UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C.  20549





FORM
10-Q/A


Mark
One





T
            QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
quarterly period ended June 30,
2007








£
            TRANSITION
      REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
transition period from__________ to __________





Commission
file
number:           0-49638





INTERNATIONAL
COMMERCIAL TELEVISION INC.


(Exact
name of small business issuer as specified in its charter)





Nevada
                    76-0621102State
      or other jurisdiction of incorporation or organization
                    (IRS
      Employer Identification
No.)










299
Madison Avenue N. Suite C


Bainbridge Island,
WA  98110


(Address
of principal executive offices)







206-780-8203


(Issuer's
telephone number)








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


Yes T   No
£





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


Yes £   No
T





APPLICABLE
ONLY TO CORPORATE ISSUERS





State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date: As of August 1, 2007, the Issuer had
12,169,187 shares of common stock, par value $0.001 per share, issued and
outstanding.





Transitional
Small Business Disclosure Format (Check one): Yes £   No
T













TABLE OF CONTENTS








PART I - FINANCIAL
    INFORMATIONITEM
      1.
                    FINANCIAL STATEMENTS
                    1ITEM
      2.
                    MANAGEMENT’S DISCUSSION AND ANALYSIS
                    25ITEM
      3.
                    CONTROLS AND PROCEDURES
                    28PART II - OTHER INFORMATIONITEM
      4.
                    OTHER INFORMATIONITEM
      5.
                    EXHIBITS AND REPORTS ON FORM 8-K
                    29SIGNATURES
                    30




Table of Contents





PART I - FINANCIAL INFORMATION








ITEM
      1.
                FINANCIAL
      STATEMENTSConsolidated Balance Sheet as of June 30, 2007
      (unaudited)
                2Consolidated Statements of Operations for the three months
      ended June 30, 2007 and 2006 (unaudited) and for the six months ended June
      30, 2007 and 2006 (unaudited)
                3Consolidated Statements of Deficiency in Assets for the six
      months ended June 30, 2007 (unaudited)
                4Consolidated Statements of Cash Flows for the six months ended
      June 30, 2007 and 2006 (unaudited)
                5Notes to the Consolidated Financial
      Statements
                6-21




Page 1
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INTERNATIONAL COMMERCIAL TELEVISION INC. AND SUBSIDIARIES





CONSOLIDATED
BALANCE SHEET


AS OF
JUNE 30, 2007


(Unaudited)








June 30,
                          2007(As
      restated- Note 11)ASSETSCURRENT
      ASSETS:Cash
                        
                        $
                        661,004Accounts
      receivable, net of allowance of $123,607
                        
                        
                        953,856Inventories
                        
                        
                        331,173Prepaid
      expenses and deposits
                        
                        
                        81,492Deferred
      tax asset less valuation allowance of $3,087,000
                        
                        
                        -Total
      current assets
                        
                        
                        2,027,525FURNITURE
      AND EQUIPMENT:Furniture
      and equipment
                        
                        
                        120,169Less
      accumulated depreciation
                        
                        
                        107,152Furniture
      and equipment, net
                        
                        
                        13,017Total
      assets
                        
                        $
                        2,040,542LIABILITIES AND SHAREHOLDERS’
      EQUITYCURRENT
      LIABILITIES:Accounts
      payable and accrued liabilities
                        
                        $
                        728,023Accounts
      payable and accrued liabilities – related parties
                        
                        
                        63,493Due
      to related parties
                        
                        
                        137,875Total
      current liabilities
                        
                        
                        929,391NOTE
      PAYABLE TO SHAREHOLDER
                        
                        
                        590,723COMMITMENTS
      AND CONTINGENCIES (NOTE 4)SHAREHOLDERS’
      EQUITY:Common
      stock, $0.001 par value, 100,000,000shares authorized, 12,169,187issued
      and outstanding as of  June 30, 2007
                        
                        
                        2,070Additional
      paid-in-capital
                        
                        
                        1,541,766Accumulated
      deficit
                        
                        
                        (1,023,408
                        )Total
      shareholders’ equity
                        
                        
                        520,428Total
      liabilities and shareholders’ equity
                        
                        $
                        2,040,542








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





Page 2
 Table of Contents




INTERNATIONAL COMMERCIAL TELEVISION INC. AND SUBSIDIARIES





CONSOLIDATED
STATEMENTS OF OPERATIONS


FOR THE
THREE AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006


(Unaudited)








For the three months ended
                      
                      
                      For the six months endedJune 30, 2007
                      
                      
                      June 30, 2006
                      
                      
                      June 30, 2007
                      
                      
                      June 30, 2006(As
      restated –
                        Note
      11)
                      
                      
                      
                      
                      
                      (As
      restated –
                        Note
      11)NET
      SALES
                      
                      $
                      2,355,486
                      
                      
                      $
                      180,484
                      
                      
                      $
                      4,038,531
                      
                      
                      $
                      502,573COST
      OF SALES
                      
                      $
                      778,315
                      
                      
                      $
                      144,447
                      
                      
                      $
                      1,234,984
                      
                      
                      $
                      273,944GROSS
      PROFIT
                      
                      
                      1,577,171
                      
                      
                      
                      36,037
                      
                      
                      
                      2,803,547
                      
                      
                      
                      228,629OPERATING
      EXPENSES:Depreciation
                      
                      
                      1,589
                      
                      
                      
                      2,173
                      
                      
                      
                      3,179
                      
                      
                      
                      6,860General
      and administrative
                      
                      
                      228,625
                      
                      
                      
                      192,972
                      
                      
                      
                      395,327
                      
                      
                      
                      308,718Selling
      and marketing
                      
                      
                      1,632,436
                      
                      
                      
                      56,464
                      
                      
                      
                      2,473,353
                      
                      
                      
                      141,363Rent
                      
                      
                      7,849
                      
                      
                      
                      4,083
                      
                      
                      
                      15,728
                      
                      
                      
                      9,159Total
      operating expenses
                      
                      
                      1,870,499
                      
                      
                      
                      255,692
                      
                      
                      
                      2,887,587
                      
                      
                      
                      466,100OPERATING
      LOSS
                      
                      
                      (293,328
                      )
                      
                      
                      (219,655
                      )
                      
                      
                      (84,040
                      )
                      
                      
                      (237,471
                      )INTEREST
      (INCOME) EXPENSE:
                      
                      
                      (5,509
                      )
                      
                      
                      1,196
                      
                      
                      
                      (3,210
                      )
                      
                      
                      1,812NETLOSS:
                      
                      
                      (287,819
                      )
                      
                      
                      (220,851
                      )
                      
                      
                      (80,830
                      )
                      
                      
                      (239,283
                      )BASIC
      NET LOSS PER SHARE
                      
                      $
                      (0.02
                      )
                      
                      $
                      (0.02
                      )
                      
                      $
                      (0.01
                      )
                      
                      $
                      (0.02
                      )FULLY
      DILUTED NET LOSS PER SHARE
                      
                      $
                      (0.02
                      )
                      
                      $
                      (0.02
                      )
                      
                      $
                      (0.01
                      )
                      
                      $
                      (0.02
                      )BASIC
      NET LOSS PER SHARE
                      
                      $
                      (0.02
                      )
                      
                      $
                      (0.02
                      )
                      
                      $
                      (0.01
                      )
                      
                      $
                      (0.02
                      )FULLY
      DILUTED NET LOSS PER SHARE
                      
                      $
                      (0.02
                      )
                      
                      $
                      (0.02
                      )
                      
                      $
                      (0.01
                      )
                      
                      $
                      (0.02
                      )








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





Page 3
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INTERNATIONAL COMMERCIAL TELEVISION INC. AND SUBSIDIARIES





CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY








Common Stock
                                
                                
                                Additional$0.001 par value
                                
                                
                                Paid-In
                                
                                
                                AccumulatedShares
                                
                                
                                Amount
                                
                                
                                Capital
                                
                                
                                Deficit
                                
                                
                                Totals(As restated – Note 11)
                                
                                
                                (As restated – Note 11)Balances,
      January 1, 2006
                                
                                
                                10,635,188
                                
                                
                                $
                                536
                                
                                
                                $
                                392,285
                                
                                
                                $
                                (1,286,114
                                )
                                
                                $
                                (893,293
                                )Issuance
      of common stock
                                
                                
                                58,000
                                
                                
                                
                                58
                                
                                
                                
