- Quarterly Report (10-Q)

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, 2009.

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

FOR THE TRANSITION FROM _______ TO ________.

COMMISSION FILE NUMBER 000-33129

INTERNATIONAL CARD ESTABLISHMENT, INC.
(Exact Name of Registrant as Specified in its Charter)

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


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


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

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

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 [ ] Accelerated filer [ ]

Non-accelerated filer [ ] Smaller reporting company [X]

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [ ]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes / / No / /

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of August 13, 2009, there were 35,873,703 outstanding shares of the Registrant's Common Stock, $.0005 par value.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements 4
Item 2. Management's Discussion and Analysis or Plan of Operation 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk 15
Item 4. Controls and Procedures 15

PART II - OTHER INFORMATION

Item 1. Legal Proceedings 17
Item 1A. Risk Factors 17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 5. Other Information 17
Item 6. Exhibits 17

SIGNATURES 18

PART I
FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INTERNATIONAL CARD ESTABLISHMENT, INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

June 30, 2009

 INTERNATIONAL CARD ESTABLISHMENT, INC. AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS

 JUNE 30, DECEMBER 31,
 2009 2008
 (UNAUDITED) (AUDITED)
 ____________ ____________
 ASSETS

CURRENT ASSETS
 Cash $ 115,938 $ 91,404

 Accounts receivable, net of allowance of $52,962 and $50,178 at June 30,
 2009 and December 31, 2008, respectively 7,794 22,572
 Note receivable, net of allowance of $50,000 at June 30, 2009 and
 December 31, 2008, respectively 88 88
 Inventory 77,236 76,394
 Other receivables 100,974 255,631
 Prepaid assets 60,328 25,003
 ____________ ____________

 Total current assets 362,358 471,092
 ____________ ____________

FIXED ASSETS, net of accumulated depreciation of $2,986,301and $2,983,007 at
 June 30, 2009 and December 31, 2008, respectively 19,752 -
INTANGIBLE ASSETS 1,457,729 1,579,378
GOODWILL 87,979 87,979
OTHER NON-CURRENT ASSETS 117,576 116,685
 ____________ ____________

 Total assets $ 2,045,394 $ 2,255,134
 ============ ============

 LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
 Accounts payable $21,891 $ 22,915
 Accrued expenses 459,544 593,312
 Due to FTS - Underpayment 111,393 -
 Line of credit, related party 735,875 658,536
 ____________ ____________

 Total current liabilities 1,328,703 1,274,763

COMMITMENTS & CONTINGENCIES - -
STOCKHOLDERS' EQUITY
 Preferred stock; $0.01 par value; 10,000,000 shares authorized, 54,000
 shares issued and outstanding at June 30, 2009 and December 31, 2008,
 respectively 540 540
 Common stock; $0.0005 par value; 100,000,000 shares authorized, 35,873,703
 and 35,873,703 shares issued and outstanding at June 30, 2009, and
 December 31, 2008, Respectively 17,937 17,937
 Common stock subscribed 30,000 30,000
 Additional paid-in capital 19,628,401 19,628,401
 Accumulated deficit (18,960,187) (18,696,507)
 ____________ ____________

 Total stockholders' equity 716,691 980,371
 ____________ ____________

 Total liabilities and stockholders' equity $ 2,045,394 $ 2,255,134
 ============ ============


 See Accompanying Notes to Condensed Consolidated Financial Statements.

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

 THREE MONTHS ENDED SIX MONTHS ENDED
 ___________________________ ___________________________
 JUNE 30, JUNE 30, JUNE 30, JUNE 30,
 2009 2008 2009 2008
 ___________________________________________________________

Revenue:
 Merchant services revenues $ 1,290,452 $ 1,780,856 $ 2,717,833 $ 3,577,976
 Equipment sales 124,521 167,806 223,586 330,000
 Less: sales returns and allowances (6,399) (2,428) (15,131) (21,063)
 ___________________________________________________________
 Net revenue 1,408,574 1,946,234 2,926,288 3,886,913

