UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C.  20549





FORM
10-Q


Mark
One





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





For the
quarterly period ended June 30,
2008








o TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934





For the
transition period from__________ to __________





Commission
file
number:             0-49638





INTERNATIONAL COMMERCIAL
TELEVISION INC.


(Exact
name of registrant as specified in its charter)





Nevada
            76-0621102State
      or other jurisdiction ofincorporation
      or organization
            (I.R.S.
      Employer Identification No.)








299 Madison Avenue N. Suite
C Bainbridge Island, WA 98110


(Address
of principal executive offices)





(206)
780-8203


(Registrant’s
telephone number, including area code)








Indicate
by check mark whether the issuer has (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.   Yes x   No
o





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





Large
      accelerated filer o
            Accelerated
      filer oNon
      - accelerated filer o  (Do
      not check if smaller reporting company)
            Smaller
      reporting company x





Indicate
by check mark whether the registrant is a shell company (as defined by Rule
12b-2 of the Exchange Act). Yes o     
No x





APPLICABLE
ONLY TO CORPORATE ISSUERS





Indicate
the number of shares outstanding of each of the issuer’s classes of common
equity, as of the latest practicable date: As of August 14, 2008, the issuer had
14,465,912 shares of common stock, par value $0.001 per share, issued and
outstanding.













TABLE OF CONTENTS








PART I
      - FINANCIAL INFORMATIONITEM
      1.
            
            FINANCIAL STATEMENTS
            1ITEM
      2.
            
            MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
      AND RESULTS OF OPERATIONS
            22ITEM
      4T.
            
            CONTROLS AND PROCEDURES
            25PART
      II - OTHER INFORMATIONITEM
      6.
            
            EXHIBITS AND REPORTS ON FORM 8-K
            26SIGNATURES
            27





Table of Contents





PART I -
FINANCIAL INFORMATION








ITEM
      1.
            FINANCIAL
      STATEMENTSConsolidated
      Balance Sheet as of June 30, 2008 (unaudited) and December 31, 2007
      (audited)
            2Consolidated
      Statements of Operations for the three months ended June 30, 2008 and 2007
      (unaudited) and for the six months ended June 30, 2008 and
      2007(unaudited)
            3Consolidated
      Statements of Shareholder’s Equity for the six months ended June 30, 2008
      (unaudited)
            4Consolidated
      Statements of Cash Flows for the six months ended June 30, 2008 and 2007
      (unaudited)
            5Notes
      to the Consolidated Financial Statements
            6-21





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1
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INTERNATIONAL
      COMMERCIAL TELEVISION INC. AND SUBSIDIARYCONSOLIDATED
      BALANCE SHEET
              AS
      OF JUNE 30, 2008 AND DECEMBER 31, 2007June 30,
            
            
            December 31,2008
            
            
            2007(Unaudited)
            
            
            (Audited)ASSETSCURRENT
      ASSETS:Cash
            
            $
            1,932,860
            
            
            $
            3,788,944Accounts
      receivable, net
            
            
            4,375,143
            
            
            
            2,854,170Inventories
            
            
            1,274,879
            
            
            
            369,549Prepaid
      expenses and deposits
            
            
            1,029,123
            
            
            
            247,842Deferred
      tax assets less valuation allowance of $2,781,000
            
            
            -
            
            
            
            -Total
      current assets
            
            
            8,612,005
            
            
            
            7,260,505FURNITURE
      AND EQUIPMENT:Furniture
      and equipment
            
            
            179,387
            
            
            
            120,169Less
      accumulated depreciation
            
            
            114,905
            
            
            
            110,330Furniture
      and equipment, net
            
            
            64,482
            
            
            
            9,839Total
      assets
            
            $
            8,676,487
            
            
            $
            7,270,344LIABILITIES AND
      SHAREHOLDERS’ EQUITYCURRENT
      LIABILITIES:Accounts
      payable and accrued liabilities
            