                                56,443
                                
                                
                                
                                -
                                
                                
                                
                                56,501Amortization
      of deferred compensation under non-qualified stock option
    plan
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                16,000
                                
                                
                                
                                -
                                
                                
                                
                                16,000Net
      income
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                343,536
                                
                                
                                
                                343,536Balances,
      December 31, 2006
                                
                                
                                10,693,188
                                
                                
                                
                                594
                                
                                
                                
                                464,728
                                
                                
                                
                                (942,578
                                )
                                
                                
                                (477,256
                                )Issuance
      of common stock
                                
                                
                                1,475,999
                                
                                
                                
                                1,476
                                
                                
                                
                                1,105,524
                                
                                
                                
                                -
                                
                                
                                
                                1,107,000Stock
      issuance costs
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (28,486
                                )
                                
                                
                                -
                                
                                
                                
                                (28,486
                                )Net
      loss
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (80,830
                                )
                                
                                
                                (80,830
                                )Balances,
      June 30, 2007
                                
                                
                                12,169,187
                                
                                
                                $
                                2,070
                                
                                
                                $
                                1,541,766
                                
                                
                                $
                                (1,023,408
                                )
                                
                                $
                                520,428








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





Page 4
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INTERNATIONAL COMMERCIAL TELEVISION INC. AND SUBSIDIARIES





CONSOLIDATED
STATEMENTS OF CASH FLOWS


FOR THE
SIX MONTHS ENDED JUNE 30, 2007 AND 2006


(Unaudited)








June 30,
                        2007
                      
                      
                      June 30,
                        2006(As restated – Note 11)CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                      
                      $
                      (80,830
                      )
                      
                      $
                      (239,283
                      )Adjustments
      to reconcile net income (loss) to net cash provided by operating
      activities:Depreciation
                      
                      
                      3,179
                      
                      
                      
                      6,860Amortization
      of deferred compensation under nonqualified stock option
    plan
                      
                      
                      -
                      
                      
                      
                      8,000Expenses
      paid through issuance of common stock
                      
                      
                      -
                      
                      
                      
                      52,500(Increase)
      decrease in accounts receivable
                      
                      
                      (398,662
                      )
                      
                      
                      285,168Increase
      in inventory
                      
                      
                      (92,486
                      )
                      
                      
                      (46,672
                      )Decrease
      (increase) in prepaid expenses
                      
                      
                      7,007
                      
                      
                      
                      (26,898
                      )(Decrease)
      increase in accounts payable and accrued liabilities
                      
                      
                      (84,518
                      )
                      
                      
                      7,565Net
      cash (used in) provided by operating activities
                      
                      
                      (646,310
                      )
                      
                      
                      47,240CASH
      FLOWS FROM INVESTING ACTIVITIES:Additions
      to property and equipment
                      
                      
                      -
                      
                      
                      
                      (9,302
                      )Net
      cash used in financing activities
                      
                      
                      -
                      
                      
                      
                      (9,302
                      )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from the issuance of common stock
                      
                      
                      1,078,514
                      
                      
                      
                      4,000Advances
      from related parties
                      
                      
                      161,020
                      
                      
                      
                      202,928Payments
      to related parties
                      
                      
                      (317,694
                      )
                      
                      
                      (204,966
                      )Net
      cash provided by (used in) financing activities
                      
                      
                      921,840
                      
                      
                      
                      1,962NET
      INCREASE (DECREASE) IN CASH
                      
                      
                      275,530
                      
                      
                      
                      39,900CASH,
      beginning of the period
                      
                      
                      385,474
                      
                      
                      
                      21,050CASH,
      end of period
                      
                      $
                      661,004
                      
                      
                      $
                      60,950SUPPLEMENTAL
      DISCLOSURES OF CASH FLOWS INFORMATION:Interest
      paid
                      
                      $
                      3,857
                      
                      
                      $
                      1,812Income
      taxes paid
                      
                      $
                      -
                      
                      
                      $
                      -








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





Page 5
 Table of Contents





INTERNATIONAL COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2007


(Unaudited)








Note
1 - Summary of significant accounting policies





Interim
reporting





The
accompanying unaudited consolidated interim financial statements have been
prepared by the Company in accordance with the rules and regulations of
Regulation S-B as promulgated by the Securities and Exchange
Commission.  In the opinion of management, the accompanying unaudited
consolidated interim financial statements contain all adjustments necessary
(consisting of normal recurring accruals) to present fairly the financial
information contained therein.  The accompanying unaudited interim
consolidated financial statements do not include all disclosures required by
generally accepted accounting principles in the United States of
America.  The results of operations for the six month period ended
June 30, 2007, may not necessarily be indicative of the results that may be
expected for the year ended December 31, 2007. These financial statements and
notes should be read in conjunction with our audited consolidated financial
statements and notes thereto for the year ended December 31, 2006, included in
our Annual Report on form 10-KSB.





Organization





International
Commercial Television Inc., (the “Company” or “ICTV”) was organized under the
laws of the state of Nevada on June 25, 1998.





On April
1, 2000, the Company entered into a Share and Option Purchase Agreement with the
trustees of The Better Block Trust (“BBT”), which owned or controlled all of the
equity interest in Windowshoppc.com Limited (“WSL”), R.J.M. Ventures Limited
(“RJML”) and Better Blocks International Limited (“BBIL”).  Under the
agreement, the Company purchased all of the equity interest in WSL and RJML, an
option to purchase all of the equity in BBIL and obtained a license to all of
the assets owned by BBIL.  The purchase price under the agreement was
8,000,000 shares of the Company’s common stock and a $590,723 promissory note.
In 2003, the BB Trust agreed to forego all interest owed in connection with this
note and the Company and BB Trust have amended the promissory note to reflect
this.  The gain of $148,483 was capitalized to additional paid in
capital in connection with the amount of accrued interest forgiven on the
note  The option exercise price is the issuance of an additional
500,000 shares of the Company’s common stock.  For accounting
purposes, the acquisition has been treated as an acquisition of ICTV by WSL and
RJML and as a recapitalization of WSL and RJML.





Strategic
Media Marketing Corp. (“SMM”) was incorporated in the Province of British
Columbia on February 11, 2003 and has a December 31 fiscal
year-end.





Windowshoppc.com
Limited was organized under the laws of New Zealand on June 25, 1999 and has a
fiscal year-end of March 31.  During the 1999 fiscal year, at the
direction of management, WSL was removed from the New Zealand Registrar of
Companies.  All assets and commitments of WSL have been transferred or
assigned directly to ICTV.





R.J.M.
Ventures Limited was organized under the laws of New Zealand on April 23, 1998
and has a fiscal year-end of March 31.  During the 1999 fiscal year,
at the direction of management, RJML was removed from the New Zealand Registrar
of Companies.  All assets and commitments of RJML have been
transferred or assigned directly to ICTV.





Page 6
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INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2007


(Unaudited)








Note
1 - Summary of significant accounting policies (continued)





Nature of
operations





The
Company sells various consumer products.  The products are primarily
marketed and sold throughout the United States and internationally via
infomercials.  Although the companies are incorporated in Nevada and
British Columbia, operations are currently run from Washington State and British
Columbia.





These
consolidated financial statements have been prepared on a going concern basis,
which assumes that the Company will continue in operation for the foreseeable
future and be able to realize its assets and discharge its liabilities and
commitments in the normal course of business. Up until December 31, 2004 the
Company incurred accumulated losses, and had a working capital
deficiency.





Since
January 1, 2005, the Company has been working to develop future profitable
operations and improve the working capital position of the Company. During the
year ended December 31, 2005, the Company refocused its efforts towards
operations and profitability. As a result, the Company increased its sales and
reduced its proportionate costs.  In addition, the Company
successfully completed a private placement subsequent to the period whereby it
raised $1,107,000 which will be used to develop new products and grow our
existing business with new and profitable product lines.





The
ability of the Company to continue as a going concern and to realize the
carrying value of its assets and discharge its liabilities when they become due
is dependent on the success of its operations.





These
financial statements do not reflect adjustments that would be necessary if the
Company is unable to continue as a going concern. If the going concern
assumption is not appropriate for these financial statements, then adjustments
would be necessary to the carrying value of assets and liabilities, the reported
net income, and the balance sheet classifications used.





Principles of
consolidation





The
accompanying consolidated financial statements include 100% of the accounts of
the Company and its wholly-owned subsidiary SMM.  All significant
inter-company transactions and accounts have been eliminated.





