cannot be        obtained. It may be anticipated that any opportunity in which the Company participates will        present certain risks. Many of these risks cannot be adequately identified prior to        selection of the specific opportunity, and the Company’s shareholders must,        therefore, depend on the ability of management to identify and evaluate such risk. In the        case of some of the opportunities available to the Company, it may be anticipated that the        founders thereof have been unable to develop a going concern or that such business is in        its development stage in that it has not generated significant revenues from its principal        business activities prior to the Company’s participation.

 

***Acquisition of Business***

 

While no        new business opportunities have been identified to date, the Company may at some juncture        be a party to a merger, consolidation, reorganization, joint venture, franchise or        licensing agreement with another corporation or entity. We may also purchase the stock or        assets of an existing business. On the consummation of a transaction, it is possible that        the present management and shareholders of the Company would not remain in control of the        Company. In addition, the Company’s sole officer and board of directors may, as part        of the terms of an acquisition or merger, resign and be replaced by new officers and        directors without a vote of our shareholders.

 

 

5

 

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The Company        anticipates that any securities issued in any such reorganization would be issued in        reliance on exemptions from registration under applicable federal and state securities        laws. However, in some circumstances, as a negotiated element of any transaction, the        Company might agree to register such securities with the Commission at the time the        transaction is consummated, under certain conditions, or at a specified time thereafter.        The issuance of a substantial number of additional securities and their potential sale into        our trading market would likely have a depressive effect on the Company’s stock        price.

 

While the        actual terms of a transaction to which the Company may be a party cannot be predicted, it        may be expected that the parties to a merger or acquisition would find it desirable to        avoid the creation of a taxable event and thereby structure the acquisition in a so called        “tax-free” reorganization under Section 368(a)(1) of the Internal Revenue Code        of 1986, as amended (the “Code”). In order to obtain tax-free treatment under        the Code, it may be necessary for the owners of the acquired business to own 80% or more of        the voting stock of the surviving entity. In such event, the shareholders of the Company        would retain less than 20% of the issued and outstanding shares of the surviving entity,        which would result in a significant dilution in the equity of such shareholders.

 

*Operation of Business After Merger or Acquisition*

 

The        Company's operation following a merger or acquisition would be dependent on the nature of        the business and the interest acquired. We are unable to determine at this time whether the        Company would be in control of the business or whether present management would be in        control of the Company following a merger or acquisition. We could expect that any future        business would present various challenges that cannot be predicted at the present        time.

 

**Competition**

 

The Company        expects that it will be involved in intense competition with other business entities in the        search for new business opportunities in the technology sector, many of which will have a        competitive edge over the Company by virtue of stronger financial resources and prior        experience. There is no assurance that the Company will be successful in obtaining suitable        businesses to incubate.

 

**Marketability**

 

Since we        currently are not involved in selling products or services, there can be no assurance that        we will be successful in marketing any such products or services that develop as the result        of any new business.

 

**Patents, Trademarks, Licenses, Franchises, Concessions, Royalty        Agreements and Labor Contracts**

 

The Company        currently owns no patents, trademarks, licenses, franchises, concessions, or royalty        agreements. The Company is not subject to any labor contracts.

 

**Governmental and Environmental Regulation**

 

The Company        cannot anticipate the government regulations, if any, to which the Company may be subject        until we begin the process of incubating new businesses. The use of assets to conduct a        business that we may acquire could subject us to environmental, public health and safety,        land use, trade, or other governmental regulations and state or local taxation. In        selecting a business in which to acquire an interest, management will endeavor to        ascertain, to the extent of the limited resources of the Company, the effects of such        government regulation on the prospective business of the Company. In certain circumstances,        however, it may not be possible to predict with any degree of accuracy the impact of        government regulation.

 

6

 

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**Research and Development**

 

We cannot        anticipate the amount of future spending on research and development, if any, as such        amount would depend upon the requirements of the businesses under development and        availability of financing.

 

**Employees**

 

The Company        is a development stage company and currently has no employees. Don Gilbreath, our sole        officer and member of our board of directors, manages the Company. We look to Mr. Gilbreath        for his entrepreneurial skills and talents. Management also uses consultants, attorneys and        accountants as necessary and does not plan to engage any full-time employees in the near        future.

 

**Reports to Security Holders**

 

The        Company’s annual report contains audited financial statements. We are not required to        deliver an annual report to security holders and will not automatically deliver a copy of        the annual report to our security holders unless a request is made for such delivery. We        file all of our required reports and other information with the Securities and Exchange        Commission (the “Commission”). The public may read and copy any materials that        are filed by the Company with the Commission at the Commission’s Public Reference        Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information        on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.        The statements and forms filed by us with the Commission have also been filed        electronically and are available for viewing or copy on the Commission maintained Internet        site that contains reports, proxy and information statements, and other information        regarding issuers that file electronically with the Commission. The Internet address for        this site can be found at*http://www.sec.gov*.

 

**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 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 Company’s Business***

 

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

 

The        Company’s auditors included an explanatory statement in paragraph 4 of their report        on our financial statements for the years ended December 31, 2007 and 2006, stating that        there are certain factors which raise substantial doubt about the Company’s ability        to continue as a going concern. These factors include as lack of 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 of $7,364,997 as of December 31, 2007. We will continue to incur        operating losses as we maintain our search for suitable businesses to incubate and satisfy        our ongoing disclosure requirements with the Commission. Such continuing        losses could result in a decrease in share value.

 

 

7

 

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*THE        COMPANY'S LIMITED FINANCIAL RESOURCES CAST SEVERE DOUBT ON ITS ABILITY TO PURSUE OUR        BUSINESS PLAN OF INCUBATING NEW TECHNOLOGY DRIVEN BUSINESS OPPORTUNITIES.*

 

The        Company’s future operation is dependent upon its ability to realize sufficient        financing to incubate technology driven business opportunities through merger or        acquisition. We cannot be certain that financing for our intended purpose will be        forthcoming. Our inability to finance new business opportunities will prevent us from        developing our business plan and may act as a deterrent in any future negotiations with        merger or acquisition candidates. Should the Company be unable to realize financing and        develop what might become a profitable business opportunity, it will, in all likelihood, be        forced to cease operations.

 

*WE ARE        DEPENDENT UPON A KEY PERSON, WHO WOULD BE DIFFICULT TO REPLACE.*

 

Our        continued operation will be largely dependent upon the efforts of Don Gilbreath, our sole        officer and one of our directors. We do not maintain key-person insurance on Mr. Gilbreath.        Our future success also will depend in large part upon the Company’s future ability        to identify, attract and retain other highly qualified managerial, technical and sales and        marketing personnel. Competition for these individuals is intense. The loss of the services        of Mr. Gilbreath, the inability to identify, attract or retain qualified personnel in the        future or delays in hiring qualified personnel could make it more difficult for us to        maintain our operations and meet key objectives such as incubation of new business        opportunities.

 

*IF THE        COMPANY IS UNABLE TO OBTAIN ADDITIONAL CAPITAL TO OPERATE OUR BUSINESS, WE MAY NOT BE ABLE        TO EFFECTIVELY CONTINUE OPERATIONS*

 

As of        December 31, 2007, the Company had working capital of $9,500. We have no revenue generation        activities in place. As such, 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 working capital. Should we be unable to secure additional capital,        such condition would cause us to reduce expenditures which could have a material adverse        effect on our business.

 

*OUR        CHIEF EXECUTIVE OFFICER MAY NOT BE ABLE TO OFFER HIS UNDIVIDED ATTENTION TO THE        COMPANY*

 

Don        Gilbreath serves as our sole executive officer and as the sole executive officer of ComCam        International. Mr. Gilbreath’s dual responsibilities cause him to divide his time        between two corporations with disparate interests. Currently, Mr. Gilbreath devotes        significant time to the marketing of ComCam International’s products and services. As        such, he may not be able increase his effort in seeking out new business opportunities in        the technology sector.

 

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

 

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

 

The Company        will need to raise additional capital. 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 the Company’s 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

 

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*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 being registered pursuant        to the Exchange Act of 1934, as amended, that requires continuous disclosure with the        Commission. In addition we incur significant expenses in connection compliance with the The        Sarbanes-Oxley Act of 2002, as well as other related rules implemented by the Commission.        We expect that compliance with these laws, rules and regulations, may substantially        increase our expenses, and make some activities more time-consuming and costly. As a        result, there may be substantial increases in legal, accounting and certain other expenses        in the future, which will negatively impact our financial performance and could have a        material adverse effect on our results of operations and financial condition.

 

*THE        COMPANY’S STOCK PRICE IS VOLATILE*

 

The market        price is subject to significant volatility and trading volumes could be low. Factors        affecting the Company’s market price include:

 

|   | **•** | the Company’s perceived prospects; |
|--------|------------|------------------------------------------|

|   | **•** | 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 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. Pinksheets and        OTCBB securities are considered penny stocks unless they qualify for one of the        exclusions.

 

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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:  

|   | **•** | 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 are required to prepare a report by        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 investors could lose confidence in the accuracy and completeness of our        financial reports, which in turn could cause our stock price to decline.

 

| **ITEM 2.** | **Description of Property** |
|-------------|-----------------------------|

 

The Company        leased 4,500square feet of office space on a month to month basis in West Chester,        Pennsylvania. Our lease costs were approximately $50,000 for each of the years ended        December 31, 2007 and 2006. ComCam International now leases the office space. We now share        this space but we pay no rent for its use. We do not believe that we will need to lease an        office at any time in the foreseeable future in order to carry out the plan of operation        described herein.

 

| **ITEM 3.** | **LEGAL PROCEEDINGS** |
|-------------|-----------------------|

 

The        Company is currently not a party to any legal proceedings.

 

 

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

 

No matter        was submitted to a vote of the security holders, through the solicitation of proxies or        otherwise, during the fourth quarter ended December 31, 2007.

 

**PART        II**

 

| **ITEM 5.** | **MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER                        MATTERS** |
|-------------|-------------------------------------------------------------------------------------|

 

The        Company's common stock is quoted on the Pink Sheets LLC over-the-counter electronic        quotation and trading system under the symbol “CMCA”. Trading in the common        stock in the over-the-counter market has been limited and sporadic and the quotations set        forth below are not necessarily indicative of actual market conditions. Further, these        prices reflect inter-dealer prices without retail mark-up, mark-down, or commission, and        may not necessarily reflect actual transactions. The high and low bid prices for the common        stock for each quarter of the years ended December 31, 2007 and 2006 are as        follows:

 

| ***Year*** | ***Quarter Ending*** | ***High*** | ***Low*** |
|------------|----------------------|------------|-----------|
| 2007       | December 31          | $0.004     | $0.001    |
|       | September 30         | $0.006     | $0.002    |
|       | June 30              | $0.005     | $0.002    |
|       | March 31             | $0.004     | $0.002    |
| 2006       | December 31          | $0.03      | $0.004    |
|       | September 30         | $0.03      | $0.02     |
|       | June 30              | $0.05      | $0.03     |
|       | March 31             | $0.06      | $0.03     |

 

**Capital Stock**

 

The        following is a summary of the material terms of the Company’s capital stock. This        summary is subject to and qualified by our articles of incorporation and bylaws.

