ICRD International Card Establishment Inc (CE)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

FORM 10-KSB/A-3
(Amendment No. 3)

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the Fiscal Year Ended: December 31, 2007

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

FOR THE TRANSITION PERIOD FROM __ TO __

COMMISSION FILE NO. 000-33129

 Delaware 95-4581903
_______________________________ ___________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)


 555 Airport Way, Suite A
 Camarillo, California 93010
________________________________________ __________
(Address of principal executive offices) (Zip code)

Issuer's telephone number: (866) 423-2491

Securities registered under Section 12(b) of the Exchange Act: None. Securities registered under Section 12(g) of the Exchange Act:

common stock, par value $.0005 per share

Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the preceding 12 months (or 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 [ ]

Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part II of this Form 10-KSB or any amendments to this Form 10-KSB.
[ ]

State the registrant's revenues for its most recent fiscal year: $9,259,520 as of December 31, 2007.

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. $2,358,051 as of March 09, 2008.

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

APPLICABLE ONLY TO CORPORATE REGISTRANTS

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. As of March 20, 2008, there were 35,286,449 shares of the registrant's common stock, $.0005 par value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

NONE.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

EXPLANATORY NOTE

We are filing this Amendment No. 3 on Form 10-KSB/A to our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007, as originally filed with the Securities and Exchange Commission (the "Commission") on March 31, 2008 (the "Original Filing"), as amended on May 7, 2008 (the "First Amendment") and as further amended on May 18, 2009 (the "Second Amendment") for the purpose of clarifying the dual dating by the auditors and incorporating the proper language in information disclosed in Item 8A. The changes in the Statement of Cash Flows did not affect the Company's net income, earnings per share or overall cash balance and did not impact the discussion on liquidity in Item 6.

Specific 2007 lines items that are affected by this change:

 AS ORIGINALLY FILED AMENDED
 FOR THE YEAR ENDED FOR THE YEAR ENDED
 12/31/2007 12/31/2007 DIFFERENCE
_________________________________________________________________________________________________________________

Cash Flows From
OPERATING ACTIVITIES
Inventories (37,919) 663,012 700,931

 NET CASH PROVIDED BY OPERATING ACTIVITIES 657,731 1,358,662 700,931

FINANCING ACTIVITIES
Proceeds from line of credit, related party 754,396 626,000 (128,396)
Noncash advances from line of credit, related party 739,565 83,653 (655,912)
Payment on line of credit, related party (1,398,008) (1,314,631) 83,377

 NET CASH (USED IN) FINANCING ACTIVITIES (448,520) (1,149,451) (700,931)


Specific 2006 lines items that are affected by this change:

 AS ORIGINALLY FILED AMENDED
 FOR THE YEAR ENDED FOR THE YEAR ENDED
 12/31/2006 12/31/2006 DIFFERENCE
_________________________________________________________________________________________________________________

Cash Flows From
OPERATING ACTIVITIES
Inventories (21,025) 383,753 (404,778)

 NET CASH (USED IN) OPERATING ACTIVITIES (547,040) (142,262) (404,778)


FINANCING ACTIVITIES
Proceeds from line of credit, related party 447,600 444,000 3,600
Noncash advances from line of credit, related party 533,221 29,441 503,780
Payment on line of credit, related party (470,192) (367,590) (102,602)

 NET CASH (USED IN) FINANCING ACTIVITIES (211,516) (616,294) 404,778

This Amendment No. 3 does not change any of the information contained in the Original Filing, the First Amendment or the Second Amendment, except as discussed in this Explanatory Note. This Amendment No. 3 continues to speak as of the date of the Original Filing and we have not updated or amended the disclosures contained therein to reflect events that have occurred since the date of the Original Filing. Accordingly, this Amendment No. 3 should be read in conjunction with our filings made with the Commission subsequent to the date of the Original Filing.

ITEM 7. FINANCIAL STATEMENTS.

INTERNATIONAL CARD ESTABLISHMENT, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2007
DECEMBER 31, 2006

INTERNATIONAL CARD ESTABLISHMENT, INC. AND SUBSIDIARIES

CONTENTS

 Page

REPORT OF THE INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM ON THE
CONSOLIDATED FINANCIAL STATEMENTS 24
________________________________________________________________________________

CONSOLIDATED FINANCIAL STATEMENTS

 Consolidated Balance Sheets 25

 Consolidated Statements of Operations 26

 Consolidated Statements of Stockholders' Equity 28

 Consolidated Statements of Cash Flows 29

 Notes to Consolidated Financial Statements 31

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders' of International Card Establishment, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of International Card Establishment, Inc. (a Delaware corporation) as of December 31, 2007 and 2006, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of International Card Establishment, Inc. as of December 31, 2007 and 2006, and the results of its operations and its cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States of America.

MENDOZA BERGER & COMPANY, LLP

Irvine, California
March 24, 2008, Except for the Restated Statement of Cash Flows, which is dated May 19, 2009

 INTERNATIONAL CARD ESTABLISHMENT, INC. AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS

 December 31, December 31,
 2007 2006
 ____________ ____________
 ASSETS
CURRENT ASSETS
 Cash $ 126,149 $ 157,528
 Accounts receivable, trade, net of allowance of $225,425 and $280,595
 as of December 31, 2007 and 2006, respectively 27,059 87,705
 Inventory 109,628 71,709
 Other receivables 268,779 372,995
 Notes receivable, net of allowance of $50,000 and $0 as
of
 December 31, 2007 and 2006, respectively 6,428 15,154
 ____________ ____________
 Total current assets 538,043 705,091
 ____________ ____________

FIXED ASSETS, net of accumulated depreciation of $2,983,007 and $2,222,776
 as of December 31, 2007 and 2006, respectively 6,320 859,551
INTANGIBLE ASSETS 1,820,300 5,270,141
GOODWILL 87,978 87,978
OTHER NON-CURRENT ASSETS 117,700 117,818
 ____________ ____________

 Total assets $ 2,570,341 $ 7,040,579
 ============ ============

 LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
 Accounts payable $ 106,394 $ 256,908
 Accrued expenses 512,981 608,428
 Current portion of notes payable 42,613 104,473
 Current portion of notes payable, related parties 400,000 480,000
 Line of credit, related parties 606,582 510,629
 Current portion of capital lease - 19,775
 ____________ ____________