Cash
equivalents





The
Company considers all unrestricted highly liquid investments with an original
maturity of three months or less to be cash equivalents.





Accounts
receivable





The
allowance for returns and bad debts for the period ended June 30, 2007 are
$101,794 and $21,813 respectively. The allowance is calculated based on historic
customer returns and bad debts. There were no allowances recorded prior to June
30, 2007. The amount of bad debt expense for the period ended June 30, 2007 and
2006 are $42,364 and $0. The amounts are included in general and administrative
expense in the accompanying consolidated financial statements.





Page 7
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INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2007


(Unaudited)








Note
1 - Summary of significant accounting policies (continued)





Inventory





Inventories
consist primarily of products held for resale, and are valued at the lower of
cost (first-in, first-out method) or market.  The Company adjusts
inventory for estimated obsolescence when necessary based upon demand and market
conditions.





Furniture and
equipment





Equipment
is carried at cost and depreciation is computed over the estimated useful lives
of the individual assets ranging from 3 to 7 years.  Depreciation is
computed using the straight-line method.





The
related cost and accumulated depreciation of assets retired or otherwise
disposed of are removed from the accounts and the resultant gain or loss is
reflected in earnings.  Maintenance and repairs are expensed currently
while major renewals and betterments are capitalized.





Long-term
assets of the Company are reviewed annually as to whether their carrying value
has become impaired.  Management considers assets to be impaired if
the carrying value exceeds the future projected cash flows from related
operations.  Management also reevaluates the periods of amortization
to determine whether subsequent events and circumstances warrant revised
estimates of useful lives.  As of June 30, 2007, management expects
these assets to be fully recoverable.





Depreciation
expense amounted to $ 3,179 and $ 6,860 for the six months ended June 30, 2007
and 2006, respectively.





Revenue
recognition





Product
sales revenue is recognized upon shipment of the product to the
customer.  The Company has a return policy whereby the customer can
return any product received within 30 days of receipt for a full refund
excluding shipping and handling.  The Company provides an allowance
for returns based upon past experience.  The return portion of the
allowance for the period ended June 30, 2007 and 2006 is $101,794 and $0
respectively. All returns for the years presented have been offset against gross
sales. Revenue related to the sale of third party products is generally recorded
at gross amounts with a corresponding charge to cost of
sales.  Certain third party products are sold under a commission basis
and only the commission income is recorded for these sales.





Shipping and
handling





Amounts
billed to a customer for shipping and handling are included in revenue; shipping
and handling revenue approximated $ 320,211 and $16,815 for the six months ended
June 30, 2007 and 2006, respectively. Shipping and handling costs are included
in cost of sales. Shipping and handling costs approximated $ 209,289 and $
14,390 for the six months ended June 30, 2007 and 2006,
respectively.





Page 8
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INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2007


(Unaudited)








Note
1 - Summary of significant accounting policies (continued)




Research and
development





Research
and development costs are expensed as incurred and are included in selling and
marketing expense in the accompanying consolidated financial
statements.  Research and development costs primarily consist of
efforts to discover and develop new products and the testing and development of
direct-response advertising related to these products.





Media and production
costs





Media and
production costs are expensed as incurred and are included in selling and
marketing expense in the accompanying consolidated financial
statements.  The Company incurred $ 1,884,738 and $75,907 in such
costs for the periods ended June 30, 2007 and 2006.








Income
taxes





The Company uses the asset and
liability method of accounting for income taxes, which requires the recognition
of deferred tax liabilities and assets for the expected future tax consequences
of temporary differences between tax bases and financial reporting bases of
assets and liabilities. A valuation allowance is recorded for deferred
tax assets when it is not more likely than not that this future tax asset will
be realized.








Stock
options





The
Company adopted a stock option plan (“Plan”).  The purpose of this
Plan is to provide additional incentives to key employees, officers, directors
and consultants of the Company and its subsidiaries in order to help attract and
retain the best available personnel for positions of responsibility and
otherwise promoting the success of the business activities.  It is
intended that options issued under this Plan constitute nonqualified stock
options.The general
terms of awards under the option plan are that 20% of the options granted will
vest the month following the grant, and 10% will vest every 6 months thereafter.
The maximum term of options granted is 10 years and the number of shares
authorized for grants of options is 3,000,000.





Prior to
March 2006, the Company used Statement of Financial Accounting Standards No. 148
"Accounting for Stock-Based Compensation - Transition and Disclosure" (SFAS No.
148) to account for its stock based compensation arrangements. This statement
amended the disclosure provision of FASB statement No. 123 to require prominent
disclosure about the effects on reported net income of an entity's accounting
policy decisions with respect to stock-based employee compensation. As permitted
by SFAS No. 123 and amended by SFAS No. 148, the Company continued to apply the
intrinsic value method under Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," to account for its stock-based
employee compensation arrangements.





Page 9
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INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2007


(Unaudited)








Note
1 - Summary of significant accounting policies (continued)





Stock options
(continued)





In
December 2004, the Financial Accounting Standards Board issued Statement
Number 123 (“FAS 123 (R)”), Share-Based Payments, which is effective for the
reporting period beginning on January 1, 2006. The statement will require the
Company to recognize compensation expense in an amount equal to the fair value
of share-based payments such as stock options granted to employees. The Company
has the option to either apply FAS 123 (R) on a modified prospective method or
to restate previously issued financial statements, and chose to utilize the
modified prospective method. Under this method, the Company is required to
record compensation expense (as previous awards continue to vest) for the
unvested portion of previously granted awards that remain outstanding at the
date of adoption.




In
January 2006, the Company adopted the expense recognition provisions of SFAS No.
123, and for the six months ended June 30, 2007, recorded no stock compensation
expense. If the Company had expensed stock options for the six months ended June
30, 2007, the stock compensation expense would also have been $
0.





Page 10
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INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2007


(Unaudited)








Note
1 - Summary of significant accounting policies (continued)





Stock options
(continued)





The
following is a summary of stock options outstanding under the existing stock
option plan for the six months ended June 30, 2007, and year ended December 31,
2006:





Number of Shares
                                      
                                      
                                      Weighted
                                        AverageEmployee
                                      
                                      
                                      Non-
                                        Employee
                                      
                                      
                                      Totals
                                      
                                      
                                      Exercise
                                        PriceBalance,
      January 1, 2006
                                      
                                      
                                      -
                                      
                                      
                                      
                                      1,209,000
                                      
                                      
                                      
                                      1,209,000
                                      
                                      
                                      $
                                      0.47Granted
      during 2006
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      $
                                      0.00Exercised
      during the year
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (8,000
                                      )
                                      
                                      
                                      (8,000
                                      )
                                      
                                      $
                                      0.50Cancelled
      during the year
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (40,000
                                      )
                                      
                                      
                                      (40,000
                                      )
                                      
                                      $
                                      2.00Balance,
      December 31, 2006
                                      
                                      
                                      -
                                      
                                      
                                      
                                      1,161,000
                                      
                                      
                                      
                                      1,161,000
                                      
                                      
                                      $
                                      0.47Cancelled
      during the period
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (4,000
                                      )
                                      
                                      
                                      (4,000
                                      )
                                      
                                      $
                                      0.50Exercised
      during the period
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      $
                                      0.00Balance,
      June 30, 2007
                                      
                                      
                                      -
                                      
                                      
                                      
                                      1,157,000
                                      
                                      
                                      
                                      1,157,000
                                      
                                      
                                      $
                                      0.43








During
the period ended June 30, 2007 and 2006, there were no options
granted.  Of the stock options currently outstanding, 1,017,000
options are currently exercisable at a weighted average exercise price of
$0.43.  These options expire at dates ranging between December 31,
2007 and September 28, 2011.





The
Company provides proforma disclosures of compensation expense under the fair
value method of SFAS 123 and SFAS 148.