 

***Common Stock***

 

As of April        14, 2008, there were 39 shareholders of record holding a total of 39,990,134 shares of        fully paid and non-assessable common stock of the 750,000,000 shares of common stock, par        value $0.0001, authorized. The board of directors believes that the number of beneficial        owners is substantially greater than the number of record holders because a portion of our        outstanding common stock is held in broker “street names” for the benefit of        individual investors. The holders of the common stock are entitled to one vote for each        share held of record on all matters submitted to a vote of stockholders. Holders of the        common stock have no preemptive rights and no right to convert their common stock into any        other securities. There are no redemption or sinking fund provisions applicable to the        common stock.

 

11

 

----

 

 

***Preferred Stock***

 

As of April        14, 2008, there were no shareholders of record of the 20,000,000 shares of preferred stock,        par value $0.0001, authorized.

 

***Warrants***

 

As of April        14, 2008, the Company had no outstanding warrants to purchase shares of our common        stock.

 

***Stock        Options***

 

As of April        14, 2008, the Company had no outstanding stock options to purchase shares of our common        stock.

 

***Convertible Debenture***

 

During the        year ended December 31, 2007, a convertible debenture, as amended, was assumed by ComCam        International from the Company. The debenture accrues interest at 7% per annum, is due on        February 14, 2009, and is convertible into a variable number of shares on a pari pasu basis        with ACC Investors LLC. At December 31, 2007 the debenture was convertible, at the option        of the holder, into either the Company’s or ComCam International’s common        stock. On February 14, 2008 the convertible debenture was amended to permit the holder of        the debenture to convert principal and interest due into 147,551 shares of either Company        or ComCam International.

 

***Dividends***

 

The Company        has not declared any cash dividends since inception and does not anticipate paying any        dividends in the near future. The payment of cash dividends is within the discretion of the        board of directors and will depend on our earnings, capital requirements, financial        condition, and other relevant factors. There are no restrictions that currently limit the        Company's ability to pay cash dividends on its common stock other than those generally        imposed by applicable state law.

 

**Transfer Agent and Registrar**

 

Our        transfer agent is Continental Stock Transfer & Trust Co., 17 Battery Place, New York,        New York 10004; their telephone number is (212) 845-3200.

 

**Purchases of Equity Securities made by the Issuer and Affiliated        Purchasers**

 

None.

**Recent        Sales of Unregistered Securities**

 

None.

 

         

12

 

----

 

         

| **ITEM 6.** | **MANAGEMENT’S PLAN OF OPERATION** |
|-------------|------------------------------------------|

 

This*Management’s Plan of Operation*and other        parts of this current 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 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 current report. Our fiscal year end is December 31.

**Plan        of Operation**

 

The        Company’s plan of operation will require $100,000 in funding over the next 12 months        to continue the search for suitable businesses for incubation and satisfy ongoing        administrative expenses, which funding is not currently available. Should we acquire a new        business opportunity within the next 12 months our funding requirements will        change.

 

**Results of Operation**

 

During the        year ended December 31, 2007, we were engaged, through ComCam International, 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. We were also engaged in the process of        “spinning-off” ComCam International to our shareholders and satisfying        continuous public disclosure requirements. Since the year ended December 31, 2007 our day        to day operations have been limited to the search for new business opportunities in the        technology sector that we might develop through merger or acquisition.

 

***Net        Losses***

 

For the        period from inception to December 31, 2007 the Company recorded a net loss of $7,364,997.        Net losses for the year ended December 31, 2007 were $414,728 as compared to $815,943 for        the year ended December 31, 2006. The decrease in net losses in the current period is        attributable to a decrease in losses from the discontinued operations of ComCam        International. This decrease in losses from discontinued operations can be primarily        attributable to a decrease in losses from operations (to $62,153 from $624,600) which were        not offset by an increase in our interest expense (to $396,562 from $193,312).

 

The Company        expects to continue to operate at a loss through fiscal 2008 due to general and        administrativeexpenses which include accounting expenses,        professional fees, consulting fees, and costs associated with the preparation of public        disclosure documentation.

 

***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 losses carry forwards at December 31, 2007, consisted        of approximately $3,807,000 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 the Company and by the applicable tax laws which        are in effect at the time such carry forwards are utilized.

 

13

 

----

 

 

 

***Impact of Inflation***

 

The Company        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***

 

The Company        made no significant capital expenditures on property or equipment for the years ended        December 31, 2007 or 2006.

 

***Liquidity and Capital Resources***

 

Cash flow        used in operating activities from inception to December 31, 2007, was $4,131,090. Cash flow        used in operating activities was $229,635 for the year ended December 31, 2007, as compared        $467,481 for the year ended December 31, 2006. The decrease in cash flows used in operating        activities for the year ended December 31, 2007 can be primarily attributed to the        reduction of losses incurred from operations and an increase in accrued expenses from our        discontinued operations. The Company expects to continue to use cash flow in operating        activities.

 

Cash flow        used in investing activities from inception to December 31, 2007, was $59,617. Cash flows        used in investing activities was $0 for the years ended December 31, 2007 and December 31,        2006.

 

Cash flow        provided by financing activities from inception to December 31, 2007, was $4,200,207. Cash        flow provided by financing activities was $223,929 for the year ended December 31, 2007, as        compared to $226,750 for the year ended December 31, 2006. Cash flow provided by financing        activities for the year ended December 31, 2007 is primarily attributable to the increase        on a note payable of $185,000 from our discontinued operations.

 

The Company        had working capital of $9,500 as of December 31, 2007. We have funded our cash needs from        inception through December 31, 2007 through revenues and a series of debt and equity        transactions. Until such time as we acquire a revenue generating business, we expect that        we will require new debt or equity transactions to satisfy cash needs. If we are unable to        acquire a business or obtain additional financing, we may not be able to continue        operations.

 

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

 

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

 

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

 

***Off        Balance Sheet Arrangements***

 

As of        December 31, 2007, the Company 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.

 

 

14

 

----

 

***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 $7,364,997 as of December 31, 2007. 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 ability to continue as a going concern, includes (i)        obtaining funding from private placement sources; (ii) obtaining additional funding from        the sale of the Company’s securities; and (iii) obtaining loans from shareholders as        necessary. Although management believes that it will be able to obtain the necessary        funding to allow the Company 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 “*Results of        Operations”*and*“Description        of Business”*, with the exception of historical facts, are        forward looking statements. A safe-harbor provision may not be applicable to the forward        looking statements made in this current report. 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; |
|------------|------------------------------------------------|

| **•** | the acquisition of a revenue producing business; |
|------------|--------------------------------------------------|

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

| **•** | 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 is required by law.

 

 

15

 

----

 

 

***Stock-Based Compensation***

 

On January        1, 2006, we adopted 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. In January 2005, the        Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 107,        which provides supplemental implementation guidance for SFAS No. 123R. SFAS No. 123R        eliminates the ability to account for stock-based compensation transactions using the        intrinsic value method under Accounting Principles Board (APB) Opinion No. 25, Accounting        for Stock Issued to Employees, and instead generally requires that such transactions be        accounted for using a fair-value-based method. We use the Black-Scholes-Merton        (“BSM”) option-pricing model to determine the fair-value of stock-based awards        under SFAS No. 123R, consistent with that used for pro forma disclosures under SFAS No.        123, Accounting for Stock-Based Compensation. We have elected the modified prospective        transition method as permitted by SFAS No. 123R and accordingly prior periods have not been        restated to reflect the impact of SFAS No. 123R. The modified prospective transition method        requires that stock-based compensation expense be recorded for all new and unvested stock        options, restricted stock, restricted stock units, and employee stock purchase plan shares        that are ultimately expected to vest as the requisite service is rendered beginning on        January 1, 2006, the first day of our fiscal year 2006. Stock-based compensation expense        for awards granted prior to January 1, 2006 is based on the grant date fair-value as        determined under the pro forma provisions of SFAS No. 123.

 

Prior to        the adoption of SFAS No 123R, we measured compensation expense for our employee stock-based        compensation plans using the intrinsic value method prescribed by APB Opinion No. 25. We        applied the disclosure provisions of SFAS No. 123 as amended by SFAS No. 148, Accounting        for Stock-Based Compensation – Transition and Disclosure, as if the fair-value-based        method had been applied in measuring compensation expense. Under APB Opinion No. 25, when        the exercise price of our employee stock options was equal to the market price of the        underlying stock on the date of the grant, no compensation expense was        recognized.

 

We account        for equity instruments issued in exchange for the receipt of goods or services from other        than employees in accordance with SFAS No. 123 and the conclusions reached by the Emerging        Issues Task Force (“EITF”) in Issue No. 96-18. 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 as defined by EITF 96-18.

 

***Recent Accounting Pronouncements***

 

In December        2007, the FASB issued SFAS 160, “Noncontrolling interests in Consolidated Financial        Statements – an amendment of ARB No. 51”. This Statement amends ARB 51 to        establish accounting and reporting standards for the noncontrolling interest in a        subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling        interest in a subsidiary is an ownership interest in the consolidated entity that should be        reported as equity in the consolidated financial statements. This Statement is effective        for fiscal years beginning on or after December 15, 2008. Early adoption is not permitted.        Management is currently evaluating the effects of this statement, but it is not expected to        have any impact on the Company’s financial statements.

         

         

16

 

----

 

         

         

In January        2007, we adopted FIN 48. FIN 48 clarifies the accounting for uncertain taxes        recognized in an enterprise's financial statements in accordance with SFAS No. 109,        "*Accounting for Income Taxes."*FIN 48 prescribes a recognition threshold and measurement of a tax        position taken or expected to be taken in an enterprise's tax return. In addition,        FIN 48 provides guidance on derecognition, classification, interest and penalties,        accounting in interim periods and disclosure related to uncertain income tax        positions.

 

In February        2007, the FASB issued SFAS 159, “The Fair Value Option for Financial Assets and        Financial Liabilities.” SFAS 159 creates a fair value option allowing an entity to        irrevocably elect fair value as the initial and subsequent measurement attribute for        certain financial assets and financial liabilities, with changes in fair value recognized        in earnings as they occur. SFAS 159 also requires an entity to report those financial        assets and financial liabilities measured at fair value in a manner that separates those        reported fair values from the carrying amounts of assets and liabilities measured using        another measurement attribute on the face of the statement of financial position. Lastly,        SFAS 159 requires an entity to provide information that would allow users to understand the        effect on earnings of changes in the fair value on those instruments selected for the fair        value election. SFAS 159 is effective for fiscal years beginning after November 15, 2007        with early adoption permitted. The Company is continuing to evaluate SFAS 159 and to assess        the impact on our results of operations and financial condition if an election is made to        adopt the standard.

         

| **ITEM 7.** | **FINANCIAL STATEMENTS** |
|-------------|--------------------------|

 

Our        audited financial statements for the years ended December 31, 2007 and 2006 are attached        hereto as F-1 through F-21.

 

17

 

----

 

COMCAM, INC.