 Total current liabilities 1,668,570 1,980,213

NOTES PAYABLE, RELATED PARTY - 360,000
NOTES PAYABLE, LONG TERM - 42,613
LONG-TERM PORTION OF CAPITAL LEASE - 63,849
 ____________ ____________

 Total liabilities 1,668,570 2,446,675

COMMITMENTS & CONTINGENCIES - -
STOCKHOLDERS' EQUITY
 Preferred stock: $.01 par value; authorized 10,000,000 shares;
 issued and outstanding: 54,000 and 58,500 shares at
 December 31, 2007 and 2006, respectively 540 585
 Common stock: $.0005 par value; authorized 100,000,000 shares;
 issued and outstanding: 35,286,449 and 33,951,698 shares
 at December 31, 2007 and 2006, respectively 17,643 16,976
 Common stock subscribed 100,064 100,064
 Additional paid-in capital 19,544,354 19,281,810
 Accumulated deficit (18,760,830) (14,805,531)
 ____________ ____________
 Total stockholders' equity 901,771 4,593,904
 ____________ ____________
 Total liabilities and
 stockholders' equity $ 2 ,570,341 $ 7,040,579
 ============ ============


See Accompanying Notes to Consolidated Financial Statements.

 INTERNATIONAL CARD ESTABLISHMENT, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS

 Years ended
 December 31, December 31,
 2007 2006
 ____________ ____________

Revenues:
 Merchant services revenues $ 8,304,759 $ 9,760,028
 Equipment sales 954,761 1,162,582
 Less: sales returns and allowances (36,861) (156,784)
 ____________ ____________
 Net revenue 9,222,659 10,765,826

Cost of revenue:
 Commissions 1,005,914 1,245,800
 Cost of sales 4,720,855 5,346,343
 Cost of sales - equipment 288,175 565,260
 ____________ ____________

 Cost of revenue 6,014,944 7,157,403
 ____________ ____________

 Gross profit 3,207,715 3,608,423
 ____________ ____________

Operating, general, and administrative expenses:
 General, administrative and selling expenses 2,540,923 5,286,889
 Restructuring charges - 207,335
 Depreciation 781,931 1,021,246
 Impairment of merchant portfolios 3,649,711 -
 ____________ ____________
 Total operating, general, and
 administrative expenses 6,972,565 6,515,470
 ____________ ____________


 Net operating loss (3,764,850) (2,907,047)

Non-operating income (expense):
 Interest income 559 644
 Interest expense (130,858) (131,855)
 Legal settlement (8,451) -
 Loss on lease settlement (51,699) -
 ____________ ____________

 Total non-operating(loss) (190,449) (131,191)
 ____________ ____________

 Net loss before discontinued operations (3,955,299) (3,038,238)

Discontinued operations:
 Loss from operations of discontinued segment
 (including loss on disposal of $543,069) - (516,993)
 ____________ ____________

 Net loss before preferred dividends (3,955,299) (3,555,231)

 Dividends paid on preferred shares - 199,844
 ____________ ____________

 Net loss allocable to common shareholders $ (3,955,299) $ (3,755,075)
 ============ ============


 26

 INTERNATIONAL CARD ESTABLISHMENT, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (CONTINUED)


 Years ended
 December 31, December 31,
 2007 2006
 ____________ ____________

 Earnings per share from continuing operations $ (0.11) $ (0.10)
 ============ ============
 Earnings per share from discontinued operations $ - $ (0.02)
 ============ ============
 Earnings per share $ (0.11) $ (0.12)
 ============ ============
 Average number of shares
 of common stock outstanding-Basic and Diluted 34,748,752 30,916,668
 ============ ============

 Dividends Per Share $ - $ 3.42
 ============ ============

See Accompanying Notes to Consolidated Financial Statements.

 INTERNATIONAL CARD ESTABLISHMENT, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


 Common or
 Preferred Stock Common Stock Additional Preferred
 _______________ ____________________ Paid-In Stock Accumulated
 Shares Amount Shares Amount Capital Subscribed Deficit Total
 ______ ______ __________ _______ ___________ __________ ____________ ___________

Balance, December 31,
 2005 62,000 $ 620 29,337,392 $14,669 $17,987,902 $ - $(11,050,456) $ 6,952,735

Common stock subscribed 100,064 100,064
Preferred stock dividend (199,844) (199,844)
Preferred stock dividend
 paid via common stock 1,450,973 725 233,347 234,072
Legal settlement 80,000 40 21,560 21,600
Common stock sold at
 $0.10 per share 2,150,000 1,075 213,925 215,000
Stock based compensation 825,508 825,508
Conversion of preferred
 shares to common shares (3,500) (35) 933,333 467 (432) -
Net loss, December 31, 2006 (3,555,231) (3,555,231)
 ______ ______ __________ _______ ___________ __________ ____________ ___________
Balance, December 31,
 2006 58,500 585 33,951,698 16,976 19,281,810 100,064 (14,805,531) 4,593,904
 ______ ______ __________ _______ ___________ __________ ____________ ___________

Stock based compensation 240,124 240,124
Conversion of preferred
 Shares to common shares (4,500) (45) 1,200,000 600 (555) -
Anti-dilution clause of 2003
 common stock financing 134,751 67 22,975 23,042
Net Loss, December 31, 2007 (3,955,299) (3,955,299)
 ______ ______ __________ _______ ___________ __________ ____________ ___________
Balance, December 31,
 2007 54,000 $ 540 35,286,449 $17,643 $19,544,354 $ 100,064 $(18,760,830) $ 901,771
 ====== ====== ========== ======= =========== ========== =========== ===========


See Accompanying Notes to Consolidated Financial Statements.