            $
            2,048,681
            
            
            $
            1,090,947Accounts
      payable – related parties
            
            
            48,770
            
            
            
            70,490Due
      to related parties
            
            
            32,834
            
            
            
            56,983Total
      current liabilities
            
            
            2,130,285
            
            
            
            1,218,420NOTE
      PAYABLE TO SHAREHOLDER
            
            
            590,723
            
            
            
            590,723COMMITMENTS
      AND CONTINGENCIES (Note 4 and 10)SHAREHOLDERS’
      EQUITY:Common
      stock, $0.001 par value, 100,000,000 shares authorized, 14,465,912 and
      14,274,287 issued and outstanding as of June 30, 2008 and December 31,
      2007, respectively
            
            
            4,367
            
            
            
            4,181Additional
      paid-in-capital
            
            
            5,047,636
            
            
            
            4,823,073Subscriptions
      received in advance
            
            
            -
            
            
            
            100,750Retained
      earnings
            
            
            903,476
            
            
            
            533,197Total
      shareholders’ equity
            
            
            5,955,479
            
            
            
            5,461,201Total
      liabilities and shareholders’ equity
            
            $
            8,676,487
            
            
            $
            7,270,344





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





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2
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INTERNATIONAL
COMMERCIAL TELEVISION INC. AND SUBSIDIARY





CONSOLIDATED
STATEMENTS OF OPERATIONS


FOR THE
THREE AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007


(Unaudited)





For the three months ended
            
            
            For the six months endedJune 30, 2008
            
            
            June 30, 2007
            
            
            June 30, 2008
            
            
            June 30, 2007NET
      SALESInfomercial
      products
            
            $
            4,281,949
            
            
            $
            3,151,752
            
            
            $
            7,950,707
            
            
            $
            4,834,797COST
      OF SALESInfomercial
      products
            
            $
            1,166,874
            
            
            $
            839,919
            
            
            $
            2,188,441
            
            
            $
            1,296,588GROSS
      PROFIT
            
            
            3,115,075
            
            
            
            2,311,833
            
            
            
            5,762,266
            
            
            
            3,538,209OPERATING
      EXPENSES:Depreciation
            
            
            2,915
            
            
            
            1,589
            
            
            
            4,574
            
            
            
            3,179General
      and administrative
            
            
            755,417
            
            
            
            206,812
            
            
            
            1,273,164
            
            
            
            373,514Selling
      and marketing
            
            
            2,089,593
            
            
            
            1,632,436
            
            
            
            4,119,029
            
            
            
            2,473,353Rent
            
            
            18,265
            
            
            
            7,849
            
            
            
            27,366
            
            
            
            15,728Total
      operating expenses
            
            
            2,866,190
            
            
            
            1,848,686
            
            
            
            5,424,133
            
            
            
            2,865,774OPERATING
      INCOME
            
            
            248,885
            
            
            
            463,147
            
            
            
            338,133
            
            
            
            672,435INTEREST
      INCOME
            
            
            11,413
            
            
            
            5,509
            
            
            
            32,146
            
            
            
            3,210INCOME  BEFORE
      INCOME TAXES
            
            
            260,298
            
            
            
            468,656
            
            
            
            370,279
            
            
            
            675,645INCOME
      TAXESIncome
      tax expense
            
            
            88,501
            
            
            
            159,344
            
            
            
            125,895
            
            
            
            229,720Tax
      benefit of net operating losscarry
      forward
            
            
            (88,501
            )
            
            
            (159,344
            )
            
            
            (125,895
            )
            
            
            (229,720
            )INCOME
      TAXES
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -NET
      INCOME
            