(A        Development Stage Company)

INDEX        TO FINANCIAL STATEMENTS

December 31, 2007 and 2006

 

 

|   | Page |
|--------|------|

 

|   | Report of Independent Registered Public Accounting                        Firm | F-2 |
|--------|--------------------------------------------------------------------------------|-----|

 

|   | Report of Independent Registered Public Accounting                        Firm | F-3 |
|--------|--------------------------------------------------------------------------------|-----|

 

|   | Balance Sheets | F-4 |
|--------|----------------|-----|

 

|   | Statements of Operations | F-5 |
|--------|--------------------------|-----|

 

|   | Statements of Stockholders’ Equity                        (Deficit) | F-6 |
|--------|---------------------------------------------------------------------------|-----|

 

|   | Statements of Cash Flows | F-12 |
|--------|--------------------------|------|

 

|   | Notes to Financial Statements | F-13 |
|--------|-------------------------------|------|

 

                                                                                                                                                                   

 

 

 

 

 

 

 

 

 

 

 

 

F-1

 

----

 

REPORT OF        INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Board of        Directors

ComCam,        Inc.

West        Chester, PA

 

We have        audited the accompanying balance sheet of ComCam, Inc.[*a        development stage company*] as of December 31, 2007, and the        related statements of operations, stockholders' equity (deficit) and cash flows for the        year ended December 31, 2007 and for the period from inception on January 1, 1999 through        December 31, 2007. These financial statements are the responsibility of the Company's        management. Our responsibility is to express an opinion on these financial statements based        on our audits. The financial statements of ComCam, Inc. for the period from January 1, 1999        through December 31, 2006 were audited by other auditors whose report expressed an        unqualified opinion on those statements and included an explanatory paragraph expressing        concern about the Company’s ability to continue as a going concern. The financial        statements as of December 31, 2006 reflect an accumulated deficit of $6,950,269. Our        opinion on the statements of operations, stockholders' equity (deficit) and cash flows from        inception of the development stage on January 1, 1999 through December 31, 2007, insofar as        it relates to amounts for prior periods through December 31, 2006, is based solely on the        report of other auditors.

 

We        conducted our audits in accordance with the standards of the Public Company Accounting        Oversight Board (United States). Those standards require that we plan and perform the audit        to obtain reasonable assurance about whether the financial statements are free of material        misstatement. The Company is not required to have, nor were we engaged to perform, an audit        of its internal control over financial reporting. Our audit included consideration of        internal control over financial reporting as a basis for designing audit procedures that        are appropriate in the circumstances, but not for the purpose of expressing an opinion on        the effectiveness of the Company’s internal control over financial reporting.        Accordingly, we express no such opinion. An audit includes examining, on a test basis,        evidence supporting the amounts and disclosures in the financial statements. An audit also        includes assessing the accounting principles used and significant estimates made by        management, as well as evaluating the overall financial statement presentation. We believe        that our audits provide a reasonable basis for our opinion.

 

In our        opinion, based on our audit and the report of other auditors, the financial statements        referred to above present fairly, in all material respects, the financial position of        ComCam, Inc. as of December 31, 2007, and the results of its operations and its cash flows        for the year ended December 31, 2007 and for the period from inception on January 1, 1999        through December 31, 2007, in conformity with accounting principles generally accepted in        the United States of America.

 

The        accompanying financial statements have been prepared assuming that ComCam, Inc. will        continue as a going concern. As discussed in Note 2 to the financial statements, ComCam,        Inc. has incurred losses since its inception and has not yet established profitable        operations. These factors raise substantial doubt about the ability of the Company to        continue as a going concern. Management’s plans in regards to these matters are also        described in Note 2. The financial statements do not include any adjustments that might        result from the outcome of these uncertainties.

 

 

PRITCHETT,        SILER & HARDY, P.C.

April 14,        2008

Salt Lake        City, Utah

 

 

F-2

 

----

 

REPORT OF        INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the        Stockholders’ and

Board of        Directors of

ComCam,        Inc.

 

We have        audited the accompanying consolidated statements of operations, stockholders’        deficit, and cash flows for the year ended December 31, 2006 and the cumulative amounts        through December 31, 2006 of ComCam, Inc. (a development stage company). These consolidated        financial statements are the responsibility of the Company’s management. Our        responsibility is to express an opinion on these consolidated financial statements based on        our audit.

 

We        conducted our audit in accordance with the standards of the Public Company Accounting        Oversight Board (United States). Those standards require that we plan and perform the audit        to obtain reasonable assurance about whether the financial statements are free of material        misstatement. The Company is not required to have, nor were we engaged to perform, an audit        of its internal control over financial reporting. Our audit included consideration of        internal control over financial reporting as a basis for designing audit procedures that        are appropriate in the circumstances, but not for the purpose of expressing an opinion on        the effectiveness of the Company’s internal control over financial reporting.        Accordingly we express no such opinion. An audit includes examining, on a test basis,        evidence supporting the amounts and disclosures in the financial statements, assessing the        accounting principles used and significant estimates made by management, as well as        evaluating the overall financial statement presentation. We believe that our audit provides        a reasonable basis for our opinion.

 

In our        opinion, the financial statements of ComCam, Inc. (a development stage company) referred to        above present fairly, in all material respects, the results of operations and cash flows        for the year ended December 31, 2006, in conformity with accounting principles generally        accepted in the United States of America.

 

The        accompanying 2006 consolidated financial statements have been prepared assuming that the        Company will continue as a going concern. As discussed in Note 2 to the financial        statements, the Company’s revenue generating activities are not in place and the        Company has incurred losses since inception. These conditions raise substantial doubt about        its ability to continue as a going concern. Management’s plans regarding those        matters also are described in Note 2. The financial statements do not include any        adjustments that might result from the outcome of this uncertainty.

 

 

JONES        SIMKINS, P.C.

Logan,        Utah

April 2,        2007

 

 

 

F-3

 

----

 

                                                                                      

| COMCAM, INC.                                                                            |
|-----------------------------------------------------------------------------------------|
| (A Development Stage Company)                                                           |
| BALANCE SHEET                                                                           |
| December 31, 2007                                                                       |
|                                                                                    |   |   |
|                                                                                    |   |   |
| ASSETS                                                                                  |   |   |
|                                                                                    |   |   |
| Current assets:                                                                         |   |   |
| Cash and cash equivalents                                                               | $ | 9,500 |
|                                                                                    |   |   |
| Total assets                                                                            | $ | 9,500 |
|                                                                                    |   |   |
| LIABILITIES AND STOCKHOLDERS' DEFICIT                                                   |   |   |
|                                                                                    |   |   |
| Current liabilities:                                                                    | $ | - |
|                                                                                    |   |   |
| Commitments and contingencies                                                           |   |   |
|                                                                                    |   |   |
| Stockholders' deficit:                                                                  |   |   |
| Preferred stock, $.0001 par value; 20,000,000 shares                        authorized, |   |   |
| no shares issued and outstanding                                                        |   | - |
| Common stock, $.0001 par value; 750,000,000 shares                        authorized,   |   |   |
| 39,990,134 shares issued and outstanding                                                | $ | 3,999 |
| Additional paid-in capital                                                              |   | 7,370,498 |
| Deficit accumulated during the development stage                                        |   | (7,364,997) |
|                                                                                    |   |   |
| Total stockholders' deficit                                                             |   | 9,500 |
|                                                                                    |   |   |
| Total liabilities and stockholders' deficit                                             | $ | 9,500 |

 

 

 

 

 

 

 

 

 

 

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

 

F-4

 

----

 

 

| COMCAM, INC.                                     |
|--------------------------------------------------|
| (A Development Stage Company)                    |
| STATEMENTS OF OPERATIONS                         |
| Years Ended December 31, 2007 and 2006           |
|                                             |   |   |   |   |   |   |
|                                             |   |   |   |   |   | Cumulative |
|                                             |   | 2007 |   | 2006 |   | Amounts |
|                                             |   |   |   |   |   |   |
| Revenues, net                                    | $ | - |   | - |   | - |
|                                             |   |   |   |   |   |   |
| Cost of revenues                                 |   | - |   | - |   | - |
|                                             |   |   |   |   |   |   |
| Income from continuing operations                |   | - |   | - |   | - |
|                                             |   |   |   |   |   |   |
| Loss from discontinued operations, net of income |   |   |   |   |   |   |
| tax of $0 for each period                        |   | (414,728) |   | (815,943) |   | (7,364,997) |
|                                             |   |   |   |   |   |   |
| Net loss                                         | $ | (414,728) |   | (815,943) |   | (7,364,997) |
|                                             |   |   |   |   |   |   |
|                                             |   |   |   |   |   |   |
| Loss per common share from continuing            |   |   |   |   |   |   |
| operations - basic and diluted                   | $ | - |   | - |   |   |
|                                             |   |   |   |   |   |   |
| Loss per common share from discontinued          |   |   |   |   |   |   |
| operations - basic and diluted                   |   | (0.01) |   | (0.03) |   |   |
|                                             |   |   |   |   |   |   |
|                                             | $ | (0.01) |   | (0.03) |   |   |
|                                             |   |   |   |   |   |   |
| Weighted average common and common               |   |   |   |   |   |   |
| equivalent shares - basic and diluted            |   | 37,245,000 |   | 30,451,000 |   |   |

 

 

 

 

 

 

 

 

 

 

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

 

F-5

 

----

```

                                                                         COMCAM, INC.
                                                                     (A Development Stage Company)
                                                             STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
                                                 Period from January 1, 1999 (Date of Inception) to December 31, 2007

                                                                                                                                              Deficit
                                                                                                         Accumulated                        Accumulated         Total
                                                                                        Additional          Other          Deferred         During the      Stockholders'
                                Preferred Stock                Common Stock               Paid-in       Comprehensive        Stock          Development       (Deficit)
                            -------------------------    --------------------------
                              Shares         Amount        Shares          Amount         Capital           Income       Compensation          Stage           Equity
                            ------------    ---------    ------------     ---------    ------------    --------------    ------------     -------------     ------------
Balance at January 1, 1999
 (date of inception)                  -  $         -               -   $         -  $            -  $              -  $            -   $             -   $            -

Issuance of common stock
     for cash                         -            -      1,783,430            180         784,816                                                   -          784,996

Net loss                              -            -               -             -               -                                           (787,169)        (787,169)
                            ------------    ---------    ------------     ---------    ------------    --------------    ------------     -------------     ------------

Balance at December 31, 1999          -            -       1,783,430           180         784,816                 -               -         (787,169)          (2,173)

Issuance of common stock
     for:
 Cash                                 -            -         424,782            42         734,045                                                   -          734,087
 Services                             -            -          54,284             5         137,036                                                   -          137,041

Net loss                              -            -               -             -               -                                           (802,538)        (802,538)
                            ------------    ---------    ------------     ---------    ------------    --------------    ------------     -------------     ------------

Balance at December 31, 2000          -            -       2,262,496           227       1,655,897                 -               -       (1,589,707)           66,417

Issuance of common stock
     for cash                         -            -          23,468             2          25,438                                                   -           25,440

Net loss                              -            -               -             -               -                                           (229,772)        (229,772)
                            ------------    ---------    ------------     ---------    ------------    --------------    ------------     -------------     ------------

Balance at December 31, 2001          -            -       2,285,964           229       1,681,335                 -               -       (1,819,479)        (137,915)

                                                                                  F-6
```