 INTERNATIONAL CARD ESTABLISHMENT, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS

 Years ended
 December 31, December 31,
 2007 2006
 ____________ ____________

Cash Flows From
Operating Activities:

 Net loss $(3,955,299) $(3,555,231)
 Loss on disposal - 543,069
 Restructuring charges - 207,335
 Loss on lease settlement 51,699 -
 Depreciation 781,931 1,021,246
 Allowance for doubtful accounts (5,169) 248,864
 Common stock subscribed for salaries - 43,064
 Stock issued for consulting fees - 21,600
 Stock issued for anti-dilution clause 23,042 -
 Stock award compensation 240,124 825,508
 Impairment of merchant portfolios 3,649,711 -
 Other non-cash items, net - 30,269
 Non-cash items due to
 discontinued operations - 26,623
 Adjustments to reconcile net loss to cash
 used in operating activities:
 Changes in assets and liabilities
 Decrease in accounts receivable 115,816 158,500
 Increase in inventory 663,012 383,753
 Increase in other receivables 104,215 (259,348)
 Decrease in prepaid expenses - 343,848
 (Increase)decrease in other non-current assets (435) 5,810
 Decrease in accounts payable (214,536) (120,378)
 Decrease in accrued expenses (95,449) (66,793)
 ___________ ___________
 Net cash provided by (used in)
 operating activities 1,358,662 (142,262)
 ___________ ___________

Cash Flows From Investing Activities:
 Acquisitions, net of attrition (199,871) (483,089)
 Purchase of equipment - (35,310)
 Proceeds from the sale of discontinued segment - 701,443
 Issuance of notes receivable (50,000) (15,000)
 Payments received toward notes receivable 9,281 -
 ___________ ___________

 Net cash (used in) provided
 by investing activities (240,590) 168,044
 ___________ ___________


 29

 INTERNATIONAL CARD ESTABLISHMENT, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (CONTINUED)

 Years ended
 December 31, December 31,
 2007 2006
 ____________ ____________
Cash Flows From Financing Activities:
 Related party notes payable, net - (76,333)
 Proceeds from notes payable 70,000 -
 Proceeds from line of credit, related party 626,000 444,000
 Non-cash advancements from line of
 credit, related party 83,653 29,441
 Payments on capital lease - (9,376)
 Payments on notes payable, related party (440,000) (200,000)
 Payments on notes payable (174,473) (651,436)
 Payments on line of credit, related party (1,314,631) (367,590)
 Proceeds from sale of common stock - 215,000
 ___________ ___________
 Net cash (used in) provided by
 financing activities (1,149,451) (616,294)
 ___________ ___________

 Net decrease in cash (31,379) (590,512)

Cash, beginning of period 157,528 748,040
 ___________ ___________

Cash, end of period $ 126,149 $ 157,528
 =========== ===========

Supplemental Cash Flow Disclosures:
 Cash paid for interest $ 91,936 $ 113,526

 Cash paid for income taxes $ - $ -

 Non-cash financing and investing activities:

 Notes payable reclassified from accounts payable $ - $ 291,589

 Capital lease, accounting software $ - $ 93,000

 Merchant portfolios purchased through common
 stock subscription $ - $ 57,000

 Merchant portfolios purchased through related-
 party notes payable $ - $ 1,040,000

 Payment of accrued preferred stock dividend with
 common stock; accrual December 2005 -
 June 2006 $ - $ 234,073

 Abandonment of fixtures due to relocation $ - $ 5,131

 Preferred share dividends paid via common stock $ - $ 199,844

 Preferred share conversions to common stock -
 see Shareholder's Equity $ - $ -

 Increase in inventory due to direct payment from
 the related party line of credit $ 700,931 $ 404,778

 Reclassification of capital lease to accounts payable
 due to settlement agreement $ 64,023 $ -

INTERNATIONAL CARD ESTABLISHMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND ORGANIZATION

International Card Establishment, Inc. (the "Company"), a Nevada corporation, is a provider of diversified products and services to the electronic transaction processing industry, offering merchant accounts for the acceptance and processing of credit and debit cards, as well as a proprietary "smart card" based gift and loyalty program. The Company's Merchant Card Services division establishes "merchant accounts" for businesses that enable those businesses to accept credit cards, debit cards, and other forms of electronic payments from their customers; supplies the necessary card readers and other point-of-sale transaction systems; facilitates processing for the accounts; and, provides e-commerce solutions. Through its NEOS Subsidiary the Company also markets a proprietary "Smart Card"-based system that enables merchants to economically offer store-branded gift and loyalty cards - one of the fastest growing product categories in the industry.

As used in these Notes to the Consolidated Financial Statements, the terms the "Company", "we", "us", "our" and similar terms refer to International Card Establishment, Inc. and, unless the context indicates otherwise its consolidated subsidiaries. The Company's subsidiaries include NEOS Merchant Services ("NEOS"), a Nevada corporation, which provides smart card loyalty programs in an integrated vertical system for its customers, as well as other electronic payment services (merchant services); International Card Establishment ("ICE"), which provides electronic payment services (merchant services); and INetEvents, Inc. ("INET"), a Delaware Corporation, which has been dormant since 2005.

The Company's subsidiary, GlobalTech Leasing ("GLT"), a California corporation, which provides lease funding for equipment supplied by the Company to its customers, as well as numerous other unrelated merchant service providers, was sold in 2006. GTL comprised the Company's entire Leasing Services segment of the Company.

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

ESTIMATES

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

CASH

For the Statements of Cash Flows, all highly liquid investments with maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of December 31, 2007 and 2006.

CONCENTRATIONS

The Company maintains cash balances at several highly-rated financial institutions in California. Accounts at each institution are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $100,000. At December 31, 2007 and 2006 the Company had one account in excess of the $100,000 insured amount.

Due to the number of customers that we process credit card transactions for we are not dependant on a limited number of customers for the generation of revenues.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company estimates its accounts receivable risks and provides allowances for doubtful accounts accordingly. The Company believes that its credit risk for accounts receivable is limited because of its large number of customers and the relatively small account balances for most of its customers. Also, the Company's customers are dispersed across different business and geographic areas. The Company evaluates the adequacy of the allowance for doubtful accounts on a periodic basis. The evaluation includes historical loss experience, length of time receivables are past due, adverse situations that may affect a customer's ability to repay and prevailing economic conditions. The Company makes adjustments to its allowance for doubtful accounts if the evaluation of allowance requirements differs from the actual aggregate reserve. This evaluation is inherently subjective and estimates may be revised as more information becomes available.

INVENTORY

Inventories are stated at the lower of cost or market. Cost is determined using the first in, first out method. The Company's inventories consist primarily of electronic merchant processing machines, gift and loyalty cards, and their corresponding printing supplies.

FIXED ASSETS

Furniture, fixtures and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives, principally on a straight-line basis. Leased assets qualifying for capital lease treatment have been included in Fixed Assets and related Accumulated Depreciation accounts in these financial statements. Leased assets consist of laptops, which are depreciated in accordance with the Company's policy.