Cost of revenue:
 Commissions 179,229 169,473 319,535 351,475
 Cost of sales 742,917 1,040,274 1,477,328 2,055,436
 Cost of sales - equipment 30,202 43,045 55,667 80,966
 ___________________________________________________________
 Cost of revenue 952,348 1,252,792 1,852,530 2,487,877

 ___________________________________________________________
 Gross profit 456,226 693,442 1,073,758 1,399,036

Operating, general and administrative expenses:
 General, administrative and selling expenses 535,272 544,672 1,113,903 1,151,080
 Depreciation 2,649 - 3,294 -
 Merchant portfolio attrition expense 66,150 75,250 161,700 157,850
 ___________________________________________________________
 Total operating, general and
 administrative expenses 604,071 619,922 1,278,897 1,308,930

 Net operating gain (loss) (147,845) 73,520 (205,139) 90,106
 ___________________________________________________________

Non-operating income (expense):
 Interest income - 29 - 80
 Interest (expense) (9,665) (18,287) (19,905) (40,469)
 Other Expense - FTS (38,636) - (38,636) -
 ___________________________________________________________

 Total non-operating income (expense) (48,301) (18,258) (58,541) (40,389)
 ___________________________________________________________

Net (loss) before provision for income taxes (196,146) 55,262 (263,680) 49,717
 ___________________________________________________________

Provision for income taxes - - - -

Net income (loss) $ (196,146) $ 55,262 $ (263,680) $ 49,717
 ===========================================================


Earnings per share - basic $ (0.01) $ 0.00 $ (0.01) $ 0.00

Earnings per share - dilutive $ (0.01) $ 0.00 $ (0.01) $ 0.00


Weighted average shares outstanding - basic 35,873,703 35,286,449 35,873,703 35,286,449

Weighted average shares outstanding - dilutive 35,873,703 36,111,507 35,873,703 35,548,246


 See Accompanying Notes to Condensed Consolidated Financial Statements.

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

 SIX MONTHS ENDED
 _________________________________

 JUNE 30, 2009 JUNE 30, 2008
 _____________ _____________

Cash Flows from Operating Activities:
 Net (loss) income $ (263,680) $ 49,717
 Depreciation 3,294 -
 Write off of cancelled merchant accounts 161,700 157,850
 Allowance for doubtful accounts, other receivables and accrued interest income,
 net of bad debt recoveries 2,784 (36,796)
 Write off of software consulting originally capitalized as fixed asset - 6,320
 Adjustments to reconcile net (loss) income to cash provided by operating
 activities:
 Changes in assets and liabilities
 Decrease in accounts receivable 11,994 21,393
 Decrease in inventories 210,976 177,814
 Decrease in other receivables 154,657 152,043
 (Increase) in prepaid expenses (35,325) (54,167)
 (Increase) decrease in other non-current assets (891) 1,311
 (Decrease) in accounts payable (1,023) (76,518)
 Increase (decrease) in accrued expenses (133,771) 135,295
 Increase in Due to FTS - Underpayment 111,393 -
 _____________ _____________

 Net cash provided by operating activities 222,108 534,261
 _____________ _____________

Cash Flows from Investing Activities:
 Acquisitions of merchant accounts, net of attrition (40,050) (50,763)
 Purchase of property and equipment (23,046) -
 Payments received toward notes receivable - 3,518
 _____________ _____________

 Net cash provided by (used in) investing activities (63,096) (47,245)
 _____________ _____________

Cash Flows from Financing Activities:
 Payment on notes payable - (42,613)
 Noncash advances from line of credit, related party 52,101 119,954
 Payment on line of credit, related party (656,579) (569,867)
 Proceeds from line of credit, related party 470,000 305,000
 Payment on notes payable, related party - (280,000)
 _____________ _____________

 Net cash (used in) financing activities (134,478) (467,526)
 _____________ _____________

 Net increase in cash 24,534 19,490
 _____________ _____________

Cash, beginning of period 91,404 126,149
 _____________ _____________

Cash, end of period $ 115,938 $145,639
 ============= =============


 See Accompanying Notes to Condensed Consolidated Financial Statements.