----

```

                                                                             COMCAM, INC.
                                                                     (A Development Stage Company)
                                                             STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
                                                 Period from January 1, 1999 (Date of Inception) to December 31, 2007

                                                                                                                                              Deficit
                                                                                                         Accumulated                        Accumulated         Total
                                                                                        Additional          Other          Deferred         During the      Stockholders'
                                Preferred Stock                Common Stock               Paid-in       Comprehensive        Stock          Development       (Deficit)
                            -------------------------    --------------------------
                              Shares         Amount        Shares          Amount         Capital           Income       Compensation          Stage           Equity
                            ------------    ---------    ------------     ---------    ------------    --------------    ------------     -------------     ------------

Balance forward, December
     31, 2001                         -            -       2,285,964           229       1,681,335                 -               -       (1,819,479)        (137,915)

Comprehensive loss:

 Net loss                             -            -               -             -               -                 -               -       (1,697,154)      (1,697,154)
 Other comprehensive income
     - cumulative
     foreign currency
     translation adjustment           -            -               -             -               -             1,668               -                 -            1,668
                                                                                                                                                            ------------

 Total comprehensive loss                                                                                                                                   (1,695,486)
                                                                                                                                                            ============

Acquisition of Bullet
     Environmental
     Technologies, Inc.               -            -       4,071,938           407       (523,193)                 -               -                 -        (522,786)

Issuance of common stock
     for:
 Cash                                 -            -         550,000            55         274,945                 -               -                 -          275,000
 Services                             -            -       1,500,000           150         899,850                 -               -                 -          900,000
 Accounts payable                     -            -         100,000            10          50,990                 -               -                 -           51,000
 Exercise of stock options            -            -          67,500             7          33,743                 -               -                 -           33,750

Issuance of stock options
     for services                     -            -               -             -         109,831                 -               -                 -          109,831
                            ------------    ---------    ------------     ---------    ------------    --------------    ------------     -------------     ------------

Balance at December 31, 2002          -            -       8,575,402           858       2,527,501             1,668               -       (3,516,633)        (986,606)

                                                                                  F-7
```

----

```

                                                                          COMCAM, INC.

                                                                    (A Development Stage Company)
                                                             STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
                                                 Period from January 1, 1999 (Date of Inception) to December 31, 2007

                                                                                                                                              Deficit
                                                                                                         Accumulated                        Accumulated         Total
                                                                                        Additional          Other          Deferred         During the      Stockholders'
                                Preferred Stock                Common Stock               Paid-in       Comprehensive        Stock          Development       (Deficit)
                            -------------------------    --------------------------
                              Shares         Amount        Shares          Amount         Capital           Income       Compensation          Stage           Equity
                            ------------    ---------    ------------     ---------    ------------    --------------    ------------     -------------     ------------

Balance forward, December
     31, 2002                         -            -       8,575,402           858       2,527,501             1,668               -       (3,516,633)        (986,606)

Comprehensive loss:
 Net loss                             -            -               -             -               -                 -               -         (649,912)        (649,912)
 Other comprehensive income
     - cumulative
     foreign currency
     translation adjustment           -            -               -             -               -           (3,344)               -                 -          (3,344)
                                                                                                                                                            ------------

 Total comprehensive loss                                                                                                                                     (653,256)
                                                                                                                                                            ============

Issuance of common stock
     for:
 Cash                                 -            -           4,000             -           2,000                 -               -                 -            2,000
 Services                             -            -       1,000,000           100          89,900                 -               -                 -           90,000
 Accounts payable                     -            -       1,226,369           123         346,547                                                              346,670
 Related party payable                -            -          92,000             9          45,991                                                               46,000
 Note payable                         -            -         150,000            15          74,985                 -               -                 -           75,000
                            ------------    ---------    ------------     ---------    ------------    --------------    ------------     -------------     ------------

Balance at December 31, 2003           -            -      11,047,771         1,105       3,086,924           (1,676)               -       (4,166,545)      (1,080,192)

                                                                             F-8
```

----

```

                                                                         COMCAM, INC.
                                                                     (A Development Stage Company)
                                                             STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
                                                 Period from January 1, 1999 (Date of Inception) to December 31, 2007

                                                                                                                                              Deficit
                                                                                                         Accumulated                        Accumulated         Total
                                                                                        Additional          Other          Deferred         During the      Stockholders'
                                Preferred Stock                Common Stock               Paid-in       Comprehensive        Stock          Development       (Deficit)
                            -------------------------    --------------------------
                              Shares         Amount        Shares          Amount         Capital           Income       Compensation          Stage           Equity
                            ------------    ---------    ------------     ---------    ------------    --------------    ------------     -------------     ------------

Balance forward, December
     31, 2003                         -            -      11,047,771         1,105       3,086,924           (1,676)               -       (4,166,545)      (1,080,192)

Comprehensive loss:
 Net loss                             -            -               -             -               -                 -               -         (608,206)        (608,206)
 Other comprehensive income
     - cumulative
     foreign currency
     translation adjustment           -            -               -             -               -             1,676               -                 -            1,676
                                                                                                                                                            ------------

 Total comprehensive loss                                                                                                                                     (606,530)
                                                                                                                                                            ============

Issuance of common stock
     for:
 Cash                                 -            -       2,500,000           250         132,350                 -               -                 -          132,600
 Exercise of stock options            -            -       2,347,500           234         200,553                 -               -                 -          200,787
 Services                             -            -       4,047,367           405         318,435                 -               -                 -          318,840
 Accounts payable                     -            -       4,025,169           403         297,809                 -               -                 -          298,212
 Deferred compensation                -            -       3,764,160           376         187,832                 -       (188,208)                 -                -
 Finder's fee                         -            -         180,000            18            (18)                 -               -                 -                -

Stock option compensation             -            -               -             -         167,626                 -               -                 -          167,626
                            ------------    ---------    ------------     ---------    ------------    --------------    ------------     -------------     ------------

Balance at December 31, 2004           -            -      27,911,967         2,791       4,391,511                 -       (188,208)       (4,774,751)        (568,657)

                                                                          F-9
```

----

```

                                                                             COMCAM, INC.
                                                                     (A Development Stage Company)
                                                             STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
                                                 Period from January 1, 1999 (Date of Inception) to December 31, 2007

                                                                                                                                              Deficit
                                                                                                         Accumulated                        Accumulated         Total
                                                                                        Additional          Other          Deferred         During the      Stockholders'
                                Preferred Stock                Common Stock               Paid-in       Comprehensive        Stock          Development       (Deficit)
                            -------------------------    --------------------------
                              Shares         Amount        Shares          Amount         Capital           Income       Compensation          Stage           Equity
                            ------------    ---------    ------------     ---------    ------------    --------------    ------------     -------------     ------------

Balance forward, December
     31, 2004                         -            -      27,911,967         2,791       4,391,511                 -       (188,208)       (4,774,751)        (568,657)

Conversion of common stock
     to Series A preferred
     stock                    4,100,000          410     (4,100,000)         (410)               -                 -               -                 -                -

Conversion of common stock
   options and warrants to
   Series A preferred stock     231,500           23               -             -          13,867                 -               -                 -           13,890

Issuances of Series A
     preferred stock
     for services             5,250,000          525               -             -         314,475                 -               -                 -          315,000

Issuance of common stock
     for:
 Cash                                 -            -       2,166,667           217          69,783                 -               -                 -           70,000
 Debt                                 -            -       3,830,000           383         118,617                 -               -                 -          119,000

Deferred compensation earned          -            -               -             -               -                 -         188,208                 -          188,208

Issuance of common stock
     warrants                         -            -               -             -         130,305                 -               -                 -          130,305

Net loss (restated)                   -            -               -             -               -                 -               -       (1,359,575)      (1,359,575)
                            ------------    ---------    ------------     ---------    ------------    --------------    ------------     -------------     ------------

Balance at December 31, 2005   9,581,500          958      29,808,634         2,981       5,038,558                 -               -       (6,134,326)      (1,091,829)

                                                                              F-10
```

----

```

                                                                      COMCAM, INC.
                                                                     (A Development Stage Company)
                                                             STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
                                                 Period from January 1, 1999 (Date of Inception) to December 31, 2007

                                                                                                                                              Deficit
                                                                                                         Accumulated                        Accumulated         Total
                                                                                        Additional          Other          Deferred         During the      Stockholders'
                                Preferred Stock                Common Stock               Paid-in       Comprehensive        Stock          Development       (Deficit)
                            -------------------------    --------------------------
                              Shares         Amount        Shares          Amount         Capital           Income       Compensation          Stage           Equity
                            ------------    ---------    ------------     ---------    ------------    --------------    ------------     -------------     ------------

Balance forward, December
     31, 2005                 9,581,500          958      29,808,634         2,981       5,038,558                 -               -       (6,134,326)      (1,091,829)

Conversion of Series A
     preferred stock to
     common stock           (4,000,000)        (400)       4,000,000           400               -                 -               -                 -                -

Issuance of common stock
     for cash                         -            -         600,000            60          16,690                 -               -                 -           16,750

Net loss                              -            -               -             -               -                 -               -         (815,943)        (815,943)
                            ------------    ---------    ------------     ---------    ------------    --------------    ------------     -------------     ------------

Balance at December 31, 2006   5,581,500          558      34,408,634         3,441       5,055,248                 -               -       (6,950,269)      (1,891,022)

Conversion of Series A
     preferred stock
     to common stock        (5,581,500)        (558)       5,581,500           558               -                 -               -                 -                -

Dividend of 100% of
     subsidiary                       -            -               -             -      2,315,250                  -               -                 -        2,315,250

Net loss                              -            -               -             -               -                 -               -         (414,728)        (414,728)
                            ------------    ---------    ------------     ---------    ------------    --------------    ------------     -------------     ------------

Balance at December 31, 2007           -  $         -      39,990,134   $     3,999  $   7,370,498   $              -  $            -   $   (7,364,997)   $        9,500
                            ============    =========    ============     =========    ============    ==============    ============     =============     ============

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

                                                              F-11
```

----

 

 

| COMCAM, INC.                                                                  |
|-------------------------------------------------------------------------------|
| (A Development Stage Company)                                                 |
| STATEMENTS OF CASH FLOWS                                                      |
| Years Ended December 31, 2007 and 2006                                        |
|                                                                          |   |   |   |   |   | Cumulative |
|                                                                          |   | 2007 |   | 2006 |   | Amounts |
| Cash flows from operating activities:                                         |   |   |   |   |   |   |
| Net income from continuing operations                                         | $ | - |   | - |   | - |
| Net cash provided by continuing operating                        activities   |   | - |   | - |   | - |
| Net cash used in discontinued operating                        activities     |   | (229,635) |   | (467,481) |   | (4,131,090) |
|                                                                          |   |   |   |   |   |   |
| Net cash used in operating activities                                         |   | (229,635) |   | (467,481) |   | (4,131,090) |
|                                                                          |   |   |   |   |   |   |
| Cash flows from investing activities:                                         |   |   |   |   |   |   |
| Net cash provided by continuing investing                        activities   |   | - |   | - |   | - |
| Net cash used in discontinued investing                        activities     |   | - |   | - |   | (59,617) |
|                                                                          |   |   |   |   |   |   |
| Net cash used in investing activities                                         |   | - |   | - |   | (59,617) |
|                                                                          |   |   |   |   |   |   |
| Cash flows from financing activities:                                         |   |   |   |   |   |   |
| Net cash provided by continuing financing                        activities   |   | - |   | - |   | - |
| Net cash provided by discontinued financing                        activities |   | 223,929 |   | 226,750 |   | 4,200,207 |
|                                                                          |   |   |   |   |   |   |
| Net cash provided by financing activities                                     |   | 223,929 |   | 226,750 |   | 4,200,207 |
|                                                                          |   |   |   |   |   |   |
| Net increase (decrease) in cash                                               |   | (5,706) |   | (240,731) |   | 9,500 |
|                                                                          |   |   |   |   |   |   |
| Cash, beginning of period                                                     |   | 15,206 |   | 255,937 |   | - |
|                                                                          |   |   |   |   |   |   |
| Cash, end of period                                                           | $ | 9,500 |   | 15,206 |   | 9,500 |

 

 

 

 

 

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

 

F-12

 

----

 

COMCAM, INC.