            $
            260,298
            
            
            $
            468,656
            
            
            $
            370,279
            
            
            $
            675,645BASIC
      NET INCOME PER SHARE
            
            $
            0.02
            
            
            $
            0.04
            
            
            $
            0.03
            
            
            $
            0.06FULLY
      DILUTED NET INCOME  PER SHARE
            
            $
            0.02
            
            
            $
            0.04
            
            
            $
            0.02
            
            
            $
            0.06





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





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INTERNATIONAL
COMMERCIAL TELEVISION INC. AND SUBSIDIARY





CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY





Common Stock
            
            
            Additional
            
            
            
            
            
            Subscriptions$0.001 par value
            
            
            Paid-In
            
            
            Retained
            
            
            Received inShares
            
            
            Amount
            
            
            Capital
            
            
            Earnings
            
            
            Advance
            
            
            TotalsBalances,
      January 1, 2007
            
            
            10,693,188
            
            
            $
            594
            
            
            $
            464,728
            
            
            $
            (942,578
            )
            
            
            -
            
            
            $
            (477,256
            )Issuance
      of common stock
            
            
            3,581,099
            
            
            
            3,587
            
            
            
            4,687,614
            
            
            
            -
            
            
            
            -
            
            
            
            4,691,201Subscriptions
      received in advance
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            100,750
            
            
            
            100,750Stock
      issuance costs
            
            
            -
            
            
            
            -
            
            
            
            (329,269
            )
            
            
            -
            
            
            
            -
            
            
            
            (329,269
            )Net
      income
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,475,775
            
            
            
            -
            
            
            
            1,475,775Balances,
      December 31, 2007
            
            
            14,274,287
            
            
            
            4,181
            
            
            
            4,823,073
            
            
            
            533,197
            
            
            
            100,750
            
            
            
            5,461,201Issuance
      of common stock
            
            
            191,625
            
            
            
            186
            
            
            
            417,638
            
            
            
            -
            
            
            
            -
            
            
            
            417,824Subscriptions
      received in advance
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (100,750
            )
            
            
            (100,750
            )Stock
      issuance costs
            
            
            -
            
            
            
            -
            
            
            
            (193,075
            )
            
            
            -
            
            
            
            -
            
            
            
            (193,075
            )Net
      income
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            370,279
            
            
            
            -
            
            
            
            370,279Balances,
      June 30, 2008
            
            
            14,465,912
            
            
            $
            4,367
            
            
            $
            5,047,636
            
            
            $
            903,476
            
            
            
            -
            
            
            $
            5,955,479





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





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4
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INTERNATIONAL
COMMERCIAL TELEVISION INC. AND SUBSIDIARY





CONSOLIDATED
STATEMENTS OF CASH FLOWS


FOR THE
SIX MONTHS ENDED JUNE 30, 2008 AND 2007


(Unaudited)





June 30,
              2008
            
            
            June 30,
              2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income
            
            $
            370,279
            
            
            $
            675,645Adjustments
      to reconcile net income  to net cash provided by operating
      activities:Depreciation
            
            
            4,574
            
            
            
            3,179Increase  in
      accounts receivable
            
            
            (1,520,973
            )
            
            
            (1,216,741
            )Increase
      in inventory
            
            
            (905,330
            )
            
            
            (30,882
            )Decrease
      (increase) in prepaid expenses
            
            
            (781,281
            )
            
            
            7,007(Decrease)
      increase in accounts payable and accrued liabilities
            
            
            936,014
            
            
            
            (84,518
            )Net
      cash used in  operating activities
            
            
            (1,896,717
            )
            
            
            (646,310
            )CASH
      FLOWS FROM INVESTING ACTIVITIES:Additions
      to property and equipment
            
            
            (59,218
            )
            
            
            -Net
      cash used in financing activities
            
            
            (59,218
            )
            
            
            -CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from the issuance of common stock
            
            
            124,000
            
            
            
            1,078,514Advances
      from related parties
            
            
            145,592
            
            
            
            161,020Payments
      to related parties
            
            
            (169,741
            )
            
            
            (317,694
            )Net
      cash provided by  financing activities
            
            
            99,851
            
            
            