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


 SIX MONTHS ENDED
 _________________________________

 JUNE 30, 2009 JUNE 30, 2008
 _____________ _____________

SUPPLEMENT DISCLOSURE OF CASH
 FLOW INFORMATION
 Cash paid for interest $ 19,905 $ 35,398
 Cash paid for income taxes $ - $ -


NON-CASH INVESTING AND FINANCING TRANSACTIONS
 Inventory purchased from line of credit, related party $ 211,817 $ 171,216


 See Accompanying Notes to Condensed Consolidated Financial Statements.

INTERNATIONAL CARD ESTABLISHMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION AND ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND ORGANIZATION

The accompanying Condensed Consolidated Financial Statements of International Card Establishment, Inc. (the "Company") should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2008. Significant accounting policies disclosed therein have not changed except as noted below.

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 Companies subsidiaries include NEOS Merchant Solutions ("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 condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, these interim condensed consolidated financial statements should be read in conjunction with the Company's most recent audited financial statements and notes thereto included in its December 31, 2008 Annual Report on Form 10-K. Operating results for the period ended June 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009.

ACCOUNTING POLICIES

On January 1, 2008, the Company adopted SFAS No. 157 (SFAS 157), Fair Value Measurements. SFAS 157 relates to financial assets and financial liabilities. In February 2008, the FASB issued Staff Position (FSP) No. FAS 157-2 "Effective Date of FASB Statement No. 157," which delayed the effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on at least an annual basis, until January 1, 2009, for calendar year-end entities.

SFAS 157 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (GAAP), and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively with limited exceptions.

SFAS 157 defines fair value as the price that would be receive to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This standard is now the single source in GAAP for the definition of fair value, except for the fair value of leased property as defined in SFAS 13. SFAS 157 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions that are based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which give the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under FAS 157 are described below:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly, or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means;

Level 3 - Inputs that are both significant to the fair value measurement and unobservable. These inputs rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability.

(The unobservable inputs are developed based on the best information available in the circumstances and may include the Company's own data.)

In April 2009, the FASB issued FSP FAS No 107-1 and APB 28-1, "Interim Disclosures about Fair Value of Financial Instruments" ("FSP FAS No. 107-1 and APB 28-1"). This FSP amends FASB Statement No. 107, "Disclosure about Fair Values of Financial Instruments," to require disclosures about fair value of financial instruments in interim financial statements as well as in annual financial statements. APB 28-1 also amends APB Opinion No. 28, "Interim Financial Reporting," to require those disclosures in all interim financial statements. This standard is effective for interim periods ending after June 15, 2009, but early adoption is permitted for interim periods ending after March 15, 2009. The Company adopted FSP FAS No. 107-1 and APB 28-1 and provided the additional disclosure requirements beginning in the second quarter 2009.

RECLASSIFICATION

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

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2009, the FASB issued Statement of Financial Accounting Standards No. 165, "Subsequent Events," ("SFAS No. 165"). SFAS 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 applies to both interim financial statements and annual financial statements. SFAS 165 is effective for interim or annual financial periods ending after June 15, 2009. SFAS 165 does not have a material impact on our financial statements.

In June 2009, the FASB issued Statement of Financial Accounting Standards No. 166, "Accounting for Transfers of Financial Assets, an amendment to SFAS No. 140," ("SFAS 166"). SFAS 166 eliminates the concept of a "qualifying special-purpose entity," changes the requirements for derecognizing financial assets, and requires additional disclosures in order to enhance information reported to users of financial statements by providing greater transparency about transfers of financial assets, including securitization transactions, and an entity's continuing involvement in and exposure to the risks related to transferred financial assets. SFAS 166 is effective for fiscal years beginning after November 15, 2009. The Company will adopt SFAS 166 in fiscal 2010. The Company does not expect that the adoption of SFAS 166 will have a material impact on the consolidated financial statements.