Estimated service lives of property and equipment are as follows:

Furniture and fixtures 3 years
Equipment and machinery 3 - 5 years
Software 5 years

INCOME TAXES

Income taxes are provided for using the liability method of accounting in accordance with SFAS No. 109 "Accounting for Income Taxes," and clarified by FIN 48, "Accounting for Uncertainty in Income Taxes--an interpretation of FASB Statement No. 109." A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment.

During the year ended December 31, 2007, the Company adopted Financial Accounting Standards Board (FASB) Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" (FIN 48), which supplements SFAS No. 109, "Accounting for Income Taxes," by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. The Interpretation requires that the tax effects of a position be recognized only if it is "more-likely-than-not" to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not threshold represents a positive assertion by management that a company is entitled to the economic benefits of a tax position, If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits. No benefits of the tax position are to be recognized. Moreover, the more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition of a benefit. With the adoption of FIN 48, companies are required to adjust their financial statements to reflect only those tax positions that are more-likely-than-not to be sustained. Any necessary adjustment would be recorded directly to retained earnings and reported as a change in accounting principle.

FAIR VALUE

The carrying amounts reflected in the consolidated balance sheets for cash, accounts receivables, net, accounts payable, and accrued expenses approximate the respective fair values due to the short maturities of these items. The Company does not hold any investments that are available-for-sale.

GOODWILL AND INTANGIBLES

Goodwill represents the excess of purchase price over tangible and other intangible assets acquired less liabilities assumed arising from business acquisitions. In 2007 and 2006, the Company's annual goodwill impairment test did not identify an impairment of goodwill.

The Company capitalizes intangible assets such as the purchase of merchant and gift loyalty accounts from portfolio acquisitions (i.e. the right to receive future cash flows related to transactions of these applicable merchants) (See Note 5). At least annually, the Company performs a census of merchant accounts received in such acquisitions, analyzing the expected cash flows, and adjusts the intangible asset accordingly. In 2006, the Company purchased merchant and gift card portfolios in the amount of $1,825,177 and $25,720 respectively, that were not related to a business combination or acquisition; at December 31, 2006 the Company recognized direct write offs of $229,228. At December 31, 2007, the Company recognized an impairment of $3,649,711 in merchant and gift card portfolios by writing them down to their appraised value.

DERIVATIVES

The Company occasionally issues financial instruments that contain an embedded instrument. At inception, the Company assesses whether the economic characteristics of the embedded derivative instrument are clearly and closely related to the economic characteristics of the financial instrument (host contract), whether the financial instrument that embodies both the embedded

derivative instrument and the host contract is currently measured at fair value with changes in fair value reported in earnings, and whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument.

If the embedded derivative instrument is determined not to be clearly and closely related to the host contract, is not currently measured at fair value with changes in fair value reported in earnings, and the embedded derivative instrument would qualify as a derivative instrument, the embedded derivative instrument is recorded apart from the host contract and carried at fair value with changes recorded in current-period earnings. As of December 31, 2007 and 2006 we determined that none of our embedded financial instruments qualified for this treatment and that the embedded instruments qualified for the derivative accounting exemption as they are both indexed to our stock and classified in the stockholders' equity section of our consolidated balance sheets. We have accounted for any calculated beneficial conversion feature as either interest expense or dividends paid, based on the nature of the host contract.

REVENUES

The Company provides merchant services, customer support for merchants and other Merchant Services providers, and sells merchant point-of-sale and credit card processing equipment. Revenue is recognized as customer services are provided.

The Company provides merchant services to customers for the acceptance and processing of electronic payments. Credit card processing fees are recognized as incurred. Sales and cost of sales of equipment are recognized when the equipment is provided and the customer accepts responsibility for the payment of the equipment.

ADVERTISING

Advertising costs are charged to operations as incurred. Advertising costs for the years ended December 31, 2007 and 2006 were $58,187 and $551, respectively.

RECLASSIFICATION

Certain reclassifications, which have no effect on net loss, have been made in the prior period financial statements to conform to the current presentation.

RESTATEMENT

RESTATEMENT We have restated our Statement of Cash Flows for the Years Ended December 31, 2007 and 2006. During both of these periods, our related party line of credit extended credit to us in three forms: 1) cash proceeds, 2) direct payment of inventory items and 3) direct payment of expendable items (e.g. office supplies). Upon further review of the transactions in this account, we have restated our numbers in association with these transactions, and the cash payments toward the line of credit. Overall net income and total cash did not change, nor did this restatement affect our earnings per share.

Specific 2007 lines items that are affected by this change:

 AS ORIGINALLY FILED AMENDED
 FOR THE YEAR ENDED FOR THE YEAR ENDED
 12/31/2007 12/31/2007 DIFFERENCE
_________________________________________________________________________________________________________________

Cash Flows From
OPERATING ACTIVITIES
Inventories (37,919) 663,012 700,931
 ____________________________________________________

 NET CASH PROVIDED BY OPERATING ACTIVITIES 657,731 1,358,662 700,931

FINANCING ACTIVITIES
Proceeds from line of credit, related party 754,396 626,000 (128,396)
Noncash advances from line of credit, related party 739,565 83,653 (655,912)
Payment on line of credit, related party (1,398,008) (1,314,631) 83,377
 ____________________________________________________

 NET CASH (USED IN) FINANCING ACTIVITIES (448,520) (1,149,451) (700,931)

Specific 2006 lines items that are affected by this change:

 AS ORIGINALLY FILED AMENDED
 FOR THE YEAR ENDED FOR THE YEAR ENDED
 12/31/2006 12/31/2006 DIFFERENCE
_________________________________________________________________________________________________________________

Cash Flows From
OPERATING ACTIVITIES
Inventories (21,025) 383,753 (404,778)
 ____________________________________________________

 NET CASH (USED IN) OPERATING ACTIVITIES (547,040) (142,262) (404,778)

FINANCING ACTIVITIES
Proceeds from line of credit, related party 447,600 444,000 3,600
Noncash advances from line of credit, related party 533,221 29,441 503,780
Payment on line of credit, related party (470,192) (367,590) (102,602)
 ____________________________________________________

 NET CASH (USED IN) FINANCING ACTIVITIES (211,516) (616,294) 404,778

NEW ACCOUNTING PRONOUNCEMENTS

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS 157). SFAS 157 provides guidance for using fair value to measure assets and liabilities. SFAS 157 addresses the requests from investors for expanded disclosure about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value and the effect of fair value measurements on earnings. SFAS 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value, and does not expand the use of fair value in any new circumstances. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and will be adopted by the Company in the first quarter of fiscal year 2008. We do not expect that the adoption of SFAS 157 will have a material impact on our financial condition or results of operations.