            921,840NET
      INCREASE (DECREASE) IN CASH
            
            
            (1,856,084
            )
            
            
            275,530CASH,
      beginning of the period
            
            
            3,788,944
            
            
            
            385,474CASH,
      end of period
            
            $
            1,932,860
            
            
            $
            661,004SUPPLEMENTAL
      DISCLOSURES OF CASH FLOWS INFORMATION:Interest
      paid
            
            $
            583
            
            
            $
            3,857Income
      taxes paid
            
            $
            -
            
            
            $
            -





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





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5
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INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2008


(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  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, 2008, may not necessarily be
indicative of the results that may be expected for the year ended December 31,
2008. 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, 2007 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.





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INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2008


(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 and televised home shopping..  Although the companies are
incorporated in Nevada and British Columbia, operations are currently run from
Washington State,  British Columbia and Wayne,
Pennsylvania.





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.  As a result
of these efforts, the Company has now reached profitable operations, and has
positive working capital.





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. Management believes that the two
consecutive years of profitability and the successful financing has mitigated
the adverse conditions which raised substantial doubt on the Company’s going
concern.





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.





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INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2008


(Unaudited)






Note
1 - Summary of significant accounting policies (continued)





Accounts
receivable





No
allowance for uncollectible accounts has been provided. Any accounts receivable
that are considered doubtful have been written off by management as bad debt
expense. The amount of bad debt expense for the period ended June 30, 2008 and
2007 are $508,247 and $20,551. The amounts are included in general and
administrative expense in the accompanying consolidated financial statements.
The Company’s management has evaluated the remaining accounts receivable and
believe they are all collectible.





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, 2008, management expects
these assets to be fully recoverable.





Depreciation
expense amounted to $ 4,574 and $ 3,179 for the six months ended June 30, 2008
and 2007, respectively.





Revenue
recognition





For our
direct response television sales generated by our infomercials, 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.  All significant returns for
the years presented have been offset against gross sales. Revenue related to
sales to our wholesale customers is recognized when each of the following
conditions is met: Persuasive evidence of an arrangement exists, transfer of the
benefit of ownership of the products has occurred, our price to the customer is
fixed and determinable and collectability is reasonably assured. 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.





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INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2008


(Unaudited)








Note
1 - Summary of significant accounting policies (continued)





Shipping and
handling





Amounts
billed to a customer for shipping and handling are included in revenue; shipping
and handling revenue approximated $ 499,000 and $320,000 for the six months
ended June 30, 2008 and 2007, respectively. Shipping and handling costs are
included in cost of sales. Shipping and handling costs approximated $ 357,000
and $ 209,000 for the six months ended June 30, 2008 and 2007,
respectively.





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 $ 3,092,450 and $1,884,738 in such
costs for the periods ended June 30, 2008 and 2007.





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.





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INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2008


(Unaudited)








Note
1 - Summary of significant accounting policies (continued)





Stock options
(continued)





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.





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 period ended June 30, 2008, issued no warrants and, therefore,
recorded no stock compensation expense.





The
following is a summary of stock options outstanding under the existing stock
option plan for the six months ended June 30, 2008 and year ended December 31,
2007:




Number of Shares
            
            
            Weighted
              AverageEmployee
            
            
            Non-
              Employee
            
            
            Totals
            
            
            Exercise
              PriceBalance,
      January 1, 2007
            
            
            -
            
            
            
            1,161,000
            
            
            
            1,161,000
            
            
            $
            0.43Granted
      during 2007
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            0.00Exercised
      during the year
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            0.00Cancelled
      during the year
            
            
            -
            
            
            
            (4,000
            )
            
            
            (4,000
            )
            
            $
            0.50Balance,
      December 31, 2007
            
            
            -
            
            
            
            1,157,000
            
            
            