In June 2009, the FASB issued Statement of Financial Accounting Standards No. 167, "Amendments to FASB Interpretation No. 46(R)," ("SFAS 167"). The amendments include: (1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should consolidate a

variable-interest entity, and (3) changes to when it is necessary to reassess who should consolidate a variable-interest entity. SFAS 167 is effective for the first annual reporting period beginning after November 15, 2009 and for interim periods within that first annual reporting period. The Company will adopt SFAS 167 in fiscal 2010. The Company does not expect that the adoption of SFAS 166 will have a material impact on the consolidated financial statements.

In June 2009, the FASB issued Statement of Financial Accounting Standards No. 168, "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles," ("SFAS 168"). SFAS 168 replaces FASB Statement No. 162, "The Hierarchy of Generally Accepted Accounting Principles", and establishes the FASB Accounting Standards Codification ("Codification") as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles ("GAAP"). SFAS 168 is effective for interim and annual periods ending after September 15, 2009. The Company will begin to use the new Codification when referring to GAAP in its annual report on Form 10-K for the fiscal year ending January 3, 2010. This will not have an impact on the consolidated results of the Company.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not, or are not believed by management to, have a material impact on the Company's present or future consolidated financial statements.

NOTE 2. OTHER RECEIVABLES

At June 30, 2009, and December 31, 2008, other receivables consisted of the following:

 JUNE 30, 2009 DECEMBER 31, 2008
 _____________________________________

Merchant residuals receivable $ 72,673 $ 226,717
Other receivables 28,301 28,914
 _________ _________

 Total $ 100,974 $ 255,631
 ========= =========

Other receivables are split between residuals due from commissions earned from merchant account transactions and employee advances with a $15,000 advance having been made to our top sales rep. The commission receivables decreased approximately $37,944 due to reduced sales by merchants caused by the recession. Our merchants experienced approximately a 12% decrease in sales between April 1 and June 30, 2009. Tighter credit policies have reduced the number of new accounts that we acquire, thereby increasing the quality of earnings by taking the most conservative forecast of the collectability of residuals. Additionally, merchants are charged an annual fee in December accounting for approximately $116,100 of the December 2008 residuals receivable.

NOTE 3. DUE TO FTS - UNDERPAYMENT

In June 2009, one of our residual sources notified us that between November 2008 and April 2009 they had undercharged us by $111,393. An agreement was reached whereby the vendor would deduct an additional $9,283 per month in fees over the next 12 months. The $111,393 was split with $72,757 being offset against the second quarter residual income and $38,636 (representing the November and December 2008 portion) was treated as Other Expense.

NOTE 4. SUBSCRIPTIONS

As of June30, 2009, we have instructed our SEC counsel to finalize all necessary paperwork for the issuance of shares comprising the remaining $30,000 in our common stock subscription.

Note 5. FAIR VALUE ACCOUNTING

The following table presents the Company's fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of June 30, 2009.

 FAIR VALUE AT JUNE 30, 2009
 ___________________________
 TOTAL LEVEL 1 LEVEL 2 LEVEL 3
 _____________________________________________________________________________
Assets:
 Intangibles - Merchant Portfolios $ 1,022,729 $ - $ 1,022,729 $ -
 _____________________________________________________________________________

 $ 1,022,729 $ - $ 1,022,729 $ -
 =============================================================================

Liabilities:
 Line of Credit, related party $ 735,875 $ - $ 735,875 $ -
 _____________________________________________________________________________

 $ 735,875 $ - $ 735,875 $ -
 =============================================================================

Note 6. RELATED PARTY LINE OF CREDIT

The related party line of credit was renewed for an additional year at June 30, 2009, at a fee of $50,000.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this report. References in this section to "International Card Establishment, Inc.," the "Company," "we," "us," and "our" refer to International Card Establishment, Inc. and our direct and indirect subsidiaries on a consolidated basis unless the context indicates otherwise.

