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, 2008, compared to the three months ended June 30, 2007, and the six months ended June 30, 2008, compared to the six months ended June 30, 2007. 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, 2008, and December 31, 2007.

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, 2008, 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. (the "Company") (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 and could be defined as a "shell" company, 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 18, 2003, 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.

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.

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 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.

In the second quarter of 2008, we formed the LIFT Networks division, based in Tampa, Florida, in a drive to accelerate revenue growth in our smart card and credit card processing businesses.

LIFT Networks will expand on our current product lines by offering additional services to our stored value Gift and Loyalty products; such as, Shop & Dine Rewards, a unique multi-merchant community stored value cash/gift, loyalty and rewards card; stored value MasterCard with payroll rewards; and the introduction of a consumer credit card program - LIFT Revolution.

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 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 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 amortize accounts at the time of attrition. In keeping with the provisions of FASB Statement 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 ACCOUNTING

In September 2006, the FASB issued FASB Statement No. 157, "Fair Value Measurements" ("SFAS 157"). SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions of FAS 157 were adopted January 1, 2008. In February 2008, the FASB staff issued Staff Position No. 157-2 "Effective Date of FASB Statement No. 157" ("FSP SFAS 157-2"). FSP SFAS 157-2 delayed the effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The provisions of FSP SFAS 157-2 are effective for the Company's fiscal year beginning January 1, 2009.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2008 COMPARED TO THE
THREE MONTHS ENDED JUNE 30, 2007

Results of operations consist of the following:


                                JUNE 30, 2008   JUNE 30, 2007       $ CHANGE  % CHANGE
Net Revenues                    $   1,946,234   $   2,253,386    $  (307,152)     (14%)
Cost of Revenues                    1,252,792       1,435,525       (182,733)     (13%)
                               ________________________________________________________
Gross Profit                          693,442         817,861       (124,419)     (15%)

Operating, General and
Administrative Costs                  619,922       1,063,966       (444,044)     (42%)
                               ________________________________________________________
Net Operating Income (Loss)     $      73,520   $    (246,105)   $   319,625     (130%)

Net revenues decreased by $307,152 from $2,253,386 for the three months ended June 30, 2007 to $1,946,234 for the three months ended June 30, 2008 because of the decrease in residuals due to attrition of the merchant portfolio and reduced sales. Our sales have decreased due to lower volume from instituting tighter controls on merchant account acquisitions.

The costs associated with the merchant account services decreased by approximately 13% or $182,733 primarily due to the decrease in residuals paid out due to attrition of the merchant portfolio, a $150,000 reduction in costs associated with First Data Resources ("FDR") residuals due to attrition of the merchant credit card portfolio, reduced inventory costs due to reduced sales and a $15,000 reduction in telemarketing expenses.

General and administrative costs decreased by approximately $444,000 from $1,063,966 for the three months ended June 30, 2007 to $619,923 for the three months ended June 30, 2008, due primarily to the reduction of bad debt, decrease in amortization and elimination of depreciation expense, since our assets are fully depreciated. Furthermore, we reduced our workforce significantly, thereby, reducing our payroll obligations. Finally, several processing expenses, such as telephone bills and merchant discount fees, that had been reported as general and administrative costs in the second quarter of 2007 were reclassified into the cost of revenues at year end in 2007. In the second quarter of 2008, those expenses were recognized as part of the cost of sales.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2008 COMPARED TO THE SIX
MONTHS ENDED JUNE 30, 2007

Results of operations consist of the following:



                                JUNE 30, 2008   JUNE 30, 2007       $ CHANGE  % CHANGE
Net Revenues                    $   3,886,913   $   4,767,382    $  (880,469)     (18%)
Cost of Revenues                    2,487,877       3,098,574       (610,697)     (20%)
                               ________________________________________________________
Gross Profit                        1,399,036       1,668,808       (269,772)     (16%)

Operating, General and
Administrative Costs                1,308,930       2,087,898       (778,968)     (37%)
                               ________________________________________________________
Net Operating Income (Loss)     $      90,106   $    (419,090)   $   509,196     (122%)

Net revenues decreased by $880,469 from $4,767,382 for the six months ended June 30, 2007 to $3,886,913 for the six months ended June 30, 2008 because of the decrease in residuals due to attrition of both merchant and gift portfolios and reduced sales. Our sales have decreased due to lower volume by instituting tighter controls on merchant account acquisitions.

The costs associated with the merchant account services decreased by approximately 20% or $610,697 primarily due to the decrease in residuals paid out due to attrition of the merchant portfolio, a $335,000 reduction in costs associated with First Data Resources ("FDR") residuals due to attrition of the merchant credit card portfolio and reduced inventory costs due to reduced sales.

General and administrative costs decreased by approximately $779,000 from $2,087,898 for the six months ended June 30, 2007 to $1,308,930 for the six months ended June 30, 2008, due primarily to the reduction of bad debt, decrease in amortization and elimination of depreciation expense, since our assets are fully depreciated. Furthermore, we reduced our workforce significantly; thereby, reducing our payroll obligations. Finally, several processing expenses, such as telephone bills and merchant discount fees, that had been reported as general and administrative costs in the second quarter of 2007 were reclassified into the cost of revenues at year end in 2007. Since January 1, 2008, those expenses were recognized as part of the cost of sales.

LIQUIDITY AND CAPITAL RESOURCES

We are currently seeking to expand our merchant services offerings in bankcard and gift and loyalty; however, we do not believe that our efforts to expand our current lines of business will result in substantial increases in operating expenses or significant reductions in earnings. Our most recent expansion, the LIFT Networks division, is completely self-sufficient and has not materially increased our operating, general or administrative expenses. We do not anticipate significant fluctuations in capital expenditures or expenses relating to this new division throughout the remainder of 2008. 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, 2008    DECEMBER 31, 2007      $ CHANGE   % CHANGE
Cash                                               $     145,639    $         126,149    $   19,490        15%
Accounts Payable and Accrued Expenses              $     678,153    $         619,375    $   58,778         9%
Accounts Receivable, net                           $      42,462    $          27,059    $   15,403        57%

We have financed our operations during the year 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, 2008, we had total current liabilities of $1,431,038 compared to $1,668,570 as of December 31, 2007. The decrease in current liabilities is primarily the result of paying down Accounts Payable.

Cash increased 15% from $126,149 at December 31, 2007, to $145,639 at June 30, 2008, because of a decreased demand on cash due to the paying down of accounts payable and debt.

As of June 30, 2008, our accounts receivable, net, increased to $42,462 compared to $27,059 at December 31, 2007. The relating allowance for doubtful accounts decreased from $225,425 at December 31, 2007, to $188,629 as of June 30, 2008, because of continued aggressive collection of old receivables.

We had no equity issuances in the second quarter of 2008.