Had
compensation cost for the Company’s option plans been determined using the fair
value method at the grant dates, the effect on the Company’s net loss and loss
per share would have been as follows for the six months ended June
30:





Page 11
 Table of Contents




INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2007


(Unaudited)








Note
1 - Summary of significant accounting policies (continued)






For the
six months ended June 30:
 
 2007
                  
                  
                  2006Net
      loss as reported
                  
                  $
                  (80,830
                  )
                  
                  $
                  (239,283
                  )Deduct:Total
      stock based employee compensation determined under fair value method for
      all awards, net of related tax effects
                  
                  
                  -
                  
                  
                  
                  -Pro
      forma net loss
                  
                  $
                  (80,830
                  )
                  
                  $
                  (239,283
                  )Loss
      per share:Basic
      - as reported
                  
                  $
                  (0.01
                  )
                  
                  $
                  (0.02
                  )Basic
      – pro forma
                  
                  $
                  (0.01
                  )
                  
                  $
                  (0.02
                  )Diluted
      - as reported
                  
                  $
                  (0.01
                  )
                  
                  $
                  (0.02
                  )Diluted
      – pro forma
                  
                  $
                  (0.01
                  )
                  
                  $
                  (0.02
                  )
 
 
 For the
three months ended June 30:
 
 2007
                  
                  
                  2006Net
      loss as reported
                  
                  $
                  (287,819
                  )
                  
                  $
                  (220,851
                  )Deduct:Total
      stock based employee compensation determined under fair value method for
      all awards, net of related tax effects
                  
                  
                  -
                  
                  
                  
                  -Pro
      forma net loss
                  
                  $
                  (287,819
                  )
                  
                  $
                  (220,851
                  )Loss
      per share:Basic
      - as reported
                  
                  $
                  (0.02
                  )
                  
                  $
                  (0.02
                  )Basic
      – pro forma
                  
                  $
                  (0.02
                  )
                  
                  $
                  (0.02
                  )Diluted
      - as reported
                  
                  $
                  (0.02
                  )
                  
                  $
                  (0.02
                  )Diluted
      – pro forma
                  
                  $
                  (0.02
                  )
                  
                  $
                  (0.02
                  )




Page 12
 Table of Contents





INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2007


(Unaudited)








Note
1 - Summary of significant accounting policies (continued)








Use of
estimates





The
preparation of financial statements in conformity with generally accepted
accounting principles of the United States of America requires management to
make estimates and assumptions that affect the amounts reported in the
consolidated financial statements and accompanying notes.  Management
believes that the estimates utilized in preparing its consolidated financial
statements are reasonable and prudent.  Actual results could differ
from these estimates.








Method of
Presentation





Certain
amounts in the 2006 financial statements have been reclassified to conform to
the 2007 presentation.





Concentration of credit
risk





Financial
instruments, which potentially subject the Company to concentrations of credit
risk, include cash and trade receivables.  The Company maintains cash
in bank accounts that, at times, may exceed federally insured
limits.  As of June 30, 2007, the Company did not exceed the federally
insured limit  in its  main credit card merchant account;
however it did exceed the limit by approximately $64,000 in its main operating
account and by $305,000 in its investment savings account. The Company has not
experienced any losses in such accounts and believes it is not exposed to any
significant risks on its cash in bank accounts. As of June 30, 2007 and June 30,
2006, 76% and 19% of the Company’s accounts receivable were due from various
individual customers to whom our Dermawand product had been sold directly via
Direct Response Television; the remaining 24% and 81% of the Company’s accounts
receivable were due from seven and five international infomercial operators,
respectively.








Note
2 - License and reconveyance agreements





Effective
April 1, 2000, the Company entered into a License and Reconveyance Agreement
with WSL and RJML.  These agreements are royalty-free.  WSL
and RJML owned or had rights in certain intellectual properties that were
transferred or assigned to ICTV during 2003.  Accordingly, WSL and
RJML granted all production rights, proprietary rights, inventory, development
rights, tangible assets, licenses and any assets or rights to the
Company.  The Company has the right to further develop and enhance the
intellectual properties as the Company sees fit.





Page 13
 Table of Contents




INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2007


(Unaudited)








Note
3 - Financial instruments





Statement
of Financial Accounting Standards No. 107 “Disclosures About Fair Value of
Financial Instruments” (“SFAS 107”) requires disclosure of the fair value of
financial instruments held by the Company.  SFAS 107 defines the fair
value of financial instruments as the amount at which the instrument could be
exchanged in a current transaction between willing parties.  The
following methods and assumptions were used to estimate fair value:





The
carrying amount of accounts receivable and payable approximate fair value due to
their short-term nature.  The carrying amount of note payable debt
represent the fair value of the note payable based on the borrowing rate of
0.0%.





Note
4 - Commitments and contingencies





Cell RXTM




During
2007 the Company and Info Marketing Group Inc. (“IMG”) entered into a Exclusive
License Letter Agreement  (“Agreement”) granting an exclusive license to
ICTV with respect to Cell RX and associated products
(”Product”).




IMG
granted to the Company an exclusive license to manufacture, market and sell Cell
RX and associated products anywhere in the world.  With respect to
marketing and selling assistance to be provided by IMG, such assistance shall
include making best efforts to obtain commitments from all of the talent who
have in the past or are presently endorsing Product to continue to do so. IMG
shall assign to ICTV all of its rights with respect to intellectual property,
tangible property, and agreements related to Product.




ICTV
shall pay royalties to IMG, up to a maximum amount of $1,000,000, as
follows.  ICTV shall make payments on a monthly basis in an amount equal to
2% (two percent) of the gross sales of Product in the preceding month. 
ICTV shall make payments in this manner until it has paid a total of $400,000 in
royalties.  Thereafter, ICTV shall make payments on a monthly basis in an
amount equal to 1.5% (one and one-half percent) of the gross sales of Product in
the preceding month, until it has paid a total of $1,000,000 in royalties, after
which no further royalties shall be due.




Upon the
Company’s purchase and payment of IMG’s entire inventory of Product, IMG shall
convey to ICTV ownership of all of the intellectual and tangible property
related to Product.  Upon conveyance of such property, the Company’s
exclusive license shall terminate, and thereafter ICTV shall be the sole owner
of Product, with all attendant rights to manufacture, market and sell Product
anywhere in the world.




Page 14
 Table of Contents




INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2007


(Unaudited)








Note
4 - Commitments and contingencies (continued)





Smart StacksTM





On May
18, 1998, RJML entered into a manufacturing, marketing and distribution
agreement with the inventor of Smart StacksTM.  Smart
StacksTM is a
set of rotating and stacking storage trays.  Pursuant to the
agreement, the inventor grants to RJML the exclusive right to manufacture,
advertise, promote, market, sell and distribute Smart StacksTM
worldwide through all means.  In consideration of the grants received,
RJML shall pay a royalty based on net sales depending on various scenarios as
defined in the agreement.  The initial term of the agreement was five
years starting May 18, 1998.  The agreement automatically and
continually renews for successive additional five-year terms unless RJML is in
material default and is notified in writing at least thirty days prior to the
end of the then current term that the inventor intends to terminate the
agreement.





On July
1, 1998, RJML entered into a production agreement with The Broadcast Arts Group,
Inc. (“BAG”) for the creation of infomercials of Smart StacksTM.  RJML
pays all necessary expenses for the creation of the infomercials and after
completion, will retain all rights, title and interest arising under the U.S.
Copyright Act, the U.S. Trademark Act and all other applicable laws, rules and
regulations in and to the entire editorial, visual, audio and graphic content of
the infomercials.  In consideration of services rendered by BAG, RJML
shall pay a royalty based on RJML’s adjusted gross sales depending on various
scenarios as defined in the agreement.




This
agreement has an indefinite term, however, it may be terminated upon thirty days
written notice under certain conditions as defined in the
agreement.





Derma WandTM





On August
17, 1999, WSL entered into a production agreement with BAG for the creation of
infomercials of Derma WandTM.  WSL
pays all necessary expenses for the creation of the infomercials and after
completion, will retain all rights, title and interest arising under the U.S.
Copyright Act, the U.S. Trademark




Act and
all other applicable laws, rules and regulations in and to the entire editorial,
visual, audio and graphic content of the infomercials.  In
consideration of services rendered by BAG, WSL shall pay a royalty based on
adjusted revenues or units sold depending on various scenarios defined in the
agreement.  The initial term of this agreement was until August 31,
2002.  Upon expiration, this agreement automatically and continually
renews for successive additional three-year terms unless either party is in
material breach or the other party notifies the breaching party in writing at
least thirty days prior to the
end of the then current term.  During the period ended March 31, 2005,
the agreement was amended such that royalties payable on units sold after
December 31, 2004 cease.