This interim report contains forward looking statements relating to our Company's future economic performance, plans and objectives of management for future operations, projections of revenue mix and other financial items that are based on the beliefs of, as well as assumptions made by and information currently known to, our management. The words "expects, intends, believes, anticipates, may, could, should" and similar expressions and variations thereof are intended to identify forward-looking statements. The cautionary statements set forth in this section are intended to emphasize that actual results may differ materially from those contained in any forward looking statement.

Our Management, Discussion and Analysis ("MD&A") is provided as a supplement to our financial statements to help provide an understanding of our financial condition, changes in financial condition and results of operations. The MD&A section is organized as follows:

o EXECUTIVE SUMMARY, OVERVIEW AND DEVELOPMENT OF OUR BUSINESS. These sections provide a general description of the Company's business, as well as recent developments that we believe are important in understanding our results of operations as well as anticipating future trends in our operations.

o CRITICAL ACCOUNTING POLICIES. This section provides an analysis of the significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosure of contingent assets and liabilities.

o RESULTS OF OPERATIONS. This section provides an analysis of our results of operations for the three months ended June 30, 2009 compared to the three months ended June 30, 2008 and the six months ended June 30, 2009 compared to the three months ended June 30, 2008. A brief description of certain aspects, transactions and events is provided, including related-party transactions that impact the comparability of the results being analyzed.

o LIQUIDITY AND CAPITAL RESOURCES. This section provides an analysis of our financial condition and cash flows as of June 30, 2009, and December 31, 2008.

EXECUTIVE SUMMARY

Our strategy is to grow profitably by increasing our penetration of the expanding small merchant marketplace for payment and Gift & Loyalty card based products. We find these merchants through our Independent Sales Organization ("ISO") and agent channels of distribution and intend to make additional acquisitions on an opportunistic basis in this fragmented segment of the industry.

OVERVIEW

We are a rapidly growing provider of credit and debit card-based payment processing services and Gift & Loyalty products to small merchants. As of June 30, 2009, we provided our services to numerous ISOs and thousands of merchants located across the United States. Our payment processing services enable our merchants to process traditional card-present, or swipe transactions, as well as card-not-present transactions. A traditional card-present transaction occurs whenever a cardholder physically presents a credit or debit card to a merchant at the point-of-sale. Card-not-present transactions occur whenever the customer does not physically present a payment card at the point-of-sale and may occur over the Internet or by mail, fax or telephone.

DEVELOPMENT OF OUR BUSINESS

International Card Establishment, Inc. (formerly Summit World Ventures, Inc.) was incorporated on December 18, 1986, under the laws of the State of Delaware to engage in any lawful corporate activity, including, but not limited to, selected mergers and acquisitions. Prior to July 28, 2000, we were in the developmental stage, whose sole purpose was to locate and consummate a merger or acquisition with a private entity, and we did not have any operations. On July 28, 2000, we acquired iNetEvents, Inc., a Nevada corporation and commenced operations. iNetEvents, Inc., a Nevada corporation, was incorporated on February 3, 1999, and provided Internet support and supply software for real time event/convention information management.

On January 16, 2003, we entered into a Plan and Agreement of Reorganization with International Card Establishment, Inc., a Nevada corporation, and its shareholders. International Card Establishment, Inc., a Nevada corporation, was incorporated on July 26, 2002. As part of the acquisition, a reorganization in the form of a reverse merger, International Card Establishment, Inc. became our wholly-owned subsidiary, and there was a change of our control. Following the International Card Establishment, Inc. acquisition we changed our corporate name from iNetEvents, Inc. to International Card Establishment, Inc. and reverse split our outstanding shares of common stock on a one for two share basis.

On December 15, 2003, we entered into a Plan and Agreement of Reorganization with GlobalTech Leasing, Inc., a California corporation, and its shareholders. On December 29, 2003, GlobalTech Leasing, Inc. became our wholly owned subsidiary. In May of 2006 we sold our GlobalTech Leasing, Inc. subsidiary which comprised our entire equipment leasing segment.