In December 2007, the FASB issued SFAS No. 160, "NONCONTROLLING INTERESTS IN CONSOLIDATED FINANCIAL STATEMENTS--AN AMENDMENT OF ARB NO. 51" ("SFAS No. 160"). SFAS 160 requires companies with noncontrolling interests to disclose such interests clearly as a portion of equity but separate from the parent's equity. The noncontrolling interest's portion of net income must also be clearly presented on the Income Statement. SFAS 160 is effective for financial statements issued for fiscals years beginning after December 15, 2008 and will be adopted by the Company in the first quarter of fiscal year 2009. We do not expect that the adoption of SFAS 160 will have a material impact on our financial condition or results of operation.

In December 2007, the FASB issued SFAS No. 141 (R), "BUSINESS COMBINATIONS (REVISED 2007)" ("SFAS No. 141 (R)"). SFAS 141 (R) applies the acquisition method of accounting for business combinations established in SFAS 141 to all acquisitions where the acquirer gains a controlling interest, regardless of whether consideration was exchanged. Consistent with SFAS 141, SFAS 141 (R) requires the acquirer to fair value the assets and liabilities of the acquiree and record goodwill on bargain purchases, with main difference the application to all acquisitions where control is achieved. SFAS 141 (R) is effective for financial statements issued for fiscal years beginning after December 15, 2008 and will be adopted by the Company in the first quarter of fiscal year 2009. We do not expect that the adoption of SFAS 141 (R) will have a material impact on our financial condition or results of operation.

NOTE 2. NOTE RECEIVABLE

In April 2007, we issued a note receivable for $50,000 to an independent third party. This receivable bears no interest and is convertible to a maximum of 10% of the third party's outstanding common stock in the event of default. Repayment was expected to begin in October of 2007; however, in September, we have fully allowed for the entire balance of this note. As of December 31, 2007, we do not expect to collect any cash from this loan or to convert the debt to common stock because of the dissolution of all business arrangements with the holder of the note.

NOTE 3. DISCONTINUED OPERATIONS

On May 10, 2006, the Company entered in an Agreement and Plan of Merger to sell its subsidiary GlobalTech Leasing, Inc. ("GTL") to an independent third party for $2,500,000 consisting of $808,943 in cash and $1,691,057 of debt assumption. The assets sold consisted primarily of cash, property and equipment. Subsequent to the disposition of GTL, management determined that approximately $158,000 of the $2,500,000 was not recoverable from the acquirer, resulting in a total $701,443 received in cash and $1,640,625 in debt assumption. We have increased our loss from discontinued operations by this amount in 2006.

GTL comprised the Company's entire Leasing Services segment of the Company. Leasing income subsequent to the sale totaled $256,384 through December 31, 2006.

The Loss on Discontinued Operations includes $26,076 of earnings in 2006 through the date of disposal. GTL's sales through May 9, 2006. Loss on the disposal totaled $543,069.

The resulting income from operations of this discontinued segment, adjusted for the total loss on the disposal, are pre-tax as the Company has reoccurring net losses and determined that there would not be a tax effect.

NOTE 4. FIXED ASSETS

Fixed assets and accumulated depreciation consists of the following:

 Years ended
 December 31, December 31,
 2007 2006
 ____________ _____________

Furniture and fixtures $ 14,750 $ 14,750
Equipment and machinery 138,257 231,257
Software 2,836,320 2,836,320
 ____________ _____________
 Subtotal 2,989,327 3,082,327
Accumulated Depreciation (2,983,007) (2,222,776)
 ____________ _____________
 $ 6,320 $ 859,551
 ============ =============

In the second quarter of 2006, the Company entered into a lease agreement for a new accounting system for $93,000. The lease commenced February 2006 and was terminated March 31, 2007. We had successfully negotiated a settlement to cancel this lease. The settlement agreement calls for payments of $10,000 over 7 months beginning May 31, 2007; all scheduled payments have been made as of December 31, 2007. We have recorded the event as of March 31, 2007 including the resulting loss of $51,699, representing the carrying value of the asset.

NOTE 5. GOODWILL AND INTANGIBLE ASSETS

Goodwill and Intangible assets were purchased with the acquisition NEOS Merchant Solutions, Inc. The purchase price allocation at fair market values included values assigned to intangible assets and a portion allocated to goodwill. The Company has determined that the intangibles purchased have an indefinite useful life except as noted below. The provisions of SFAS No. 142, "GOODWILL AND OTHER INTANGIBLE ASSETS", require the completion of an annual impairment test with any impairment recognized in current earnings.

The Company commissioned an outside appraisal to determine if any impairment in intangibles or goodwill for both 2007 and 2006 exists. We have determined that at present the NEOS tradename has an indefinite life, which has been included in the Company's annual impairment analysis. In 2007 and 2006, the Company completed an impairment analysis that resulted in no impairment of goodwill. We have recognized an impairment of $3,649,711 in our merchant and gift card portfolios by writing them down to their appraised value.

The Company's intangible assets consisted of the following:

 December 31,
 _____________________________
 2007 2006
 ___________ ___________

Merchant portfolios $ 1,385,300 $ 4,809,421
Tradename 435,000 435,000
Gift card portfolios - 25,720
 ___________ ___________
 $ 1,820,300 $ 5,270,141
 =========== ===========

Goodwill $ 87,978 $ 87,978
 =========== ===========

Acquisitions, net of attrition, were $199,870 and $483,089, respectively.