Page 15
 Table of Contents




INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2007


(Unaudited)








Note
4 - Commitments and contingencies (continued)





Derma WandTM(continued)





On
October 15, 1999, WSL entered into an endorsement agreement with an individual
for her appearance in a Derma Wand infomercial.  On July 11, 2001, the
agreement was amended to include a royalty payment for each unit sold
internationally, up to a maximum royalty payment for any one calendar
quarter.  Further, if the infomercial is aired in the United States,
then the airing fee will revert back to the same flat rate per calendar
quarter.  The initial term of the agreement is five years starting
October 15, 1999.  The agreement automatically and continually renews
for successive additional five-year terms unless RJML is in material default and
is notified in writing at least thirty days prior to the end of the then current
term that the individual intends to terminate the agreement.





The
Company assumed any and all responsibilities associated with the agreements
noted above on April 1, 2000, pursuant to the license and reconveyance agreement
disclosed in Note 2.





On
January 5, 2001, WSL entered into a marketing and royalty agreement with Omega
5.  WSL shall have worldwide nonexclusive rights to manufacture,
market and distribute Derma WandTM.  In consideration of these rights,
WSL shall pay a royalty for each unit sold of Derma Wand depending on various
scenarios as defined in the agreement.  The agreement is silent as to
its duration.





During
2007, the Company entered into an exclusive license agreement with Omega 5
wherein ICTV was assigned all of the trademarks and all of the patents and
pending patents relating to the Derma WandTMand was granted
exclusive license with respect to the commercial rights to the Derma WandTM. The
geographical scope of the license granted is the entire world consisting of the
United States of America and all of the rest of the world.   The
license remains exclusive to ICTV provided ICTV pays to Omega 5 a minimum annual
royalty of $250,000 in the initial 18 month term of the agreement and in each
succeeding one-year period. If the Company fails to meet the minimum
requirements as outlined in the agreement, it may be forced to assign the
trademarks and patents back to Omega 5. After the initial term, the exclusive
license granted shall renew automatically for a three year period, and
thereafter automatically at three-year intervals.





Also
during 2007, the Company entered into a drop ship agreement with The Home
Shopping Network (HSN).   The basic terms of the agreement are
that orders would be taken by HSN and transmitted to the Company’s third party
fulfillment warehouse. The fulfillment warehouse is then required to ship the
product to the customer within (3) three business days of the promotion of the
product by HSN.  The receivable created upon the shipment of the goods
is between the Company and HSN with terms of payment net 30 days.  HSN
has the right to withhold, for a period of ninety (90) days, up to ten percent
(10%) of each invoice as a reserve against Product returns from
customers.   As of June 30, 2007, the Derma Wand is the only
product that has been sold by HSN for the Company.





Page 16
 Table of Contents




INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2007


(Unaudited)








SprintR





On June
6, 2002, the Company entered into an exclusive license and marketing agreement
with Land Surfer Scooter Company Ltd. (“LSSC”).  LSSC has been granted
by way of a valid agreement, by the manufacturer, the exclusive right to market
a fold-up rocker-powered scooter.  LSSC agrees to allow the Company to
order the scooters directly from the manufacturer and the Company agrees to
provide LSSC all copies of such orders.  In consideration of the grant
received, the Company shall pay LSSC a royalty per unit sold depending on
various scenarios.  The initial term of the agreement is five years
starting June 6, 2002.  The agreement automatically and continually
renews for successive additional five years unless the Company is in
default.







Note
4 - Commitments and contingencies (continued)








Bondzalot





On July
8, 2002, the Company entered into an exclusive marketing and distribution
agreement with an individual in connection with a range of specialty adhesive
products (“Products”).  The individual has granted the exclusive right
to market through all forms of distribution a product to be known as BondzalotTM
in all countries throughout the world other than Canada and the United Kingdom,
and on a non-exclusive basis in Canada and the United Kingdom.  In
consideration for the right received, the Company shall, at its own expense,
produce and test broadcast a long-form infomercial (“Program”) and pay a royalty
on a per unit basis at a price to be determined.  The Company agrees
to purchase a minimum of $250,000 worth of Products from the individual on an
annual basis, commencing from the date the Program is test broadcasted (December
15, 2002), to retain the exclusive rights; otherwise the license shall revert to
a non-exclusive license.  The initial term of the agreement is five
years starting July 8, 2002.  The agreement automatically and
continually renews for successive additional five-year terms, unless either
party is in breach of the agreement and the breach is not remedied within 30
days of written notice.  The Company produced and tested the
Program.  As the results were poor, the Company did not purchase the
minimum commitment to retain exclusive rights.  Management plans to
edit the Program with the intention of marketing the Products
internationally.





TwinTechTM





In
January, 2003, the Company entered into an exclusive agreement with Chevron
Oronite Company LLC (“COC”) whereby the parties acknowledge that ICTV intends to
market, sell and distribute various automobile fuel and oil additive products,
developed by COC, in the United States and elsewhere in the world via various
means and media, including, without limitation, one or more direct response
television programs of 30 minutes or less.  The initial term of the
agreement is three years from the date of first airing of the infomercial and
automatically renews for three years unless the Company is in
default.





Page 17
 Table of Contents




INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2007


(Unaudited)








On
February 20, 2003, the Company entered into a Supply Agreement with Calidad Auto
Tech, Inc. (“CAT”) whereby CAT will sell to the Company and the Company will
purchase from CAT certain automobile fuel and oil additive products developed by
COC.  The initial term of the agreement is three years from the date
of first airing of the infomercial and automatically renews for three years
unless the Company is in default.







Note
4 - Commitments and contingencies (continued)





TwinTechTM(continued)








On April
28, 2003, the Company entered into a Broadcast Video Production Agreement with
Real to Reel Productions (“Real to Reel”) whereby Real to Reel will render
various services related to the production of an infomercial designed to sell
the TwinTechTM  Automotive Engine Treatment Additive.  In
addition to the production fee, the Company shall pay a royalty based on gross
sales generated from the infomercial.  The term of the agreement is
five years and Real to Reel retains the right of first refusal for subsequent
new shows to further promote the product.




On April
28, 2003, the Company entered into a funding agreement with a shareholder,
whereby the shareholder agrees to pay Real to Reel’s production fee of
approximately $196,000, and in return, the Company has agreed to pay a per kit
royalty to the shareholder based on various scenarios, until such time as the
total royalty payments reach $2,000,000. The production fee was accrued and
expensed as “production costs” and included in selling and marketing expenses
during the fiscal year ended December 31, 2005.





During
the period ended March 31, 2005, the Company entered into an agreement with COC
and CAT terminating the January 2003 and February 20, 2003 agreements described
above.  In consideration for surrendering our rights to advertise,
promote, market, sell or otherwise distribute TwinTechTM we received $800,000
from COC.  From these funds, we have agreed to repay Real to Reel’s
production fee in full settlement of the obligations to a shareholder set forth
in the April 28, 2003 agreement described above.








Other
matters





For the
period from January 1, 2004 through August 31, 2005, the Company did not
maintain product liability insurance for all products sold.  For
certain products, the Company is listed as an additional insured party under the
product manufacturers’ insurance policy. On February 20, 2007, the Company
purchased additional liability insurance to cover all direct to consumer product
sales in the US; this policy is due to expire on February 20,
2008.  At present, management is not aware of any claims against the
Company for any products sold.





Page 18
 Table of Contents




INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2007


(Unaudited)








On
December 20, 2005, the Company entered into an operating lease agreement for
office facilities for its international operations from an unrelated party for
approximately $2,400 per month.  The term of the lease is three years
commencing May 31, 2006 and ending May 31, 2009. Our executive offices are
located in Bainbridge Island, Washington and are provided to the Company at a
rate of $350 per month by Kelvin Claney, President of the Company.








Note
5 - Related party transactions





The
Company has received short-term advances from a shareholder.  These
advances amounted to  $137,875 as of June 30,
2007.  Interest rates charged during this period ranged from 0% to
21.24%.  These advances are included in “Due to related parties” on
the accompanying consolidated balance sheets.





The
Company has a note payable to a shareholder in the amount of $590,723. This loan
is interest-free and has no specific terms of repayment.








Note
6 - Capital transactions





During
the six months ended June 30, 2007, the Company issued 1,475,999 shares of
common stock at $0.75 per share, for a total of $1,106,999 as part of a private
placement. Investors will also receive a warrant to purchase one additional
share of the Company’s stock. The exercise price of the warrant will be $1.00
per share and is valid and exercisable from the date of issue and thereon for a
2 year period. 4,000 options were cancelled at $0.50 per share, for a total of
$2,000.