Effective September 8, 2004, we entered into a Plan and Agreement of Reorganization with Neos Merchant Solutions, Inc., a Nevada corporation, and its shareholders. Effective September 8, 2004, Neos Merchant Solutions, Inc. became our wholly owned subsidiary.

In May 2008 we started LIFT Network, a new sales division focused on marketing for small to medium sized businesses. LIFT Network is based in our corporate offices in Camarillo, California with a small office in Tampa, Florida.

In January 2009 we began a new month-to-month "rental" ("LiftMySales") program. The first sales under this program were booked in February 2009. Under this program, there is no long-term contract and the merchant pays an all inclusive fee for the loan of a terminal and monthly fees for all services. These services have been expanded to include assistance to the merchant in marketing their company including on-line "coupon" and sales tools. This program is being marketed under the LIFT name. A video detailing the program is available at WWW.LIFTMYSALES.COM. Under this program, the merchant is provided a "loaner" terminal.

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 Companies 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 Nevada corporation, which has been dormant since 2005.

CRITICAL ACCOUNTING POLICIES

The methods, estimates and judgments we use in applying our accounting policies have a significant impact on the results we report in our financial statements, which we discuss under the heading "Results of Operations" following this section of our MD&A. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Our most critical accounting estimates include the assessment of recoverability of long-lived assets and intangible assets, which impacts operating expenses when we impair assets or accelerate their amortization or depreciation.

We believe the following critical accounting policies reflect our more significant estimates and assumptions used in the preparation of our consolidated financial statements:

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 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.

REVENUE AND COST RECOGNITION

Substantially all of our revenues are generated from fees charged to merchants for card-based payment processing services. We typically charge these merchants a bundled rate, primarily based upon the merchant's monthly charge volume and risk profile. Our fees principally consist of discount fees, which are a percentage of the dollar amount of each credit or debit transaction. We charge all merchants higher discount rates for card-not-present transactions than for card-present transactions in order to compensate ourselves for the higher risk of underwriting these transactions. We derive the balance of our revenues from a variety of fixed transaction or service fees, including fees for monthly minimum charge volume requirements, statement fees, annual fees and fees for other miscellaneous services, such as handling chargebacks. We recognize discounts and other fees related to payment transactions at the time the merchants' transactions are processed. We recognize revenues derived from service fees at the time the service is performed. Related interchange and assessment costs are also recognized at that time.

We follow the requirements of EITF 99-19, "Reporting Revenue Gross as a Principal Versus Net as an Agent", in determining our revenue reporting. Generally, where we have merchant portability, credit risk and ultimate responsibility for the merchant, revenues are reported at the time of sale on a gross basis equal to the full amount of the discount charged to the merchant. This amount includes interchange fees paid to card-issuing banks and assessments paid to credit card associations pursuant to which such parties receive payments based primarily on processing volume for particular groups of merchants. Interchange fees are set by Visa and MasterCard and are based on transaction processing volume and are recognized at the time transactions are processed.

GOODWILL AND INTANGIBLES

Since 2005, we capitalize 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) and, at least quarterly, amortize accounts at the time of attrition. Additionally, in keeping with the provisions of FASB No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"), we also hire an outside firm to complete an annual valuation to determine any impairment recognized in current earnings.

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE MEASUREMENTS

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

(The unobservable inputs are developed based on the best information available in the circumstances and may include the Company's own data.)

The following table presents the Company's fair value hierarchy for those assets and liabilities measured at fair vlue on a recurring basis as of June 30, 2009.

 FAIR VALUE AT JUNE 30, 2009
 _______________________________________________

 TOTAL LEVEL 1 LEVEL 2 LEVEL 3
 _______________________________________________
Assets:
 Intangibles -
 Merchant
 Portfolios $ 1,022,729 $ - $ 1,022,729 $ -
 _______________________________________________
 $ 1,022,729 $ $ 1,022,729 $ -
 ===============================================


Liabilities:
 Line of Credit,
 related party $ 735,875 $ - $ 735,875 $ -
 _______________________________________________
 $ 735,875 $ - $ 735,875 $ -
 ===============================================

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2009 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2008