NOTE 6. ACCRUED EXPENSES

Accrued expenses consist of the following:

 December 31, December 31,
 2007 2006
 ____________ ____________

Accrued payroll $ 298,528 $ 249,688
Customer deposits 40,589 43,215
Accrued expenses, other 125,189 51,823
Accrued interest 7,977 18,328
Sales taxes payable 2,110 23,454
Reserve for chargebacks 38,588 221,920
 _________ _________
 $ 512,981 $ 608,428
 ========= =========

NOTE 7. NOTES AND LEASES PAYABLE

Notes and leases payable consist of the following:

 December 31, December 31,
 2007 2006
 ____________ ____________
Notes payable, capital lease obligation
 to acquire computer equipment $ - $ 2,202
Notes payable, at 6% interest, due May 2008 42,613 102,271
Lease payable, capital lease obligation
 to acquire accounting system - 19,775
 ____________ ____________

Current portion of notes and leases payable $ 42,613 $ 124,248
 ============ ============

Notes payable, at 6% interest, due May 2008 $ - $ 42,613
Lease payable, capital lease obligation
 to acquire accounting system 63,849
 ____________ ____________

Noncurrent portion of notes and leases payable $ - $ 106,462
 ============ ============

As previously disclosed, in the second quarter of 2006, the Company entered into a lease agreement for a new accounting system for $93,000. The lease commenced February 2006 and was terminated March 31, 2007. We had successfully negotiated a settlement to cancel this lease. The settlement agreement calls for payments of $10,000 over 7 months beginning May 31, 2007; all scheduled payments have been made as of December 31, 2007. We have recorded the event as of March 31, 2007 including the resulting loss of $51,699, representing the carrying value of the asset.

The Company is required to make the following principal payments on its total debt (including related party debt see Note 12):

Year Ended December 31, Principal Payments
 __________________

2008 1,047,890
2009 -
2010 -
2011 -
Thereafter -
 ____________
Total $ 1,047,890
 ============

NOTE 8. RESTRUCTURING CHARGES

Due to the Company's continued losses, we critically reviewed all locations and closed non-profitable locations where appropriate in 2006. Due to this we have reported a Restructuring Charge in our in Statement of Operations of $207,335 for the year ending December 31, 2006.

The Company consolidated locations and moved the majority of operations to its Camarillo location, which was completed in the third quarter of 2006.

All items identifiable for this restructuring at December 31, 2006 have been expensed and consist of:

Payroll and benefits $ 80,031
Office closure and early lease termination 85,156
Transitional staff housing and other 42,148
 _________
Total $ 207,335
 =========

NOTE 9. STOCKHOLDERS' EQUITY

The authorized common stock of the Company consists of 100,000,000 shares of common shares with par value of $0.0005 and 10,000,000 shares of preferred stock with a par value of $0.01.

In 2006, the Company has the following common stock transactions:

o Issued $100,064 of common stock subscriptions, $43,064 were for accrued salaries.

o Issued 1,450,973 of common stock for preferred share dividends amounting to $234,072.

o Issued 80,000 of common stock relating to a legal settlement amounting to $21,600.

o Issued 2,150,000 of common stock for a cash offering; shares sold at $0.10 a share for a total of $215,000.

We did not issue or authorize for issuance any shares in the first quarter of 2007. The only activity in our equity section relates to the expensing of stock options granted as of December 31, 2006, amounting to $240,124.

In 2007, the Company has the following common stock transactions:

o Issued 1,200,000 shares for the conversion of 4,500 preferred shares.

o Issued 134,751 shares per a 2003 agreement's antidilution clause for a value of $23,042.

As of December 31, 2007, we have instructed our SEC counsel to finalize all necessary paperwork for the issuance of shares comprising the remaining $100,064 in our common stock subscription.

PREFERRED STOCK

Collectively, the Series A Convertible Preferred Stock contain the following features:

o Dividends: Each share of Series A Preferred Stock pays a mandatory monthly dividend, at an annual rate equal to the product of multiplying (i) $100.00 per share, by (ii) six and one-half percent (6.5%). Dividends are payable monthly in arrears on the last day of each month, in cash, and prorated for any partial month periods. From and after the Effective Date of the Registration Statement, no further MANDATORY DIVIDENDS shall be payable on the Series A Preferred Stock. There have been no preferred stock dividends declared or paid since that date.

o Liquidation Preferences: Series A Preferred Stock is entitled to be paid first out of the assets of the Corporation available for distribution to shareholders, whether such assets are capital, surplus or earnings, an amount equal to the Series A Purchase Price per share of Series A Preferred Stock held (as adjusted for any stock splits, stock dividends or recapitalizations of the Series A Preferred Stock) and any declared but unpaid dividends on such share, before any payment is made to the holders of the common stock, or any other stock of the Corporation ranking junior to the Series A Preferred Stock with regard to any distribution of assets upon liquidation, dissolution or winding up of the Corporation.

o Voting Rights: None

o Conversion Rights: Series A Preferred Stock may, at the option of the holder, be converted at any time or from time to time into fully paid and non-assessable shares of common stock at the conversion rate in effect at the time of conversion, provided, that a holder of Series A Preferred Stock at any given time convert only up to that number of shares of Series A Preferred Stock so that, upon conversion, the aggregate beneficial ownership of the Corporation's common stock is not more than 9.99% of the Corporation's common stock then outstanding. The "Conversion Price" per share for the Series A Preferred Stock shall be equal to Eighty-Five percent (85%) of the Market Price, rounded to the nearest penny; in no event shall the Conversion Price be less than $0.375 per share (the "Floor Price") or exceed $0.47 (the "Ceiling Price").

o Reservation of Stock Issuable Upon Conversion: The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of common stock, solely for the purpose of effecting the conversion of the shares of the Series A Preferred Stock 15,000,000 shares of common stock.

As disclosed above in Note 6, the Company accrued for Preferred Stock Dividends $ 0 as of December 31, 2007 and 2006, respectively. In the second quarter of 2006, the Company amended the preferred share agreements above with the shareholders to remove the dividend reference. Consideration for all dividends accrued as of June 22, 2006 were paid via issued of 1,450,973 in the Company's common stock. Total dividends accrued and paid (cash and stock issuance), inclusive of the beneficial conversion accounted for as preferred dividends, totaled $0 and $199,844 as of December 31, 2007 and 2006, respectively.

The Company has converted 4,500 and 3,500 shares of preferred stock to 1,200,000 and 933,333 shares of common stock in 2007 and 2006, respectively.