Note
7 - Basic and diluted loss per share





Statement
of Financial Accounting Standards No. 128 (SFAS 128), “Earnings Per Share”
requires presentation of basic earnings per share and diluted earnings per
share.





The
computation of basic earnings per share is computed by dividing earnings
available to common shareholders by the weighted average number of outstanding
common shares during the period.  Diluted earnings per share gives the
effect to all dilutive potential common shares outstanding during the
period.  The computation of diluted earnings per share does not assume
conversion, exercise or contingent exercise of securities that would have an
anti-dilutive effect on net income or loss.





Page 19
 Table of Contents




INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2007


(Unaudited)








Note
7 - Basic and diluted loss per share (continued)








The
computations for basic and diluted loss per share are as follows:





For
      the six months ended June 30, 2007:
                  
                  Income (Numerator)
                  
                  
                  Shares (Denominator)
                  
                  
                  Per Share AmountBasic
      earnings per shareLoss
      available to common shareholders
                  
                  $
                  (80,830
                  )
                  
                  
                  11,332,788
                  
                  
                  $
                  (0.01
                  )Diluted
      earnings per shareLoss
      available to common shareholders
                  
                  $
                  (675,645
                  )
                  
                  
                  11,716,253
                  
                  
                  $
                  (0.01
                  )






For
      the six months ended June 30, 2006:
                    
                    Loss(Numerator)
                    
                    
                    Shares (Denominator)
                    
                    
                    Per Share AmountBasic
      loss per shareLoss
      available to common shareholders
                    
                    $
                    (239,283
                    )
                    
                    
                    10,693,188
                    
                    
                    $
                    (0.02
                    )Diluted
      loss per shareLoss
      available to common shareholders
                    
                    $
                    (239,283
                    )
                    
                    
                    10,693,188
                    
                    
                    $
                    (0.02
                    )






For
      the three months ended June 30, 2007:
                    
                    Income (Numerator)
                    
                    
                    Shares (Denominator)
                    
                    
                    Per Share AmountBasic
      earnings per shareLoss
      available to common shareholders
                    
                    $
                    (287,819
                    )
                    
                    
                    11,972,387
                    
                    
                    $
                    (0.02
                    )Diluted
      earnings per shareLoss
      available to common shareholders
                    
                    $
                    (287,819
                    )
                    
                    
                    12,483,934
                    
                    
                    $
                    (0.02
                    )






For
      the three months ended June 30, 2006:
                      
                      Loss(Numerator)
                      
                      
                      Shares (Denominator)
                      
                      
                      Per Share AmountBasic
      loss per shareLoss
      available to common shareholders
                      
                      $
                      (220,851
                      )
                      
                      
                      10,693,188
                      
                      
                      $
                      (0.02
                      )Diluted
      loss per shareLoss
      available to common shareholders
                      
                      $
                      (220,851
                      )
                      
                      
                      10,693,188
                      
                      
                      $
                      (0.02
                      )




Page 20
 Table of Contents





INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2007


(Unaudited)








Note
8 - Income taxes





For the
most part, the Company has experienced operating losses since
inception.  The Company has provided a full valuation allowance on the
net deferred tax asset because of uncertainty regarding its
realization.  This asset primarily consists of net operating losses
and amortization.





The
Company had net operating losses of approximately $ 695,000 related to US
federal, foreign and state jurisdictions through June 30,
2007.  Utilization of net operating losses, which begin to expire at
various times starting in 2021, may be subject to certain
limitations.





Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes.





Significant
components of the Company’s deferred tax assets are approximately as
follows:





June 30, 2007Net
      operating loss
                
                $
                236,000Basis
      of investments
                
                
                2,327,000Basis
      of intangibles
                
                
                428,000Basis
      of stock options
                
                
                103,000Accumulated
      amortization
                
                
                107,000Accumulated
      depreciation
                
                
                4,000State
      taxes
                
                
                (118,000
                )Total
      deferred tax assets
                
                
                3,087,000Valuation
      allowance
                
                
                (3,087,000
                )Net
      deferred tax assets
                
                $
                -








Note
9 - Segment reporting





The
Company operates in one industry segment and is engaged in the selling of
various consumer products primarily through direct marketing
infomercials.  The Company evaluates performance and allocates
resources based on several factors, of which the primary financial measure is
operating income (loss) by geographic area.  Operating expenses are
primarily prorated based on the relationship between domestic and international
sales.





Page 21
 Table of Contents




INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2007


(Unaudited)








Note
9 - Segment reporting (continued)





Information
with respect to the Company’s operating loss by geographic area is as
follows:





For the six months ended June 30, 2007
                
                
                For the six months ended June 30, 2006Domestic
                
                
                International
                
                
                Totals
                
                
                Domestic
                
                
                International
                
                
                Totals(As restated – Note 11)
                
                
                
                
                
                (As restated – Note 11)Net
      Sales
                
                $
                3,436,713
                
                
                $
                601,818
                
                
                $
                4,038,531
                
                
                $
                156,045
                
                
                $
                346,528
                
                
                $
                502,573Cost
      of Sales
                
                $
                989,616
                
                
                $
                245,368
                
                
                $
                1,234,984
                
                
                $
                25,036
                
                
                $
                248,908
                
                
                $
                273,944Gross
      profit
                
                
                2,447,097
                
                
                
                356,450
                
                
                
                2,803,547
                
                
                
                131,009
                
                
                
                97,620
                
                
                
                228,629Operating
      expenses:Depreciation
                
                
                2,783
                
                
                
                396
                
                
                
                3,179
                
                
                
                2,131
                
                
                
                4,729
                
                
                
                6,860General
      and administrative
                
                
                352,890
                
                
                
                42,437
                
                
                
                395,327
                
                
                
                96,259
                
                
                
                212,459
                
                
                
                308,718Selling
      and marketing
                
                
                2,465,378
                
                
                
                7,975
                
                
                
                2,473,353
                
                
                
                116,002
                
                
                
                25,361
                
                
                
                141,363Rent
                
                
                13,770
                
                
                
                1,958
                
                
                
                15,728
                
                
                
                2,845
                
                
                
                6,314
                
                
                
                9,159Total
      operating expense
                
                
                2,834,821
                
                
                
                52,766
                
                
                
                2,887,587
                
                
                
                217,237
                
                
                
                248,863
                
                
                
                466,100Operating
      income (loss)
                
                $
                (387,724
                )
                
                $
                303,684
                
                
                $
                (84,045
                )
                
                $
                (86,228
                )
                
                $
                (151,243
                )
                
                $
                (237,471
                )








For the three months ended June 30,
      2007
                
                
                For the three months ended June 30,
      2006Domestic
                
                
                International
                
                
                Totals
                
                
                Domestic
                
                
                International
                
                
                Totals(As restated – Note 11)
                
                
                
                
                
                (As restated – Note 11)NET
      SALES
                
                $
                2,136,145
                
                
                $
                219,341
                
                
                $
                2,355,486
                
                
                $
                40,511
                
                
                $
                139,973
                
                
                $
                180,484COST
      OF SALES
                
                $
                668,830
                
                
                $
                109,485
                
                
                $
                778,315
                
                
                $
                17,775
                
                
                $
                126,672
                
                
                $
                144,447Gross
      profit
                
                
                1,467,315
                
                
                
                109,856
                
                
                
                1,577,171
                
                
                
                22,736
                
                
                
                13,301
                
                
                
                36,037Operating
      expenses:Depreciation
                
                
                1,478
                
                
                
                111
                
                
                
                1,589
                
                
                
                449
                
                
                
                1,724
                
                
                
                2,173General
      and administrative
                
                
                214,148
                
                
                
                14,477
                
                
                
                228,625
                
                
                
                54,803
                
                
                
                138,169
                
                
                
                192,972Selling
      and marketing
                
                
                1,620,134
                
                
                
                12,302
                
                
                
                1,632,436
                
                
                
                42,491
                
                
                
                13,973
                
                
                
                56,464Rent
                
                
                7,300
                
                
                
                549
                
                
                
                7,849
                
                
                
                1,023
                
                
                
                3,060
                
                
                
                4,083Total
      operating expense
                
                
                1,843,060
                
                
                
                27,439
                
                
                
                1,870,499
                
                
                
                98,766
                
                
                
                156,926
                
                
                
                255,692Operating
      income (loss)
                
                $
                (375,745
                )
                
                $
                82,417
                
                
                $
                (293,328
                )
                
                $
                (76,030
                )
                
                $
                (143,625
                )
                
                $
                (219,655
                )




Page 22
 Table of Contents





NOTE
10  -  GOING  CONCERN  CONSIDERATIONS




The
accompanying consolidated financial statements have been prepared assuming the
Company will continue as a going concern and do not include any adjustments to
reflect the possible future effects on the recoverability of assets and
liquidation of liabilities that may result from this uncertainty. Although the
Company has a positive working capital at June 30, 2007, the operating cash
flows have decreased approximately $646,000 year to date. In addition, the
company has an accumulated deficit of approximately $1,023,000 as of June 30,
2007. These considerations raise  substantial doubt about the
Company's ability to continue as a going concern. Management is actively
pursuing additional financing to fund the current operating
losses.