            1,157,000
            
            
            $
            0.43Cancelled
      during the period
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            0.50Exercised
      during the period
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            0.00Balance,
      June 30, 2008
            
            
            -
            
            
            
            1,157,000
            
            
            
            1,157,000
            
            
            $
            0.42





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INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2008


(Unaudited)








Note
1 - Summary of significant accounting policies (continued)





Stock options
(continued)





During
the period ended June 30, 2008 and 2007, there were no options
granted.  Of the stock options currently outstanding, 1,109,000
options are currently exercisable at a weighted average exercise price of
$0.42.  These options expire at dates ranging between December 31,
2009 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 income and
earnings per share would have been as follows for the six months ended June
30:





For the
six months ended June 30:





2008
            
            
            2007Net
      income  as reported
            
            $
            370,279
            
            
            $
            675,645Deduct:Total
      stock based employee compensation determined under fair value method for
      all awards, net of related tax effects
            
            
            -
            
            
            
            -Pro
      forma net income
            
            $
            370,279
            
            
            $
            675,645Earnings  per
      share:Basic
      - as reported
            
            $
            0.03
            
            
            $
            0.06Basic
      – pro forma
            
            $
            0.03
            
            
            $
            0.06Diluted
      - as reported
            
            $
            0.02
            
            
            $
            0.06Diluted
      – pro forma
            
            $
            0.02
            
            
            $
            0.06





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INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2008


(Unaudited)








Note
1 - Summary of significant accounting policies (continued)





Stock options
(continued)





For the
three months ended June 30:





2008
            
            
            2007Net
      income  as reported
            
            $
            260,298
            
            
            $
            468,656Deduct:Total
      stock based employee compensation determined under fair value method for
      all awards, net of related tax effects
            
            
            -
            
            
            
            -Pro
      forma net income
            
            $
            260,298
            
            
            $
            468,656Earnings  per
      share:Basic
      - as reported
            
            $
            0.02
            
            
            $
            0.04Basic
      – pro forma
            
            $
            0.02
            
            
            $
            0.04Diluted
      - as reported
            
            $
            0.02
            
            
            $
            0.04Diluted
      – pro forma
            
            $
            0.02
            
            
            $
            0.04





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 2007 financial statements have been reclassified to conform to
the 2008 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, 2008, the Company did not exceed the federally
insured limit  in its main operating account or its main credit card
merchant account; however it did exceed the limit by approximately $1,600,000 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, 2008, 60% of the Company’s accounts
receivable were due from various individual customers to whom our infomercial
products had been sold directly via Direct Response Television; the remaining
40% of the Company’s accounts receivable were due from seven wholesale
infomercial operators.





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INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2008


(Unaudited)








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, hard 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.





Note
3 - Financial instruments





Statement
of Financial Accounting Standards No. 107 (“SFAS 107”), “Disclosures About Fair
Value of Financial Instruments” 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 values
of   financial   instruments   such
as cash, accounts receivable, accounts payable andaccrued
liabilities, and due to related parties approximate their fair values due to the
short settlement period for these instruments.  The carrying amount of
note payable 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”).





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INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2008


(Unaudited)








Note
4 - Commitments and contingencies (continued)





Cell RXTM(continued)





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 $1,000,000.00, 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 $400,000.00 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 $1,000,000.00 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.




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.





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14
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INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2008


(Unaudited)








Note
4 - Commitments and contingencies (continued)





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.





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 a License Agreements with Omega 5 wherein ICTV
was appointed as exclusive distributor for the Derma WandTM
worldwide.  The rights remain exclusive to ICTV provided ICTV
purchases a minimum quantity each year and pays the royalty described
above.  The term of the agreement is in effect so long as the Company
is not in default of the terms of the agreement.





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15
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INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2008


(Unaudited)








Note
4 - Commitments and contingencies (continued)





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.





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.





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16
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INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2008


(Unaudited)








Note
4 - Commitments and contingencies (continued)





TwinTechTM(continued)





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.