(A        Development Stage Company)

NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2007 and 2006

 

Note 1        – Organization and Summary of Significant Accounting Policies

 

Organization

 

ComCam,        Inc. (the Company) was formed on January 1, 1999 (date of inception). The Company is        considered a development stage company as defined in SFAS No. 7. Sources of financing for        the development stage activities have been primarily through equity and debt.

 

Effective        December 28, 2007, the Company issued a dividend of 100% of the shares of its wholly owned        subsidiary Comcam International, Inc. to the Company’s shareholders on a pro-rata        basis. Shareholders received one share of the subsidiary’s common stock for every        twenty shares of the Company’s common stock held.

 

Cash and        Cash Equivalents

 

For        purposes of the statement of cash flows, the Company considers all highly liquid        investments with a maturity of three months or less to be cash equivalents.

 

Accounts        Receivable

 

Accounts        receivable are amounts due on product sales and are unsecured. Accounts receivable are        carried at their estimated collectible amounts. Credit is generally extended on a        short-term basis; thus accounts receivable do not bear interest although a finance charge        may be applied to such receivables that are more than thirty days past due. Accounts        receivable are periodically evaluated for collectiblity based on past credit history with        clients. Provisions for losses on accounts receivable are determined on the basis of loss        experience, known and inherent risk in the account balance and current economic        conditions.

 

Inventories

 

The Company        values its inventories at the lower of cost or market, determined on the first-in first-out        (FIFO) method.

 

Income        Taxes

 

Deferred        income taxes are provided in amounts sufficient to give effect to temporary differences        between financial and tax reporting, principally related to net operating loss        carryforwards.

 

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        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 year ended December 31, 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 December 31, 2007.

 

F-13

 

----

 

COMCAM, INC.

(A        Development Stage Company)

NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2007 and 2006

 

Note 1        – Organization and Summary of Significant Accounting Policies(continued)

 

Property        and Equipment 

 

Property        and equipment are stated at cost less accumulated depreciation. Maintenance and repairs are        charged to expense as incurred. Costs of major renewals or betterments are capitalized over        the remaining useful lives of the related assets. Depreciation is computed by using the        straight-line method. Equipment is depreciated over three to five years and furniture and        fixtures are depreciated over seven years. The cost of property disposed of and related        accumulated depreciation is removed from the accounts at the time of disposal, and gain or        loss is reflected in operations.

 

Revenue        Recognition

 

Currently        the Company has only generated revenue from two sources of revenue; 1) product sales and 2)        consulting services. Each of these are sold and delivered separately to the        customer.

 

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.

 

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.

 

As the        Company continues to grow, sales will be evaluated to determine if a product sale or        consulting agreement contains multiple deliverables. If sales were to contain multiple        deliverables they would be reviewed for compliance with the provisions of EITF 00-21, which        would require the consideration of whether or not a separate unit of accounting existed for        purposes of determining revenue recognition. The individual sales would be considered a        separate unit of accounting if all of the following criteria are met:

 

|   | a. | The delivered item(s) has value to the customer on a stand                        alone basis; |
|--------|----|------------------------------------------------------------------------------------------------|

|   | b. | There is objective and reliable evidence of the fair value                        of the undelivered item(s); and |
|--------|----|-------------------------------------------------------------------------------------------------------------------|

|   | c. | If the arrangement includes a general right of return                        relative to the delivered item, delivery or performance of the undelivered                        item(s) is considered probable and substantially in the control of the                        Company. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

Earning        (Loss) Per Share

 

The        computation of basic earnings (loss) per common share is based on the weighted average        number of shares outstanding during the period.

 

The        computation of diluted earnings per common share is based on the weighted average number of        shares outstanding during the period plus the common stock equivalents which would arise        from the exercise of stock options and warrants outstanding using the treasury stock method        and the average market price per share during the period. Common stock equivalents are not        included in the diluted earnings per share calculation when their effect is        antidilutive.

 

F-14

 

----

 

COMCAM, INC.

(A        Development Stage Company)

NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2007 and 2006

 

Note 1        – Organization and Summary of Significant Accounting Policies        (continued)

 

Stock-Based Compensation 

 

Effective        January 1, 2006, the Company adopted Statement of Financial Accounting Standards (SFAS)        123R,*Share-Based Payment*, using the        modified prospective method. This statement requires the Company to recognize compensation        cost based on the grant date fair value of options granted. In 2006, the Company recognized        no compensation cost related to adoption of the statement.

 

Concentrations

 

The        Company maintains its cash in bank deposit accounts, which, at times, may exceed federally        insured limits. The Company has not experienced any losses in such accounts and believes it        is not exposed to any significant credit risk on cash and cash equivalents.

 

During 2007        the Company’s revenues were primarily from sales to a single customer. In addition,        the products sold during 2007 were purchased primarily from a single vendor.

 

Use        of Estimates in the Preparation of Financial Statements

 

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

 

Note        2 – Going Concern

 

As of        December 31, 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 financing 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.

 

Note 3        – Discontinued Operations

 

Effective        December 28, 2007, the Company issued a dividend of 100% of the shares of its wholly owned        subsidiary Comcam International, Inc. to the Company’s shareholders on a pro-rata        basis. Shareholders received one share of the subsidiary’s common stock for every        twenty shares of the Company’s common stock held.

 

As a result        of this dividend the statements of operations and cash flows for the year ended December        31, 2006 have been restated to record the necessary adjustments required to reflect the        operations of Comcam International, Inc. as discontinued operations.

 

F-15

 

----

 

COMCAM, INC.

(A        Development Stage Company)

NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2007 and 2006

 

Note 3        – Discontinued Operations(continued)

 

Summarized        results of operations for Comcam International, Inc. included as loss from discontinued        operations, net of tax, in the accompanying statements of operations for the years ended        December 31 and cumulative amounts, were as follows:

 

|                                                                      |      |       |      |       |        | Cumulative  |
|---------------------------------------------------------------------------|-----------|------------|-----------|------------|-------------|-------------|
|                                                                      |      | 2007       |      | 2006       |        | Amounts     |
|                                                                      |      |       |      |       |        |        |
| Revenues, net                                                             | $         | 1,209,762  |      | 44,402     |        | 1,818,992   |
| Cost of revenues                                                          |      | 1,019,564  |      | 149,868    |        | 1,271,313   |
|                                                                      |      |       |      |       |        |        |
| Gross profit (loss)                                                       |      | 190,198    |      | (105,466)  |        | 547,679     |
|                                                                      |      |       |      |       |        |        |
| Operating expenses:                                                       |      |       |      |       |        |        |
| General and administrative expenses                                       |      | 278,249    |      | 488,324    |        | 5,193,846   |
| Research and development expenses                                         |      | 6,052      |      | 31,210     |        | 2,257,831   |
| Gain on cancellation of debt                                              |      | (31,950)   |      | (400)      |        | (234,077)   |
|                                                                      |      |       |      |       |        |        |
|                                                                      |      | 252,351    |      | 519,134    |        | 7,217,600   |
|                                                                      |      |       |      |       |        |        |
| Loss from operations                                                      |      | (62,153)   |      | (624,600)  |        | (6,669,921) |
|                                                                      |      |       |      |       |        |        |
| Other income (expense):                                                   |      |       |      |       |        |        |
| Interest income                                                           |      | 883        |      | 1,969      |        | 14,211      |
| Interest expense                                                          |      | (396,562)  |      | (193,312)  |        | (752,391)   |
| Gain on embedded derivative liability                                     |      | 43,104     |      | -          |        | 43,104      |
|                                                                      |      |       |      |       |        |        |
|                                                                      |      | (352,575)  |      | (191,343)  |        | (695,076)   |
|                                                                      |      |       |      |       |        |        |
| Loss before provision for income taxes                                    | (414,728) |       | (815,943) |       | (7,364,997) |
|                                                                      |      |       |      |       |        |        |
| Provision for income taxes                                                |      | -          |      | -          |        | -           |
|                                                                      |      |       |      |       |        |        |
| Net loss                                                                  | $         | (414,728)  |      | (815,943)  |        | (7,364,997) |
|                                                                      |      |       |      |       |        |        |
| Net loss per common share - basic and diluted                             | $         | (0.01)     |      | (0.03)     |        |        |
|                                                                      |      |       |      |       |        |        |
| Weighted average common shares - basic and                        diluted |      | 37,245,000 |      | 30,451,000 |        |        |

 

 

 

F-16

 

----

 

COMCAM, INC.

(A        Development Stage Company)

NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2007 and 2006

 

Note 3        – Discontinued Operations(continued)

 

Summarized        cash flow information for Comcam International, Inc. included as net cash used in        discontinued investing activities and net cash provided by discontinued financing        activities, in the accompanying statements of cash flows years ended December 31 and        cumulative amounts, were as follows:

 

|                                      |   |    |   |    |   | Cumulative |
|-------------------------------------------|--------|---------|--------|---------|--------|------------|
|                                      |   | 2007    |   | 2006    |   | Amounts    |
| 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:     |   |    |   |    |   |       |
| Issuance of common stock                  |   | -       |   | 16,750  |   | 2,275,410  |
| Increase in notes payable                 |   | 185,000 |   | 210,000 |   | 1,849,530  |
| Proceeds from spin-off of subsidiary      |   | 38,929  |   | -       |   | 38,929     |
| Proceeds from reverse acquisition         |   | -       |   | -       |   | 36,338     |
|                                      |   |    |   |    |   |       |
| Net cash provided by financing activities | $      | 223,929 |   | 226,750 |   | 4,200,207  |

 

 

Note 4        – Details of Discontinued Operations

 

Convertible Debenture and Embedded Derivative to HNI, LLC

 

During the        year ended December 31, 2007, a convertible debenture was transferred from the Company to        Comcam International, Inc. Details related to the convertible debenture are discussed below        as they were when initiated by the Company.