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NOTE
11 - RESTATEMENT





The
Company has reviewed its revenue recognition policies and has discovered that it
was understating customer returns for its infomercial products
sales.  In addition, The Company has also reviewed its timing for
recognizing revenues on product sales and determined that certain revenues were
being recorded before completion of the sale. As a result of these discoveries,
management determined that it was appropriate to restate our consolidated
financial statements for the period ended June 30, 2007.  The effect
of the restatement on the consolidated financial statements is as
follows:





For
      the three months ended June 30, 2007
                                                
                                                
                                                For
      the six months ended June 30, 2007Accounts
      receivable:As
      previously reported
                                                
                                                $
                                                1,771,935
                                                
                                                
                                                $
                                                1,771.935Adjustment
                                                
                                                $
                                                ( 818,079
                                                )
                                                
                                                $
                                                ( 818,079
                                                )As
      restated
                                                
                                                $
                                                953,856
                                                
                                                
                                                $
                                                953,856Inventories:As
      previously reported
                                                
                                                $
                                                269,569
                                                
                                                
                                                $
                                                269,569Adjustment
                                                
                                                $
                                                61,604
                                                
                                                
                                                $
                                                61,604As
      restated
                                                
                                                $
                                                331,173
                                                
                                                
                                                $
                                                331,173Net
      sales:As
      previously reported
                                                
                                                $
                                                3,151,752
                                                
                                                
                                                $
                                                4,834,797Adjustment
                                                
                                                $
                                                ( 796,266
                                                )
                                                
                                                $
                                                ( 796,266
                                                )As
      restated
                                                
                                                $
                                                2,355,486
                                                
                                                
                                                $
                                                4,038,531Cost
      of sales:As
      previously reported
                                                
                                                $
                                                839,919
                                                
                                                
                                                $
                                                1,296,588Adjustment
                                                
                                                $
                                                ( 61,604
                                                )
                                                
                                                $
                                                ( 61,604
                                                )As
      restated
                                                
                                                $
                                                778,315
                                                
                                                
                                                $
                                                1,234,984Operating
      expenses:As
      previously reported
                                                
                                                $
                                                1,848,686
                                                
                                                
                                                $
                                                2,865,774Adjustment
                                                
                                                $
                                                21,813
                                                
                                                
                                                $
                                                21,813As
      restated
                                                
                                                $
                                                1,870,499
                                                
                                                
                                                $
                                                2,887,587Income/
      (loss) for the year:As
      previously reported
                                                
                                                $
                                                468,656
                                                
                                                
                                                $
                                                675,645Adjustment
                                                
                                                $
                                                ( 756,475
                                                )
                                                
                                                $
                                                ( 756,475
                                                )As
      restated
                                                
                                                $
                                                (287,819
                                                )
                                                
                                                $
                                                (
      80,830
                                                )Net
      income /(loss) per shareAs
      previously reported
                                                
                                                $
                                                0.04
                                                
                                                
                                                $
                                                0.06Adjustment
                                                
                                                $
                                                ( 0.06
                                                )
                                                
                                                $
                                                ( 0.07
                                                )As
      restated
                                                
                                                $
                                                (0.02
                                                )
                                                
                                                $
                                                (0.01
                                                )




Page 24
 Table of Contents





ITEM 2.
            MANAGEMENT
      DISCUSSION AND ANALYSIS





Except
for the historical information presented in this document, the matters discussed
in this Form 10-QSB, and specifically in the "Management's Discussion and
Analysis or Plan of Operation”, or otherwise incorporated by reference into this
document contain "forward looking statements" (as such term is defined in the
Private Securities Litigation Reform Act of 1995).  These statements
can be identified by the use of forward-looking terminology such as "believes",
"expects", "may", "will", "intends", "should", or "anticipates" or the negative
thereof or other variations thereon or comparable terminology, or by discussions
of strategy that involve risks and uncertainties.  The safe harbor
provisions of Section 21E of the Securities Exchange Act of 1934, as amended,
and Section 27A of the Securities Act of 1933, as amended, apply to
forward-looking statements made by the Company.  You should not place
undue reliance on forward-looking statements.  Forward-looking
statements involve risks and uncertainties.  The actual results that
the Company achieves may differ materially from any forward-looking statements
due to such risks and uncertainties.  These forward-looking statements
are based on current expectations, and the Company assumes no obligation to
update this information.  Readers are urged to carefully review and
consider the various disclosures made by the Company in this report on Form
10-QSB and in the Company's other reports filed with the Securities and Exchange
Commission that attempt to advise interested parties of the risks and factors
that may affect the Company's business.








The
following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the Financial
Statements and accompanying notes and the other financial information appearing
elsewhere in this report.





Overview





ICTV was
incorporated as Moran Dome Exploration, Inc. on June 25, 1998.  We had
limited operations and assets until April 2000, when we entered into and closed
a Share and Option Purchase Agreement with Kelvin Claney, Robin Jan Claney and
William Ainslie Reece, in their capacity as trustees of The Better Blocks
Trust.  When the Share and Option Purchase Agreement with The Better
Blocks Trust closed, we began our operations as an infomercial company selling
products directly to consumers via long-form and short-form infomercials, both
domestically and internationally.  We market products that we own or
have the exclusive license to market (which we refer to as “our products” or
“our own products”), and we also act as the international marketing distributor
for products owned by third parties (which we refer to as “third-party
products”).  As the international marketing distributor for the
third-party products, we take previously existing infomercials for third-party
products, locate international infomercial operators to sell the products
featured in the infomercials, and we receive either a royalty or the difference
between the price at which we sell the product to the international infomercial
operator and the price at which we acquire the product.





Although
we currently sell products through infomercials, the goal of our business plan
is to use the brand awareness we create in our infomercials so that we can sell
the products featured in our infomercials, along with related families of
products, under distinct brand names in traditional retail
stores.  Our goal is to have these families of products sold in the
traditional retail environment in shelf-space dedicated to the product
category.  We are developing the infrastructure to create these brands
of products so that we can implement our business plan.





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 Table of Contents




Fluctuations
in our revenue are driven by changes in our product mix.  Revenues may
vary substantially from period to period depending on our product
line-up.  A product that generates revenue in one quarter may not
necessarily generate revenues in each quarter of a fiscal year for a variety of
reasons, including, seasonal factors, the product’s stage in its life-cycle, the
public’s general acceptance of the infomercial and other outside factors, such
as the general state of the economy.





Just as
fluctuations in our revenues are driven by changes in our product mix, our gross
margins from period to period depend on our product mix.  Our gross
margins vary according to whether the products we are selling are primarily our
own products or third-party products.  As a general rule, the gross
margins for our own products are considerably higher based on proportionately
smaller cost of sales.  For third-party products, our general
experience is that our gross margins are lower, because we record as cost of
sales the proportionately higher cost of acquiring the product from the
manufacturer.  Within each category (i.e., our own products versus
third-party products), gross margins still tend to vary based on factors such as
market price sensitivity and cost of production.





Many of
our expenses for our own products are incurred “up-front”.  Some of
our up-front expenditures include infomercial production costs and purchases of
media time.  If our infomercials are successful, these “up-front”
expenditures produce revenue on the back-end, as consumers purchase the products
aired on the infomercials.  We do not incur infomercial production
costs and media time for our third-party products, because we merely act as the
distributor for pre-produced infomercials.  It is the responsibility
of the international infomercial operators to whom we sell the third-party
products to take the pre-produced infomercial, adapt it to their local standards
and pay for media time.