NET LOSS PER COMMON SHARE

Net loss per share is calculated in accordance with SFAS No. 128, "EARNINGS PER SHARE". The weighted-average number of common shares outstanding during each period is used to compute basic loss per share. Diluted loss per share is computed using the weighted averaged number of shares and dilutive potential common shares outstanding. Potentially dilutive common shares consist of employee stock options, warrants, and restricted stock, and are excluded from the diluted earnings per share computation in periods where the Company has incurred a net loss.

NOTE 10. SHARE OPTION PLAN

The Company's 2003 Stock Option Plan (as amended) for Directors, Executive Officers, and Employees of and Key Consultants to the Company (the "Plan"), which is shareholder approved, permits the grant of share options and shares to its employees for up to 5,000,000 shares of common stock. In addition, in 2007 Company has issued 3,074,000 options under a non-statutory stock option plan. The Company believes that such awards better align the interests of its employees and key consultants with those of its shareholders. All option awards are generally granted with an exercise price equal to market price of the Company stock at the date of grant, unless otherwise defined in the option agreement with the grantee.

The fair value of all option awards is estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the following table. Expected volatilities are based on volatilities from the Company's traded common stock since the acquisition of INetEvents, Inc. in July 2003. The expected term of options granted is estimated at half of the contractual term as noted in the individual option agreements and represents the period of time that options granted are expected to be outstanding. The risk-free rate for the periods within the contractual life of the option is based on the U.S. Treasury bond rate in effect at the time of grant for bonds with maturity dates at the estimated term of the options.

 2007 2006

Expected volatility 212.88% 183.39%-189.44%

Weighted-average volatility 70.96% 45.92%
Expected dividends 0 0

Expected term (in years) 4 2-4.5
Risk-free rate 4.013% 4.625%-4.875%

A summary of option activity as of December 31, 2007 and 2006, respectively, and changes during the periods then ended is presented below:

 Weighted-
 Weighted- Average
 Average Remaining Aggregate
 Exercise Contractual Intrinsic
 Options Shares Price Term Value
___________________________________________________________________________________________

Outstanding at December 31, 2005 - $ -

Granted 4,370,000 $0.22

Exercised - $ -

Forfeited or expired (125,000) $0.20)
 ______________________________________________________
Outstanding at December 31, 2006 4,245,000 $0.22 2.2 $ 835,684

 ______________________________________________________
Granted 3,185,000 $0.15

Exercised - -

Forfeited or expired - -
 ______________________________________________________
Outstanding at December 31, 2007 7,430,000 $0.19 3.5 $1,079,811
 =======================================================
Exercisable at December 31, 2007 7,245,000 $0.19 3.5 $1,065,631
 =======================================================

A summary of the status of the Company's nonvested shares as of December 31, 2007 and 2006, and changes during the periods ended December 31, 2007 and 2006, is presented below:

 Weighted-Average
 Grant-Date
Nonvested Shares Shares Fair Value
___________________________________________________________________

Nonvested at December 31, 2005 - -
Granted 85,000 $ 11,448
Vested - -
Forfeited - -
Nonvested at December 31, 2006 85,000 11,448
Granted 3,100,000 244,127
Vested (3,085,000) (241,395)
Forfeited - -

Non-vested at December 31, 2007 185,000 $ 14,180
 ========== ========

NOTE 11. INCOME TAXES

The consolidated provision for federal and state income taxes for the years ended December 31, 2007 and 2006 are as follows:

 2007 2006
 _________ __________

Current - State $ 1,000 $ 1,000
Current - Federal - -
Deferred - State (121,000) (171,000)
Deferred - Federal (539,000) (978,000)
Increase in valuation allowance 659,000 1,148,000

 _________ __________
Income tax expense (benefit) $ - $ -
 ========= ==========

There were no amounts paid for federal income taxes during the years ended December 31, 2007 and 2006.

The income tax provision differs from the expense that would result from applying statutory tax rates to income before taxes because of certain expenses that are not deductible for tax purposes and the effect of the valuation allowance.

As of December 31, 2007, the Company had federal net operating loss carryforwards of $11,763,000 that can be deducted against future taxable income. These tax carryforward amounts expire as follows:

December 31, 2022 $ 16,000
December 31, 2023 631,000
December 31, 2024 3,400,000
December 31, 2025 3,926,000
December 31, 2026 2,962,000
December 31, 2027 828,000
 ___________
 Total $11,763,000
 ===========

However, such carryforwards are not available to offset federal alternative taxable income. Internal Revenue Code Section 382 imposes limitations on our ability to utilize net operating losses if we experience an ownership change and for the NOL's acquired in the acquisitions of subsidiaries. An ownership change may result from transactions increasing the ownership of 5% or greater stockholders in the stock of the corporation by more than 50 percentage points over a three-year period. The value of the stock at the time of an ownership change is multiplied by the applicable long-term tax exempt interest rate to calculate the annual limitation. Any unused annual limitation may be carried over to later years.

The state operating losses will expire between 2012 and 2017 if not utilized.

The Company accounts for income taxes in accordance with Statement of SFAS No.
109 - Accounting for Income Tax and FASB Interpretation No. 48 - Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No.109, whereby deferred taxes are provided on temporary differences arising from assets and liabilities whose bases are different for financial reporting and income tax purposes. Deferred taxes are attributable to the effects of the following items:

o Differences in calculating depreciation on property, plant and equipment

o Differences in calculating amortization and/or impairments on intangible assets

o Allowance for bad debt

o Tax loss carryforwards

The Company's total deferred tax assets and deferred tax liabilities at December 31, 2007 and 2006 are as follows:

 2007 2006
 ___________ ___________

Deferred tax asset - current $ - $ -
Deferred tax asset - non current 5,156,000 4,618,000
 ___________ ___________
 Total deferred tax asset 5,156,000 4,618,000
 ___________ ___________

Deferred tax liability - current - -
Deferred tax liability - non current (262,000) (384,000)
 ___________ ___________
 Total deferred tax liability (262,000) (384,000)
 ___________ ___________

Current deferred tax asset (liability) - -
Non current deferred tax asset (liability) 4,894,000 4,234,000
 ___________ ___________
Net deferred tax asset (liability) $ 4,894,000 $ 4,234,000
 ___________ ___________

Valuation allowance (4,894,000) (4,234,000)
 ___________ ___________

 Net deferred tax asset (liability) $ - $ -
 =========== ===========

SFAS No. 109 - Accounting for Income Tax and FASB Interpretation No. 48 - Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No.109, specify that deferred tax assets are to be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. The valuation allowance increased $660,000 and $1,148,000 during the years ended December 31, 2007 and 2006, respectively, based upon management's expectation of future taxable income. The Company will continue to assess the valuation allowance and to the extent it is determined that such allowance is no longer required, the tax benefit of the net deferred tax asset will be recognized in the future.