 

On February        14, 2007, the Company issued a Convertible Debenture (the Debenture) to HNI, LLC. The        Debenture, as amended, accrues interest at 7% per annum and is convertible into a variable        number of shares. The per share conversion rate is defined as 30% off the most recent        closing bid price on the date that the Company receives notice of conversion.

 

The Company        analyzed the Debenture based on the provisions of EITF 00-19 and determined that the        conversion option of the Debenture qualifies as an embedded derivative. Information related        to the recognition of the embedded derivative is as follows:

 

 

 

 

F-17

 

----

 

COMCAM, INC.

(A        Development Stage Company)

NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2007 and 2006

 

Note 4        – Details of Discontinued Operations(continued)

 

Embedded        Derivative

 

The fair        value of the embedded derivative on February 14, 2007 was determined to be $113,080 and was        recorded as an embedded derivative liability. The embedded derivative is revalued at the        end of each reporting period and any resulting gain or loss is recognized as a current        period charge to the statement of operations. The fair value was calculated using the        Black-Scholes option pricing model with the following factors, assumptions and        methodologies:

 

|   | **•** | The fair value of the Company’s common stock was                        calculated to be $.017 per share on February 14, 2007. |
|--------|------------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | A volatility of 149% was calculated by using the                        Company’s closing stock prices since May 2006. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | The exercise price was $.0119. This amount was determined                        based on 30% off the most recent closing bid price immediately preceding                        February 14, 2007. |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | The estimated life was determined to be 1 year, which is                        equal to the contractual life of the embedded derivative. |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | The risk free interest rate was determined to be 5.06% based                        on the 1-year treasury rate. |
|--------|------------|------------------------------------------------------------------------------------------------------------------|

 

Since the        transfer of the convertible debenture, the Company has recorded accretion expense related        to the embedded derivative discount of $56,540.

 

Income Taxes

 

The        difference between income taxes at statutory rates and the amount presented in the        financial statements is a result of the following:

|   | Years Ended |
|--------|-------------|

|   | December 31, | Cumulative |
|--------|--------------|------------|

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

 

|   | Income tax benefit at statutory rate | $ | (144,000) | (273,000) | (1,332,000) |
|--------|--------------------------------------|---|-----------|-----------|-------------|

|   | Change in valuation allowance | 144,000 | 273,000 | 1,332,000 |
|--------|-------------------------------|---------|---------|-----------|

 

|   | $ | - | - | - |
|--------|---|---|---|---|

 

Deferred        tax assets are as follows:

|   | 2007 |
|--------|------|

 

|   | Net operating loss carryforwards | $ | 1,332,000 |
|--------|----------------------------------|---|-----------|

|   | Valuation allowance | (1,332,000) |
|--------|---------------------|-------------|

 

|   | $ | - |
|--------|---|---|

 

The        Company has net operating loss carryforwards of approximately $3,807,000, which begin to        expire in the year 2019. The amount of net operating loss carryforwards that can be used in        any one year will 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 carryforwards can be        utilized.

 

F-18

 

----

 

COMCAM, INC.

(A        Development Stage Company)

NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2007 and 2006

 

Note 4        – Details of Discontinued Operations(continued)

 

Supplemental Cash Flow Information

 

Actual        amounts paid for interest and income taxes are as follows:

 

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

 

|   | Interest | $ | - | 2,000 |
|--------|----------|---|---|-------|

|   | Income taxes | $ | - | - |
|--------|--------------|---|---|---|

 

On December        28, 2007, the Company distributed a dividend of 100% of the shares of its wholly owned        subsidiary Comcam International, Inc. to the Company’s shareholders on a pro rata        basis that entitled a shareholder to receive one share of Comcam International,        Inc.’s common stock for every twenty shares of the Company’s common stock held.        Assets, liabilities, and equity included in the dividend is as follows:

 

|   | Account receivable | $ | (192,541) |
|--------|--------------------|---|-----------|

|   | Inventory | (66,278) |
|--------|-----------|----------|

|   | Property and equipment, net | (127,179) |
|--------|-----------------------------|-----------|

|   | Other assets | (2,106) |
|--------|--------------|---------|

|   | Accounts payable | 316,860 |
|--------|------------------|---------|

|   | Accrued expenses | 470,156 |
|--------|------------------|---------|

|   | Embedded derivative liability | 69,976 |
|--------|-------------------------------|--------|

|   | Notes payable | 1,807,433 |
|--------|---------------|-----------|

|   | Equity | (2,315,250) |
|--------|--------|-------------|

 

|   | (38,929) |
|--------|----------|

|   | Cash transferred | 38,929 |
|--------|------------------|--------|

 

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

 

During the        year ended December 31, 2007, the Company:

 

|   | **•** | Acquired $125,000 of property and equipment in exchange for                        a convertible debenture. |
|--------|------------|-------------------------------------------------------------------------------------------------------------|

|   | **•** | Recorded an embedded derivative liability of $113,080 and                        recorded a discount on the convertible debenture of $113,080. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | Decreased the value of the embedded derivative liability and                        recognized a gain on the embedded derivative liability of                        $43,104. |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | Converted 5,581,500 shares of Series A preferred stock into                        5,581,500 shares of common stock. |
|--------|------------|----------------------------------------------------------------------------------------------------------------------|

 

During the        year ended December 31, 2006, the Company issued 4,000,000 shares of common stock in        exchange for 4,000,000 shares of Series A preferred stock.

 

 

F-19

 

----

 

COMCAM, INC.

(A        Development Stage Company)

NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2007 and 2006

 

Note        5 – Preferred Stock

 

The        Company has authorized 20,000,000 shares of preferred stock with a par value of $.0001, and        established one series of preferred shares designated as: Series A Preferred Stock,        consisting of 10,000,000 shares.

 

The        Series A Preferred Stock has the following rights and privileges:

 

| **•** | The holders of the shares are not entitled to vote, however,                        they are entitled to elect a majority of the Board of Directors. |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| **•** | Upon the liquidation of the Company, the holders of the                        shares will rank subordinate to the holders of common shares. |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------|

| **•** | The holders of the shares are entitled to dividends on                        parity with common stock shareholders. |
|------------|----------------------------------------------------------------------------------------------------------------------|

| **•** | The shares are convertible at the option of the holder at                        any time into common shares, at a conversion rate of one share of Series A                        Preferred Stock for one share of common stock. |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

Note 6        – Commitments and Contingencies

 

As        disclosed in Note 4, during the year ended December 31, 2007, a convertible debenture (the        Debenture) was transferred from the Company to Comcam International, Inc. (formerly a        wholly-owned subsidiary). A condition of the Debenture transfer was that the Company would        continue to guarantee the Debenture until certain conditions were met by Comcam        International, Inc. These conditions have not yet been met and therefore, the Company        continues to be a guarantor of the Debenture. The Debenture bears interest at 7%, is due on        February 14, 2009, and is convertible into a variable number of shares (currently 147,551)        of either Comcam International, Inc. or the Company’s common stock. At December 31,        2007, the Debenture had an outstanding balance of $125,000.

 

Except        for the debenture guarantee disclosed above, management believes that the Company is not        liable for any existing liabilities of its former subsidiary, but the possibility exists        that creditors and others seeking relief from the former subsidiary may also include the        Company in claims and suits pursuant to the parent-subsidiary relationship which previously        existed between the Company and its former subsidiary. The Company is not currently named        in nor is it aware of any such claims or suits against its former subsidiary. Management        believes that the Company would be successful in defending against any such claims and        believes that no material negative impact on the financial position of the Company would        occur. Management further believes that with the passage of time, the likelihood of any        such claims being raised will become more remote.

 

Note        7 – Fair Value of Financial Instruments

 

The        Company’s financial instruments consist of cash, accounts receivable, accounts        payable and notes payable. The carrying amount of these items approximates fair value        because of their short-term nature and the notes payable bear interest at the market        interest rate.

 

 

F-20

 

----

 

COMCAM, INC.

(A        Development Stage Company)

NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2007 and 2006

 

Note        8 – Recent Accounting Pronouncements

 

In        September 2006, the FASB issued FASB Statement No. 157,*Fair Value Measurements*(“FAS        157”). FAS 157 establishes a single authoritative definition of fair value, sets out        a framework for measuring fair value, and expands on required disclosures about fair value        measurement. FAS 157 is effective for the Company on January 1, 2008 and will be applied        prospectively. The provisions of FAS 157 are not expected to have a material impact on the        Company’s financial statements.

 

In        September 2006, the FASB issued FASB Statement No. 158,*Employers’ Accounting for Defined Benefit Pension and Other        Postretirement Benefits*(“FAS 158”). FAS 158        addresses the accounting for defined benefit pension plans and other postretirement benefit        plans (“plans”). Specifically, FAS 158 requires companies to recognize an asset        for a plan’s overfunded status or a liability for a plan’s underfunded status        and to measure a plan’s assets and its obligations that determine its funded status        as of the end of the company’s fiscal year, the offset of which is recorded, net of        tax, as a component of other comprehensive income in shareholders’ equity. FAS 158        was effective for the Company as of January 1, 2007 and applied prospectively. The        provisions of FAS 158 did not have any impact on the Company’s financial        statements.

 

In January        2007, we adopted FIN 48. FIN 48 clarifies the accounting for uncertain taxes        recognized in an enterprise's financial statements in accordance with SFAS No. 109,        "*Accounting for Income Taxes."*FIN 48 prescribes a recognition threshold and measurement of a tax        position taken or expected to be taken in an enterprise's tax return. In addition,        FIN 48 provides guidance on derecognition, classification, interest and penalties,        accounting in interim periods and disclosure related to uncertain income tax        positions.

 

In        February 2007, the FASB issued SFAS No. 159 ("SFAS 159"), "The Fair Value        Option for Financial Assets and Financial Liabilities". Under SFAS 159, companies may        elect to measure certain financial instruments and certain other items at fair value. The        standard requires that unrealized gains and losses on items for which the fair value option        has been elected be reported in earnings. SFAS 159 is effective for the Company as of        January 1, 2008.

 

In        December 2007, the FASB issued Statement of Financial Accounting Standards No. 160,        “*Noncontrolling Interests in Consolidated Financial        Statements, an Amendment of ARB No. 51*” (“SFAS        160”). SFAS 160 establishes accounting and reporting standards pertaining to        ownership interests in subsidiaries held by parties other than the parent; the amount of        net income attributable to the parent and to the noncontrolling interest; changes in a        parent’s ownership interest; and the valuation of any retained noncontrolling equity        investment when a subsidiary is deconsolidated. SFAS 160 also establishes disclosure        requirements that clearly identify and distinguish between the interests of the parent and        the interests of the noncontrolling owners. SFAS 160 is required to be adopted        prospectively for the first annual and interim reporting period beginning on or after        December 15, 2008. The Company is currently reviewing the effect that the adoption of this        statement will have on our financial statements.

 

.

 

F-21

 

----

 

| **ITEM 8.** | **CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON                        ACCOUNTING AND FINANCIAL DISCLOSURE** |
|-------------|-----------------------------------------------------------------------------------------------------------------|

 

None.