Results
of Operations





The
following discussion compares operations for the quarter ended June 30, 2007,
with the quarter ended June 30, 2006.





Revenues





Our
revenues increased to approximately $2,355,000 for the quarter ended June 30,
2007, up from approximately $180,500 recorded during the comparative quarter in
2006, a 1,204% increase. In June 2007, our revenue was generated solely from the
sale of our Derma Wand product simply because this product has received the
highest amount of interest from our international and domestic infomercial
operators and is also selling very well in the United States through our direct
response television campaign. Our Company resources are very limited at this
time so it was decided to concentrate these resources on marketing and selling
our most popular product. All revenues recorded during the quarter ended June
30, 2007 were generated by our own products, as was the case during the
comparative period in 2006.





Gross
Margin





Gross
margin percentage increased to approximately 67% for the quarter ended June 30,
2007, compared to approximately 20% for the quarter ended June 30,
2006.  The increase in gross margin percentage was primarily due to
the revenues generated from sales of our Derma Wand product directly to
consumers in the US. During the quarter ended June 30, 2007, we received gross
margins of approximately $1,577,000 for Derma Wand, and in the quarter ended
June 30, 2006, we received gross margins of $36,000 for Derma Wand.





Page 26
 Table of Contents




Operating
Expenses





Total
operating expenses increased to approximately $1,870,000 during the quarter
ended June 30, 2007, from approximately $256,000 during the quarter ended June
30, 2006, up approximately $1,615,000, or 633%.  This increase is
attributed primarily to three factors; $1,091,000 in media costs were incurred
during the period as compared to $ 15,000 during the quarter ended June 30,
2006,  $151,000 in fulfillment charges were charged during the period
compared to $2,000 during the quarter ended June 30, 2006, and
finally  $150,000 in answering service charges in relation to product
sales were incurred during the period as compared to $ 4,000 during the quarter
ended June 30, 2006.





Net
Income (Loss)





Apart
from the past two fiscal years ended December 31, 2006 and December 31, 2005, we
have not achieved profitability on a consistent or annualized
basis.  Our net loss of approximately $288,000 for the quarter ended
June 30, 2007 follows up first quarter 2007 net income of approximately
$207,000.   Market acceptance of the products we launch is the
greatest determining factor as to whether we will continue to operate profitably
or at a loss.








Liquidity
and Capital Resources





At June
30, 2007, we had approximately $661,000 in cash on the books, compared to
approximately $385,000 at December 31, 2006.  We experienced negative
cash flow from operations of approximately $646,000 in the second quarter of
2007 compared to a positive cash flow from operations of approximately $47,000
for the same period in 2006. The negative cash flow from operations was a
combination of net income, an increase to accounts receivable, an increase in
inventories, and a decrease in prepaid expenses and payables and accrued
liabilities.





We have a
note payable to The Better Blocks Trust (“BB Trust”) in the amount of
approximately $591,000.





The
Company has granted 1,175,000 stock options; 900,000 at $0.35, 160,000 at $0.36,
60,000 at $0.50, 35,000 at $1.50 and 20,000 at $2.00.  All option
grants vest over a five-year period.  To date, a total of 34,000 stock
options have been exercised at $0.50 for proceeds of $17,000.  If the
optionees exercise the remainder of these options as they vest, we will receive
$436,300 in capital The options granted on September 28, 2001 resulted in a
deferred non-cash compensation expense of approximately $32,000. During 2005,
$16,000 of this deferred non-cash compensation expense was amortized; the
remaining $16,000 was amortized during 2006. This assumes an estimated fair
value of $1.50 per share, based on the price of our offering of $1.50 per share
at the time. No options were granted, but 4,000 options were cancelled during
the period ended June 30, 2007.





Page 27
 Table of Contents





Although
we have experienced negative cash flows from operating activities, the Company
has working capital of approximately $1,098,000. The accumulated deficit has
increased to approximately $1,023,000 as of June 30, 2007.  Although
we have negative cash flow from operations at this time, this is due primarily
to the decrease of our outstanding liabilities and an increase in our accounts
receivable. During this period, we have obtained additional capital of
approximately $1,107,000 through the issuance of common stock.  This
capitalization will be used to develop new products and expand our business. In
an effort to reach consistent profitability and become less dependent on the
requirement to finance continuing operations, we are working to increase
revenues and profit margins by continuing the trend of generating revenues by
selling our own products where our margins are much higher than our third-party
products.








ITEM 3.
            CONTROLS
      AND PROCEDURES





The
Company maintains disclosure controls and procedures that are designed to ensure
that information required to be disclosed in the Company's Exchange Act reports
is recorded, processed, summarized and reported within the time frames specified
in the SEC's rules and forms, and that such information is accumulated and
communicated to the Company's management, including its Chief Executive Officer
and its Chief Financial Officer, to allow timely decisions regarding required
disclosure based closely on the definition of "disclosure controls and
procedures" in Rule 13a-15(e) and 15d-15(e).





As of
June 30, 2007, the Company carried out an evaluation, under the supervision and
within the participation of the Company's management, including the Company's
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and
procedures.  At the time of the original filing, the Company's Chief
Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures were effective.





Therefore,
as of June 30, 2007, there were no changes in the Company's internal controls
over financial reporting identified in connection with the evaluation required
by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the
fiscal quarter then ended that materially affected, or was reasonably likely to
materially affect our internal control over financial reporting.





However,
during the Company’s internal review of its financial statements for the third
quarter of 2008, The Company discovered that it was understating customer
returns for its infomercial products sales.  In addition, The Company
has also reviewed its timing for recognizing revenues on product sales and
determined that certain revenues were being recorded before completion of the
sale.   As a result, the Company has reviewed its revenue
recognition policies and revised its internal procedures and controls to ensure
that such transactions are recorded properly and the Company has restated its
financial statements in this report for the applicable period.




Page 28
 Table of Contents




PART II – OTHER
INFORMATION





ITEM 4. – OTHER INFORMATION





Effective
May 30th, 2008,
ICTV named Richard Scheiner as its Chief Operating Officer.  Mr.
Scheiner will be paid an annual salary of $200,000, and will receive such
performance bonuses and stock options as agreed upon between Mr. Scheiner and
ICTV’s Board of Directors.





In
conjunction with the hiring of Mr. Scheiner, ICTV moved its operational
functions to Wayne, Pennsylvania, where Mr. Scheiner is located.  The
company planned on moving its financial management function to Pennsylvania in
the Third Quarter of 2008. Rather than relocate to Pennsylvania, ICTV’s Chief
Financial Officer, Karl Redekopp, resigned on July 28th, 2008,
with an effective date of August 15th,
2008.





The
Company hired Richard Ransom as its Director of Finance, based in Wayne,
Pennsylvania, with a starting date of July 29th, 2008.
Mr. Ransom was then named the company’s new Chief Financial Officer, effective
as of December 8th,
2008.  He will be paid an annual salary of $125,000, and will receive
such performance bonuses and stock options as agreed upon between Mr. Ransom and
ICTV’s Board of Directors.








ITEM 5.
            EXHIBITS
      AND REPORTS ON FORM 8-K





EXHIBITS





Exhibit


Number
            Description





*31.1
            Rule
      13a-14(a)/15d-14(a) Certification – Chief Executive
  Officer





*31.2
            Rule
      13a-14(a)/15d-14(a) Certification – Chief Financial
  Officer





*32
            Section
      1350 Certifications





* Filed
herewith





REPORTS
ON FORM 8-K





The
Company has released form 8-Ks and 8-K/As on the following dates relating to the
restatement of the consolidated financial statements dating back to June 30,
2007:





Form
      8-K –
            reported
      on October 31, 2008


Form
      8-K/A -
            reported
      on November 7, 2008


Form
      8-K/A -
            reported
      on December 17, 2008





Page 29
 Table of Contents





SIGNATURES





In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.





INTERNATIONAL COMMERCIAL TELEVISION
      INC.RegistrantDate:
      February 9, 2009
                                        By:
                                        /s/ Kelvin ClaneyName:  Kelvin
      ClaneyTitle:
      Chief Executive OfficerDate:
      February 9, 2009
                                        By:
                                        /s/ Richard RansomName:  Richard
      RansomTitle:
      Chief Financial
Officer







Page 30