Upon adoption of FIN 48 as of January 1, 2007, the Company had no gross unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods. The Company files income tax returns in the United States federal jurisdiction and California state jurisdiction. As of December 31, 2007 the Company has not filed federal or state of California tax returns, and is working with their tax accountant to rectify that situation as fast as practical. These U. S. federal and state income tax returns are considered open tax years as of the date of these consolidated financial statements. The Company has filed an extension for its 2007 corporate tax return.

NOTE 12. RELATED PARTY TRANSACTIONS

On September 30, 2006, the Company entered into an agreement for a revolving line of credit worth $1,000,000 with Worldwide Business Services Group to be used primarily for working capital. The balance due on the line was $606,582 and $510,629 as of December 31, 2007 and 2006, respectively. In the third quarter of 2006, the CEO of Worldwide Business Services Group became the Company's General Manager. Due to this, we have reflected the outstanding line of credit as related party.

Our Line of Credit with Worldwide Business Services Group matured on July 30, 2007. The Line of Credit was renewed for one year during the third quarter of 2007 and now matures on July 30, 2008.

Related party bonuses paid during the years ended December 31, 2007 and 2006 totaled $6,800 and $179,275, respectively, and are included in general and administrative expenses.

During the year ended December 31, 2006, the Company also purchased merchant portfolios from a related party for $1,040,000. Payments of $40,000 are required for 26 months. This note contains interest of 6% per annum. This is our Notes Payable, Related Party on our accompanying balance sheet and was $400,000 and $480,000 as of December 31, 2007 and 2006, respectively. No portfolios from this source were purchased in 2007.

NOTE 13. COMMITMENTS AND CONTINGENCIES

The Company's existing $500,000 line of credit, entered into in December 2005, was extinguished in July 2006. In July 2006, the Company entered into another line of credit agreement with the same vendor for $2,000,000. At the time of extinguishment the Company had not drawn down on the line of credit and no balance was outstanding. As of December 31, 2007 the Company has not drawn on the line of credit.

The Company is engaged in various non-cancelable operating leases for office facilities and equipment. Under the related lease agreements, the Company is obligated to make monthly payments ranging from $159 to $3,725 with expiration dates through January 2011.

Minimum future lease obligations for the five years immediately following the balance sheet date are as follows:

2008 $ 71,242
2009 57,746
2010 11,239
2011 7,210
Thereafter -
 ________

Total future minimum lease commitments $147,438
 ========

In 2005, the Company was engaged in a operating lease for a sales office. Under the term of the lease agreement, the Company is obligated to make minimum monthly payments of $2,579 with an expiration date through August 2009. This lease was terminated in 2006.

The company leases its facilities for a total of $5,877 per month. Our current offices are located in Camarillo and Mission Viejo, California. Total lease costs for the years ended December 31, 2007 and 2006 were $86,494 and $70,524, respectively.

In 2007, ICE was served a subpoena by the receiver for a company seized by the FTC. The receiver's counsel felt that ICE was not acting quickly enough on the subpoena so they filed a motion to hold ICE in contempt. A payment of $8,451 was made in 2007 in full settlement of the claims. This amount represents attorneys' fees that the receiver incurred in filing that motion. There are no other fees or costs the receiver is alleging is owed. There are no material legal proceedings pending or, to our knowledge, threatened against us or any of our subsidiaries.

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

None.

ITEM 8A. CONTROLS AND PROCEDURES.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Pursuant to Rule 13a-15(b) under the Securities Exchange Act ("Exchange Act") of 1934, the Company carried out an evaluation with the participation of the Company's management, including William Lopshire, the Company's Chief Executive Officer ("CEO") and Candace Mills, the Company's Chief Financial Officer ("CFO"), of the effectiveness of the Company's disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the year ended December 31, 2007. Based upon that evaluation, the Company's CEO and CFO concluded that the Company's disclosure controls and procedures are not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including the Company's CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of International Card Establishment, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company's principal executive and principal financial officers and effected by the company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:

o Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;

o Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

o Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

We conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of December 31, 2007, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission's rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2007, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described below.

In light of the material weaknesses described below, we performed additional analysis and other post-closing procedures to ensure our financial statements were prepared in accordance with generally accepted accounting principles. Accordingly, we believe that the consolidated financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2) or combination of control deficiencies, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected. Management has identified the following three material weaknesses that have caused management to conclude that, as of December 31, 2007, our disclosure controls and procedures were not effective at the reasonable assurance level:

1. Our financial reporting process did not entail detail enough for us to separate out the major components of our related party line of credit.

To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.

Remediation of Material Weaknesses

To remediate the material weaknesses in our disclosure controls and procedures identified above, we have adjusted our internal financial reporting processes to ensure that detail is robust enough to identify the major components of our related party line of credit for proper disclosure in our statement of cash flows.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

No changes in the Company's internal control over financial reporting have come to management's attention during the Company's last fiscal quarter that have materially affected, or are likely to materially affect, the Company's internal control over financial reporting.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Date: October 8, 2009

INTERNATIONAL CARD ESTABLISHMENT, INC.

BY: /s/ WILLIAM LOPSHIRE
 __________________________________
 WILLIAM LOPSHIRE
 CHIEF EXECUTIVE OFFICER
 (PRINCIPAL EXECUTIVE OFFICER),
 SECRETARY AND DIRECTOR


BY: /s/ CANDACE MILLS
 __________________________________
 CANDACE MILLS
 CHIEF FINANCIAL OFFICER
 (PRINCIPAL ACCOUNTING OFFICER)

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

 SIGNATURE TITLE DATE


/s/ WILLAIM LOPSHIRE CHIEF EXECUTIVE OFFICER, October 8, 2009
_____________________ SECRETARY AND DIRECTOR
 WILLAIM LOPSHIRE



/s/ CANDACE MILLS CHIEF FINANCIAL OFFICER October 8, 2009
_____________________
 CANDACE MILLS

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