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, 2008, 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,
2009.  At present, management is not aware of any claims against the
Company for any products sold.





Page
17
 Table of Contents





INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2008


(Unaudited)








Note
4 - Commitments and contingencies (continued)





Other matters
(continued)





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 January 1, 2006 and ending December 31, 2008. On April 1, 2008, the
Company entered into an operating lease agreement for office facilities for its
executive offices in Bainbridge Island from an unrelated party for $1,600 per
month.  The term of the lease is 1.5 years commencing April 1, 2008
and ending October 31, 2009. On April 1, 2008, the Company entered into an
operating lease agreement for office facilities in Wayne, Pennsylvania from an
unrelated party for approximately $2,900 per month.  The term of the
lease is 3 years commencing April 1, 2008 and ending March 31,
2011.





Note
5 - Related party transactions





The
Company has received short-term advances from a shareholder.  These
advances amounted to $33,000 as of June 30, 2008. These advances are
non-interest bearing and without specific terms of repayment.  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, 2008, the Company issued 191,625 shares of common
stock at $2.20 per share, for a total of $421,575 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 $3.00
per share and is valid and exercisable from the date of issue and thereon for a
2 year period.





Page
18
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INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2008


(Unaudited)








Note
7 - Basic and diluted income 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.





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





For the six months
      ended June 30, 2008:
            
            Income (Numerator)
            
            
            Shares (Denominator)
            
            
            Per Share AmountBasic earnings per
      shareIncome
      available to common shareholders
            
            $
            370,279
            
            
            
            14,328,344
            
            
            $
            0.03





Diluted earnings per
      shareIncome
      available to common shareholders
            
            $
            370,279
            
            
            
            16,159,388
            
            
            $
            0.02For the six months
      ended June 30, 2007:
            
            Income (Numerator)
            
            
            Shares (Denominator)
            
            
            Per Share AmountBasic earnings per
      shareIncome
      available to common shareholders
            
            $
            675,645
            
            
            
            11,332,788
            
            
            $
            0.06





Diluted earnings per
      shareIncome
      available to common shareholders
            
            $
            675,645
            
            
            
            11,716,253
            
            
            $
            0.06For the three months
      ended June 30, 2008:
            
            Income (Numerator)
            
            
            Shares (Denominator)
            
            
            Per Share AmountBasic earnings per
      shareIncome
      available to common shareholders
            
            $
            260,298
            
            
            
            14,382,401
            
            
            $
            0.02Diluted earnings per
      shareIncome
      available to common shareholders
            
            $
            260,298
            
            
            
            16,188,261
            
            
            $
            0.02





Page
19
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INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2008


(Unaudited)








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





For the three months
      ended June 30, 2007:
            
            Income (Numerator)
            
            
            Shares (Denominator)
            
            
            Per Share AmountBasic earnings per
      shareIncome
      available to common shareholders
            
            $
            468,656
            
            
            
            11,972,387
            
            
            $
            0.04Diluted earnings per
      shareIncome
      available to common shareholders
            
            $
            468,656
            
            
            
            12,483,934
            
            
            $
            0.04





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 and
televised home shopping.  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.





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





For the six months ended June 30, 2008
            
            
            For the six months ended June 30, 2007Domestic
            
            
            International
            
            
            Totals
            
            
            Domestic
            
            
            International
            
            
            TotalsNET
      SALESInfomercial
      products
            
            $
            7,481,340
            
            
            $
            469,367
            
            
            $
            7,950,707
            
            
            $
            4,232,979
            
            
            $
            601,818
            
            
            $
            4,834,797COST
      OF SALESInfomercial
      products
            
            $
            2,021,926
            
            
            $
            166,515
            
            
            $
            2,188,441
            
            
            $
            1,051,220
            
            
            $
            245,368
            
            
            $
            1,296,588Gross
      profit
            
            
            5,459,414
            
            
            