Results of operations consist of the following:

 June 30, 2009 June 30, 2008 Difference Difference
 $ %
 ____________________________________________________________

Net Revenues $ 1,408,574 $ 1,946,234 $ (537,660) (28)
Cost of Revenues 952,348 1,252,792 (300,444) (24)
 ____________________________________________________________
Gross Profit 456,226 693,442 (237,216) (34)
Operating, General,
 and Administrative Costs 604,071 619,922 (15,851) (3)
 ____________________________________________________________

Net Operating Gain/(Loss) $ (147,845) $ 73,520 $ (221,365) (301)
 ============================================================

Net revenues decreased by $537,660 from $1,946,234 for the three months ended June 30, 2008 to $1,408,574 for the three months ended June 30, 2009, due mainly to the poor economy as well as continued attrition of merchant accounts and tighter credit policies. Residuals decreased by approximately $490,400. This decrease was due in part to the attrition of merchant accounts but the primary factor was the faltering economy which affected us in two ways. First, reduced merchant sales led directly to reduced residuals. Secondly, many small businesses closed shop last year due to the lagging economy. A number of merchants simply closed their doors and bank accounts, precluding us from even collecting their early termination fees. Equipment sales dropped by $43,285, due primarily to our new marketing model, introduced in January 2009, wherein merchants receive a "loaner" terminal as part of a total package for which they pay a flat monthly fee. Merchant attrition, caused by better offers from competitors as well as closing businesses, is a common aspect of our industry. However, we believe our new marketing models will help stop attrition to some extent. In the second quarter we saw a significant decline in attrition of merchant accounts, roughly 22% less than we had seen over the previous year.

The costs associated with the merchant account services decreased by approximately 24% or $300,444 primarily due to decreased costs associated with residual income as well as decreased commissions and equipment costs due to lower sales. Again, both residuals and sales were lower than in prior periods due to the sluggish economy.

General and administrative costs decreased by approximately 3% or $15,851 from $619,922 for the three months ended June 30, 2008 to $604,071 for the three months ended June 30, 2009. While there was cumulative decrease of approximately $97,500 for amortization, interest, office and bonus expenses, these were offset by a $43,900 combined increase in advertising, depreciation, salaries, office rent and state taxes and the additional $38,600 of undercharged residual fees for November and December 2008. An increase of $27,051 increase in advertising reflects expenses associated with the startup of the new LiftMySales program.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2009 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2008

Results of operations consist of the following:

 June 30, 2009 June 30, 2008 Difference Difference
 $ %
 _____________________________________________________________

Net Revenues $ 2,926,288 $ 3,886,913 $ (960,625) (25)
Cost of Revenues 1,852,530 2,487,877 (635,347) (26)
 _____________________________________________________________
Gross Profit 1,073,758 1,399,036 (325,278) (23)
Operating, General,
 and Administrative Costs 1,278,897 1,308,930 (30,033) (2)
 _____________________________________________________________

Net Operating Gain/(Loss) $ (205,139) $ 90,106 $ (295,245) (328)
 =============================================================

Net revenues decreased by $960,625 from $3,886,913 for the six months ended June 30, 2008 to $2,926,288 for the six months ended June 30, 2009, due mainly to the poor economy as well as continued attrition of merchant accounts and tighter credit policies. Residuals decreased by approximately $860,100. This decrease was due primarily to the faltering economy, with merchant sales dropping approximately $1.2 million since January 2009. Equipment sales dropped by $106,000, due to a combination of the poor economy and to our new marketing model, introduced in January 2009, wherein merchants receive a "loaner" terminal as part of a total package for which they pay a flat monthly fee. Merchant attrition, caused by better offers from competitors as well as closing businesses, is a common aspect of our industry. However, we believe our new marketing models will help stop attrition to some extent.

The costs associated with the merchant account services decreased by approximately 26% or $635,347 due primarily to $578,108 in decreased costs associated with residual income as well as $31,940 in decreased commissions and $25,299 in equipment costs due to lower sales. Again, both residuals and sales were lower than in prior periods due to the sluggish economy.