 

| **ITEM 8A.** | **CONTROLS AND PROCEDURES (ITEM 8A (T))** |
|--------------|-------------------------------------------|

 

**Management's Annual Report on Internal Control over Financial        Reporting**

 

The        Company’s management, including our chief executive officer and chief financial        officer, is responsible for establishing and maintaining adequate internal control over our        financial reporting. Internal control over financial reporting is a process designed by, or        under the supervision of, our chief executive and chief financial officers and implemented        by our board of directors, management and other personnel, to provide reasonable assurance        regarding the reliability of financial reporting and the preparation of financial        statements for external purposes in accordance with generally accepted accounting        principles and includes those policies and procedures that: (i) pertain to the        maintenance of records that, in reasonable detail, accurately and fairly reflect the        transactions and dispositions of our assets; (ii) provide reasonable assurance that        transactions are recorded as necessary to permit preparation of financial statements in        accordance with generally accepted accounting principles, and that our receipts and        expenditures are being made only in accordance with authorizations of our management and        directors; and (iii) provide reasonable assurance regarding prevention or timely        detection of unauthorized acquisition, use or disposition of our assets that could have a        material effect on the financial statements. Because of their inherent limitations,        internal control over financial reporting may not prevent or detect misstatements. Also,        projections of any evaluation of effectiveness to future periods are subject to the risk        that controls may become inadequate because of changes in conditions, or that the degree of        compliance with the policies or procedures may deteriorate.

 

Under the        supervision and with the participation of our management, including our principal executive        officer and principal financial officer, we conducted an evaluation of the effectiveness of        our internal control over financial reporting based on the framework in*Internal Control* *— Integrated Framework*issued by the        Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation,        our management concluded that our internal control over financial reporting was effective        as of December 31, 2007.

 

This annual        report does not include an attestation report of our registered public accounting firm        regarding internal control over financial reporting. Management's report was not subject to        attestation by our registered public accounting firm pursuant to temporary rules of the        Commission that permit us to provide only the management’s report in this Form        10-KSB.

 

**Changes in Internal Controls over Financial Reporting**

 

During the        period ended December 31, 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.

 

| **8B.** | **OTHER INFORMATION** |
|---------|-----------------------|

 

None.

 

 

18

 

----

 

**PART        III**

 

| **ITEM 9.** | **DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL                        PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.** |
|-------------|---------------------------------------------------------------------------------------------------------------------------------------------|

         

**Officers and Directors**

 

The        following table sets forth the name, age and position of each director and executive        officer of the Company:

 

| ***Name***                                                                                                        | ***Age***                                                                          | ***Year***

***Elected/Appointed***                                                      | ***Positions Held***                                                                                                   |
|-------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------|
|  

Don Gilbreath

                         

Robert Betty

                         

Albert White |  

50

                         

51

                         

62 |  

2002

                         

2002

                         

2004 |  

CEO, CFO, PAO and Director

                         

Director

                         

Director |

 

***Don        Gilbreath***- Mr. Gilbreath has served as a chief executive        officer, chief financial officer, principal accounting officer, and director of the Company        since June 3, 2002. He will serve until the next annual meeting of the Company’s        shareholders or until his successor is elected.

 

Mr.        Gilbreath has 24 years of experience in product development, engineering project management        and specialized technical sales. He has provided specialized R&D expertise to General        Electric, Johnson Controls, TCI, Standard & Poor’s, and Commodore International.        He developed and launched or licensed over 30 products including musical instruments,        multimedia players, and Internet access devices. Mr. Gilbreath has broad experience in        directing international engineering teams, vendor negotiations, licensing, patents,        offshore manufacturing and launching of innovative products to world markets. >From 1987        to 1992 Mr. Gilbreath was Director of Product and Market Development for Commodore        International Ltd. Among other responsibilities he was Chief Designer of CDTV, the        world’s first consumer multimedia player under $1,000. In addition, he created and        developed OEM sales channels and vertical markets for Commodore’s complete line of        microcomputers and peripherals. In 1990 Mr. Gilbreath was selected as delegate from the USA        to the USSR for technology transfer of semiconductor and computer architecture. In 1993 he        founded Gilbreath Systems Inc., an international contract engineering and product        development firm, and from 1994 to 1997 served as CTO and VP Engineering for VIScorp, a        Chicago-based company that designed and developed set-top boxes (pre-WebTV). In 1997, Mr.        Gilbreath founded the ComCam International.

 

Mr.        Gilbreath has served as a chief executive officer, chief financial officer, principal        accounting officer, and director of ComCam International since September 18,        1998.

 

***Robert Betty***- Mr. Betty was appointed        as a director of the Company on June 3, 2002. He will serve until the next annual meeting        of the Company’s shareholders or until his successor is elected.

 

 

 

 

19

 

----

 

Mr. Betty        has over 22 years of experience in the electronics industry. From 1990 to 1994 he held        various management positions for Maris Equipment Inc., rising to vice president of        operations with responsibility for all P&L and a $63 million budget. He was the        founder, in 1994, and is the current president of Pinnacle Electronic Systems Inc., a        security systems integration firm located in West Chester, Pennsylvania. He has used his        security systems expertise as project and/or operations manager for, among others, state        prisons, a strategic oil reserve at Big Hill Texas, and five air bases located in Saudi        Arabia to support the F5 Aircraft. Betty is a member of several management associations and        holds numerous technical certificates.

 

Mr. Betty        has served as a director of ComCam International since February 19, 1999.

 

***Albert White***– Mr. White was        appointed as a director of the Company on December 6, 2004. He will serve until the next        annual meeting of the Company’s shareholders or until his successor is        elected.

 

Mr. White        graduated from Columbia University with a Master of Business Administration and from the        University of Denver with a Bachelor of Science/Bachelor of Arts in Marketing. Mr. White        has held senior management positions with technology based companies, as the vice-president        of Network Solutions, a Virginia based developer of internet addressing systems from 1989        to 1994, and as the senior vice president of RMS Technology, a New Jersey-based        telecommunications provider, from 1994 to 1996. Since 1996 Mr. White has acted as a        business and financial consultant to chief executive officers throughout North America and        has provided entrepreneurial advice to both national and international clients. These        include acting as Senior Consultant for Safeguard Scientific, Inc., Wayne, Pennsylvania        (1997-1999); Managing Director of Promark International, LLC, Silver Spring, Maryland.        (1997-2001); Financial Advisor to the chairman and founder of Johnson Research and        Development, Atlanta, Georgia (2000-2001); and Chief Executive Officer of Excellatron Solid        State, LLC, Atlanta, Georgia (2001- 2003). Mr. White currently provides business        consultancy services in the areas of finance, marketing, acquisition/merger and real estate        development in the Atlanta, Georgia and Washington, D.C. area.

 

Mr. White        has served as a director of ComCam International since January 5, 2000.

 

No other        persons are expected to make any significant contributions to the Company’s executive        decisions who are not executive officers or directors of the Company.

 

Directors        currently are not reimbursed for out-of-pocket costs incurred in attending meetings and no        director receives any compensation for services rendered as a director. The Company may        adopt a provision for compensating directors in the future.

 

***Term        of Office***

 

Our        directors are appointed for a one (1) year term to hold office until the next annual        meeting of our shareholders or until removed from office in accordance with our bylaws. Our        executive officers are appointed by our Board of Directors and hold office until removed by        the board.

 

***Family Relationships***

 

There are        no family relationships between or among the directors or executive officers.

 

***Director’s Compensation***

 

Directors        are not reimbursed for out-of-pocket costs incurred in attending meetings and no director        receives any compensation for services rendered as a director. We do not anticipate        adopting a provision for compensating directors in the foreseeable future.

 

20

 

----

 

***Director Independence***

 

The Company        is quoted on the OTC Bulletin Board inter-dealer quotation system, which does not have        director independence requirements. However, for purposes of determining director        independence, we have applied the definitions set out in NASDAQ Rule 4200(a)(15). NASDAQ        Rule 4200(a)(15) states that a director is not considered to be independent if he or she is        also an executive officer or employee of the corporation. Accordingly, we consider Mr.        White and Mr. Betty to be independent directors.

 

***Involvement in Certain Legal Proceedings***

 

To the best        of our knowledge, during the past five years, none of the following occurred with respect        to a present or former director, executive officer, or employee: (1) any bankruptcy        petition filed by or against any business of which such person was a general partner or        executive officer either at the time of the bankruptcy or within two years prior to that        time; (2) any conviction in a criminal proceeding or being subject to a pending criminal        proceeding (excluding traffic violations and other minor offences); (3) being subject to        any order, judgment or decree, not subsequently reversed, suspended or vacated, of any        court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending        or otherwise limiting his or her involvement in any type of business, securities or banking        activities; and (4) being found by a court of competent jurisdiction (in a civil action),        the Commission or the Commodities Futures Trading Commission to have violated a federal or        state securities or commodities law, and the judgment has not been reversed, suspended or        vacated.

 

**Compliance with Section 16(A) of the Exchange Act**

 

Based        solely upon a review of Forms 3, 4 and 5 furnished to the Company, we are aware of the        following persons who, during the period ended December 31, 2007, failed to file, on a        timely basis, reports required by Section 16(a) of the Securities Exchange Act of        1934.

 

| **•** | Robert Betty failed to timely file a Form 4 or 5 despite                        being a director and shareholder. |
|------------|-------------------------------------------------------------------------------------------------------------------|

| **•** | Albert White failed to timely file a Form 3, 4 or 5 despite                        being a director and shareholder. |
|------------|----------------------------------------------------------------------------------------------------------------------|

 

**Code        of Ethics**

 

On January        26, 2005, ComCam adopted a new Code of Ethics pursuant to 247CFR which requires registered        investment companies and their investment advisers and principal underwriters to adopt a        code of ethics and reporting requirements to prevent fraudulent, deceptive and manipulative        practices. The Code of Ethics applies to directors and senior officers, such as the        principal executive officer, principal financial officer, controller, and persons        performing similar functions. The Company has incorporated, by reference, a copy of its        Code of Ethics as Exhibit 14 to this Form 10-KSB. Further, the Company’s Code of        Ethics is available in print, at no charge, to any security holder who requests such        information by contacting the Company.

 

 

 

 

 

 

21

 

----

 

**Board        of Directors Committees**

 

The        Company’s board of directors established an audit committee on January 26, 2005. The        primary responsibility of the audit committee is to oversee our financial reporting process        on behalf of the board of directors and report the result of their activities to the board.        Such responsibilities shall exclude but shall not be limited to, the selection, and if        necessary the replacement of our independent auditors, review and discuss with such        independent auditors and our internal audit department (i) the overall scope and plans for        the audit, (ii) the adequacy and effectiveness of the accounting and financial controls,        including our system to monitor and manage business risks, and legal and ethical programs,        and (iii) the results of the annual audit, including the financial statements to be        included in our annual report on Form 10-KSB. The committee, in carrying out its        responsibilities, believes its policies and procedures should remain flexible in order to        best react to changing conditions and circumstances. We have filed, by reference, a copy of        our Audit Committee Charter as Exhibit 99(i) to this Form 10-KSB.

 

The        Company’s board of directors has not established a compensation committee.