            302,852
            
            
            
            5,762,266
            
            
            
            3,181,759
            
            
            
            356,450
            
            
            
            3,538,209Operating
      expenses:Depreciation
            
            
            4,304
            
            
            
            270
            
            
            
            4,574
            
            
            
            2,783
            
            
            
            396
            
            
            
            3,179General
      and administrative
            
            
            1,228,007
            
            
            
            45,157
            
            
            
            1,273,164
            
            
            
            331,077
            
            
            
            42,437
            
            
            
            373,514Selling
      and marketing
            
            
            4,114,227
            
            
            
            4,802
            
            
            
            4,119,029
            
            
            
            2,465,378
            
            
            
            7,975
            
            
            
            2,473,353Rent
            
            
            25,750
            
            
            
            1,616
            
            
            
            27,366
            
            
            
            13,770
            
            
            
            1,958
            
            
            
            15,728Total
      operating expense
            
            
            5,372,288
            
            
            
            51,845
            
            
            
            5,424,133
            
            
            
            2,813,008
            
            
            
            52,766
            
            
            
            2,865,774Operating
      income
            
            $
            87,126
            
            
            $
            251,007
            
            
            $
            338,133
            
            
            $
            368,751
            
            
            $
            303,684
            
            
            $
            672,435





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INTERNATIONAL
COMMERCIAL TELEVISION INC.





NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30,
2008


(Unaudited)








Note
9 - Segment reporting (continued)





For the three months ended June 30,
      2008
            
            
            For the three months ended June 30,
      2007Domestic
            
            
            International
            
            
            Totals
            
            
            Domestic
            
            
            International
            
            
            TotalsNET
      SALESInfomercial
      products
            
            $
            3,920,033
            
            
            $
            361,916
            
            
            $
            4,281,949
            
            
            $
            2,932,411
            
            
            $
            219,341
            
            
            $
            3,151,752COST
      OF SALESInfomercial
      products
            
            $
            1,045,045
            
            
            $
            121,829
            
            
            $
            1,166,874
            
            
            $
            730,434
            
            
            $
            109,485
            
            
            $
            839,919Gross
      profit
            
            
            2,874,988
            
            
            
            240,087
            
            
            
            3,115,075
            
            
            
            2,201,977
            
            
            
            109,856
            
            
            
            2,311,833Operating
      expenses:Depreciation
            
            
            2,694
            
            
            
            221
            
            
            
            2,915
            
            
            
            1,478
            
            
            
            111
            
            
            
            1,589General
      and administrative
            
            
            720,316
            
            
            
            35,101
            
            
            
            755,417
            
            
            
            192,335
            
            
            
            14,477
            
            
            
            206,812Selling
      and marketing
            
            
            2,087,305
            
            
            
            2,288
            
            
            
            2,089,593
            
            
            
            1,620,134
            
            
            
            12,302
            
            
            
            1,632,436Rent
            
            
            16,916
            
            
            
            1,349
            
            
            
            18,265
            
            
            
            7,300
            
            
            
            549
            
            
            
            7,849Total
      operating expense
            
            
            2,827,231
            
            
            
            38,959
            
            
            
            2,866,190
            
            
            
            1,821,247
            
            
            
            27,439
            
            
            
            1,848,686Operating
      income
            
            $
            47,757
            
            
            $
            201,128
            
            
            $
            248,885
            
            
            $
            380,730
            
            
            $
            82,417
            
            
            $
            463,147





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ITEM2.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS





Except
for the historical information presented in this document, the matters discussed
in this Form 10-Q, and specifically in the "Management's Discussion and Analysis
of Financial Condition and Results of Operations”, 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-Q 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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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, 2008,
with the quarter ended June 30, 2007.