General and administrative costs decreased by approximately 2% or $30,033 from $1,308,930 for the six months ended June 30, 2008, to $1,278,897 for the six months ended June 30, 2009. While there was cumulative decrease of approximately $163,000 for amortization, auto, consulting, interest, insurance, office and bonus expenses, these were offset by a $133,000 combined increase in advertising, depreciation, salaries, office rent and state taxes and the additional $38,600 of undercharged residual fees for November and December 2008. An increase of $429,900 in advertising reflects expenses associated with the startup of the new LiftMySales program.

LIQUIDITY AND CAPITAL RESOURCES

We are currently seeking to expand our merchant services offerings in bankcard and gift and loyalty. In addition, we are investigating additional business opportunities and potential acquisitions; accordingly we will require additional capital to complete the expansion and to undertake any additional business opportunities.

 June 30, 2009 December 31, 2008 Difference Difference
 $ %
 _________________________________________________________________

Cash $ 115,938 $ 91,404 $ 24,534 27
Accounts Payable and
 Accrued Expenses $ 481,435 $ 616,227 $ (134,792) (22)
Accounts Receivable, net $ 7,794 $ 22,572 $ (14,778) (65)

We have financed our operations during the second quarter primarily through sales, the collection of accounts receivable, the use of our line of credit, and the use of cash on hand. As of June 30, 2009, we had total current liabilities of $1,328,703 compared to $1,274,763 as of December 31, 2008. The increase in current liabilities is primarily due to the FTS fee underpayment.

Cash increased 27% from $91,404 at December 31, 2008, to $115,938 at June 30, 2009, due to decreased advertising and salaries expenses.

As of June 30, 2009, our accounts receivable, net decreased to $7,794 compared to $22,572 at December 31, 2008. The relating allowance for doubtful accounts increased only a $2,784 from $50,178 at December 31, 2008, to $52,962 as of June 30, 2009, because of continued strong controls on cash collections.

We had no equity issuances in the first or second quarters of 2009.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

N/A.

ITEM 4T. CONTROLS AND PROCEDURES.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Pursuant to Rule 13a-15(b) under the Exchange Act, 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 three months ended June 30, 2009. Based upon that evaluation, the Company's CEO and CFO concluded that the Company's disclosure controls and procedures are effective to ensure that information requiring disclosure 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.

CHANGES IN INTERNAL CONTROLS

Our management, with the participation our Chief Executive Officer and Chief Financial Officer, performed an evaluation to determine whether any change in our internal controls over financial reporting occurred during the six month period ended June 30, 2009. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that no change occurred in the Company's internal controls over financial reporting during the six months ended June 30, 2009, that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

N/A.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

(1) Committees and financial reviews.

The board of directors has not established an audit committee. In addition, we do not have any other compensation or executive or similar committees. We will not, in all likelihood, establish an audit committee until such time as we increase our revenues, of which there can be no assurance. We recognize that an audit committee, when established, will play a critical role in our financial reporting system by overseeing and monitoring management's and the independent auditor's participation in the financial reporting process.

Until such time as an audit committee has been established, the board of directors will undertake those tasks normally associated with an audit committee to include, but not by way of limitation, the (i) review and discussion of the audited financial statements with management, and (ii) discussions with the independent auditors with respect to the matters required to be discussed by the Statement On Auditing Standards No. 61, "Communications with Audit Committees", as may be modified or supplemented.

ITEM 6. EXHIBITS

(a) The following exhibits are filed with this report.

31.1 Certification by Chief Executive Officer pursuant to Sarbanes Oxley
Section 302.

31.2 Certification by Chief Financial Officer pursuant to Sarbanes Oxley
Section 302.

32.1 Certification by Chief Executive Officer pursuant to 18 U.S. C.
Section 1350.

32.2 Certification by Chief Financial Officer pursuant to 18 U.S. C.
Section 1350.

SIGNATURES

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

Date: August13, 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)

International Card Estab... (CE) (USOTC:ICRD)
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