 

| **ITEM 10.** | **EXECUTIVE COMPENSATION** |
|--------------|----------------------------|

 

**Compensation Discussion and Analysis**

 

The        objective of the Company’s compensation program is to provide compensation for        services rendered as an executive officer. Our salaries are designed to retain the services        of our executive officer. Salary is currently the only type of compensation we utilize in        our compensation program. We utilize this form of compensation because we feel that it is        adequate to retain and motivate our executive officer. The amounts we deem appropriate to        compensate our executive officer are determined in accordance with market forces; we have        no specific formula to determine compensatory amounts at this time. While we have deemed        that our current compensatory program and the decisions regarding compensation are easy to        administer and are appropriately suited for our objectives, we may expand our compensation        program to any additional future employees to include options and other compensatory        elements.

 

Our chief        executive officer, chief financial officer and principal accounting officer entered into an        employment agreement with the Company on June 22, 2005 pursuant to which he was entitled to        an initial salary of $60,000 per annum to manage the Company and our former subsidiary        company, ComCam International, Inc. Since the Company remains in the development stage, Mr.        Gilbreath agreed to waive any entitlement to said salary for the period from June 22, 2005        to December 31, 2007. Sums paid to Mr. Gilbreath in each of 2007 and 2006 were paid to him        in the form of a consulting fee rather than a salary by ComCam International.

 

**Tables**

 

The        following table provides summary information for the years 2007, and 2006 concerning cash        and non-cash compensation paid or accrued by the Company to or on behalf of (i) the chief        executive officer and (ii) any other employee to receive compensation in excess of        $100,000.

 

 

 

 

 

22

 

----

 

 

| ***Summary Compensation Table***            |
|---------------------------------------------|
| Name and Principal Position                 | Year | Salary

($) | Bonus

($) | Stock Awards

($) | Option

Awards

($) | Non-Equity Incentive Plan Compensation

($) | Change in Pension Value and Nonqualified Deferred                        Compensation

($) | All Other Compensation

($)

                          | Total

($) |
| Don Gilbreath*

CEO, CFO, PAO, and director | 2007

2006

                         

                          | -

-

                         

                          | -

-

                          | -

-

                         

                          | -

-

                          | -

-

                          | -

-

                          | 4,000

39,000

                          | 4,000

39,000

                         

                          |

| * | Amounts credited to Mr. Gilbreath were paid by our former                        subsidiary ComCam International. |
|---|-------------------------------------------------------------------------------------------------------------------|

We have no        “Grants of Plan-Based Awards”, “Outstanding Equity Awards at Fiscal        Year-End”, “Option Exercises and Stock Vested”, “Pension        Benefits”, or “Nonqualified Deferred Compensation”. Nor do we have any        “Post Employment Payments” to report.

 

| **ITEM 11.** | **SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND                        MANAGEMENT AND RELATED STOCKHOLDER MATTERS** |
|--------------|---------------------------------------------------------------------------------------------------------------------------|

 

The        following table sets forth certain information concerning the ownership of the        Company’s 39,998,634 shares of common stock issued and outstanding as of April 14,        2008, with respect to: (i) all directors; (ii) each person known by us to be the beneficial        owner of more than five percent of our common stock; and (iii) our directors and executive        officers as a group.

 

| ***Names and Addresses of Managers and Beneficial                        Owners***                                                                  | ***Title of Class*** | ***Number of Shares*** | ***Percent of***

***Class*** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|----------------------|------------------------|-------------------------------|
| Don Gilbreath, CEO, CFO, principle accounting officer and                        director

1525 Tanglewood Drive

West Chester, Pennsylvania, 19380 | Common               | 11,223,138             | 28.1%                         |
| Robert Betty, director

912 Carrie Lane

West Chester, Pennsylvania, 19383                                                                          | Common               | 1,320,067              | 3.3%                          |
| Albert White, director

420 Northwest Drive

Silver Spring, Maryland 20901                                                                          | Common               | 200,000                | 0.5%                          |
| Global ePoint, Inc.

339 S. Cheryl Lane

City of Industry, CA 91789                                                                                 | Common               | 2,000,000              | 5.0%                          |
| Officer and Directors as a Group                                                                                                                    | Common               | 12,743,205             | 31.9%                         |

         

|   | * | Toresa Lou makes voting and investment decisions for Global                        ePoint, Inc.; Toresa Lou uses Global ePoint, Inc.’s address as her                        mailing address. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

23

 

----

 

| **ITEM 12.** | **CERTAIN RELATIONSHIPS AND RELATED                        TRANSACTIONS** |
|--------------|---------------------------------------------------------------------------|

 

None of our        directors or executive officers, nor any proposed nominee for election as a director, nor        any person who beneficially owns, directly or indirectly, shares carrying more than 5% of        the voting rights attached to all of our outstanding shares, nor any members of the        immediate family (including spouse, parents, children, siblings, and in-laws) of any of the        foregoing persons has any material interest, direct or indirect, in any transaction in the        period covered by this report or in any presently proposed transaction which, in either        case, has or will materially affect us.

 

| **ITEM 13.** | **Exhibits** |
|--------------|--------------|

 

Exhibits        required to be attached by Item 601 of Regulation S-B are listed in the Index to Exhibits        beginning on page 26 of this Form 10-KSB, which is incorporated herein by        reference.

 

| **ITEM 14.** | **PRINCIPAL ACCOUNTANT FEES AND SERVICES** |
|--------------|--------------------------------------------|

 

***Audit        Fees***

 

Pritchett,        Siler & Hardy ("Pritchett") is providing audit services to the Company in connection        with its annual report for the fiscal year ended December 31, 2007.

 

Jones        Simkins, P.C. (“Jones Simkins”) provided audit services to the Company in        connection with its annual report for the fiscal year ended December 31, 2006 and reviews        of the Company’s quarterly financial statements for the fiscal year ended December        31, 2007. The aggregate fees billed by Jones Simkins during the years 2007 and 2006 were        $8,733 and $35,769.

 

***Audit        Related Fees***

 

Neither        Pritchett nor Jones Simkins billed the Company fees in 2007 or 2006 for professional        services that are reasonably related to the audit or review of the Company’s        financial statements that are not disclosed in “Audit Fees” above.

 

***Tax        Fees***

 

Jones        Simkins billed to the Company fees of approximately $734 and $2,891 during 2007 and 2006,        respectively, for professional services rendered in connection with the preparation of the        Company’s tax returns. Pritchett billed to the Company no fees for professional        services rendered in connection with the preparation of the Company’s tax        returns.

 

***All        Other Fees***

 

Neither        Pritchett nor Jones Simkins billed to the Company fees in 2007 or 2006 for other        professional services rendered or any other services not disclosed above.

 

***Audit        Committee Pre-Approval***

 

All        services provided to the Company by Pritchett and Jones Simkins, as detailed above, were        pre-approved by the Company’s audit committee.

 

 

24

 

----

 

**SIGNATURES**

 

In        accordance with the requirements of the Securities Exchange Act of 1934, the registrant        caused this report to be signed on its behalf by the undersigned, thereunto duly authorized        this 14th day of April, 2008.

 

**COMCAM, INC.**

 

 

/s/ Don Gilbreath

Don Gilbreath

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

 

 

In        accordance with the Exchange Act, this report has been signed below by the following        persons on behalf of the registrant and in the capacities and on the dates        indicated.

 

|   | ***Signature*** | ***Title*** | ***Date*** |
|--------|-----------------|-------------|------------|

         

         

|   | /s/ Don Gilbreath | Director | April 14, 2008 |
|--------|-------------------|----------|----------------|

Don Gilbreath

         

|   | /s/ Robert Betty | Director | April 14, 2008 |
|--------|------------------|----------|----------------|

Robert Betty

         

|   | /s/ Albert White | Director | April 14, 2008 |
|--------|------------------|----------|----------------|

Albert White

 

 

25

 

----

 

**INDEX        TO EXHIBITS**

 

| ***Exhibit*** | ***Description*** |
|---------------|-------------------|

         

| 3(i)(a)* | Certificate of Incorporation dated December 5, 1997                        (incorporated by |
|----------|---------------------------------------------------------------------------------------------|

reference to the Form 10-SB filed on September 20, 1999).

| 3(i)(b)* | Amendment to Certificate of Incorporation dated February 28,                        1998. |
|----------|-------------------------------------------------------------------------------------------|

(incorporated by reference to the Form 10-SB filed on September 20,        1999).

| 3(i)(c)* | Amendment to Certificate of Incorporation dated March 15,                        1998. |
|----------|----------------------------------------------------------------------------------------|

(incorporated by reference to the Form 10-SB filed on September 20,        1999).

| 3(i)(d)* | Amendment to Certificate of Incorporation dated June 3,                        2002. |
|----------|--------------------------------------------------------------------------------------|

(incorporated by reference to the Form 10-KSB/A filed on August 8,        2002).

| 3(i)(e)* | Amendment to the Certificate of Incorporation dated December                        2, 2004. |
|----------|----------------------------------------------------------------------------------------------|

(incorporated by reference to the Form 10KSB/A filed on May 19,        2005).

| 3(ii)* | Bylaws (incorporated by reference to the Form 10-SB filed on                        September 20, 1999). |
|--------|----------------------------------------------------------------------------------------------------------|

| 4* | Amended and Restated Certificate of Designation, the Number,                        Powers, Preferences, Qualifications, Limitations, Restrictions, and Other                        Distinguishing Characteristics of Series A Preferred Stock of ComCam, Inc.                        (incorporated by reference to the Form 8-K dated December 5,                        2005). |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10(i)* | Stock exchange agreement between ComCam, Inc., and ComCam                        International, Inc., dated May 8, 2002 (incorporated by reference to the                        Form 10-SB/A, filed with the Commission on June 26, 2006). |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10(ii)(a)* | Securities Purchase Agreement between ComCam, Inc., ComCam                        International, Inc., and ACC Investors, LLC, dated June 22, 2005                        (incorporated by reference to ComCam, Inc.’s Form 8-K filed June 30,                        2005). |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10(ii)(b)* | Promissory Note for 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)* | Warrants of 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)* | Warrants of 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 with of 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/A-2, filed with the Commission on October 31, 2006). |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10(iii)* | Employment agreement between ComCam, Inc., ComCam                        International, 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(iv)* | Asset Purchase Agreement between ComCam, Inc. and HNI, LLC                        dated February 14, 2007 (incorporated by reference to the Form 8-K, filed                        with the Commission on February 15, 2007). |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10(v)* | Joinder, Amendment and Consent Agreement between ComCam,                        Inc., ComCam International, Inc. and HNI, LLC dated September 28, 2007                        (incorporated by reference to the Form 10-QSB filed November 14,                        2007). |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10(vi) | Amendment Agreement dated February                        14, 2008. |
|--------|---------------------------------------------------------------------|

| 14* | Code of Ethics adopted March 1, 2004 (incorporated by                        reference to the Form 10-KSB filed April 14, 2004). |
|-----|----------------------------------------------------------------------------------------------------------------------------------|

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

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

| 99(i)* | Audit Committee Charter adopted January 26, 2005                        (incorporated by reference to the Form 10-KSB/A filed May 19,                        2005). |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

         

|   | * | Incorporated by reference to previous filings of the                        Company. |
|--------|---|--------------------------------------------------------------------------------------|

 

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