Revenues





Our
revenues increased to approximately $4,300,000 for the quarter ended June 30,
2008, up from approximately $3,200,000 recorded during the comparative quarter
in 2007, a 34.4% increase. In June 2008, 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 and televised home shopping campaigns. All revenues recorded
during the quarter ended June 30, 2008 were generated by our own products, as
was the case during the comparative period in 2007.





Gross
Margin





Gross
margin percentage was approximately 73% for the quarter ended June 30, 2008, as
was the case for the quarter ended June 30, 2007.  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,
2008, we received gross margins of approximately $3,115,000 for Derma Wand, and
in the quarter ended June 30, 2007, we received gross margins of $2,312,000 for
Derma Wand.





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23
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Operating
Expenses





Total
operating expenses increased to approximately $2,900,000 during the quarter
ended June 30, 2008, from approximately $1,850,000 during the quarter ended June
30, 2007, up approximately $1,050,000, or 56.8%.  This increase is
attributed primarily to four factors; $1,558,000 in media costs were incurred
during the period as compared to $ 1,091,000 during the quarter ended June 30,
2007, $186,000 in fulfillment charges were charged during the period compared to
$151,000 during the quarter ended June 30, 2007, bad debt expense was $341,000
for the period ending June 30, 2008 as compared  to $21,000 during the
quarter ended June 30, 2007, and finally  $210,000 in answering
service charges in relation to product sales were incurred during the period as
compared to $ 150,000 during the quarter ended June 30, 2007.





Net
Income





Over the
past two fiscal years, we have managed to achieve profitability on an annualized
basis.  Our net income of approximately $260,000 for the quarter ended
June 30, 2008 follows up first quarter 2008 net income of approximately
$110,000.  Although we expect continued strong sales from our Derma
Wand product over the remainder of the year, we anticipate that until additional
financing is completed, we will continue to operate at a lower net income level,
as we reinvest all available funds into new products.  Market
acceptance of the products we launch will also be a determining factor as to
whether we will continue to operate profitably or at a loss.





Plan
of Operation; Liquidity and Capital Resources





At June
30, 2008, we had approximately $1,930,000 in cash on the books, compared to
approximately $3,789,000 at December 31, 2007.  We generated negative
cash flows from operations of approximately $1,900,000 in the second quarter of
2008 compared to a negative cash flow from operations of approximately $646,000
for the same period in 2007.  The negative cash flow from operations
was a result of the increase to accounts receivable, inventories and prepaid
expenses, and decrease to accounts payable





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
$468,820 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 or exercised during the
period ended June 30, 2008.





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During
the past two fiscal years ended December 31, 2007 and 2006, as well as the first
quarter of 2008 we have generated a net income from operations. Although we have
experienced negative cash flows from operating activities, the Company has
working capital of approximately $6,480,000.  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, inventories and prepaid expenses. 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.





ITEM4T.
            CONTROLS
      AND PROCEDURES





We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our 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
our management, including our Chief Executive Officer and our 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, 2008, we carried out an evaluation, under the supervision and within
the participation of our management, including our Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures.  Based on the foregoing, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures were effective.





There has
been no change  in our 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 our last fiscal quarter
that has materially affected, or is reasonably likely to materially affect our
internal control over financial reporting.





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PART II –
OTHER INFORMATION




ITEM 6.     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





1.
            Current
      report on Form 8-K dated May 30, 2008
regarding:





a)
            Appointment
      of Richard Scheiner as Chief Operating
Officer


b)
            Relocation
      of executive offices to 299 Madison Avenue North, Suite C, Bainbridge
      Island WA 98110





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SIGNATURES





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





INTERNATIONAL
      COMMERCIAL TELEVISION INC.RegistrantDate:
      August 14, 2008
            By:
            /s/ Kelvin ClaneyName:  Kelvin
      ClaneyTitle:
      Chief Executive OfficerDate:
      August 14, 2008
            By:
            /s/ Karl RedekoppName:  Karl
      RedekoppTitle:
      Chief Financial Officer






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